PHELAN ADMITS MAN UNITED PAIN
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Manchester United chief executive David Gill has spoken for the first time about the "potential" in floating shares on the Singapore Stock Exchange with the Glazers seemingly now valuing the club at a staggering £2.57 billion.
The Glazers paid £790 million to buy Manchester United - although the final bill amounted to £850 million including the legal and advisory costs - and they recently rejected offers of £1.5 billion from China and Qatar as, it is now clear, they fell well short of their valuation.
The Glazers are seemingly planning to float 25% of Manchester United on the Singapore Stock Exchange at a value of $1 billion (£643 million), which would value Manchester United at £2.57 billion. If the shares are sold, they could carry voting powers of only 12%, which would fall well below the 25% threshold that allows shareholders to contest decision-making.
"It's a potential," Gill told the Sunday Telegraph. "I think the finances of the club are in robust health in terms of the bond interest against the EBITDA [earnings before interest, taxes, depreciation, and amortization] that we do have, so in that respect I am not concerned.
"But it was an opportunity, and is a potential opportunity, to strengthen them even further. If the proceeds were by and large used to pay down the bond debt then that would take some of the interest costs out."
The Glazers' advisory team - including Morgan Stanley, JP Morgan, and Credit Suisse - will inform the owners when the time is right to press ahead with the plans and, given the parlous state of the global economy at present, it appears they will have to wait.
"It is not officially on hold but the owners will be taking appropriate advice from the advisors and determining what the markets are telling us," Gill added. "But I don't think it's the level of the market - it is the sheer volatility. That's the challenge."
Although United recently posted an operating profit of £110.9 million for the past financial year, paying down the bond debt would free up greater funds for investment into the squad. Gill, though, denies Sir Alex Ferguson has been significantly hindered.
"It [the debt] hasn't been a problem," Gill, who was in Senegal to support a UNICEF initiative, said. "There have been a lot of comments and a lot of criticism. On the one hand, you argue clearly our interest costs have gone up now as a limited company, but it is not 45 to 0 because as a listed company we had corporation tax payments, we had dividend payments.
"The owners have never been anything other than 100% supportive on delivering to Alex or me the players we need to keep ourselves going, but people don't believe us.
"If you look at it, we are spending £13 million revamping Carrington [the training ground] and we have just completed this summer at Old Trafford our box redevelopment. There has never been any money that we have needed to develop the club that hasn't come forward."
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Manchester United assistant Mike Phelan admits the squad are hurting following their derby day humiliation but insists they will bounce back.
The Red Devils suffered their heaviest home defeat since 1955 on Sunday as near neighbours Manchester City romped to a stunning 6-1 win.
The victory puts Roberto Mancini's men five points clear at the top of the table and emphasises that they a real threat to United in the title race.
Phelan admits the defeat was hard to take but has urged perspective given there is still a long way to go in the season.
"You have to take the hurt on board and deal with it," he told the Manchester Evening News.
"You find whether you have the success in you to go again. It is only three points. We are not even into double figures in games yet in the league season. You cannot afford to let it spiral out of control and be the defining moment of your season. It is one game which we have to overcome.
"One thing you do is take on board what has happened because it is important to learn from your mistakes. You can't forget it. We won't be allowed to and we shouldn't forget it.
"It is in the history books now and you have to live with that but you get an opportunity to work again, to look at the issues that caused us problems and deal with it.
"You can't hide from it. The players will hurt but they have another game to play. Normally we react well to a knock like we got on Sunday.
"We have a new group of players. It is a new unit we have put together. For some of them it is the first real big hit they have taken. We are going to find out now can they handle it. Can they take it on board? Can they learn from the game?"
Comparisons have been drawn between Sunday and a 5-1 defeat United suffered at the hands of City at Maine Road in 1989 - a game that Phelan played in.
The club responded to that mauling by going on to win the FA Cup the following May and Phelan expects a similar response this time.
"I have never forgotten the hurt of the 5-1 at Maine Road. But you react. You pull together. We knew we were a good group of players as this group knows it is a good group of players," added the 49-year-old.
"Something has happened that we didn't think could happen, as it did in '89, but now it has happened it is a question of do you pull together or do you let it affect you?
"It wasn't all bad. From a coaching point of view some of the game was okay but others we lost focus. That could be because it is a new group and everything has been going well. You reflect on that and you see what is in the players' lockers and the club's locker and how we move forward. We will. These things have happened before.
"We look at it, analyse it, try not to dwell too much on it and move on. It makes you reflect on what you have got, what you thought you had but you haven't.
"Sometimes you can get a little bit, not carried away, but everything is good because you are playing well, you are scoring goals and creating things, everyone is patting you on the back then you get a reducer. That is good when it happens. Sometimes a hard lesson learnt is a good lesson to build from."