Wednesday, 3 February 2010

Taking stock. United.

It is 23 days since Red Football Ltd launched it’s £500m offer of “Senior Secured Notes due 2017” and by doing so shone a light onto the true financial state of Manchester United.  In the three and a bit weeks since 11th January, so much has been written about United’s finances that even those with the most dedicated interest can’t help feeling dazed and confused. 

Here are four things to bear in mind in all the noise.  If you want further information on any of these figures please contact me.

The Glazer family have not put one single penny into Manchester United during their almost five years of ownership and have already incurred £385m of costs.
They have racked up £85m in professional fees and other costs since the takeover, lost £35m on derivatives, paid out over £170m in interest and ratcheted up the debt in the PIKs by another £72m. As reward for a job well done they’ve paid themselves £13m in “consultancy” and “management” fees and lent themselves £10m of the club’s money.

Manchester United has debts for which it is directly responsible of £504m which on their own will soak up half the cash profits the club generates.
Not a penny of the £504m borrowed has benefited the football club.  Not a penny has been spent on players, facilities, Old Trafford, coaches, Carrington or even cheaper pies.  Over the next seven years, the club will have to pay over £300m of cash in interest to service this debt for absolutely no benefit.

Adding on the “Payment in Kind” securities (“PIKs”), the entire Red Football structure is teetering under a staggering £716m of debt.
Whilst the management claim this amount of debt is “manageable” the financial markets have shown they totally disagree by slamming the price of United’s bonds.

The claim that the PIKs are not the club’s responsibility is at best misleading and at worse an outright lie.
The Glazer family have not paid off a single penny of the PIKs since 2006, demonstrating that they have no funds to do so.  The bond issue unlocks the Manchester United vault so they can take the club’s cash to pay them off.  The bond documents show £130m can be diverted out of the club in the first year alone to pay the Glazer’s debts.  The £140m in the bank is totally at the Glazers’ mercy.

Football shouldn’t be about any of this, and our club doesn’t have to be exploited like this.  We can change this.  United.....