Prestwich_Blue
Well-Known Member
Re the rags - at the moment, with capacity crowds and regular appearance in the later stages of the CL knock-out they can produce enough income to service their debt but there's not a lot left over. However that's mostly interest - they have to find an extra £1.1bn between 2013 and 2017 to repay the capital on the bank loans and the PIK notes.
The key bit of information is their cashflow statement. This tells you how much cash they actually generate and spend without accounting transactions. In the last accounts (2008) they spent £12.3m more than they earned and that would have been more except they borrowed a bit more. They had to pay £60m in interest but their total interest payable was £70m as they don't pay the interest on the high interest PIK notes but add it to the outstanding amount. That year also included a profit on the sale of players of over £20m mainly from selling their younger players like Pique, Rossi, Shawcross & Richardson.
They won't have that in the next accounts (Ronaldo was sold in this financial year) so they will have spunked away something like £40m of cash. That's whay Ferguson won't be spending the rest of the Ronaldo money - they needed it to replace this level of loss.
Also, the football club is profitable but the group isn't. If you look at their holding company (the one where all the subsidiary companies are consolidated) they only just made an operating profit in 2008 (£926k). Out of that they had to deduct nearly £70m of interest (although not all of that was actually paid) leaving them with a £43m loss.
If they start losing income by not getting to the last 8 or further and their corporate match day income starts drying up then they are going to have more trouble meeting their interest repayments. Plus they have a lot of key players that will need replacing (Scholes, Giggs, Neville, Van Der Sar, Ferdinand) and they can maybe afford £20m a year in transfers. They will increasingly have to rely on selling younger players they've brought through the ranks to supplement that.
As for us wer're at an early stage in our business cycle. It's like an owner setting up a factory and buying a lot of expensive machines in the hope that he can generateenough revenue to pay for them. Their revenue was nearly 3 times ours (257m v 87m) yet our loss was £90m as against their £43m. He's right that it will get worse before it gets better but we don't have to find huge interest payments and won't be spending big money every season so that will settle down.
Eventually the investment will pay off and (if we get regular CL football) our income will go up and our costs will level off. Liverpool's income was around £160m in the same year and something like that's probably achievable within 3 years.
However, they are possibly at the peak of their earning power; ticket prices are as high as they can go (they're not filling the ground for cup games) and they've appeared in two consecutive CL finals. If they don't qualify for the CL then alarm bells will ring very loudly.
Our squad is getting stronger but theirs is getting weaker.
Someone may buy them but they will need to be very wealthy. Their value is reckoned to be around $1.4m (£900m) but their current debt is something like $1.2m and rising.
The key bit of information is their cashflow statement. This tells you how much cash they actually generate and spend without accounting transactions. In the last accounts (2008) they spent £12.3m more than they earned and that would have been more except they borrowed a bit more. They had to pay £60m in interest but their total interest payable was £70m as they don't pay the interest on the high interest PIK notes but add it to the outstanding amount. That year also included a profit on the sale of players of over £20m mainly from selling their younger players like Pique, Rossi, Shawcross & Richardson.
They won't have that in the next accounts (Ronaldo was sold in this financial year) so they will have spunked away something like £40m of cash. That's whay Ferguson won't be spending the rest of the Ronaldo money - they needed it to replace this level of loss.
Also, the football club is profitable but the group isn't. If you look at their holding company (the one where all the subsidiary companies are consolidated) they only just made an operating profit in 2008 (£926k). Out of that they had to deduct nearly £70m of interest (although not all of that was actually paid) leaving them with a £43m loss.
If they start losing income by not getting to the last 8 or further and their corporate match day income starts drying up then they are going to have more trouble meeting their interest repayments. Plus they have a lot of key players that will need replacing (Scholes, Giggs, Neville, Van Der Sar, Ferdinand) and they can maybe afford £20m a year in transfers. They will increasingly have to rely on selling younger players they've brought through the ranks to supplement that.
As for us wer're at an early stage in our business cycle. It's like an owner setting up a factory and buying a lot of expensive machines in the hope that he can generateenough revenue to pay for them. Their revenue was nearly 3 times ours (257m v 87m) yet our loss was £90m as against their £43m. He's right that it will get worse before it gets better but we don't have to find huge interest payments and won't be spending big money every season so that will settle down.
Eventually the investment will pay off and (if we get regular CL football) our income will go up and our costs will level off. Liverpool's income was around £160m in the same year and something like that's probably achievable within 3 years.
However, they are possibly at the peak of their earning power; ticket prices are as high as they can go (they're not filling the ground for cup games) and they've appeared in two consecutive CL finals. If they don't qualify for the CL then alarm bells will ring very loudly.
Our squad is getting stronger but theirs is getting weaker.
Someone may buy them but they will need to be very wealthy. Their value is reckoned to be around $1.4m (£900m) but their current debt is something like $1.2m and rising.