[Archived] Glazer Set For Utd

[neekoy]

More Debt

[Hughesy]

More debt maybe, but more managable and now no longer can the banks take over & run the club.

Glazer is a very clever man. He has reduced the annual payments by £28 million, they have secured a £14 million a season AIG sponsorship deal, they will from now on have extra revenue from up to 8000 extra seats and they are also looking to announce a new TV deal soon. Aswell as the Sky TV packages that are now worth more money to clubs from next season (07/08)

I think the man is very clever and knows exactly how to go about his business.

[philipl]

Apart from the fact the Mancs have £500m more debt than would be allowed by the new UEFA regulations due to be introduced in 2008/9.

[Hughesy]

Its not Man United's debt though, its his

[ABBEY]

the rat faced w@@@@@r is a total cock

yea rght fergie and utd have not tried doing exactly the same thing...pick yer toys and dummy off the floor and put em back in yer pram. you big baby!!!!!!

[thenodrog]

Scumchester have been doing exactly the same thing since 1963 when the max wage was abolished. It's why everybody else hates em so much.

If it's bad for football now then it was all those years ago when the expectations of any one of half a dozen or so clubs and their supporters could be justifiably high on the opening day of every season.

[Grabbi Graeme]

On the player front another blow for Fergie as Fernando Torres rules out a move to Man Utd , currently being reported on SSN

[philipl]

My questioning of the Glazer take-over of the Mancs has been raised on another thread so here is a quick appraisal:

The Glazers had a game plan which undoubtedly involved conversion of high priced debt and manoevring the hedge funds but at the end of the day, nobody pays the rates of interest they were doing on an investment regarded as anything as other than highly risky.

Their high risk strategy seems to be working as they have had a series of lucky breaks:

- Ferguson's transfer funds have been extremely limited but with the exception of Carrick, his recent buying seems to have come off spectacularly well. Vidic and Evra look fabulous value for a combined £11m.

- Getting £10m for Jon Obi Mikel wouldn't have been in anybody's business plan.

- Chelsea seem to be "crumbling" remarkably easily under the title pressure the Mancs are exerting this season. This is a fabulous result for Ferguson who has spent a net £10m or less over the past two seasons. Had Ferguson's drinking gone to Clough proportions (as it could easily have done), the prognosis for Manc success on the field would have been dramatically different.

- The size of the rise in Prem TV rights was definitely not in the Glazer business plan. At the time of the purchase, a modest decrease in value was on the cards.

- The increase in global TV moneys has come through the Premiership's brand strength (of which the Mancs are historically a significant component) rather than any spectacular success of the Glazers' much-heralded international marketing of the Manc brand.

- That said, the Glazers have again struck lucky with old Manc Beckham turning up in LA. Manc TV will be showing plenty of old coverage of Becks no doubt.

However, it is still premature to say mission accomplished for the Glazers. If Man U win the Prem in 2007/8 and pocket £50m, it still does not cover the £60m in interest payments (factually reported in their offer document) BEFORE repayment of capital borrowed.

The UEFA rules on club licensing in respect of debts still need to be changed for the Mancs to be entirely comfortable about their future in European competition.

The ordinary Manc supporter is helping pay for the Glazers as by the time the 2008/9 season starts, they will be paying close to double the ticket prices before the Glazers appeared. We may delight in the Mancs being hit that way but there are plenty of threads moaning about the price of tickets so the Glazers are no heroes in this regard.

The Glazers are winning in their sporting chance but it was and probably still is a hell of a gamble.

[BlueMonday]

And it will take many, many years of sustained success to be able to keep on top of that debt.

Even Manure can't keep that up.

[thenodrog]

- That said, the Glazers have again struck lucky with old Manc Beckham turning up in LA. Manc TV will be showing plenty of old coverage of Becks no doubt.

Good summary but could 'struck lucky' be an example of wheels within wheels?

[American]

You also missed that they re-financed the debt about 6 months ago, so as most of your postings, your figures are wrong.

[philipl]

You also missed that they re-financed the debt about 6 months ago, so as most of your postings, your figures are wrong.

Did you or did you not read my second sentence?

The announcement of re-financing six months ago was meaningless- the first tranche of debt matured then and had to be repaid.

Interesting it was re-financed so they weren't able to repay without borrowing again.

My guess is that they did a deal similar to the ARSENAL one. But whereas Arsenal were mortgaging future income from a brand new stadium which boosts their matchday earning power by 100%, the Glazers were mortgaging their own purchase.

£600m of debt is still £600m of debt and the Glazers will have done incredibly well if they reduced the interest burden from £60m to under £50m a year.

Out of interest, which part of any of my posts (never mind "most" of them) was definitively wrong?

[philipl]

Man U's financial results.

Profit after tax tripled to £32m but operating profits scarcely budged so the Glazers had spotted some tax efficient wheeze the old board was not using.

That said, the £12m profit on the Obi settlement has saved a lot of red faces at the Mancs.

The refinancing upped debt from £580m to £660m and cut interest costs from £92m to £60m per year. Most of last year's interest bill has effectively been rolled up into increased borrowings.

No doubt the lending structure is now optimised for the next few years as opposed to being structured to be sure of securing control. However, 9% average interest says the lenders still see this as a more than averagely risky deal.

[daveoftherovers]

I hear that the United franchise are now grossing £2m per home game...

Figures still don't look right for me, how on earth are they going to pull back that level of debt, the business plan must be taking winning the PL & CL as read !??!!

[philipl]

Details of the Liverpool take over.

So another bunch of Americans march in and dump the interest burden of the debt on the club and wrack up a half billion balance sheet debt over time.

The difference is, the Liverpool purchasers have backed the borrowings with personal guarrantees and are no where near so shaky as the Glazers.

The interest Liverpool are paying is a relative paltry £21m a year.

I still do not see how Arsenal, Liverpool and Man U are going to get UEFA licenses when the indebtedness rules come in two years from now. Obviously, UEFA are going to have to drop that idea and Michel Platinin will be very accommodating.

[philipl]

The numbers behind the Glazer take over.

[neekoy]

Got my fingers crossed that debt can't be serviced (and add to that Liverpool's) and those two clubs end up on the shitepile of football

[trueblue]

Got my fingers crossed that debt can't be serviced (and add to that Liverpool's) and those two clubs end up on the shitepile of football

In reality though, that is never going to happen... there will always be someone (billionaire/corporation) that will step in and take over the reins at big name clubs.

[American]

This to me being the key portion:

Townsend said of the debt repayments that they were "bearable" given United's record-breaking attendances - the highest in Europe - and other commercial earnings which United estimate will take their annual profits every year up to £108.9m by 2011. "We believe the business is sustainable and manageable. The priority is still the team."

The Glazers' plans showed that they wanted United to be clear to spend £25m on players every season, with a further one-off £25m available to splash out on a star. The summer will demonstrate the robustness of that budget and, with the inflation about to hit English football given the increased TV deals, how far it will go to strengthen Ferguson's squad.

Such are the ways of business now. Tom Hicks has said that the Glazers showed the other American billionaires the riches in English football. Since the Premier League began in 1992 there has been talk of bubbles bursting, but 75,927 people were at Old Trafford to see West Ham's 1-0 win and United's dance with the trophy, the images beamed around the world. Premiership football is booming, not declining, and the Glazers have captured the game's most romantic, richest name. They are confident the fans will be back, and that season-ticket money, and all the other earnings, will service the cost of the family's takeover.

Still, their financial plan relies on continuing top-three finishes, reaching the last 16 of the Champions League - and retaining the fans' loyalty. On all these fronts they will have to be careful.

My guess would be that was exactly what the business plan was. I'd say also, with the new money and what other clubs are selling for, the club would likely fetch more than they paid for it at this point and I'd also guess that the percentage value of the cash they personally put in will be higher than the true percentage that they put in.

Philip, this isn't a dig, or anything like that, I just truly think you'd be interested: If you want some good insight on how to buy a sports franchise and get a good ownership stake without putting in a lot of money, read The Hustlers Handbook and Veeck as in Wreck, both by former baseball owner Bill Veeck. They are a bit older, but still very fascinating on the art of buying and running a sports franchise.

[blue phil]

The Glazers have already turned down an £850m takeover bid from a Chinese consortium according to The Sunday Times .

[philipl]

Meanwhilst, there is an Arsenal pressure group preparing to fight the possible American take-over of their club.

This analysis of the financial state of Man U does not make comfortable reading.

[Billy Castell]

Just skimmed that analysis philipl, and it seems that Man Utd are doing enough to stop the administrators coming in, but are not really cutting down the debt burden at all, and with the interest increasing the debts, there could be a big pile of poo and industrial sized fans waiting for them in the medium or long term. Would that be an accurate summary?

What a shame if it is. I bet we'd all be gutted.

[Bazzanotsogreat]

Sorry to disillusion you guys but United will never go into administration , they are the biggest global brand within football especially in the lucrative far eastern markets. If the debt levels become to large then the Glazers will simply sell united on for a small profit, yet I don’t see this happening.

Next season I can see United retaining their crown & reaching at least the semis of the Champs league ( as much as it pains me to say) think of the extra prize money /TV revenue that ill be generated from these two comps alone. Then we have large rises in ticket prices in a 76,000 stadium that has increased in nearly 9000 seats since the Glazers brought the scum. Remember it is reported that the Glazers turned down on offer of over 750 million last month from a Chinese consortium. United along with Real/Barca & perhaps AC are the only clubs in Europe that could handle such debt levels and still be attractive as a business to future investments.

[philipl]

Reported is the operable word.

At the end of the day business fundamentals come into play. Man U have a debt to turnover ratio of 3 and last year's cost of servicing the debt was pushing 50% of turnover.

I am not saying the Man U global brand is not extremely valuable but a couple of season's coming 5th in the Premiership are as unsustainable for the Mancs as one was for Ridsdale's Leeds - that's why we are seeing relatively free wheeling Manc spending (probably Rooney-esque deals with a huge amount backended and very contingent for the two youngsters). Its all a huge gamble by the Glazers which is working because Ferguson is a genius (unlike Benitez).

Abramovich has the real estate value of Stamford Bridge to fall back on. It seems the Glazers are banking on the Manc followers swallowing a near 100% increase in costs over 5 years to pay for their chancing.

[Bazzanotsogreat]

Reported is the operable word.

At the end of the day business fundamentals come into play. Man U have a debt to turnover ratio of 3 and last year's cost of servicing the debt was pushing 50% of turnover.

I am not saying the Man U global brand is not extremely valuable but a couple of season's coming 5th in the Premiership are as unsustainable for the Mancs as one was for Ridsdale's Leeds - that's why we are seeing relatively free wheeling Manc spending (probably Rooney-esque deals with a huge amount backended and very contingent for the two youngsters). Its all a huge gamble by the Glazers which is working because Ferguson is a genius (unlike Benitez).

Abramovich has the real estate value of Stamford Bridge to fall back on. It seems the Glazers are banking on the Manc followers swallowing a near 100% increase in costs over 5 years to pay for their chancing.

When in the last 15 years have United finished outside the top 3. As it stands their current squad will retain the Premiership nevermind finsih outside the top 4.As much as I would like it to happen United will always be amongst the richest & most attractive clubs in terms of supports and proposed business takeovers. Even if they did get themselves into serious financial trouble, the list of proposed buyers would be huge due to their legacy and global their brand.

You talk about their debt increasing by over 50%- United’s answer will be to increase stadium size & ticket prices as they have done & possibly bump up merchandize price & sales drive in the lucrative Asian markets. As the tiger economies grow so does the revenue generated by the largest football sides United, Real, Barca etc remember there is much more disposable income in far eastern economies now than their was even 5 years ago. Which is good news for the sports & leisure sectors.