Dear United Fans,
Please stop listening to the so-called ABU journalist who suddenly became financial experts 10 days ago. I would
recommend that each of you to read up on United finances in the bond
prospectus here - http://www.joinmust.org/docs/mufc-notes.pdf
What I have noticed in the financial statements which went un-mentioned in the ABU merchant of doom press:
1) Manchester United reported a net profit of 25 million including
the gains from the disposal of players. What these financial experts
did not mention was that there are numerous non-cash items that were
included in the computation of the net profit like depreciation,
goodwill and ammortization of its assets like player's registration.
This are non-cash items and are merely there as an accounting input to
balance its balance sheet. These non-cash expenses are sizeable - 81
million last year. United did not lose 81 million cash - instead it
merely inputted a loss of 81 million to balance its asset sheet which
registered a reduction in 81million value in player's contracts.
Player's values are reduced as their contracts get closer to
expiration.
If United bought Berbatov at 30 million for a 5 year contract, its income statement will not put a 30 million expense, instead there will be a yearly 6 million depreciation expense. The cash-flow on the other hand will recognize a 30 million outflow in investments. The depreciation expense is a non-cash item since the club doesn't lose 6 million cash a year. It has already paid the 30 million pounds when Berbatov signed for us.
2) To back me up, I look at its cash-flow statement. United
received over 111 million cash from its operations - matchdays revenue,
competitions, commercial and tv deals. This operating cash flow is
similar to its net profit excluding non-cash items like depreciation
and its interest payments (which comes under investment cashflow).
United then paid 40 million for its debt interest and another 10
million financing expense hence leaving it with 60 million cash. United
received 40 million from investment which I believed could be from the
transfer surplus. In all, United received a total of 100 million pounds
CASH last year. United didn't receive a mere 30 million cash (as many
has been misled), it received over 100 million pounds cash!
3) In 2009, United received over 100 million pounds CASH. This is
after paying the interest, transfers and capex. This is 1/5 of United's
debt btw. While I doubt any of it will go to paying the principal of
United's debt, I believe most of it will go to Ferguson's purchase of
new players.
This is why I trust Fergie's claims that the money is
there - simply because a) United made 100 million pounds last year and
b) It has a total 150 million pounds cash in its bank. I won't be
surprised if Fergie makes purchases totalling 80 million next year.
4) Considering that United might increase ticketing price, more
overseas tour, more sponsorship deals, its operating cash-flow will
definitely increase (an increase of 30mil since 2007). Perhaps within
the next 2 years, our operation cash-flow might hit 150 million.
Considering that after financing its debts with the bond issue, its
interest expense will be around 40-50 million pounds (9-10% interest).
Ferguson will balance his purchases with sale of some deadwood - hence
I estimate on average, our transfers expense will be around 20-40
million a year (we don't really need much players beside a LW, GK, CM).
Hence I estimate on average for the next 5 years, we can easily rack in
40-60 million pounds a year. This means around 200 million cash will be
made over the next 5 years after deducting 50 million to Glazer as a
dividend. We could easily repay half of the bond and raise a 300 mil
bond issue in 2016.
5) The future is still bright despite being burdened with the debt.
Don't be fooled by the ABU propoganda. My calculations are by no means
accurate...they are just estimation based on my understanding of its
consolidated financial statement. Most companies will rarely repay any
of their bonds entirely with cash-flow. Usually they will repay a
portion of it and raise a new bond issue to extend their debt maturity
profile. I hate to analyse United as a financial corporation but ever
since it become a PLC decades ago, it stopped being a traditional club.
MUST has a valid point about the immoral nature of the debt. But don't
be deluded into thinking that the debt will lead United into the brink
of oblivion. United is a business franchise. It stopped being a club
when it became a PLC. The only chance it had of becoming a club again
was lost when United fans failed to support Shareholder's United desire
to buy out the club.
By:
Grandmaster89
Sweet, cheers for the read =)
well, if only if it keeps winning right??
We will keep wining. The whole squad is fine. We just to fine-tune it - a new left winger if Obertan can't step up, a creative attacking midfielder, a goalkeeper, a central defender if vidic leaves. This can be balanced with the sale of Foster, Nani, Vidic.
Originally posted by grandmaster89:We will keep wining. The whole squad is fine. We just to fine-tune it - a new left winger if Obertan can't step up, a creative attacking midfielder, a goalkeeper, a central defender if vidic leaves. This can be balanced with the sale of Foster, Nani, Vidic.
i like your optimism..
Don't worry and live the dream. We won't win anything this season unless we are lucky. I am looking forward to the next haha!
Originally posted by grandmaster89:Don't worry and live the dream. We won't win anything this season unless we are lucky. I am looking forward to the next haha!
well,no matter, the debt is still like a "fish-bone in the throat". I wish this can be resolved asap.
if you are so confident about United's balance sheet then whats stopping you from buying their recent bond issue
hi guys..this might be a long shot...
was wondering if we can buy the bonds...where can we buy them..and the minimum we buy? If it is affordable, maybe y not :P
cheers
there is a game later match against Man Utd VS Man City, will Manchester win this time?
Cos its in US$100,000 blocks? Its not for the average businessman or retired investors to play with as it has a 7 yrs maturity time on it... Its more for big investment group or very very rich individuals...
wow.. hehe..guess not for people like me :)
anyhow thanks for the info
cheers
If I had a million dollars, I would definitely purchase 100,000 pounds worth of United bonds at 10% yield. I will be getting 10K pounds a year (or approx S$2K interest income every month). United has 1.1 billion pounds worth of assets, it can easily be liquadated at 50% valuation to repay its bond-holders in the event of a bankrupty which is highly unlikely.
United's debt is over-hyped by the ABU press. Glazer and Fergie isn't worried for a reason - United's cashflow is extremely strong.
Originally posted by grandmaster89:If I had a million dollars, I would definitely purchase 100,000 pounds worth of United bonds at 10% yield. I will be getting 10K pounds a year (or approx S$2K interest income every month). United has 1.1 billion pounds worth of assets, it can easily be liquadated at 50% valuation to repay its bond-holders in the event of a bankrupty which is highly unlikely.
United's debt is over-hyped by the ABU press. Glazer and Fergie isn't worried for a reason - United's cashflow is extremely strong.
I think they said the returns are like between 7% to 9%... I agree its a very good plan if it sells...
The lower the better for the Club. I heard that it will be priced at around 9-10% yield since Manchester United lacks any credit rating from either S&P or Moody's. One of my investment has a credit rating and its bond yield is 6.875%. So I don't expect it to be at 7%...but then again this is Manchester United so you never know,
Originally posted by Ashianamarley:there is a game later match against Man Utd VS Man City, will Manchester win this time?
Depends which team fergie sends out...
The thing is, United fans are getting fed up with the recent increases in ticket prices. If you've noticed recently on tv, Old Trafford has had many empty seats due to (a) many more passionate fans have been priced out of watching every single game, (b) leading to more daytrippers/prawn sandwich brigade who leave the stadium 15 minutes before full time. You may have noticed that the atmosphere in Old Trafford has been shockingly poor this season, where away fans continually outsing United fans in what is the biggest stadium in club football in the UK. (Leeds game for example)
Secondly, there is an ACS (automatic cup scheme) being forced on all season ticket holders meaning they cannot opt out of FA Cup and Champions League matches which may be midweek/late nights when they cannot attend due to schedule clashes/other commitments. This is all part of the Glazers' plan to suck as much money as possible without listening to the pleas of the average United fan. "Want a season ticket? Pay for cup matches you cannot attend. If not, pay the normal price for every league match you attend." As of Sept 30 2009, 16% of corporate and executive tickets remain unsold. (That's where the biggest money comes from)
Prices for the average attendee have been continually increasing 14%, 11% and 11% each year.
Besides, if you analyse the prospectus carefully, notice 23 million pounds have been taken out of United for "management and consultancy fees" with each Glazer pocketing more than 6 million pounds. All this for sinking a previously debt-free, financially stable club into one with the biggest debt in football. 41.9 million pounds have been paid last year just to service the interest of the principal debt ALONE. Which means the principal debt of about 509 million pounds has not been touched. In addition, the funds owed to PIKs with an interest rate of 14.25% has snowballed from to 200 million pounds with the first tranche due to be paid in August 2010 (no wonder they need to raise capital through the bond offer).
On top of that, they are now planning to sell Carrington (the state of the art training complex a financially flourishing pre-Glazer United could afford and build) to one of the Glazers' holding companies and lease it back to United. That's asset stripping in broad daylight. And if a multi-billionaire comes and buy United I suspect that he'll have to pay extra to get Carrington back under United's control too.
What people don't get is how some people like the Glazers can come in and buy a club like United when they don't have the money to pay for it in full, take a huge loan of 500 million pounds, probably more than the GDP of a 3rd world country, secure the debt against the club, raise ticket prices through the roof, force the ACS on season ticket holders, and still pay themselves "management and consultancy fees" while not touching the debt they incurred. And probably in the future, when they manage to sell United at a huge profit, eff off and go back to Florida to enjoy the fruits of their "clever investment project".
Who suffers the most? The fans, no doubt. Imagine, during a period of sustained success, 3 Premier Leagues in a row, 2 consecutive Champions League finals, including one win, and a World Club Championship to boot, selling the best player in the world, and yet they are still in this precarious financial position. In the very near future, Sir Alex would be retiring, so will Giggs, Scholes, van der Sar, and the old guard. Can one guarantee success on the pitch? If United fails to finish in the top 4, the loss in Champions League revenue etc will seriously implicate their cash flow and ability to pay off the debts. Some of the glory-hunting supporters will no doubt move on to teams like Chelsea, Arsenal, even City and there would be lower attendances. To compensate for the loss in revenue, the Glazers would most probably increase ticket prices again.
Yes, some of the analysis which can be found all over the web might be exaggerated, but do not underestimate the threat of this situation, which could have been avoided altogether in the first place had the Glazers not been allowed this daylight robbery.
I do agree that the debt is immoral. The club is being forced to take on Glazer's debt since it is now part of its assets. But this is the real world where capitalism rule. Everbody uses debt to attain control of something. Even you would have used debt to purchase a car or a house so isn't it similar to Glazer borrowing 500 million pounds to buy out a club at 200% leverage?
The Club is no longer a club owned by the fans. It became a business franchise the moment the fans decided to list in out on the stock exchange as a PLC. As a PLC, United became a business whose interest lies in making as much money as possible for its shareholders. The fans became the Club's clients through ticketing sales or merchandise sales or overseas tours. So don't ever get the illusion that the fans are the Club or that the fans own the Club. This is a fallacy which MUST has sold on to you. The fans own nothing, they are merely repeat customers to a business franchise. If tickets are priced out, there are numerous others tourist fans who are willing to buy it - Old Trafford volume still remains above 75K.
It is harsh but it is true - which is why I stopped regarding United as a Club but a business franchise long ago. United fans had the opportunity to buy out the club for more than 2 decades. Yet, nobody supported Shareholder's United proposal to raise fund to buy out the Club and turn it into a Barcelona or Real Madrid model. So instead of blaming the opportunistic Glazers, I blame the complacent and ignorant fans who were happy to leave United as it was (a valuable take-over target). This is why, as much as it pains me toI say, Glazers and United fans deserve each other. But Glazer doesn't deserve to be the owner of such an illustrious institution.
Glazer took out 26 million from the Club which is a mere 25% of our cash generated this year. I don't see anybody complaining when their businesses or shares gives them dividend payouts exceeding 50% and neither do I see people slamming Man United for giving its shareholders dividends when it was a PLC. Glazer is United owner - he has the right to take a portion of United's funds.
In short, United has the funds (over 150 million cash in the bank) and the ability to generate at least 30-40 million pounds of cash over the next 5 years. I see no reason how the club is destabilized financially. The Club is operating in conditions prevalent among most businesses in the real world albeit with a very strong cash-flow.
United's short-coming on the field is to be blamed solely on United's player and coaching staff. Glazer has given Fergie sufficient resources to purchase Berbatov, Nani, Anderson, Owen Hargreaves and Tosic recently. Is it Glazer's fault that these players did not step up to the mark? Clearly not - poor scouting and a lack of good coaching can be blamed for contributing to poor replacements for Giggs and Scholes. Fergie will spend big this summer - he needs a LW (if Obertan fails), a creative midfielder, a forward striker (if Diouf fails), a central defender (if Vidic goes) and a goalkeeper. Outgoing - Nani, Foster, Vidic could easily translate to an outlay of 80 million pounds (half of United's cash in bank)
I don't support the Glazer but since they are here, there is nothing I can do but support the Club and hope it does well on the field.
Originally posted by grandmaster89:I do agree that the debt is immoral. The club is being forced to take on Glazer's debt since it is now part of its assets. But this is the real world where capitalism rule. Everbody uses debt to attain control of something. Even you would have used debt to purchase a car or a house so isn't it similar to Glazer borrowing 500 million pounds to buy out a club at 200% leverage?
The Club is no longer a club owned by the fans. It became a business franchise the moment the fans decided to list in out on the stock exchange as a PLC. As a PLC, United became a business whose interest lies in making as much money as possible for its shareholders. The fans became the Club's clients through ticketing sales or merchandise sales or overseas tours. So don't ever get the illusion that the fans are the Club or that the fans own the Club. This is a fallacy which MUST has sold on to you. The fans own nothing, they are merely repeat customers to a business franchise. If tickets are priced out, there are numerous others tourist fans who are willing to buy it - Old Trafford volume still remains above 75K.
It is harsh but it is true - which is why I stopped regarding United as a Club but a business franchise long ago. United fans had the opportunity to buy out the club for more than 2 decades. Yet, nobody supported Shareholder's United proposal to raise fund to buy out the Club and turn it into a Barcelona or Real Madrid model. So instead of blaming the opportunistic Glazers, I blame the complacent and ignorant fans who were happy to leave United as it was (a valuable take-over target). This is why, as much as it pains me toI say, Glazers and United fans deserve each other. But Glazer doesn't deserve to be the owner of such an illustrious institution.
Glazer took out 26 million from the Club which is a mere 25% of our cash generated this year. I don't see anybody complaining when their businesses or shares gives them dividend payouts exceeding 50% and neither do I see people slamming Man United for giving its shareholders dividends when it was a PLC. Glazer is United owner - he has the right to take a portion of United's funds.
In short, United has the funds (over 150 million cash in the bank) and the ability to generate at least 30-40 million pounds of cash over the next 5 years. I see no reason how the club is destabilized financially. The Club is operating in conditions prevalent among most businesses in the real world albeit with a very strong cash-flow.
United's short-coming on the field is to be blamed solely on United's player and coaching staff. Glazer has given Fergie sufficient resources to purchase Berbatov, Nani, Anderson, Owen Hargreaves and Tosic recently. Is it Glazer's fault that these players did not step up to the mark? Clearly not - poor scouting and a lack of good coaching can be blamed for contributing to poor replacements for Giggs and Scholes. Fergie will spend big this summer - he needs a LW (if Obertan fails), a creative midfielder, a forward striker (if Diouf fails), a central defender (if Vidic goes) and a goalkeeper. Outgoing - Nani, Foster, Vidic could easily translate to an outlay of 80 million pounds (half of United's cash in bank)
I don't support the Glazer but since they are here, there is nothing I can do but support the Club and hope it does well on the field.
A good read man, just curious, are you an accountant?
Hi Chris,
Thanks for the compliment but I am not an accountant.
I do some equity investment in the local stock market in my free time hence analysing financial statement is a skill which I picked up. Though I am not as good as a professional accountant or investment guru. This are my personal views based on my interpretation of the Club's prospectus and their performance on-field over the past 2 seasons. I just felt that I needed to speak out against the merchant of doom press and ABU propoganda against the Club.
May we silence our noisy neighbours tomorrow!
Originally posted by grandmaster89:Hi Chris,
Thanks for the compliment but I am not an accountant.
I do some equity investment in the local stock market in my free time hence analysing financial statement is a skill which I picked up. Though I am not as good as a professional accountant or investment guru. This are my personal views based on my interpretation of the Club's prospectus and their performance on-field over the past 2 seasons. I just felt that I needed to speak out against the merchant of doom press and ABU propoganda against the Club.
May we silence our noisy neighbours tomorrow!
Thats cool, I'm studying accounting right now. Never realized I'd be able to apply what I learnt in class so soon. Haha
Originally posted by wqtrigger:The thing is, United fans are getting fed up with the recent increases in ticket prices. If you've noticed recently on tv, Old Trafford has had many empty seats due to (a) many more passionate fans have been priced out of watching every single game, (b) leading to more daytrippers/prawn sandwich brigade who leave the stadium 15 minutes before full time. You may have noticed that the atmosphere in Old Trafford has been shockingly poor this season, where away fans continually outsing United fans in what is the biggest stadium in club football in the UK. (Leeds game for example)
Secondly, there is an ACS (automatic cup scheme) being forced on all season ticket holders meaning they cannot opt out of FA Cup and Champions League matches which may be midweek/late nights when they cannot attend due to schedule clashes/other commitments. This is all part of the Glazers' plan to suck as much money as possible without listening to the pleas of the average United fan. "Want a season ticket? Pay for cup matches you cannot attend. If not, pay the normal price for every league match you attend." As of Sept 30 2009, 16% of corporate and executive tickets remain unsold. (That's where the biggest money comes from)
Prices for the average attendee have been continually increasing 14%, 11% and 11% each year.
Besides, if you analyse the prospectus carefully, notice 23 million pounds have been taken out of United for "management and consultancy fees" with each Glazer pocketing more than 6 million pounds. All this for sinking a previously debt-free, financially stable club into one with the biggest debt in football. 41.9 million pounds have been paid last year just to service the interest of the principal debt ALONE. Which means the principal debt of about 509 million pounds has not been touched. In addition, the funds owed to PIKs with an interest rate of 14.25% has snowballed from to 200 million pounds with the first tranche due to be paid in August 2010 (no wonder they need to raise capital through the bond offer).
On top of that, they are now planning to sell Carrington (the state of the art training complex a financially flourishing pre-Glazer United could afford and build) to one of the Glazers' holding companies and lease it back to United. That's asset stripping in broad daylight. And if a multi-billionaire comes and buy United I suspect that he'll have to pay extra to get Carrington back under United's control too.
What people don't get is how some people like the Glazers can come in and buy a club like United when they don't have the money to pay for it in full, take a huge loan of 500 million pounds, probably more than the GDP of a 3rd world country, secure the debt against the club, raise ticket prices through the roof, force the ACS on season ticket holders, and still pay themselves "management and consultancy fees" while not touching the debt they incurred. And probably in the future, when they manage to sell United at a huge profit, eff off and go back to Florida to enjoy the fruits of their "clever investment project".
Who suffers the most? The fans, no doubt. Imagine, during a period of sustained success, 3 Premier Leagues in a row, 2 consecutive Champions League finals, including one win, and a World Club Championship to boot, selling the best player in the world, and yet they are still in this precarious financial position. In the very near future, Sir Alex would be retiring, so will Giggs, Scholes, van der Sar, and the old guard. Can one guarantee success on the pitch? If United fails to finish in the top 4, the loss in Champions League revenue etc will seriously implicate their cash flow and ability to pay off the debts. Some of the glory-hunting supporters will no doubt move on to teams like Chelsea, Arsenal, even City and there would be lower attendances. To compensate for the loss in revenue, the Glazers would most probably increase ticket prices again.
Yes, some of the analysis which can be found all over the web might be exaggerated, but do not underestimate the threat of this situation, which could have been avoided altogether in the first place had the Glazers not been allowed this daylight robbery.
Lets be honest, everyone gets fed-up with any type of increases in prices. Nobody wants to pay more if they can... Our very own experienced tells use this... A few years ago watching EPL was only $8. Then it went up to $15. That's like almost 100% increased. We grumble a lot but still ended up paying for it. Then a few years later, it went up to $25. Again everyone around us were not pleased but it still end up as the crown jewel of the provider's programme.
Price increased are part and parcel of the game now... It is not unique to them only, In 2008, Portsmouth increased by 17.5%, Blackburn by 12.9%, Sunderland 12%, Spurs 10.7, Wigan 10%... Arsenal don't even need to increase by much, only 2.6% cos they have the most expensive tickets in UK at $60 pounds.
In my honest opinion, to blame the Glazers for all the negative that take place is a bit unfair. They have brought positive to the club as well. As you mentioned, 3 consecutive titles and twice in the CL final winning one of it didn't happened just by chance...
A piece I read which I thought was quite enlightening and fair had this part within...
It would be preferable if any downfall was for football, rather than financial, reasons, but both elements need expert management to produce success. A popular theory is that Liverpool’s domination of English football ended because the club failed to adequately replace an ageing team. Yet, just as significantly, it failed to capitalise commercially on the boom in the English game which limited its spending power. Arsenal fell away in the last five years because of the limitations placed on Arsene Wenger, the manager, by the building of a new stadium. Economics invariably play a role in the balance of power, and if boardroom decisions precipitate a decline at Manchester United, these will not be unique circumstances.
The Glazers’ business plan is increasingly troubled, but three consecutive League titles and a Champions League win would suggest it has not been without its benefits. The idea that there was some golden era of club ownership – now expanded to include Manchester United plc – is something of a myth, too.
It is simplistically imagined that, without the Glazers, Manchester United would have those same titles, with the same income, a £91million operating profit and £80m from the sale of Cristiano Ronaldo, to be lavished on the finest players in Europe.
Here is an alternative scenario. On December 7, 2005, Manchester United lost 2-1 to Benfica to finish bottom of Champions League group D. It is the only time they have failed to make it to the knock-out stage since the 32-team format was introduced. The Glazers had been in charge for six months.
Had United been a plc there would have been an immediate impact on the share price followed by a statement at least, and possibly a profits warning. Who knows what the ramifications would have been from there? With no shareholders to placate, the Glazers simply kept their mouths shut, flew home and in 18 months Manchester United were champions again.
Now extrapolate the fall-out from a financial hit to the plc in 2005. Would it have left United open to offers on the odd player, perhaps an expendable unproven one like that Portuguese lad who many had marked down as a show pony? That would have plugged the Champions League shortfall straight away. Even had Ronaldo been around to ignite Manchester United’s resurgence, the idea of three League titles and £80m from last summer is a little far-fetched.
A plc board does not turn down very good money for a player who wants to leave and there was £60m sitting on the table from Real Madrid in 2008. So, no Ronaldo, no third straight title because take him away and Liverpool are League champions and considerably stronger for it. Maybe they keep Xabi Alonso, too.
Nobody knows what would have happened to Manchester United plc, but to afford it every positive that has taken place under the Glazers, and none of the negatives, is shallow.
Sir Alex Ferguson served both regimes and there must be a reason why he remains an advocate of private ownership. Predictably, those favouring strict financial regulation have seized on the crisis at Manchester United to advocate reform. Yet, if anything, this demonstrates the contrary worth of football’s free market as an agent of change. If clubs could only spend what they generated, Manchester United’s supremacy would be as good as cemented.
Indeed, there could be a renewed resolve to generate television deals individually, rather than collectively, to maximise this advantage. That would spell the end of competition in the English game. The financial gain would be so great that a chimpanzee could take United to the title every year.
I am not saying they are right or wrong here. As a fan, of course we wouldn't want to see the club we support in huge debts. But we have to understand that its also a business. What they does with the club, how much they pay themselves, its really up to them cos its a private "company" now and no longer a PLC. So they have their rights. Cos it's them who put up the $810m pounds of their money to buy it. Not the fans... If this venture goes badly wrong, it's they who will have to bear this burden for the rest of their lives and not the fans... Of course we can say they took out $275m only and the rest was loan from banks. But remember this, they are responsible for the loan ultimately, not the fans.
Whether they make enough money and sell it away and return to the US in the future, It really isn't a thing anyone should be trouble with... They took the risk, and if it pays out handsomely for them years later, they deserve it for managing well. If it turns out badly, it's the Glazer family who will pay the heaviest price and goes bankrupt, not the fans.
So you still think the fans suffer the most?
For me, If the only club I ever supported fails to finish in the top 4 and slide down maybe even out of the premiership, I will just lose my keen interest in watching football... I will still like to know how their situation is but I am not going to jump to another club for sure cos I can never find the same feeling towards it...
I agree entirely with Zocoss,
United seems a lot stronger without being constraint by the norms of being a PLC - needing to report to Directors or gaining permission from its shareholders or worrying its share price etc.
It is immature and naive to blame Glazer for every bad thing that the Club has endured recently (while failing to attribute any of the positives to them). A lot of United fans are being mis-led by the ABU press who would have pounced on our so-called weak financial performance to preach and pray that we might collapse.
It is also wrong to blame and criticize Glazer if he choose to pay himself a small dividend time and time again. You do not see me criticizing Starhub for paying out nearly all of its earnings via a high payout ratio dividend policy to its shareholders despite very very large debts. I believe its debt to equity ratio exceeds Manchester United and yet no one is saying it is a doomed institution - instead people are investing their savings through the purchase of its shares due to their 10% dividend yield which is 4 times that of our SG bonds or 2.5 times that of our CPF rate.
The key is cash-flow and I have already explained how United's cash-flow remains very robust. The bond issue will increase our cash-flow through the reduction of our interest expenses. Remember Glazer's fortunes are now tied to United's destiny - if the Club fails, Glazer loses all of his 275 million pounds investment and if it prospers it promises high returns to his investment.
Glazer has been a good owner for United, unlike Liverpool's. He has given Fergie leeway in the footballing world and has entertained his request for new players - Berbatov (club record), Owen Hargreaves, Valencia, Nani, Anderson, Tosic, Carrick and so on. It is not Glazer's fault that only Carrick and Valencia has added value to the squad.
As, I said, MUST is a foolish organization. They had over 5 years to raise funds to buy out a portion of United. But after all this years and yapping, they have not even raised 0.1% of the monies need to buy United. 2 days ago, they met in a PUB in Manchester (despite nearly all of United fans are outside of England) and collectively decided that they represent the true voice of United fans and demanded Glazer to leave. They are a bunch of idiots whom will only destabilize the Club further.
Support the Team and Live the Dream!!!
Originally posted by grandmaster89:The lower the better for the Club. I heard that it will be priced at around 9-10% yield since Manchester United lacks any credit rating from either S&P or Moody's. One of my investment has a credit rating and its bond yield is 6.875%. So I don't expect it to be at 7%...but then again this is Manchester United so you never know,
Yup, I came across a report that mentioned $50,000 blocks with 7% return was being offered to players and club personnel... Of course there was some that had 9% as well...
The lower the better for the Club. Considering current interest payments are around 8-9% (based on 40 mil expense over a 500 mil debt), it will help save some expense. Moreover, the current interest expense doesn't include the interest from the PIK notes which will be made in full once it matures. So massive savings in capex as well.
It is a logical move.
50,000 blocks - maybe some rich fans can invest haha ???
But Starhub shares yield is close to 10% so hmmm but there is the prestige of being Manchester United's debtor though haha!