Tuesday, 25 May 2010

Half “The Equalizer” and half “Josh Lyman”?

I hear on the grapevine that select print and broadcast journalists are being invited into 50 Pall Mall, Manchester United's London office, for off the record briefings by Edward Woodward. Woodward is United's brilliantly named but oddly titled "Chief of Staff". I've never had the pleasure of meeting him as he came on board from JP Morgan after the takeover, but I can't help imagining him as a cross between:


Anyway, the message from the Chief of Staff is that all is well with United's finances. On the thorny subject of the PIKS, let me quote the BBC's David Bond (who is clearly one of the chosen few invited to hear the gospel) in his latest blog (my emphasis):

"One of the reasons why the Glazers took out a £500m bond to refinance what they call their "senior debt" (a term which basically tells you it has priority over the PIKs) earlier this year was to free them from the restrictions which prevented them from taking cash out of the club to pay off the PIKs.
The bond has now liberated them and, with the club predicting cash reserves of £150m by June, the money is there to start paying them off.

And yet, they don't expect to start removing cash from United's hugely successful commercial operation in the near future - certainly not before the end of the current financial year which closes on 31 June [sic].
Why? Implausible as it may seem the Glazers are apparently comfortable with the loan. They view it as a tax deductible, benign security."

So that's OK then. A debt instrument ratcheting up at 16.25% per annum and heading towards £600m by the end of its life in 2017 is "benign". As for the tax deductible nature of the instrument, the c. £26m of interest added to the PIKS in the last financial year saves a whole £7.3m in corporation tax. Well worth the risk I'm sure you'll agree!

Anyway, it's nice to hear that all is well. How very reassuring during the period when the club is asking fans to renew their season tickets....

PS. Q3 results confirmed for Friday at 12.30pm.

PPS. Wouldn't it be nice if United's senior management would talk to the supporters customers for a change?