No other football club in the Premier League take share dividends. It is ALL invested into the clubs, that's the difference between Glazer and other ownership.
Our debt has increased 133% to £474.1 million
- Thread starter Livewire1974
- Start date
Yeah agree with much of that. I think my frustration comes from the fact we are valued to high for an investor or businessman to purchase us and if they did they would in turn take out every bit as much as the Glazers, which in a nutshell sort of covers what you describe above.
It's why I, begrudgingly, wanted the Saudi takeover to happen. In my opinion it's the only way for a club our size to operate to it's fullest potential with maximum investment of our own money, without an owner that seeks a financial return. They were the only viable suitors who could afford us and not take out from the club.
It's what City have, Chelsea, PSG, Barca, Real. None of their owners seek financial returns. That is where we fall short under the Glazers compared to the teams we want to be competing with.
It's not the numbers spent but the ability to operate to our fullest potential, the same as those clubs do/have.
Dividends are also more tax friendly, at least in the UK. Many shareholders take their pay via dividends and in my experience it's purely for tax reasons instead of drawing down earnings and paying the associated PAYE.
It really depends on what the shareholders intend to do with their equity. If the intention is to sell, they would be better served to buy back shares and this drive price up. Dividends are double taxed (as being issued after tax and on individual level) and are not really tax efficient for the company.
Also, keep in mind that both the club and the Glazers are subject to US tax and financial regulations.
Can you tell me which other Premier League clubs are publicly traded and thus you have information about their owners vehicles to extract value? As far as I can tell, there aren't any and I find it very difficult to determine how other clubs deal with their profits.
Probably the best way to find out is to analyse their owners' tax returns but I neither have the time nor do I believe I will have access to that information.
But overall, your claim appears unfounded.
But the Glazer mouthpieces on this forum will tell you Covid is the only culprit.
“shareholders never inject capital. Even if they do it will be debt”. You made me laugh man. Thanks
Last edited:
the problem is that the Glazers and Woodward have wrongly invested in players like sanchez for instance. Being greedy (a shareholder would alway be - to be fair), the Glazers disregarded these decisions which cost the club a fortune and continued to propose dividend distributions. This can only lead to a deterioration in the club’s financial position and ultimately a reduction in equity value (which is also not good for the Glazers).
unfortunately, this club is badly managed. The club is not progressing as it should, the fans are not happy and the club’s financial performance is not good!
To be fair, almost all of the companies you listed are in industries that were most effected by COVID - O&G, retail and travel - and, in respect of the O&G companies, got the double whammy of COVID + the OPEC+ dispute. Oil futures traded at NEGATIVE values a few months ago because storage capacity was full worldwide. That means sellers were paying holders of the futures to take delivery of oil...
I'm a corporate attorney in Houston, Texas and some of those O&G companies you listed were clients of the firm I left a month ago or competitors of clients of that firm. I know that industry extremely well and drafted tons of COVID/OPEC+ disclosure. O&G is an extremely capital intensive industry, especially compared to football, and though the companies you listed would be safe, their customers and suppliers have been filing for bankruptcies left and right (again, I work on these). Not a fair comparison - their need for liquidity is much greater than the football clubs and the industry environment is much more unstable (historically/customarily, as well as presently).
Same with travel and cars/vehicles. Work from home and virus fears have killed travel and used car prices have skyrocketed as people are buying more used vehicles and less new ones because they're driving less. I've worked at my office about 6 times since March...
And then retail, which was dying a slow death before COVID.
Basically, you cherry picked examples and made an apples to oranges comparison to help your argument. To be fair, there aren't other public company football clubs that make for good comps. But that also means that we have no idea whether the owners are taking money out of the clubs because they're private companies.
If we're going to cherry pick, here's 21 companies that increased dividends during COVID.. https://www.kiplinger.com/investing...d-increases-announced-during-the-covid-crisis
Glad to bring joy and laughter“shareholders never inject capital. Even if they do it will be debt”. You made me laugh man. Thanks
But to the point, can you please elaborate how and when do shareholders inject capital without creating debt for the company?
It's difficult concept for most here as they are accustomed to State and Oligarchs running the club and then assume that is the model how an organisation is run. Just look at the title of this thread, it's not correct at all but anyone who don't want to dig deeper can just see the number and claim Glazers are doing bad job financially. That's how misinformation spreads.Glad to bring joy and laughter
But to the point, can you please elaborate how and when do shareholders inject capital without creating debt for the company?
Even the oligarch pumped all his money as debt but as you rightly point out, very few care to actually check or know what they're discussing...
By, you know, infusing more equity instead of taking more debt?Glad to bring joy and laughter
But to the point, can you please elaborate how and when do shareholders inject capital without creating debt for the company?
Rights issues, preferential etc are various methods of doing that.
Anyways, seems like a big boohoo over nothing. Net debt has hardly increased and frankly is all that really matters.
Just serves as a reminder that we, as a club, have been looted even though we are not fiscally managed poorly today.
You do realize that equity is another form of debt, right?
Erm...no it isnt
Basically the amounts paid to Glazers (through dividend and interest) are 2x of the COVID-19 costs.. great.
Equite is an instrument for companies to share ownership in exchange for capital. Then they repay that with percentage of earnings (in the form of dividend) and/or by increasing the value of the business (and thus increasing the equity value). I should've phrased my previous sentence better. Equity is another financing instrument that is then repaid.
And what you suggested was to issue more stock? (I don't understand what infusing equity means) So, basically to sell part of the club ownership? And then dividend payouts will be bigger (not that it makes a whole lot of difference) and people will claim the club is feeding the Glazers even more.
Equity doesn't necessarily need to be repaid. Many companies do not distribute dividends and the return to shareholders is a function of increased value of their part ownership.
It's a bit off tangent, but what I was referring to was that Glazers/ any other owner CAN infuse additional cash into the business (thereby increasing their ownership) or by allowing new investors to buy a stake by putting in cash into the company (diluting their stake). Neither involves them selling their shares but rather creation of new shares. A bit like how Roman first gave Chelsea money by giving it interest free loans and then just converted that debt into equity.
Fundamentally, what I was trying to say was that football in Europe is not a model that is suited for pure business-like ownership. It's got a vast social/ prestige involvement in it. As a result, clubs that are held purely as business entities are always going to be at a disadvantage because there are owners who (a) may not own the club for business returns ergo not taking money out or (b) put more money into it to built brands.
For us, it's the worst of all worlds. Not only is the club owned by business men who want returns, but also added more debt to the club to fund their own takeover, ie legally siphoning off cash. So whether we are financially well managed today (relatively in an accounting sense we are decently managed) is irrelevant because the core ownership structure renders us uncompetitive. Best of all worlds would be to have a fan owned club as in option (a) explained above. No sugar daddy and all clubs cash flows back into club development, player purchases and local grassroots investments. We can use those cash flows to hire 100 Woodward's to ensure that we keep growing as a brand
EDIT: not to mention the fact that we need owners who are more proactive to CEO incompetence than currently shown
You can still find out if private limited companies declare dividends to shareholders, in the UK it is a statutory provision for dividends to be disclosed on their accounts which are filed publicly at CH.
From memory the only other club in the PL to have declared dividends in recent years is Newcastle under Mike Ashley (and possibly a very small dividend for Liverpool under FSG but I may be wrong). Its completely right to say that among other football clubs, United are relatively unique in that our owners extract cash from the club beyond director salaries.
You could argue that we're also relatively unique in that we chose to go public whereas most other clubs are private limited companies so we have dividend commitments to shareholder ageements, but that's a bad excuse because it was a decision that the Glazers made in an attempt to raise finance to refinance the costly debt the club was saddled with following their takeover. Its also still true that whilst the newly issues shares have options, the vast majority of dividend rights still sit with the 6 Glazer family members.
Why would they dilute the stock though? Either they would be taking even more ownership of the club (and thus getting more divident returns) or would be diluting their ownership. Either way, I don't really see the point from their (or the club's) perspective to do that.
That's not true at all. All clubs have always generated profits for their owners and the prestige is added bonus for the them. Not the other way around. Fans believe owners do not expect profits because fans do not own businesses and do not invest their money (a lot of times in the millions) in the same manner. Even the bankrupting and failing football clubs have brought profits to their owners. Especially when the model is similar to Abramovich' initial financing in the form of debt. When a business collapses, debtors are first in line to receive on their claims.
A fan owned club is a very ambigious term. If that means a 'democratic model' where fans actually make decisions, count me out. Most people are absolutely incapable of making rational decisions and are proving this every day on this forum. The Spanish model of club elections is also something I cannot condone because it incentivizes populism and election promises ("I'll bring Sancho if you sign me" sounds way too familiar considering the Real Madrid elections)
The German model has proven wildly unsuccessful when it comes to actual football success as both Bayern and Dortmund are not fan-owned (at least not in the way most people imagine it).
I think you are mixing your fan expectations of the club and the owners' expectations of the CEO to run the club as a business. Manchester United are doing quite well for the owners and I would assume they evaluate the CEO as successful. If and how they judge on the failing to challenge for major trophies in the past few years, we don't know. They might or might not care. If and how they judge the slowing down growth in revenues is more important and the pandemic may actually be seen as a blessing in disguise for Woodward because if revenues continued to slow down with no external factors, it would've been his fault.
So true, but we know that the word "debt" is a trigger word for most United supporters...
Trigger word or not, the debt that we've had to service since 2005 has been partly responsible for United's decline (the other reason being the Glazer's lack of leadership). The decline started in 2009 (most likely 2005!) when 'the worlds biggest football club' replaced (if you can say so) world class talent in Ronaldo and Tevez with Valencia, Obertan, and Owen. £80 million for Ronaldo was a ridiculous amount of money back then and should've have been invested in the likes of Robben, Aguero, Silva etc. City bought Aguero in 2011 for £35 million which puts the £80 million we got for Ronaldo a couple of years earlier into perspective. The money should've been invested back into the club but the vast majority wasn't. We can thank the 'trigger word' debt for that. In fact the bulk of the Ronaldo money ended up in investment banks, used mainly to service the debt and its ridiculously high interest rates at the time.
The fact that people argue the debt is good today because it gives us tax breaks etc completely ignore the damage that the debt has caused these last 15 years. Yes, we've grown as a business, but we've declined as a football club relative to others. The Glazers and their debt are responsible for this one way or another.
To add to that, our rate of growth on the business side of things has slowed. Other clubs are closing in on our revenue. So even their we are seeing the starts of a plateau
heard of capital contributions? Capital increase? Sorry if I have offended you. I apologise for that. But shareholders do that sometimes.Glad to bring joy and laughter
But to the point, can you please elaborate how and when do shareholders inject capital without creating debt for the company?
No offence taken. But capital contributions come in exchange for equity. And that would mean diluting the stock. Which in turn would mean either Glazers increase their ownership (if they are to do the capital contributions) or they surrender relative ownership (either of which I can't see a reason for them to do). And both scenarios would mean more money paid out as dividend due to the higher number of shares in circulation.
Interesting on the dividends. Wasn’t aware of that statutory requirement in the UK - thanks. Definitely not the same in the US! At least not under Delaware or Texas law, can’t speak for other states.
do we know that every other club is incorporated in the UK, though? If Chelsea’s holdco, for example, was incorporated in Cayman or a foreign jurisdiction, wouldn’t all you could gather from the CH records be that earnings from a UK opco were distributed to the holdco (I.e. you would see distributions to individual owners, just up the organizational structure)? Surely that statutory requirement can’t apply to foreign incorporated parents of UK entities?
in any event, I’m not a fan of the Glazers. I’m not a fan of the debt or dividends. But I’m only opposed because I’m a fan of the club. If I remove my fandom from the equation, there’s nothing wrong with what they’re doing from a general business/legal perspective. It’s all very common for businesses of all kinds.
In other words, you think that SAF is a little b*tch. You must, because SAF said he was looking for value in the market and that was obviously a lie and he was obviously protecting the Glazers and being their little b*tch. And btw....when Ronaldo left and we "only replaced him with Valencia" we actually scored more goals. And not just a few more. A lot more than the previous season...
SAF wasn't shy in spending money; he was spending £30 million on CB's back in 2002; he was clearly following 'the no value in the transfer market' line given to him by the Glazers. Personally, I feel like he was trying to protect the club (at a time when the debt interest was very high) as he knew he could still keep the club competitive at the top with little investment which would bring in maximum revenue. Looking back our lack of investment in that period created a window of opportunity for City to rise to the top by snapping up the likes of Aguero, Silva, Kompany, whilst we were doing business with Wigan, Aston Villa, and Blackburn for Valencia, Young, and Phil Jones. Whether trying to protect the club makes me think that SAF's a 'little b*tch'? For me, no, but if you think I do, fair enough, I won't lose any sleep anytime soon.
Oh and on Valencia, he was a decent right winger for one or two seasons but then declined rapidly and ultimately ended up as back-up right back. If we could turn back time to 2009, give me a 25 year old Arjen Robben any day of the week.
Anyway, I've gone off on a tangent; lets get back to my original point and the bigger picture...do you think the Glazer debt has played any part in the decline of Manchester United?
so we agree now that shareholders can give money to the club without it being debt. That’s good. But equity does not alway mean capital increase. It can be waiver of debt, additional paid in capital, etc...
let’s not go into the details of this as in principle, shareholders support to improve the financial position in destress to yield return (after having a healthy financial position). After all, shareholders need return on investment. My initial point was that the Glazers were not supposed to approve dividend distribution in such times. They need to support the club.
these Glazers....
Busy day so had to put responding to this on the backburner.
Regarding O&G, yes that's true. The Norwegian currency is of course solidly tied to the price per barrell. My companies does a ton of import from countries like Taiwan, China, Pakistan etc who primarily trade in USD. Historically the USD strengtens vs the NOK when the price drops. So I've been very interested in OPEC calming down a bit with their production. But relevant to this discussion: pretty cherrypicked, I'll admit.
I can't speak for the US market other than what I read in the news, but in my local market in Norway, retail just set new records during the pandemic. Apparently everyone working from home is having a real positive effect on the retail side, and my own companys revenue is up 37% compared to last year (After standing near 0 the first week of lockdown and I started to think "oh well.. time for the next venture").
The problem I suppose with arguments that are a handful of lines long is that they are lazy and easily rebutted, like you did with mine.
I'll admit that I was a bit presumpteous and didn't bother investigating my own claim too much outside of checking the accounts of the Fenway Sports Group (Fenway gave a £100m+ loan to LFC to upgrade Anfield and only took back £10m as far as I can tell) , MUFC and some generalized googling.
My general claim is still that the vast majority of the PL club owners are long term investors that will one day sell.
I guess the root of my annoyance is that the clubs overall budget is heavily affected, and will fore the forseeable future affected our transfer spendings. The dividends is more symbolic than anything.This would be a perfect time to reconsider the clubs wage structure, because I don't believe that the club balks so much at the actual transfer fee, as they do over the total contract cost over 5 years.
Anyway, I concede that you're right about your argument, so a good day to you.
I think we agree on a lot more than we disagree on, and the civil discourse is a welcome departure from most message board discussions and appreciated.
I probably wasn't clear enough on retail, either. Brick and mortar retail is what's getting killed, and each day I see the equity markets respond positively to retailers announcing layoffs/store closings and focusing more on online retail (GAP, for example, saw its shares jump for that reason this week, I believe). Presumptuous on my part to assume industries in other countries have been affected the same as they have in the US, too.
This thread has left me very conflicted because, given my line of work, I have no problems with what the Glazers are doing from a purely business/legal perspective. It's... business. And as a corporate attorney, I facilitate similar business transactions for a career and philosophically have no issues with it. Like any fan, however, I'd much prefer to see a debt free club (or at least any debt on the balance sheet having been used for the club's purposes rather than acquisition financing) and earnings retained for the club's investment.
Unfortunately, the club's (and the premier league's) success may leave us stuck with the Glazers for a long time. Very few consortiums would buy the club with outright cash and without also leveraging against the club (and even if they did, which would be a terrible use of capital, they would still seek some sort of return through continued dividends), and it's valuation is so high now that very few individuals can afford to buy the club...
I'll just keep dreaming that Jeff Bezos will wake up and realize he's a die hard fan and spend a fraction of his wealth to buy the club, payoff its debts, and deliver us Haaland, Sancho and Mbappe in the summer
So again, you obviously think that SAF was Glazer's little b*tch and that he was lying to protect them. Got it...
You assume that the club should not be run as a return generating business. The business is not under threat of bankruptcy or in any dire financial state. Why would they dilute equity and thus either increase or decrease their relative ownership? It makes no sense. Also, why would they stop dividend payout? To cause the share price to crash? Again, it makes no sense.
Matchday revenues only account for 18% of our income in 2019 so yes people would not expect us to suddenly see our debt increase by 133% because of that one factor.
Yes, but we've just spent another 100m in transfers which all come out of out our pocket and labelled as debt too.
What I meant was we were always going to be making a loss in this financial window, I don't know why anybody is shocked.
If you say so mateSo again, you obviously think that SAF was Glazer's little b*tch and that he was lying to protect them. Got it...
Anyway, do you think the Glazer debt has played any part in the decline of Manchester United?
From what I understand about US tax law, Delaware is basically a mini Luxembourg and is favoured for it's shareholder anonymity so yeah, it doesn't surprise me that the duty for disclosure is considerably less!
If I remember correctly you are a US tax lawyer so you might get a kick out of the level of statutory disclosure required for limited companies in the UK - https://find-and-update.company-information.service.gov.uk/company/02570509 that's the Companies House page for one of the private limited holding companies in the United group. The information contained on a private company's statutory accounts and on directors and shareholders will probably surprise you!
Your question about how foreign holding companies fit into the picture is a complex one to answer. It's true that a number of clubs are owned through overseas holding companies but all of these structures will still have a holding company in the UK which needs to statutory disclosure criteria. In short it is very unusual for football clubs (or any company that generates profit in the UK) to engage in the sort of base erosion or profit shifting that Amazon / Facebook etc are famous for because of our tax law. To grossly over simplify our controlling foreign company tax laws, revenue generated in the UK generally can't be siphoned to other jurisdictions to prevent paying tax. There was a good study on the corporate structure of UK clubs by the Tax Justice Network. To paraphrase, the corporate structure of UK clubs is designed to allow foreign entities to funnel money into UK companies with minimal oversight and shareholder anonymity, but not to funnel profits out. Foreign holding companies bring the larger existential tax avoidance issue for sale or disposal, but there's currently no evidence that UK clubs are extracting operating profit to pay dividends via foreign parent companies. Again, it's pretty unusual for football clubs to declare dividends full stop.
I do agree with your conclusion that they aren't doing anything illegal or that unusual for corporate finance. It is however very unusual for a football club. The LBO and hostile takeover was unique in football as far as I'm aware. So is the level of debt in the club to non connected parties (except for spurs, but they borrowed to build a stadium). So is the dividend policy and the level of money they extract. As was the decision for a public share offering to refinance expensive PIK debt.
One question which you may be the perfect person to answer... as you're likely aware, United the PLC are incorporated in the Cayman Islands. Most reporting say that although this will increase the Glazer family's personal tax bill (for the reason I stated above - they'll be paying tax twice in some cases), it was done to give anonymity and a sweeter deal to new public shareholders. This makes sense since they moved the club to the Cayman Islands shortly before the decision to publicly offer stock. However... The Glazer family ownership of the PLC is also notoriously complicated and is constructed of several family trusts, almost all incorporated in Nevada. Does any reason jump out at you why they'd pick Nevada rather than say, Delaware?
It's a tiny point, but the club have always refused to comment on why their corporate setup is structured the way it is, and it's always annoyed me that I can't see the logic of family trusts in Nevada.
I think we agree on a lot more than we disagree on, and the civil discourse is a welcome departure from most message board discussions and appreciated.
I probably wasn't clear enough on retail, either. Brick and mortar retail is what's getting killed, and each day I see the equity markets respond positively to retailers announcing layoffs/store closings and focusing more on online retail (GAP, for example, saw its shares jump for that reason this week, I believe). Presumptuous on my part to assume industries in other countries have been affected the same as they have in the US, too.
This thread has left me very conflicted because, given my line of work, I have no problems with what the Glazers are doing from a purely business/legal perspective. It's... business. And as a corporate attorney, I facilitate similar business transactions for a career and philosophically have no issues with it. Like any fan, however, I'd much prefer to see a debt free club (or at least any debt on the balance sheet having been used for the club's purposes rather than acquisition financing) and earnings retained for the club's investment.
Unfortunately, the club's (and the premier league's) success may leave us stuck with the Glazers for a long time. Very few consortiums would buy the club with outright cash and without also leveraging against the club (and even if they did, which would be a terrible use of capital, they would still seek some sort of return through continued dividends), and it's valuation is so high now that very few individuals can afford to buy the club...
I'll just keep dreaming that Jeff Bezos will wake up and realize he's a die hard fan and spend a fraction of his wealth to buy the club, payoff its debts, and deliver us Haaland, Sancho and Mbappe in the summer
Sh!t like this is what I was alluding to earlier.
1. These two posters are around 88% aligned.
2. To the average joe, this is all Greek to them.
And the Glazer/Woodward can and will take advantage of #2 if needs be.
The reason people were shocked was the magnitude of change, not the direction of change. If it was true that the debt had increased by 133% that should be shocking. If enough people dismissed that as "well of course we've lost that much, it's entirely explained by factors outside our control, what's the fuss" then that attitude alone would create conditions ripe for exploitation by the powerful people it's protecting (directly or indirectly).
But the figures don't appear to be accurate. Which is what makes it all the more alarming that people can just brush those numbers off as business as usual.
Not sure what we're actually talking about here, to be honest.
Is there any reason to believe that something beyond an obvious - and fully expected - effect from the Covid-19 "depression" has influenced United's finances?
Is there any reason to believe that something beyond an obvious - and fully expected - effect from the Covid-19 "depression" has influenced United's finances?