Thursday, 17 June 2010

David Gill sticks to his guns - so where's the money coming from?

David Gill has replied to my open letter of 8th June.  This is his reply:

So on the subject of repaying the PIKS, he is sticking to what he said on BBC Radio 5Live back in January:
“We [the senior executives of Manchester United] don’t wake up worrying about the PIK interest,we don’t worry about the PIK repayment. That is something that the family, the owners, have put in place and they will ensure is repaid or is part of their overall financial planning in due course, but that is nothing to do with the club. You’d have to speak to the owners and get their views as to their plans etc in respect to that. This notion that Manchester United is £716m in debt is just a total misconception frankly.”

I'm not surprised that David is maintaining his stance on this issue, although I'd have liked the scoop if he'd written to say "fair cop Anders".

But this official denial that the repayment of the PIKS (currently around £220m and rising) is "nothing to do with the club" raises the question of how on earth they CAN be repaid.  Let's consider the options:

Borrow against Glazer family assets
In the aftermath of the revelations about First Allied, the Bucs spokesman confirmed (by saying "Companies they [the Glazers] own generate revenues in excess of $800 million each year.") that the family only own three major businesses, United, the Bucs and First Allied.  All three are already borrowed up to the maximum possible.  So the option of borrowing to repay the PIKS can be ruled out.

Sell assets
My work on First Allied shows that there is not sufficient value in that business to repay the PIKS.  If the family did sell United, this would of course eliminate the issue, but they have publicly denied they will.  The option of selling the Bucs is always there of course.  Forbes magazine thinks the value of the franchise is falling, but even at a price of $900m and deducting debt, the sale of the Bucs would easily provide enough to repay the PIKS.  A Tampa Bay journalist told me he thought such a sale unthinkable as NFL franchises are long-term licences to print money, but the option is definitely there. 

Use United's cash anyway
Could it be that David Gill believes that his comments are consistent with using the club's cash to pay the PIKS? He talks about not "worrying about the PIK interest" and that management don't "worry about the PIK repayment", but "worry" is not the issue here.  When he says "That [the PIKS] nothing to do with the club." does he just mean the fact that they are not secured on the club's assets but rather its equity?  I think someone who thought such apparently reassuring statements were consistent with taking a quarter of a billion pounds out of Manchester United to repay the Glazers' debt would be guilty of dissembling. 

So I can't think of any other viable way to repay the PIKS and I know that senior United staff have given non-attributable briefings to journalists in which they concede it is the probable course of action.

How has it come to this? Why are we left trying to deconstruct 88 words spoken in January?  Why won't the club engage with concerned supporters? If people like me are scaremongering, why not explain why?  Instead we have the pathetic spectacle of a football club anonymously claiming "victory" over its own supporters in the pages of the Daily Mail.

This is the sad state of Manchester United Football Club in 2010; silent, aggressive and resentful of its own supporters.  And that is a great, great shame.