are Man U going the same way as Liverpool?

233 · 8 Oct 2010 at 14:47

noted with interest they made an £80 million loss overall- scary stuff when you consider they made an operating profit of over £100 million

surely they cant sustain this sort of loss for another season or 2?

my understanding is that they owe £500 million is that in addition to the £504 million in bonds that have to be repaid in 2017? where are they going to findthe £900 million or so for that ?

anyone care to clarify the financial position as i feel i must be missing something here?

DanH84 · 8 Oct 2010 at 14:51

Foxtrot26 said:
noted with interest they made an £80 million loss overall- scary stuff when you consider they made an operating profit of over £100 million

surely they cant sustain this sort of loss for another season or 2?

my understanding is that they owe £500 million is that in addition to the £504 million in bonds that have to be repaid in 2017? where are they going to findthe £900 million or so for that ?

anyone care to clarify the financial position as i feel i must be missing something here?

it's not in addition to the bond issue. There's some stuff in the banter thread btw. Oh and it won't be repaid in 2017, you can say with near certainty that that's not the Glazers intention, they'll refinance.

jakeke · 8 Oct 2010 at 14:52

In a word, no.

The Running Man · 8 Oct 2010 at 14:54

it another word:

its not good. the team is in a bit of a rut. are being out competed on the field and financially.

will we ever be as sucessful as we have been or get to 2x consecutive Champs Leagues finals again? i dont think so. So, unless we cut costs to measure up with our expected lower income levels then i think we will be in long term financial trouble.

if we cut costs, we will be even less sucessful on the pitch.

233 · 8 Oct 2010 at 14:57

ok maybe my maths is flawed here but a £504 million bond issue for 7 years at 8.75% is

a balance of a billion quid !!!!!! i assume they are paying the interest yearly atm hence the payments going out etc but £44 million a year in interest is still ridiculous and thats before you cover any of the debt itself. jesus and i thought my beloved rangers were bad with a total debt of £27 million lol

to the man u fans, look on the bright side, at least you aint liverpool

£350 million owed and paying £40 million a year to service that at least the glazers managed to get a better deal

Saviola · 8 Oct 2010 at 15:22

Foxtrot26 said:
are Man U going the same way as Liverpool??

I am not 100% sure on ManU's finances but there is certainly some chance that they could end up in the same state as Liverpool. Going for ManU is that their owners seem a little bit more capable than our 2 buffoons. There are also more likable in the business world.

That level of debt can soon spiral out of control so no one is going to be able to say with 100% certainty they will be fine. I would be interested to see what level of expenditure, ie transfers, wages, they anticipate over the next 2-3 years.

Every dog has its day, but with every rise comes a fall

DanH84 · 8 Oct 2010 at 15:27

Saviola said:
I am not 100% sure on ManU's finances but there is certainly some chance that they could end up in the same state as Liverpool. Going for ManU is that their owners seem a little bit more capable than our 2 buffoons. There are also more likable in the business world.

That level of debt can soon spiral out of control so no one is going to be able to say with 100% certainty they will be fine. I would be interested to see what level of expenditure, ie transfers, wages, they anticipate over the next 2-3 years.

Every dog has its day, but with every rise comes a fall

28million net expenditure on players. (not reflected in P/L as Ronaldo's wasn't last year) 7% increase in wages. Relatively consistent with spending every year bar the Ronaldo sale where obviously we made a net profit. They'll be looking at some serious acquisitions over the next 18 months though which you'd think is why they've kept 163million cash in reserve (not that they'd spend all of that obviously).

Saviola · 8 Oct 2010 at 15:34

DanH84 said:
28million net expenditure on players. (not reflected in P/L as Ronaldo's wasn't last year) 7% increase in wages. Relatively consistent with spending every year bar the Ronaldo sale where obviously we made a net profit. They'll be looking at some serious acquisitions over the next 18 months though which you'd think is why they've kept 163million cash in reserve (not that they'd spend all of that obviously).

Yeah I have read the blurb before too. Will Alex see that kind of money though is my question, time will tell I suppose.

DanH84 · 8 Oct 2010 at 15:44

I don't really see much reason to doubt it? Of course next year is when clubs like Man City and Chelsea stop having the power to blow United, Arsenal and Liverpool out of the water transfer fee and wages wise. Of course what they will or won't spend is pure speculation however there's no realistic prospect of United going under.

Saviola · 8 Oct 2010 at 15:54

DanH84 said:
I don't really see much reason to doubt it? Of course next year is when clubs like Man City and Chelsea stop having the power to blow United, Arsenal and Liverpool out of the water transfer fee and wages wise. Of course what they will or won't spend is pure speculation however there's no realistic prospect of United going under.

That's true regarding spending.

Being Devils Advocate going back to 2007, we thought there was no chance of us going into Administration!!

platypus · 8 Oct 2010 at 16:11

They only made a profit last year due to the sale of Ronaldo. Worrying times ahead for Man Utd surely.

Shamikebab · 8 Oct 2010 at 17:35

I would have thought it was more likely we'd get sold before we got that bad.

BaZ87 · 8 Oct 2010 at 17:49

Shamikebab said:
I would have thought it was more likely we'd get sold before we got that bad.

Just responding to your point and not suggesting that Utd will go bust but.....

It would all depend on what happens over the next few years. If the Glazers can pay-off any of the debt they're personally responsible for or shift it onto the club then they wouldn't stand to lose anything other than the business.

Therefore the only reason to sell before you got into such a position would be if the debt was less than the potential sale value of the business, and who knows how much debt will be on Utd come a few years time or the value of the club.

Obviously unlikely but you only have to look at H&G to see that greed can override common sense; 18 months ago they could have walked away with £100m each, now they stand to lose close to £100m each.

DanH84 · 8 Oct 2010 at 18:16

BaZ87 said:
Just responding to your point and not suggesting that Utd will go bust but.....

It would all depend on what happens over the next few years. If the Glazers can pay-off any of the debt they're personally responsible for or shift it onto the club then they wouldn't stand to lose anything other than the business.

Therefore the only reason to sell before you got into such a position would be if the debt was less than the potential sale value of the business, and who knows how much debt will be on Utd come a few years time or the value of the club.

Obviously unlikely but you only have to look at H&G to see that greed can override common sense; 18 months ago they could have walked away with £100m each, now they stand to lose close to £100m each.

Just on that Baz, the only provision for the Glazers to remove any money from the club is a £25million/year dividend providing certain ebitda targets are hit (they don't seem to have taken it this year) They can also take a one off £70million cash payment (presumably to pay down the PIKS) I'd imagine this will go at some point though most seem confused as to why they haven't taken it yet. But under those terms there doesn't seem to be a way they can shift the PIK's onto the club until the Bond comes up in 5-6 years time?

BaZ87 · 8 Oct 2010 at 18:30

I can't remember the exact terms but I thought that each director could take several £m out each year on top of the £25m dividend?

DanH84 · 8 Oct 2010 at 18:33

you're right actually, they can take a total of £6mill a year in management fees (that's between them) they forsook that this year though.

Brummies · 8 Oct 2010 at 22:12

As long as Utd have CL then they won't, sounds stupid but trust me the money they get from playing in the CL is a lot.

Jokester · 8 Oct 2010 at 22:17

Brummies said:
As long as Utd have CL then they won't, sounds stupid but trust me the money they get from playing in the CL is a lot.

It's not £80million a lot for sure.

It's only a matter a time now to be honest, unless someone buys them out. The debt is just a millstone round their neck now.

Brummies · 8 Oct 2010 at 22:20

Jokester said:
It's not £80million a lot for sure.

It's only a matter a time now to be honest, unless someone buys them out. The debt is just a millstone round their neck now.

not £80m no but they do get a lot of money for playing easy millions. Without CL they'll be worse off.

DanH84 · 8 Oct 2010 at 22:25

Jokester said:
It's not £80million a lot for sure.

It's only a matter a time now to be honest, unless someone buys them out. The debt is just a millstone round their neck now.

i don't get your english there sorry? (I've had a fair amount to drink) not 80million a lot for sure?

*edit (I think I've read it correctly now) Yeah I mentioned earlier that the losses are largely accounting losses rather than cash losses. That point stands.

I think the Glazers would sell if an offer came in that matched their valuation of the club, however I'm sure that they are comfortable servicing the debt currently and feel that there are avenues to increase commercial growth.