Friday, 3 August 2012

An apology to Sir Alex and a restatement of the fundamental issues


Sir Alex Ferguson

Readers will no doubt have seen Sir Alex Ferguson's statement that he will not benefit financially from the IPO. As one of the people suggesting he was likely to participate in the $288m "2012 Equity Incentive Reward Plan" the club are putting in place, I'd like to apologise to Sir Alex for the suggestion that personal gain was a motivation in his support for the owners. I think it was a valid question to ask in the light of his comments about "real fans" last week, but I was wrong about my assertions. I have frequently stressed on this blog the miracles Sir Alex has achieved at United and was proud to promote the SAF25 fans' book last year. I'm extremely glad he is not caught up in the murky finances of our club.

The real issue

The key issue with the IPO is not however the share options that will be granted, but the continuing financial costs to the club of the Glazers' ownership. I thought it might be helpful to set out the costs and savings that stem from the financial structure that has been in place since 2005. There have been a few comments on this blog questioning the financial costs of ownership so I wanted to set them out again in full with full sources.

The costs divide into several categories. Firstly "cash costs" of £402m, money paid out of the club's coffers. The most important element of this is interest (£295m). Second are the limited repayments of debt since 2005, these comprise £37m of the original bank debt and £93m of repurchased bonds. Please note I have not included the repayment of the PIKs as the club did not pay for this. Adding these together we get costs of £531m, around two thirds of United's total wage bill over the last seven years to put the figure in context.

For information I have also set out various costs paid by the taking on of additional debt rather than paid out of cash flow. I have not added this £79m to the £531m as there would be an element of double counting (I include repayments in the cash costs so can't include debt additions too).

There are two key savings from the financial structure totalling £180m, firstly the dividends which the plc used to pay and secondly corporation tax saved because interest payments are tax deductible.

I have assumed dividends would have increased 8% per year from 2006-2012. This compares to 7.6% per year growth in the seven years up to the takeover and is faster than the 7% growth in EBITDA seen since the last full year of the plc (2003/4).

Corporation tax is as set out in the Manchester United Limited accounts (but not paid because of deductible interest higher up the corporate structure).

The net cost: £531m - £180m = £351m is a vast number. It is the gross transfer spend of the club in the ten years from 2001/2 to 2010/11. It could alternatively have funded a 60% ticket price cut in every year since the takeover. It could have been used to build out Old Trafford to be a 100,000 seat stadium. It was used for none of these things. It is the cost in cold hard cash of the Glazers' ownership.

Crucially, this figure ignores the fact that even after all this waste of money, the club still has £437m of debt on the balance sheet and that this will still be around £360m after the IPO.





The IPO

The IPO is a huge wasted opportunity to stop this enormous outflow of money from Manchester United. The SEC F-1 prospectus confirms that the IPO will only reduce the club's debt by around £78m, saving (after tax) only around £5m per year. Longer term, the IPO will cost the club more each year in higher US taxes (the corporate tax rate is 35% vs. 24% in the UK).

The real beneficiaries of the IPO will be the Glazer family who will receive around $150m from their sale of 8,333,333 shares and the unnamed senior executives (but not Sir Alex) who will be entitled to 16,000,000 shares under the "2012 Equity Incentive Reward Plan". All these people will make money and the club will be left with the vast bulk of its debts.

The IPO gives no opportunity for supporters to take a meaningful stake in their club. The shares on offer represent 10% of the club but with under 2% of the votes.

It has been mentioned by some people that the club is constrained by the bond terms as to the amount of debt it can repay. It is true that until 2013, the club can only repay 35% of the bonds. That figure is £182m compared to the £78m the IPO will repay. It is in any event only five months until this restriction falls away. If this IPO was about paying down debt, the vast majority of the $300m (£193m) proceeds could be applied to debt repayment today, with the balance being applied in January.

Agendas

People have queried my "agenda". My agenda remains the same. I want Manchester United run for the glory of Manchester United, not to make money for owners who do not care about it. I want the money United makes to be ploughed back into the club, invested in players, stadium and cheaper tickets, not wasted on financing costs. I want debts taken on only to expand the facilities of the club. This is not a pipe dream. It is how almost every European football club is managed, for the glory of the club. It is how the other financial titans; Barca, Real and Bayern are run.

As part of the IPO roadshow, the senior management team at United (Woodward, Arnold and Bolingbroke)  have done a video presentation. For the next few days you can view it here: 


In the video presentation they confirm that the club's transfer budget in the future will usually be a net £20-25m, the average spend over the last fifteen years. That is a choice being made by the Glazers, more concerned with maximising profits. A debt free United run like a normal football club could afford to compete with biggest clubs in Europe, we aren't even trying.

LUHG


60 comments:

Anonymous said...

Well done Anders for being the bigger man and apologising. I suspect if the roles were reversed you'd be waiting a long time for one.

Apologies for the repost, but I posted on the other thread, just as this one was published.


Why would any normal fan argue that the millions leaching out of the club on a daily basis is in any way a good model for ownership.

Don't forget this "model" has only been sustained by
1. Massive increase in ticket prices (despite firm and "sincere" denials at the time of takeover).
2. Massive cost cutting in staff, reduction in local staff, moving commercial arm to London, paying as many people as possible minimum wage.
3. Reduction in quality of on and off field product, speaking to a lot of exec ticket holders, the club is starting to take the mic with what is provided as part of the package
4. Reduction in transfer spend, impacting on the quality of the on field product. Despite media and Internet hype, this squad plays the least attractive football since '89.
5. Increase in media revenue - which the Glazers have in no way been responsible.
6. Probably most importantly - loss of transparency and accountability to the fans. A lot of people on here saying "we have no idea what's going on in the club, so we can't judge". This is a direct result of the Glazer ownership, and Ferguson's endorsement of them. To those who feel there's insufficient evidence to judge, I would say - if it moos, eats grass, gives milk and lives in a field - its probably a cow.

I applaud Anders call for unity, but a line needs to drawn in the sand and people decide which side they're on. The days of sitting in the ground wearing green and gold whilst lining the Glazers pockets are over. Btw Fergie's words would carry a grain more credibility had he actually said them, rather than released as a press statement.

The Pigeon said...

Fantastic work once again, Andy. What do you make of the comments by Duncan Drasdo that the IPO could be a first step towards the Glazers selling MUFC?

Anonymous said...

Fair play Anders.

I for one appreciate your great work and find it quite ridiculous that you have to explain yourself. It all seems fairly black and white to me.

Cheers and keep it up!
LUHG

D Curtis

Red Devil said...

Some fantastic Number Crunching mate..

This will hopefully bring it out in clear numerical terms the excessive costs that the Glazer regime have brought to the erstwhile debt free club.
I have been wanting to do it for a long time so as to finally shut up some of the Glazer defenders who keep on about the dividends that would have been paid and taxes and so on. This analysis finally puts a rest to that. Excellent work on that front..plus the fact that it is in post tax terms makes it even better.

They forget the point that the dividends were an optional thing that could have been suspended/reduced in some years if we had a huge need to invest in players or suffered some calamities on the pitch...the current interest costs cannot be deferred in times of need.

And this number is only going to go up in the future as the cost of buying out the additional debt at a premium as well as interest payments are only going to increase.

Anonymous said...

Finally a bit more realistic numbers, but I think that you should have included commercial increase but make two tables, one like this one, and one where you will reduce it with the amount of commercial revenue they have brought to the club, just two see how much more would we have WITHOUT them, but with PLC (the second table), and the first one would shou how much they could we have if there was no debt. Also, I think that you have missed the PLC costs.

The problem is that it has to go together, because there is no other club that is increasing they revenue in such numbers, like United (Real, Barcelona and Bayern have a huge advantage and that's why than can increase it more, and also it depends a lot from pount to euro ratio, as you know).

The best thing for us would be someone with Glazers ability to generate cash, but someone who didn't put the club in debt.

The reason I am writing this is because I have read another comparison and it says that the maximum the Glazers have costs us is 147 milion pounds (maximum, but it's probably less, but these numbers have included the commercial revenue increase, costs of the PLC....) - end no, it wasn't GCHQ (he also knows a lot as he has proved it, but he also goes radically to the other side, not explaning everything correctly).

Now, I am not saying that this 147 mil number is correct, but I don't think that the 351mil number is totally correct.

One thing I will agree is that thay have cost us money for now and even if it's 147 mil it's a huge number, but I can't tell what the future will bring.

Red Devil said...

@Anonymous above

True...fair point. They have accelerated the increase in commercial income, no doubts about that.

However, that fact that United did have a very decent commercial income before the Glazers took over which was growing on its own by the way should also be taken into account.

Besdies the amount they have ALREADY cost us is 351m as per the analyis. It doesn't include the interest costs/derivatives losses and the Principal value of debt repayments still there on the clubs books to the extent of 423 m at the moment.

andersred said...

Hi Anonymous at 11.22

I'm sorry but it just isn't possible to include commercial gains in the way you suggest.

The costs and benefits of a financial structure are facts. If you have debt it incurs costs and creates savings which can be measured. That's what I have included in my post.

There is no evidence that the commercial gains made since 2005 could not have been made under other owners. United's commercial income is very much in line with other major clubs. Many of the main personnel were in place pre 2005. Any decent management team should be able to generate £100m of commercial income from United.

Management is not in any case just about income, it is about income and costs. Eight years ago in 2003/4 the plc managed to generate EBITDA of £58m. In 2012, the figure was c. £91m. That's growth of 6.7% per annum BEFORE any financial costs. Hardly genius.

anders

s7_MUFC said...

@ Andy
I don't think you should use tax savings due to interest as saving because those taxes could have been saved if we spent more money on Transfers(ie. higher Player Amortization) and Wages instead of paying interest.I would also like to know your opinion on use of class A and B shares, If they are intending to sell just 10% of shares than there is no point in reducing voting powers because other shareholders would still be in minority(ie. Usmanov @ Arsenal) and wouldn't have power to influence how club is managed.Does this mean they are planning to sell significant portion of their stakes in future?

andersred said...

@Red Devil,

Exactly right. This is cost SO FAR. Still £350m of debt (post IPO) to service and repay.

@s7_MUFC

You're right, if this was it, they could sell shares with equal votes to their's. Suggests more cashing in to come. I reiterate, debt reduction is a figleaf. All about Glazers getting rich.

anders

Anonymous said...

Andy, wasn't the smartest move by you to flirt with a defamation suit risk by making that comment that on TV without making clear it was a statement of opinion rather than fact, and intending to raise a question.

As to your intentions, its never going to happen. The club has moved on from being community football once the BSkyB money came in. A clubs income stream was no longer wholly dependent on fan income - the club could be more commercialized and the TV and commercial income streams became more important. Once this became the business reality, the club's income was not primarily the fan's money anymore. The fans income traditionally supported the players wages and operating costs. But since the advent of commercial and TV income bringing in marquee players and wages, the matchday income is now dwarfed by the players wages alone. Adopting that view, the Glazers are not ripping off the fans, they are taking the club's media and commercial income. As for ticket prices, you are well positioned to understand that it ticket prices are determined by the market. The means to increase revenue by increasing ticket prices is limited. You know the waiting list can be viewed as untapped price demand. You may not agree, but the waiting list was evidence that the matchgoing fans ticket prices were subsidized. No business has the obligation to subsidize ticket prices UNLESS the fans own the club, the reality of which is they don't and the club IS NOT a community asset.

Like I said before, your aims are noble, but like "World Peace" equally unlikely. My opinions on your unashamed bias in presentation of facts saddens me as colleague in the finance profession. I can understand MUST being like that, they are a bunch of emotional dreamers where reality and competent financial knowledge don't come into it whose unashamed BS just part of their Machiavellian doctrine. They just want cheap tickets and bragging rights that they have supported the club all their life. I guess they didn't count on people with competent financial knowledge who are true fans as much as you offering an unbiased view.

Time will vindicate right or wrong positions. I too wait to see what the Glazers will do with the profits once the debt is gone in a few years. My guess is develop a Manchester United F1 business. But let's see.

In the meantime, hope we do sign RvP and sweep the board next season!!! Rob.

Rob said...

Hi Andy, I would also be interested in seeing how the turnover has increased in their management. Perhaps with a comparison against Arsenal?

I agree that the Glazers are not what we want as fans, but a balanced view would include their contribution in building the brand.

Rob

Anonymous said...

@ Anders..Another brilliant article... Thank you for keeping us up-to-date during these dark days in our clubs history. @ Red Devil...Congratulations from a NZ Red who has been supporting United since the 70s and 80s ,( the time when Doubles and Trebles for United fans were of the alcoholic sort , the title was a dream , and the FA cup was the only comfort) for your "battles" with Wakey at RoM .Good to see a few others over there question the Glazer ownership in light of the latest IPO details. Chris NZ

Anonymous said...

Keep up the good work Andy! They do take notice as we see now

Anonymous said...

Go to Redcafe and debate it with them, Andy.

Anonymous said...

Anders, great post and undersatnd many respect your position entirely. you put your opinions into the public domain and correct where you deem necessary, which is a whole lot more than the Glazers do.

Moving on, how can the club offer a share-bonus scheme that is almost as valuable as the IPO itself?

There's nobody at United who could justify being paid even a fraction of £200 million plus. Especially if SAF isn't going to benefit.

The obvious conclusion is that cash is going to end up with 'The Family' in some form.

Who do you think is going to benefit from this astonishing largesse?

Cheers OnlyaRed

Loyal Red said...

Couple of points -
You cant deny that the stadium hasnt been invested in. Facilities are improved year on year. you only have to see the exec box upgrades that occured over the last couple of seasons.
Further to that, the investment taking place at Carrington will make it a stand out facility in World Football.

No matter who the owners are, or who any future owners may be. Ticket prices will not change.
Ticket prices are not the blame of The Glazers, they are the blame of football in general. Even non-league clubs, such as FC Utd are over charging. Take a look at prices in the Premier League and Uniteds are comparable, if not better than most. Some Blue square Premier clubs season tickets are more expensive than the cheapest ones at Old Trafford.

The Barcelon model you mention has generated massive debts and bailouts. The Camp Neu is amongst one of the most out of date and decaying stadiums in Europe. A stadium that relies on the tourist trade to sell out and is often half full for lesser games or domestic cup games. The Barcelona fans themselves complain about the poor atmopshere.

John Swift - 26 Year Season Ticket Holder said...

I want Manchester United run for the glory of Manchester United, not to make money for owners who do not care about it. I want the money United makes to be ploughed back into the club, invested in players, stadium and cheaper tickets, not wasted on financing costs. I want debts taken on only to expand the facilities of the club. This is not a pipe dream.

HERE HERE - We can all debate the exact figures but this is surely what all true United Fans want.

Anonymous said...

@Anders - about commercial income -

I do agree that a club of this size should have big commercial revenue, but the PLC didn't improve it in the last five years, and don't forget, even you said that you were surprised how much more commercial revenue thay have made last year, so it's not that easy to do it.

Maybe another owner would have, but the PLC didn't, and we don't have an example of someone else owning United (not recently).

I have seen the IPO presentation and they have really good ideas. If they really increase the commercial revenue to ca. 250mil in 3 years as they plan to do, that would be huge. Also, on the beginning they said that all of they plan depend on success on the pitch, witch is good for us.

Again, I do agree that they have cost us money, but it doesn't mean that the team is much weaker because of that. We spend huge sums on wages and they have increased the revenue, so without them we even could have a weaker team. The cost for the fans are another think, but I will come to that.

Tax saving via purchasing players. Do you really think that SAF would have spent so much? I do not to be honest. He wanted to spend 30mil on Benzema, on the end they wanted more, United withdraw and didn't spend the money at all. Also, that would mean a lot of player sales, witch could mean even more profits and more tax in some years (amortization vs. full price received for a player).

Now, that money could have been used to lower ticket prices, but that would definitely mean less revenue, so less money for player wages. Would fans be happy with that?

It's not that simple, as people think it is.

And again, for now I do agree that they have costs us money and a lot of money, but I have high hopes that in few years they will making us money (also themselves, but also us), the only bad thing is that they will never say that they are making enough, so that they could lower ticket prices. They will never be good for fans in that way, but could be good for the success of the club (again, my hopes).

Anonymous said...

To all those who claim the team hasn't been neglected look at the squad for 2005/6 per glazer economics.

Van der Sar - peak of career, astute purchase
Patrice Evra - established French international
Heinze - Argentinian international
Ferdinand - world record defender fee - peak of career
Ronaldo - say no more
Rooney - £26m
Saha - backup striker bought for 12.8m
Ruud - possibly the most prolific striker in the world at that time
Js park off the back of a hot WC
Vidic - say no more
Scholes 31 at that time
Pique - double champ league winner


Who've we got left that meets that calibre?
Scholes
Rooney
Vidic
Giggs
Ferdinand
Evra - all there pre glazers

Rvn
Pique
Ronaldo
Heinze- all sold at a profit

Park now gone ?profit
Vds and Saha left at a loss


What are we left with?
Carrick 31 years old
Da silva bought on the cheap
Smalling and Evans - not yet proven
Anderson - say no more
Hernandez, nani, young and Valencia - all internationals but unproven at the highest level.

In fact when you take out carrick. Nani and Anderson, who were bought 6 years ago. You're not left with a lot.

Anonymous said...

@ Loyal Red. Indeed ticket prices are rising across the board and would have done so under a PLC. But they would have done so at a slower rater and in smaller increments to a point where they would probably be slightly lower than current prices, and crucially may have retained many fans for longer.

As for the 'finance expert' above, you may well long for a more unbiased portrayal of the figures but some facts remain. The debt is what it is, the net spend likewise (and I note from the IPO roadshow they have included figures from long before the takeover to increase that and hide the large decrease in this at Glazers hands)and the costs in interest, fees, penalties, currency fluctuation losses are all huge numbers. The fact they have increased revenue (probably) beyond what the PLC would have acheived doesn't quite undo the damage for me.

Keep up the good work Andy and well done on the apology. Now maybe if SAF would show a little empathy toward fan concerns over debt (not just 'real fans'), we can move on from this.

Dean

Alexx@ intell said...

http://savepic.net/3200753.htm

An alternative view on Glazers cost.

Anonymous said...

Actually the IPO amount is pretty much the most that can be paid off as per the bond prospectus:

"In addition, at any time prior to 2013, up to 35% of the aggregate principal amount of each of the Sterling Notes and the Dollar Notes may be redeemed with the net proceeds of certain equity offerings at % of the principal amount of the Sterling Notes and %
of the principal amount of the Dollar Notes, in each case, plus accrued interest, if at least 65% of the principal amount of each of the Sterling Notes and the Dollar Notes remains outstanding."

65% has to remain, £92m has already been paid off as per your own figures, therefore the max that could be paid off is £83m, which is effectively the amount of the IPO. (The Glazer's shares being sold are seperate to the IPO, existing shares can't be sold in an INITIAL Public Offering).

Anonymous said...

Just remind me who took out the bonds............?

andersred said...

Sorry Anonymous @ 15.02 you are wrong.

The £92m I quote haven't been technically repaid, the company bought them in the market and is holding them "in treasury". They therefore are still "outstanding" in the sense of that clause.

The total bonds outstanding remains around £520m face value (varies day to day due to £/$ movements). They could therefore repay 35% x £520m = £182m prior to Jan 2013 and the balance from Jan 2013.

16,666,667 shares are being sold in the IPO half of which are new and half existing shares sold for the benefit of the family. You are wrong about that too and if you don't believe me, here is a link to the prospectus:

https://dl.dropbox.com/u/6622840/prosp.pdf

Look at the front page!

anders

Anonymous said...

Andersred,
Good post.
I don't agree with some of your numbers but I think they are in the right ballpark.
I do believe that the Glazers brought some American "Can do" with them, particularly on the commercial side. And the significant leveraging added a bit of "Must do".
I agree with your assertion that the PLC would have increased the commercial portfolio too; they needed to, as the wage bill (both the absolute size and the escalation rate) needed to be serviced. Poor commercial performance would have culminated in stagnant and even declining profits. A foreseeable decline that management and shareholders would have worked to avoid.
The Glazerites are happy of course to make sweeping bold statements about how poorly the plc would have performed without thinking through how management would have reacted.
In any event, for an independent metric on how the club might have performed without the Glazers, you only need to look at the commercial performance of the top 4 commercial earners (apart from Manchester United). According to the FML report, the average increase between 2005 and 2011 for those clubs runs about 50m pa. Add this average to the Club's 2005 level and you get to 96m (which is only 6-7m shy of the Club's actual for 2011. Of course, the cash impact is smaller again as no tax or dividends would be paid on unearned monies.
The big opportunity lost because of the enormous outflow on interest, debt repayments,etc is the stadium expansion. An expanded stadium would of course generate more revenue thus offsetting the extra commercial revenue.

The 147m glazer cost estimate appearing on Redcafe is complete rubbish and the method of the fool who suggested was completely debunked by another poster. There is obviously an agenda to decost the Glazer model and quite apart from the obvious ploy of ignoring actual Glazer costs the other is to snipe at a plc performance that actually never came to pass. Obvious stuff really.

This LBO fiasco isn't so much a debate about debt management as is it is a debate about what clubs are actually supposed to do. Do we dole out huge amounts of cash on useless debt (rendering it manageable in the process) just to enrich profiteers or do we enrich spectacle on the field. There is a fundmental conflict between those who believe profitability is the goal and those who believe that profitability is secondary to the spectacle. Fans are natively mutual. Profiteers like the Glazers are anyting but. Buying a "Messi" would certainly enrich the spectacle but what would he do for the profit margin? Given that the costs of such players are being determined by clubs for whom profit is secondary, a cold calculation would probably show that buying such players isn't as postitive to the profit line as buying some unknown "with great potential" from a geography that the commercial team believes is hot.

We can actually afford Superstar players. Profitability as opposed to debt is dictating our transfer policy.




Brian

andersred said...

Hi Brian,

I agree and have made the point before that it is the self inflicted constraint of seeking a certain level of profits that constrains the club as much as lack of cash (although cash is held back too - look at the decline in cash balance due to bond buybacks).

anders

ron said...

And what happens if the IPO fails to sell?

Anonymous said...

@ Anders 15:35

If they bought them back "in the market", then they would have been paying the market price for the bonds, not the widely reported 108.75 set price surely? If they're paying the price from that clause then surely they're no longer outstanding? I fail to understand how you can differentiate between the two. I assume they're in Treasury and we're 'earning' the coupon hence they're still "outstanding"?

If that's the case then the market price over the history of the buybacks is less than the fixed premium price, therefore they've bought back more of the bonds notionally than you are currently accounting for?

Anonymous said...

Good point about the bonds, Anders.
Indeed, both the first and second drafts of the prospectus specified that all the proceeds would be used to reduce indebtedness. The second draft also mentioned that the repurchased bond would be retired following the offering.

So the revised prospectus with only half the proceeds going to the club is not due to restrictions caused by the equity offering clause in the bond document. The redemption terms are identical for a public offering pre jan 2013 and optional redemption terms immediately thereafter.
I suspect that they intended to redeem some of the bonds via the equity offering clause and redeem the remainder (same terms) from Jan 2013. Holding cash for a short while isn't a big deal- indeed, the club since 2009 has held large amounts of cash on the balance sheet. It's not new.
They changed their mind about how the IPO money was to be used. The bond clause is irrelevant. They probably received some indication
that demand for the shares wouldn't be badly impacted by a split.

Anonymous said...

Off topic but somebody mentioned FC United over-charging? At £ 90.00 (if that is all you can offord) for 21 games? I think not.

Dave

Anonymous said...

Andy,

Seems a silly question, but would appreciate a yes or no answer.

Is "Net Transfer Spend" players bought minus players sold.

Thanks.

andersred said...

Anonymous @ 16.02

They have been bought in the open market and not yet retired (they intend to retire them after the IPO according to the F-1)

Here's an extract from p4 of the 2011/12 Q3 results (available here: http://www.mufplc.com/pdf/Q3%202012%20Report.pdf)


"As previously disclosed in the senior secured note offering memorandum and quarterly financial
statements, we may from time to time purchase or sell our securities.

As of 31 March 2012 we own £92.3 million of our senior secured
notes.

These purchases were made pursuant to the board’s emphasis on prudent treasury management and
improving the yield from its cash and cash equivalent balances. The purchased senior secured notes are
being held by the Company and have not been retired. The senior secured notes may be sold back to
the market in the future depending on the capital and operating requirements of the business."

Hope that clarifies it.

anders

Anonymous said...

The big question is why are they ipoing at all?
If the debt is manageable and not restricting growth then why exchange it for equity? From the point of view of pre-existing shareholders (the Glazers), equity in a growth company is more expensive than manageable debt however useless it is.
I can only come up with the following reasons:

They needed the money- you previously mentioned the possibility of a pik2

or

Future prospects aren't as hot as they would like investors to believe. Or at least not as hot as a 6 times revenue valuation would warrant.

or

Not all the Glazers are singing from the same hymn sheet- the IPO provides the mechanism whereby each can go their own way but overall control would remain within the family.

One final queation, anders. Is there any danger that the new investors could get shafted down the road if the Glazers decided to delist?

Darren said...

For eight consecutive years immediately pre-Glazer United generated the highest revenues of any football club on the plant. Yet this weird pro-Glazer cult would have us believe that we were financial pygmies before the Glazers came along. It's astonishing.

They have no real argument to counter the cold stark figures, so resort to inventing a fantasy world where the PLC would have suddenly stopped doing what they'd done so brilliantly for fourteen years.

EBITDA of £583m during the Glazer regime has been almost entirely wiped out by Glazer costs of £531m. Disgusting, absolutely disgusting. Yet still some so-called United fans will make excuses for these parasites. I just don't get it.

Anonymous said...

And by the way, because Anders is too balanced to say it. This doesn't include the PIK debt, which we all know is there somewhere, just off the books.

Anonymous said...

Someone at the top congratulating you for apologising! You couldn't make it up!!

HGow about not going all over the media spreading your bullshit, spite and bitterness next time, then you want have to admit what a twat you've made of yourself ;-}

andersred said...

Anonymous @ 11.55

How about putting your name on your comments when you throw insults around? Sad.

anders

David said...

anders, I never read anything in these 'anonymous' postings bunch of cowards without the guts to put a name to a post. You are doung a super job, nildesperandum mate !

Anonymous said...

That's not an insult lad. I said you could easily have avoided making a twat of yourself simply by not jumping up and down in the national media spreading the spiteful and bitter anti-Fergie party line.

The facts of the matter are that you presented as fact something that was never written clearly enough for someone of your intelligence to have been interpreted it with such certainty.

I may be wrong, but I'd say you were giving the gallery what they wanted - if I was being kind. The alternative is that you have lost your focus.

Kind Regards, Rich.

Anonymous said...

@Anders - if the IPO is successful and they redeem 75mil worth of bonds, that would mean that the interest would be 28,5mil a year.

Does it not mean that if they don't take dividends, and with the tax saving, it would mean less cash flowing out of the club, than it would be without the debt, but with dividends and tax, so more money stays in the club (the EBIDTA should rise with all these new deals, at least from next year)?

I am only talking about interest, not the money we will have to spend to buy back bonds (I know that this loan is not cheap).

Anonymous said...

Hi Rich 14:04,

Strictly speaking you actually said "your bullshit, spite and bitterness next time, then you want (sic) have to admit what a twat you've made of yourself ;-}". I assume you meant won't not want.

You clearly attributed the bullshit, spite and bitterness to anders, if you weren't trying to insult him, what were you trying to do? A clear unemotional statement of fact would have been more effective. If you've got any.

Personally I think a legitimate question was asked. Was Fergie, the highest paid employee at the club, employed by the club for 25 years and cornerstone to the club's commercial and football success going to benefit from the 2012 Equity Incentive Reward Plan.

If he doesn't benefit, who is eligible. As someone who's remit is to scrutinise the club, it would have been negligent not to ask the question. Or perhaps you think Fergie is a saint, Santa Claus is real, Qatar really is the best place for the WC and Hitler is living on the moon in a bus.

Best wishes. Al

Anonymous said...

I think it was always obvious that the "Equity Incentive Reward Plan" was all about rewarding people on the club's board whose names end in Glazer. "Attract and retain the best talent" my arse! It doesn't take hundreds of millions to attract good football club administrators. It's just a way for the Glazers to print money for themselves by issuing shares.

I'm torn between wanting the IPO to fail to teach these scam-merchants a lesson and wanting it to succeed in some form because it's clearly the first step towards the Glazers selling more of the club and anything that allows them to shore up their own finances means they have less need to take money from United.

Chris

Anonymous said...

The real issue is that you directly accused SAF on Sky of dishonesty. No amount of backtracking will get you out of that. I hope that the club sues you. It was a cowardly attack.

You acted like a cunt Andy, you put self exposure ahead of dealing with factual matters. It will come back to haunt you at the match. I for one will be happy to give you my opinion face to face.

Well done - you have driven every match going manc I know away from the real issue.

Mark - E239.

ja said...

Wow, such vitriol and nasty language. Anders raised a valid point not an accusation and if you Rich and Mark cannot see that you are either totally stupid or part of the 'divide and conquer' approach of the Glazers. You - Rich and Mark - are creating the distraction. perhaps diversionary tactics away from the Glazer IPO heist. If the IPO gets away, why would this be a first step in a Glazer sale. That would only happen when they can no longer use the club as a personal ATM. Under the Glazers, the debt will never go, as it goes down, they will keep topping up the loans as a kind of remortaging. For them it is the perfect scenario. As the old saying goes 'the art of taxation consists in so plucking the goose as to get the most feathers with the least hissing'. There is clearly a concerted campaign to discredit MUST and people like Anders, perhaps in order to stiffle the hissing in a divide and conquer way.

Tacconi said...

Hi Andersred

I was wondering, when calculating what the glazer have cost United.
What about the huge increase in sponsorships we have seen, is that only Gills work or has the glazer been instrumental in bringing in some of that cash, i mean a lot of the cash comes from american companies so could it have been done without them?

Best regards

Ken Larsen

Anonymous said...

Dear Mark,
I must be different to you, but I don't know many "cunts" who would spend most of their spare time researching, analysing and explaining the intricate financial processes of a football club, because they believe an injustice has occured resultIng in the disenfranchisement of thousands and the exploitation of millions. For free. "Cunts" who believe in scrutiny, transparency, shared ownership and collective responsibility appear to be thin on the ground as well.

However, I do know plenty of "cunts" who are out for themselves, don't care who they have to screw to get there, who are only interested in lining their own pockets. Mark, if you are a real person sitting in the seat you claim to, and somehow I doubt it, you should be ashamed of yourself. As Ja has said, what is wrong with asking a fair question, is anyone above scrutiny? At what point of the Glazer's pillage of our club are you prepared to do what Anders has done? When your ticket is £2000?, 10000?, never?

Anonymous said...

why to apologise to that fucking old cunt fergusson?? he's the one who engineered this glazers takeover, because of his petty conflict for a pathetic horse. fergie must be held accountable together with glazers for this scam. and to mark and to all these morons who say - "fergie is always right" - you haven't got a fucking clue!

Anonymous said...

I think Andy made a mistake in mentioning The equity plan. If there was any complicity on Fergies's part, then rewarding him through an equity plan would be too obvious. While we wont know how individuals benefit, we will know how much of the plan is vested and the total worth of the benefits vested.

However the question posed, though politically costly, is a proper one. The nonsense splattered on here by those righteously indignant on Fergie's behalf is merely part of a campaign to discredit anyone objecting to the Glazer ownership.

I agree with the sentiments of Ja et al.

The Glazers are profiteers. About 70% of the club's cash profits (Ebitda) have been consumed by LBO financing costs. And those aren't the only costs.
The debt is manageable but it is still useless debt. The Glazers could have removed more of the useless debt in the IPO but they didn't. Why? Well, it's manageable- the club can pay for it with further optional redemptions going further. More waste for the club.
Some folks belive that the reduction in debt and debt interest will translate into more money available for investment in the club, in players and infrastructure. Nope. A valuation of 22 plus EBITDA tells of a plan to maintain expenditure as is (even see player wages decrease as a proportion of turnover).
And, of course, if those folks belive that aren't they just implicitly confirming that so far the debt has been a hindrance.


I suspect further optional redemptions of the bond going forward, eventually to be replaced by high dividends.

Anonymous said...

Thanks for the helpful sics and corrections.

Anyone pretending that Green attacking Ferguson in the national media was not part of the hateful and bitter anti-fergie backlash at his dismissal of them last week (and previously) is a fool. Anyone who knows that that was precisely what it was but thinks it's a credible position to suggest otherwise is an idiot.

I have no real idea why Green thinks it is helpful to give the media this stuff? No-one in their right mind actually thought the IPO blurb was stating that Ferguson was about to receive a windfall from the share issue.

It's difficult to imagine that Green was amongst them, either.


Regards, Rich.

Anonymous said...

Thanks Rich,

I'm quite happy here with the fools and idiots. Perhaps you could enlighten everyone, explaining precisely why it was impossible for Ferguson to benefit under the terms of the IPO. Or are we supposed to take it on faith? Fergie hasn't found it difficult taking his salary or bonuses off the Glazers, why not shares?

Anonymous said...

No offence, but I don't want to play.

I think the line his critics were spinning in the media was insulting - just as it was intended to be.

Ultimately it was nothing more than spin though.

Your wording is interesting by the way. Last week you'd have been talking out of your arse about Ferguson getting £10m or something and using that bullshit to twist the ears of the sheep who follow your side of the argument* as to how the manager could possibly be happy to work for the hedge funds (and the Glazers). Now you're revising that to "benefit under the terms of the IPO". No doubt the next spiteful and bitter attacks are a work in progress.

Love Rich.


*and no, that doesn't mean there are only two opposite sides of the argument either, just to save you the trouble of the inevitable short-cut-to-thinking reposte.

Anonymous said...

Hi Rich,

At the risk of repetition,
What question was asked by Anders that was unworthy of response?
Under what circumstances would it be appropriate to answer questions regarding SAFs interests (or not) in the IPO?
SAFs thrown his weight behind the Glazers, is "why?" such an unreasonable question?
What about the history of SAF at the club (coolmore, panorama, Bebe, Kleberson, the 2001 contract negotiations) makes him immune from scrutiny?
You state there is a bitter backlash against Fergie, what do you believe motivates this, if not genuine concern?
You describe "Anders' followers" as idiots and fools. What evidence do you have to present to refute his claims?
Is Ferguson a key employee? If so is it unreasonable to wonder if he might benefit from the IPO, given the scant information we've had from the club.

Some answers to these reasonable questions would be appreciated more than your offensive pigeon-holing of people on this forum.

Kind regards
Flossy (the sheep)

Anonymous said...

We're still waiting for a reply Rich.....................
Baa

Patrick Barclay said...

I'm sorry you felt you had to apologise, Anders, because you are every much on the right lines. If it had not been for Ferguson and his ill-fated championing of Magnier and McManus, the Glazers would never have been able to seize power at United, let alone abuse it, as many fans believe they have. So no wonder he supports them and frequently calls them wonderful owners.

David said...

Patrick Barclay, you are so right, history will show that Fergie ultimately tipped the balance that enabled the Glazers to buy the club. As I have pointed out on here before, Professor Roland Smith when he was Chairman of the 'old' PLC warned Fergie not to get involved in the Rock of Gibraltar affair. Did he listen, no, his ego was too big and HE PUT HIMSELF BEFORE THE CLUB- FACT. Football Manager- supreme, after that he slides down one hell of a lot

Anonymous said...

Anders,

Firstly without you and the MUST and red issue lads asking questions and highlighting concerns the pr lead media spin would have us believe that the Glazers are good for the club.
Your work on here has given me a great insight and education into the ways of football business. The way that acountancy rules, Exchange rules and the financial world can be twisted and pulled to make something look right that really isnt right.
Don't give up the great work you do, don't surpress your concerns just because someone in a suit at MUFC got Sir Alex to fire of a statement about being hurt by the questions and concerns of supporters.
Finally if Sir Alex is not in for a windfall, he must be a bit miffed that as such a massive figure within the club that suits who contribute nothing to the selection and running of the first 11 are going to make serious money, possibly more than he himself earns.

LUHG
Don't give up.

Anonymous said...

The thing about this underwriting of IPO's is that banks palm off the underwritten shares onto their own clients, rather than go onto sell them on the market if the issue fails. That way they can say how successful the offer was. What appalls me is that where the managed funds are held on a discretionary mandate, the funds have no say on what the manager purchases. The underwriting banks spread their share of the underitten share issue widely so a fraction of each investor fund is stuck with these shares and so is not materially affected. All in the name of picking up an underwriting fee for the bank and perhaps a free holiday in Florida as a back handed thank you to the banks promoting an IPO.
What concerns me even more is the zealotry that has been applied to overstate the value of MUFC to an irrational level given its pricing and the multiple applied. Could these same banks be linked to the separate alleged new PIK lending that was made to the Glazers a couple of years ago and therefore need to get this share issue away come what may?. Pity that this question has not been asked of the banks during the investor road-shows. Anyway the float today- if it fails - might mead to Facebook style questions when this sort of info might be gleaned.

Anonymous said...

MUST complain about the debt, but then hamper any attempts to reduce it! "Brilliant"!

They don't have the financial power to reduce debt.

They don't know anyone who can reduce the debt.

They stop all attempts by Glazers to reduce debt.

They have no real Idea what next, after the Galzers are gone, and people are still supporting them.

They have started relatively well, but they've got lost during the campain.

Anonymous said...

This is not an attempt to reduce debt. This is an attempt to withdraw funds from the club. MUST actually supported the IPO, before the Glazers altered the IPO to benefit themselves.

I can't quite understand your argument. It's the Glazers who've saddled the club with this debt, not MUST. As for a plan, it would be easier to balance the books without money disappearing in share issues, directors loans consultancy fees and interest payments. This is all part of the Glazers structure - not part of MUSTs long term plans.

I'd like to think your comments stem from a lack of knowledge of the facts, but I suspect your motives may be more sinister - in line with a number of posts on this thread.

DADnMAD said...

Firstly I'd like to say that I am just an average United fan (from Manchester) who knows very little about financing , ipo's & profit margins. What I do know is that I love MUFC dearly, as did my dad, grandad & great grandad. When it comes to ownership of United, I trust the Glazers as far as I could throw one of em. As for sir Alex, I have always respected & appreciated all he has done for the club. What does concern me is the amount f times I see blogs, statements, opinions & sometimes (as I now see here) literary abuse from United fan to United fan about the Current situation we find ourselves in. As a night club doorman, I work every night with the mentality of "don't trust anyone", which works for me, as I've caught many an asshole with a knife (ready to stick in my back). My main point being that, we have no idea if sir Alex is motivated in his decision making by money, which, due to his love of horses & gambling is a worry, or if the Glazers will ever sell up & bugger off, leaving the fans to fend for ourselves. What I do know is, that since the ownership change occurred, United fans all over the world, are at each others throats & heavily opinionated, even sometimes rude & hurtful. Isn't it time, that we got back to basics, in trying to convince others to STOP shelling out their money to sit in the ground wearing a G & G scarf or shirt, or paying their hard earned cash to the likes of MUTV or even Sky Sports. I'm sorry if anyone feels as though I have gone off the financial topic. But I would like to see us together fighting the same cause once more. Oh & one more thing, I do believe that when it comes to anyone's financial motives at United, everyone is a suspect.....including Sir Alex, even though I love & respect him dearly. Thank you & peace. United For Life, Red For Ever.