Rags in financial trouble?

[Prestwich_Blue]

Prestwich- interesting, where's that from? As transfer fees are excluded, do you know why Q3 08/09 was healthy? And, therefore what has caused the reverse in 09/10 and 10/11?

It's from a blog called andersred (<a class="postlink" href="http://andersred.blogspot.com/" onclick="window.open(this.href);return false;">http://andersred.blogspot.com/</a>) and that article is from last June.

I'd guess that Q4 08/09 was much better because they did their sponsorship deal with Aon then and took nearly half of the cash up front. 09/10 is actually quite a typical pattern as clubs get most of their money at the end of a season, thanks to Sky and season ticket sales. Some comes in December/January but the bulk in May/June. The regular cash inflows during the season are relatively small.

They have to pay wages and other operating expenses out of that cash so it goes down over the course of a season and in Q3 and the early part of Q4 most clubs are in their worst position financially. They splashed out a lot on transfers in Q1 10/11 without much coming in from sales and they won't be getting the money from the latter stages of the CL. While they say they don't count on that money, they must have looked at the group they were in and thought they would easily qualify as group leaders and probably get through a couple of rounds.

 

[petrusha]

Just to point out it was summer 2008 when JW loaned money for wages, and not 2009.

On another point, am I being completely mad in suspecting that the best thing for City may not be for United to crash and burn? That way, they'll get rid of the Glazers, whose diverting money from the club over the last few years has made it much easier for us to think of competing with them. And if the Glazers leave, I fear that someone of considerable wealth might pick them up as a trophy asset, paying off the debt and allowing them to invest the huge revenues United generate into the team.

So might we be better off if United became like Arsenal over the last few years? By which I mean capable of finishing consistently in the Top Four to keep CL revenues, allowing them to generate the cash for the Glazers to continue taking out of the club but without being able to punch their weight given the income levels that United have.

Thoughts, anyone?

 

[Gary James]

Just to point out it was summer 2008 when JW loaned money for wages, and not 2009.

On another point, am I being completely mad in suspecting that the best thing for City may not be for United to crash and burn? That way, they'll get rid of the Glazers, whose diverting money from the club over the last few years has made it much easier for us to think of competing with them. And if the Glazers leave, I fear that someone of considerable wealth might pick them up as a trophy asset, paying off the debt and allowing them to invest the huge revenues United generate into the team.

So might we be better off if United became like Arsenal over the last few years? By which I mean capable of finishing consistently in the Top Four to keep CL revenues, allowing them to generate the cash for the Glazers to continue taking out of the club but without being able to punch their weight given the income levels that United have.

Thoughts, anyone?

Totally agree that it's worse for Utd if the Glazers remain. The point about the wages was just to illustrate the difference (I doubt Utd's former Chairman could afford to pay their present squad's wage bill if the situation arose anyway).

While the Glazers remain at Utd their thoughts seem to be short term.

I also reckon that Gary Neville's plans for his supporter complex may harm Utd's financial position - it may seem odd, but I'm sure Utd fans would much rather put money into his place than into the Glazer family's pockets. So one of their biggest heroes could unwittingly damage their club's financial position further!

 

[Prestwich_Blue]

It's a very difficult balancing act they've got at the moment. They are a number of calls on their spare cash (in order of priority):
1) Pay bond interest.
2) Keep the Glazers afloat personally.
3) Buy back bonds to reduce the debt capital.
4) Buy players

They've been generating about £100m surplus cash each of the last 2 years so there should be a lot of money to spare in theory but (1) has to be done whatever so that comes straight out of any cash they have and eats up about half of it. The Glazers probably take £10m of the rest at least

That should leave that about £40-50m for the other two activities. However, the wage bill will probably have gone up very significantly because or Rooney plus the other senior players who have clauses guaranteeing them parity with the top earner so it's unlikely they'll generate as much cash this season. That could cost them £20m or more and the £30m they'll probably lose from dropping out of the CL will also affect their cash pile.

So they'll struggle to strengthen significantly without selling and their debt will roll on unchecked for another year, which means it'll be harder to pay off by 2017 when the bonds are due. The Glazers' other business (shopping malls in the USA) has almost certainly taken a big hit thanks to the credit crunch and it's almost certain that these were mortgaged to the hilt. We know that some of these malls have defaulted on their mortgages and others are struggling. So it's likely that United is their cash lifeline at the moment meaning they won't sell unless it gets them out of the shit.

I was talking to someone from MUST recently and he was saying their nightmare scenario is Baconface retiring while their debt is still high as the new manager will have little money for transfers and the "Fergie effect" will have gone. While they're in the CL they're probably OK just about but if they ever finish out of the top 4 then things could collpase quite quickly. They'll either have to sell their higher earners/more saleable assets

 

[r.soleofsalford]

and Colombo apparently discovered America :)

Sorry mate, had to do it :)

that short one eyed cigar smoking italian/american runt discovered america ? i must of missed that episode

 

[more lazy than useless]

So might we be better off if United became like Arsenal over the last few years? By which I mean capable of finishing consistently in the Top Four to keep CL revenues, allowing them to generate the cash for the Glazers to continue taking out of the club but without being able to punch their weight given the income levels that United have.

Thoughts, anyone?

Could they survive outside the CL, like Liverpool for instance?

I know they have bigger bills, so need the bigger in come, but I suppose what I'm thinking is at what point down the league table do they reach the cut-off point for viability?

I realise this is a moving target as they can adjust their costs to suit (to some extent) and raise money by other means (eg selling fringe players) but given the big falls in income from CL to EL, from EL to top 1/2 league atc, there will be a tipping point. Would I be right to think that in their present state no CL = more than just a blip?

EDIT: PB posted at same time and seems to have answered this. Now that's what I call service, knows what question I'm going to ask!

 

[fbloke]

United have trumpeted the fact that they are the biggest brand in world football and have 20 billion, zillion, gazillion fans etc but the fact is that that means they have a lot more to lose, more quickly than any other club once the success stutters.

 

[bluemonkey71]

<puts ice cream in freezer>

 

[blue order]

Be careful what you (we) wish for folks!

Not dissimilar to Liverpool situation, if they run into real trouble they may be forced to sell. The price would be heavily discounted and it is more than likely it would be someone or some organisation with real 'till' that would come in. They could then be in a much stronger position to buy players (like us) but not handicapped by the ridiculous FFPR because of their turnover. A discounted selling price will only enhance their position going forward.

The best case scenario is that the Glazers keep their heads just above water. Keep paying the debts and interest but not at risk of breaching bank covenants etc and having the decision to sell taken out of their hands. This way they keep going, the Glazers keep milking but the club remains a wounded and restricted animal as it has been for the last year or two.

 

[Prestwich_Blue]

It would be nice if they struggled along just having enough money to pay the bond interest but do little else for a while, having to develop young players then sell them 2-3 seasons later.

However the Glazers are going to sell or float eventually. The latter might be a preferable option as then they would be owned by a large number of small shareholders rather than one very wealthy owner. Then they could drop out the top 4, lose CL income and their "fans" & sponsors desert them, leaving them just another mid-table club with their precious history all they have to sustain them.