Prestwich, you seem to now about business so I will ask you, when the Glazers bought the Rags it was with borrowed money, now that is fine when The GPC is winning most of the trophies. I am sure they felt it would go on forever and when the time came they could easily find a buyer. The new fellah would have no problem buying the debt and continuing but since then they have been going backwards. The stadium need millions spending on it, the squad even more and sponsorship is hopefully diminishing. Suddenly their original exit strategy (if they had one) is looking very shaky as any one with a business acumen would surely not touch these lot, (if the debt cannot be serviced easily) What do you reckon, am I right ?
I don't know what their exit strategy is or was or even if they have one. The time to sell, if they intended to, was when the share price got to $26 at the start of the 2018/19 season, which valued them at over $4bn. As you rightly say, they bought the rags with borrowed money. Some we know about, as it's in the publicly available accounts, and some (assuming there's more) we don't, as it's hidden in accounts of companies that aren't publicly available.
If there is more debt (which I think is a safe assumption as they had to refinance large Payment in Kind notes) they'll need security for that and I'd guess that security will be their United shares. Their shopping mall business will be hugely leveraged and we know they mortgaged that to the hilt just before the 2008 financial crisis. That debt would have been secured on the property originally but the decline in commercial property prices and the banks tightening up on loan-to-value ratios would have meant them having to either repay a lot of debt or put up significantly more collateral. Yet again, all they would have had was their United shares.
So it's possible that they're so in hock that they can't sell, unless the share price reaches a high that would enable them to clear all their debt. Meanwhile they carry on taking dividends and consultancy fees which keeps them fed and watered. One of the family, Darcie, used her shares as collateral for a loan last year
https://www.manchestereveningnews.c...otball-news/man-utd-glazer-loan-news-16481111.
As I said earlier in the thread, they're at a potential tipping point this season though. Failure to qualify for the CL will see a further drop in revenue, which won't help them, but failure to even get an EL place could be quite catastrophic in financial terms. To be able to pay the dividends which fund the Glazers' lifestyle, they'll have to make big cuts in expenditure and sell the most valuable assets. The share price will drop like a stone and if they are being used as collateral, the lenders will be asking some hard questions.
Update: I've just checked Andy Green's blog (who's a United supporting financial analyst) and a few years ago he had confirmation that the Glazers were personally on the hook for about $400m of United's debt, in addition to the $550m in their accounts. He also said there were covenants on that debt which required them to reach certain financial targets, otherwise they'd be in breach of the loan terms. We do know there are similar covenants on United's own debt and these might be at risk of being breached if they miss out on Europe altogether. So finishing eighth could really spell big trouble for them.
