[Archived] End Of Manc Dominance?

[deftangel]

Presumably as well, the £80m will be paid in installments rather than being a lump sum yet they are counting all of it in this year (hence their profit). Is that just to make the figures look prettier for selling these bonds?

[sparkspakespoke]

Presumably as well, the £80m will be paid in installments rather than being a lump sum yet they are counting all of it in this year (hence their profit). Is that just to make the figures look prettier for selling these bonds?

I heard that the 80 million was paid as one lump sum at Fergies insistence.

[philipl]

den, that is baasically correct- a bond is a long term loan to a company or Government entity.

For Man U to be pricing their's at around 8% interest shows how risky it is; Rovers are paying 3.75% on their bank debt.

Man U have a series of debts- the most worrying are the hedge funds with the most expensive money costing 18% and the ability for controlling directors to be appointed if not repaid this April. The obvious thing would be to do a bond to cover the £200m or so of the most expensive debts but the banks have a clause requiring some of their debts costing 6% be paid first.

So the new bond will not reduce the Manc interest charges by much overall and the fees for arranging the bond could well be about £50m.

[Zulu]

den, that is baasically correct- a bond is a long term loan to a company or Government entity.

For Man U to be pricing their's at around 8% interest shows how risky it is; Rovers are paying 3.75% on their bank debt.

Man U have a series of debts- the most worrying are the hedge funds with the most expensive money costing 18% and the ability for controlling directors to be appointed if not repaid this April. The obvious thing would be to do a bond to cover the £200m or so of the most expensive debts but the banks have a clause requiring some of their debts costing 6% be paid first.

So the new bond will not reduce the Manc interest charges by much overall and the fees for arranging the bond could well be about £50m.

So, they're stuffed then? Please make it so.

[Hughesy]

So, they're stuffed then? Please make it so.

We could all wish – but United are a worldwide brand who will always have plenty more rich people waiting to bail them out!

[Zulu]

We could all wish – but United are a worldwide brand who will always have plenty more rich people waiting to bail them out!

Sad, but true.

[philipl]

United now need the thick end of a billion just to settle debts and get the Glazers out. You are down to very small numbers of people who have a dispensible billion down the back of the sofa. The likeliest scenario is United suffering a long slow painful decline and perhaps eventually going bust about 2015 or whenever the bond is redeemable, if they manage to sell it.

[Hughesy]

United are part of a elite group of clubs (Barca, Madrid, United and maybe Liverpool) which I feel would never go bust - because of thier 'Brand' and also the amount of people who would love to own them for 1 reason or another.

[DE.]

United are part of a elite group of clubs (Barca, Madrid, United and maybe Liverpool) which I feel would never go bust - because of thier 'Brand' and also the amount of people who would love to own them for 1 reason or another.

There's a difference between wanting to own United and actually being able to do it. If their debts continue to increase at the rate they currently are, there will be very few people able to bail them out, no matter how many people might want to.

[BlueMonday]

Im sure I read somewhere today that Man U had returned to profit this finacial year. Surely this cant be true with the size of the debt they're servicing.

P.S. Source of story Yahoo News(sorry cant put up link)

[DE.]

They made their profits through the sale of Ronaldo alone. Otherwise it would have been a 32M loss. Unless they sell players for a combined 50M or so every year they won't make profits.

[LeChuck]

Perhaps Rooney to Real stories aren't as ridiculous as they first sounded then.

They'd be royally screwed if that happened, especially if they tried to replace him with another Valencia type signing.

[DE.]

To be fair, I don't think Valencia's been that bad for them. Problem is, he's going to be compared to Ronaldo... and he's nowhere remotely near that level.

Berbatov is probably the biggest waste of cash to date. 30M

[philipl]

More details of the mess they are in So the Glazers plan to dividend the Manc cash flow to service their own debts...

[thenodrog]

"It is thought the bond will be secured on most of the club's assets but not their impressive Carrington training ground."

Hmmm.... I'd imagine that would represent the jewell in the crown but it's not going to be part of the deal.

[PAFELL]

More details of the mess they are in So the Glazers plan to dividend the Manc cash flow to service their own debts...

Correct me if I am wrong, when the Glaziers bought the club they saddled it with huge debts. Surely if anybody else came along to buy the club, they wouldn't be permitted to saddle even more debt on to the club in order to buy it. Would any new buyer have to pay the debts first then the value of the club.

[philipl]

The Glazers trick can only be done once- there is only so much debt even a mega-brand can support and my guess is that the Mancs are saddled with a few hundred million more than that business can handle. The Glazers got lucky with Ferguson getting lucky on the signings he made in the two seasons around them arriving. Ferguson's signings over the last two or three seasons have been rubbish in comparison.

The Guardian has done some digging and the situation is far far worse than the Manc accounts show on first reading

- The Glazers took out £20m last year for their own pockets

- The Manc horror story needs the accounts of Red Football to be filed as well before the true total indebtedness is revealed. My guess is the debts of the two companies together now stand at £750m and interest is running at a Ronaldo a year- about £80m combined. This is why total interest paid by Man U since Glazers arrived five years ago is £263m but MUST reported that the Glazers effectively cost the Mancs over £250m in interest in their first three seasons.

- The bond was going to be £700m, now it is £500m. Interest was going to be 8%, now 9% but to be set by market reaction.

- AC Milan in the Champions League is an utterly critical tie for the Mancs. If they get knocked out, placing that bond is going to be very very difficult for them.

[PAFELL]

The Glazers trick can only be done once- there is only so much debt even a mega-brand can support and my guess is that the Mancs are saddled with a few hundred million more than that business can handle. The Glazers got lucky with Ferguson getting lucky on the signings he made in the two seasons around them arriving. Ferguson's signings over the last two or three seasons have been rubbish in comparison.

The Guardian has done some digging and the situation is far far worse than the Manc accounts show on first reading

- The Glazers took out £20m last year for their own pockets

- The Manc horror story needs the accounts of Red Football to be filed as well before the true total indebtedness is revealed. My guess is the debts of the two companies together now stand at £750m and interest is running at a Ronaldo a year- about £80m combined. This is why total interest paid by Man U since Glazers arrived five years ago is £263m but MUST reported that the Glazers effectively cost the Mancs over £250m in interest in their first three seasons.

- The bond was going to be £700m, now it is £500m. Interest was going to be 8%, now 9% but to be set by market reaction.

- AC Milan in the Champions League is an utterly critical tie for the Mancs. If they get knocked out, placing that bond is going to be very very difficult for them.

Hand on heart, do you really think man u will fold? Are man u in a better or worse situation than liverpool?

[philipl]

Hand on heart yes Man U could fold as their debts are about three times bigger than Liverpool's and are paying double the interest rate Liverpool are paying.

It might seem odd to people who have only known the Premier League but I remember Man U in the old second division. More to the point, they have been very strong for 16 years but the 20 odd years before that Man U were just a larger version of what Everton are now.

If Man U slip out of the Champions League, they cannot sevice these debts. They were chasing the quintuple last season but still had to sell Ronaldo to keep out of deep financial trouble- apart from Rooney, who else can they sell for over £50m; the amount they would need to replace lost CL moneys?

Man U are not going bust any time soon but I honestly believe the best thing that could happen would be for the Glazers not to succeed with their Bond issue and for the Hedge Funds to take control. All the bond would do is simply burden the Mancs with yet more debt (all of which had to be repaid in 2017 in one go) and spin out a what looks like will be a long lingering death.

I come back to the point, it is relatively easy to find people with several disposable tens of millions to look at a branded big city Prem club. There are five hovering over West Ham. Man U need people with several disposable hundreds of millions and they are a very different and much much rarer animal. The Glazers have pulled the trick of getting the club to pay for buying itself- nobody can repeat that make money deal because the £700m+ of debt is already there needing to be serviced and repaid.

[den]

Philip, I was listening to a football financial expert a few days ago on Sky News. He was explaining the situation that MU are in and his verdict was that they need to sort out the debt problem. However, he was asked right at the end of the interview if he thought MU were in danger of folding. An emphatic "NO" was his reaction. MU have the entire Asian continent virtually to themselves as far as support goes. That in itself will keep them going very nicely, - but only once they have sorted the debt refinancing out.

[philipl]

I am not saying they would go under now but 2015 to 2017 could be grim.

[PAFELL]

I am not saying they would go under now but 2015 to 2017 could be grim.

But during that time they are more lkely to get into the champions league each of those seasons. Though I suppose if they missed out just once or not go beyond the first stages then this would bring things a lot closer.

[Rovermatt]

Good piece in today's Guardian.

[PAFELL]

Good piece in today's Guardian.

Very good article. Not happy reading for man u fans etc. With City now having money and other clubs progressing united are in serious trouble if they do not get into the champions league in the next few seasons. Even this season they are out of the FA Cup.

Another thought - how could the Glaziers protect the club, like Jack did for Rovers, in the event of their death? (hope philip can answer that one)

[philipl]

Glazers are the very sort of people Jack protected Rovers from!

The Mancs would be in a much better shape if they did all disappear.