Rags Saved? r.e Bond issue

[Prestwich_Blue]

Could some finance boffin please reassure me that the rags are still in the shit using financial jargon, conjecture or even blind guesswork, just to make me feel better? Please!?

If you want it in financial terms, even on the assumption that they continue at their current level of success, their free cash flow (i.e. the amount of spare cash they have) will be pretty well eaten up by what the Glazers and bond interest take out. That's according to Neil Hume in the Financial Times. Link to the series

In the article "Some people are on the pitch..." Article link he says:

While by all accounts co management impressed on the road show, particularly in relation to the potential commercial upside, the risks from a traditional high yield perspective don’t seem to be adequately compensated if the deal comes at price whisper.

The co has high leverage, limited base case FCF (they can’t sell Ronaldo for £80mm every season), and pretty leaky covenants, particularly compared to other recent senior secured notes offerings. Furthermore, the club’s recent EBITDA has been driven off three excellent seasons on the pitch (three premier league titles and two Champions League finals) but you don’t have to be a Liverpool fan to recognise that football success can be cyclical and this deal seems to be priced for perfection on the pitch.

On my numbers, the business will probably produce modest FCF on a recurring basis and, when you consider the many baskets (including £6mm/yr management fees, £3mm/yr overhead expenses, £25mm general), then virtually all that FCF could leak out of the structure. The coupon on the approx. £212mm PIK at Red Football Joint Venture steps up to 16.25% from 14.25% in August 2010, adding pressure on the Glazers to address that sooner rather than later.

If they don't get into the CL then the fun starts. If they don't get in the CL two years running then the meltdown starts.

 

[mackenzie]

Interest on the debt, of that magnitude, will never really go away.

They can shift it about, play the okey cokey with it, whatever..... it will always lurk.

If they slip out of the CL their fall will be dramatic.

 

[fbloke]

An aspect I dot think anyone is considering is that of the Glazers paying all the debt off (a la Sheikh Mansour) or getting a partner involved and selling shares .

The first one is highly unlikely as they didnt buy the club when it was cheaper to do so.

The second would be funny as hell 'cos then as well as debts that have to be managed there would be arguments and fallings out as well.

Oh hang on that's Liverpool isnt it, lol.

 

[mr t]

They're doomed - The Glazers are like leeches. They'll suck all the blood out of the club before it withers and dies.

 

[Rag formerly known as Lemon]

Hate to say it,but some big consortium of business men is bound to buy the fuckers out sooner or later.

I have heard and read many Blues come out with this, but I do not understand why they think that any person that is a hard enough nosed businessman to have accumulated enough wealth to be able to finance the purchase of the rags would be interested, where would they increase the incoming revenue to pay the debts never mind the investment needed to keep a squad of over the hill has beens at the top table?

THEY ARE DOOMED.
TICK TOCK

We are doomed, that is for sure, but just a couple of points on this. Firstly, there's no incentive for the Glazers to sell, they took out considerable personal loans which they intend to use furture earnings of the club to pay off -starting with 70m of the bond money. They were unable to do this under the terms of the previous financial agreement. If they sold now, they'd get approximately what they owe, so there's no value in it for them. While they still own the club, they can keep siphoning money off for their own gains - which is what they are in it for.

In terms of someone (or a consortium) wanting to own the club, I'm sure there would be takers. Bear in mind if you are buying it lock stock and barrel, i.e paying a billion, thus clearing the debts, you're instantly making a profit. United is one of the very few clubs in the world that runs at a profit - at least it would be if it wasn't paying interest on loans, but the kind of people that would be able to buy United for that kind of money wouldn't be in profit, it would be a status symbol.

BTW, I can't reply to PM's under this user name - I assume I need a certain number of posts

 

[Bill]

I have heard and read many Blues come out with this, but I do not understand why they think that any person that is a hard enough nosed businessman to have accumulated enough wealth to be able to finance the purchase of the rags would be interested, where would they increase the incoming revenue to pay the debts never mind the investment needed to keep a squad of over the hill has beens at the top table?

THEY ARE DOOMED.
TICK TOCK

We are doomed, that is for sure, but just a couple of points on this. Firstly, there's no incentive for the Glazers to sell, they took out considerable personal loans which they intend to use furture earnings of the club to pay off -starting with 70m of the bond money. They were unable to do this under the terms of the previous financial agreement. If they sold now, they'd get approximately what they owe, so there's no value in it for them. While they still own the club, they can keep siphoning money off for their own gains - which is what they are in it for.

In terms of someone (or a consortium) wanting to own the club, I'm sure there would be takers. Bear in mind if you are buying it lock stock and barrel, i.e paying a billion, thus clearing the debts, you're instantly making a profit. United is one of the very few clubs in the world that runs at a profit - at least it would be if it wasn't paying interest on loans, but the kind of people that would be able to buy United for that kind of money wouldn't be in profit, it would be a status symbol.

BTW, I can't reply to PM's under this user name - I assume I need a certain number of posts

can you read pm's

 

[Prestwich_Blue]

They're doomed - The Glazers are like leeches. They'll suck all the blood out of the club before it withers and dies.

Let's hope so. Rumours are that the Glazers are strapped for cash generally so it's them or the rags and they won't care what state they leave them in as long as they get what they need.

 

[mackenzie]

I have heard and read many Blues come out with this, but I do not understand why they think that any person that is a hard enough nosed businessman to have accumulated enough wealth to be able to finance the purchase of the rags would be interested, where would they increase the incoming revenue to pay the debts never mind the investment needed to keep a squad of over the hill has beens at the top table?

THEY ARE DOOMED.
TICK TOCK

We are doomed, that is for sure, but just a couple of points on this. Firstly, there's no incentive for the Glazers to sell, they took out considerable personal loans which they intend to use furture earnings of the club to pay off -starting with 70m of the bond money. They were unable to do this under the terms of the previous financial agreement. If they sold now, they'd get approximately what they owe, so there's no value in it for them. While they still own the club, they can keep siphoning money off for their own gains - which is what they are in it for.

In terms of someone (or a consortium) wanting to own the club, I'm sure there would be takers. Bear in mind if you are buying it lock stock and barrel, i.e paying a billion, thus clearing the debts, you're instantly making a profit. United is one of the very few clubs in the world that runs at a profit - at least it would be if it wasn't paying interest on loans, but the kind of people that would be able to buy United for that kind of money wouldn't be in profit, it would be a status symbol.

BTW, I can't reply to PM's under this user name - I assume I need a certain number of posts

Lemon

TOUGH!!!!! (on all counts). ;-)

My biggest fear though is that you will get the kind of benefactor we have.

Are there any out there that could do that?

 

[mancitylegend]

it means a red sunset and a blue dawn......

 

[Rag formerly known as Lemon]

We are doomed, that is for sure, but just a couple of points on this. Firstly, there's no incentive for the Glazers to sell, they took out considerable personal loans which they intend to use furture earnings of the club to pay off -starting with 70m of the bond money. They were unable to do this under the terms of the previous financial agreement. If they sold now, they'd get approximately what they owe, so there's no value in it for them. While they still own the club, they can keep siphoning money off for their own gains - which is what they are in it for.

In terms of someone (or a consortium) wanting to own the club, I'm sure there would be takers. Bear in mind if you are buying it lock stock and barrel, i.e paying a billion, thus clearing the debts, you're instantly making a profit. United is one of the very few clubs in the world that runs at a profit - at least it would be if it wasn't paying interest on loans, but the kind of people that would be able to buy United for that kind of money wouldn't be in profit, it would be a status symbol.

BTW, I can't reply to PM's under this user name - I assume I need a certain number of posts

can you read pm's

I can, yes