Friday, 28 May 2010

Q3 Results - first thoughts and update post analysts' call

Edit post analysts call:
Not much new came out of United's call with analysts.  One point worth noting is that Edward Woodward reiterated the club's "guidance" (a term for a steer given to markets by a company on a particular subject) of net transfer spend of around £25m each financial year.

Up to 31st March this year, the reported net cash transfer spend is £32m.  Foster has since been sold (for around £4m) so the net number is now around £28m.  The "guidance" would suggest no more signings between now and the end of June.

From July, there is theoretically a lot of money available to Sir Alex, including the 2010/11 £25m budget and the Ronaldo money.  The club also has a further £75m credit facility available.  Add that lot up and you get firepower almost as massive as City's.

Of course moaning people like me think that a big chunk of that money will go off to pay some of the PIKS. Only time will tell.

The only other feature of the call was an unwillingness to be drawn on how renewals were going.  Quelle surprise.....

Links to Q3 results:

Figures here
Presentation here

New information from today's figures:

"Net finance charges for the three months ended 31 March 2010 were impacted by an exceptional £40.7 million loss on interest rate swaps related to our previous senior bank facilities. As disclosed in the bond Offering Memorandum, the swaps were linked to the previous bank facilities and the loss crystallised upon repayment of our bank loans."

So unwinding the swap cost £40.7m. The original estimate in the bond prospectus was £35m. The swap was only in place because of the bank debt the club previously had. Under the bank covenants, at least half the debt had to be "hedged". The club chose to hedge almost all of it, a bad mistake as rates fell sharply.

Other points:
Matchday
Turnover up £3.7m (4.6%) in the nine months vs. last year, all due to playing two more league home games during the period (but one fewer domestic cup game). Obviously we played two fewer home league games compared to the year before in the final three months. So matchday income for the year will be flattish.

Media
Turnover up £23.3m (26.7%) for the nine months. All due to the better CL deal that kicked in for the 2009/10 season.

Commercial
Nine months turnover up £6.1m (11.8%). This is the impact of the new platinum sponsors the London commercial office have been securing.

So robust revenue on the media and commercial side, stagnating matchday income.

Costs
Staff costs up £6.7m (7.6%) for the nine months - all related to pay rises.
Other costs up £0.6m (1.4%). Good cost control.

I take it from these numbers that the Glazers have not yet taken the £6m management fees for the year to which they are "entitled".

Interest
The last quarters to include interest charges for the old bank loans saw a net finance charge of £29.2m for the nine months (before adding the swap unwind cost mentioned above). That's an annualised £38.9m per annum, below the annual cost bond interest cost of £45m the club will now be paying.

Cash
Q3 is a cash negative quarter for the club and there was a working capital outflow of £18.5m (£52.3m for the nine months).
Net cash spend on players for the nine months was £32.4m. This covers the net spend since 30 June 2009 remember, so that includes Valencia, Obertan, Diouf, Smalling and probably "Chicharito" but excludes the Ronaldo sale.
The club spent £3.3m on the stadium during the nine months.
The net impact of the bond issue/bank debt repayment was a cash outflow of £16m for the nine months - issue costs etc.
£12.7m of the £40.7m of swap cancellation costs were paid out in cash during the quarter, the rest is still to come.

Balance sheet
With the cash outflows, cash on the balance sheet fell from £122.1m at 31st December to £95.9m at 31st March. The Ronaldo money is still safely tucked away. I believe it will be used to partially repay the PIKS. You can make up your own minds.
The gross debt is £520.9m, primarily the bonds. This does not include the PIKS (in RFJV) which will currently total c. £220m.

Initial summary
A well run football club, benefiting from better TV deals and new sponsorship deals. No growth in matchday income. Wage costs are still rising well above inflation.

Below the football club sit some very nasty financials. A £45m annual interest bill soaks up half the EBITDA, the £41m swap closure costs is half the Ronaldo proceeds on it's own. A totally pointless waste of money. Lurking, unseen in these figures, are the PIKS rising at 14.25% pa.

More later.....

82 comments:

Anonymous said...

I have no MAJOR problem with the huge debt overhang that is currently in place. However, there are two scenarios I see playing out. Maybe both one after the other. First increase top line figures for inflows and manage outflows smartly. I see them trying to do this. When they first purchase United I suspected the next step in their financing was to move from most of the bank and hedge fund debt into bonds. This they did. Next step potentially is privately floating the company, and thereafter moving it through to an IPO phase. However, most sports team owners won't do this. There are plenty of good financing options available, however, none will come cheaply if they don't improve performance of both BS and IS. By the way, what if they succeeded as owners in the long run? Would everything happening now still be questioned? United have been rather successful during their tenure. And the growth of the commercial arm is what I see being their most lethal weapon in succeeding in the long run.

Jörgen said...

Hi Anders,

Thanks for your early analysis.

In addition, I would like to add that good accounting practice would be to accrue the costs of mgmt fees, if they are to take during this accounting year, as mgmt fees usually cover costs in a company that doesn't have any revenue, like a holding vehicle. Otherwise you would have to issue new shares to keep it from spending its share capital.

Does it say anything about accruals of this kind, as I suppose they are bound to specify prepayments and such?

Anonymous said...

One additional comment to add to the above, increased obligations of public reporting. I think this is a potential positive from a fan standpoint. I think they are good business owners in general, maybe not hardcore fans. BTW, I used to stay in Tampa, and saw the way they took a laughing stock NFL franchise and turned them into a winner. Maybe some investigative history into their conduct of the Tampa Bucs from laughing stock to winners will change the views of many people.

Anonymous said...

And what are the Bucaneers now?? A laughing stock again! The glazers only know how to strip an asset bare and then leave it to sink.

Anonymous said...

Strip an asset bare? I hardly think so, means you know very little about the Buccaneers. And laughing stock? Please! Talk sense.

andersred said...

Jörgen,

Appreciate I owe you a reply on those other subjects. I'm a bit busy right now...

On the management fees, you are correct they would have to accrue them, therefore they haven't yet done this (from the prospectus):

"Under the Notes, we are permitted to pay up to £6 million per annum to one or more entities related to our ultimate shareholders for administration and management services. We expect to enter into a management services agreement."

Time will tell.

Anonymous,

They had to report publicly having tapped the bond markets. NOTHING in their actions here on in Florida suggests they like disclosure!

I appreciate the previous owner of the Bucs, Hugh Culverhouse, probably wins a prize for the worse single owner of a US sports franchise ever so the Glazers look good by comparison.

Recently, the Bucs have hardly been "winners". Salary spend 30% below cap and a 3:13 season?

anders

Jeremy said...

So, at close of 2009 full year accounts, they made a profit because of two exceptional items that came in (Ronaldo sale and AON upfront cash), and so far this year they have exceptional items going out (refinancing and currency).

They are surely going to make a big loss this year. I'll be interested to see what you think about that Anders!

Julian said...

Why haven't they used the 70m to pay down part of teh PIK debt. It's probably quite a clever ploy to show that they are not withdrawing undue amounts from the club. But at 16.25% they have to deal with that debt and I daresay a substantial amount will be earmarked accordingly. Fergie does have a sizeable amount this year for players - if he finds "value" but next year the budget has probably been 80% spent with the two new signings Smalling & Hernandez. Assuming Fergie does splash out and the Glazers set about dealing with the PIK debt what is going to happen in the future ? There will be limited monies available for new players
That's the issue.

Ole1999 said...

Thanks again Anders for your excellent analysis.

A few things I need to be pointed out are:

- The £40.7m loss on the interest rate swaps really is a disgraceful piece of business. Effectively the club are paying this amount to enable the Glazers move loans that would have been due at various points over the next 5 years out until 2017.

- Shareholder Funds are up from £458m in December to £798m in March ... this gives the impression that £340m extra capital has been put into the club but that hasn’t really happened at all … this increase is effectively part of what the Glazers were doing to increase the balance sheet on the "Use of Proceeds" part of the prospectus. They make a capital contribution and we get as an asset an interest-free loan. The Glazers are now legally free to take cash out of United and reduce their Capital Contribution figure.

- The FX loss on the Bonds was £19m on the movement on the USD vs GBP. While I accept that this is a non-cash item until 2017, it is not the whole picture. Basically, it appears they are not hedging the USD Bonds. Thus United have all the FX exposure risk on these Bonds.

Jeremy said...

Anders, what do you say to the fact that the overall debt in the club has gone down from £543.3m to £520m for the corresponding period last year, as stated by David Bond on the BBC site.

I can see in the figures where he gets that from, and that as part of the bond they paid off £507m of the previous debt and got £491m of new debt, but I'm surprised the club aren't shouting look the debt's gone down, and there must be a reason that I'm missing.

Ole1999 said...

Jeremy
In respect of 2009 results, these would NOT have included the AON deal on the P&L.
The Cash received would be offset by Deferred Income (a liability on the balance sheet). Revenue Recognition rules will dictate that over the course of the 4 year deal the Deferred Income will decrease and the Revenue will be presented.

In respect of the debt, I can't see any Net Debt reconciliation on the mufplc website. I don't think they need to talk about it as part of the bond requirements, hence why we don't receive detailed notes to the accounts. We will have to wait until year end to see the Net Debt position.

Ole

Ole1999 said...

I apologise. I see where the Debt figure mentioned is coming from (page 4 of the results report).

I don't think any discussion on Debt is useful without taking into account both the Cash (96m) and the PIKs. Thus even if they said Debt was down this would be countered with the level of the PIKs.

A worrying aspect is that on page 10 where it mentions we have already drawn down £25m of the £75m revolving facility. Question is: What has this £25m been spent on? Smalling and Chicharito?

Ole

andersred said...

Thanks for everyone's comments.

Jeremy,

The debt has gone down from £543m last March to £520m this March because the old bank debt agreement enforced repayments. At 31st December 2009 (the last quarter end before the bond issue), the debt was actually down to £508m. So in the first three months of 2010 it's gone up by £12m. One of the "advantages" of the bond vs. the bank debt is that it doesn't have to be repaid until 2017.

Jeremy,

All good points, especially the exchange rate risk vs. the dollar.

I think you are misreading the £25m RCF drawdown comment on page 10. They mention that last year they had drawn down £25m at 31st March, not this year.

take care,

anders

Diem said...

Just a couple of thoughts on two points.

The Swap: Personally, I think you win some, you lose some. The arrangement was taken our prior to the crash in interest rates, making this appear to be a much worse decision than it could have been. You're almost expecting to pay more when you enter into a swap, accepting that as a cost offsetting the benefit of the fixed repayments.

FX hedging: With rates at a low point compared to long-term trend (typically 1.6), entering into a fix at this point would be questionable.

I wonder whether the prospective growth in commercial arrangements, presumably largely in Asia, would be settled in USD rather than GBP? This could provide something of a natural hedge.

That's obviously a massive speculation though!

andersred said...

Hi Diem,

Well - no debt - no hedge - no opportunity to blow up....

Secondly, the obligation was to hedge at least 50% of the bank debt, they chose to do £450m rather than the £250m minimum.

They said last quarter they'll seek new sponsorship income in US dollars from here on. It's currently a drop in the ocean vs. the annual $35m coupon payments.

anders

Diem said...

Thanks anders.

Worth a try :-)

You never know, Nike might be persuaded to change currency of payment!

Jeremy said...

Another interesting thing. In the working capital section, page 8 it says they got a lot of season ticket monies before the end of March 2009, and this was not repeated this year.

So, Mr. Gill, how is the being on track with the past?

Actually, it surprises me that people would have renewed so early last year.

Anonymous said...

Hi anders,

I haven't been able to see the full Q3 report yet so I'll ask you. Have they included the sponsorship money we will get from AON or is that going to be in the one next season.

Secondly, I must admit I'm not very good at this financial stuff, like some, Gill reported we have £95mill transfer kitty in the bank. If we dont spend this money will it be taken out to pay the interest of the PIK's? or just be sitting there untouchable,

thanks.

The Red Devil said...

Why do anti-Glazer people insist on always referring to and including the PIK debt as part of the problem and at the same time insist that under no circumstances will they tolerate the Glazers removing money from the club to pay off some of the PIKs?

It's like: "You leave that there - we need a stick to beat you with!"

Also, whilst I appreciate Anders' efforts at explaining the finances for us who have neither the time, inclination or knowhow to do it for ourselves it would be great if it could be a little bit more impartial.

A lot of the figures used on here are FACTUAL and therefore cannot be manipulated to prove or disprove a hypothesis, however, whenever a figure is able to be manipulated a little, the opportunity is taken.

For example, every report I have read about Ben Foster's transfer to Birmingham has quoted £6 Million but Anders quotes £4 Million.

Then there is "I take it from these numbers that the Glazers have not yet taken the £6m management fees for the year to which they are 'entitled'."

Again, the figures aren't there so you put them in for yourself and then rather disingenuously slip in the word "entitled".

Correct me if I am wrong here but wouldn't a bad situation be one where Manchester United makes a massive profit and does not spend any of this surplus on various "expenses" as those profits would be subject to top-rate Corporation tax?

I always get the impression when reading this blog that I am still not being given the full story - only those parts the teller wishes me to hear, which is a shame because you clearly know your stuff and with a little more objectivity it could be so much better and would come closer to fulfilling your stated aim: "to help correct the information gap by providing information and commentary on what is going on at United."

Tier 2 Red said...

Thanks Anders for explaining all this money stuff for those of us who dont have the knowhow to understand it.

Red Devil - The PIK debt is part of the problem, although the Glazers are personally responsible for it, from reading Anders other blogs on their US business interests - they are clearly struggling, therefore United is their only 'cash cow' which has the means to pay the PIK's in the long term.

As for the Consultancy fees - im sure the bond document states that they are 'entitled' to these fees!

It seems to me in my un-educated opinion, the Glazers are trying to play it clever in this quarter, neither taking the 'consultancy fees' they are entitled to or taking money from the club to pay of the PIK's - surely this is due to the negative publicity they have had in the past few months and even the Glazers would not be stupid enough to take that money out of the club, whilst they are asking for people to renew their season tickets.

Its all very depressing - if I read the article right even without taking money for consultancy fees or to pay the PIKs, over £40 million left they club simple for the privilege of swapping bank debt for bonds. Think what money that could be spent on.

Red Devil to follow your line of thinking, I think a better scenario would be for United not to make a massive profit but to be a club run by professionals (like Mr Gill) where money is spent on keeping ticket prices down, free tickets for local schools/kids, invest in the stadium and invest in the playing squad - of course when 'the value returns to the market'!!

Maybe Im looking at it to simplistically but forgetting all this complicated financial stuff the club owes over £500 million in debt that will eventually have to be paid back - money that will not be spend on players, stadium or facilities.
Plus the over £200million of PIKs which only the naive would think the Glazers aint gonna use United's cash flows to pay off.
This is without all the complicated interest stuff!

All this for the pleasure of having the Glazers own us.

Fair play looking at this from a business point of view they have done well increasing the commercial revenues but surely this Q on Q increase can not continue indefinitely. From reading various press reports the Glazers seem to be banking on half the world wanting to watch football on their mobile phones as the future cash cow which will drastically increase revenues. Cant see it happening myself.

Anonymous said...

I think the most depressing thing I read in all this was this comment in the Guardian:

"The owners, however, do not want to capitalise their investment until revenue-boosting new technology develops, allowing access to live games and more content through mobile phones, a person familiar with the situation has told the Guardian."

So that explains the ruinous debt and the reckless risks. They think there is a pot of gold waiting in some high tech broadband future. How idiotically naive.

Like many businessmen before them they have convinced themselves that there are untold riches to be made in markets they don't really understand. The people who do understand those markets have a much more sober assesment of the rewards available.

So I guess the question now is: how long will it take for the penny to drop? When will the Glazers realise that their fantasy is not going to come true? Only them will they sell.

The Red Devil said...

Well said Tier 2 Red - I cannot argue with much of what you said there.

I just think that sometimes far too much emphasis is placed on what the Glazers may or may not take out of the club without giving credit for what they have brought into the club.

Not necessarily in terms of finance but there can be little doubt that they are attempting to increase sponsorship revenues from all kinds of areas and that they now provide a far more efficient way of running the club than was ever the case under the PLC format.

The debt is there and we cannot escape from that fact but contrary to what some people have been suggesting over recent years, the Glazers have NOT stripped the club of all its assets in order to pay them off nor have they actually taken a lot of money from the club for themselves (as far as I am aware, their own withdrawals have been in the region of £25 million plus a £10 Million loan which presumably will have to be paid back.)

£25 million over 5 years is not ridiculous money for a club which has been bringing in close to £200 Mill per year during that time. At the end of the day, they ARE the owners and they are perfectly entitled to take a cut - the word doesn't need speech-marks around it.

Also, what always seems to be overlooked is the fact that if the club had remained as a PLC then a lot of the interest that is going down the plughole would still be going down the plughole in shareholder dividends and corporation tax.

I am not pro-Glazer and I am not trying to say that all is rosy - just that it is not as bad as some people say.

I applaud people like Anders who try to educate the masses on what is happening with the finances (even if I would prefer a little more objectivity) and if the g&g campaign has had any bearing on the club's decision to freeze ST prices and the Glazers' decision to keep their withdrawals to a minimum then it has been a success for that alone.

However, I am not a fan of all this doom & gloom scaremongering about what the Glazers "might" do at some point in the future.

Call me naive but I prefer to think that an alternative outcome is possible - one that is far more in line with what we have seen from past experience:- that the Glazers continue to bring in revenues from all kinds of sources, that they tackle the debts whilst continuing to provide sufficient funds for the manager until one day we are free of the debt and bringing in an enormous wedge of cash every year.

In light of yesterday's announcement from UEFA and their "Financial Fair-play" initiative, we could be the strongest and most financially viable club in the world under the Glazers.

Well, if the anti-Glazer section are allowed to speculate on the future, so am I! :)

andersred said...

Red Devil,

Sorry you feel I'm too biased.

On the PIKS, the issue is whose responsibility they are.

Everyone agrees that the leveraged acquisition of United landed the club with £500m of debt and that this costs the club £45m a year in interest. That's a shocking waste of money in my view, others may disagree. As a fixed cost that has to be paid for seven years, it increases the risks to the club.

David Gill says the PIKS are the family's responsibility and the club will not have to repay them.

Until the bond issue, the bank covenants made it impossible for the club's cash to be used to repay them. As well documented, the bond allows this to happen whilst increasing the interest cost on the £500m to the £45m mentioned above.

This is the central argument. If people like me are correct, we have been systematically lied to for five years and the club's money will be used to pay the Glazer's debts. If this wasn't bad enough, the Glazers' mismanagement of the PIKS (instruments with a normal shelf life of 2-3 years) means they have already expanded to £220m and are growing at 14.25% (soon to be 16.25%) pa.

If there was any indication that the Glazers are capable or willing to repay the PIKS this argument would not arise.

On your other points, the Foster number was just an error on my part, not an attempt to do down our transfer dealings...

I listed the pluses and minuses of the financial structure in a reply to a comment on the "costs" post earlier this week. This included the £86m saved in corporation tax over five years.

anders

The Red Devil said...

Thanks for you response Anders.

It seems the Glazers can't really "win" here then doesn't it?

As owners of the club, can we agree that they are entitled to withdraw money from the club?

If they then use this money to pay off their personal debts (the PIKs) then that is their business?

But if the accounts show at some stage that they have taken (say) £20 Million out and then suddenly the PIK debt is reduced by £20 Million, the anti-Glazer faction would go ballistic.

It is a bit like saying that if I ran a company and took a share of the company profits to pay off the mortgage on my house then I am wrong to do so - what I really I should be doing is using the money to pay my employees higher wages or reduce the cost of my product/service.

Since my comment on this post a few hours ago, I have done a bit more reading of the more recent posts and I did indeed see the one about the costs the Glazers have brought upon the club and the corporation tax issue.

Again, your subjectivity on the issue clouds what would be an otherwise excellent piece. It seems that when the Glazers do well, they have only done what anyone else could have done and when they have not done so well, they are a bunch of idiots. Again, they can't win.

I would just like to say that I am not over the moon with the Glazers but I was never over the moon with the PLC setup (if interest payments are a waste then surely shareholder dividends are also a waste - the difference being that ONE day, one might be lost whilst in the other scenario, they would be there forever).

I have to say, however, that the thought of MUST/Red Knights in charge makes me feel very uneasy. too many chiefs, egos and agendas there, methinks.

The perfect scenario would be for some billionaire Manchester United fan to come along and buy United and clear the debts without wanting any of the money back in return. As that is unlikely to happen, I think that for all it's faults, the Glazers' ownership model is the best option currently open to us.

It could be better but looking at the plight of some clubs around the country, it could be a hell of a lot worse.

andersred said...

Red Devil,

They own the club, they can take money out. I'm not trying to rewrite the rules of business, although I prefer the ownership model the vast majority of major football clubs have where the owner(s) are in it for the glory/status/because they are fans.

For supporters ownership is about how much fans have to pay and how much money the football club has to invest in players, the stadium, youth development etc.

If the Glazers do take money from the club to pay the PIKS, then my £437m estimate of how much they have cost (minus £86m tax saving and say £100m dividends saved) will be correct.

That money will have gone (and more will follow in the years to come) and there will have been absolutely no benefit to the football club whatsoever. No South Stand development, no ticket price reductions, no star striker to play alongside Wayne etc, etc.

That's the bottom line of all this. Not that they are acting illegally in some way. Football is a sport first and a business second.

anders

The Red Devil said...

I could argue virtually every paragraph you have written there Anders because they all contain either flaws in logic or subjective opinion passed off as fact but I think I have made my points and there is no sense in taking this further.

I'll be back though, I do enjoy your blog and I hope that you continue to scrutinise the financial goings on at Manchester United both now and long after the Glazers have gone.

The real bottom line is that we are all Manchester United fans and, as you say, football is a sport first and a business second.

andersred said...

Cheers Red Devil,

We are United. Very true.

A

Anonymous said...

The Red Devil, you have a very strange way of looking at things.

Of course it is perfectly legal for the Glazers to have done what they have done. It might be immoral but sadly not illegal.

But that's hardly the point. They ARE extracting collosal sums of money out of the club just to service the debts they imposed on the club.

Even if it doesn't lead to complete financial meltdown of the club, and it could do, it puts us at a massive disadvantage to those clubs we compete with.

The idea that somehow we can continue to compete with these other clubs when we are so hamstrung by the financial impact of the Glazer regime is frankly ludicrous.

And that's not even mentioning the effect on the support with the outrageous ticket price hikes and other policies which have priced out and disenfranchised so many thousands of our core supporters. The same supporters who built this great club.

Marc said...

After reading this blog I think nothing new result came out from there q3. But I will check the given links for new information.

The Red Devil said...

"The Red Devil, you have a very strange way of looking at things."

Why thank you. I do try to think for myself and not follow a herd like a sheep.

Whether the way the Glazers have done anything "immoral" is something I suppose we could argue all day and all night.

It is like the landlord who puts down a deposit on a house and then fills it with tenants who effectively pay off his mortgage, giving him a bit of monthly income and a capital asset at the end of the mortgage term but done on a much bigger and more audacious scale.

I personally don't find the buy-to-let method of business immoral.

The difference is, of course, that tenants can choose whether or not to rent a property off a landlord.

As Manchester United supporters, we have no choice. We support Manchester United and it is not a case of "Oh, I don't like these owners, I think I'll go and support Everton instead".

Please believe me, I am not a massive fan of what the Glazers have done and as they clearly can't be bothered defending themselves, I wonder why I should bother either.

The thing is though that like it or not, the Glazers are the owners so what do we do about it?

Well, some people think that by boycotting season tickets, merchandise and generally hitting the Glazers in the pocket to such an extent that they lose money and are forced to sell.

Personally, I find this a far more immoral way of doing business.

Not to mention self-defeating and with no guarantee of success.

As unpalatable as it might seem, my own personal view is that we all should carry on supporting the team and continue to spend on the tickets and merchandise in the same way that we have done in the past.

I know that the two are inextricably linked but just try to remove the debt situation from your evaluation of the Glazers.

Are they really doing such a bad job?

Are we really hamstrung in the transfer market or are Gill and Fergie telling us the truth (but it is a case of that not fitting some people's arguments and so choosing to disbelieve it)?

Unless Anders can show me any different then even if someone did come in and buy the club from the Glazers tomorrow then they would not do it as an altruistic gesture. They would want their money back and as we appear to be looking into a purchase price of well into £1 Billion+, we would actually be in a worse debt situation than we already are.

On top of that, I am not entirely convinced either that "fans" make the best owners.

Look at the situation at West Ham where David Gold is a West Ham fan and never passes an opportunity to voice his opinion - even if that entails criticising his own team in the match day programme notes!

The fact that the Glazers keep their mouths shut, leave the football to Sir Alex and just get on with business is not a bad thing. Certainly give me that over a David Gold type owner any day.

When I originally posted on here today, it was just to try to redress some of the anti-Glazer bias.

There's not much of it around.

Perhaps this is why you find my thinking "strange"? :)

monsta666 said...

I know this may seem, harsh but is there a realistic chance of this model being sustainable? The whole debt-repayment regime (and regime is the right word) all seems rather hopeless. The whole model seems to be based on the assumption that Manchester United will forever be ultra successful. This is obviously impossible so sooner or later the whole thing will collapse.

What is most worrying is the fact that the debt has increased despite Manchester United enjoying one of the most successful periods ever. If the debt increased then what hope do Manchester United have in reducing it in the future?

A barren two-years with little or no silverware could prove disastrous and with Giggs, Scholes, Neville, Van Der Saar and most crucially Alex Ferguson retiring in the coming years they will need to spend significant sums in replacing them. If they do not do this Manchester United will not be competitive in the future.

The Tampa Bays have hardly won a thing in recent years due to a lack of investment in the club but thankfully for them the club will endure as costs are more regulated. This is not the case here and with no drafts a large dip in form would prove catastrophic for United's finances.

I do not see the Glazer's being very competent with their ownership of Manchester United. They have underestimated costs massively, they have taken high risk loans and generally failed to think of adequate plan to repay these loans.

Even this stunt with not paying the PiK loan is ill-advised and is generally short-sighted. It is a simply a PR exercise, a PR exercise that will cost United about £20m. There is simply no financial sense in allowing a 200m loan at 14% to roll for another year. As bad as it would have looked, the Glazer's should have spent all of the Ronaldo money reducing this costly loan. By not doing so they are putting the club in greater danger for the simple reason of saving face.

In any case I felt they should have sold the club this year. The club has just come of the back of hugely successful period, and they are on the wane (sorry if this is harsh). I feel the value has reached its peak and they would have gained maximum profits selling today. In the coming years their field performance will decrease (there is no player investment) and this will reflect in its future value as the clubs value is closely linked to on-field performances.

Despite not being a Manchester United supporter this whole saga angers me very much. The Glazers are a disgrace to English football. My club is one of United's bigger rivals certainly in the 90's (not Chelsea or City) and whilst I would love our club to beat them I never wanted to win like this.

I would be tempted to joining the MUST cause but I don't think they would accept non-United supporters!

Another question that I am curious about: how would Manchester United fair under the financial fair play rules that UEFA want to push forward? If they couldn't qualify for the Champions League that would be the end of the club. I know the question is difficult to answer, but as a financial expert what is your opinion Anders?

Julian said...

It seems to me that what needs to be done is a projection of what the financial scenario is likely to be over the next five to seven years. Is the financial situation as precarious as is made out or can, given certain criteria, the Glazer plan work out. Before the fans are asked to make sacrifices like staways, they need to know the tangible dangers involved in an over-leveraged business but one that seems to be earning substabtially increased revenues year in and year out. What has to be shown, perhaps, is that the Glazers cannot pay down debt, provide money for the team and infrastrucutre spend as well as drawing out sums for themselves. What indeed are the dangers of the whole thing coming unstuck ? How great are these given forseeable circumstances ?

steven said...

I've just tried to look at a rudimentary financial scenario for this years financial situation regarding the Uefa Financial Fair Play rules recently imposed and the situation looks bad for United. I'm sure that the club will fall short of 20-25m below the threshold and I'm excluding the effect of the interest rate swap. This means that the Glazers will have to drastically reduce costs, wages, operational costs and transfer spend. An alernative would be to drastically improve turnover or a combination of both. Another alternative is raise that amount through player sales.They are desperately trying to exclude the PiK loan from this scenario but at least Uefa seem wise, at the moment, to their lies.
Whether a bid is forthcoming this summer or not I think the momentum for new ownership should continue.

Matt said...

Red devil, you seem remakably relaxed about what's happening. I agree that it's not bound to end in disaster, there's significant chance that it will.

At best, we are losing 45m per year more than we would have been without their ownership. You could argue that they've grown the commercial side more than it would have grown anyway, but I expect that's offset by the 'loans', 'consultancy' and other fees being siphoned off.

At worst, you can add to that - what - another £500m over 5 years ?
So £145m worse off per year.
We may be a huge club, but we're not that huge. If it looks OK now, just wait until 2015, 2016.

Just look at what's happening. First - ticket prices rocket.
Second - we start selling star players without replacing them.
All this just to keep pace with the debt never mind repay any of it. So which bullet can we fire next... tickets can't go up much more, the only big ticket player left is Rooney - then it's the stadium I'd suggest.

Anders should you have time I would love to see a projection going forward 5 or 7 years, assuming that at least some of the PIKs need to be repaid by us, to see where we end up / how much is likely to be available for transfers etc. as it seems to be the asset stripping has started and is bound to continue.

And Red Devil, should you see that breakdown then I'd love to know which bits you find comforting.

The Red Devil said...

Matt,

It isn't really possible to project 5-7 years into the future though is it? And any such projection made by Anders would not exactly be unbiased now would it?

Without being privy to what the Glazers are doing behind the scenes, the best you can do is look at the last five years and imagine that it will repeat itself knowing full well that it is only pure guesswork and speculation.

I could say right here that the Glazers are about to announce a £200 Million per year sponsorship deal and whilst you might be sceptical, you can't prove me wrong, can you? (I'm not saying that, by the way, I just made it up! :) )

I have seen no evidence of asset stripping or are you suggesting that the sale of Ronaldo was evidence of this?

If we had to drag him to Real Madrid kicking and screaming when he didn't really want to leave Manchester United then I would have been outraged but that wasn't exactly the case was it? He wanted to go and the money was too good to refuse.

As for Wayne Rooney. Again, this is yet another thing that "might happen in the future" that the doom-mongerers like to use, despite just about everyone who matters, including himself, saying that he won't be leaving United.

I do think that Ronaldo and Rooney are completely different cases and I said last year that the Ronaldo sale was not evidence that the Glazers are selling players to make ends meet but that if Rooney were to be sold for a similar amount then that probably would be.

Until it happens though, you can't really use it as a stick to beat the Glazers with, I'm afraid.

I am not happy with the debt situation but my stance is that it is there and like them or loathe them, they own Manchester United and there's not a lot we can do about that really.

Suggestions that we should all withhold money from them (not renew STs and stop buying merchandise) and even boycott any commercial body who sponsors or funds Manchester United in any way make me feel quite sick, to be honest.

It's self-defeating and might create a self-fulfilling prophecy.

As for "which bullet can we fire next?" well, increasing the revenues generated from sponsorship and exploring other revenue streams in other countries appears to be the way the funds will be generated. Something the Glazers seem to be fully aware of and actively pursuing at this very moment in time.

I just prefer to see a light at the end of the tunnel rather than tell myself that all is dark and hopeless.

A also prefer to believe that the Glazers' rational self-interest will be sufficient to ensure that they do everything possible to maintain United's position amongst the elite of world football.

I also prefer to believe Sir Alex Ferguson when he says he has money to spend and has no problem with the Glazers.

I would prefer it more if the likes of Gill or even the Glazers themselves would do a bit more to reassure the fans though, I must admit. Gills contemptuous and dismissive comments the other day weren't very smart.

Diem said...

monsta666: The Glazers are a disgrace to English football

I don't think that's true at all - what damage have they done to English football? Even if their stewardship of United could have been better, I hardly think their conduct is worse than Hicks and Gilette at Liverpool (constantly bickering and not delivering on promises of a new stadium), Pearson et al at Hull (gambling - and losing - on the Premiership), and frankly one of the worst: Storrie at Portsmouth.

Compared to this the Glazers can be accused of a slightly worse financial model than before (debt costs). They've not interfered with the running of the club (David Gold noted above), and Sir Alex's big-money signings in the past haven't been unqualified successes: for each Ferdinand and Rooney there's a Veron and Berbatov (although I keep hoping Berba will come good).

Red Devil: I think your comments about bias are too strong - all I've seen Anders produce is factual data supplemented by commentary. This mirrors the model professional news organisations[1], so I'm not sure to what higher standard you can be expecting?

If Anders were to produce a forward looking view, I'd expect it to be of similar standard to his work on "The £437m of Glazer costs" - fully referenced and open to discussion.

[1] e.g. Tim Harford's observations at http://www.ft.com/cms/s/2/c1024624-62e8-11df-b1d1-00144feab49a.html

DP said...

"It isn't really possible to project 5-7 years into the future though is it?"

It's fraught with all kinds of difficulties and uncertainties, but that's exactly what businesses do in order to borrow money, to project future growth, and to plan for that growth (and prepare for potential difficulties). It would be difficult for someone outside of the club to do, which is likely why so few people are prepared to attempt it, but it would certainly be helpful in attempting to understand where the possible risks and rewards are in the medium term.

Not understanding the possible pressures that we could experience if certain targets aren't met and levels of success maintained is actually reason for more concern, not less. When the risk is potentially very high, an absence of knowledge is actually thought to be more of a reason for action, which is why the case for action on climate change is strengthened by the levels of uncertainty, given the potential for unmitigated disaster.

And the logical implication of your comment is that the only point at which it would be reasonable to raise the alarm about the financial health of the club would be when we are either very close to, or actually in the process of, financial disaster.

"And any such projection made by Anders would not exactly be unbiased now would it?"

Objectivity is a very difficult skill to master. But objectivity can also be abused, as we regularly witness in the media when they frame an issue as two or more opposing sides with a valid point of view, when in fact, one of the sides is, as near as it is possible to be, objectively correct, while the other holds a position that has no basis in fact, whatsoever. I'm thinking specifically of many scientific issues where total crackpots are often given equal time alongside someone who has worked in that area for decades. That's not objectivity.

The problem with your criticism is that you haven't actually made a compelling argument that shows that Andersred is lacking the necessary objectivity to write about this issue in a fair and responsible manner. But even if you could make that argument, and conclusively so, unless Andersred had specifically sold himself as an dispassionate and objective observer, your argument literally crumbles to a complaint about the blog not being exactly as you would like it to be.

The only honest approach, therefore, is to actually deal with the arguments and to show that they're either not correct, or that they ignore something important which significantly weakens them to the point of irrelevance.

The Red Devil said...

Anders IS anti-Glazer. He doesn't hide the fact. Therefore, his natural predisposition when drawing up his projectionos comes from an anti-Glazer bias.

Anders is objective with the known facts (i.e. the figures that have been released in the various accounts and reports etc).

However, much of the problem with the Glazers is that we don't actually know what goes on in their minds, we don't know what their plans for the future are and we don't know what they are working on right at this very moment.

In other words, there are an awful lot of gaps there to be filled.

Anders tries his best to fill them but it is always coming from an anti-Glazer stance.

Whenever the subject of money the Glazers COULD take out of the club is being detailed, it is always written in that light i.e. they COULD take £25 Million but by the same token, they might decide NOT to take the £25 Million out of the club.

This possibility is never mentioned so that almost every time, the worst-case scenario is being delivered.

That's all I am saying.

It is not a criticism of Anders or this Blog. I like this Blog and it does serve a great purpose.

However, it is important that people realise that there is bias there... not that it is difficult to detect when you read things OBJECTIVELY and not get caught up in the subjective and emotional slant that Anders sometimes employs.

I mean, look at the page:-

"What's all this fuss about the Glazers anyway?"

"In a nutshell, the Glazer family are financially exploiting United supporters to make themselves rich whilst adding nothing to our football club."

Does that sound like an objective fact or a rather emotionally-charged, subjective opinion?

Whenever reading Anders' figures, bear that sentence in mind and remember that the person interpreting the figures and making the projections is coming from that position.

That's all I am really saying.

If I come across as a Glazer fan then I have obviously not made myself very clear. I cannot defend the Glazers with any great conviction because I don't have a crystal ball and I cannot read their minds.

They might turn round next year and sell the players, the stadium and Carrington in which case I will be sitting here as outraged as anybody else and if anyone wants to set up a Glazer hunting expedition at that point, sign me up.

However, at the moment, this remains pure speculation.

As owners go, the debt apart, they don't seem all that bad to me. They stay the hell out of the football side of things and seem to let Fergie get on with how he wants to run things.

Fergie says that they have not imposed any limits on his spending so why CHOOSE to disbelieve him?

The team remains successful on the pitch and whilst I am concerned about whether we will be able to replace the older players, it could well be that that is not exactly a problem that can be solved simply by waving money at it anyway.

At the end of the day, there must be a thousand businesses in the world that the Glazers could have bought using the same methods that they have used to buy Manchester United. If their intentions are entirely dishonourable then why choose, of all of them, a "business" that is under the most intense media scrutiny 24 hours a day and means that you will be trying to do your dirty work under the full glare of that publicity?

There must have been easier targets with fewer people around to get in your way? Why the hell choose Manchester United, one of the biggest names in the world of sport?

I don't have the answer to that one either...

andersred said...

Thanks for the eloquent defence DP, much appreciated.

I do have views, they are anti-Glazer, but they are born out of evidence based analysis. "Ideologically" (if that isn't too stupid a word to use in the context of football ownership) I would be against a Sheikh Mansour type owning United, but I obviously couldn't and wouldn't make any of the same financial arguments against such ownership!

I have thought about modelling the club going forward but really don't see the point for the reasons DP gives. The club itself uses a consistent 3rd place finish in the league, group stage qualification for the CL every year and a quarter final every four years as assumptions for its modelling. Such assumptions are just that, assumptions, with little predictive power. Last year (2008/9), the club only missed it's own EBITDA forecast made in 2006 by £2m (2.1%), but this was achieved by earning revenue £45m higher than plan with costs £47m higher! That should be a lesson on the difficulty of forecasting football clubs.

Where I do think The Red Devil is barking up the wrong tree is on the Glazers' intentions re: the PIKS and the restricted payments. To use a crack pot theory, more applicable here, the bond issue is an example of Hume's "argument from design". It is so clearly designed for a purpose, at a cost (in higher interest and fees). If you don't need the club's money to repay "your" PIKS, why build the bond that way? Of course this is not proof, but add in the failure to repay so far and have a quick look at First Allied and the evidence is pretty strong.

Nobody can forecast the future behaviour of a family or individual with 100% certainty of course, but the bond prospectus is the financial equivalent of finding tons of fertilizer in what you suspect is a terrorist safe house....

anders

Jörgen said...

I can't really contain myself anymore so here goes:

Anders, I do believe you were a bit biased when you released the 437m cost figure.

As I pointed out, a loan isn't a cost and you agreed, but only after the cost figure was widely published. It's not a big deal, but still it shows your tendency to interpret things negatively, as your motivation to include the loan as a cost was, that you are not sure that the loan will be paid back. You might be right but there is absolutely nothing that points in either direction.

The rolled up interest on the PIK's are also included in the cost figure of 437m. Again, this is interpreting things negatively. If the Glazers were to sell United to the Red Knights, the most likely scenario would be that the Glazers paid the PIK's with money from the sale. The interest would never hit the club.

Moreover, in that calculation of what the Glazers have cost United, the alternative costs are not included. The only way to make sense of the 437m is to present what other costs we would have had if we were still a plc. What would the dividends have been if we presume the same levels as under the plc? Were there anything back then looking like mgmt fees? How much? (And not to forget, what is a mgmt fee? Is it really to be interpreted as siphoning off cash?)

Since the figure of 437m was introduced it has now become a fact, regardless of how much we discuss it here. I'm not even sure it would change anything if Anders, for some reason, came out and said they are completely false (I'm not saying they are). The problem with this is that MUST actually asked Anders to provide them with the figures. Add that to the disussion above (about what figures to include and how to interpret them) and you don't have to be a conspiracy theorist to question the impartiality of the figures.

Of course, It's Anders blog (and life) so he can say what he wants on it, and I do appreciate the blog and the efforts Anders puts into it, but it would be better without the constant underscore of the Glazers doing everything out of malice (in search of a better word).

I take comfort in the fact that we all want the club to be in a good shape and as successful as ever. "Believe" would be a good term, I suppose.

Brgds
J

EastStand375 said...

I must say that was a superbly written piece by the poster named ''The Red Devil''.

You have very eloquently detailed exactly why NO Manchester United supporter should take this blog seriously if they're looking for a fair and balanced view on the club's financials.

Alternatively, if anti-Glazer propaganda and bias is your cup of tea, then pull up a chair and make yourself comfy because this is the best place for you guys!

And just for the record Anders, we'll have to wait and see what happens with regards to the PIK loan. The way you ''spin'' it, anyone would think that it was simply a matter of time before the club's cash is used to repay part of that PIK loan when in reality that couldn't be any further from the truth.

You can put me down for a pint of Stella by the way.

andersred said...

Jörgen,

They asked me for an updated total (estimates to end June 2010) of the same calculations I did in my post on 5th February (http://andersred.blogspot.com/2010/02/money-for-nothing-where-ticket-price.html).

That was "cash costs" and I included the £10m loan as it was an outflow of cash - it is of course NOT an accounting charge.

In that post I excluded the PIKS because it is a controversial area. Personally I am convinced that if we take the Glazers at their word when they say they are not selling the club, then the only possible source of capital to repay them is the club itself. I will be able to expand on the rationale behind this belief more fully next week. I was happy to include the rolled up interest in the numbers I supplied MUST for this reason.

The purpose of the recent post itself was to provide the sources for the figures MUST used. I keep saying "people can make up their own minds" because I mean it! If people disagree with the PIKS point, exclude them. Please. How many other propagandists provide full sources to allow people to draw their own conclusions?!

As for the benefits of the capital structure, I am very happy to list them as I have in answer to questions. The primary one is corporation tax. The British taxpayer in me wonders how great that "saving" is of course! There will have been dividend savings too, but as a quoted company, United was a low yield stock which looked for consistent dividend growth and paid occasional special dividends in bumper years. At 6% CAGR since 2005, the cost in dividends would have been £44m, at 8% CAGR, £48m. Not savings that would have dented the huge costs incurred under the Glazers...

If you want to ask MUST why they ran with a "costs" story not a "cost benefit analysis" ask them. It would be a pretty naive question, they are a campaigning group and they want to make headlines!

In any event, don't let process issues overwhelm the essential debate.

And yes, I agree we do all want the club to end up in a good state. "United", as the word goes....

anders

The Red Devil said...

EastStand375 - thank you. I knew when I posted on here that I was entering something of a lion's den. It's nice to receive some support.

Anders - Where I think you are barking up the wrong tree is a couple of words you used in the paragraph accusing me of barking up the wrong tree! :)

"If you don't need the club's money to repay "your" PIKS, why..."

That pretty much encapsulates the whole conundrum.

As fans, we tend to think of Manchester United as OUR club.

As the owners, I suspect the Glazers see the club as THEIR club.

As I said before, as the owners, they are perfectly entitled to take whatever money they want to take out of it and spend it on whatever the hell they want to spend it on.

Not a particularly pleasant thought but it remains, like it or not, a fact.

The question is:- will they take so much out of the club that they will ruin it. The common-sense part of me believes that they won't be that stupid.

Reading between the lines, it looks like you are just waiting for the Glazers to take some money out of the club and pay off some of those PIKs and you will say, "Aha! Caught you! I told you all this would happen!"

Would you prefer that they took the money out and spent it on a yacht or something?

Let me just ask you something. If the Glazers COULD pull this off, pay off all the debts and then only take a small percentage for themselves from profits after that point, do you not think that they would be very good owners?

Anyway, to show that I do have a sense of humour about this whole Glazer thing, here's something I wrote a couple of weeks ago.

Call it a peace offering!

A Knock on the Door

andersred said...

That's very funny. Peace offering accepted.

The 40% hike in ticket prices alone makes them bad owners in my view.

The terms of debate on the PIKS are set by David Gill and the Glazers. If one of them turns around tomorrow and says "yes, despite being non-recourse, we expect to use the club's cashflow to pay off the PIKS" then THAT argument is settled.

At that point my £437m cost number (perhaps less the £10m in personal loans) will be definitively right. Then we can argue whether their ownership is worth that sum.

In the meantime, the PIKS are central to everything...

anders

andersred said...

Eaststand,

Let the record show. If we don't see evidence of money be paid up from RF Ltd to repay some of RFJV's PIKS by 31st May 2011 I owe you a pint of Stella.

A

Ole P. Pedersen said...

To The Red Devil: You say "If the Glazers COULD pull this off, pay off all the debts and then only take a small percentage for themselves from profits after that point (...)" - what makes you think they will take a SMALL percentage when/if debt is repayed? Of course they will up their own cut.

Increase in turnover is their plan, I think, and looking at it from their angle, that has worked reasonably well so far. Question now is whether turnover can continue to increase the same way. Overseas TV rights double from the coming season, and now contribute serious amounts of money for the next three seasons. However, internet rights are included in that. Their main challenge turnoverwise may be that it seems very unlikely that turnover from gate receipts and match days will increase at all short term.

Jörgen said...

Anders, thanks for your comments.

I don't want to call you a propagandist. And I do appreciate that you are trying to be transparent in how you reach your conclusions. Also, the fact that we are disussing things now is proof that the debate is open.

The problem I have is that when someone tries to challenge or moderate popular opinion of the Glazers (i.e that the Glazers are all bad) they are being called trolls or other derogatory names. Most of the time, there isn't even a debate.

When MUST have published a figure of 437m this is the perceived truth and from a PR perspective it's going to be very hard to change that. Not because it is a fact, but because it was published and widely quoted.

But if we look at this number it is perfectly possible to subtract the loan (10m), the mgmt fees(6m), the savings in corporate tax (86m), no dividends (44m) and the rolled up interest on the PIK's (83m). We are then left with 208m which is less than half your number (I'm not sure if you use the rolled up interest to offset corp tax, so this might be wrong).

I'm not saying that these are figures I stand by or even that they are correct. All I am saying that the figure of 437m was published but with a different mindset this number could have been substantially lower.

When you say that people can exclude them if they want to, I say it's too late for that. From a PR perspective the figure of 437m is established. You are an established figure in this discussion so you have a big influence on how things are perceived. Personally, I like the fact that you are transparent in your reasoning, but most people just read your conclusions and go from there.

The danger in this is that it promotes knee jerk reactions. If we look at the Red Knights a lot of people were ready to accept them even without knowing who they were or what they really had planned. This might put us in a situation which is even worse.

On a positive, your third paragraph is phrased well in using words like "personally" and phrases like "if we are to take the Glazers at their word" (Btw, I totally agree that if they are not selling they have to use cash from the club to repay the PIK's, but I cannot be sure that this is their strategy).

I believe that this is the way to go forward as otherwise it is too easy to be called a propagandist by the Glazer camp.

I hope you see this as a way of me trying to give feedback to an already good blog.

I am looking forward to your piece on their intentions with not selling the club.

Brgds
J

Jörgen said...

Anders, thanks for your comments.

I don't want to call you a propagandist. And I do appreciate that you are trying to be transparent in how you reach your conclusions. Also, the fact that we are disussing things now is proof that the debate is open.

The problem I have is that when someone tries to challenge or moderate popular opinion of the Glazers (i.e that the Glazers are all bad) they are being called trolls or other derogatory names. Most of the time, there isn't even a debate.

When MUST have published a figure of 437m this is the perceived truth and from a PR perspective it's going to be very hard to change that. Not because it is a fact, but because it was published and widely quoted.

But if we look at this number it is perfectly possible to subtract the loan (10m), the mgmt fees(6m), the savings in corporate tax (86m), no dividends (44m) and the rolled up interest on the PIK's (83m). We are then left with 208m which is less than half your number (I'm not sure if you use the rolled up interest to offset corp tax, so this might be wrong).

I'm not saying that these are figures I stand by or even that they are correct. All I am saying that the figure of 437m was published but with a different mindset this number could have been substantially lower.

When you say that people can exclude them if they want to, I say it's too late for that. From a PR perspective the figure of 437m is established. You are an established figure in this discussion so you have a big influence on how things are perceived. Personally, I like the fact that you are transparent in your reasoning, but most people just read your conclusions and go from there.

The danger in this is that it promotes knee jerk reactions. If we look at the Red Knights a lot of people were ready to accept them even without knowing who they were or what they really had planned. This might put us in a situation which is even worse.

On a positive, your third paragraph is phrased well in using words like "personally" and phrases like "if we are to take the Glazers at their word" (Btw, I totally agree that if they are not selling they have to use cash from the club to repay the PIK's, but I cannot be sure that this is their strategy).

I believe that this is the way to go forward as otherwise it is too easy to be called a propagandist by the Glazer camp.

I hope you see this as a way of me trying to give feedback to an already good blog.

I am looking forward to your piece on their intentions with not selling the club.

Brgds
J

Jörgen said...

I double posted for emphasis... :)

Sorry about that, but I don't know what happened.

J

The Red Devil said...

Ole P. Pedersen said

"what makes you think they will take a SMALL percentage when/if debt is repayed? Of course they will up their own cut."

That's kind of why I started my question with the word IF...

The Red Devil said...

Just been watching Sky Sports and I saw the MUST vice-chair state that since taking over in 2005 the Glazers have cost Manchester United "almost £450 Million".

Is this a factually correct statement?

I don't want to hear about what "might" happen in the future regarding the PIKs loans.

I want to know if £450 has "haemorrhaged" from Manchester United since 2005. Yes or no.

The Red Devil said...

£450 Million (obviously). Even I am prepared to concede that £450 has probably gone down the swanny! :)

Ole P. Pedersen said...

This is certainly the best Glazer debate around.

Getting the numbers crunched by Anders is certainly a VERY big plus for us all, he turns pretty complex stuff into something more understandable for people like me (journalists, the lowest of the low!).

But I see some good points being made about how we should not automatically assume what will happen. And certainly, saving 86m in corporate tax is hard to ignore.

May I suggest: Publish a table of cost/savings with one coloumn that sums the already occured events, one that sums the projected/possible/likely/inevitable future events, and one total coloumn. This would give us a minimum cost (the already occured) - and a possible/likely cost to be incurred (which, of course, will be rising every year by current standards).

As a journalist, I understand why MUST use the highest number, because the higher the number, the better chance there are to 'sell' the story to the media. However, the campaign will probably have to go on for years. Banding about numbers that aren't factually correct destroys credibility, if not yet in the media, then certainly with the people who run this club we all love. And I have yet to find a 'Gill out' campaign that involves many normal people.

I would say that Anders is about established as THE analyst within the United community, certainly from where I sit in Scandinavia. Keep up the very impressive work, we need this sound and serious debate - whether we think more or less of the present owners.

DP said...

Part 1

Anders IS anti-Glazer. He doesn't hide the fact. Therefore, his natural predisposition when drawing up his projectionos comes from an anti-Glazer bias."

Your assertion is noted, but it's an ad hominem and an attempt to poison the well.

It's simply not an argument against his position, because it shouldn't matter whether Anders is a sociopath, as long as his arguments are sound, or at the very least, defensible. It's just not honest to insist on questioning his objectivity without first showing that he is wrong, and then linking that to his beliefs about the Glazers. What you are doing here is attempting to discredit Anders by pointing out that he is biased, before you have shown that he is wrong, which is poisoning the well.

"However, much of the problem with the Glazers is that we don't actually know what goes on in their minds, we don't know what their plans for the future are and we don't know what they are working on right at this very moment."

But who's fault is that? I hadn't heard of amortisation until recently, and I'm now in a position where I feel that I have to scour over balance sheets that I barely understand in an attempt to find out exactly what is going on at my club.

Much of this is irrelevant to my own position, anyway, which is largely philosophical. Of course, I'm perfectly aware that idealism is not a recipe for any kind of long-lasting stability or success, which is why I am prepared to compromise, and why I accept that if things were different my stance would be significantly less hostile, despite not being entirely happy with any of the owners that we have had at any point during my lifetime.

"Whenever the subject of money the Glazers COULD take out of the club is being detailed, it is always written in that light i.e. they COULD take £25 Million but by the same token, they might decide NOT to take the £25 Million out of the club."

Think about what you are saying here, because it looks to me as though Anders is simply making people aware of the possibility, which is a perfectly reasonable and valid thing to do. If people are going away with the idea that the Glazers are taking that money out, I could understand the concern, but I'd also be a lot more concerned about those people and their ability to process information.

I suppose that you could argue that by mentioning it Anders is actually giving it more prominence than it deserves, particularly if there is no evidence that they have used that option, and that this is the evidence for his lack of objectivity.

But there's a problem. If Anders was in fact staunchly pro-Glazer, you would necessarily have to conclude that he also wasn't being objective if he didn't mention those details. And that reveals a contradiction, because the fact that someone is pro or anti should not persuade you to make a contrary argument, depending on which you are dealing with. Either it is the right thing to do to mention those details, or it isn't. How you view the person revealing that information is irrelevant.

DP said...

Part 2

"Does that sound like an objective fact or a rather emotionally-charged, subjective opinion?"

Let's test it.

Are "the Glazer family...financially exploiting United supporters"? Yes, that's an objectively true statement, although it applies to all businesses and club owners. But it's further and more devastatingly evidenced by the increases in pricing and the fact that the supporters money is being used to finance their them ownership the club, which is contrary to the expectations of almost all football fans and what they believe that their money should generally be used for.

Are they "[making] themselves rich", in the process? Rich is obviously a relative term. There are plenty of reasons to think that they are in it for the potential profits, but I can't deny that, despite having already loaned themselves tens of millions, it's not absolutely certain at this point whether they will take any more money from the club for themselves. There is plenty of evidence to suggest that they will, but it obviously can't be shown to have happened until it does happen.

However, it is objectively true to say that they have so far used the clubs profits to service the debt, which is the very definition of enriching themselves with the ownership of the club. We don't say that someone isn't rich if they have very little cash, but own several billion pounds worth of real estate.

Finally, are they "adding nothing to our football club"? Again, this is arguable, because of the scope of what it includes, and because a case can be made either way, but you'd have to imagine that it is meant from the perspective of the fans, particularly when much of the case for them having added value to the club is actually at the expense of the fans.

The only possible way to make a case for the Glazers having added value to the club would be in those areas that don't directly involve fans paying more. But when we look at it from the perspective of the club as a whole, it's very difficult to argue that they have added anything like what they have taken, particularly when much of the "addition" has come from the fans pockets.

In the end, it's just not that easy to remain entirely objective at all times, so it's really not fair to cherry pick the odd statement and use that as evidence of a lack of objectivity, particularly when the person involved has made no secret of his stance on the issue. It's also rather condescending to complain about objectivity as if the people reading this blog aren't sufficiently intelligent enough to make up their own minds.

The argument made here would be just as relevant on any website and about any issue, including on newspaper websites where journalists are supposed to adhere to certain standards. That should tell you that it just isn't a particularly effective line of argument to pursue.

DP said...

Part 3

"They might turn round next year and sell the players, the stadium and Carrington in which case I will be sitting here as outraged as anybody else and if anyone wants to set up a Glazer hunting expedition at that point, sign me up."

And this is where the real difference of opinion lies. Obviously you don't feel that events so far have been sufficient to cause you to be anything more than ambivalent towards the Glazers, but others clearly do. As I've said, my own position doesn't rest on them financially destroying the club, or even raising prices to the extent that they already have. But as I've also said, I'm not naive enough to think that I can demand the perfect owner, so I am willing to compromise.

But there's a problem with the idea that all of the players would need to be sold, as well as the stadium and training ground, for you to become outraged. At that point, it would clearly be too late to do anything. You appear to be almost exclusively concerned with the state of the club as you personally envision it, whereas I and others can't separate the club from the fans. A football club, after all, is really an abstract entity, which tends to include numerous buildings and employees, but also, crucially, the fan-base. There doesn't appear to be any reason to exclude the fan-base from consideration, if you include the buildings and the employee's, which you necessarily must (because without them Manchester United would just be a name).

Once you take the fan-base in to consideration, though, the case against the current ownership is already massively strong, because there is no argument — and indeed, very few people are even willing to defend the principle — for loading a debt free club with £500m-£700m of debt, and then expecting the lifeblood of the club, the fan-base, to pay that off so that you can own the club.

The fact that it's legal says nothing about whether anyone considered all of the circumstances in which it could be used when it was made legal. There are certain circumstances in which most people can see the logic to it being allowed, because the relationship between the company and customer is one of mutual trade, free of coercion. But that breaks down when the circumstances are sufficiently different as they are between a football club and its fan-base. It's not at all clear that the psychology of the average football fan is anything like that of the very same people when they are buying goods and services in a normal environment.

Fergie says that they have not imposed any limits on his spending so why CHOOSE to disbelieve him?

This isn't about believing or disbelieving Sir Alex, because we can actually check to see how much he has spent. But even if he had more money to spend than under previous ownership, that wouldn't excuse the fact that £45m is needlessly being taken out of the club every year to service the debt, and many millions more in fee's and such like as that debt is refinanced.

This is my money, and I have every right to complain about how it is being used. If I found out that Marks and Spencer was using money to fund child-trafficking, for example, I would no longer shop there.

This situation obviously isn't as serious as that, but there is no law which states that I can only be concerned about certain things and not others. I don't want to pay off the needless debt so that someone can own my club. Unless you can persuade me that it's actually a good thing to do that, what you are basically saying is that you are happy supporting the club as it is and that you really don't want to see the boat rocked. That's not a particularly persuasive argument, but it is a selfish one, and I'd suggest that you talk to some of the people who can no longer afford to watch their club after 40-50 years of following it everywhere.

The Red Devil said...

DP. As soon as I saw "Ad Hominem" used in your second sentence, I though "Uh ho... here we go" but out of courtesy, I read your essay. Perhaps you should hand it in for your final exam? You might actually receive a C for it.

A word of advice... philosophy students bore the pants off people. That glazed look that passes over people's eyes as you dissect and analyse their every word at parties is NOT adoration and admiration at your intellect.

Anyway, this isn't about philosophy and if you want a philosophical debate, there are plenty of discussion forums out there.

I am trying to get to the bottom of this question:-

Have the Glazers cost Manchester United £450 Million since they took over in 2005?

This is the claim being made by MUST and it has obviously come from Anders' calculations.

It is a claim that must be backed up with objective proof or it is, quite simply, a lie.

A is A. (Aristotle's Law of Identity - stick that in your essay for an extra credit).

The more I see, the more I am forming the conclusion that Anders cannot actually point to £450 Million but can only do so by making several assumptions.

They might well be based on very sound reasoning and an extremely well educated guess but, until that £450 Million becomes an actual FACT then it is wrong to present it as such.

Despite all the things the Glazers may or may not do in the future, there is such a thing as "innocent until proven guilty" in this country.

The proof of guilt must come from the accuser. The Glazers cannot be expected to prove what is currently a negative because, as a philosophy student such as yourself will know, that is an impossibility.

What Anders COULD do is say that it COULD be anywhere between £Y and £Z depending on certain factors which are at this stage unknown but as someone else noted above, that isn't exactly the stuff of headlines.

I'm not going to respond to the rest of your essay. It would get tedious and boring very, very quickly.

I came here to make a point, I think I have made it.

I will leave it to others to judge because, contrary to what you say, I DO NOT think they lack the intelligence to decide for themselves.

Jörgen said...

DP

I don't agree that "financially exploiting" is an objectively true statement as there is something in there called connotation. "Exploiting" represents something negative in most cases. When trying to remain neutral, words with strong connotations, either way, are not recommended.

Neither do I agree that the definition of enriching yourself is to use the club's money (profit is not the correct term) to make interest payments. The debt remains (well, it has changed a bit).

This means that if the value of the club is the same, they are no richer than they were before they bought the club. If the value has gone up, they are richer, but not because they have taken money from the club. Unless they have taken cash from the club to line their own pockets, but as we have concluded they have not taken any substantial amounts (you can always complain about the loan and mgmt fees, but the dividends when we were a plc were much higher).

I have now shown that your idea of objectivity can be questioned and that some of your statements are more opinions than anything else. There is nothing wrong with opinions but they have to be stated as such as otherwise they are easy to misunderstand as facts.

This is important to establish in this discussion, as the financial questions are very complex.

Brgds
J

The Red Devil said...

Jörgen - I agree with everything that you've just said but you've taken the bait.

Now the truth will be buried amidst a load of philosophical musings and semantic gobbledegook which is DP's intention.

Anonymous said...

"If the value has gone up, they are richer, but not because they have taken money from the club."

I don't quite follow that argument.

Let's make it simple. The Glazers could not afford to buy the club. So they took out loans. They loaded that debt onto the club and are USING THE CLUBS MONEY to pay the interest on those loans. The debts wont get paid off, ever, just the interest.

In the meantime, because TV revenues continue to increase and because the Glazers have gouged every last penny out of the pockets of supporters, the value of the club increases.

Therefore if the Glazers sold the club today they would make themselves say £200m cash profit. They will have made that profit for themselves by TAKING MONEY OUT OF THE CLUB to service the monstrous debt.

They would most definately be richer because they have taken money from the club.

"Have the Glazers cost Manchester United £450 Million since they took over in 2005?"

Yes, yes they have. Anders has listed all the costs for you. They are all Glazer Costs, every penny of them.

You can deduct the costs that the PLC would have incurred if you like, Anders has kindly given you estimates for that. Maybe you could get the difference down to £250m or so if you try really hard. That would only be £50m per year then in extra Glazer costs per annum compared to the PLC. Lovely. Still, they have brought in an official wine partner now so it's not all bad.

Jörgen said...

Anonymous

I agree that your points are valid, but they are all interpretations of the figures and the situation, opinions as it were. This is why I posted the last comment.

When you use figures to prove a point, it's hard to be objective about it. Typically, figures are perceived as being objective and hard facts, but they have no meaning without an interpretation. Any interpretation will be biased.

That's why the 450m are interesting. Tbh, I agree 250m may be bad enough, but the fact remains that the large majority of the people that have been exposed to the 437m think that this figure is an objective calculation.

I am trying to show that it is not (but this is the only forum so far where the discussion is even possible). Anders is considered an authority on the matter. Therefore I believe it is important for his credibility, and for the debate in general, to be even clearer in how to interpret the numbers he presents. In my opinion you can only reach 437m if you buy into Anders presuppositions (I'm not claiming that these are wrong). Even people that come here seem to forget that sometimes and that's not good for any of us.

FYI, it wasn't too hard to get the figure down by 200m. That's why it's even more important to debate around it.

Brgds
J

United Rant said...

The Red Devil seems to employ the tactic of all Glazer apologists. Declare everything is wrong with the analysis and offer nothing in return, with a bit of added smugness for good measure. Throw in a bit of FUD and we have the classic Glazer spin patsy. I just wish this faction of United supporters who refuse to believe the numbers there in black & white would stop throwing around insults though. I guess they take their cue from the ceo...

The Red Devil said...

Basically, a chap called Oliver Houston (MUST vice chair) was given at least five minutes of airtime on Sky Sports news yesterday telling everyone that "since 2005, the Glazers have cost Manchester United almost £450 Million".

This is quite clearly shown to be an outright lie.

Unfortunately, as Jörgen has pointed out, the lie is now out there and is treated as "fact".

That Houston went on to use this figure and state that, "looked at another way, United could have let every match-goer in for free last season AND given them all a £800 cash lump sum and we would STILL be in the same situation" just shows the kind of nonsense that the wrong figures in the wrong hands can lead to.

It is all designed to create anger amongst the section of fans who hang on every word MUST say and the higher the figure, the angrier they get.

The problem is, of course, that once something is exposed as a lie, credibility goes out of the window and everything else coming from the same source has to be viewed with the same scepticism.

The Red Devil said...

After clearly insulting me at least three times within the space of one paragraph, it seems a bit rich for you to accuse me of insulting anyone.

I insulted DP because he was pulling stuff he had read in Philosophy for Dummies out of his ass and taking the conversation in a direction way off topic.

It just had to be nipped in the bud.

As for "offering nothing in return". I think I have helped to establish that due to Anders' anti-Glazer bias, he is willing to put numbers into the "black & white figures" that have no right being there and that he is quite happy to leave some out that should be in there in order to put forward the worst case scenario to MUST who then pass it on to whoever will listen.

Besides this, I have been writing on the subject of the Glazers, the Red Knights and MUST on my own blog for around twelve months now. I do my bit, I think.

At the end of the day, you and I are both United supporters and now we are arguing amongst each other.

The one indsiputable FACT in all of this, however, is that the Glazers own Manchester United at this moment in time.

So, what are we going to do about it?

Protest? To what end?

"To oust the Glazers"

To what end?

"To get new owners in"

What new owners? Where are these people willing to buy Manchester United?

Even if someone stepped forward to buy United then surely it is going to take a sum of money which would put us even further in debt than we already are.

I have always maintained that as unpalatable as it may seem, the best option is to just go with the Glazers. Get this debt paid off asap and go from there.

We can argue all day long about how "nice" it would be to have a man in charge who will free us from debt, put ST prices back to pre-2005 levels and buy us all the best players in the world but I'm trying to live in the real world which isn't perfect but is all I have to work with so I get on with it.

I am not quite sure what a "Glazer-apologist" is. I have no loyalty to the Glazers whatsoever.

However, I AM a Manchester United fan and I want to see MU fans standing next to MU fans shoulder to shoulder and wearing the same colours. I certainly don't see the need to prove my love for United by "hating Glazer".

I'd rather just get on with supporting the team and try to forget they're even there.

I do however wholly support Anders in his attempts to keep an eye on what is happening with the finances. If it helps to keep the Glazers excesses in check then it serves a great purpose.

RB said...

@ The Red Devil

I agree with absolutely everything you have said in that last post.

While I can't fault much of Andersred's analysis and appreciate the time taken to explain the details, it does of course come from a certain perspective, so it is good to hear both sides of the story.

The Red Devil said...

@ RB

Thank you, I appreciate that.

United Rant said...

@ Red Devil

Problem with this "let's go with the Glazers" line that you are pushing is that they haven't paid off a penny of the debt... and there's nothing in the business model to suggest they plan to any time in the next seven years (unless the PiK debt payment from club funds comes true of course).

In fact the total debt including bond + PiK has substantially increased over the past five years and will continue to do so unless the model changes.

You can take Andersred's £437m figure at face value if you like, there are some assumptions in there of course about paying down the PiKs with club cash and you're right it doesn't include the corp tax the Glazers are avoiding (dividends under the PLC were minimal). Paying down the PiKs with club funds is still TBD and we'll only find out once the Q1 2010/11 results are out in the autumn but if they don't the PiK debt will continue to rise until it matures in 2017 at a cost of £600m. Again I don't think that is disputed by anyone. Some simple maths really.

But I'm really not quite sure where you're going with the "bias" line. Yep. Me too. And about 160,000 MUST members. MUST is, after all, a pressure group not the BBC commited to giving equal air time to each side. For good reason because fans have seen the money being leached out of the club for no benefit at all, whatever the total figure is, and they're angry about it.

Fortunately we now have some financial transparency and we can see money flooding out of the club in black & white while Sir Alex scrubs around at the bottom of the market and fans pay 48% more for their tickets while being harassed by stewards for wearing a scarf.

You're welcome to "go with the Glazers", everybody gets an opinion of course. I for one am counting the days until they leave the club as is inevitable and hope the damage they cause along the way isn't irreparable. In the meantime I'll probably have to take out a mortgage to afford tickets this year.

The Red Devil said...

@United Rant

That's better.

However, I am seeing a circle developing here and we are coming right back to the start of it.

If you're not sure where I am coming from with the "bias" angle, I suggest you re-read the above because you have clearly not understood why it isn't even in the best interests of MUST (long-term) to put out the wrong ones. I'm not going to go through it all again.

My ideal solution for all this would be for some super-businessman who has a love for Manchester United to come along, give the Glazers what they want, clear the debts, leave Fergie with a few quid to spend on players and let Gill (or whoever is the best person for the job) get on with the business side of things without ever wanting a penny of his "investment" back.

That is my Christmas Wishlist Dreamland Solution.

However, until that day, my next best suggestion is to go with what we have and make the best of it.

What is YOUR solution?

United Rant said...

@ Red Devil.

So wait. Your plan is to... do absolutely nothing. Genius.

Well I wrote a 10 point plan in February. Some is now totally out of date, some isn't.
http://www.unitedrant.co.uk/10-point-plan-to-oust-glazers/

Pressure, continual and unrelenting is important and can achieve results. Even if its to get the Glazers to lower the bid price

Ole1999 said...

I wish people would stop calling people who don't follow the MUST party line "Glazer apologists". As far as I'm concerned they're United fans first and foremost but who want to look at the financial position from a (emotions notwithstanding) neutral point of view.

The fact that opinions differ is a healthy thing but name calling achieves very little.

I'm more concerned about the YTD financial results which show us at a loss of over £66m. Assuming no player sales one could forecast a full year forecast loss of somewhere between £60m and £75m ... not a pretty sight when you consider the introdution of the new Fair Play rules.

The Red Devil said...

@ United Rant

Supporting my team is not "doing absolutely nothing".

I have been mulling over your ten point plan for a little while now and it is impossible to respond without taking this thread into ten new tangents.

This has all the makings of a atheist v christian "Does God exist" argument so I'll leave it there, I think.

I hope that we can at least agree that we are faced with the same problem but that we are approaching it from completely different angles.

Without a crystal ball, it is impossible to know who is "right".

Red & White. United.

Ole1999 said...

@ Red Devil.
"Does God exist"

I believe he goes by the name of Eric and was born in a great year for English football.

The Red Devil said...

@ Ole1999

Spot on! :)

DP said...

"As soon as I saw "Ad Hominem"...I though "Uh ho... here we go" but out of courtesy, I read your essay. Perhaps you should hand it in for your final exam? You might actually receive a C for it."

That may well be true, but it would not be because I've described your line of argument incorrectly. I'm delighted that you had the moral courage to read on after that, but there is a certain irony to the accusation about a lack of objectivity, which is effectively a request for accuracy, when you don't appear to be quite so enthusiastic about the use of an accurate term of description when it pertains to yourself.

"Have the Glazers cost Manchester United £450 Million since they took over in 2005?
[...]
It is a claim that must be backed up with objective proof or it is, quite simply, a lie."


I have no reason to disagree with this, although people can make mistakes, which is not the same thing as a purposeful attempt to deceive.

You can't expect Anders to do any more than to cite his sources and to explain his reasoning. If you find mistakes or unjustified assumptions, you should make them known, as you clearly have done. But the fact that there is some disagreement doesn't automatically invalidate an argument.

I'm staunchly anti-Glazer, but I have absolutely no interest in misrepresenting their true impact on the club, even if that would help my "cause". This really shouldn't be that hard to understand. Some people genuinely do aspire to intellectual honesty at all times, even if they are only human and are bound to make mistakes. It's when there is a consistent pattern of evasion and bad faith that we should become suspicious.

"...I am forming the conclusion that Anders cannot actually point to £450 Million but can only do so by making several assumptions.

They might well be based on very sound reasoning and an extremely well educated guess but, until that £450 Million becomes an actual FACT then it is wrong to present it as such."


A conclusion is obviously baseless without explanation and supporting evidence, but that applies to all of us. You admit this yourself and then consistently fail to live up to your own principals. I suspect that you are talking about the inclusion of the PIK's, which is actually a perfectly reasonable argument, and one that I have pointed out on another forum. But this is what Anders says about the £437m figure:

"The information is divided into RF and RFJV costs. This is deliberate so those who don't agree that RFJV costs will be paid by United can exclude them from the calculation."

If Anders had left out the PIK's completely, not only would his assessment have been incomplete, but there would have been justifiable complaints about their exclusion.

It's just not reasonable to complain when it's obvious that an attempt has been made to offer a fair assessment, and especially when all citations and assumptions are quite clearly included. And the argument that these figures are being "presented as fact" is not credible because the very suggestion that it's possible to exclude the PIK's refutes that.

DP said...

""Exploiting" represents something negative in most cases."

You are using a very narrow definition:

Merriam-Webster: "to make productive use of".

I understand that for some people it may have negative connotations, but as long as the definition is correct, which it is, it's still an objectively true statement. Anders may have meant it in one or both ways, but I wasn't arguing that he had used it in a specific way.

Admittedly, if it was a rarely used definition then my point would lack credibility, but I don't accept that it is, as I come across that definition on a regular enough basis and even use it that way, myself.

"Neither do I agree that the definition of enriching yourself is to use the club's money to make interest payments. The debt remains."

To all intents and purposes, the Glazers now own the club. The club is valued at a higher price than when they bought it, which would allow them to make several hundred million pounds if it was sold.

That the debt remains is only relevant to the extent that they will be enriching themselves further each time some of it is paid off using the clubs money.

"This means that if the value of the club is the same, they are no richer than they were before they bought the club. If the value has gone up, they are richer, but not because they have taken money from the club."

As I've said, all estimates value the club at more than the current debt. You even admit that they would make money if they sold it in those circumstances and then bizarrely suggest that it's "not because they have taken money from the club", which is only true in the sense that the money hasn't gone directly in to their own bank accounts.

If you were correct, it would not be possible to describe them as having enriched themselves even if all of the debt is eventually paid off. But that's obviously false, because there is a clear, though indirect, transfer of wealth from the club to the Glazers over time, as the debt is serviced and then eventually repaid (which may never happen), which gives them full ownership of an asset that they haven't had to personally invest in.

So, my original point stands, because the servicing of the debt has already allowed the Glazers to increase the value of the club, whether through their own ingenuity or natural increases in TV money, etc, so that they could walk away even at this point with several hundred million pounds from an original investment of nothing. If that's not personal enrichment, I don't know what is.

"I have now shown that your idea of objectivity can be questioned and that some of your statements are more opinions than anything else."

What you have actually done is presented arguments to that effect. An arguments merit will depend on whether it survives scrutiny.

The Red Devil said...

My last word on this...

"In addition to the huge debt they’ve dumped on a previously profitable club they also wasted £443m in interest and fees – far more than the total (£398m) received from supporters in payment for tickets during their reign."

Taken from the MUST website as part of their statement dated 2nd June 2010 following the announcement that the Red Knights were not going to make a bid for the club.

In light of everything written above, readers can decide for themselves if that is the truth, a mistake or a lie.

Jörgen said...

This is sooo off topic but here goes:

Objectivity is often defined as a state where something is true independently from the mind of the beholder or receiver. A quick look at wikipedia describes it as "mind-independent" which may be a good way to describe it.

The word "exploit" can be interpreted in several ways, even according to the dictionary you mentioned. Therefore, it is not mind-independent how we understand its meaning. Rather, it is a matter of subjective understanding and not a word that signals objectivity.

To claim that the sentence or expression in question is objectively true is a discussion in line with "The present king of France is bald" and is more relevant from a philosophical point of view. In this particular debate it is of less direct importance (unless you are trolling, of course).

And for the rest part, I have provided alternative, possible explanations to the story, rather than outright arguments. This is what I have shown, that there are multiple ways to interpret the situation. My point is that objectivity is hard to come by (even accounting suffers from subjectivity) and may not be what we should strive for.

Rather it may be more fruitful to be critical from every aspect of the matter in a more scientific approach (but may be not as fun). At least, we should be open to the fact that we are all biased to a certain degree, refrain from name calling and stop seeing the situation as black or white.

Anonymous said...

Objectivity means taking an impartial or disinterested view on something. In the sense that referees ought to be objective.
The present king of France is bald statement has nothing to do with objectivity, whatever your view of royalty or republicanism. I think you are in the realms of a bit of knowledge is dangerous territory. You would appear to have read a bit of Russell and using what you read in an entirely different context. Russell was talking about logic, not objectivity. Not only that, because you use the present tense 'is', the adjective 'present' is redundant.
BTW I am a native Manc, United fan since childhood in the 60s and think the Glazers are the worst sort of parasite imaginable in a football context. LUHG

Jörgen said...

Anonymous, I suppose you directed your comment at me and I have swallowed the bait.

We have the same opinion about how to interpret the term objecticity (although, I can think of other ways to define the concept). By your definition, to remain objective one should avoid words with strong connotations. In my opinion, the word "exploit" is not neutral and may not be the correct word to use when trying to remain impartial.

If you read my post carefully, I agree with you that the philosophical concept of "objectively true" as used in the discussion around the phrase "The present king of France is bald" is not relevant here (it's actually more of a discussion of whether the sentence has meaning and can be found true or false, but from a logical pov, as you point out). This is also what I said in my post.

I do disagree with you though, that the "is" makes the "present" redundant. If you change "present" to "former" you realise that it points to an entirely different person, thus making it useful. It could well be that the former king gave up the throne and is still alive.

Btw, if you read up on Russell (again?) you'll find that "present" is the most important word of the sentence. The whole point is that there isn't any king of France, remember?

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Anonymous said...

Hi Andersred,

Thank you for the analysis. I'm United fan from Asia, so sorry for my bad English. I have some small questions about our club's finance

You said that " With the cash outflows, cash on the balance sheet fell from £122.1m at 31st December to £95.9m at 31st March. The Ronaldo money is still safely tucked away." ( in the balance sheet part).

So that means now we have 95,9+80m =180m cash to spend? Why can you be sure about that? And why the Glazer can tuck away that Ronaldo money?

I'm looking forward to receiving the answer from you

Thank you very much.

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