BBC BLOGS - David Bond
« Previous | Main | Next »

Loan repayments good news for Man Utd fans

Post categories:

David Bond | 08:46 UK time, Tuesday, 16 November 2010

By paying off the controversial payment-in-kind (PIK) loans the Glazer family have potentially removed a debt time bomb which was ticking away under Old Trafford.

With total debts of £720m it was these loans - accruing a staggering 16.25% of interest each year - which have become the most potent symbol of the Glazer's leveraged regime.

Secured on the club but kept at arms length by the Americans' complex ownership structure, they were first taken out in 2005 from three hedge funds to help the Glazers purchase the club and, despite a partial refinancing a year later, have been sitting there ever since racking up hefty interest which would have to be repaid along with the original sum in 2017.

Then, from out of nowhere, came the news that the Glazers would be paying them off in full next Monday.

The details emerged after JP Morgan, the investment bank which advises the Glazers on the PIK loans, made a company filing from joint chairman Joel Glazer which set out the family's plans to redeem the debt in full.

In keeping with the Glazers' opaque financing practices we do not know the identity of the lenders.

But more importantly we do not know where the Glazers have found the money to pay them off.

Club sources on Tuesday morning told me that money from the club would not be used to redeem the PIKs - even though the Glazers have the freedom to draw a dividend of £100m out of the club as part of their £526m bond which refinanced the club's majority of debts in January.

Manchester United fans with a banner protesting against the Glazers

This is expected to be clarified when United publish financial results for the first quarter of the financial year.

There was speculation overnight on Monday that the Glazers may have sold some shares in the club to finance the move.

The Glazers may have released funds by selling some assets in the United States or refinanced the loans with other banks at better interest rates.

There will undoubtedly be relief among fans who have long seen the PIK loans as the biggest threat to United's future financial stability.

But they are unlikely to rest easy until they know for sure how they were paid off - something the secretive Glazers are unlikely to ever reveal.

Comments

Page 1 of 2

  • Comment number 1.

    I'm not sure what to make of this yet until more information comes to light.

  • Comment number 2.

    I really like this blog

  • Comment number 3.

    i wonder how much they managed to sell Old Trafford for.

  • Comment number 4.

    Assuming that the PIK loans are paid-off in full and however that was funded has no further debt impact on the club then this is big news for Utd fans.

    The debt burden will be significantly reduced and with Utd breaking records by posting the first ever operating profit of more than 100 million last year there will be more than enough to fund the debt AND provide plenty of funding for players.

    I'll hold fire until this is finally resolved but if it goes through as outlined then Happy Days!

  • Comment number 5.

    So the debt may still be as high as ever just it is not called a PIK loan anymore it may just be called a bank loan? OK the the intrest should be much lower but it is still a big worry for us United fans!

  • Comment number 6.

    Wonder how the Glazer got that kind of money to pay the debt off!!

  • Comment number 7.

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

  • Comment number 8.

    TJ

    In reality if we are down to debts of just £500m (I know a odd use of teh term only)then taking into account it a business with cash reserves elsewhere of £160m and generates the best part of £100m in cash pa from opperations things will certainly be looking pretty good as after our fixed interest payemnts we will be generating more cash than virtually any other club the world over (c£60m pa). If there are bank debst brought in t replace them well being honest they will be nowhere near as punitive interest wise so it would be a decent move forward although still not ideal.

    However its been done t is a step in the right direction anyway!

  • Comment number 9.


    Worst case scenario, they've borrowed at lower rates to pay off the PIKs, so the debt is still there at a lower rate, which is still not bad. Hopefully they've been smart at fixing the rates on the replacement debt at a significantly lower rate. Best case scenario, they've paid the PIKs off by selling assets belonging to them in the states. Unthinkable scenario, they've 'borrowed'from the club, which would suck. But eitherway I think, the Glazers aside, we shouldnt worry so much about our club. The Glazers a businessmen, they're quite successful businessmen, safe to assume they wont want to lose any money. As such the best way for them to make money is to keep United at the pinnacle of Club football in the PL and in Europe, which to be fair to them, they've done, even last year wasnt THAT bad was it. I for one dont expect United to dominate the way we have done in the past, its just the nature of football and the PL in particular, no team will dominate in the way pool and Utd have in the past. But as long as we're challenging, as long as we play quality football and show the kind of spirit we showed at Villa Park, I'm happy, eitherway I'm proud to be a red.

  • Comment number 10.

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

  • Comment number 11.

    I think people need to give the Glazers a break. I'm completely against the LUHG movement and the red knights. As one one of the previous posters said, the Glazers are successful businessmen and they would not want one of their biggest investments to fail. To prove this, united have had quite a successful time during their ownership. I think they are quite shrewd - like fergie - and do not see the point in paying over the odds for overhyped players (£25 million for milner - seriously!). People need to let the Glazers run their business how they want. Look how long they've hung around at Tampa Bay, ok maybe not been that successful on the field there, but they haven't left them because they've been unsuccessful.

  • Comment number 12.

    good news that the debt is being repayed?i thought that was a bad thing.will be interested seeing the financial statement later today.

  • Comment number 13.

    A lot of delusion on here.

    The Glazers have leveraged the club to the hilt with debt. They have not personally spent a cent of their own money, so why would that change now?

    The fact remains that they continue to insult the fans with a complete lack of transparency in respect of the finances of the club. A total lack of communication and dialogue about what their plans are? where they are borrowing the money from? and why what was said to change Wayne Rooneys mind about signing (apart from the ridiculout salary package).

    I would be amazed if they managed to realise any assets from the U.S. and it is more likely that they will just refinance the PIKS at a lower interest rate, which still leaves open the possibility that they will drain £95m from the club at a future point to partially clear their own personal liabilities.



  • Comment number 14.

    As stated by others , nothing is being "paid off" , its simply a remortgage from one bank to another.

    The issue Man Utd have is performance. Anything less than top 4 performance year on year spells disaster. How the club can be valued at £1000 million is beyond me .

    Keep paying the £60 tickets, great value for money , I am sure Rooney is really appreciates the sacrifices ordinary fans are making.

  • Comment number 15.

    It's only like using a credit card to pay off another credit card. The debt hasn't gone away.

  • Comment number 16.

    From Oliver Kay - "19-word statement: "The board notes recent press speculation. The board can confirm that there has been no dividend of club cash” "

    As I have already said, a complete lack of transparency and dialogue.

    LUHG

  • Comment number 17.

    If the PIK loans were always the Glazers debt and have never affected Man Utd's financial clout why is this such good news?

    I've read many times that the PIK loans were not Utd's responsibility, solely the Glazer's. What has changed here? The Glazers have refinanced their personal debt?



  • Comment number 18.

    http://andersred.blogspot.com/

    See Andersreds latest blog for factual information in respect of the PIK's.

  • Comment number 19.

    If you look at the Glazer's personal wealth and the value of their assets something has got to give to pay off the PIKs unless they are simply refinancing it at a lower rate of interest in which case the effect on the club will be minimal save for the fact that the permitted dividend of £95m that can be taken will cover more interest than it would at present. As they have ruled out paying with club money and by selling shares it is difficult to imagine how else they could do it.

    The club's ability to compete for players and wages will still be hindered unless or until the bond debt is removed or revenues are significantly increased by a broadcasting revolution or some other means such as renaming the stadium.

    Fortunately for Fergie the standard of the league has dipped and he should be able to paper over the cracks for the remainder of his tenure.

  • Comment number 20.

    @13. At 11:15am on 16 Nov 2010, LJHRED

    You really are a bundle of joy aren't you? Do you think mthis got into the media against the Glazer's wishes? The initial reports, on here and elsewhere, are that the pay-off iwll not be linked to bringing further debt to the club.

    Why not wait and see before assuming that the glass is half empty?

  • Comment number 21.

    15. At 11:17am on 16 Nov 2010, kafkafil wrote:
    It's only like using a credit card to pay off another credit card. The debt hasn't gone away.

    ------------------------------------------------------------------------
    No it's not, if the model reporeted is what unfolds....nothing like that in fact!

  • Comment number 22.

    17. At 11:19am on 16 Nov 2010, tommybrusher wrote:
    If the PIK loans were always the Glazers debt and have never affected Man Utd's financial clout why is this such good news?

    I've read many times that the PIK loans were not Utd's responsibility, solely the Glazer's. What has changed here? The Glazers have refinanced their personal debt?


    ----------------------------------------------------------------------
    I'll give you the benefit of the doubt and assume that you born yesterday! With everything that has been published on this subject for...forever...do you really not understand that the PIK debt interest was being paid out of club profits???

    If you want to comment on a subject I suggest informing yourself on the basics first.

  • Comment number 23.

    ocean finance. maybe they should the debt advice to get it reduced. the glazers are not fit for purpose.

  • Comment number 24.

    @20 - Word of Wisdom.

    No crystal ball needed WoW.

    No details on PIK refinancing are been revealed in the RF results.

    I am aware that the Glazers have stated that they will not use cash funds from the Club to pay off the PIK's, but it doesn't take a genius to realise that they will still rely on future dividends/draw downs and management fees.

    They have made £36m from paying off the PIKS (when they bought the 15% stake in the PIKs) and that stake was bought using the money they took from the club.

    Why would I assume that the glass is anything but half empty when the Glazers have, to this day, not personally spent a penny on the club?

  • Comment number 25.

    14. At 11:16am on 16 Nov 2010, hughesz wrote:

    As stated by others , nothing is being "paid off" , its simply a remortgage from one bank to another.

    The issue Man Utd have is performance. Anything less than top 4 performance year on year spells disaster. How the club can be valued at £1000 million is beyond me .

    Keep paying the £60 tickets, great value for money , I am sure Rooney is really appreciates the sacrifices ordinary fans are making.

    ========================================================================
    This just sums up all the ABU brigade. Jealous little rival. How do you know its going from one bank to another - proof please?

    Yes we have to qualify for top 4. Considering we have been in the top 3 for over 15yrs is quite assuring :-)

    Its worth 1 billion simple as.... Stop being so bitter

    £60 per ticket - wow your info is worrying. Its £27 - £51 and £10 for all under 16's. And the football at United is definitely worth it. Top class European nights, League titles won, Cup campaigns. OT is fantastic mate, something you wouldnt know.

    United!

  • Comment number 26.

    This one isn't going to be accepted blindly by United fans. What I'd want to know is where the money came from to pay the PIKs off, and why it couldn't have come earlier. I remember a report by Panorama into the Glazers revealing they had shopping centres in America that was making massive losses. Maybe the Glazers have turned these around and got a loan from someone secured against these centres.
    http://www.bbc.co.uk/news/10237268

  • Comment number 27.

    Am glad to see the highest interest part of our debt go but its hard to be too happy due to the usual Glazer smoke and mirrors. Not withdrawing the £100m from the club could well be a political move given the Rooney stransfer saga nad the Red Knight's campaign. I wouldn't be suprised to see it syphoned off at a later date.

  • Comment number 28.

    £60 per ticket - wow your info is worrying. Its £27 - £51 and £10 for all under 16's. And the football at United is definitely worth it. Top class European nights, League titles won, Cup campaigns. OT is fantastic mate, something you wouldnt know.

    United!
    ___________________________________________
    spot on lad!

    no idea about this £60 a ticket. We are oaying more than we used to but it's still fairly reasonable, I think anyway. I would speculate that this is a refinancing move which may possibly half the rate of repayment for the £220mil pik loan. This isn't all together fantastic news but it will save utd a fair few million per year. The overall debt still remains and it is a worry that at any time, they can dip into the funds that are utd's and use it for their own debts. That said, and as has already been written, they're businessmen and as such they don't want to lose money and will recognise that success on the field is paramount. But until we know more about how they have serviced this debt in whatever way, we should hold fire on our derogitory comments.

    Manchester na na na!!!

  • Comment number 29.

    I don't think that we have got another loan to pay this PIKs off, why would any bank want to take it on a payment to pay another loan off, especially with what has happened with Liverpool and RBS.

    Football clubs aren't the cash cows which buyers have assumed them to be and with what Liverpool went for, £300million does everyone believe that United are worth the £1billion that the Glazer's hope we are worth. Could this be a means to an end?

  • Comment number 30.

    It wont be good news till the Glazers have gone.

    Parasites.

  • Comment number 31.

    Re 22. WordsofWisdom
    The PIK debt interest was just rolled up, hence the PIK debt increasing year on year.
    By paying this off (replacing the debt) will not effect the amount of money Manchester United have to spend but should stop the debt increasing at such a fast pace.
    Maybe it is you that needs to do the research!!

  • Comment number 32.

    Keep paying the £60 tickets, great value for money , I am sure Rooney is really appreciates the sacrifices ordinary fans are making

    _________________

    watching prem footy IS expensive, simple as that

    but how do YOU judge value??

    do you consider cheaper prices combined with never challenging for a trophy as value?

    based on bottom end season ticket prices UTD are about 7th behind arsenal, chelsea, spurs and liverpool for a start

    considering UTD have won, on average, approx one trophy per season since the prem league started UTD fans get better value than ANY of the other prem clubs > FACT

  • Comment number 33.

    This blog says they can pay £100M from the club, but the main article says £70.

    A few months ago the BBC said the total debt was about £500M, but then another blog on the same day said £750M.

    I don't think the BBC has a clue about the numbers and are making it all up as they go along.

  • Comment number 34.

    "Loan repayments good news for Man Utd fans"

    If it means the Glazers can stick around for the next decade or two I would agree, very good news.

  • Comment number 35.

    Ah, what a great opportunity for the United haters to have a go, after a couple of weeks off since the Rooney contract circus! You lot must have been getting withdrawal symptoms! :)

    Just to keep this very very basic for everyone, as from the comments I've seen, no-one seems to know the first thing about finance.

    Total debt = £720m approx.
    £520m @8% for argument sake (coz it's half the PIK amount, and I can't be bothered to look it up)
    £200m @16%.
    Total yearly re-payments = £73.6m

    £720, @ 8% - yearly repayment = £57.6m

    I know those figures arent all spot on, and there are other charges etc etc. I just wanted the United haters to see the baseline of the worst case scenario - a loan at lower interest to replace the PIK's!
    That's a £15m a year difference, with no clause to HAVE to pay it back in 2017. See why it's a good thing now??!!

    Also, for my fellow United fans and Glazer doubters:
    IF, they have taken money from the club to pay this 200m, all it does is free up more money over the next few years - £32m a year in interest alone! And it is more than likely compound interest, then fees, etc etc.
    That's still at least a David Villa every season we could afford!
    Good enough for me when you consider the young squad we have at the minute.

  • Comment number 36.

    I've been saying this all along: Glazers are businessmen, they're after profits and value, they would not take club into Portsmouth mess. Fans should not complain about sale of C.Ronaldo. ManU has X-factor in SAF, he has an ability to turn Berbaflop into next Maradona. ManU will sell Rooney in January, but Berbatov and Hernandez will be turned into world-class strikers.

    I'm a Chelsea fan, by the way.

  • Comment number 37.

    The Glazers have must have sold a stake in Red Football Limited !! The consequences of this can only be uncertain. We need a new owner ASAP !!

  • Comment number 38.

    #29
    "does everyone believe that United are worth the £1billion that the Glazer's hope we are worth"

    Liverpool - £300m, approx £40m operating profit as a club (forgetting the debt they were saddled with). Own the club for 20 years at that rate, you make £500m profit

    Without the debt, United make £100m a year operating profit. Buy the club for a billion, and in 20 years you've made £1bn profit!!

    Get it??!!

  • Comment number 39.

    Would all the financial planning by the Glazers be in serious trouble if United failed to make top 4 this or one season? The only reason the turnover was high this season was taking into account of Ronaldo's transfer money. If no players are sold for big money then the losses will be higher, and the value of squad in terms of saleable assets probably is limited to 5 or 6 players.

  • Comment number 40.

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

  • Comment number 41.


    These numbers do add up, but please consider the amount you have to invest.

    For example :

    300M to make 500M profit equals 166% return on ivestment.
    1000M to make 1000M equals 100% return on investment.

    Which is the better deal ?


    -------------------------------------------------
    38. At 12:52pm on 16 Nov 2010, Nevs_A_Red wrote:
    #29
    "does everyone believe that United are worth the £1billion that the Glazer's hope we are worth"

    Liverpool - £300m, approx £40m operating profit as a club (forgetting the debt they were saddled with). Own the club for 20 years at that rate, you make £500m profit

    Without the debt, United make £100m a year operating profit. Buy the club for a billion, and in 20 years you've made £1bn profit!!

    Get it??!!

  • Comment number 42.

    #36 berbatov has been pants since he came from spurs, aside from the odd showing so I am afraid he will never be world class. Hes's too old now apart from being a lazy sod. Why shouldn't we complain about the sale of Ronaldo? ( he wanted to leave i know but that is an aside in this discussion)The money raised from his sale was demanded up front in cash, to be paid by the financial year end. this differs from the usual way that the fee is spread out over the lenght of a contract, why do you suppose that was??? Oh yes to show an operating profit on the books so that the gimps could say how everything in the garden was rosey.

    I could go on but i fear I am wasting my keyboard time because if some of you on here don't appreciate whats going on by now then I'm afraid that you never will.

    For those that want to see the state of afairs have a look here
    http://andersred.blogspot.com/

  • Comment number 43.

    Nevs_A_Red: Using your own figures (with these sorts of vague 'valuation' exercises there are all sorts of figures flying around) with Liverpool you would make 167% return over 20 yrs (your figures exclude the increased value of the club, less the acquisition interest payable by Glazers but anyway) and with Utd you'd make 100% return. OR to put it another way, with Liverpool you're paying 300m to make 500m, with Utd you're paying 1000m to make 1000m. So yes, everything else being equal the UTD valuation of 1bil would seem high. To put it another way, buyng two Liverpools would only cost 600m and would still make the 1000m.

    I happen to think that Utd prob are worth a bil, but just wanted to illustrate that the arguments that fly around on here don't necessarily prove things one way or the other.

  • Comment number 44.

    Did the 100m operating profit not include the sale of Ronaldo? Will the normal profit not be far less?

  • Comment number 45.

    #44 The Ronaldo sale was in the previous year, that's the only reason Utd made a net profit that year and an overall loss this time (the operating profit excludes the finance charges).

  • Comment number 46.

    #42 and 43 - if you look at it as percentages then yes, i does seem better that way, but you can turn any figures in your favour in different ways. However, making £1bn over 20 years as opposed to making £500m over 20 years is surely better? right?! ;-)

    Regardless of how you look at it anyway, you've misunderstood the point of that post - my point was purely to illustrate that United are easily worth £1bn.

  • Comment number 47.

    #44 & 45:
    operating profit excludes player sales.

  • Comment number 48.

    #43
    Just to add to my comment after reading this part of your again:
    "To put it another way, buyng two Liverpools would only cost 600m and would still make the 1000m."

    You can't buy two Liverpools! You can't use that as an argument after a factual based point on percentages. There isn't two Liverpool's to buy! lol.....oooh, what a horrible thought actually. ;-)

  • Comment number 49.

    I don't understand the anti-Glazer case at all. Would it be any better to have an owner who'd paid cash, and now expects to take an annual profit of 3-5% of the value of his investment? No-one's going to spend that money just for fun, so they'll always expect a return of some kind.

    The previous owners of United reinvested all profits year on year, but then the only way for them to cash out and take their profits was to sell for such a high price that the deal only really made sense as a leveraged one.

  • Comment number 50.

    Credit where credit's due, the Glazers have allowed us to dodge a bullet. Where's the catch though?

  • Comment number 51.

    Plus in comparing with the Liverpool value of 300 million remember that overall Liverpool require a lot more investment in players and infrastructure to catch up with United's level, that's built into the lower value.

    All football clubs are now businesses that can be bought or sold to some extent - at some point they will have money creamed off from them. You just have to hope your team is owned by people who can maintain the balance of creaming off money whilst still winning trophies. At least in this country (as opposed to the franchise-based US for example) you generally have to try to win trophies to maintain maximum profitability. It amuses me to see people fawn over the way Arsenal is run, there is nothing stopping those owners from deciding at some point they want to exit with cash and sell out to someone who loads the club with debt, and there is nothing their fans could do about it. The better run your club is, the more tempting a target it is for a leveraged buy out (as United found out).

  • Comment number 52.

    #25

    "The issue Man Utd have is performance. Anything less than top 4 performance year on year spells disaster."

    I've never understood that argument. I'd say that for United to drop out of the top four would be the result of catastrophe, not the cause of it. Everything at the club would have to fall apart before they finished lower than 4th. (And I'm an Arsenal fan, not a United supporter.)

    As various owners have shown, it's not about acquisition debt, but good management of the club. Mike Ashley didn't borrow to buy Newcastle. As long as the Glazers run United reasonable conservatively - which means not changing much - then they will not drop out of the CL places, and their investment is safe.

    To analyse the deal *with the benefit of hindsight*, there are a number of points to consider:

    1) The Glazers didn't pay a big price for United. The PL revenues have increased by enough that it looks like they got a very good deal. Revenues will continue to increase for the foreseeable future, in my opinion, simply because the global TV rights are vastly undervalued at the moment when compared to the only other comparable draw in the entertainment world: Hollywood. The EPL *weekly* reaches the same audience as Hollywood does *yearly*, but only receives about a tenth of the amount of money.

    2) The credit crunch cost them at least £100 million due to being unable to refinance when they expected to. Having survived that, though, all that's happened is that they've made a bit less profit. If the deal was ever going to fall apart, it was in the last couple of years. Having survived the credit crunch relatively unscathed shows that there is not much scope for things to go wrong.

    3) The Glazers plan for making a profit involved increasing Utd's revenues by more than the amount needed to pay off their loans. This has already been done, and there is scope for significant further increases.

    If you look at it purely from a financial point of view, the Glazer takeover is one of the all-time great LBO deals. They're safe now, although the anti-Glazer bandwagon's rolling fast enough that it'll take a while to stop.

  • Comment number 53.

    43. At 1:16pm on 16 Nov 2010, smellslikesalmon wrote:
    Nevs_A_Red: Using your own figures (with these sorts of vague 'valuation' exercises there are all sorts of figures flying around) with Liverpool you would make 167% return over 20 yrs (your figures exclude the increased value of the club, less the acquisition interest payable by Glazers but anyway) and with Utd you'd make 100% return. OR to put it another way, with Liverpool you're paying 300m to make 500m, with Utd you're paying 1000m to make 1000m. So yes, everything else being equal the UTD valuation of 1bil would seem high. To put it another way, buyng two Liverpools would only cost 600m and would still make the 1000m.

    I happen to think that Utd prob are worth a bil, but just wanted to illustrate that the arguments that fly around on here don't necessarily prove things one way or the other.

    _______________________________________________________________________

    Based on the figures above you guys are forgetting one thing and that's Liverpool have to spend £300 - £400 million to build a new stadium while Utd have a 76k capacity already and even if they extend to 90 that'll cost about £100 million. So buying Liverpool at £300 million, paying for a new stadium probably only gives them a return on their capital of about 33% making the billion Utd is worth v good investment!

  • Comment number 54.

    The Glazers didn't pay a big price for United

    ==

    No, they let the supporters pick that tab up.

    Some absolutely shocking comments on this blog "give the glazers a break, they're good business men". Getting United fans to pay for their takeover? Well yeah, that's as shrewd as you can get I guess. And to have the very same people defend you over it? Now they're just showing off

  • Comment number 55.

    This should be good news

    But until this actually happens, there will still be questions on the Glazers. I doubt Manchester United can reduce their massive debts before the new financial rules comes into effect soon. If that happens, Manchester United will lose valuable revenue and debt will just increase!

    Manchester United must spend a lot of money in January. If this does not happen its is very likely Rooney will leave Manchester United and go to Manchester City. Already signs of Manchester United declining is being shown so far this season, they have not being playing good,a already got too many draws. SAF must spend in January to win the premier league this season or next season before he retires.

    Glazer's current value of Manchester United at £1bn is a good true value of the club given the success Manchester United had over the last two decades.

  • Comment number 56.

    "But they are unlikely to rest easy until they know for sure how they were paid off - something the secretive Glazers are unlikely to ever reveal." That is exactly the problem.

    Not disclosing a source of an albatross funding till things get out of hands will do them in. Apart from some special ingredients for products like Coca cola's secretive recipes and sources of intelligence that some organization guard against and not telling people the truth about them why should a source of funding for a club that is ruining the club be a secrete thing.

    The glazers must know that man u is a global brand that is bigger than them. the earlier they sell their businesses in the US and solely fund man u with the money and stop paying themselves with accruals from the club as directors and as well as using some to pay debt of their other businesses the better.

    Till this is done we fans of man u across the world ( I am writing from Ghana)will organize and sack them from the club the Liverpool style.

    The holy spirit of those who died in the Munich air crash will be with us. Amen.

    Long live man u.

    long live supporters of man u.

  • Comment number 57.

    That loan money is simply being paid off by other new loans which do not have such interest. The total debt is just about the same.

  • Comment number 58.

    Manchester United must spend a lot of money in January. If this does not happen its is very likely Rooney will leave Manchester United and go to Manchester City. Already signs of Manchester United declining is being shown so far this season, they have not being playing good,a already got too many draws. SAF must spend in January to win the premier league this season or next season before he retires.

    ===

    The club, the fans that pay to watch are much more important than Wayne Rooney and whoever he ends up playing for.

  • Comment number 59.

    Still quering why so many people think that another bank will lend us the money to pay of this debt, there is something going on here and I don't like it one bit.

  • Comment number 60.

    Genghis you are living in dreamland, the Glazers aren't good business men at all - look at their business portfolio in the states to see how that is performing. ALso, they took on Tampa Bay, hiked up the prices and since then won nothing - how is that successful - the club's sell on value will be greatly diminished if it isn't winning anything on the pitch that is why they haven't sold it! If they'd had any money to invest in Tampa's team they would have done in order to try and gain success to make the Bucc's a more attractive propoisition to buy. If United don't win things like Arsenal haven't for the last 5 years then do you think the temporary fans will stay around? Yes they'll still probably get 40-50k through the turnstiles but then it becomes alot less attractive proposition.

    Viewfromverve - provided the loan is fully secured most banks would be willing to fund those PIK loans - offer the Glazers 7.5% above LIBOR (0.7% roughly currently) would look a lot more attractive than the 16% they are paying currently. To a bank that would represent 16million a year income for the life of the loan - why wouldn't a bank want a piece of that if fully secured?

    My opinion is that this is nothing news - it doesn't really change the position of the owners or the club, yes it may free up £15 million per annum against debt repayments but against the already massive debt repayments that are eating into the retained profits of the club, it won't be long before there isn't even £7 million to buy a homeless person!

    I'm an Everton fan but secretly a closet United fan as I've so enjoyed the football they've played over the last 19 years. It is a disgrace to saddle a club in so much debt. Bill Kenwright is getting slaughtered by a certain sections of our fans who seem to think he should sell to the first person who comes along making an offer. I hope Bill remains cautious and gets proof of funds as he has asked for on a number of occassions. We don't want to go down the same route as Portsmouth, Southampton, Leeds and we certainly don't want the situation our friends across the park found themselves in this season. I'd much rather have someone in charge of my club who cares about it's future not just five minutes of success like Portsmouth had?

  • Comment number 61.

    Tampa is not a good example, the NFL is weird. It can be more profitable to have a losing team than a winning one due to paying minimum salaries and the fact that income is not so heavily proportional to sporting success (ie superbowl winner does not get lots more money than bottom team, all merchandising profits are shared across the NFL, etc). The only reason owners would want to win the Superbowl is for sporting/egotistical fulfilment - from a business perspective it doesn't make much sense to try to do so.

  • Comment number 62.

    Agree with #60 this is a non story, until we know how this has been financed we cannot judge this a good news story or other.

  • Comment number 63.

    The primary concern for the club is not the Glazers but when Ferguson leaves.

    If they are still here when he goes, then I fear for the team/club for the next 10 years.

    The club makes massive profits but it's being held together by the team's on field achievements by a relatively average team.

  • Comment number 64.

    #60

    "the Glazers aren't good business men at all - look at their business portfolio in the states to see how that is performing."

    Sorry, but taking a proper look at their malls shows how well they do what they do. Although some individual malls aren't profitable for them, those ones can be (and in some cases, have been) dumped. The mall investments as a whole have made them huge profits. If they drop or renegotiate the worst-performing mall/loan combos in their set, they will be left with ~$350 million debts and malls worth (conservatively, in a poor market) $500 million.

    You may not like the way they do business, but they're very good at what they do.

  • Comment number 65.

    54. At 3:28pm on 16 Nov 2010, Kapnag wrote:
    The Glazers didn't pay a big price for United

    ==

    No, they let the supporters pick that tab up.

    Some absolutely shocking comments on this blog "give the glazers a break, they're good business men". Getting United fans to pay for their takeover? Well yeah, that's as shrewd as you can get I guess. And to have the very same people defend you over it? Now they're just showing off

    ===

    Kapnag, I know most of us think of Man Utd as much much more than a business, but in the end that's exactly what it is. Letting the "supporters pick up the tab" is a bit like saying that the customers of Tesco pay for Sir Terry Leahy's foreign holidays. Of course it's true. If you own a business then your customers pay and get something in return (i.e. supporters watch quality football) and the owners make a profit. Business owners are not charitable organisations and if the owners want a reasonable return on their investment then they are entitled to it.

  • Comment number 66.


    The club, the fans that pay to watch are much more important than Wayne Rooney and whoever he ends up playing for.


    ========

    Indeed, but how many teams would like to see worse football so their morals can be satisfied?

  • Comment number 67.

    I admit I do not know an awful lot about finance (computing is my thing being a BSc final year student)it would be interesting as a life long fan to hear them come out and explain the source of the funding to pay off the PIK.

    People were talking about selling of shares, and frankly I find that hard to believe that they sold enough to cover the PIK interest.

    Then again, we have become accustomed to not expecting in-depth answers from the Glaziers, so while the air is cold, I won't hold my breath.

  • Comment number 68.

    Im no expert in these matters so i would like to ask anyone who is to look over the clubs latest financial statement. to me it all looks pretty good. also, would it appear in this statement if the glazers used any 'united' money or sold off any united assets to pay off the pik loans? heres the link to the statement:

    http://www.mufplc.com/pdf/Q1_2011_Report.pdf

    wrt to the pik loans, i believe it can only be a good thing to pay these off, even if the glazers have secured another loan at a lower rate to do so.

  • Comment number 69.

    #68

    "Im no expert in these matters so i would like to ask anyone who is to look over the clubs latest financial statement. to me it all looks pretty good."

    Google the Swiss Ramble blog - can't be beat if you want proper financial analysis. If I remember rightly, he did a piece on those results not too long ago.

    One thing to note is that those accounts were compiled before this development, so they don't help in working out where the money came from. Next year's accounts will have to make it clear, I believe.

    One possibility that hasn't yet been mentioned is that the PIKs have been paid off in return for a bond-like commitment - the financial instrument, not 007 - to pay future amounts. That would make the letter of the statement true, whilst still paying the loans off (long-term) with profits from the club. I don't think it's particularly likely, but it's a possibility. It's more likely that the pay-off of the PIKs is simply financed by loans a level up from the Utd holding company - making the Glazers (or at least, their investment company) liable whatever happens to United.

  • Comment number 70.

    dave, correct me if im wrong but these results were published today werent they? so how the swiss ramble blog has done a piece on them im not sure. antway thanks for your reply, il check out the blog.

  • Comment number 71.

    #68

    Don't know if the link will make it through moderation, but: http://swissramble.blogspot.com/2010/10/united-we-stand-divided-we-fall.html

  • Comment number 72.

    Oh, and according to (probably accurate) gossip in the City, John W Henry - new owner of Liverpool - was signed up with the Red Knights. Shows what 'true fans' they are, for those who think the grass would be greener elsewhere.

  • Comment number 73.

    "Club sources on Tuesday morning told me that money from the club would not be used to redeem the PIKs - even though the Glazers have the freedom to draw a dividend of £100m out of the club as part of their £526m bond which refinanced the club's majority of debts in January.

    This is expected to be clarified when United publish financial results for the first quarter of the financial year.

    There was speculation overnight on Monday that the Glazers may have sold some shares in the club to finance the move."

    These are quotes from David Bond's blog (above) and im pretty sure, id go as far as to say certain the the financial results he refers to (paragraph 2) are the ones outlined in the report:

    http://www.mufplc.com/pdf/Q1_2011_Report.pdf

    So as there is no mention of money taken out of united or united assets sold, or shares in united sold for that matter; does that mean that the glazers have paid the pik loans with money from elsewhere?

  • Comment number 74.

    Dave just checked out that blog, it was a piece about united annual financial results published back in october (i think, sometime around then anyway). it seem that the main concern raised in the blog was the amount of interest repayments on all debts (bonds and pik loans). the pik loans are potentially the most 'harmful' so the fact that the glazers are paying these off and not using any united money or assets to do so is a good thing, right?

  • Comment number 75.

    Cooking the books as a political gesture and nothing else.

  • Comment number 76.

    @75 seeing as you are obviously an impartial observer, il take your word as gospel mate!

  • Comment number 77.

    Frankly where else are the Glazers going to get the money from except from MUFC or refinancing the loans, outstanding interest, and any early payment penalties with new loans which, despite what others have said, will probably be at a higher rate of interest than the 16.25% corrently being paid. Either way this will hurt the club badly either by taking £200m plus out of the kitty asap or by loading higher loans at an even more punitive rate on the club, which will also allow the Glazers to take the earmarked money out of the club for other purposes at a future date.
    As a United fan I've been very pessimistic about the financial situation since the Glazers came in (due to a BBS degree from college), and frankly unless they post full details which say otherwise I can only see this latest move pushing United deeper into the mire of debt.

    Remember the American businesses owned by the Glazers are mostly in default of their own loans, with income way down on what they expected and outgoings staying at the same level. In fact some of their business are effectively bankrupt, so the only thing keeping the Glazers treading water is the financially successful MUFC.

  • Comment number 78.

    #74

    Sorry, my mistake - didn't realise the quarterly results were out already. Time flies and all that.

  • Comment number 79.

    I will be a VERY HAPPY man if this proves true in the fouth coming weeks! My only concern is where did they get the money from?!?! Surely if they had it already they would of just paid off the PIK's sooner!

  • Comment number 80.




    Research into the Glazier family has pulled up something interesting as to where some of the funds have come from to pay the 220 million in PIK loans.

    They quickly raised almost $100 million (£62 million) by selling off the exclusive La Bellucia mansion in Palm Beach for $24 million, Florida's biggest real estate transaction of the year, and disposing of its majority stake in the investment firm Zapata for another $74 million.

    They appear to be dumping their 'First Allied Corporation' that owns 6.7 million square feet of retail shopping space in 64 malls. Their personal family wealth has swelled to $2.6 billion. Though ownership of the Tampa Bay Buccaneers is not rosy as this venture and their retail portfolio is only yealding approx $9 million per annum.

    Reports in the US indicate/suggest that the PIK loans are being paid off directly from the familys own personal wealth.



  • Comment number 81.

    Thank God for FC United of Manchester...

  • Comment number 82.

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

  • Comment number 83.

    Have to laugh at all the naivety coming out of these comments.

    Put simply...

    How much of their own money have these Glazers put into the club...................Zero
    How much of their own money have these Glazers put into paying the PIK debt........?

    Only a fool would think your club won't end up paying for it.

    Best case scenario.......
    The amount you pay each year is reduced but you pay for many more years!!!

  • Comment number 84.

    To those arguing the Glazers are businessmen who don't want to lose money, well look at what happened at Liverpool, just because you want to make a profit doesn't mean you will. Also if it is looking likely that United could go down the route of administration I am sure the Glazers will have no qualms asset stripping to pay off remaining debts and leech some money from us.

    On top of this United have already lost nearly £500 million in interest payments alone, that kind of money is about what Man City have spent the last few years whilst we've been scraping every barrel going for a bargain buy.


  • Comment number 85.

    #68 j0hnb1972

    Thanks for the link to the quarterlies.

    #60 usedtobefast

    The Glazers bought the Tampa Bay Bucs in 1995 - they'd had 18 straight losing seasons prior to that. Since then they've had 6 losing seasons out of 14 - that's above average in terms of the NFL. In that time they've won a Superbowl, along with 4 Division titles and one Conference championship. They're in the second year of a rebuilding process similar to the one they started in 1996 - they dumped the expensive, non-producing players, appointed a young, dynamic head coach, and set out to build via the draft. So far this year they are 6-3, which is amazing for a team in the second year of rebuilding. They do have a low payroll - they're going to have to sign a lot of their young players to long term contracts soon, so they need a lot of room under the salary cap. What they are doing is pretty standard - it's just a case study in how to do it well.

    As far as the PIK is concerned, I can't see any reason for the Glazers to reveal their finances to anyone. You might argue that they should do it as a courtesy to assuage our fans' worries but, to be honest, considering the treatment they have been receiving from what amounts to little less than a lynch mob for the last couple of years, I don't see that they owe them any courtesy at all.

  • Comment number 86.

    #80

    They put around £270+ million of their own money into the initial purchase. Adding in the £220+ million to pay down the PIK puts their investment at around £500 million. It really doesn't matter where the money came from, it's their money and they've chosen to put it into United. (Bear in mind also that they own the club - any money in our bank accounts is theirs - they have chosen to leave that money in the club.)

  • Comment number 87.

    #84

    Asset stripping is an interesting concept. The value of the club as a (successful) going concern appears to be in excess of £1 billion. The original cost of their players was £246 million. I suppose they could sell Old Traford and Carrington to developers but, given the impossibility of getting the necessary development approvals, I don't see how that would work. Perhaps you have got a unique insight, but I can't see how any version of 'stripping' could create a value greater than United's (going concern) value as long as it is successful - which would lead me to believe that all the incentives would drive the Glazers to maintain United's success. (Success doesn't mean we win every trophy every year - two PL seconds and three titles in five years constitutes success by any reasonable measure - and that's without the two CL finals and sundry other bits of silverware.)

  • Comment number 88.

    ""In keeping with the Glazers' opaque financing practices we do not know the identity of the lenders.But more importantly we do not know where the Glazers have found the money to pay them off.""

    In other words............they got their new money from the ultimate loan sharks.........aka Govt Sachs

  • Comment number 89.

    @83

    "Only a fool would think your club won't end up paying for it"


    It's not "their club" though is it? It's the Glazers club. They own it and they can do what they like with it. Tesco customers have no say in how they run their business, and Man Utd fans have no say in how the Glazers run theirs.

  • Comment number 90.

    Read through a great deal of silly comments by fans and abu's alike but there are a few points which should be made clear.

    IF the Glazers borrowed money from elsewhere to pay this back then it would have to be stated at some point, as they have not done it already the fact it would look bad in the future would lead you to believe this is not borrowed money from a bank or investor.

    We know the money has not come from either United or Tampa Bay so really there is oonly 1 other rational place the majority could have come from and that is the glazers real estate assetts. Now no one can say how much they have or do not have as for some reason information on their other business's are unavailable. Really I think the most plausable thing is that they have sold off some american assetts to raise funds.

  • Comment number 91.

    What a load of optimistic tosh! The debt still stands at around £500 million and the source of the funds used for the pay-off is concealed: only the most naive fan would believe that the Glazers have the club's long-term interest at heart. They are up to something - get out your green and gold and pray that this is a precursor to a sale. But why would they sell a cash cow? All is speculation.

  • Comment number 92.

    Indeed, but how many teams would like to see worse football so their morals can be satisfied?

    ==

    What an awfully short sighted comment. Morals? Do you think Portsmouth fans are more concerned about the players that used to play for them, or the future of their club? I've had enough of all these "Want everything NOW!" football supporters we have these days in the sport - the biggest signings, the biggest trophies, manager after manager to do it.

    As for the possibility of this being Glazer wealth, I think in that case it is PR to get fans back through the turnstiles, what with games now failing to sell out. If they thought their drive to sell season tickets in the summer was hard, it will be even worse for them next summer.

  • Comment number 93.

    Kapnag, I know most of us think of Man Utd as much much more than a business, but in the end that's exactly what it is. Letting the "supporters pick up the tab" is a bit like saying that the customers of Tesco pay for Sir Terry Leahy's foreign holidays. Of course it's true. If you own a business then your customers pay and get something in return (i.e. supporters watch quality football) and the owners make a profit. Business owners are not charitable organisations and if the owners want a reasonable return on their investment then they are entitled to it.

    ===

    Are you for real??

    Pre 2005 - NO DEBT FOR SUPPORTERS TO PICK UP!

    Post 2005 - Ticket prices increase 50%.

    I hate this ridiculous argument put forward by people like you - "oh that's the price of success" as if there was no success before the glazers! Supporters pay to get through the turnstile to watch a game. They don't pay to maintain the Glazers balance sheets.

    And you said it all "their investment" - can you tell me how placing over £500m of debt onto the organisation you're taking over is "investing"??

  • Comment number 94.

    I don't think it makes much difference long term or how the Galzers got the money cause the bottom line is at any time they can take money out of the club to cover their own backsides, so if they've refinanced somewhere else but end up not being able to make payments or get hit with one off interest charges where will they then go to pay it off, the Man Utd kitty no doubt. It will be interesting to find out as well after the repayments wheather Fergie still has £100m in cash reserves to spend.

  • Comment number 95.

    92. At 09:20am on 17 Nov 2010, Kapnag wrote:
    Indeed, but how many teams would like to see worse football so their morals can be satisfied?

    ==

    What an awfully short sighted comment. Morals? Do you think Portsmouth fans are more concerned about the players that used to play for them, or the future of their club? I've had enough of all these "Want everything NOW!" football supporters we have these days in the sport - the biggest signings, the biggest trophies, manager after manager to do it.

    As for the possibility of this being Glazer wealth, I think in that case it is PR to get fans back through the turnstiles, what with games now failing to sell out. If they thought their drive to sell season tickets in the summer was hard, it will be even worse for them next summer.
    -----------------------------------------------------------------------

    What do you mean games not selling out? The only game at OT that hasnt sold out this season was the CC game against wolves. Even though attendance for that game was very low it was still the highest (although the newcastle vs arsenal game on the wed might have beaten it) attendance of the round. In all PL games there have been > 75K and i think the only other game that was quite a low attendance was the Bursaspor game (73K only!!!).

  • Comment number 96.

    You've been able to get tickets for any matchday - the only game this season that hasn't gone on general sale is the home match with Liverpool - unheard of 6 years ago

    Have you been on viagogo? They can't sell any tickets for The wigan game on the 20th yet, cos it hasn't even sold out at Old Trafford.

  • Comment number 97.

    Sounds like they are setting up a sale Mr Bond after they off load Rooney in January. Im aware another American would like to buy a big English club, this enabling the Premier League 39th game to happen. We saw wuith the Wembley gridiron game they could easily sell games abroad. The England team model is broken and so Man United and Liverpool could become our international teams...

  • Comment number 98.

    I guess that no one on here is going to change their point of view... but here goes anyway:

    The club holds ~720m in debt - paying less interest on that debt makes it cheaper to run the business each year. So if the Glazers have borrowed money to pay this debt, I have no issue as long as the interest rate is lower.

    One thing that hasn't been mentioned much is the way that the PIKs work. The club don't actually pay any interest on the PIK. The interest is added to the debt each year. So.. although the interest rate on any loan to pay the PIK may be lower, it will actually increase the annual debt payment, not reduce it. What is does do is prevent D-Day happening in 2017 when the PIK notes need to be paid. If the PIK were allowed to accrue until 2017, they would need to find >£600m to pay them off (16% interest).

    Man Utd does not generate enough cash at the moment to make much of a dent in the debt. Much the same as most people's relationship with their mortgage. So if you see the Glazers as being the owners of a house with a £700m mortgage then you get a picture of the reality.

    If you didn't have to pay a mortgage each month you would have a great deal more money to spend on other stuff. That is the position of the anti-glazer guys.

    In an ideal world, Man Utd would have zero debt, allowing it to generate huge profits. These profits may be re-invested or may go to pay a dividend to the owners (either a single private owner or shareholders). It may also result in the club deciding to reduce ticket prices in order to share the wealth around. It may also inspire a new breed of anti-united "fat-cat", "profiteering at the expense of the lower leagues" criticism. This is a more preferable situation for many as you can do something about it whereas with a debt you cannot do anything.

    The bottom line is that this deal is generally good for United as their business stands today. It would be better if it was not needed.

    I am a United fan and would prefer to see the club out of debt, but I do recognise that the club, in this modern world belongs to business people (like every other pro club in the land) and they bring certain baggage. There comes a point when that baggage becomes too heavy and will take a club down (Leeds, Portsmouth, Liverpool) - this deal lightens a heavy load on United, but United has strong foundations and can handle it at the moment. The risk remains real that any fundamental shift in either performance on the pitch or performance in the economy will create great instability. I hope that if that happens, the Glazers don't hang on like Hicks and Gillet, but allow someone else to save the great club.

  • Comment number 99.

    We Want Glazer Out, WE WANT GLAZER OUT!

  • Comment number 100.

    @98. At 11:37am on 17 Nov 2010, goalie_up_front

    That's probably the most intelligent post I've seen on the subject. Kudos for that! And seeing as you seem to have a good grasp of the financials, do you know how players (as assets?) are handled on the balance sheet?

 

Page 1 of 2

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.