£100 million sweetener or always in the Glazers grand plan?
Manchester United’s beleaguered owners the Glazer’s £100 million ‘peace deal’ offer to fans can surely be seen for what it is, a stunt. An attempted PR coup for the debt riddled club and its owners to win back the Manchester United faithful after the peaceful yet powerful protests at Old Trafford a fortnight ago. United Chief Executive David Gill in a recent interview with BBC Radio Five Live suggested not only would United invest heavily in new players in the summer, but that up to £100 million could be made available to Sir Alex Ferguson.
‘The owners understand that they will only get value back by ensuring the team continues to be successful and continues to attract exciting players and produces results off the pitch as well’
‘We do our planning throughout the year but the money will be there and it might be more than £55million.’
‘We have well over £100million in the bank, so we will assess the squad over the next few months and go into the market as appropriate.’
Whilst Manchester United fans have serious worries about the club’s future with debts of over £500 million owed by the Glazers, to suggest an ability to spend £100 million on players with such a debt hanging over the club screams of mismanagement. Of course hearing your team could be spending such a vast amount of money on talent is music to the ears of any football fan, yet surely common sense must prevail.
It’s the interest payments that are killing United’s budget. Without the £60million plus payments the Glazers have to pay on the clubs debt every year United could maintain an extremely large transfer budget and stay profitable without the worry of selling off the crown jewels, al la Rooney due to unmanageable debt. It’s all fine David Gill announcing up to £100 million available to buy players, but what if something goes wrong? An unexpected early exit from the Champions League perhaps? A long term injury to Wayne Rooney causing significant damage to United’s title chances? What about when Sir Alex steps down? The club will go through a transition period upon his departure, such his impact at the club. Sir Alex Ferguson is Manchester United. Will the performances drop? Whilst I am not suggesting United will not be challenging for honours on all fronts, will they be the same team without Ferguson?
Fans of the club need only to look at rivals Liverpool to see what crippling debt can do. If Liverpool doesn’t make the Champions League they could be in serious trouble, furthermore their untimely exit from the competition this year has cost them an estimated £20 million. Could Manchester United cope with such a loss of revenue considering how large their debt is? Instead of David Gill suggesting such an obscene transfer budget, they should spend money more wisely by giving Wayne Rooney a new contract. Spending £100 million on players could be a great summer for United fans, but if the Glazers think this will turn the fans around to their side, they are strongly mistaken.
Football News 24/7
A £100 million budget would be quality, finally sign someone like Ribery! Yet the debt needs to be taken to consideration. The point about Ferguson is so true. Wonder who will take over eventually. Anyone hedging their bets on someone?
Reply
There isn’t £100m at all. About £127m is earmarked to be removed by the Glazers this year in order to pay down their PIK debt and interest on the bond, which is due in August. Fans need to know the truth not buy into the spin that comes out of David Gill’s mouth.
Reply
You’re mixing up the two debts. The £500m is the debt the club owes and it’s taken care of by the bond. They pay just over £40m a year interest on this. The club generate £90m a year cash profits before transfer activity, so this is affordable. If they also have £100m in the bank it’s not irresponsible to invest some of that on players to help guarantee future performance and hence profits.
The other twenty million interest is on the PIK loans that the Glazers took out. The last thing we want is the Glazers talking money out of the club to reduce those debts (though I bet they will, they have in the past). The Glazers are supposed to be billionaires, they should sell off some of their other assets to pay it. How about that US football team they own (worth $1bn apparently)? Or just sell United. Perhaps they need to ask themselves, are they really rich enough to own *two* big sports teams?
Reply
Not mixing up debts at all. Buried in the small print on the bond issue it is clearly spelt out how much the Glazers will take of the club in interest, management fees and dividends – around £565m over the next seven years. And even then we’ll be left with a £500m bond to repay. This article is totally misleading.
Reply
Sorry United Rant, I meant the article was mixing up the debts (you posted just as I was writing my message and I was replying to the article, not your post).
However, to reply to your point, the bond document does not say how much the Glazers will take out, just how much they theoretically could take out. Many of the payments can only be activated if profits are above a certain level. And they know they have to balance this with funding the team properly or the flow of money could abruptly dry up as we drop out of the Chanpions League. Also the club will not be left with £500m to pay. The bond will be paid off when the Glazers sell the club (the prospectus says that it has to be paid off on any change of control). If the next owner wants to borrow £500m to buy us he’ll have to make his own arrangements.
What’s intersting about Gill’s comments (and SAF’s insistence that he still has the Ronaldo money to spend) is that it shows people have misinterpreted the bond prospectus. We all assumed that the Glazers would take £70m out of the club immediately to pay off some of the PIK loans and this was spoken of as if it was an established fact. It appears that they are not going to do this. Or not for a while, anyway.
Having said all that I think we should still protest. The Glazers are just letting us keep a little more of our of our own money than the pessimists had assumed. That doesn’t excuse the hundreds of millions they have taken out of the club in interest payments to pay off their debts.
Reply
Pls inform sir 2 sign swezteger
Reply