25 Jul 2022 16:49:50
I know we're just football fans who should not be too concerned about the money, but we all know of clubs that have collapsed financially. It's been concerning me that the EPL, like Europe and the US, has seen its best days and that from now on a far more difficult economic environment will exist, especially for underperforming ex-giants with high debt and high payrolls.
United must have already reduced their wage bill significantly. Martinez, Eriksen and Malacia will cost not much more than Pogba. Matic, Mata, Lingard, Cavani, Henderson and Pereira are savings. The departures of Ronaldo, Wan-Bissaka, Jones, Telles and possibly Lindelof would be a boon. And to what extent was the wage bill reduced by failure to qualify for the Champions League?
It would not be surprising if the new business strategy involves restructuring costs to ensure that the club remains profitable even without Champions League football. With the debt so high, and no potentially significant sales of players in the offing, Woodward has left the club in a shambles. The club doesn't just need to rebuild the squad, it also needs to rebuild its financial structure. For these reasons I can't see us signing more than 2 new players in August.
25 Jul 2022 17:06:48
Wages transfer fees etc will continue to rise. Income will keep pace.
United debt is zero issue. A drop in the ocean. Thousands of businesses would kill for our financial position and debt to value ratio.
On the open m area united would sell for 4b or more.
Relax the world is not ending.
True we are in for a rough ride economically for a few years on a macro level but united are in a great spot financially.
Little or no worries on that front.
25 Jul 2022 17:47:13
Ken
Wrong on the debt, it’s not the forum on here but gearing is key for a business and good use of leverage in terms of debt is seen as important to move a business forward. However, our debt did not benefit the business or the club, it was not used for Capex, it was wasted to buy the owners in, it gave no value to the business, nor does it. United are not in a great spot, the CEO has openly admitted the need for external funding. Our present income stream can keep up payments, yet there is no debt reduction, what is the plan for debt reduction. The costs of the debt have been massive, well over £1Bn and have not benefitted the club at all. We can’t afford to borrow to rebuild the stadium and are susceptible to the vagaries of CL qualification.
In summary many businesses would like our income stream, could cope with our debt, just it’s not our competitors!
25 Jul 2022 18:08:26
Ken, maybe you're right. The Chelsea sale would suggest you are. but it's interesting that the stock market doesn't see it that way. Perhaps you should buy some United shares?! Market cap is only $1.81bn.
25 Jul 2022 19:32:45
I understand what the market rate is shaw but the brand will carry the premium.
Redman.
Your last paragraph sums it up perfectly.
For the owners the business value to debt ratio is no issue at all in fact they are in a great position. As long as it stays like that they will be delighted while enjoying a super income annually.
So from a business owners point of view everything is rosy.
However from a supporters point of view I don't disagree with a word you've said nor have I ever.
You refuse to see it from the owners point of view. They are here for 1 reason only and that is to make money.
They would like success on the pitch for sure.
They have invested more than any other club in the world in trying to do that for the last 10 years. Albeit horrendously managed by their employees.
From a fans point of view if that 1.2b had bought 3 or 4 titles and a couple of cl their would be a lot less moaning from the fans.
But they will roll the dice again this summer and try to invest in players to catch up again.
Will they invest 100s millions into the club infrastructure etc? No because they don't see the benefit to their balance sheet.
Are they good owners from a fans point of view no.
But is the business in good financial shape from their point of view? Yes it is.
Once you detach yourself and look at it from their point of view you'll begin to understand why things are the way they are.
I'm not sure exactly what people expect from owners.
If fans of some clubs are lucky enough to have what I call hobby owners then great. They are owners who plough money in to keep a hobby going.
Do you think Chelsea new owners won't want a return on their investment. How much debt are they in? Was 1.7b or thereabouts.
You've been around the clock and yoy are bitter about the way the club was bought and you've every right to be but you look at it from the owners perspective it makes sense.
They have no emotional attachment. The asset value is high. They are in the money.
25 Jul 2022 19:33:42
The problem with the debt is it's not been paid, only the interest is. We bought a car on finance for £50,000, paid £90,000 in interest payments and still owe £40,000.
We could have wiped this debt off long ago but I would assume it keeps the Glazers and everyone involved with the deal in the good books with J. P Morgan. When all is said and done they'll probably have made well over €2 billion from their initial loan.
That been said I don't get too bogged down with the finances. But with the stadium needing refurbishment as with the training ground. We'll have to learn quickly to be savvy in the transfer market. Because we can't afford to be wasting money hand over fist the way we normally do.
25 Jul 2022 20:49:47
I must have been doing something wrong in my business all these years.
The debt is at an all time high at $590m. The shares which were trading at $26 a year ago are $12 at present. If I was an owner or shareholder, I'll be worried.
The point is the club was bought with loans. Loans that were not set up correctly thereby costing a lot more than they should.
Add to that the lack of investment in the stadium and training facilities and the ludicrously high wage structure, and we have a clear picture of a business that is failing. Period.
The Glazers were looking at around $4b as a market value, however, I don't think there will be any takers at that price as the investment needed to bring the facilities up to scratch as well as trimming the squad and levelling the salaries, will add a huge amount on top of the purchase price.
It is not a sustainable scenario nor is it a successful business model. We as supporters, should be worried. If it carries on this way, the geniuses in charge will have to increase ticket prices, increase their marketing (difficult at this time and especially as the team is unsuccessful) or stop their dividend income (and I don't think that will happen) . So, there will come a time when there little cash cow is.
25 Jul 2022 20:58:39
Ken
The owners have a good position, for themselves, of course it makes sense to them, the club not so much. “They” have not invested one penny, the club has, poorly or otherwise.
I understand the “owners point of view”, but we are up against competitors that do not have this. Maybe when City and Liverpool stay out of reach, Chelsea continue with new owners focussed on the club, unlike ours building assets for themselves. Maybe when Newcastle start to bear down on us, you will not be so accepting.
25 Jul 2022 21:18:06
I’m not a financial guy or know anything about debt management etc etc.
But I do actually go to Old Trafford every other week and a lot of away grounds in between. What I will say is that the ground is looking very tired and needs some decent investment, the south stand has always been an issue and the whole infrastructure of the place needs some investment.
I’ve also been led to believe that the training ground needs some improvement compared to other clubs, this comes from a former player who I know. This coupled with the fact that we are treading comparatively lightly on the transfer front suggests we aren’t in a good place financially.
Yes they service the debt, but the Glazers have no real interest in moving the club forward with any big appetite. The sooner those parasites sell up the better.
25 Jul 2022 21:53:59
Ken, the club is far worse off than it was 3 or 4 years ago. We're making losses. We're not in the ECL. The facilities are in need of improvement. I don't think it's unreasonable to think that all the changes that have been taking place are in response to the club's decline in value and some concern that a long period of mediocrity coupled with the highest payroll will result in a larger debt load at a time of rising interest rates and stagnant revenues.
The Glazers are clearly comfortable with debt and leverage. Why would they not be? It's not money from their own pockets they're investing. But if you believe Arnold at this present time the well is dry. Woodward was responsible for blowing in excess of £1bn with nothing to show for it. The free spending days are over. We're pretty much back to the time when the Glazers bought the club using it's cash flows to finance debt rather than for reinvestment in players and facilities.
25 Jul 2022 22:27:11
Bottom line is performances on the field of play will determine the clubs value the most. If Utd don't win a major trophy in the next few years and / or fall right down the table then the fan base will shrink and the income streams become trickles.
Yes there is a hard core of us supporters who will follow through good and bad times but we have to be honest and acknowledge that many so called fans are only supporters whilst we win. If the team fails they will leave and the clubs reduced income streams will mean we won't have the financial power to attract the calibre of player required to get Utd back to the very top.
The huge level of debt we carry will then be a real burden compounding our inability to sign the best players. A vicious downward spiral then entails.
26 Jul 2022 02:33:50
Appreciate your take Ken but nobody borrowing £100m to get through C.V. can be in a strong financial position and that’s before even looking at the £1b in interest paid. It’s farcical that we owe as much now as what the Glazers leveraged on the club in 2005. Merchandising income etc isn’t going any higher. We still have a huge wage bill despite recent improvements. We have lost Champions League income and will lose sponsors monies if failing to qualify this year. And as others have noted the CEO has said we’d need external funding to build a new stadium.
I think we remain in a mess financially. The fact someone paid £4b for Chelsea is encouraging that multiple prospective buyers were available but in no way means they’d pay that for United.
A new stadium and significant further investment in the squad to compete with City look a pipedream.