New concerns about Manchester United's 'snowballing' debts - SportsPro Media Manchester United's debts have once again been the subject of intense press scrutiny, with respected British journalist David Conn adamant that, despite the club's three Premier League titles in a row, its debts have "snowballed". The Old Trafford giants are currently second in the Premier League, and have won the competition for the last three seasons running. That spell has also taken in a Champions League victory and a runners-up spot in the same competition. Despite that, concerns about the club's finances continue to make headlines. 'In only three years up to 30 June 2008, the closing date of their most recent published accounts, United became liable to pay a staggering £263m in interest alone. Despite that, the capital lump sum which United owe to banks and hedge funds has actually snowballed by £159m, from £540m in 2005, to £699m in 2008,' writes Conn in The Guardian. 'That increase is accounted for partly by the very high interest charged on the £275m the Glazers borrowed from three hedge funds to buy United. When the entire debt was refinanced only 15 months later in August 2006, the hedge fund debt had risen by £79.1m, which included £13.2m for "early redemption". The refinancing paid that off, leaving United with £525m owed to banks and £138m owed to hedge funds. An estimated £29m was paid in professional fees then, principally to bankers, lawyers and accountants.' With United reportedly looking to refinance once again, the large fees demanded by those bankers, lawyers and professionals could come under scrutiny once again. Still, Manchester United continue to be arguably the most valuable sports property in soccer. A study conducted by SportsPro last summer valued the club at US$1.495 billion, noting record annual revenues of US$412 million during the 2007/08 season. Ticket revenue grew by 10 per cent year on year to US$162.5 million – testament to the club's ability to sell out its 76,200-capacity Old Trafford stadium on a regular basis. Broadcast revenue, meanwhile, increased by 44 per cent to US$146.8 million - an amount that continues to rise thanks to the ever-increasing television money pouring into the Premier League and Champions League.
Pretty much. We will lose Vidic this summer, and maybe some other stars too, just so it can go into the fat americans pocket!
the decline has already became unfortunately from RONALDO to obertan from TEVEZ to owen and now if vidic goes.. from VIDIC to cahill 3 world class players gone and 2 good players in good players are for the like of villa and spurs not us !!! this problem must be resolved once and for all !!!!!!
i meant we went from WORLD CLASS players like ronaldo tevez to average players (plyrs that attract teams lower then us)
I will say this for the millionth time, THE GLAZERS SIMPLY CANNOT AFFORD TO LET UNITED SLIP INTO MEDIOCRITY OR THEY RISK FINANCIAL RUIN. Let me explain. United is currently valued at $1.9 billion - this valuation is based on a number of factors but the most important are yearly revenue and cash flows (the Glazers in fact have been able to finance and refinance the debt because of this). Should United have a run of bad seasons, say two, revenue from all sources would decrease significantly. As a result, the value of the club would also decrease substantially and the Glazers would stand to lose tens, if not hundreds, of millions. Liverpool, as an example, are valued at just over half of United's value (approximately $1 billion). The difference between the two valuations is simple - United winning trophies and staying at, or near, the top.. I would love to see the Glazers out of United, but while they are here, they have to keep us winning.
More scrutiny and doubts.... So, are you sure you've got £60m to spend at Manchester United, Sir Alex? | Mail Online And a welcome or unwelcome prospect... http://blogs.telegraph.co.uk/sport/...to-rescue-manchester-united-from-the-glazers/ ............................. The problem facing the Glazers – or one of them, at least – is that Manchester United is such a renowned global brand that there are very few people out there who could actually afford to buy the club from the Florida-based family should they ever need to cash in their chips at Old Trafford. In their last Soccer Rich List, published in August 2009, the widely respected business magazine Forbes.com placed United in number one spot in the list of the world’s most valuable clubs with a valuation of £1.3bn. Real Madrid, in second position, were some way back with a valuation of £944m. It isn’t just football where United rule, however. Across the sporting spectrum, they are the most valuable ‘franchise’ on the planet, with NFL giants the Dallas Cowboys and Washington Redskins their closest rivals ..............
Very worrying that money is becoming a huge problem with United while down the road City are wiping there bums with buckets off money.
I wish I could be as positive as you!! You think that after Vidic is sold some of the money will be used to buy Cahill - you think we can successfully bid for that sort of player - dream on I think
Understand your strength of feeling and understand your explanation - but sorry just because you say it does not make it fact!! I totally agree that the owners want us to be as successful as possible I totally agree that this will sustain or increase the value of the club and therefore the owner's potential profit when they sell But actually that is not the point - that is like buying a house and being lucky enough to be selling it at a high point in the market values - making a killing More relevant to our position is the crunch in values and the people being unable to make pay their mortgages due to a drop in revenue The owners put very little of their money in (in percentage terms) - unlike at chelsea and the bitters - they loaded the debt onto the club - and just like some buy to let investor they have the tenant (the club) using their money to pay the mortgage If it goes wrong for the asset (the club) the owners could lose some of their limited investment - and of course they would lose the previous potential killing they would have made is everything had stayed rosy in the world and they could sell at high point in the market But back in the here and now (2009/10) the asset needs to be managed very tightly so that it can pay the mortgage - even that is not enough - so the owners are trying to remortgage - this is not easy but might work (this one time only) - but here is the rub that you have put your finger on.... If we do not keep winning trophies - the potential value of the club will drop -making it harder to secure loans at good rates - meaning the club can only just about get by paying its mortgage - so no money for transfers for years - meaning more time not winning trophies - meaning drop in value of club and so on in a downward spiral.... also in investment terms we become less attractive - yes we have the global brand etc - but the price that the owners would want is off the scale of business sense when you can pick up a chelsea - a bitters - a villa etc for a fraction - you would need a buyer that for whom the money is simply not an issue - people that want to make a business return would increasingly not look at us We need a Sheik or equivalent - and we need them asap IMO - I worry that without that we could indeed sprial downward The model to watch is the scouse if they drop revenues by not making top 4 - wow they could go really downhill
Your analogy of real estate funded by a mortgage is a good one except that, in this case, the owners are not subject to the fluxuations of a much larger marketplace. Unlike a property, they have complete control over the value of the asset and can significantly impact that value by maintaining revenues and cash flows. The only way to do that is to keep United successful and winning trophies. But let's play the worst case scenario out. If the Glazers are truly struggling to service the debt, and must use every bit of revenue to do so, they would have to put United up for sale berfore the value begins to spiral significantly down. Financial prudence (not to mention the institutions holding the debt) would dictate this.. A couple of key points: ! - The debt, although officially on United's books, would have to be resolved by the Glazers as part of the sale - unless the purchaser(s) - and it would likely be a consortium - decide it is in their best interests to maintain it (possibly for tax reasons).. 2 - Any purchasers would only put up such an investment with a business plan that maintains revenues and cash flows, and ultimately increases the club's value. Again, that means United must continue to win trophies. If the Glazers are in as much financial trouble as is being speculated, it's actually good news for potential purchasers. They may get the club at a bargain, possibly ruining the Glazers in the process.
Yes - we are not saying particularly different things- my glass is probably a little emptier I recognise the house analogy is a bit simplistic - but the points I would make in reply to your post are: If we just accept that the owners are struggling to service the debts - then yes they can take action - but whilst not particularly impacted by a global market - like housing - they are otherwise impacted. E.g. 1/ If they decide to sell that will have reverberations in itself - and I would take the Newcastle example as reference (and yes I know that they are nothing compared to us but bear with me...) 2/ If the price for the owners to make a profit is say $1.8bn - it is clear that a buyer could not purchase at that price on a basis of a business plan that included borrowings - the Glazer's problem 3/ So it would be necessary for the price to be reduced to just allow the repayment to financial institutions - which would likely then be viable - but why would the Glazer's do that - they would be better off holding and hoping for a market turnaround (Like Newcastle) 4/ Meanwhile if the business world becomes aware of a owner unable to sell for the amount they want - you get all sorts of negative press / distraction - and the value drops like a stone (Newcastle) 5/ This leads to more constraints on money - distraction etc etc I think that we need urgently: a) the Glazer's to decide to sell at a sensible price and b) a buyer for whom the (lets say) $1.5bn is not an issue and they do not need it to be financially viable Hence I mentioned a Sheik - because also important would be the deal to be brokered / don secretly - do not know about others but I was totally surprised by the takeover of the bitters - that was kept really quiet so it is possible But if the Glazer's hold on and they are having problems - there that could be increasingly bad news for us
Well that is all OK then - so long as we keep winning - my concern is if we do not win anything this season - highly possible - then that creates more ripples - and there is real pressure on for next season - cos if we go 2 seasons without winning anything.......... And if this current squad are not capable of winning the major trophies - which is a concern - where will the extra players required be coming from? I do not want to see any downward spiral - but whilst I can accept the motivations of people who have a lot of 'skin in the game' to see us successful - all the evidence is this does not extend to putting more money in At the moment it seems to be HOPING SAF continues to weave his magic - I would rather be owned by others and not be reliant on debt - colossal amounts of money have left the club to service the Glazer debts - that is money just lost to the club Your'e glass is more than half full - that is good - I wish mine was
So perhaps I am not just being doom and gloom..... Perhaps we cannot afford to be just relaxed and comfortable that these men in suits will not allow us to fail and will have our interests at heart Or maybe when the re-financing lunches are held they will be thinking more about how they can milk the cow to maximum while the going is good - do you think they will include in their discussions comments like: "... no hang on here we need to make sure that we do not take out too much short term profit for ourselves and that we as a priority make sure that UNITED is strong for another 40 years and that SAF has all the funds he needs to make sure that we keep winning trophies........." I would like to think so, but.......
For god sake don't turn on sky sports news we are done for, if it wasn't for the Ronaldo transfer we would have recorded a 30million pre tax loss, bye bye trophies :bye2:
I flip between anger at ".... how the F*** could this have ever happened - we were positioned to be top forever..." to incredible depression that our club is essentially 'doomed' - the poison has been taken - nothing is gonna change it now unless some massive sugar daddy parachutes in and pays way over the top - there are only so many Sheiks!!! It just seems an incredible chain of events - and I know that people will post CL - 3 titles - yes I know, but we had the team to do that in the past - not now - we brought the right people in to keep us going in the past - we do not have the money now (any?). We need to look forward not back all the time - and the underlying position is terrible - really hope for SAF's sake that we tough it out this season and win a 4th in the row - I think he would retire then and I would rather see him go out on that high than spend a last few years seeing us slide
Red Football Ltd - the holding company of Manchester United Ltd - has published the following summary for the financial year ended 30 June 2009. Group turnover for the year was £278.5 million (2008: £256.2 million). Operating profit before depreciation and amortisation of intangible fixed assets for the year was £91.3 million (2008: £80.4 million). Profit before tax for the year was £48.2 million (2008: Loss of £21.4 million). The Manchester United team maintained a very high level of performance on the pitch, winning the Premier League for the third consecutive season, winning the Carling Cup, and finishing runners up in the Champions League. In addition to this, the team were crowned World Club Champions. During the year Old Trafford staged 34 major events, including 19 Premier League home games, 6 UEFA Champions League, 5 domestic cup, 1 friendly and the Ole Gunnar Solskjaer testimonial), the Engage Super League Grand Final and an international rugby union fixture between Argentina and England. Manchester United secured a new shirt sponsorship deal during the year with Aon who will become the new principal shirt sponsor and will succeed AIG from the commencement of the 2010/11 season. Manchester United also welcomes a number of significant new commercial partners, including 3 Indonesia, Bharti Airtel and Hublot as our official time keeping partner. In addition, we welcome back Audi as our car partner. Red Football Ltd - Trading update - Manchester United Official Web Site
