*Official* English Football Season 2009-2010

[BoyBrumby]

It makes no difference whether United are in debt or not, either they pay interest on their debts or they pay their debts off and stop earning interest on that money in the business. All the headlines with lots of big numbers are just being sensationalist.

The concern isn't whether they're in debt, it's whether they're making money. The figures quoted in the press don't really mean anything because you don't know whether the business is actually losing money or has just had a lot of its assets revalued. You'd have to look at their accounts to find out whether they're really in trouble. But they've managed to run up more debt in a period of almost unprecedentedly tight credit, so someone obviously has a great deal of faith in their business model. When notoriously cautious banks are willing to stake another $200m of their money on United's future I don't think we have too much cause to worry. Not just yet anyway.

You have a slight misunderstanding of the nature of the debt. United, as a business, are liquid, but like most companies don't hold a lot of cash in reserve so aren't earning interest on anything. The debts the Glazers' holding company have secured against United, meanwhile, are accruing interest at a phenomenal rate. The recently published accounts show, despite the £80m for the Winking Chav, United's parent company made a gain of just £6.4 million for the last year & the debt has increased to a whopping £716.6 million.

The trouble is the hedge funds they borrowed some money from charge Shylockesque usury rates. The £138 million borrowed in June 2006 now stands at £202m. & the good news, for non-United fabs everywhere, is the original terms expire in August (hence the bond issue), when the rate the debt attracts interest at jumps from 14.25% to 16.25%.

I'd be worried if I were a United fan.

 

[aussie]

Surely they aren't the cheapest seats?

To my knowledge for big CL, matches vs Liverpool/Chelsea/Arsenal or the season opener it always flies up (this is why for a die-hard United fan you got to be season ticket holder or a One-United fan). Or else you can never se those games live at the ground.

For the normal games which anybody can get a ticket for depending on which part of OT you sit, prices ranges from (Junior-Senior-Adult) to the typical £10 - £49.

I was at the OT when Barcelona where here & payed £120. So i'm hoping i got my info wrong or something, since that price is too high especially for the carling cup match (semi-final or not) geez..

 

[Uppercut]

You have a slight misunderstanding of the nature of the debt. United, as a business, are liquid, but like most companies don't hold a lot of cash in reserve so aren't earning interest on anything.

No, no, Manchester United is a business, they use money to make more money. That's the key difference between capital in a business and capital in my pocket. Sorry if I wasn't being clear, but when I refer to interest, I'm talking about the money that United make from their own capital. They could pay off their debts, but if they did that there'd be that amount less capital in the club to make more money with. Hence it makes no difference whether they pay it off or not.

The debts the Glazers' holding company have secured against United, meanwhile, are accruing interest at a phenomenal rate. The recently published accounts show, despite the £80m for the Winking Chav, United's parent company made a gain of just £6.4 million for the last year & the debt has increased to a whopping £716.6 million.

The trouble is the hedge funds they borrowed some money from charge Shylockesque usury rates. The £138 million borrowed in June 2006 now stands at £202m. & the good news, for non-United fabs everywhere, is the original terms expire in August (hence the bond issue), when the rate the debt attracts interest at jumps from 14.25% to 16.25%.

I'd be worried if I were a United fan.

The figure of £6.4m could mean a lot of things, but it doesn't necessarily imply that the business is unprofitable. High interest rates on loans simply mean that the club has to make money at a greater rate, which might seem difficult, but someone clearly has a great deal of faith in the club to do it because they're still lending them more money. In the current financial market, if you're already £500m in debt and banks are willing to lend you another £200m, your business model has to be pretty flawless. It's much more important that a business is profitable than that it's not in debt, and of all the scary figures flying around, the £6.4m profit one is the least reliable.

Even if it isn't, the brand recognition and incredible consumer loyalty (which so many of us fools are now trapped in) means that someone somewhere will feel that they can make the business work. So even if the Glazers are forced to claim insolvency, their debtors aren't going to dissolve the club because it's worth so, so much more than the sum of its parts. They'll simply find another buyer who thinks they can run it profitably and sell it on.

So the club isn't going anywhere, but the cause for concern is the effect all of this has on the pitch. That's what worries me. But even then, not too much. No one involved can afford to let the football team grow crap.

 

[Mr Mxyzptlk]

So the club isn't going anywhere, but the cause for concern is the effect all of this has on the pitch. That's what worries me. But even then, not too much. No one involved can afford to let the football team grow crap.

I don't think the existence of the club is in question. It's the success of the club when other big clubs are spending bigger and bigger.

 

[BoyBrumby]

No, no, Manchester United is a business, they use money to make more money. That's the key difference between capital in a business and capital in my pocket. Sorry if I wasn't being clear, but when I refer to interest, I'm talking about the money that United make from their own capital. They could pay off their debts, but if they did that there'd be that amount less capital in the club to make more money with. Hence it makes no difference whether they pay it off or not.



The figure of £6.4m could mean a lot of things, but it doesn't necessarily imply that the business is unprofitable. High interest rates on loans simply mean that the club has to make money at a greater rate, which might seem difficult, but someone clearly has a great deal of faith in the club to do it because they're still lending them more money. In the current financial market, if you're already £500m in debt and banks are willing to lend you another £200m, your business model has to be pretty flawless. It's much more important that a business is profitable than that it's not in debt, and of all the scary figures flying around, the £6.4m profit one is the least reliable.

Even if it isn't, the brand recognition and incredible consumer loyalty (which so many of us fools are now trapped in) means that someone somewhere will feel that they can make the business work. So even if the Glazers are forced to claim insolvency, their debtors aren't going to dissolve the club because it's worth so, so much more than the sum of its parts. They'll simply find another buyer who thinks they can run it profitably and sell it on.

So the club isn't going anywhere, but the cause for concern is the effect all of this has on the pitch. That's what worries me. But even then, not too much. No one involved can afford to let the football team grow crap.

The £6.4 million figure is the most relaible, because it comes from the company's audited books.

United's turnover for the year was £278m, up from £256m the previous year & they also made an £80.6m profit on transfers, yet the company has only ended up £6.4m in the black? It doesn't take an expert to see that is unsustainable over the even the short-medium term.

United will go on (Leeds did), but unless ownership changes in five years (at the outside) there's going to be some defaulting on the debts, which will be interesting to see.

 

[Uppercut]

True. But their current financial state doesn't make much difference to that. Self-supporting clubs like United, Liverpool and Arsenal will theoretically always struggle against clubs propped up by millionaires. What can you do?

 

[cpr]

To my knowledge for big CL, matches vs Liverpool/Chelsea/Arsenal or the season opener it always flies up (this is why for a die-hard United fan you got to be season ticket holder or a One-United fan). Or else you can never se those games live at the ground.

For the normal games which anybody can get a ticket for depending on which part of OT you sit, prices ranges from (Junior-Senior-Adult) to the typical £10 - £49.

I was at the OT when Barcelona where here & payed £120. So i'm hoping i got my info wrong or something, since that price is too high especially for the carling cup match (semi-final or not) geez..

Yeah, those prices are probably for the cheapest available seats, which are going to be very rare for these games. Never paid over £38 for a ticket at home, only paid £200 for the full away day in Milan last year (though the Euro trips have been hiked up considerably in the last 18 months). Its like concert tickets, buy them straight away at a decent price, if not then the price skyrockets after a few days for whatever's still available.

 

[Mr Mxyzptlk]

If debts are increasing at the rate Man U's seem to be, that struggle will just get greater and greater though. Man U is a club that needs to continue to win.

 

[Uppercut]

The £6.4 million figure is the most relaible, because it comes from the company's audited books.

United's turnover for the year was £278m, up from £256m the previous year & they also made an £80.6m profit on transfers, yet the company has only ended up £6.4m in the black? It doesn't take an expert to see that is unsustainable over the even the short-medium term.

United will go on (Leeds did), but unless ownership changes in five years (at the outside) there's going to be some defaulting on the debts, which will be interesting to see.

It's not that the figure might be a lie, it's that it doesn't really tell you anything. Given the confidence shown in the club by investors, it could just be (for example) the result of some assets losing their value rather than the business being unprofitable.

Just say your house is worth £40,000 less today than it was this time last year, your financial report would show that as a loss of £40,000. If you're only earning £25,000 a year, that's a £15,000 loss. It doesn't take an expert to see that is unsustainable over even the short-medium term. Except really you're living comfortably. Hmmm.

You see the problem with looking at the last word of a story while ignoring the rest of it? I haven't looked at the books- why would I bother?- but creditors accountants have, and in an incredible amount of detail. When they conclude that it's worth pumping another £200m into the business- and this in a period where credit is so tight it borders on ridiculous- I'm inclined to believe them.

 

[Mr Mxyzptlk]

But you talk as though creditors don't make these mistakes/poor investments. A whole lot of now-defunct banks would beg to differ.

 

[Uppercut]

But you talk as though creditors don't make these mistakes/poor investments. A whole lot of now-defunct banks would beg to differ.

Oh yeah, you can never be complacent. At the moment banks getting themselves into trouble by being too strict with credit is much more common, but bad investments happen all the time.

Nevertheless, there is a phenomenal amount of detail in accountancy work. I find it strange that these people spend months pouring over piles and piles of financial data and analysing it inside out before concluding that it's a solid business decision... ... then the Daily Mail publishes the number £6.4m and a lot of unqualified football fans think they know better.

 

[BoyBrumby]

It's not that the figure might be a lie, it's that it doesn't really tell you anything. Given the confidence shown in the club by investors, it could just be (for example) the result of some assets losing their value rather than the business being unprofitable.

Just say your house is worth £40,000 less today than it was this time last year, your financial report would show that as a loss of £40,000. If you're only earning £25,000 a year, that's a £15,000 loss. It doesn't take an expert to see that is unsustainable over even the short-medium term. Except really you're living comfortably. Hmmm.

You see the problem with looking at the last word of a story while ignoring the rest of it? I haven't looked at the books- why would I bother?- but creditors accountants have, and in an incredible amount of detail. When they conclude that it's worth pumping another £200m into the business- and this in a period where credit is so tight it borders on ridiculous- I'm inclined to believe them.

Any company that can service debt of the magnitude United can will attract creditors, but why do you think the Glazers borrowed some of the money they needed from hedge funds & not banks? Because the banks wouldn't lend any more against United's assets. Leveraged buy-outs usually mean the purchasers pays too much for the company they buy. As the Glazers were forced to borrow £138m from a US hedge fund, it's fair to say United may have been overvalued. With the fall in property prices United's net assets are unlikely to have increased in value since the Glazers took over either. This, ironically, means the banks are less likely to foreclose because any money they'd recoup on their investment in a winding-up would incur a loss.

The fact that the Glazers are now looking to sell their debt in the form of a bond issue also suggests that banks won't lend anymore.

 

[Uppercut]

Yeah, that's true. Hedge funds aren't exactly run by a bunch of fools but they're more inclined to make a risky investment than banks are. TSTL.

I loved F365's description of the Glazers- "multi-millionaires who don't actually have any money".

 

[Ausage]

The trouble is the hedge funds they borrowed some money from charge Shylockesque usury rates.

for getting the word Shylockesque into a post.

 

[PhoenixFire]

Brought back horrible memories of GCSE English coursework.

 

[duffer]

Tevez fumed: "Gary Neville is stupid - a bootlicker.

"He said that I was not worth £25million so he would look good to the manager.

"My goal celebrations were aimed at him. I don't know why he's talking s**t about me as I always had respect towards him."

Speaking on Argentinian radio, striker Tevez added: "The celebrations were not targeted at Alex Ferguson or the United fans but solely at Neville.

"I will never be disrespectful to Man United fans, even if they insult me. It was for Gary Neville. He was my team-mate but he is a bootlicker of Ferguson.





Incredible.

 

[Pothas]

Got to love Tevez, could not pick a better person to fued with without loosing popular support.

 

[aussie]

Yeah, those prices are probably for the cheapest available seats, which are going to be very rare for these games. Never paid over £38 for a ticket at home, only paid £200 for the full away day in Milan last year (though the Euro trips have been hiked up considerably in the last 18 months). Its like concert tickets, buy them straight away at a decent price, if not then the price skyrockets after a few days for whatever's still available.

Yea. May have to go the City of Manchester stadium more often in future to see big games if with all this debt talk though..

 

[Craig]

Tevez fumed: "Gary Neville is stupid - a bootlicker.

"He said that I was not worth £25million so he would look good to the manager.

"My goal celebrations were aimed at him. I don't know why he's talking s**t about me as I always had respect towards him."

Speaking on Argentinian radio, striker Tevez added: "The celebrations were not targeted at Alex Ferguson or the United fans but solely at Neville.

"I will never be disrespectful to Man United fans, even if they insult me. It was for Gary Neville. He was my team-mate but he is a bootlicker of Ferguson.





Incredible.

That is a quality rant.

 

[social]

Manchester United Debt Tops $1.2 Billion

Paying the interest MIGHT BE half the battle as, unless the primary debt-holders are complete idiots, there should be a clause in the loan docs relating to security levels.

With the debt increasing, under normal circumstances the banks would be revaluing the assets to determine whether security is adequate. If it's not, the Glazers would be asked to top it up with cash etc and if they cant .......

In any event, this is just another example of why football clubs are generally piss-poor investments