We're Doomed. United make £58m loss

Interesting read.

I know similar has been posted before but if anything is worth multiple threads then this is.

http://www.guardian.co.uk/football/2....premierleague

With Manchester United powering to a probable second successive Premier League title and ready for a Champions League final, it appears that life at Old Trafford could hardly be rosier, but the club's accounts, now published in full, detail a significantly bleaker picture of the club's finances under the ownership of the Florida-based Glazer family.


Before the family's 2005 takeover, United prided itself on being the only Premier League club regularly to make a significant profit, to have cash in the bank and, unlike all the others, no debts. After the leveraged takeover, the Glazer family loaded their borrowings on to the club and the position has changed. The accounts for the company that the Glazers use to own United show total borrowings, in the year to June 30 2007, were up to £666m, by far the highest of any English football club, ever. The total owed to all creditors, including the banks, was up to £764m and includes £56m that United owe to other clubs in transfer fee instalments on players Sir Alex Ferguson has signed.


The total interest payable by the club on its borrowings was £81m, although only £42m was actually paid. The rest, which accrued on the millions owed to hedge funds, is allowed to roll up until the whole amount has to be repaid in 2016, or, alternatively, until the Glazers can refinance it. A total of £152m is currently owed to hedge funds, at 14.25% interest a year - £22m from 2007-08. Last year the Glazers tried to refinance but were unable to strike a deal with financial institutions, and a spokesman acknowledged that the credit crunch is making it more difficult now.


David Gill, United's chief executive, announced the headline results back in January, stressing that United's phenomenal money-making power, with 76,000 crowding into Old Trafford and the Premier League's huge TV rights deals, had produced record income of £210m and operating profits of £75m. The full accounts show, however, that even though United made a further £11m profit from buying and selling players, the interest and other accounting provisions pushed United into recording an overall loss of £58m.


The accounts also reveal that by far the highest proportion of income, £92.5m, is still generated on home match days, and although the club has announced more modest ticket price rises for next season than for the previous two, supporters groups continue to protest that they are paying the debts of a takeover they opposed. "It is outrageous that supporters are paying the huge interest on these borrowings, which are worrying for the club's future," said Sean Bones of the Manchester United Supporters Trust. "Our money is pouring out to pay the Glazers, while they have not put a penny into the club."


The spokesman for the Glazer family pointed to the club's success on the field, and in generating income off it, as evidence of the family's competent management. "The family continue to run United as a business," he said. "Their model is to encourage success on the pitch by backing Sir Alex Ferguson, and to grow revenues off it. The interest payments are more than covered by the cash generated."

Have they?

I still think they'll sell 49% in the near future in order to clear some of the debt and get in to bed with some television type media bastards.

They'll sell Ronaldo and Rooney before they sell any more shares. Who cares eh? We're probably going to be Champions soon, £#%&! it. Live for today, that's what I say.

Originally Posted by Spiffy

They'll sell Ronaldo and Rooney before they sell any more shares. Who cares eh? We're probably going to be Champions soon, £#%&! it. Live for today, that's what I say.

with that 1/3 of the debt being wiped off we should be ok right?

Originally Posted by Spiffy

They'll sell Ronaldo and Rooney before they sell any more shares. Who cares eh? We're probably going to be Champions soon, £#%&! it. Live for today, that's what I say.

You make this point a lot but i'm not sure what it is? Should i not be happy that we may win the double? Are you not happy about this?

Originally Posted by marlo stansfield

with that 1/3 of the debt being wiped off we should be ok right?

You're a real #@&%! Marlo, I didn't say it was. I said I'd registered the Fin Acct from United who had mentioned amongst other things something about the debt being lower than we thought due to some US accounting loop hole. Probably linked into the fact that it's leveraged finance. Neither of us are accountant's so there's no point debating it any further.

Originally Posted by Spiffy

You're a real #@&%! Marlo, I didn't say it was. I said I'd registered the Fin Acct from United who had mentioned amongst other things something about the debt being lower than we thought due to some US accounting loop hole. Probably linked into the fact that it's leveraged finance. Neither of us are accountant's so there's no point debating it any further.

http://www.utdforum.com/forum/showpo...67&postcount=6

Apparently then can write off a third of the debt under US law (£#%&! knows how that works). I asked, surely they still need to pay it back? "No" they borrowed £600M and now it's £400M. How the £#%&! that happened I don't know, something to do with US law regarding borrowing to buy businesses I assume.

We're making so much more money due to getting to the semi final of the EC, winning the Premiership and getting to the final of the FA Cup + the new TV money.

Basically we were undervalued after all it would seem.

im an accountant, you recruit accountants so our secretaries know more about accountancy than you tbh.

Borrowings of £666 Million? We are in league with Satan!

Originally Posted by marlo stansfield

http://www.utdforum.com/forum/showpo...67&postcount=6




im an accountant, you recruit accountants so our secretaries know more about accountancy than you tbh.

Can you tell me where I said it was possible? I specifically said that I didn't know how it worked, it was him who said it was possible. You're not an accountant, we've been through this many many times. You're a liar, that's all you'll ever be.

Originally Posted by Spiffy

. You're not an accountant, we've been through this many many times. You're a liar, that's all you'll ever be.

Someone posted this on RI the other day, thought it was an interesting and pretty easy to understand take on things.

With all this talk and reference to the Accounts, I decided to part with £14 on my credit card and download all the Accounts and some "current appointments reports", for all MUFC companies, and the Red Football Shareholder Group.

I am a season ticket (yes, renewing) holding accountant with my own practice. I sit in the West Stand lower, eat chip butties, not prawn sandwiches, and was on the coaches in the late 70's.

I'm going to analyse the Accounts and financial position from two perspectives. As a businessman, and as a Red.

Firstly to cherry pick some figures from the Accounts:

1. There is no "net debt" of £ 666million at 30/6/07. The group accounts show what is CLEARLY a solvent Balance Sheet. (£80m in the BLACK).

2. The figures for interest and loans quoted earlier in this thread are entirely accurate.

3. However, these are only PART of the picture, and the value of the Group Companies assets exceeds the value of their liabilities.

4. The value of "Goodwill" in the Accounts is £ 451m. This is the written down value of the amount paid to buy the club.

5. The value of "player registrations" (i e the playing staff) is £ 123m.

6. The "current assets" exceeded "current liabilities" by £ 5m.

7. There are "operating profits" of £7m.

8. Amortisation of intangible assets (ie writing DOWN the value of the players' pool and the goodwill) was £ 58m.

9. Interest payments were accuratelt quoted at £ 81m. Down from £113m in the previous year.

10. There was an UNQUALIFIED audit report by Price Waterhouse.

Ok, so the businessman's analysis:

The financial position of the group is not as bad as people might believe. Because of the prestige of the club in a niche market, and its undoubted capacity to generate turnover, there is a very real possibility that the value of the Goodwill is significantly understated. The truest value of the goodwill would be "what someone is prepared to pay for it". I think United would clearly sell for more than the Balance Sheet value.

I also believe that the value of the player pool is considerably higher than the £ 123m being shown on the Accounts. With two players being worth at least £ 80 million between them, if not more, then this value is clearly understated.

If the players pool was valued at its current selling price, and indeed if the club's goodwill was so valued, the Balance Sheet would look far healthier.
(Legislation forbids selling value from being used if it is higher than original cost).

Looking at the long term debt, I see that this has increased, yet the interest costs have fallen. Over the long term, and annually, the value of the long term debt will fall, and the Accounts should look better annually.

The operating profit of £ 7m, was stated AFTER depreciating the "intangible assets" by £ 58m. If it can be accepted that these figures for depreciation are in fact more of a legal and accounting requirement, than a reflection of commercial reality (as the assets are already undervalued), then there are cash profits of £65m to finance the interest of £81m. I would expect there to be further net losses in 2008, albeit smaller, but the Group may start to realise operating profits after interest in 2009.

The unqualified audit report also speaks volumes. By saying nothing, Price Waterhouse have made it perfectly clear in their report that the Group is not
in immediate threat of financial difficulty. By law they would have to, if they felt that there were problems ahead. Contrast this with Chelsea, who Accounts have consistently been qualified for the past few years.

In summary, the businessman is not too despondent with these Accounts. A solvent Balance Sheet, with undervalued assets, and expected falling debt levels, with a "cash cow" prestige company in a niche market, is by no means a cause for immediate concern.

Now, as a Red:

To be honest we are not yet "£#%&!ed". But, the businessman's analysis forgets that this is no ordinary business. We can £#%&! off to Asda if we don't like what Tesco sells. This just doesn't happen here. On page 1 of the Accounts, there is a club policy statement. It is club policy to "treat supporters as customers". That £#%&!s me off. Imagine Tesco saying, "yeah your food bill this week is £ 80, but you have to pay for the next four weeks, whether you shop here or not" ? What the £#%&! ?

The Accounts, whilst showing a long term commercial viability, hide the fact that EVERYTHING depends on on-field success, AND the never ending loyalty that reds show to the team, being converted into cash. Well, keep taking the piss, and it won't. I buy my ticket, I sing, I get pissed and I fall asleep happy when we've won. I don't buy the programs/Ronaldo teddy bears or United wallpaper. And I ain't alone. But there are many who do. And the club needs these people whether those on this site like them or not.

The criticality is that the club needs to sustain its on field success in order to generate its off field revenue. It's a very fine line. Start to "not win" things, and there is no doubt that players will have to be sold to reduce the repayment/interest levels to affordable amounts.

And when that starts to happen, as a businessman AND a red will agree, everything starts to spiral downwards.

Have the Glazers been good for us ? On the field everything is going well. Off it ? When fans are calling each other "@#%&!s", and meaning every letter of it, because they have differing opinions, all of which are genuine and heart felt, then there has to be something going very very wrong somewhere.

toilet sniffer.

do you understand this paragraph.

The unqualified audit report also speaks volumes. By saying nothing, Price Waterhouse have made it perfectly clear in their report that the Group is not
in immediate threat of financial difficulty. By law they would have to, if they felt that there were problems ahead. Contrast this with Chelsea, who Accounts have consistently been qualified for the past few years.

great post that.

It's true, we can argue about it all day but one thing is true - the glazers have been very lucky that on the field success. I think everything would be different had we hit a slump.

Originally Posted by marlo stansfield

toilet sniffer.

do you understand this paragraph.

Yes I do. Tell me Marlo, why do we have to resort to a layman's explanation from RI? We have our own forum accountant don't we? Why didn't you just download them and tell us what's going on?

Originally Posted by Spiffy

Yes I do. Tell me Marlo, why do we have to resort to a layman's explanation from RI? We have our own forum accountant don't we? Why didn't you just download them and tell us what's going on?

hahahahahaha nice try.

at least now you very small grasp of accounts is being exposed.

if i was to see the financial accounts i could interpret it in a totally different way to some one else.

there are also so many different ways of looking at the accounts of a company (liquity wise ,profitability wise, or from a shareholders position)
i could explain things to you using ratios and you wouldnt have a clue.

thats the reason you recruit accountants and are not one yourself.

Originally Posted by marlo stansfield

hahahahahaha nice try.

at least now you very small grasp of accounts is being exposed.

if i was to see the financial accounts i could interpret it in a totally different way to some one else.

there are also so many different ways of looking at the accounts of a company (liquity wise ,profitability wise, or from a shareholders position)
i could explain things to you using ratios and you wouldnt have a clue.

thats the reason you recruit accountants and are not one yourself.

is it not liquidity?

Originally Posted by Billy Baroo

is it not liquidity?

yes it is.

acid test ratio and current ratio.

Originally Posted by marlo stansfield

hahahahahaha nice try.

at least now you very small grasp of accounts is being exposed.

if i was to see the financial accounts i could interpret it in a totally different way to some one else.

there are also so many different ways of looking at the accounts of a company (liquity wise ,profitability wise, or from a shareholders position)
i could explain things to you using ratios and you wouldnt have a clue.

thats the reason you recruit accountants and are not one yourself.

I never wanted to be an accountant. I'm not some failed number cruncher who's doing recruitment you know. Besides, the money's not enough. It's been a while since I placed someone on more than me.
It's not an insult to tell someone who isn't an accountant that they know nothing about it.

Hope that helps.

Originally Posted by Spiffy

You're a real #@&%! Marlo, I didn't say it was. I said I'd registered the Fin Acct from United who had mentioned amongst other things something about the debt being lower than we thought due to some US accounting loop hole. Probably linked into the fact that it's leveraged finance. Neither of us are accountant's so there's no point debating it any further.

Originally Posted by Torquemada

Borrowings of £666 Million? We are in league with Satan!

I know, spooky isn't it

Originally Posted by Spiffy

I never wanted to be an accountant. I'm not some failed number cruncher who's doing recruitment you know. Besides, the money's not enough. It's been a while since I placed someone on more than me.
It's not an insult to tell someone who isn't an accountant that they know nothing about it.

Hope that helps.

What did you want to be? Lion Tamer, Lumberjack