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Crunching the numbers at Old Trafford

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David Bond | 16:59 UK time, Friday, 8 October 2010

On the face of it, Manchester United's annual financial results look terrible.

A club-record loss of £83.6m, a slowing in revenue growth due to a disappointing season on the pitch and a whole raft of expensive and complicated debt costs.

But look beyond the headline figures and United remain the strongest financial performers in the Premier League.

At the operating level - what accountants call EBITDA (earnings before interest, taxation, depreciation and amortisation) - United generated a "cash profit" of £100.8m, an increase of £8.7m from 2009.

And despite being knocked out of the Champions League at the quarter-final stage and finishing second in the Premier League behind Chelsea, United still managed to increase their revenues.

United's problem has never been generating cash. And under the Glazers, United have become even more successful - although critics would argue part of that is down to increasing ticket prices.

The problem with United is what the club spends that cash on. And opponents say that too much of it is spent financing debts used to buy the club in 2005.

It is certainly true that United turned a £100m operating profit last year into an £83.6m loss because of a mix of ongoing and one-off debt costs.

Manchester United reported a £80m annual lossManchester United reported a record annual loss of £83.6m

First of all there was £42.3m in annual interest charges.

In February, United refinanced their senior debt by issuing a £500m bond repayable in 2017.

This was done to fix the club's annual interest payments for a longer period to ensure financial stability. It was also done to allow the Glazers to draw cash from the club, if needed, to pay off their expensive PIK loans, which now stand at £220m and are incurring interest at a rate of 16.25% annually.

Under the terms of the bond, the Glazers can draw up to £130m from the club to pay off the PIKs - even though they were not taken out on the club.

The results show there is still £163m of cash in the club's bank account, a clear indication that no money has yet been drawn down to pay off the PIKs, but many analysts and fans fear it is only a matter of time until that happens.

On top of the £42.3m in interest charges on the club, there is another exceptional interest charge of £40.7m. This is the cost of terminating a so-called interest-rate swaps deal which the club had as part of their old bank finance arrangements. In simple terms, United hedged their interest rates but got burned because they failed to predict they would fall as low as they have in the credit crunch and economic slow down.

United have already paid around £15m of this cost and will pay the rest off over the next five or six years and - while they acknowledge it is a hefty bill - they claim it will eventually be offset by the better terms of the bond.

The second and less serious interest cost relates to a foreign exchange loss linked to the bond issue, which was offered to investors in both Britain and the United States. Because of this part of the bond will need to be repaid in dollars.

At the time when the bond was taken out, the dollar was much weaker compared to the pound ($1.62 to £1). But by 30 June, the end of United's accounting year, the dollar had strengthened ($1.51 to £1) meaning that if the bond had to be repaid at that point United would have lost £19.2m.

However, United do not have to pay the bond back until 2017 and so no cash has left the business. Indeed by 2017, the dollar could be weaker than at the point the bond was issued - meaning United could actually save money.

Despite all those caveats, it remains the case that none of these charges would exist if it wasn't for the fact that United was bought by the Glazers with debt, some of it on extremely punitive terms.

Since the Glazers took over, they and the club have incurred more than £450m in interest charges and debt-related payments. To be clear, that doesn't include the actual sums borrowed, which stand today at £741m - including £220m of PIKs and the £521m club debts.

But it does include all fees to lawyers and bankers, penalties related to refinancing, loans to the Glazers, the PIKs interest and annual interest charges. To put that into context, those debt payments are £150m more than the price agreed by John Henry to buy arch-rivals Liverpool.

And it is this which so angers fans opposed to the Glazer regime.

Andy Green, a financial analyst and blogger on United's finances (andersred.blogspot.com), said: "It's an absolute tragedy for the fans because we have this football club which pays its own way and which through the strength of the business and through fans coming through the gates could have the cheapest seats in the League or marquee signings every year.

"Instead, almost half a billion pounds in five years has been paid to bankers, lawyers and the Glazers."

When I spoke to David Gill, the United chief executive, I put it to him that fans will be anxious when they see the club has made a record loss.

"Yes, the headline figure is a big number but you have to go back and look at what caused that," he said.

"If you strip out the one-off costs, we are still generating significant profits at the operating level to cover the bond costs going forward."

That may be so. But the big question for United now is how do they continue to grow the business?

In the five years since the Glazers took over, United's revenues increased by a staggering £127m.

And while commercially, United will continue to reap the rewards of their worldwide strategy, elsewhere it is hard to see how they can make more money.

Unless they break the collective sale arrangement in the Premier League, any major growth in television revenues will be difficult and there is little scope to increase the capacity of Old Trafford.

They could put up ticket prices again but that would be extremely controversial and unless they can guarantee winning the Champions League and Premier League each season, it is hard to see how they can emulate the growth of the last five years.

On the costs side, interest charges under the bond will be £45m a year from next year and players wages and transfers are unlikely to come down in the near future. So where is the growth going to come from?

When the Red Knights were looking at raising the money to launch a bid for the club earlier this year it was reported the Glazers would only sell for £1.5bn, arguing there was still huge potential for growth.

But if Liverpool's sale is the best and most recent example of market value then it is easy to understand why the Red Knights dropped their interest. Liverpool's operating profit last year was £35m, meaning the club would be sold for roughly 8.5 times that amount.

If that same equation was used for United (operating profit £100m), it would value the club at £850m - way short of the Glazers' supposed asking price.

Comparsions with Liverpool are perhaps a bit unfair. They are in a desperate mess in the boardroom, out of the Champions League and in the relegation zone of the Premier League. Despite having similar wage costs to United, they generate a fraction of their revenues.

But even if one uses the more generous multiple of 10 times operating profit then United's value would still only be £1bn - £500m less than the Glazers' price.

The latest financial results will only strengthen the resolve of those United fans calling for the Glazers to sell up and move on. But the prospect of a sale at Old Trafford still seems a long way off.

Comments

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  • Comment number 1.

    Great blog, shows how out of touch the Glazers are with the business of running a football club

  • Comment number 2.

    Thank you for clearing that up David.

  • Comment number 3.

    Has no one ever played Football Manager, taken over Utd, and plunged them into bankrupcy? The Glazers are obviously just City fans with enough money to do this for real 0^)

  • Comment number 4.

    I can't say I am not opposed to te Glazer regeime, but I am sure things will work themselves out. However, I think it is criminal that the club has been ruined like this. Even if we clear our debts someday, this will ALWAYS hang over our heads like a white elephant. Thank you Malcolm and co. You have ruined our club for MANY years to come.

  • Comment number 5.

    Thanks for making a tricky topic easy to understand. It's clear to me that the Glazer family is not running a football club. They are running a globally branded business that just happens operationally to be a football club. The extent to which that club remains operational and can fulfill the high standards held by fans, players, and managers remains to be seen. My guess is the Glazer family will suck out as much value as they can while playing the spread between the historic brand value and the emerging brand value.

  • Comment number 6.

    This is a balanced piece. Personally, I think its rather dreamy of supporters to expect real business people to buy an £800m (as was) football club with cash in one lump sum and expect them to continue to invest in all other aspects of the club too. The terms of the purchase were clearly steep in terms of repayments but, rather like when someone looks to buy a very expensive house, you consider the price paid and associated repayments figures over the long term, with the aim of re-couping or improving on your original investment.

    I say this to counter the teary eyed diatribe put out by MUST and to point out to people looking to question the Glazer's as businessmen. Remember this, the Glazer's bought an £800m house and 5 years on its worth £1.5bn. So, remind me....how is that poor judgement on their part?

  • Comment number 7.

    You can thank the beast that is the Premier league for this almighty mess as well as along the road at Liverpool. Im fairly certain that leveraged buyouts are not allowed in any other league.

    Its utterly incredible that the glazers could walk away from this tommorow with £200m in PIK loans to pay off, whilst Manu would need to pay off over £500m for the privelage of buying themselves! Its a bit like a master chef at a restuarant charging himself for his own meal at night.........only in football could this madness happen.

    Im no manu fan but I do hope the glazers are punted soon. 2 of the UK's great football institutions being taken to the cleaners by some chancers is not what I like to see.

  • Comment number 8.

    as far as i know these dudes went to a bank and said give us 500mil and we'll buy Utd and your security for that 500mil will be Utd. i really have a hard time seeing how this is acceptable (legal).

  • Comment number 9.

    "At the time when the bond was taken out, the dollar was much stronger compared to the pound ($1.62 to £1). But by 30 June, the end of United's accounting year, the dollar had weakened ($1.51 to £1)."

    Maths is obviously not your strong point, the dollar has actually strengthened, not weakened.

  • Comment number 10.

    It was also done to allow the Glazers to draw cash from the club, if needed, to pay off their expensive PIK loans, which now stand at £220m and are incurring interest at a rate of 16.25% annually.
    ---

    The Glazers were reported to have bought back 20% of the PIKs in 2008 (source: Bloomberg, Article title "Manchester Utd. Owners Said to Have Bought Back 20% of Own Loan" Sep 17, 2010)

    Assuming thats accurate; is it possible that unbeknownst to us they repurchased further amounts at that time or since? The omission to date to withdrawal the £75m carveout and £25m dividend entitlement outlined in the prospectus is pretty confusing.

    On figures of £220m, 20% would leaving £176m remaining to hedgefunds. If they could cut that down to £76m with the £100m above, then can chip away at that yearly with the further yearly £25m dividend entitlement and PIKs cleared in 4-5 years.

    Todays results don't make great reading, but as discussed fair few one-off payments or non-realised expenses contingent on exchange rates etc.

    To reverse the £19.3m exchange rate loss, all that would need would be for the pound to strengthen from 1.51 at the end of last financial year to 1.62 at end of current financial year. (it's 1.58 today), but then any gain/credit next year would be equally irrelevant until 2017, when the bonds actually mature.

    Also, whilst perhaps unlikely Glazers will still be around in 10 years, after 15 years of ownership, the £35m yearly amortisation of goodwill "losses" won't be deducted from the P+L, and will improve the reported trading income quite considerably.

    "During the year ended 30 June 2010, a provision of £2.2 million was made which reflects the present value of future lease payments on a property in the Republic of Ireland, originally signed in August 2000 which the Company’s subsidiary is not using. This provision assumes that we are unable to secure a suitable sub-tenant until we can exercise a break clause in 2015"

  • Comment number 11.

    Yet another pundit that fails to discern the obvious: Manchester United are in deep trouble. They are nothing more than a cow for the Glaziers to milk, and the Glaziers have absolutely no intention of stopping the milking.

    Man U can't buy the players they want and need -- never mind Lord Ferg's smokescreen about the current state of the transfer market.

    It may not be a rapid implosion like Liverpool's. Call it a slow drain by a trio of vampires -- you feel like something's not right, but you can't quite put your finger on it; you just know you don't as well as you used to, a little more tired everday. Then, one day, you're clawing at the lid of your coffin from the inside.

    Man U fans better wake up fast and hope Scholes and Giggs can last another decade or two.

  • Comment number 12.

    ''I say this to counter the teary eyed diatribe put out by MUST and to point out to people looking to question the Glazer's as businessmen. Remember this, the Glazer's bought an £800m house and 5 years on its worth £1.5bn. So, remind me....how is that poor judgement on their part? ''

    ---------------------------------------------------------------------

    good point but don't forget that currently the only people that think Man Utd is worth £1.5 bn are the current owners and lets be honest, everybody thinks they've got the nicest house in the road, dont they?

  • Comment number 13.

    As someone has mentioned, these paragraphs are totally wrong:

    "At the time when the bond was taken out, the dollar was much stronger compared to the pound ($1.62 to £1). But by 30 June, the end of United's accounting year, the dollar had weakened ($1.51 to £1) meaning that if the bond had to be repaid at that point United would have lost £19.2m.

    However, United do not have to pay the bond back until 2017 and so no cash has left the business. Indeed by 2017, the dollar could be stronger than at the point the bond was issued - meaning United could actually save money."

    The dollar has STRENGTHENED from $1.62 to $1.51 to the GBP. This is the cause of the 'loss', as it will take more pounds to pay off the same amount of dollars in debt. United will only 'save money' if the dollar weakens below the point at which the bond was issued, not strengthens.

  • Comment number 14.

    United wouldn't have won 3PL and CL without the Glazers. People forget the trouble with the Irish Duo and Rock of Gibraltar.

    The debt is an issue; it has stopped Ferguson from re-investing, especially after the Ronaldo sale. If they ever fail to qualify for the CL, United will be in trouble.

    Another thing, anyone saying "this would only happen in football", actually it happens in all forms of finance. But you guys can only understand it when football is used as an example. The whole thing is a joke and that's why we have our present recession.

  • Comment number 15.

    This is a well written well reseraeched piece David, with some interesting quotes.

    One of the most interesting is "It's an absolute tragedy for the fans because we have this football club which pays its own way and which through the strength of the business and through fans coming through the gates could have the cheapest seats in the League or marquee signings every year". Ticket prices are up every year, season ticket sales are down and the waiting list has evapourated, and new players are not marquee signings.

    That demonstrates the financial mis-management that is the root cause of the problem. To me it also shows that Gill & SAF have sold out their principles to the Glazers (Gill for his salary & SAF for his place in the record books). The financial realities will catch up with the Glazers fairly soon, as the US retail sector continues to struggle and their other businesses are cash starved. Liverpool's current debt / interest / ownership problems are only a few months ahead of ManU (imho).

  • Comment number 16.

    The other common denominator with Manu & Liverpool situations is about Perceived Value.
    American business people tend to only focus on the Income Statement, driven by Wall Street expectations if they are a public company or driven by owner's dividend expectations if they are a private company. They do not have a good understanding of Balance Sheets.
    Imagine buying a 200,000 pound house in a 200,000 pound neighbourhood then spending 150,000 pounds on renovations and lawyers and fees to re-mortgage the house, then trying to sell it for 350,000 costs plus 50,000 profit. Your perceived value would be unrealistic, as you can only sell it for what someone is willing to pay. In the meantime you are stuck in a house you can't afford with loans you can't pay. Eventually the bank will call in the loans.
    Liverpool next week for sure. United could be next.

  • Comment number 17.

    So as long as the schmucks, sorry fans keep paying, the club is in great shape. Hmmm, so really the fans decide the fate of the club and ultimately, the Glazers.

  • Comment number 18.

    Great blog. Thing is that the Glazers won't sell united as it's the only piece of property that is making any real money or is not in negative equity. Surely the board could have recognised what the Glazers were going to do given that they took the Tampa Bay Bucaneers from a super bowl winning franchise to a team that regularly has losing seasons by slashing the wage bill so that it was the lowest in the NFL. It amazes me that they passed the fit and proper persons test, truly

  • Comment number 19.

    Liverpool will soon go into administration so I can see no reason why United wont follow them on the dust road to financial ruin.
    It was their choice in the first place and the silly breakaway group at United were probably amongst the thousands of United supporters who were happy to go along with the Glazers,they thought it would make their beloved set of myths totally invinceable but ha ha it has gone all pear shaped all because of GREED and selfishness.Furthermore it was MUFC as a PLC who were founder members of the 'buying success' brigade,Chelsea followed suit and to an extent Liverpool did also.These three clubs wanted success to themselves,a closed shop was created within the top four and when Man City became the richest football club in the world overnight they resented it especially United and taking Glazer on board was the first nail in the coffin,of there are many more nails to hammer in but by heck MUFC are now £1.2B in debt and have lost another £82.6M in the process.It is all self inflicted and I as a Man City have little sympathy for them in fact I am delighted....

  • Comment number 20.

    Murray and Smellslikesalmon - thanks for your eagle-eyed observations. We've tweaked the bit about the dollar strengthening/weakening.

  • Comment number 21.

    If Man United or Liverpool do go into administration I can't see it doing them much harm. This may be an over simplification but they would basically get a large chunk of debt written off in return for a 9 point deduction. The problem would only arise of the Premier League stepped in and demanded they sold players to reduce their debts and that is never going to happen. Adminisitration would be excellent in the long term for both clubs. I am sure teh Red Knights or whoever would be delighted to buy the club on the cheap.

  • Comment number 22.

    Thanks to those of you who spotted my basic exchange rate mistake - has now been corrected. Hope it didn't spoil your enjoyment of the piece. David

  • Comment number 23.

    Post 12 good point but don't forget that currently the only people that think Man Utd is worth £1.5 bn are the current owners and lets be honest, everybody thinks they've got the nicest house in the road, dont they?
    -------------------------------------------------------------------------
    Actually forbes have manchester united valued at $1.84Billion (which on todays exchange rate of $1.58 to the £ is £1.16Billion) not £1.5B i know but not bad. This figure places manchester united as the richest sports franchise in the world.

    http://www.bloomberg.com/news/2010-07-21/manchester-united-tiger-woods-are-atop-forbes-lists-of-richest-in-sports.html

  • Comment number 24.

    8. At 6:56pm on 08 Oct 2010, SpUrS4EuRoPeAnNeJoLeNa4EvA wrote:
    as far as i know these dudes went to a bank and said give us 500mil and we'll buy Utd and your security for that 500mil will be Utd. i really have a hard time seeing how this is acceptable (legal).

    You've clearly never had a mortgage then!you borrow against an asset which you pay off with your earnings and hope there's enough left to live on. Unfortunately the Glazers took out a 125% Northern Rock mortgage and maxed their credit cards to fund the initial payment. Foolish but just business. By contrast Sheikh Mansour is still using the loose change from down his sofa to fund City. He has made way more in trading Barclays shares than he has ever spent at Eastlands. If you are a United fan who owns a gas guzzler and banks at Barclays, thank you from the blue side

  • Comment number 25.

    Post 15 To me it also shows that Gill & SAF have sold out their principles to the Glazers (Gill for his salary & SAF for his place in the record books).
    -----------------------------------------------------------------------

    I think with 11PL, 2CL, 5FA Cups, 4League Cups, 1 Euro Cup winners cup, 1 UEFA Super Cup, 1 Intercontinental Cup, 1 World Club Championship, 8 Charity/ Community Shields (i wont even bother with what he did at Aberdeen!), i think SAF's erm 'Place in the Record Books' is pretty safe already, dont you?

  • Comment number 26.

    18. At 8:40pm on 08 Oct 2010, Gallihore wrote:
    Great blog. Thing is that the Glazers won't sell united as it's the only piece of property that is making any real money or is not in negative equity. Surely the board could have recognised what the Glazers were going to do given that they took the Tampa Bay Bucaneers from a super bowl winning franchise to a team that regularly has losing seasons by slashing the wage bill so that it was the lowest in the NFL. It amazes me that they passed the fit and proper persons test, truly
    ----------------------------------------------------------------------

    i dont think the board could do anymore than they did. gill warned that he felt that the buy-out was over-leveraged and that the figures didnt add up. but the board as such were powerless to stop a hostile takeover once the glazers were able to buy the shares off the coolmore guys. gill has now had to change his position and many united fans have critised him for this. however i believe that united are lucky to have a true united man as CEO. he is constrained in what he can say or do publicly now that is for sure, but i believe that he is working hard behind the scenes to make this workable. i would say to united fans who doubt his 'loyalty' to consider the alternative! most probably a true glazer man....not a happy thought.

  • Comment number 27.

    excuse my spelling, i meant 'citicised'.

  • Comment number 28.

    lol, one more go 'criticised'

  • Comment number 29.

    I said previously that SAF has sold out his principles to the Glazers for his place in the record books. Let me clarify.

    From 1888 to 1992 Liverpool won the old Football League championship 18 times, and from 1992 to date they have won the new FA Premier League championship 0 times for a total of 18 English championships.

    From 1888 to 1992 United won the old Football League championship 7 times, and from 1992 to date they have won the new FA Premier League championship 11 times for a total of 18 English championships.

    SAF is driven by personal ambition, which may be both a strength & a weakness, and wont retire until after United has more wins than Liverpool. SAF sees himself as special, so he wont want to retire to be replaced by the special one Jose Mourinho.

  • Comment number 30.

    You have to wonder what damage would be done to the balance sheet where SAF to resign. He's not getting any younger and has often indicated that as soon as the missus insists that's enough he'll quit. Can he be replaced with the same level of success? Yes, but not instantly. A new comer would take several years to stabilise the club with their own brand of football.

  • Comment number 31.

    For those of us in K stand whose season tickets have increased from £27 to £36 a game since the Glazers took over their ownership of the club is not about £5m, £50m or £500m debt but about how long we can afford to keep on supporting our club. The faces around me have gradually changed each season as lifelong fans have been dumped by the Club because there is always been someone else to take the seat. HOWEVER this season for the first time in 20 years United failed to sell out season tickets and the stadium is definitely not full each game anymore. This is the warning sign that The Glazers will not have failed to note. The cash cow can only be milked so far, merchandising and shirts sales will also fall as the global armchair supporters increasngly buy Barcelona, Citeh and Chelski shirts. We WILL get our club back, its only a matter of time. Even if we dont win another PL for 20 years we wont be the basket case that Liverpool has become and the manufactured non-club that Citeh and Chelski have become. Roll on 2013 when the new rules apply that mean clubs can only spend what they earn of face possible expulsion from the CL - Hmm ! Now who will be happiest with that arrangement I wonder?

  • Comment number 32.

    Great blog which only serves to illustrate how far apart football on the pitch is from the business of football.
    When fans are milked and revenues peak and there's no extra money to buy the top players to keep in touch with the money bags then ManU have reached their peak, and although it is a long way to get down to a Liverpool style fiasco the warning signs are there.
    But all these costly debts were taken out when borrowing freely was rampant and the credit crunch had not hit.

  • Comment number 33.

    United will continue rising.

  • Comment number 34.

    Who says the value of the club is 1.5 billion? The Owners? In that case, my right boot scored 30 goals last season so i'm worth 5 million, I've decided. Only thing is, if I wanted to sell my body, i'm more likely to fetch £2 at the magic roundabout. A clubs worth what is paid for it, not what the owners decide. The fact that the owners are asking for 1.5 billion signals their only intention... to make profit on the club.

    United has evolved from a football club to a business project for a sports investment company, these companies have no thought for the condition they leave their projects in and are notoriously good at selling at the highest point. The buyout should never have been allowed with the structure in place. We all know it, the premier league knows it, everybody at the club knows it. Over the next 5-10 years, the united fans are really going to know it. And with Sir Alex unlikely to go on into his 80's, few ready managers of his level around and more competition from the new generation of mega clubs, its pretty much a lottery which direction the club takes on over the next few years. And two things you can bank on are that the likes of Anderson, Nani, Smalling are not at the level that Scholes, Giggs, Neville were at their age, and secondly that judging by this set of accounts, the cash to buy a new set of hopefulls isn't there.

  • Comment number 35.

    creative accounting has existed since currency was invented. the glaziers are no different. while the media has focused microscopically on Liverpool, Leeds at the time, and now the reds, people are failing to see the underlying problem of the premier league in general. Few financial rules, even less willingness to tackle these financial giants, and ultimately we have ended up with an overstated, over publicised 'best league in the world' scenario.

    be under no illusions. we dont have the best league in the world. we have the most expensive league in the world and the two are not the same.

    As a model, (and it hurts to say this) the German league has the financial situation under control. As I understand it, severe penalties for a red balance sheet. surely this would stop foreign investors squeezing money from our clubs?

  • Comment number 36.

    MU cant go bankrupt faster enough, no loss

  • Comment number 37.

    34. At 11:16pm on 08 Oct 2010, benj8min wrote:
    Who says the value of the club is 1.5 billion? The Owners? In that case, my right boot scored 30 goals last season so i'm worth 5 million, I've decided. Only thing is, if I wanted to sell my body, i'm more likely to fetch £2 at the magic roundabout. A clubs worth what is paid for it, not what the owners decide. The fact that the owners are asking for 1.5 billion signals their only intention... to make profit on the club.

    United has evolved from a football club to a business project for a sports investment company, these companies have no thought for the condition they leave their projects in and are notoriously good at selling at the highest point. The buyout should never have been allowed with the structure in place. We all know it, the premier league knows it, everybody at the club knows it. Over the next 5-10 years, the united fans are really going to know it. And with Sir Alex unlikely to go on into his 80's, few ready managers of his level around and more competition from the new generation of mega clubs, its pretty much a lottery which direction the club takes on over the next few years. And two things you can bank on are that the likes of Anderson, Nani, Smalling are not at the level that Scholes, Giggs, Neville were at their age, and secondly that judging by this set of accounts, the cash to buy a new set of hopefulls isn't there.
    -----------------------------------------

    mate check out the link i gave in post 23. forbes value united at about £1.16B, not the £1.5B the glazers value united at granted, but still the most valuable sporting franchise in the world.

  • Comment number 38.

    Seems to me, the only man on the planet with ANY financial sense is Sir Alex Ferguson (oh and maybe Sir Alan Sugar). The manager, has been smart enough to realise that buying new players in such an overinflated market is not worth it. On the face of it, the Glazer really are not running the club in its best interests and it's a bloody shame they have far too many supporters inside the board. It was never going to be possible for the Glazer's to make a profit with this venture without bringing down the quality of the football. The longer the stay, the tougher it will be for United to compete at the top.

  • Comment number 39.

    Re: the value of the club:

    I found it remarkable when the Liverpool owners were talking smugly about one of their best ever investments and hundreds of millions in profit not long before Broughton and the bank took control. Any valuation of United should be treated with similar scepticism. If United continue to underinvest in the team and miss out on the CL (not inconceivable given the rise of Tottenham and City) then the Glazers could be in trouble. If this happens and financial institutions could step in, any talk of £1.5BN or Forbes rich lists will soon be forgotten.

    An extremely important point that people seem to miss is that the bond issue does nothing to pay off the debt. In 2017 (I think) United will just have to refinance the same debt. People have mentioned mortgages as a way of understanding the situation; United have a £40M a year, interest only mortgage.

  • Comment number 40.

    Re 6. At 6:45pm on 08 Oct 2010, Surreyred wrote:

    Surreyred you conveniently missed a few points in your post:

    1) The Glazer Family did not buy Manchester United! Manchester United effectively bought itself, the Glazers merely put down a deposit and used the profits of that company to fund the purchase, a leveraged buy-out is the correct term.

    2) Where do you get the valuation of £1.5 Billion, I assume you read the same article that I did?

    Even at a more than generous 10x operating profit the top valuation of Manchester United would be £1 Billion although this is unrealistic. Also more importantly a companies 'value' is actually based on what a buyer is willing to pay for it and given the only proposed buyer of Man Utd have publicly stated they would not pay that figure then that valuation is, again, unrealistic.

    Manchester United can survive this situation however the situation does seem to be affecting our ability in the transfer market which in turn over time will affect our performance on the pitch and if we finish outside of the t four and fail to gain a Champions League position and miss out on the revenue that creates then I fear that is when the real problems will appear.

    The Glazers need to be realistic, sell the club for somewhere between £700-850 Million and be happy with that, if they do not realise their business model is flawed and learn lessons from what is going on with our rivals Liverpool then they have no right to call themselves 'business men'.

  • Comment number 41.

    I still dont understand why the premier league allowed the glazers to take over in the first place. Didnt they block murdochs takeover even though he is so much richer?

    I could buy liverpool right now with nothing to my name with a similar loan and saddle them with less debt than the glazers put on united.

    This season is crunch time, if we dont spend big and replace scholes, giggs, vds and hargreaves depending on his recovery then there will be no more wool over anyones eyes and fergie will slowly lose his status if he keeps supporting them. No one is bigger than the club, not even fergie.

    Personally i think the glazers are in it for the long haul and know business well enough to understand they will have to keep investing in the team to keep profits up.

    Id love it if the red knights stepped up and took control but i cant see it happening with the glazers asking for so much.

  • Comment number 42.

    Bound to happen. Glazer debt has now overtaken the club profit. Fans not buying season tickets. You can blame them all you want, but someone made a bank full of cash selling to them. Who would that have been? This is symptomatic of the Premier League. Multi-millionaires buying teams that billionaires should be running and leveraging them to the max. Next up - administration for Liverpool, followed by administration for the Red Devils. The only gem they have left is Rooney and he's looking a bit tarnished. No more 80 million sales left. Been a United fan for over 40 years and the whole sequence is gone to the dogs. Harder to watch than the bad days before Sir Alex.

  • Comment number 43.

    This issue can be traced back to the 1980s in America, when Wall Street, with the City of London concocted the leverage buyout. For those of you too young to remember read a book called "Barbarians At The Gates", the $25 billion leverage buyout of RJR Nabisco by Henry Kravis of KKR. It's a great read. Before that a CEO would consider it unethical to do what Glaziers have done. It will all end badly, as it did for RJR Nabisco, years stimied under debt, and in the end Kravis and company came out just about even. So, its bad business too, as Hicks will learn next week.
    The real problem is a lack of business ethics, and that can only be addressed by the Government stepping in and taking on the monied elite.

  • Comment number 44.

    The bottom line here is that MU are a business that is owned by the Glazers. The fans are merely consumers. They had the chance to buy the club in the late 80s/early 90s but didn't. They can jump up and down all they want but the only way they will make the Glazers sit up and notice is to stop buying their merchandize - seats at games, replica shirts etc.

  • Comment number 45.

    #18
    Great blog. Thing is that the Glazers won't sell united as it's the only piece of property that is making any real money or is not in negative equity. Surely the board could have recognised what the Glazers were going to do given that they took the Tampa Bay Bucaneers from a super bowl winning franchise to a team that regularly has losing seasons by slashing the wage bill so that it was the lowest in the NFL. It amazes me that they passed the fit and proper persons test, truly

    -----

    I understand that you don't like the Glazers, but lying doesn't help. When the Glazers bought the Franchise in 1995 they'd had 13 successive losing seasons - they were a national joke. Under the Glazers they've had 8 winning seasons, 6 losing (and one 8-8) and have won a Superbowl. For a perennial loser in a small market that's not a bad turnaround. Even looking at their recent history, two of the last three seasons have been winning and, despite the expert's predictions, they are 2-1 so far this season. So, hate the Glazers all you want, but don't make up stuff about the Bucs to justify it.

  • Comment number 46.

    On another matter, it's interesting that, in an apparently disasterous financial year for United, cash in the bank has gone up. (David's statement that "The results show there is still £163m of cash in the club's bank account" is a little disingenuous - the cash has actually gone up by £13 million.) This really highlights the gulf between accounting and reality. #10 (ralph250) mentioned the amortisation of goodwill as a factor that distorts the trading results - it is one factor among many. The reality is that, in a year that had a lot of 'one time costs' and in which they spent around £38 million on players (I'm taking that from news accounts - I haven't seen the annual report yet) they still put money in the bank. I just don't see the signs of a club/company in distress - perhaps someone could enlighten me.

  • Comment number 47.

    Other than relegated clubs like Hull, they'll be 1 PL club a year in Portmouth-type trouble for the foreseeable future. West Ham, Portsmouth, Liverpool this year, likely Man. U next? Then who? Villa? Everton? Spurs?

    We should all be like Arsenal. Have we learned in time?

  • Comment number 48.

    MUFC did not buy itself so why is the club paying off someone elses(Glazier) debt , who will own the club when the debt is repaid?.

  • Comment number 49.

    The £163mill in cash is all thats left from the £500 mill bond issue,right

  • Comment number 50.

    When the Red Knights were looking at raising the money to launch a bid for the club earlier this year it was reported the Glazers would only sell for £1.5bn, arguing there was still huge potential for growth.

    David

    I don't remember anyone reporting that the Glazers were prepared to sell for £1.5bn - in fact I think the reports were that they had turned down a £1.5bn offer. And I seem to recall that David Gill said at the time that the Glazers had no intention of selling (with the implication of 'at any price'). Could you give a source for the reports you are quoting.

  • Comment number 51.

    'The Glazers bought your £800m house' leaving you the occupants to pay off the mortgage very good business indeed.

  • Comment number 52.

    Football club owners are not elected representatives. They are businessmen, and they are looking to make profits. The Glazers can turn the place into a baseball ground if it'll make them more money. Fans are living in cocoland if they think that they can run buisinesses that belong to other people. Manchester United was SOLD to the Glazers remember? It is thier run as they wish. Same is true for Liverpool..

  • Comment number 53.

    cobbcottage - it's called a leveraged buyout, the glazers tooks loans to buy the club then once they bought it they transfered the debt onto united to make it their responsibility. As for the £160m in cash, that's got nothing to do with the bond issue, it's simply money generated by the club that hasn't been spent yet, the £500m bond issue was used to pay off the bank debt the glazers took out when they bought the club.

    As for united's financial position, it's obvious the current position is substainable and the club generates enough money to meet it's obligations. However unfairness of the current position on match going fans is obvious, the price rises have in effect maintained the status quo in terms of financial position - i.e. they have raised revenues enough to cover the interest payments, so the fans are in effect paying the cost of them buying the club. Without the glazers revenue's wouldn't have increased so much but they also wouldn't have the debt so the fans would be getting the same 'product' (I hate that word in football) for a much lower price. The fact they could do it is the reason football shouldn't be treated as a normal business in the eyes of the law, fan's feel an emotional attachment to a football club that they don't feel for e.g sony, which means football fans are much easier to exploit than other 'consumers' (another business term I hate being used in football).

    One more thing that frustrates me is the collective tv deal, united's popularity accounts for a huge percentage of that tv deal and if they were allowed to negotiate their own deal it would almost certainly dwarf those of barca and real and make us untouchable in financial terms, with or without the glazers. There's a good argument that united benefit is tangible ways from a premier league made stronger by the collective TV deals, but it's obviously far less than they would benefit from an individual deal and the collective TV deal also badly hinders the national team (the financial disparity between the premier league and the championship requires ready made foreigners to be bought rather than developing youth, without the collective TV deal I guarantee that within 15 years we would have a far better national team and far fewer foreign players in the PL)

  • Comment number 54.

    As a Liverpool fan I'm not here to gloat - our situation doesn't allow such childish luxury. It's disappointing to see 2 great clubs in such a financial mire. Football is now so removed from its fan base as to beggar belief. What is worrying for Utd is that SAF won't be there forever and you only need to go on a run where no trophies are won. Given Chelskis form and Citehs billions it is going to be harder for Utd to be as successful as in the past. You only have to look at last season - the Carling Cup - not such a good return for all the millions. It doesn't take much for fair weather fans to slope off. As was mentioned in a previous post there are empty seats at Old Trafford. I think if the Liverpool deal goes through it will lead to the club being run on the lines of Arsenal, which is no bad thing. What is so striking from all the figures are the huge sums lost to the club through interest payments. If I were a Utd fan I would be seething. Interesting times ahead I think.

  • Comment number 55.

    Platini is right. No more debts for football clubs. This is the road to ruin and attracts all the wrong people to invest in football.

    The rules should be:

    Noone can can buy a football club using a LBO. Either they have the cash or they don't.

    No club can seek loans using a football club's assets as collateral.

    No club can sign players on credit.

    Clubs that have a debt larger than their annual income to be relegated.

    All clubs up for sale should be offered first to fans' organisations with government help if necessary to see if they can go back to "club" status.

    All clubs to have fan representatives on their board with full access to all the club's accounts and business plans.

    Time to get real.

  • Comment number 56.

    @SpUrS4EuRoPeAnNeJoLeNa4EvA

    as far as i know these dudes went to a bank and said give us 500mil and we'll buy Utd and your security for that 500mil will be Utd. i really have a hard time seeing how this is acceptable (legal).

    --------

    one of the great ironies of the capitalist system.

    a poor person will go to prison for the theft of, say, a few hundred quid.

    a rich person will get a knighthood for the theft of several million.

    one is called crime.

    the other is called business.





  • Comment number 57.

    #31, Phil, philanthropists saved United from going under at least twice in the last century. Without them United wouldn't be here, and wouldn't have been able to build up the business. Certainly no less manufactured than City. And David, without Ronaldo's sale, last year's figures wouldn't have been so rosy either. With this year's losses, bearing in mind the advantages the Sky and CL money have given the Sky 4, I want to know why no-one's going on about how they have 'ruined' football by pricing everyone else out of the market, as reaper says, hastened and galvaniseded by becoming a more soulless PLC phil, safe in the knowledge, they thought, that the people who run the game are more interested in milking as much money as possible from the game than allowing the likes of Forest and Villa to win the League or European Cup again anytime soon. This means making it easier for the Real Madrids and Manchester Uniteds of this world to dominate world football and more difficult for outsiders to break into this elite. It's this greed that has pushed up the price Sheikh Mansour has had to spend to try and break the mould, which you feel the EPL, UEFA and FIFA are not particularly happy to see. A bit like Ireland going to South Africa instead of France.

    You reap what you sow.

  • Comment number 58.

    Looks likely that Manchester United are going to fall foul of the Uefa financial play fair rules unless they curb their spending even further.

    http://www.guardian.co.uk/football/2010/may/27/uefa-michel-platini-club-financial-regulations

  • Comment number 59.

    RE: Ticket prices - do people not realise that ticket prices increase in line with everything else that has increased over the past few years!

  • Comment number 60.

    46(Ravelston). which they spent around £38 million on players (I'm taking that from news accounts - I haven't seen the annual report yet)
    -------
    Net spend on new players I think was approximately £12m. (about £28m purchases and £16m recoup)
    The figure you've got would be "amortisation of player's registrations" which was £37.6m last year and £40.087m this. I've spoken with you before, so I think you're familiar, but for the benefit of the others, it's spreading acquisition costs for all players over the whole course of their contract. It's similar to depreciation; Players are deemed capital assets and it's based on their value to the business being £0 when their contract expires. ie. they can leave on a free.

    So say in 2010, Utd make a £20m signing on a 5 year contract, whilst that's a £20m outlay from the cash in balance, theres equally a new £20m asset on the balance sheet: The business has lost nothing on acquisition.
    each year you then adapt the written down value of the player on the books.

    so at acquisition £20m
    end of year 1 £16m (Deduct £4m from the Profit and loss)
    end of year 2 £12m (Deduct £4m from the Profit and Loss)
    -- say he then signs a 1 year extention (to make 4 remaining)
    end of year 3 £9m (Deduct £3m from the Profit and Loss)
    end of year 4 £6m (Deduct £3m from the Profit and Loss)
    end of year 5 £3m (Deduct £3m from the Profit and Loss)

    If he reaches end of year 6, he can leave on a free - If at end of year 5, he's instead sold for £10m, you'd have a capital gain of £7m (£10m - £3m), and pay corp tax accordingly.
    So that £4m deducted is added with the amounts deducted in respect of the other players to come to the tally figure (In Utd's case £40.087m)
    It refers to all players contracted to Utd who were purchased from elsewhere.

    It's not money coming out of cashflow this season, but it's reflecting the cost to the business. They will need replacing eventually so it's very much a relevant cost, but won't necessarily be realised until you need to replace that player. Does mean though that for instance Rooney's book value in the books will be about £4-5m, whereas he's worth much more than that in reality.

  • Comment number 61.

    At 09:11am on 09 Oct 2010, errrrrrrrrrm wrote:

    One more thing that frustrates me is the collective tv deal, united's popularity accounts for a huge percentage of that tv deal and if they were allowed to negotiate their own deal it would almost certainly dwarf those of barca and real and make us untouchable in financial terms, with or without the glazers. There's a good argument that united benefit is tangible ways from a premier league made stronger by the collective TV deals, but it's obviously far less than they would benefit from an individual deal and the collective TV deal also badly hinders the national team (the financial disparity between the premier league and the championship requires ready made foreigners to be bought rather than developing youth, without the collective TV deal I guarantee that within 15 years we would have a far better national team and far fewer foreign players in the PL)

    ********************************************
    Even if the first point is true it rather missing the point that if Utd don't have anyone to play then they don't have a "product". No one would pay to watch Utd V Utd reserves. You also underestimate the benefit of a competitive league, no one wants to pay to watch teams with lots of money hammer smaller teams for long

    Ultimately Utd don't have choice. The smaller clubs recognise the power they have, and hold the cards.

    as for how it would help the England team, just don't get that at all. Just mean bigger clubs could forgo youth for Marquee players


  • Comment number 62.

    I feel sorry for United fans being stuck with these terrible owners though I suppose as the fan of another team I should be grateful that United are being financially handicapped in this manner.

    It's an excellent piece by the writer but I wonder whether in the particular context of a football club EBITDA is the best measure in terms of normal operating financial performance?

    I fully understand the notion of looking at profit before interest (in the case of United mostly caused by the ownership model) taxation and depreciation but the final element, amortisation, I would have taken to be a key operating cost in the context of a football club.

    For a normal business the writing down of intangible assets would not be a significant operating cost but for a football club, particularly one paying large transfer fees amortisation costs must be be a very significant part of it's normal on-going operation, and if it is a club where regular big buys feature then I would have thought it to be an intrinsic cost element of their normal operations.

  • Comment number 63.

    The Glazers are a deplorable family that stand for everything that is wretched with our capitalist system and big business in general. They have no aim other than making money, and to do this they have decided to attach themselves like parasites to two highly respectable sports teams in the shape of Manchester Utd and the Tampa Bay Buccaneers.

    I am a United fan and I don't think there can be any doubt that the Glazers' ownership is a hinderance to the club's sporting success at this moment in time. Fergie and David Gill have insisted that they are free to spend as much as they want on new players but I just can't quite believe this. Take a look at the Glazers' other team - The Bucs in the NFL. The Glazers took ownership in 1995 and initially they did well, turning them into the team that won the Superbowl in 2002. Since then however the Bucs have become the most frugal team in the whole league (which consists of 32 teams) in terms of player and coach recruitment and as a result last season was their worst since 1991, finishing with a winning record of 3-13. The consensus in the NFL community is that the Bucs' slide is a direct result of funds being redirected into the debt repayments resulting from the Man Utd takeover.

    I don't think it's coincidence that both of the Glazers' sports teams are spending less in recent seasons. The Glazers are only interested in money and they'd be happy to ruin both Manchester United and the Tampa Bay Buccaneers as long as they walked away with a profit. The debt figures are just sickening when you consider the position we were in before the takeover. I just pray that the youngsters Fergie is buying can fulfull their potential and help us ride through the storm, bacause I can't see any £30million signings around the corner.

  • Comment number 64.

    The £163mill in cash is all thats left from the £500 mill bond issue,right
    -----

    The bond issue was used to pay off the bank debt. Utd had around £140m (including ronaldo £80m) in cash at the time prior to the bond issue.

    They used all the money raised from the bond issue plus £30m of that cash to clear the primary bank debt, pay the fees, and the first installment on the hedging loss (the £40.7m interest rate swaps referred to in the blog). The balance of that £40.7 is spread over the next 5-6 years, whilst all shown in this years accounts; about £12-14m has been paid out so far I think.

    The accounts show a £488.7m increase in borrowings and £507.3m repayment of borrowings.

    ----

    edit to above post (60). Apologies but net spend was higher in the books (£30.4m) as have included Valencia, Obertan and Diouf etc. I was just looking at January and this Summers deals. (Hernandez, Smalling, Bebe, Foster, Tosic etc).

  • Comment number 65.

    Just what is the reason for this mess? It all bpils down to player wages and transfer fees. It is obvious that the market can not bear the type of money being spent on players any more. Time for a 'correction' of this secor of the market too. If ManU and Liverpool cannot afford the top players, no one will. Torres for £3 million. Anyone? This will happen sooner thank you think. Just like it happened to you house prices. And as painful as it was for you when the house price crashed, it will be for some clubs. They could be out of business alltogether.

  • Comment number 66.

    As long as Manchester United are successful over the next few years with Sir Alex Ferguson still manager, United's revenues would keep rising

    But the problem these days is more about money than anything. Liverpool's debt will probably cleared if the takeover is completed soon and that will leave only Manchester United with massive debts in Premier League.

    United should have a takeover from a different owner by the end of this year so debt can be cleared and then Manu can guarantee they will play in the Champions League under the new financial rules. If Glaziers still owning Manu for the next couple of years, its highly unlikely Manu can compete in the Champions League even if they qualify to it.

    The same applies to Man City

    The main reason why most premier league clubs got debt is because Sky is pumping too much money into football forcing clubs to spend and as a result go into debt

  • Comment number 67.

    It always amazes me how many football fans can not get their heads around basic business & finance.

    A leveraged buyout has become common business practise, although it may be considered "unethical" by some. It is a bit far fetched to expect any buyers to spend huge amounts (be it 300 Million, 500 Million or 800 Million) in CASH. Even if they do have the cash, it makes more sense to fund at least a portion of the puchase by way of loans. The cash available should then be used to invest in and improve the asset, increasing the value.


    Where the problem with leveraged buyouts comes in is when the amount borrowed forms too high a percentage of the purchase price. If the borrowings are too high in relation to the equity of the company (in this case a football club) then it becomes risky.

    Think of a lever, used to lift a heavy object. A gear will multiply the force placed on the lever, allowing a heavier object to be lifted. The weight of the object being lifted, divided by the force placed on the lever tolift it, will give you the ratio. If this ratio is high (closer to 1 : 1) then the setup is not efficient. A more efficient gearing wil allow a heavier object to be lifted with a lower force on the lever.

    With a leveraged buyout you have to look at the financial gearing, or the ratio between the debt (loan) and the value of the purchase.

    Gearing is usually expressed as a percentage and is calculated by dividing the Companys debt by its equity.

    A highly geared company is one where there is a high proportion of debt to equity, and can be considered a risky investment as there is a higher likelihood of the company being unable to pay its large debts.

    If you purchase a company (or football club) and the amount borrowed is too high a percentage of the value of the business (or club), then your gearing is inefficient, and the risk is greater. If the business underperforms, due to an economic crisis, bad management, declining markets or whatever reason, then there is simply very little equity left in the asset (the business or club) to be used to get through the crisis.

    This is partly why the Glazers would have us believe that the club us worth 1.5 Bilion, rather than 1.1 Billion - they want us to believe that the gearing is lower than it is. The second is that they wish to discourage any attempts to force them into a sale.

    Many people have commented about using a mortgage to purchase a house. This is not entirely correct, unless it is an investment property to be rented out. If it is the home you are living in, the you need to earn funds elsewhere to repay the mortgage.

    Think of it rather as using a mortgage to purchase an hotel. You are ot going to pay cash for the hotel, but are going to fund at least a portion of the purchase by way of a mortgage. This is, in effect, your leveraged buyout, and the percentage of the value borrowed by way of mortgage will determine your gearing. The lower the percentage the better, obviously.

    The hotel is generagting an income, and this income is being used to repay the debt. As long as the hotel is well managed, the wage bill of the staff is not too high a percentage of the income generated, and the income remains stable in relation to interest rates, then all is well and good. The hotel will increase in value over time, and the debt will eventually be paid off. All things being equal, the hotel will increase in value, and your gearing will reduce further.

    Many things can, and will, however impact on this. The credit crisis will reduce the number of visitors. An increase in interest rates will increase your costs. The hotel wil reuire maintenance, without which the value will decline. (Think buying players)

    If there is insufficient cash in the accounts, or income reduces, or costs unexpectedly increase, then these need to be funded by further loans to get through the "crisis". These additional loans will further increase the gearing. Obviously, the higher the gearing the less "value" is left for you to borrow against. If your income drops to the point where it is lower than the amount required to run the hotel and repay the loans, than you are headed towards backruptcy.

    Is Manchester United in danger of becoming bankrupt? Not on your life, as much as the suporters of rival clubs would wish us to be.

    Is everything hunky dory? Unfortunately not, but how many big businesses are in the position of being "hunky dory" in the present situation.

    There are things to be concerned about, but nothing which can not be overcome. We have a good management team, and hopefully we can trust them to weather the storm.

    The gearing is somewhat higher than we (the fans) would like it to be. This is a concern rather than a crisi situation.

    There is money (quite a lot actually) in the bank. A large percentage of this money, however, if spent would be converted into debt owed to the Glazers, as it represents money due and payable to them. So, we can spend this money, and invest in the playing staff, but it would increase our debt. The balance, is available to buy players, but needs to also take care of any "unepected expenses" which may crop up. So, obviously, we should not look to spend it all.

    There is 163 million in cash available, in total, so we do not have a cashflow problem. However, 30 Million of this is actually payable to the Glazers should they wish to draw it. Thus, if we spend more than 33 Million we will increase the clubs debt. Maybe this, in part at least, accounts for Sir Alex being cautious concerning the prices he is prepared to pay for players. Clubs which are currently being funded out of the pockets of wealthy owners (increasing the clubs indebtedness to the owners, whether or not the fans realise or wish to admit it) does create a false value. I do agree with Sir Alex that many of the big names are simply not wort investing in. In the scenario of the Premier League, Man City seem to be buying a lot of players, and offering them crazy wages, as much to prevent other clubs having them than because they really need or want them.

    We do need players, particularly in midfield, a great goalkeeper, and at least oe more really good defender, ad it remains to be seen if we find them at a realistic price. We need to stop spending money on "youngsters for the future" right now, and concentrate on the present .... but I digress.

    The other financial concern is that we will not be able to maintain the large growth in revenue that we have seen over the past 5 years. This will hamper us further. Should we not continue to do well in the Champions League, resulting in lower revenue from that source, then the situation gets worse. This makes investment in players for the "here and now" rather than the future even more important.

    It is a good thing that the debt has been converted into bonds, as the conditions are far more favourable. We can take the cost of doing this as a once off, no problem.

    It must be remembered that the "costs" reflected in the accounts due to fluctuations in the dollar/Pound exchange rate are no more than book entries. They do not currently impact on our cashflow in any way. When the bonds mature in 2017, then we see the impact. I do not see the dollar weakening significantly against the pound in the short term, but am not stupid enough to try predict what the exchange rate will be in 2017.

    Who expects the bonds to be settled (repaid) in cash in 2017 ? Certainly not me. Expect another bond issue, to settle this one, thus extending the debt for another 5 or 7 years. We can only hope that the economy then will be such that the interest on the bonds is lower, or that the Glazers see fit to reduce overall debt between now and then, which is unlikely.

    However, we are not in the position that Liverpool are (nowhere near) and will never be in the position of Portsmouth.

    The clubs financial position is not as dire as many would have us believe, by a long shot. However, the level of debt does need to be reduced, and the gearing improved. The lower interest costs will do wonders for our cash flow.

    Will the Glazers be leaving any time soon? Absolutely no way. The simple fact that they see the clubs value at 1.5 billion instead of 1.1 billion should tell you that. They have no need to sell (unlike Gillet 7 Hicks at Liverpool) and absolutely no desire to sell.

    Even should they decide to sell, and be willing to accept as "little" as 1 Billion, the buyout would be leveraged. Who is to say that the gearing on that buyout would be any lower than our current gearing, or that the terms of the loans would be any better than the terms on our current loans.

    The people shouting from the rooftops that Man United is heading for administration need to be ignored, or even better, be quiet until they actually have any understanding of business and finance. Those calling for a buyer to buy out the Glazers, need to be careful what they wish for (as stated, the gearing and repayment terms may end up worse) or stop living in a dream world where people make billion pound purchases out of their petty cash box, and billion pound corporations operate without debt.

    Things are not "perfect", or maybe not even as great as they could be, but we are far from being in crisis.

    Be realistic, and have faith in the management team which has done a pretty decent job thus far.

  • Comment number 68.

    post 67 :

    " It always amazes me how many football fans can not get their heads around basic business & finance. "

    It could be that one of the problems is the inability of people who work in finance to make the subject even remotely interesting : your crashing bore of a post being an excellent example.

  • Comment number 69.

    53: errrrrrrrrrm

    Re: Collective TV deals.

    I'm a Utd fan, but I'd be against an individually negotiated deal. Yes it would benefit Utd and arguably England, but seriously limits competition within the league. Barca and Madrid get €120m a year on their deals, the next highest is Valencia on €30m and Sevilla on €20m.
    (source Guardian: "Domination by Barcelona and Real Madrid making Spain the new Scotland" 28 March 2010)
    The prem may well be slightly different in that you'd expect more than 2 clubs to be able to negotiate deals significantly higher than €30m, (the colletive is about £30m I think), but there's already financial disparity between the top and the bottom of the league and that to me would make it far worse.
    The benefit to the national team is arguable. Agree for the lower clubs, that it might promote development from the academies within, though equally with far lower cash coming in, could preclude them being able to afford to purchase English players from elsewhere due to the "English Player Tax" that's currently prevalent.
    As for the elite; they would still be highly competitive and would have the increased money and negotiating power to purchase the best players in the world - of which more likely than not are from overseas. Will they have the patience to develop and integrate English youth when they can just go out and buy a Sneijder. If limited amounts breakthrough into those elite teams, then our English players will get limited/no exposure to top level European football to aid their development.
    Argument that be beneficial to the national team if the homegrown rule could be augmented so Starting XI has to include say, 2 English Nationals etc, but then that would contravene European Law (Freedom of movement of workers - can't be discriminated on basis of nationality), so a no go from the start.

    Controversial and again I'm against it, but I did suggest in another bbc blog the possibility that the FA might look at the Spanish and German systems whereby clubs B teams are integrated into the domestic leagues, just can't play in the same one as the parent. Barcelona B and Villareal B are in the Segunda División (2nd tier, equivalent to our Championship), Castilla (Real Madrid B) are in the 3rd tier. Bayern II, Stuttgart II, Bremen II are all in the German 3rd tier.
    The top youth prospects are often picked up by the top teams, but those players have the benefit of being exposed to regular football at a higher level than reserves at a younger age, whilst still having access to the top facilities, coaches, players to mentor etc. Equally as the formations/tactics will likely be the same as the parent club, it eases transition into the senior team as more likely to be adapt at the system, as opposed to a talented English player from say Arsenal who goes on loan to a Championship club that plays longball all game.

    As I said though, controversial to implement.

  • Comment number 70.

    #68 So sorry you didn't enjoy it or understand it.

  • Comment number 71.

    67. At 11:01am on 09 Oct 2010, HotdogSalesman wrote:

    Blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah

    =====================================

    Please, stick to selling hotdogs.

  • Comment number 72.

    #53, the end of the collective TV deal would benefit the likes of United in the short term. Long term it would kill off the premier league. There is a lot of talk about the dominance of the big 4 (Chelsea, United, Arsenal and Blackburn are the only teams to have won the PL), but the big attraction of the PL is that it is so competitive.
    With teams negotiating their own TV deal, who would pay good money to see United or Arsenal wiping the floor with teams who are unable to compete. Within 10 years foreign fans (who may call themselves United or Arsenal fans, but have no emotional attachment to the teams) would be looking for a more competitive league to watch. Look at how Serie A has fallen compared too the premier league.

    I don't understand why people are questioning the Glazers as business men. As long ass they keep United afloat, they will continue to milk the club in order to pay off their own debts, then sell it on for a hefty profit.

  • Comment number 73.

    So if United did not sell Ronaldo to Madrid they would have made an operating profit of 20 million and a loss of 163.6 million! Sounds like this little bit of business has been left out of your calculations and that Man Utd are well and truely in a mess, financially.

    Their owners The Glazer Family have suffered further embarrassing financial difficulties after four more of its US shopping malls recently fell into default on their mortgages. With the interest rate charged on United's enormous "payment-in-kind debts" rising from 14.25% to 16.25% this month, the news could hardly come at a worse time.

    An investigation by the Guardian newspaper in conjunction with the BBC's Panorama programme and the investment analyst Andy Green in June found that of the 68 shopping malls owned by the Glazers' US-based First Allied Corporation, four had gone bust and one more had defaulted on its mortgage. An analysis of the malls' most recent financial disclosures has revealed that four more have since failed to pay their mortgages and become classified as "delinquent", with two falling into default this month.

    The four malls are in Houston, Texas; Denver, Colorado and two in Ohio. That means nine, or 13%, of the Glazers' malls are now "delinquent" or insolvent, and a further 29 centres, 43%, have so many units empty the rental income does not cover the mortgage payments. First Allied is the only significant business the Florida-based family runs besides Manchester United and the Tampa Bay Buccaneers NFL franchise, and the bank disclosures show it making income above the malls' running costs of only US$9m a year.

    These disclosures come at a particularly sensitive time considering United's own debts. The interest rate increase took effect this month, according to the most recent accounts filed by one of the Glazers' United companies.

    According to Red Football Joint Venture Limited, the accounts for the year to 30 June 2009 recorded that United's total bank and other borrowings had swollen to £716m, all of it derived from the Glazers' original personal borrowings to buy the club in the first place in 2005. Of that, around £500m was owed to banks and refinanced in January with the issue of bonds at an average around 8.5% interest "yield" annually – £42.5m this year.

    The payments in kind, originally owed to three hedge funds, had risen to £202m by 30 June last year, so at 14.25% have accrued a further £34m interest since. That interest is not paid but accumulates, so the Glazers' United companies now owe £236m to the hedge funds. The increased interest rate to 16.25% means that over the next year a further £38m will be added, swelling the total to £274m, unless a proportion of the hedge fund debt is paid off.

    No public United documents explain why the interest rate has increased, but it has been reported that United were hit with it as a penalty clause because their debts have risen to more than five times the basic profit they make.

    The club's chief executive, David Gill, has maintained that the payment-in-kind debts at these credit-card rates of interest are not the club's responsibility, but fall on the family to repay. However, it is not at all clear the Glazers have the resources from First Allied or elsewhere to meet these liabilities, and the bond document issued by United provides the right to take almost £130m out of the club. That can be used to pay towards the payment-in-kind debt if necessary.

    Gill and the Glazers argue the club is unaffected by these debts, by far the largest external borrowings ever owed by an English football club, and that funds are available for the manager Sir Alex Ferguson to spend. The manager has said the transfer market is over-priced and it is his own choice this summer to have signed only Chris Smalling from Fulham, Javier Hernández from Guadalajara and the deal which has stunned football, the 20 year old Portuguese striker, Bébé, for £7.4m.

    Yet Green – an investment analyst and United supporter who writes about the club's finances in his blog www.andersred.blogspot.com – said the latest disclosures from First Allied were a cause for further concern. "They show that the Glazer family's only significant other business is making almost no money, and certainly not generating the cash to reduce United's massive debts," he said. "The family's shopping malls are afflicted by low occupancy rates, more have fallen into default, and whatever David Gill says, there appears no doubt that Manchester United itself will be made to service these useless debts and pay huge interest payments, all money which could have been spent signing players."

    It's only going to get worse for Man Utd and Liverpool's problems will pale into insignificance.

  • Comment number 74.

    MANCHESTER UNITED JUST LIKE LEEDS, AND LIVERPOOL, WILL FALL

  • Comment number 75.

    @67. At 11:01am on 09 Oct 2010, HotdogSalesman wrote:
    "It always amazes me how many football fans can not get their heads around basic business & finance."
    -----------------------------------------------------------------------
    I haven't the slightest idea why that would be. Do you have any understanding of the mix and background of the the average football fan?

    I work in corporate finance myself and have no issue with any of the points you make other than to suggest, in the context of the readership on a football Blog, that your entire post is arrogant, condescending and nothing more than an intellectual w**k.

  • Comment number 76.

    Re. surreyred

    The Glazers may well have done a superb business deal, but while they sit on their hands hoping the value of the asset will increase still further those of us that are actually supporters are watching the squad deteriorate into a painfully average mid-table outfit.

    Most mystifying in all this is the role of Ferguson, who appears to have toed the Glazer line throughout while watching his transfer budget disappear in interest and fees despite consecutive ticket price rises up until sales finally slumped this summer.

    But then we can "always go and watch Chelsea" eh Sir Alex?

    LUHG

  • Comment number 77.

    67. At 11:01am on 09 Oct 2010, HotdogSalesman wrote:
    It always amazes me how many football fans can not get their heads around basic business & finance.

    ======================================

    What type of muppet are you.

    The model used by Glazers is closer to that of the ATTROCIOUS banking collapse than ANY basic business & finance.

    It essentially RELYS upon self proclaiming inflated value/worth.

    USA investment methods and practice are predominatly based upon a "cash cow" methodology, or what was termed in pre-Victorian and USA civil war times heath care as "bleeding the patient", which ultimately has as MANY disasterous consequences now as then.

    Man Utd is being bled to death, just as the WHOLE world is via USA financial practices which predominantly rely upon DEBT growth and imaginary fantasy inflationary values and NOT REAL PHYSICAL value/worth growth.

    USA financial services reminds me of a voluntary organ donation which pays cash for an organ, but then, once on the operating table under anesthetic, much more is removed than AGREED with.

    Man Utd, WILL go the same way as Liverpool and or Leeds United, it ALREADY IS on that direct path which the past 2 years financial statistics actally PROVE. The false accounting PRETENCES which are put forward by yourself and other financial "experts" as reasoning of improvements are just blatant accounting manipulation of statistics.

    It DOESNT matter if Man Utd have improved income, the FACT remains is that they are in a FAR FAR LESS healthier position than 5 years ago, due to "cash cow" methodology of USA business principles.

    A donor, ONLY has so much blood to give, the Gazers have ALREADY FAR surpassed any viable and sustainable level of "cash cow" extraction methodology.

  • Comment number 78.

    Continue to be amazed at how clubs like Liverpool and ManU allowed themselves to be bought over in the way they did. It beggars belief. They just look like 'milking' operations for the owners bought on tic.

    Very good blog David and what is interesting is the speculation around what may happen regarding the bond payment. Utd may have made record operating profits but its hard to see how these will continue to grow in such a way that that they will mask the interest-related and bond debts that the club will accumulate. Very depressing news for Utd as a club.

  • Comment number 79.

    @67

    Whilst I may not agree with all of your points, but dont have the knowledge to really put a good argument against it. I will say that unlike some of the posts following it, I found it a good read, and most importantly (as a lot of people find on this blog system the BBC has) a easy read for such a long post.

  • Comment number 80.

    Liverpool's case can't be compare with Man Utd's because, while problems of LFC are related to mis-management and this is evidenced on the number of players who came in and out of Anfield under Rafael, problem of MUFC is the owners milking the Club. i believe going to administration will do LFC no harm and infact will safe them because at the moment they are on a downward trend. Manchester United will learn from developement at LFC and i am sure Glazers will be force out soon! Man Utd will be ok under new ownership and i predict that happening ..... and will compete for the best talent up there with the like of R. Madrid/City/Chelsea soon.

  • Comment number 81.

    For such a club whose brand value is greater then Yankees, it is just sad. England sure has a lot to learn from Germany.

  • Comment number 82.

    How can any Man U fans complain about the Glaziers?! The Glaziers are still giving Sir Alex whatever money he wants, there has never been any news of Sir Alex getting frustrated because he cant buy X or Y. You have players costing nearly £20m on the bench, and you spent £7m on a player who Sir A had never seen (although obviously the scouts will have done). Any other club (bar Chelsea and Man City as they are ridiculous) would expect a £10m signing to be playing week-in week-out. Plus you have had amazing success on the pitch so the debt has not been affecting anyone related to the football side.
    What you guys cant see is that the Glaziers know what they are doing. They have a business plan and are sticking to it. So when the debt is finally payed off, you will have the largest revenue and profit of any club in the world and will be able to do a Man City, while spending in your means.

    I am a liverpool fan, so compare what is going on at Anfield; crippling debts which mean we cannot but players (we were outspent by Hull in the Summer transfer window of 09) but fans who expect us to keep up with the Chelseas, Man Citys, the Man Us, the Spurs who can spend at will. Liverpool have less than half your debt yet we are being destroyed by it. So clearly the Glaziers know what they are doing, unlike Hicks & Gillet

    STOP COMPLAINING!

  • Comment number 83.

    75. At 12:31pm on 09 Oct 2010, WordsofWisdom wrote:
    @67. At 11:01am on 09 Oct 2010, HotdogSalesman wrote:
    "It always amazes me how many football fans can not get their heads around basic business & finance."
    -----------------------------------------------------------------------
    I haven't the slightest idea why that would be. Do you have any understanding of the mix and background of the the average football fan?

    I work in corporate finance myself and have no issue with any of the points you make other than to suggest, in the context of the readership on a football Blog, that your entire post is arrogant, condescending and nothing more than an intellectual w**k.

    =============================================

    As an 'average football fan' (whatever that means - are you linking average with thick perhaps?) I did actually get what hotdogsalesman was trying say - the problem was that he forgot the mustard and burnt the onions - kebab for me in future!

  • Comment number 84.

    When we get made bankrupt, and slowly get relegated to the Conference League, we will find out who are the real fans and who are the plastics!!!

    ILtG

  • Comment number 85.

    I am not sure you are correct in your analysis of these numbers. Looking at the Liverpool valuation at 8.5x operating profit, you do not add cash to the value, which at £160+m would directly increase the price by that much. When comparing to Liverpool, a premium for Manchester United of a 10 multiple vs 8.5 is easily conservative. Add to that the additional capital required to the Liverpool deal to build a stadium equivalent to Old Trafford in capacity terms (£400+), one can easily arrive at a valuation of in excess of £1.5bn. Your comment on the interest rate hedging tends to show your own opinion rather being impartial. Hedging interest rate risk is a prudent action taken by most companies, particularily those whose revenues have linkages to inflation. The bond financing effectively mirrors exactly the cashflows that would have been paid over the term of this hedging - so the statement from the company that the upfront termination payment is mirrored with savings in the future is a fact - not a "claim". If you are going to talk finance, be impartial - it is largely a realm of facts. If you are going to talk about sport, then OK, opinions are part and parcel. Why is there no song and dance about the impressive growth of the company under the new owners?

  • Comment number 86.

    sherrcd - How would ending the collective TV deal mean united having no one to play? Other clubs existed before the PL and would exist without it. Ending the collective deal would definitely mean clubs likes bolton, wigan and the like having to concentrate on developing their own players rather than signing south american and african players, it would definitely mean a larger percentage of the players in the premier league being english (or at least british), it would definitely reduce the financial disparity between the PL and the championship and so reduce the need to sack managers 5 games into a season and spend beyond their already inflated means to stay in the premier league.

    Although my point about the percentage of the TV deal for which united are responsible is subjective your view is very short term, the immediate impact would be a reduction in the overall quality of the premier league as wages are lowered at 'smaller' clubs and (some) foreigners decide that they never really had a life long desire to play in the north east after all. But the medium/long term effect would almost certainly be a return to substainable club building around strong youth development and stable management, that can only help these clubs and the national team.

    As for exactly how it would help the national team, it would increase the pool of english players playing at the top level of national football, the talent is there and this would give clubs the motivation to develop it, if only to create players that are worth selling to united and liverpool. Players need to be playing at the top level to develop, we would have more english players playing against the best foreign players week in week out, with the best of them probably playing with them at the top clubs.

    =========================================================================

    ralph250 - the 'english player tax' only exists because the shortage of english players of suitable calibre, that can and would change with clubs focusing on youth development

    =========================================================================

    Dr. John B - as amusing as it was the see Blackburn mentioned as one of the big four, your other point about the attraction of the PL being competitiveness is obviously wrong, the attraction for players is money whilst the attraction for foreign fans is a combination of players and style of play, the all action blood and guts english/british brand of football is more entertaining to the uninitiated than spannish pass and move or italian tactical battles (all generalisations but hold enough truth to have their impact).

  • Comment number 87.

    @52 - Where is this " cocoland " you speak of? Is it also run by a bunch of clowns?

    @75 Words Of Wisdom indeed!

  • Comment number 88.

    United's wage bill is a lot bigger than Liverpool's.

  • Comment number 89.

    Football clubs are not like other businesses. There's one major difference: with a normal business, if you don't like the product or service on sale you can move to another supplier who more fits your needs and desires.
    With a football club, the customers can't choose, they are captive. A Liverpool fan doesn't suddenly say: "I don't like G&H so I'll go down to Goodison Park on Saturday. Or maybe pop up to Manhcester where City have a good deal on season tickets."
    Football club owners have a captive customer base. The most that fans do is to stop going to matches. They are linked to their by cultural, social and psychological ties that are very strong. Football clubs define a local community.
    That's why they need to be controlled by Governement to stop them being exploited. Football clubs should be like listed buildings that have very restictive regulations imposed on the owners, and collective ownership and control by the community (the fans) greatly encouraged.
    The fans (customers) of Manchester United, Liverpool and the other clubs are being emotionally blackmailed by their shyster owners who know all this and take full advantage.
    Stupid fans exacerbate this by calling fellow fans "unfaithful" if they don't pay up ridiculous amounts of money to watch boring and irrelevant games like the Carling Cup.
    Time for the Government to set up a commission into the running of the game and bring in legislation. It's also time for the fans to wise up. A few empty grounds wouldn't be a bad idea to let the greedy owners know what can happen if they go too far.
    It's also time that supporters clubs and fans draw up a common list of demands for how football should run and present it the the FA and FL.
    Make yourself heard.

  • Comment number 90.

    HotDogSalesman
    "Since the Glazers took over, they and the club have incurred more than £450m in interest charges and debt-related payments. To be clear, that doesn't include the actual sums borrowed, which stand today at £741m - including £220m of PIKs and the £521m club debts
    =========================================================================So lets put this in perspective, they have paid 450 million pounds in interest payments, on a club worth about 1000-1500 million pounds, and they have debts currently 741 million pounds, and this is considered sound business. United as a team are in a rebuilding phase, so they will not reach the heights of past years, so the lower figure is more realistic

    If they were such good business men why did they sign loans at 16% interest. Thats like buying a club on credit card rates, obviously the banks and other investors saw this as a high risk gamble.

    Yes there are people who will pay 800 million pounds cash for the club they are called Chinese businessmen, Russian oligarchs and Arab sheiks.
    Alternatively, the club could be owned by the fans in a sort of co-operative with sound experience administration, which is what top clubs should be aiming for. Ultimately, all the money to pay the debts will come from fans, either in ticket sales, mechandizing or tv rights. So why shouldn't they own a part of what they pay for.

  • Comment number 91.

    tommythetank wrote:
    Platini is right. No more debts for football clubs. This is the road to ruin and attracts all the wrong people to invest in football.

    The rules should be:

    Noone can can buy a football club using a LBO. Either they have the cash or they don't.

    No club can seek loans using a football club's assets as collateral.

    No club can sign players on credit.

    Clubs that have a debt larger than their annual income to be relegated.

    All clubs up for sale should be offered first to fans' organisations with government help if necessary to see if they can go back to "club" status.

    All clubs to have fan representatives on their board with full access to all the club's accounts and business plans.
    ---------------------------------------------------------------

    This is pretty much what the Bundesliga is give or take a few points.
    Excellent way to run a league

  • Comment number 92.

    #80 - Zindia
    "Liverpool's case can't be compare with Man Utd's because, while problems of LFC are related to mis-management and this is evidenced on the number of players who came in and out of Anfield under Rafael, problem of MUFC is the owners milking the Club."

    What on earth does that mean? Liverpool's financial problems are due entirely to the debts lumped on the club by the owners. The situation at Man Utd is similar, but so far the Old Trafford club hasn't hit the tipping point where it can't afford the ever-rising interest payments.

  • Comment number 93.

    Probably one of the more balanced views on the financial aspects but you still wouldn't make it one day in the world finance or trying to run the financial aspects of a company.

    There is a simple way that blazers are going to look at this:

    Buy a club for £800m
    Borrow say £700m
    Put £100m of equity
    10 year s on

    Club is worth £2000m
    Paid interest worth 11%(say avg over lifetime) on 800m=880m
    Debt repayment is £800m
    Net left over is £400m

    They make 4 times their money. If they bought for cash, they'd only make 2.5 times their money(2000/800)

    You are all happy to do that with mortgages as in take a loan, and hope to make money on an increase in the value of the house but still fail to recognize the value of debt as a useful instrument to raise capital for a business investment.

    Debt is bad if you destroy the business that it is secured against dent the lack of investment. I can't see any evidence of that at united. We are still buying players, we are rightly rejecting overpriced deals - who would buy benzene at €40m today, David Silva clearly looking like a bad investment, spending 300 m on players does not guarantee success- look at real last season. Man united are again ahead of the game here-they use financial muscle in the mid 90s from the it bigger stadium and on field success to build up a big club. Now they know that the market is over inflated and are staying out for the moment.

    I don't why supporters are so worried about debt per se - ok they are raising ticket prices, of course they will as any successful business providing a desirable product. Hypocrites all of you- have no problems borrowing money yourself but as soon as someone else does it, you come up in arms.

    The club has done well, is undergoing a generational change right now and still competing at the highest levels in every competition. Cohesiveness that others would die for in their teams. Glazers are doing a fantastic job with commercial opportunities and leaving the football side to Gill and Sir Alex

    Really, journalists should stay out of these things. If you don't understand,ask. Don't make stupid populist arguments.




  • Comment number 94.

    @ 71 How about a trade ? When those who do not understand business stop trying to comment on club finances, then we have a deal.



  • Comment number 95.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 96.

    we have to ask the glazers to leave our club for us. they are not leading us anywhere. they would ruin our club. nay they are ruining it. we would get up one day and our great club will be no more. how come the club make operating profit but declare losses as huge as the profit. the glazer are taking money to finance their private businesses. if man u were to be any other club it would have been a dodo (history) the glazers should be warned. i suggest we should stage a massive demo against the glazers every country there are man u fans.

  • Comment number 97.

    post 93 :

    " don't why supporters are so worried about debt per se - ok they are raising ticket prices, of course they will as any successful business providing a desirable product. Hypocrites all of you- have no problems borrowing money yourself but as soon as someone else does it, you come up in arms."

    Absolute nonsense. When I borrow money the only people who are involved are the lender and myself. If I can' t pay back the debt it is my problem - no-one else's. In the case of a football team, someone comes along who couldn't care less about the club, and loads them up with debt which could potentially ruin them. There are therefore tens of thousands of people " involved " who really do care about the final outcome. And you think that makes them hypocrites ?

  • Comment number 98.

    88 "United's wage bill is a lot bigger than Liverpool's."

    - - - - - - - - -

    So is their income .... only more so.

    Rather look at wages as a percentage of revenues.

    And, just btw, Man City's wage bill is around 67% of revenue, and growing. If they don't greatly increase revenues and the wage bill continues growing, then they would have a problem. Their situation is (currently) not bound by the romal rules of business, as it is being funded out of the pockets of their wealthy owner, or they would be unable to continue. If he decides one day it is time to sell, then he mut either take a loss, or sell the club for enough to recover his purchase price PLUS his investment in players etc, before adding whatever profit he wants as a return on his investment. Is he likely to get that price? Certainly not as things stand. My point? Simply that, like it or not, all clubs (even those with "wealthy sugar daddy's) have debt, some just do not have it reflected in their accounts.

  • Comment number 99.

    Manchester utd are finished if the glaziers stay in control.Depression and massive debts in America mean they are using the fatted calf of united to survive.Sadly there is dwindling meat left on the calf.I predict that each season united will fall lower down the league and win nothing.Its sad that failing American buisnessmen can take over profitable British football clubs and destroy them.Roooney could be the next to go.

  • Comment number 100.

    #31, phil

    Being in debt must be very painfull indeed. Does believing that Chelsea (double winners) and City (2nd in the EPL) are non-clubs make you happy (especially when they are winning.) I hope it does, coz you will need all the happiness you can get for a long long time

 

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