How much can we spend? (before we jeopardize our finances)

[Sassy Colin]

1 million dollars hehehehe!

 

[lysglimt]

If we get rid of 4-5 of the players we want to get rid of - I see no problem in us spending close to £150 mil. Sanchez has gone, if Lingard, Rojo, Jones and Smalling to name 5 leaves - we should raise close to £50 million and in total save £1 m a week in wages. That should more than cover improved and new contracts.
True - the losses because of Corona is substantial - but so is the reward for C.L, new tv-deals, new improved prize money etc

 

[Lentwood]

I did a thread on this that got some good input from finance bods.

Think the general (sensible) consensus was that we have spent about the ceiling of what we could do over the last 7/8yrs

 

[Bestietom]

"Don't spend Don't prosper". Unfortunately that's the way it is now. If you don't bring in the top players you fall behind the big teams, and they will be the ones who prosper and take the big prizes and monies.

 

[padzilla]

I think failing to challenge for the PL year in, year out will jeopardise our finances more in the the long-run than signing the right players.

 

[7even]

Our Annual Report 2019/20 will probably be published between September 15 - September 30.

At that time we will fully know the impact of COVID between Mars to June 2020, and how much it will affect our transfer budget. Borussia Dortmund predicted a loss of €21m for period Q4. (April -June 2020) I think we will see similar numbers in our Annual Report 2019/20.

a) Our 2020/21 CL qualification probably doesn’t affect our budget until late 2020 or early 2021.

b) What has a immediate effect is a empty Old Trafford. Our Match day revenue will heavily decrease in 2020/21 Q1, and probably Q2. (July to December 2020)

c) We will also see a decrease in our Television revenue. According to reports we must rebate approximately £20m. This will have an immediate impact in our budget.

d) Alexi Sanchez departure will not affect our transfer budget at all. It’s £7,5m (£15m -£7,5m) spread over 12 months starting from July 2020.

e) We will be without our annual pre season tour. That will also affect our budget with immediate effect.

f) Our EL campaign will give us some extra money. How much I don’t know.

g) In order to increase our transfer budget we must sell more players. Depending on who it’s a span from £10m up to ... something. (estimated Smalling 20m, Rojo 3m, Jones?, Pereira 10m, Lingard 15m)

h) Our wages will increase because of our CL qualification

i) Our wages can decrease if we get rid of a few high earners

All in all I find it very unlikely that without sales we spend more then €60-80m in this window. I’m not even sure about that amount. It’s really hard to predict how much we will (or maybe can) spend with a ungoing Pandemic.

The optimist inside me says buy Sancho and go all in on him. Splash €90-100m up front and gamble. The pessimist says no way buddy we will do that. It’s a f*cking struggle inside my head and nobody wins. The optimist is a night owl and my depressing pessimist rules the days.

 

[cyril C]

If we get rid of 4-5 of the players we want to get rid of - I see no problem in us spending close to £150 mil. Sanchez has gone, if Lingard, Rojo, Jones and Smalling to name 5 leaves - we should raise close to £50 million and in total save £1 m a week in wages. That should more than cover improved and new contracts.
True - the losses because of Corona is substantial - but so is the reward for C.L, new tv-deals, new improved prize money etc

50m for Lingard, Smalling, Rojo, Jones? We can't even finalise a deal on Smalling, a regular player on loan and deem essential, for 28m, so what is the prospect of offloading Jones, Rojo, who hardly play, other than free? Rojo FOC might be OK, but are you willing to let Jones go for free?

This whole saga will drag on for weeks, while the transfer window is smaller. That's why most clubs don't intend to buy, as you can see how quiet this window is.

Wake up to reality, is the only advice that I can give. BTW, we will lose at least half of our 100m ticket sale next season, that is why no clubs are spending big.

 

[ravelston]

As of 31 March 2020, the club has £356.4m in outstanding unamortised transfer fees of players we previously signed. These costs will need to be run through the books in the coming years.

In that context, I can't see us going too crazy in the market for the foreseeable future. We have already spent a huge amount of money. Covid just makes things even more tricky.

Amortisation gives us an offset against taxable income - so it reduces our tax bill - otherwise it has no cash flow consequences. (There's no tax relief at the time we buy players - we get it over the life of the contract by amortising the cost.) To get an idea of our obligations with respect to past transfers you need to look at payables ( Q3 - £134m outstanding, £50m in FY2020) and receivables( Q3 - £58m outstanding, £42m in FY2020). Means we owed £68m (net) on past transfers at the start of FY2021 (i.e. now). That's not bad in the context of recent years - mostly because we paid cash for Maguire and James.

Drawing down on the credit line gives us the ability to manage what's going to be a strange pattern of cash flows for the rest of the calendar year (and, possibly, beyond), but it's an expensive way of doing business and I'm sure we'll want to get out from under it asap. It's hard to know what the shortfalls are going to be long term - season ticket sales would normally have put £50- £60m in the bank by May 1st, and we're probably losing £10- £15m in merchandising and £10m in other matchday revenues each quarter. Overall it's not going to be something we can't make up, but there's only one pot of money. However much the aggregate shortfall is, that's the amount we'll lose off the transfer budget.

 

[TrustInOle]

1 million dollars hehehehe!

 

[MikeUpNorth]

Amortisation gives us an offset against taxable income - so it reduces our tax bill - otherwise it has no cash flow consequences. (There's no tax relief at the time we buy players - we get it over the life of the contract by amortising the cost.) To get an idea of our obligations with respect to past transfers you need to look at payables ( Q3 - £134m outstanding, £50m in FY2020) and receivables( Q3 - £58m outstanding, £42m in FY2020). Means we owed £68m (net) on past transfers at the start of FY2021 (i.e. now). That's not bad in the context of recent years - mostly because we paid cash for Maguire and James.

Drawing down on the credit line gives us the ability to manage what's going to be a strange pattern of cash flows for the rest of the calendar year (and, possibly, beyond), but it's an expensive way of doing business and I'm sure we'll want to get out from under it asap. It's hard to know what the shortfalls are going to be long term - season ticket sales would normally have put £50- £60m in the bank by May 1st, and we're probably losing £10- £15m in merchandising and £10m in other matchday revenues each quarter. Overall it's not going to be something we can't make up, but there's only one pot of money. However much the aggregate shortfall is, that's the amount we'll lose off the transfer budget.

Yes, all true. The other area where amortisation is relevant is in the company's reported profit and earnings per share. Even in these days where EBITDA and other cashflow-like metrics are given precedence, I'm sure a listed company like United will want to keep their reported earnings per share as high as possible and not crush it through outsized amort charges.