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An Interesting Insight To The Finances Of That Lot
Etepttocs (Manchester City) 4 years ago
I won't clog up the forum with this, but, it does make for interesting reading, and is good for a giggle imo



A nearly 300-page prospectus to the SEC contains a series of warnings about

The state of the club's finances.

The filing says "our indebtedness could adversely affect our financial

Health and competitive position" and reduce "the availability of our cash

Flow to fund the hiring and retention of players and coaching staff."

United also warns that new UEFA spending restrictions "could negatively

Affect our business."
[account-removed] 4 years ago
I wrote a reply to that actually when you posted in the original topic that I had written in the United forum. Shall I copy paste the response here as well for other fans to read? If its a problem, do contact me and I will take down the answer from this forum.


You have raised some great points related to the Manchester United IPO.

The filings to the SEC (US Securities and Exchange Commission) does say that, well according to the papers and media at least. But the wordings need to be taken with with caution and a sense of realism.

Manchester Uniteds debt have been affecting them ever since the takeover was completed nearly 7 years ago. But the club has still been competitive on both fronts, on the pitch and off the pitch. They manage to pay interest payments and still make a profit. Thus they are not only paying off the debts, but are also making profits off the pitch as a business and being successful on the pitch as well. Since the interest payments are easily serviceable by the club and the revenues have increasing (mostly due to commercial revenue), it is safe to say that the financial future of the club does not depend on the success or failure of the IPO, and nor does it get inversely affected by the upcoming FFP rules.

The competitive position is a possibility that could take a hit due to the presence of domestic clubs with rich benefactors (e. G. Manchester City, Chelsea). Their owners have deep pockets and willing to spend in order to see their clubs gain success on the pitch. But, many signs have been visible in the Manchester City camp, and the Chelsea camp, that they take the threat of the FFP regulations quite seriously, which is why they have lessened their transfer spending sprees, attempting to reign in costs, widen revenue bases and be more successful off the pitch in terms of commercial revenue, sponsorships, brand value, etc. Therefore, since Manchester United is not under any threat to change its current operations and operating activities in order to comply, and there two biggest domestic rivals and threats have to change their operating activities to comply with FFP, it seems that Manchester United here have the upper hand, and should consider themselves quite safe regarding their competitive position in the domestic league.

Their competitive position in Europe is where the status quo might be changed. Due Barcelona's and Real Madrid'd capability of negotiating individual domestic TV rights, they have the upperhand in terms of transfers spending and salaries that they can pay out to its employees. Even PSG are likely to gain an upperhand due to the fact that they are the only big weights financially in their domestic league and their increased profile which will soon be capable of attracting many of the best players now. Malaga of Spain too have a change of jumping ahead of United on the European front. But Malaga and PSG too face the threat of the FFP due to their operating activities being unsustainable and against the regulations. But should everything go as planned for PSG and Malaga, then they would probably rank with other clubs like Manchester United, Chelsea, Manchester City, Bayern Munich, Arsenal, etc as a Tier 2 club, and Barcelona and Real Madrid would rank as a Tier 1 club. By Tier 1 I mean, this group of club(s) has the best chance of competing for the Champions League due to their circumstances, in this case is the individual domestic TV rights that both Barcelona and Real Madrid enjoy. Tier 2 sees a lower probability of success in the Champions League competition based on the club(s) circumstances. It should be mentioned however that PSG operates in a domestic league far less lucrative that the Premier League and La Liga with respect to its domestic TV revenue. Malaga too have this problem due to the individual TV rights issue in La Liga, but that could change for Malagas benefit if the planned revolt in few years time by lower clubs aligns the La Ligas TV revenue distribution with those currently in place in the Premier League or the Bundesliga.

You mentioned, "the availability of our cash flow to fund the hiring and retention of players and coaching staff". This might have some weight especially if you check the recent accounts where there is a fall in Cash in Hand of this year, when compared with the financial results of previous year. But, this could easily be tempered by the fact that Manchester United is a successful business off the pitch and always finds way of increasing Cash in Hand when there is a drop in previous years. This has happened in the past, and using that as a trend, it is likely that Cash in Hand will increase in the next financial year. Retention of players doesn't seem to be a particularly big problem for the club over the years. Only 2 big players it could be argued left the club against their wishes, Cristiano Ronaldo, and Tevez. Player retention statistics from the recent past look to favour Manchester United. Increased success in the commercial revenue sector could offset the increased inflation in wages, just as it has done in the past, caused by clubs like Manchester City, PSG, etc. The club can't match wages offered by the clubs with wealthy owners, but the level of pay is still one that can attract the required calibre of players to Manchester United in order for them to be a success on the pitch and off the pitch.

As stated by Manchester United CEO, David Gill: "Funds are available without a doubt, " Gill said to MUTV.
"We can still pay very well in terms of wages and transfer fees. "

In the SEC filing, Manchester United have mentioned that the FFP rules "could negatively affect our business. " this is a vague statement, because it does give any specific in which how the FFP rules could affect the business. Manchester United makes profits, both operating and net, even without the FFP rules being fully in place, so I don't see them being affected by the rules when it comes fully into place. Also, there is an allowable deviation limit that is permitted during the years preceding the year when the FFP will fully be in place. So, in the event that there is a hit taken by the business, the allowable deviation loss limit should more than cover for it. The allowable loss deviation limit is specified in the FFP regulations, Article 61, Paragraph 2, called "Notion of acceptable deviation".

Some of the benefits that Manchester United already have in place before the FFP is fully in place are as follows:

1.) a strong team on the pitch
2.) a strong team off the pitch
3.) acceptable youth development infrastructure
4.) accepatable stadium size, that also has the scope of expanding to 90, 000+ seats.
5.) one of the top clubs in terms of revenue generation and a good spread of revenue being generated from media, commercial and matchday, and all three 3 revenue sources show promise of increasing for the forseeable future.
6.) a strong worldwide brand which helps Manchester United find new partners and sponsorships (e. G. The Chevrolet deal that replaced Audi is more lucrative and financially rewarding to Manchester United)
7.) operating activites are well served by its current revenue base and show promise that it will be maintained at a level that is both financially profitable for the club, as well as profitable on the pitch in terms of titles.
8.) in the event that the IPO is a failure, the debts are serviceable by the club and they already pass the FFP test.

Comparison with domestic clubs shows that only other club that is as well placed as Manchester United at passing the FFP test, and that's Arsenal.

Manchester City and Chelsea (the other 2 English participants of the Champions League for the upcoming season) are not as well placed as Manchester United and Arsenal, and the 2 clubs bankrolled by wealthy benefactors have a some way to go in order to be ready for passing the FFP test and to demonstrate whether they are able to stand the test of time by being successful both on and off the pitch.

As things stand, Manchester United is well placed to pass the FFP test and be a major force in the Premier League as well as Europe for the long term, even more so if the IPO is a success.

You were quite right in stating that Manchester United is claiming poverty when they said lines like:
"our indebtedness could adversely affect our financial

Health and competitive position" and reduce "the availability of our cash

Flow to fund the hiring and retention of players and coaching staff. "

United also warns that new UEFA spending restrictions "could negatively

Affect our business. "

But, as I have already proved earlier in my reply, this doesn't seem to be the case, and Manchester United doesn't seem to be poor, nor risk being poor in the forseeable future. Then why is it that the club are claiming poverty? Without more facts, we can only come up with theories.

Based on the facts and my intuition, the Glazers are aware that the shares that they are going to be listing is not attractive to private investors that have no attachment to Manchester United, especially not at the price that they are rumoured to be quoting. The fact that the shares on offer have only one vote per share is another factor why such investors won't be interested in buying these shares.

But fans of Manchester United and especially Manchester United fans that happen to be businessmen and investors (e. G. The Red Knights) will be willing to buy the shares due to their attachment to Manchester United. By pretending to be poor, or offer profit warnings so early on before the IPO is even registered seems to me that the Glazers are trying to use the Manchester Uniteds supporters emotions to their advantage by offering these shares at way above market price especially since these shares have few voting rights. Any shares not snapped up by Manchester United fans can then be bought by the various big financial institutions that are underwriters of this IPO.

Also, it is my belief that the Glazers investment in Manchester United has been very good for the Florida based family. Most of the money used to buy the club is being paid for by the club anyway, and the I think the Glazers are planning to sell the club when its market value is at its highest in the foreseeable future. Currently the club is valued by Forbes at £1. 4 billion, and the Glazers have in the past rejected rumoured bids by the Qatar Royal Family (Al-Thani) of £1. 5 billion. The question I ask myself is, why did the Glazers reject that bid? They would have made a huge return on their investment if they accepted the bid (since United have been paying off most of the debts since their leveraged buyout). So why did the Glazers reject it? The only logical explanation is that the Glazers value Manchester United at more that £1. 5 billion that Forbes and the Qatar Royal Family seem to feel the club is worth. The Forbes valuation had taken into account the debts currently placed on the club in its consolidated accounts. If the debts were to be wiped out by this initial rumoured IPO, then the clubs valuation could rise a lot more that £1. 5 billion. The valuation could reach £2 billion if the debts are wiped out by the IPO, and if there is more success on the pitch (trophies) and more success off the pitch (increased commercial revenue, media revenue, etc) then the valuation could rise even more than £2 billion. They could possibly value the club at £2. 5 billion. I think the Glazers plan to use proceeds from the IPO to pay the Manchester United debts off, oversee a few more year of on the pitch and off the pitch success, and then launch a full IPO and sell all their shares at a valuation of around £2. 5 billion. The question then would be, who will then be the owners of Manchester United? Will it be the fans? A financial institution? A Sheikh? A Glazer? Who knows, but time will tell.

Lastly, you asked me, "Khalid7 this floatation is set to raise around $100 million or £64 million. How is that going to pay off most of the debt, which is estimated anywhere between £350-650 million, depending on who your listening to? "

My reply:

Well, the debt currently stands at a little over £400 million according to the the last set of financial statements released in 31st March 2012. The floation is rumoured to be around the $100 million mark. But this is a common tactic used by majority of IPOs in order to find out what the registration fees is going to be for the IPO, and to test the waters a bit. Majority of IPOs quote a very low initial floation for this purpose, and when those launching the floatation have all their bearings, then the real amount planning to be raised from the floatation is revealed. The Glazers are certainly not stupid at valuation of Manchester United and its future potential valuation. That's why it very likely that the sum they wish to generate from the initial IPO is a lot more that $100 million. I don't think we will know the real amount the Glazers are planning to raise soon, but a month or so from now, we should get word on how much the Glazers are planning to raise from this IPO. My estimate is £500 million and they will probably list 25-30% of their shares, just as they were planning to do in Singapore. Most of it will be used to pay off the debt as proposed in their prospectus when they were earlier planning to float in Singapore Stock Exchange, and the rest of the money will be taken by the Glazers. I don't think all the debts will be cleared by this IPO, but a huge chuck off it should be payed off, and the rest of the remaining debt should be serviced by Manchester United. That way, the debts will be reduced substantially, and Manchester United will get a boost in transfer spending and wage budget in order for it go more toe-to-toe with other rich clubs for players, etc.


If its a problem, do contact me and I will take down the answer from this forum
Etepttocs (Manchester City) 4 years ago
footytube only just showed me your response in the other forum. So. No problem Khalid.

I will however post the analysis of the situation by Market strategist,former professional footballer and Manchester United fan Michael Jarman here, and a link to the bbc article as well, for the sake of symmetry, you understand.


" We have become the laughing stock of the premiere league"
Market strategist,former professional footballer and Man Utd fan Michael Jarman.

With respect Khalid, his opinion, as a professional market stratergist, means more than the opinion of someone who openly admits to disliking City and their owner and counts the club as a rival
[account-removed] 4 years ago
Unfortunately I can't access the vid. Don't know what the problem is. I have tried looking for this interview in written words, but I can't find it online. Do you have any links that can help me out here?

Also, yes, I do hate City. Of course I do. I hate City because its the same as Chelsea now. Its not trying to build success on its own like United, Arsenal, Liverpool, etc. Instead they are following the Chelsea route of buying success. I don't hate the owner though, as I have said earlier, I am used to Sheikhs owning clubs in the Middle East (my original home region).

But, please do understand that when I am writing articles, or responding to queries in an article I have written, I take off my United-tinted glasses and speak objectively as a football fan and an accountant. I don't speak as a United fan, or City rival, or Chelsea rival, etc in my articles. One reason is I am trying to be objective, and the second reason is that I am trying to engage fans of all clubs here in footytube, and thirdly because if I prove to myself that I can do a good job with writing objective articles, then I can apply to write for Bleacher Report and other sports related websites where I can engage and talk to many, many fans of all sorts of clubs.

[account-removed] 4 years ago
I just got the chance to watch the vid, thanks for the link.

I respect the fact that he is a market analyst, but some of his facts don't really add up. I myself am an accountant and I have also done and still do market research all the time, so I don't get why he is only showing one side of the situation. I think a longer interview would have helped that man give a balanced view so that he can cover all the available facts and little details.

Anyways, I will cover the points that I don't agree with him and why I don't agree with his view:

1.) he keeps mentioning that the IPO is only going to be for $100million. It doesn't make sense because the Glazers are reported to be offering 25-30% of the shares. To value 25% of Uniteds shares at $100 million, means the Glazers would value the whole club (100% shares) at around $400 million. The club is valued by Forbes at $2. 235 billion. If this market analyst seriously believes the Glazers value the club at $400million, and 25% of the shares at $100million, then this is one of the best investment options of the decade, and definitely this year. But, he didn't state that usually in IPOs, especially in the NYSE, the initial quoted floatation is just a means of figuring out how much the registration fees are going to be for the IPO, as well as testing the waters in terms of how much interest there is in the IPO and trying to build some more publicity and interest in the IPO. The Glazers are bad businessmen, but I am sure their advisers are smart enough to see that $100million for 25% of Manchester Uniteds shares is a bad move by the Glazers. The quoted amount the Glazers wanted to raise when they were planning to list in Singapore Stock Exchange was $1billion when they released a prospectus related to the the possible IPO in Singapore, and Hong Kong as well. I am pretty sure, the Glazers know that 25% of Manchester United shares are worth a lot more than $100million. My conservative estimate of what the Glazers possible valuation of the 25% of the shares is around £500million (around $800 million). That would make the valuation of all 100% of the shares at £2 billion, and I calculate that is a realistic future market value since without the debts and a few years of success (on the pitch and off the pitch) should make this value realistic. I think the Glazers will target £400-£600 million for 25% of the shares, but I am going to sit on the fence and say £500 million, and whatever is not bought by the market will be bought by the IPOs underwriting banks.

2.) he mentioned that the IPO had some doomsaying stuff about Manchester United. I have mentioned earlier in a previous post why I don't agree with this view, but there is one reason I failed to mention as well. A doomsaying report in the IPO registration in the SEC will help a lot with publicity and attracting more fans to buy the Manchester United shares with their hearts and not with their minds. Its a good tactic. News like this would be headlines in every major newspaper, especially the sports and business sections. This PR move has worked in my opinion since any and every sports, business, general news, etc website has this IPO as headlines. It could further help the Glazers raise more money and possibly exceed my £500million conservative estimate of what they are going to raise. I don't understand why the market analyst has failed to grasp this important piece of information.

3.) there are 5 major investment banks that are underwriting this IPO and these types of banks are seriously not going to be interested in an IPO that is only for $100 million.
The 5 investment banks underwriting this IPO are:
I.) JPMorgan Chase & Co: $136. 58B
Ii.) Deutsche Bank AG : $34. 32B
Iii.) Credit Suisse Group : $22. 78B
I've.) Jefferies Group, Inc. : $2. 96B
V.) subsidiary of Bank of America, Merrill Lynch : $86. 86B

The figueres stated above are the market capitalisations of the IPOs investment banks as quoted in the NYSE. As you can see, all the banks are too big to be underwriters for an IPO as small as $100m, with the exception of Jefferies Group who only started being involved in investments since the early 2000s. All indicators point toward the IPO being a lot larger than $100million, and in my estimate it should be around £500million. These 5 banks that are the underwriters already know how much the Glazers plan to raise from this IPO, and since there are so many large banks, I think its safe to assume the IPO will be bigger than whats seen quoted in the press.

4.) he mentioned that since 5 banks are underwriting these shares that the market doesn't want to buy these shares. I don't agree because it doesn't make sense for 4 (out of 5) large banks to be willing to put money into buying shares as the underwriters if there is no market to sell it to. Underwriters usually buy the remaining left over stocks (shares) of an IPO for a discounted price and then sell it to the market for the market price, thus the underwriting banks make a profit through the underwriting process. Although the US market has far less fans than the Asian markets, the sign that big banks want to underwrite this IPO shows that there is a market for these shares. So in the event that the IPO has limited success, then the shares will be bought by the underwriting banks for a discounted price and then they will sell at the market price when they wish to for a profit.

5.) when Manchester United was planning to launch the IPO is Singapore and Hong Kong, there were also many underwriters for that proposed IPO, and only 1 bank has dropped out of transferring its support for Manchester Uniteds support in the NYSE and not in Singapore, and that's Morgan Stanley. But, with the presence of other big name underwriters for the IPO in the NYSE, I willing to put my neck on the line and say that the IPO will generate a lot more than $100 million.

Thanks for the link!
Etepttocs (Manchester City) 4 years ago
I have left a message on your wall
Etepttocs (Manchester City) 4 years ago
Disagree as much as you like.

The glazers track record of raiding the coffers at old trafford suggests that any funds raised in excess of the £64 million mentioned will end up in Glazers pocket or will be used to furthersupport thier property business in the states.

You probably unerstand that, but can not or will not accept it.

[account-removed] 4 years ago
I agree, the Glazers track record isn't good, especially regarding Manchester United. But there are some points that most people (especially those that arent in the field of commerce), are not aware of.

1.) the IPO prospectus that they filed with the SEC says the net proceeds of the IPO will be used to pay of Manchester Uniteds debts. That means, (IPO proceeds - registration fees) = IPO net proceeds. This is the figure that will go to pay off the debts. The Glazers don't have a choice and stick to their word because if they divert those funds elsewhere (e.G. Glazers other business interests), then there will be consequences. Some of the consequences are:

I.) the PR campaign against the Glazers will intensify if the Florida based family go against their word. If I was the Glazers though, I wouldnt lose much sleep over this threat since they have seen off other campaigns as well (e.G. The green and gold campaign, initial resistance/protests when they first bought the club, etc)

Ii.) if they go against their word, then they will certainly be sued by those that bought the shares. When someone launches an IPO and says the proceeds will be used for certain purposes, then they have to stick to that, otherwise the IPO buyers will sue the Glazers for fraud (covered in commercial law) and the Glazers will end up losing more money than they gained. If I was the Glazers, then I would be very worried about this. That's why I seriously don't think the Glazers will go against their word.

2.) once the IPO goes through, Manchester United will no longer be a private limited company. It will become a public limited company again, and under Company Law, public limited companies are under legal obligation to publish their accounts to the public (especially to the Stock Exchange), which means that any Tom, Dick and Harry can go through their future published financial accounts (balance sheet, income statement, cash flow statement, etc). Should the Glazers try to take money out of the club, or any other sinister activity, then they can no longer hide it since the accounts will now be available to the public. Additionally, this should heap more pressure on Manchester United spokepersons and the CEO, David Gill, to be more responsive to enquiries about the clubs finances on a timely basis.

Anyways, time will tell for certain what happens.

Btw, below is the link to the Manchester United IPO prospectus that was filed with the SEC. Its quite long and time consuming, but I thought I should share the link with you in case you were interested in reading it.

Etepttocs (Manchester City) 4 years ago
Etepttocs (Manchester City) 4 years ago
Etepttocs (Manchester City) 4 years ago
Etepttocs (Manchester City) 4 years ago
His name is Malcolm Glazer he thinks he's rather flash, he tried to buy a

Football club, but, didn't have the cash, he borrowed lots of money and got you

All upset, now City are fooking loaded and you're in fooking debt!

Oh ho ho ho ho ho ho. Ha ha ha ha ha ha.
Ho ho ho ho ho ho ho. Ha ha ha ha ha ha.

Oh ho ho ho ho ho ho. Ha ha ha ha ha ha. Ho ho ho ho ho ho ho. Ha ha ha ha ha ha
Etepttocs (Manchester City) 4 years ago
Etepttocs (Manchester City) 4 years ago
Etepttocs (Manchester City) 4 years ago
[account-removed] 4 years ago
Manchester United (nyse:manu) is a great club, but this is a terrible investment.

Details of the IPO

Manchester United is planning to use the proceeds from its IPO to decrease the burdensome debt that was brought on the balance sheet when the Glazer family took over in a leveraged buyout in 2005. With 16. 7 million shares being sold (10 percent of total shares outstanding) in a price range of USD 16 to 20, the club will eventually be valued at USD 2. 6bn to 3. 3bn. That is more than double the value the Glazers paid for the club.

With the stated goal of the IPO being to reduce debt, you would think all the proceeds would be used to pay off loans. That’s where you are wrong! The setup is as follows: the club will sell 8, 333, 333 shares at USD 16 to 20, which will eventually be used to pay down debt. Meanwhile, the Glazers will pocket the proceeds of 8, 333, 333 additional shares sold at the same price. So the owners are not entirely looking for investors to help them pay down debt. They will be filling up their own pockets as well.

After the Glazers take their share of the total GBP 210 million IPO proceeds, roughly GBP 100 million will be used to pay down the existing debt of GBP 440 million. This decrease in leverage will surely decrease the club’s yearly interest expenses, leaving more cash (hopefully) for maintaining the squad or facilities.

With the details in table 1 in place, you can see the stock is likely to be traded at a price-to-earnings ratio in the range of 75 to 93 given the company’s estimated profits for 2012. That is VERY expensive for a company that hasn’t really shown attractive earnings or revenue growth in recent years, and shares in a company whose business model is a football club. The valuation simply makes no sense. Warning signs

Warning signs

With more information being given to us through the amendment last Monday, we have a clearer picture of how the club’s 2012 financial year will pan out. As you might expect, I am not particularly impressed. I can agree the club has done one thing well, and that is growing its commercial revenue segment, which covers sponsorship, retail, merchandising and product licensing (approx. 35 percent of 2012 revenues). This segment will most likely continue to grow, as the club just announced a record sponsorship deal with the world’s largest carmaker, GM.

However, all revenue streams (commercial, broadcasting and matchday) are heavily dependent on pitch performance, especially broadcasting and matchday revenues (which declined by 12 percent compared to last year). It’s not only broadcasting and matchday revenues that are sensitive to performance: commercial value might also deteriorate over time should the pitch performance get worse.

Despite growing commercial revenues in recent years, total revenues in 2012 are expected to be 3. 5 to 5 percent lower than the year before. Revenues were heavily affected by the club failing to qualify for the later stages in the Champions League last year which shows how sensitive revenues are with respect to pitch performance. At the same time as revenues are decreasing, player and staff expenses have increased by 4 to 5 percent. First warning sign! Revenues are slowing down while costs are increasing.

A second warning sign is the massive tax credit the club is utilizing in 2012. As the club had a tax credit of roughly GBP 27m, the club will turn a profit in the year. The tax credit is a onetime thing and won’t help the club to be profitable next year. Had there not been any tax credit this year there wouldn’t have been any profits!

The third warning sign is that total operating expenses are growing faster than revenues. A major factor in running a football club players’ salaries. As the world of football becomes more competitive, salaries have increased significantly. If the club fails to grow revenues at a higher pace than salaries and other costs, you will end up with a significant problem! That is just finance one-0-one.


A stock with little or no growth being priced at a P/E that is higher than 70 – No thanks!

It is not like this is a company that can expand its operations to new regions, increase number of games played by participating in more leagues outside its home country or set up a ‘subsidiary team’ elsewhere.

The broadcasting and matchday revenues are simply capped to a certain degree. The main factor that can boost revenues is the brands commercial value. That is simply not enough for me to make an investment case out of it. Bad investment!

Doesn't look good
Etepttocs (Manchester City) 4 years ago
No buyers at $16-$20. Price slashed to $14 a share.

Etepttocs (Manchester City) 4 years ago
Thing's not quite going as planned....


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