[Guest]

Hopes for greater financial transparency in football take another hit as the champions' loans are traded around the City

How are we to make sense of the news that Manchester United's enormous debts – £667m as of last year's accounts – are being sold at a loss by crisis-stricken financial institutions in the City of London? Banks, hedge funds and private equity speculators, all wrestling with the economy's general collapse, are, according to the financial data company Markit, flogging off United's steepling loans at 70% of their value.

One well-informed City source said that is the price only of United's "senior" debt, the £425m secured on Old Trafford, the Carrington training ground, the gilded players, season tickets, commercial contracts, on the lock, stock and corporate barrel of English football's most glittering club. A further £90m of loans, which are not secured, are being sold for 50p in the pound, while the rest of the £667m – £152m "payment in kind" debt, loaned originally by hedge funds at a swingeing 14.25% interest – is said to be available for buyers who can name their price.

In 2006–07, the club's profit was wiped out by the eye-watering interest, £81m, payable on the Glazers' loans; this time the interest will certainly be higher, but there may even be a little profit left over.

First, United's debts are up for sale to any financial outfit, including the merciless and ruthless, who would leap punitively on United if the club were to breach any covenant, however minor.

Second is the question of accountability. The public, including United fans, cannot know who holds the debt in United. When the Glazers bought the club for £831m, the family itself paid £272m cash, £284m was loaned by their bank, JP Morgan, and "syndicated" to other banks, and the other £275m, which the family could not borrow at standard rates, was advanced at very high interest by three hedge funds, Citadel, Och-Ziff and Perry Capital. In 2006 the Glazers managed to refinance those original loans, but there has been no public disclosure of who holds the £425m, the other £90m, orthe high-interest £152m "payment in kind" loans.

Full story..David Conn: Manchester United's massive debts now at mercy of market | Sport | The Guardian

 

[TheManc]

Very worrying.

I reckon sooner or later we will have to sell players to finance it. I genuinly beleive that this will be a major problem for us. Luckily right now we have Fergie is as stubborn as they come, but once a lesser manager comes I can see the owners having there way.

 

[thekeanefella]

scary reading.


good point TM , new ground rules will surely be laid down when sir alex eventually retires.
the new man might not get the same backing in the transfer market or have as much control over signings or player departures , if our financial state worsens.

 

[Nachito Coronel]

It was just a matter of time until the current credit crunch hit football.

 

[Guest]

More of a concern should be...

United's debts are up for sale to any financial outfit, including the merciless and ruthless, who would leap punitively on United if the club were to breach.

Could be Sheik Rattle n Roll at sh!tteh, Red Ruski blue at chelski, wank and yank at dippers
or anyone at all.

The debts are up for sale to ANYONE who wants them.
In the end United could end up owned by a multitude of different outfits,
all wanting their interest payments on the right dates every year.

Nice to know us United fans could be providing the transfer money to pay for
new players for the dippers, through ticket prices/merchandise etc profits paying
off the interest on the debts.

 

[scottsati]

since the takeover and the way it was funder financially we have been walking a tight- rope, we can sit back and citicize other clubs and their owners but they were at least not funded like we were.

also of a major worry is the still lingering prospect that uefa will somehow start cracking down on clubs and the way they are funded, if they were ever to bring in laws along the lines of what they have been saying clubs like us and real madrid etc would have a lot of explaining- and re-financing to do.

 

[Jazz 16]

oh dear...:blink:

 

[stretty]

The credit crunch has not hit united like it has hit me , the glazers should be laughing at the moment.
My understanding of the situation (and i could be totally wrong on this) is they took out massive interest only loans out against our club, if that is the case the interest rate has plummeted therefore cutting their repayments in half.
Am i wrong on this , i could well be , not great on all this finance that is putting it in laymans terms

 

[hatedastarfish]

When are the 07-08 profits out? They should be good considering the CL + PL double. Then again they would have the Tevez/Nani/Anderson/Hargreaves fee's factored in.

Will the Glazers be thinking if it starts going sour... sound out a willing buyer or what

 

[eoininho]

More of a concern should be...

United's debts are up for sale to any financial outfit, including the merciless and ruthless, who would leap punitively on United if the club were to breach.

Could be Sheik Rattle n Roll at sh!tteh, Red Ruski blue at chelski, wank and yank at dippers
or anyone at all.

The debts are up for sale to ANYONE who wants them.
In the end United could end up owned by a multitude of different outfits,
all wanting their interest payments on the right dates every year.

Nice to know us United fans could be providing the transfer money to pay for
new players for the dippers, through ticket prices/merchandise etc profits paying
off the interest on the debts.

That's not how this will work at all...

the banks that are in trouble are trying to offload a loan in order to get an injection of cash NOW as opposed to 10-15 years or whatever length the loans are for... they are taking a hit on the rate of the loan and any bank that is in a good position would be more than delighted to take such a loan on, it's a guaranteed earner! OTHER BANKS not individuals / companies... this will have absolutely no impact on United, we agreed terms on a loan / servicing of interest etc and its simply passing the loan over to someone else nothing in the original contract will change...

So Citeh's owners will NOT be able to buy a loan off a bank, unless that is they themselves own a bank, which in any case they would not be able to have such an interest in a second club, FIFA / UEFA would not allow this to happen , it would be illegal!

When Leeds were going into administration they offered the last 3 or so million we owed over the next 2 years for Rio Ferdinand to us for 2.2million or something like that... very similar to what the banks that are in trouble are doing now..

Not to worry all, nothing of this will have a negative impact on us... and if it did who would be the most attractive club in the world to buy???
(I work in finance by the way)

 

[Edwards]

we will be fine ! :thumbsup:

 

[Richie]

When will this catch up with us? Its worrying, we wouldn't be the first big club to fall apart with debts.

Its like global warming the way I see it, its clearly a ******* big problem but we're all just ignoring it likes its not even there.

I know nobody likes our league being run by Middle eastern ownership, but if a rich Arab, or rich anyone for that matter, were to come in with an offer, that would also clear our debts, I would take it gladly.

We're a sustainably successful big profit organisation and we don't need the risk of having these hurrendous debts hanging over us.

 

[stretty]

just hope we do not end up like city arabic owned , give me the glazers anyday compared to a sheikhs little hobby and past time

 

[sunchaser]

we will be fine ! :thumbsup:

yes. in the last few years i've heard about real madrid and their colossal debts almost every month and they are fine.

 

[Giggsy the Legend]

Thank god for Saudi Telecom

 

[Titface]

just hope we do not end up like city arabic owned , give me the glazers anyday compared to a sheikhs little hobby and past time

really?!?!?

i have to completely disagree with you.
I'm not quite sure how it works but i have done a bit of reading on this (and normally confuses me more) but im sure in a few years we will have to make big lump sum payments....(such as £12 million, then another £12-13 million a year or two down the line)
Where is that type of capital going to come from?!(selling players??!?)

I'd bite the arabs hands of if they wanted to buy united, just for the fact of a secure financial future. In my opinion the arabs have been IDEAL owners in the sense they have given sparky any money he needs and left him, and city on a whole to run the club in they way they see fit.

Alot of fans dont realise the danger OUR football club could be in.
Do a search ( even just on these forums) and have a read......

 

[babysenorita]

United unfazed by debt fears


UNITED remain bullish about their financial position despite coming under attack from Dave Whelan.

The straight-talking Wigan owner singled out United and Liverpool for criticism due to the massive debts they incurred gaining new American owners.

At a time of belt-tightening everywhere amid an ongoing global economic crisis, Whelan fears for the financial future of the game and many wonder how well prepared United and Liverpool are to respond.

While the strained relationship between co-owners Tom Hicks and George Gillett does not make for the most stable of backdrops at Anfield, over at Old Trafford work continues as normal.

Privately some question the paradox between Whelan complaining about debt levels while at the same time bankrolling Wigan to an extent they certainly could not afford to maintain should his funding ever dry up.

However, there will be no public condemnation, nor any justification for United's present position after a financial year that has seen them increase turnover to a staggering £257.1million, a 20% rise.

As turnover is not profit, analysts will need to wait for United to post their annual results at some point over the next few weeks to start working out what their present debt position is.

The Glazer family have already ditched one attempt at restructuring their loans because the terms were not favourable.

Yet there is no likelihood of any financial institution pulling the plug on such a cash cow, even when bankers on both sides of the Atlantic are under sustained attack from both governments and the general public for their reckless lending.

United's present sponsors AIG are in the firing line, which is why the club are currently touring the globe looking for a replacement from 2010.

There have been no bold statements about an increase on the overall £18million-a-year deal they currently have in place but that is what they will be aiming for.

Similarly, attendances are holding up pretty well and United remain an attractive sponsorship proposition, hence their Asia summer tour of China, Korea, Indonesia and Malaysia being followed immediately by the Audi Cup in Munich.

Throw in prize money from last season's Champions League win and this season's Club World Cup success, plus TV money secured at current levels until 2013 by Premier League chief executive Richard Scudamore, and it is easy to see why United are not getting too flustered by Whelan's attack.