Man Utd's Debt now £764m

[Martin Lol]

So says the Guardian........................

 

http://www.guardian.co.uk/football/2008/may/06/manchesterunited.premierleague

 

United play for the double on back of £58m losses last yearDavid Conn The Guardian, Tuesday May 6 2008 Article historyAbout this articleClose This article appeared in the Guardian on Tuesday May 06 2008 on p1 of the Sport news & features section. It was last updated at 03:04 on May 06 2008. 

Malcolm Glazer's takeover has led to Manchester United's financial fortunes taking a nosedive PJasienski/Getty

 

With Manchester United powering to a probable second successive Premier League title and ready for a Champions League final, it appears that life at Old Trafford could hardly be rosier, but the club's accounts, now published in full, detail a significantly bleaker picture of the club's finances under the ownership of the Florida-based Glazer family.

 

Before the family's 2005 takeover, United prided itself on being the only Premier League club regularly to make a significant profit, to have cash in the bank and, unlike all the others, no debts. After the leveraged takeover, the Glazer family loaded their borrowings on to the club and the position has changed. The accounts for the company that the Glazers use to own United show total borrowings, in the year to June 30 2007, were up to £666m, by far the highest of any English football club, ever. The total owed to all creditors, including the banks, was up to £764m and includes £56m that United owe to other clubs in transfer fee instalments on players Sir Alex Ferguson has signed.

 

The total interest payable by the club on its borrowings was £81m, although only £42m was actually paid. The rest, which accrued on the millions owed to hedge funds, is allowed to roll up until the whole amount has to be repaid in 2016, or, alternatively, until the Glazers can refinance it. A total of £152m is currently owed to hedge funds, at 14.25% interest a year - £22m from 2007-08. Last year the Glazers tried to refinance but were unable to strike a deal with financial institutions, and a spokesman acknowledged that the credit crunch is making it more difficult now.

 

David Gill, United's chief executive, announced the headline results back in January, stressing that United's phenomenal money-making power, with 76,000 crowding into Old Trafford and the Premier League's huge TV rights deals, had produced record income of £210m and operating profits of £75m. The full accounts show, however, that even though United made a further £11m profit from buying and selling players, the interest and other accounting provisions pushed United into recording an overall loss of £58m.

 

The accounts also reveal that by far the highest proportion of income, £92.5m, is still generated on home match days, and although the club has announced more modest ticket price rises for next season than for the previous two, supporters groups continue to protest that they are paying the debts of a takeover they opposed. "It is outrageous that supporters are paying the huge interest on these borrowings, which are worrying for the club's future," said Sean Bones of the Manchester United Supporters Trust. "Our money is pouring out to pay the Glazers, while they have not put a penny into the club."

 

The spokesman for the Glazer family pointed to the club's success on the field, and in generating income off it, as evidence of the family's competent management. "The family continue to run United as a business," he said. "Their model is to encourage success on the pitch by backing Sir Alex Ferguson, and to grow revenues off it. The interest payments are more than covered by the cash generated."

 

[Greg]

www.redcafe.net/forum.php

[madras]

can they afford to finance the debt on their turnover ?

 

if the answer is yes it aint so bad

[Mike]

Leeds!

 

Using that as a verb.

[Astroblack]

It'll all work out in the end for them.

 

Always does. 

[Thespence]

Them Man United fans are having tough time, if I was them I would go & watch FC United instead

[Guest toonlass]

If it were any other club then the receivers would be revving their engines now.

[relámpago blanco]

If it were any other club then the receivers would be revving their engines now.

Aye but its not and they could probably raise 200-300M on player sales alone.

 

[ShearMagic]

With their ridiculous sponsorship and marketing turnover they'll be able to manage it.

 

They'll never be free of the debt (well not in the near future), but they'll get by.

[womblemaster]

think this wakes folk up about what glaziers have really done to the club. 

 

Its quite ironic that biggest club in the world, is effectively bust.  Its being run on hot air and mirrors! 

 

manu fans had better hope the credit crunch doesnt deepen; They coould get wiped out.

[Chris_R]

If it were any other club then the receivers would be revving their engines now.

Aye but its not and they could probably raise 200-300M on player sales alone.

 

 

I'd love to see them forced into doing that!

[Guest alex]

Like a rudderless ship.

[Guest optimistic nit]

i must say, i really didn't think that united would have anything to worry about, but a guy on their forum makes an excellent point, that their debt has still risen despite a record tv deal, huge amounts of success in the last 2 seasons and a 50% increase in ticket prices.

 

maybe they do have something to be concerned about.

[Slugsy]

Don't know what the fuss is all about, it was a typical leveraged buy-out with a fairly typical funding structure.  Big numbers but Man U are a big business.

[The College Dropout]

Surely the Glazers know what they're doing...

[Teasy]

Don't know what the fuss is all about, it was a typical leveraged buy-out with a fairly typical funding structure.  Big numbers but Man U are a big business.

 

They're still making massive losses each year despite the incredible success there having and the new TV deal.  They've won the league, the new TV deal has come in and there ticket prices have increased..  Yet despite a record high income and initial profits of £75 million, interest payments have pushed that to a £56 million loss!  Surely when a debt is creating more debt year on year that means its not managenable..  Especially when its happening despite record high incomes.

 

With their ridiculous sponsorship and marketing turnover they'll be able to manage it.

 

They'll never be free of the debt (well not in the near future), but they'll get by.

 

But they aren't managing it, despite a record high turnover..

[alexthegreat]

Noticed this bit:

"The total owed to all creditors, including the banks, was up to £764m and includes £56m that United owe to other clubs in transfer fee instalments on players Sir Alex Ferguson has signed."

 

They have not spent much in the transfer market in the last 2 years for a club their size, and have got a lot of money back for the likes of Smith (6million), Rossi (7million), Richardson (5m), Van Nistelrooy (11m)

 

They have bought players in but now this article says they havent paid for them. 56 million must be about three quarters of the fees for players Ferguson signed since Glazer took over, and I think I am right in saying they will have to find about 19m if they want to keep Tevez.

 

And despite this, and massive ticket price increases, and reaching a champions league final and winning the league last year, they still didnt make a profit?

 

Their squad is looking a bit thinner now especially up front. They now only have rooney, tevez (who they dont own), saha (who they reckon is finished), and then its the likes of dong, welbeck, campbell

 

Fact is having to pay 50million in interest payments every single year is going to bite

 

 

 

 

[thomas]

Leeds!

 

Using that as a verb.

First semi this board has ever given me.

[Teasy]

Aren't the interest payments actually far more then £50 million a year?  Unless I'm misunderstanding something here?

[Gash]

I read a very interesting article about a year back saying that alls united are doing atm is paying back the interest!

And unless they win year in year out, it is going to be very difficult for them to survive.

They either need a billionaire (Glazers arent putting any of their own money in are they?) or they will disapear!  mackems.gif

[midds]

I highly doubt the biggest football club on the planet will just disappear tbh.

[Menace]

They won't go under, just get taken over by a billionaire if they are in the shit.

[Mike]

www.redcafe.net/forum.php

 

Ok, as an American, I can't be the one to point this out, but someone else might notice that the best part of the debt thread over there is the "location:" item underneath the avatars.

[Guest sittingontheball]

The Glazers come from US sports. Here's an insight into how they are funded.

 

JUAN GONZALEZ: Well, I was struck—you have numerous chapters in the book on the various aspects of this transfer, but I was especially struck by your material on the New York Yankees and Steinbrenner and Joyce Hogi, who you mention in the book, who I know well, and this whole issue of sports teams across America and how the public is subsidizing them. Could you elaborate on that part of it?

 

 

DAVID CAY JOHNSTON: Sure. George Steinbrenner is getting over $600 million for the new Yankee Stadium in New York. The New York Mets are getting over $600 million. In fact, the City of New York gave them money to lobby against the taxpayers to get more money. Rudy Giuliani gave $50 million to the two teams for that purpose.

 

 

The new owners of the Washington Nationals baseball team in Washington, D.C., paid $450 million for the team. But, in fact, they got the team for free, because the subsidy they’re getting for the new stadium is worth $611 million. We actually paid these people to buy the team.

 

Now, in this country right now, we are spending $2 billion a year subsidizing the big four sports: baseball, basketball, football and hockey. It accounts for all of the profits of that industry and more. Now, there may be individual teams that make money, but the industry as a whole is not profitable. And that’s astonishing because the big four leagues are exempt from the laws of competition. By the way, irony is not dead, because here are people who are in the business of competition on the field who are exempted by law from the rules of economic competition.

 

If you go to England and you want to start a soccer team, they have to let you join the soccer league. There are thirteen commercial soccer teams in the London area. New York City, the biggest city in the country, there are two baseball teams, because there’s no free entry into the market. In Los Angeles, there’s no football team. And the owners use this power to prevent others from owning teams, to prevent municipal governments from owning teams, to prevent nonprofits from owning teams, to extract money from the taxpayers to build them new stadiums.

 

At the same time that we’re doing this, we are starving our public parks for money. And I show in Free Lunch how the rise of urban gangs and now suburban gangs is connected to this. We used to have all sorts of programs in this country after World War II for young men and young women on Saturdays and during the summer and school holidays, where even if you didn’t have any money—didn’t matter that your parents didn’t have any money, because—and I know this because I did it as a child—you could go to any one of a half-dozen different places, and there were organized activities to keep you out of trouble. After all, idle hands are the devil’s workshop is not exactly a radical new idea. Well, we’ve cut and cut and cut those programs to fund two different subsidies: one to sports teams’ owners, one that goes to Tyco, General Electric, Honeywell and some other big companies. And, lo and behold, we’ve had a big rise in urban violence because of the vacuum being filled by young people who no longer have these organized activities.

 

AMY GOODMAN: Speaking of sports teams, talk about President Bush and where you believe, really, ultimately, he got his wealth.

 

DAVID CAY JOHNSTON: Well, it isn’t a function of belief, Amy. I’ve got the documents. President Bush, who will go down in history as the great tax cutter, owes almost all of his fortune to a tax increase that was funneled into his pocket. What happened is, an oil man named Eddie Chiles wanted to sell his money-losing Texas Rangers baseball team. They played in a little stadium, smaller than the one we have here in Rochester, New York, and of course couldn’t make any money. So George Bush put together a group of very wealthy investors to buy the team. He put up himself $600,000 of borrowed money. The partners then gave him a 10 percent stake as the managing partner. That’s a very common arrangement in business. Then they held a special election in January of the year in question to increase the sales tax in the town of Arlington, Texas, by one half-cent. That money was used to build a new baseball stadium. It’s an incredibly nice baseball stadium.

 

Then the power of government to seize land by eminent domain—and I go back to what was talked about in Kenya, the leader there can give you land, he can presumably therefore also take it away—the government used its power of eminent domain to seize land from people, not for a public purpose—not for a military base, for a school, for a highway, for a sewer plant—but because it was coveted by President Bush and his friends, and they were unwilling to go into the market and buy it through market economics. So the government seized this land. People were paid far less than they were owed, and we know that because one family fought back, and a jury, after being out just a matter of minutes, awarded them about six times what they had been offered by the government of Arlington.

 

The value of this subsidy, according to Ray Hutchison, who is the husband of Senator Kay Bailey Hutchison, is a prominent Republican insider in Texas and is the leading authority on municipal bond finance in Texas, was $202.5 million. The profit that President Bush and his partners made when they sold the team was $164 million. What does that tell you? Every single penny of additional money President Bush got from that investment, his gain, came from the taxpayers. He did not add one cent to the value of that team through his skill as an MBA manager. This gets repeated all over the country.

 

 

source:

http://www.democracynow.org/2008/1/18/free_lunch_how_the_wealthiest_americans

 

Obviously you can't pull the same tricks here, but that's the mindset they are bringing.