RuuDie:



very possible but can only really be successful if enforced by individual clubs rather than the FA. . . .

I don't think a club can successfully implement a wage cap. Like Wenger said - With the way we are going in football, if you are successful on the pitch, you are doomed.

A club implementing a wage cap with the current conditions is tantamount to committing suicide. Footballers will simply move on and recent stats have shown that the biggest wage players are the most successful on the pitch. When clubs see that they win trophies when they pay big, they will continue in that light.

So unless the FA steps in, there can't be a successful cap on wages.

nateevs:

I don't think a club can successfully implement a wage cap. Like Wenger said - With the way we are going in football, if you are successful on the pitch, you are doomed.

A club implementing a wage cap with the current conditions is tantamount to committing suicide. Footballers will simply move on and recent stats have shown that the biggest wage players are the most successful on the pitch. When clubs see that they win trophies when they pay big, they will continue in that light.

So unless the FA steps in, there can't be a successful cap on wages.

It'd take a very brave FA to attempt to put a cap on player's wages. . . . . to some clubs, its gonna be welcome; to others it'd be like being put in a strait jacket; and its really unrealistic cuz its difficult to get any form of uniformity from big clubs all d way down 2 d lower ligues.

RuuDie:

It'd take a very brave FA to attempt to put a cap on player's wages. . . . . to some clubs, its gonna be welcome; to others it'd be like being put in a strait jacket; and its really unrealistic cuz its difficult to get any form of uniformity from big clubs all d way down 2 d lower ligues.

footie are governed by laws

it wont make sense if clubs or a particular FA tries such cos a footballer will just move to team that wont cap wages or players will move to leagues where wages are not capped

the only thing to do is if it comes from FIFA , UEFA and other footie governing bodies

this definitely can only benefit the smaller clubs cos they'll probably be able to compete for signatures of some of the players in question

i think it makes sense to cap wages but i dont think transfer values should be capped. that i think should be left to the dictates of the market and how strong the value of the player is in the market.

~Sauron~:

Just like Real Madrid are swimming in debt.

so Real madrid owes £509million (or the overall £716.5million owed by ManU's parent company)?
Your dear club is about to go belly up, and you are deluding yourself that all is well, by thinking madrid is in the same position. Madrid is in good financial health, have a president worth $1.8billion, and, the members and political clout to deal with any financial crisis. Abi you see Madrid running helter-skelter trying to raise a £500million bond to postpone the doomsday?
The bonds will raise your annual interest bill from £42m to at about £45m or more, while the Glazers will siphon money from the club into the parent company to service the 14.25% compounded PiK loan which has already grown to £202million (which means it will increase by £29m this year). Without another CR to sell and having collected advance payment on your shirt sponsorship, wont be surprising to see one or more of Rooney, Rio, Giggs, and Scholes departing from the club to reduce the wage bil and/or raise money.
Of course to the fanboi, I am obviously clueless, but no worry, na here we go all dey as your ManU is walked to the gallows. All that delude themselves that ManU is too big to fall will soon discover that the bigger they are, the harder they fall.
awon onigbese!!! Buncha useless Obertans!!!

biina:

so Real madrid owes £509million (or the overall £716.5million owed by ManU's parent company)?
Your dear club is about to go belly up, and you are deluding yourself that all is well, by thinking madrid is in the same position. Madrid is in good financial health, have a president worth $1.8billion, and, the members and political clout to deal with any financial crisis. Abi you see Madrid running helter-skelter trying to raise a £500million bond to postpone the doomsday?
The bonds will raise your annual interest bill from £42m to at about £45m or more, while the Glazers will siphon money from the club into the parent company to service the 14.25% compounded PiK loan which has already grown to £202million (which means it will increase by £29m this year). Without another CR to sell and having collected advance payment on your shirt sponsorship, wont be surprising to see one or more of Rooney, Rio, Giggs, and Scholes departing from the club to reduce the wage bil and/or raise money.
Of course to the fanboi, I am obviously clueless, but no worry, na here we go all dey as your ManU is walked to the gallows. All that delude themselves that ManU is too big to fall will soon discover that the bigger they are, the harder they fall.
awon onigbese!!! Buncha useless Obertans!!!

hahaha
in this era of arab money

its easier for DK to become prime minister of UK than for UTD to go extinct

if yawa gas, the Glazers will divest and a bigger billionaire writes off the chicken feed and take ownership

a billion dollars is what is giving u sleepless nights?
all dubai princes will die to own the club

Errr Chac,

are we still waiting for Roman to grow tired of chelsea ?


Tkb,

with the kinda money the Glazers are raking, i don't think they'll be willing to sell easy; do u ?


Guyz how una dey, been a long while.

Happy New year to you all !!

who be this? wormedup

are you still on planet earth?

hapi nu year man

of course, when we all carry placard to carrignton and ask dem to sell to a saudi prince, they'll respond

besides, if the yearly interest payment cannot guarantee marquee signings anymore then the handwriting will be on the wall for them to fck off

lets see as it pans out but as of today, no crisis yet

tkb,

i still get vivid image of the banner wey una carry dey protest when glazers wan buy; still didn't stop them from doing the deeds !
i dey my bros, na Yar A'dua absence dey mess me up .

tkb417:

hahaha
in this era of arab money

its easier for DK to become prime minister of UK than for UTD to go extinct

if yawa gas, the Glazers will divest and a bigger billionaire writes off the chicken feed and take ownership

a billion dollars is what is giving u sleepless nights?
all dubai princes will die to own the club

I have always admired your blind optimism, as you seem to be the only one who knows these arabs who are willing to buy a debt ridden ManU whose value will soon be below its debt obligations.

The Glazers were able to buy a debtless manU for about £800m and I cant remember any arab prince being in contention (in fact I doubt you have ever had an arab as a major shareholder), now you think they will buy a club which is over £700m in debt. Even liverpool with their small debt (when compared to ManU) were unable to snag a saudi prince.

Billionaires that buy clubs for toys dont buy big clubs like manU, but rather midsize clubs like Citeh, Chelsea, Villa etc, where their investment can go directly into assembling their dream team, and not into paying off some useless debts.

Dont get me wrong, I think the Glazers are doing fine, after all their true investment is less than £300m, and after the bond refinancing, they will essentially move the PiK on to the clubs and all they have to do is sell the club for more than £300m (which shouldnt be too difficult) and they should walk away with a tidy profit. Its the club that faces being relegated to mediocrity, cos even with success on the pitch, it will be difficult to service an interest bill of about £100m every year.

But then what do I know. so no worry, just watch the plot unfold

lol
blind optimism call it anythn

if i can get you clearly, what ure saying is
> UTDs debt are spiralling out of control- Yes and No

Yes, in the sense that the bond is another debt instrument which adds to the existing debt/backlog interest payments

No, in the sense that the bond is being engineered to actually reduce the interest payments and free up funds for the team

Oga, if uve not been following the trend of events in footie world then na u sabi. The arabs are out there to launder their cash and oh yeah footie especially England is the best place for that to happen. lest i forget, who told you the arabs are only interested in the mid size clubs?
the only reason why the midsize clubs come handy is because of their cost of acquisition and relatively little or no ambition if you compare them with the top clubs in europe ( a club with lil or no ambition will not offer any resistance to a take over- West ham is an example)

fyi, Roman wanted Manchester United b4 but shying away from making steps to acquire it cos of the perceived inherent hostile atmosphere the investment in UTD would bring

lets assume a debt ridden Manchester United would not be attractive to smart money holders, lemme point it to you that a suave and smart invester who has got the cash would prefer a debt ridden manchester united whose enterprise value is zero to a midsize club whose pedigree in the footie world is zero.

a debt ridden UTD would be a hotcake for any sane human being & the brand UTD cannot be bought

a club with an edifice like OT, a club with the largest fan base in the world, a club with money making machies spread across the globe would be worth every arab penny

good we agreed on one thing- the Glazers would sell when the right time and the right buyers come

That debt too strong mehn. Only a mentally handicap person will consider buying Man Utd in its current state. U think say na beans? hahaha. Old Trafford will soon become citeh's training ground. 

Breaking NEWS!!!!

Chief Adebayo Alao Akala bids for Man disUNITED

tkb417:

lol
blind optimism call it anythn

if i can get you clearly, what ure saying is
> UTDs debt are spiralling out of control- Yes and No

Yes, in the sense that the bond is another debt instrument which adds to the existing debt/backlog interest payments

No, in the sense that the bond is being engineered to actually  reduce the interest payments and free up funds for the team

You are wrong. In exchange for increased interest payments, the bonds are being used primarily to buy time (the current debt capital are due from 2013) and to restructure the debt so that they can use funds from the club to tackle the 14.25% PiK loan which they cannot do under the current terms. A 3rd factor is that the bonds will be a fixed interests of no less than 8.5% (probably about 9%), while the current bank loans (which are the senior loans) are at about 8% currently but being fixed margin from libor makes them variable. One can argue either way for fixed v variable but only time will tell. With the bonds, ManU will be paying more than the 42m they paid last year

Oga, if uve not been following the trend of events in footie world then na u sabi. The arabs are out there to launder their cash and oh yeah footie especially England is the best place for that to happen. lest i forget, who told you the arabs are only interested in the mid size clubs?

launder cash? as if they got it illegally. as to who told me that the arabs are interested in only mid size clubs? History = fulham, portsmouth and Citeh. The closest to a big club buy was liverpool and that is yet to happen.

the only reason why the midsize clubs come handy is because of their cost of acquisition and relatively little or no ambition if you compare them with the top clubs in europe ( a club with lil or no ambition will not offer any resistance to a take over- West ham is an example)

while I agree with the cost of acquisition being a factor, ambitions are less inimical. With all their ambitions, liverpool would jump at the first arab prince that looks their way

fyi, Roman wanted Manchester United b4 but shying away from making steps to acquire it cos of the perceived inherent hostile atmosphere the investment in UTD would bring

roman is not arab, nor is usmanov. Still I have not heard that he showed any serious interest in buy ManU and would like you to provide a reference.

lets assume a debt ridden Manchester United would not be attractive to smart money holders, lemme point it to you that a suave and smart invester who has got the cash would prefer a debt ridden manchester united whose enterprise value is zero to a midsize club whose pedigree in the footie world is zero.

a debt ridden UTD would be a hotcake for any sane human being & the brand UTD cannot be bought

a club with an edifice like OT, a club with the largest fan base in the world, a club with money making machies spread across the globe would be worth every arab penny

A smart investor weighs the risk-reward ratio and looks at the cash flow of the investment vehicle. Football is becoming less and less of a profitable venture, and a look at the balance sheet of united buttresses this, as operating profit before amortization was £90m. Successful clubs are not selling clubs, and one should not expect ManU making much profits like this years £80m from player transfers (was £22m in 2008, £11m in 2007 and £12m in 2006). So very soon, you will have a club whose cash flow cannot service its debt. So any prospective buyer would have to pay off a substantial part of the debts to make the investment workable (otherwise he will be flushing money down the drain in a club he doesn't really own). All these were with ManU having record success in recent years, same will not be repeated in the near future.As if that wasn't bad enough, failure on the pitch and/or departure of SAF will further reduce revenue and goodwill, and its obvious that the more time united stay on this path, the closer they get to financial collapse.

good we agreed on one thing- the Glazers would sell when the right time and the right buyers come

I was never concerned with glazers, as they made their profit the moment the leveraged buyout was successful.

You are wrong. In exchange for increased interest payments, the bonds are being used primarily to buy time (the current debt capital are due from 2013) and to restructure the debt so that they can use funds from the club to tackle the 14.25% PiK loan which they cannot do under the current terms. A 3rd factor is that the bonds will be a fixed interests of no less than 8.5% (probably about 9%), while the current bank loans (which are the senior loans) are at about 8% currently but being fixed margin from libor makes them variable. One can argue either way for fixed v variable but only time will tell. With the bonds, ManU will be paying more than the 42m they paid last year

i agree with this; in essence buying time for the first capital repayment is to free up funds for the club b4 the first lump sum payment due in 2013
thts ma point. Under the present scenario, interest payment would hinder SAFs plan for the team

A smart investor weighs the risk-reward ratio and looks at the cash flow of the investment vehicle. Football is becoming less and less of a profitable venture, and a look at the balance sheet of united buttresses this, as operating profit before amortization was £90m. Successful clubs are not selling clubs, and one should not expect ManU making much profits like this years £80m from player transfers (was £22m in 2008, £11m in 2007 and £12m in 2006). So very soon, you will have a club whose cash flow cannot service its debt. So any prospective buyer would have to pay off a substantial part of the debts to make the investment workable (otherwise he will be flushing money down the drain in a club he doesn't really own). All these were with ManU having record success in recent years, same will not be repeated in the near future.As if that wasn't bad enough, failure on the pitch and/or departure of SAF will further reduce revenue and goodwill, and its obvious that the more time united stay on this path, the closer they get to financial collapse.

lol so what are u saying?
a smart investor would look at the risk-reward ratio

tell me of any club who is more profitable than UTD?
the last time i checked, UTD's cashflow was supposed to be backed with a CDO to raise cash b4 going for this bond thingy
ol boi lets wait till SAF leaves or we stop winning, then we can now see if we'll become Leeds UTD

tkb417:

i agree with this; in essence buying time for the first capital repayment is to free up funds for the club b4 the first lump sum payment due in 2013
thts ma point. Under the present scenario, interest payment would hinder SAFs plan for the team

I still dont see how you have reached the conclusion that the move makes more money available for SAF.
United essentially have two loans:
1. a bank loan of £509.5m, which was £518.7m in 2008 and required a net interest payment of £41.9m. This loan is secured directly against the clubs assets e.g Old trafford and is due from 2013 to 2017
2. a PiK loan of £202m at an interest rate of 14.25% compounded (and can increase to 16.25% if not service by august). This is secured against Red Football Joint Venture Ltd which is the vehicle for the Glazers' stake in the club and the notes are due in 2017.

Under the current terms,  the bank loan with its lower interest rates is the senior debt, and thus the Glazers are required to pay it off first before they can use any funds from the club to tackle the PiK loan. this is unworkable for the Glazers cos even if they manage to pay back the senior debt by 2017, the PiK would have ballooned to almost £600m.

Since the Glazer have shown no intention of bringing in external funds to pay the PiK, the intend to refinance/restructure the senior debt portion and change the terms to allow them tackle the PiK ahead of the bank loans. Enter the bonds issue.

The £500m bonds issue (which I believe was successful) will replace the bank debt and now allow them to give the PiK priority. The yield on the Bonds will be about 9% increasing the interest bill to £45m (as opposed to less than £41.9m that would have been paid  under the current structure) and will be due in 2017. In addition to the slight increase in interest bill, is that the glazers will now be able to use up to £70m to service the PiK loan. Current profit before amortization was £90m, so unless that profit is greatly increased, they can barely support the new interest bill, talk less of servicing the PiK loans.

The Glazers' game plan is obvious, they intend to pay off (or more likely refinance) the PiK loans (which is the main obstacle to them making a tidy profit from selling united) at the expense of the club, so that we all is said and done, the full £720m or more debt will be entirely on the club. There is no way SAF will have money to spend on top players unless united take on more debts.

tkb417:

lol so what are u saying?
a smart investor would look at the risk-reward ratio

tell me of any club who is more profitable than UTD?
the last time i checked, UTD's cashflow was supposed to be backed with a CDO to raise cash b4 going for this bond thingy
ol boi lets wait till SAF leaves or we stop winning, then we can now see if we'll become Leeds UTD

profitable? United was in the red in 2008, and if not for the sale of CR would have been in the red again this year. United like most of the other big clubs are not profitable.
United are already headed for 'trophylessness' this year: injury ridden in the defence, eliminated from the FA cup, on the brink of elimination in the carling cup, 3rd in the EPL and up against it in the CL.
But no worry, all will unfold in the coming years. First will be the sale of your training ground to pay debts.

biina,

all u've said boils down to UTD not being able to buy players in the future - nothing in ur statement points to the fact that UTD might not be able to clear all the debts incurred thus far. . . this is hardly a disastrous scenario u've painted cuz in the last 5 seasons, i think UTD have spent far less on acquiring players than the other top sides in the EPL (perhaps only Arsenal tops that) but still have managed to dominate.

RuuDie:

biina,

all u've said boils down to UTD not being able to buy players in the future - nothing in your statement points to the fact that UTD might not be able to clear all the debts incurred thus far. . .  this is hardly a disastrous scenario u've painted cuz in the last 5 seasons, i think UTD have spent far less on acquiring players than the other top sides in the EPL (perhaps only Arsenal tops that) but still have managed to dominate.

Given all the recent success, the debt position has continued to worsen. I wonder what happens when the success stops? 
All united have done is being barely able to pay the interest on the loans. They have only been able to pay back £9m of the senior debt capital after receiving upfront almost half of the Aon sponsorship (which doesnt begin till august) and selling CR last year. Are they going to sell CR again this year? Go and look at the financial statements before you start deluding yourself like if your club is printing money. If you can barely pay your interest bill, means you cannot pay your debt.

United have been able to attain success with their existing roster, but as that roster wears down, they will need injection of world class players, and not useless Obertans, or do you think your current squad can win major trophies or that Giggs and scholes will play forever. The current united squad is definitely weaker than what you had when CR was still on the team.

biina:

[b]Given all the recent success, the debt position has continued to worsen. I wonder what happens when the success stops? [/b]All united have done is being barely able to pay the interest on the loans. They have only been able to pay back £9m of the senior debt capital after receiving upfront almost half of the Aon sponsorship (which doesnt begin till august) and selling CR last year. Are they going to sell CR again this year? Go and look at the financial statements before you start deluding yourself like if your club is printing money. If you can barely pay your interest bill, means you cannot pay your debt.

United have been able to attain success with their existing roster, but as that roster wears down, they will need injection of world class players, and not useless Obertans, or do you think your current squad can win major trophies or that Giggs and scholes will play forever. The current united squad is definitely weaker than what you had when CR was still on the team.

The big question is whether the current level of indebtedness is excessive for this point in both the footballing cycle and in the economic cycle, keeping in mind the brand that is UTD.

RuuDie:

The big question is whether the current level of indebtedness is excessive for this point in both the footballing cycle and in the economic cycle, keeping in mind the brand that is UTD.

The only reason things have gone on for this long is because of the brand that is UTD. That has been played to the maximum level now in my opinion. Because of the economic conditions, any small gains (such as the recent Turkish Airlines deal) will be offset by reduced income in other areas.

Income CANNOT grow to match the debts of Utd at present and the last two seasons display that. Despite being very successfull in both, Utd's holding company debt GREW significantly. That is the key indicator.

The reality is that Utd will not continue to dominate EVERY season - once that happens, revenue will drop, further worsening the situation with regard to debt repayments.

I suspect that one of the club's assets, likely the Carrington training ground, will be sold in order to make a dent in the debt.

The current restructuring will slow down the growth of the debt, but will not reduce the principal owed already. With UEFA and FIFA clamping down on excessive debts in the near future, something drastic will be required to prevent some form of asset sale by the club.

Despite denials by Fergie, that is the prime reason the Ronaldo returns have NOT been spent and will not be spent.

In terms of the raw amount of debt, we are in a bad way, but serious business people compare the level of debt to the value of the club. I don't think the debt as a percentage of UTD's value is as bad as it is painted.

RuuDie:

In terms of the raw amount of debt, we are in a bad way, but serious business people compare the level of debt to the value of the club. I don't think the debt as a percentage of UTD's value is as bad as it is painted.

Mint!!!!!!!!!!!

the 500million bond was snapped up in a week!

who are the fools?
the buyers? No

UTD is defintely a green buck for any would be investor
debt ridden or not


lets wait for Biinas days of gloom to manifest b4 we kill ourselves

as it is now, no wahala

Denial is never good therapy

Manchester United is going broke.

Its not a question of denial. . . . its more of people making it look all gloomy like doomsday is on hand for MAN UTD fc - as if the debts cannot be paid off completely or reduced to very considerable limits in the next 5yrs or thereabouts.
Furthermore, i really don't think the ability to clear the debts is so ingrained in the onfield successes, there are quite a number of viable options at the disposal of the glazers even though it'd be quite difficult in these days of global recession.

The debt is at least 55% of the club's total (including brand) value, and you do not have the cash flow to service it (talk less of paying it off). If by August, the net debt exceeds 5x the profit before interest, tax, depreciation and amortization, the PiK loans will go up to 16.25% (current ratio is about 5.5x). So unless you get some major cash (like from selling the training ground and/or star players), the debt will continue to grow, while pulling down the value of the club, and unless your a deluding yourself that ManU will win the double this year, there will be less success on he pitch, further reducing the club's value.

@tkb417
United is such a green buck that most high yield accounts shunned it.  
Yet you miss the point that the bonds are secured against the clubs assets, thus while the bonds might not pan out for the 7-yrs total, the investor can still recover their funds. Also the bonds will be traded and so they can get their money and possible returns by trading it.

RuuDie:

Its not a question of denial. . . . its more of people making it look all gloomy like doomsday is on hand for MAN UTD fc - as if the debts cannot be paid off completely or reduced to very considerable limits in the next 5yrs or thereabouts.
Furthermore, i really don't think the ability to clear the debts is so ingrained in the onfield successes, there are quite a number of viable options at the disposal of the glazers even though it'd be quite difficult in these days of global recession.

The debt cannot be reduced in 5 years - that is a FACT. They can only stop it growing.

THe only ability to clear the debts is to SELL Utd assets or for the Glazers to sell other assets to pay back Utd deals.

There's no rocket science about it.

Utd is NOT even paying back principal right now - it's barely making interest payments, so how will the debt magically reduce?  

No one is saying the club will go under, but it might need to sell assets or curtail it's actions in the transfer market.

The ultimate solution is to convert the debt into equity the way Abramovich did.

However, the Glazers owe others the money, so unless the bond holders want equity in the club, then it's not going to happen.

All you can do is service the debts.

The debt principal will not reduce until United can pay fully the interest associated. It will be interesting to see how they will come up with the at least £75m they need to pay only the accrued interest this year. More than that will be needed to pay any principal on the PiK.

I suspect Rooney and/or the training ground will be sold this summer to raise cash. They will likely transfer the training ground to the JV company and then lease it back to united, essentially creating a siphon pipeline directly from the club to the PiK loan.

The Glazers are not trying to payoff the debts, but rather trying to put it all on the club, which will allow them to make a profitable sale. The PiK currently stands in their way of making good profit on their meager investment.

Manchester United have signed a three-year sponsorship deal with Turkish Airlines for an undisclosed sum that could help the Premier League club's parent company reduce some of its mounting debt.

The Istanbul-based company last month signed a three-year, £2.7 million sponsorship deal with European champions Barcelona as it seeks to become a global brand.

Details of the deal with United, who have also raised in excess of £500m through a bond issue, were not disclosed.

"This deal is yet another indication of the global appeal of Manchester United and we are very pleased to welcome them (Turkish Airlines) to the club," United chief executive David Gill said in a statement on the club's website.

Under the terms of the deal the airline will fly the team's players and officials to relevant matches, tournaments and training camps as United's official carrier.

http://uk.eurosport.yahoo.com/22012010/58/premier-league-manchester-united-new-sponsor.html

so much ado over nothn

tkb417:

so much ado over nothn

'cos of a £700k per annum sponsorship deal
wetin u wan take the money pay - refreshments?