Okay, £360m in debt no sign of a lifting on the wages and transfer squeeze and now Edelman is getting out/cashing in? The US economy is in the toilet and GB's looks to be heading in the same direction. The hoped for windfall from redeveloping Highbury ourselves could go pear shaped and leave us hampered with too much debt for years. Is it time to pucker up and go cap in hand to the Russki or to the Yank, give em control and wave goodbye to the debts?
It's this sort of panicky thinking that will get us stuck with even more debt. http://www.guardian.co.uk/football/2008/may/06/manchesterunited.premierleague No thanks.
But should Man U really be concerned? Is there really any chance of them going belly up? I haven't had the time to follow this.
I'm no economist, but I suspect that whatever downturn is or might in the future befall the UK economy will have little effect on the North London real estate market. Quality flats in that area of London might lose some value in the short term but should prove pretty resilient.
Probably not. However, you never know. I'd rather my club not be three quarters of a billion pounds in debt, and then have them in turn place the debt on the shoulders of the supporters.
Hmmmm.... should we sell out and place the future of the club in the hands of people who haven't even followed it as long as I have? No.
On the back page of the Daily Mail today here in the UK, it states that (despite signing a new contract on £35,000 per week), Adebayor is now demanding £80K per week or he is out ! With Flamini gone, Hleb not too far behind I would suggest, is this now going to open the floodgates? What do we do? Be held to ransom; as suggested above, ship in a Yank or Ruski; or settle for not being able to compete at the top, and hope AW can find a bottomless pit of young, raw undiscovered talent for ever and a day!? Something needs to be done and soon. Quite what, at present, I have no idea.
Dude, no matter how bad it is, selling out like Chelski is never an option. That article had no quotes attributed to Ade in it anyway. The only quote was one sentence from his agent where he said "now is not the time to discuss it."
Adebayor - Reports I want to leave the club are rubbish Relax. Besides there is nothing to suggest the club won't give improved contracts to those who show loyalty and perform at high standards (e.g. Sagna's new contract). In fact I wouldn't be surprised if the club was the one to offer Ade a new contract since he's been very loyal and has performed very well. There is no reason to bring Fat and Orange in...we don't need them.
This is a question for discussion not a statement of panic! It is however generated out of the kind of concerns that Jeff illustrates. ManUre is a bad example in our case. We may not be publically owned but our debt to earnings situation is not greatly different to theirs; probably worse! The difference is that Old Tramshed is on an industrial estate and has cost far less to build and modify than our new home. Yes their debts have gone to cover a buyout, but it has also gone on buying and paying for players who will ensure their continued ability to repay those debts. With Highbury a potential noose around our necks, the clubs finances are not a simple equation of footballing success generating sufficient revenue to run a top club. We could win trophies, pack out the new stadium and conceivably still not have the capital reserves to improve the squad or compete on wages. That is the present reality. I don't know how long we will be carrying the cost of redeveloping highbury on our books or if that investment will now generate the return that justified it's risks? The only kind of owner, which might be worth considering, would be one with deep enough pockets not to have to worry about the short term return on his/her investment. I've yet to see anything that suggests that the way the finances of the club are currently run are actually doing anything other than ensuring the maximum end value to the share holders at the minimum risk. Everything is being financed out of revenue so none of the board are having to put up a single penny, even though they have all seen their share values increase exponentially. On top of that most of them are probably paid hansome salaries to increase the own share values? Perhaps if we had owners willing to actually put their own capital into the club we wouldn't need to wait years and years to compete in the market and keep the very best players? That could even be done without a new owner, simply by issuing and selling new shares, but that would water down the value of their current holdings! In pure footballing terms I don't understand why the current situation is seen as a question of club loyalty or nescessarily in the interest of the fans and playing staff? If failing to strengthen what might have been the greatest team to ever play English football was in the interest of the club and not the shareholders bank balances then I'm sorry that I'm too dumb to understand! May be the question should be... If the shareholders had been willing to get a little less rich, might we still have had enough money available to have had it all?
I thought a large number of the flats from highbury re-development were under contract? That being so, what is the default rate that point? Considering the type of buyer? I would be surprised if it topped 10%. What does that total? It appears our debts are half that of MU, yet our revenue is nearly equal, I don't think that puts us into the same category as MU. Also consider the formulation of the debt, which Arsenal have financed into bonds. I don't think the interest rate is fixed, but there is not a great spread above LIBOR if I recall correctly. My understanding of the some of the MU financing is that is through hedge funds, which are likely to be more aggressive in seeking a return than bond-holders. In other words, MU's financing is much more aggressive than our own. There are economic doomsday predictors with every downturn, after 9/11, after the dot-com bubble, after Enron/WorldCom corporate fraud, after the US recession in the early 90s. I don't think its time to pull up stakes yet. Are you selling your house? Hoarding gold?
Thanks for a reasoned answer! My response; 1. If our finances are in a better state than ManUre's then why aren't we champions and in the CL final? 2. Have you seen the price of gold lately? 3. Why not increase the club's capitalisation with a rights issue?
No. Our debt is roughly half as great as theirs is, and the two clubs are generating similar income. If you didn't read the article I posted, it stated that their bottom line for the year was a loss of £60 million, after paying off the interest on the Glazers' loan and other expenses. In previous years, they had made money at the end of the day. Not sure how this is exactly a good thing. That last bit there about the club 'paying for players who will ensure their continued ability to repay those debts' is straight out of How Not To Run A Football Club by Peter Ridsdale. Not suggesting Man United will suffer the same fate, but employing that sort of philosophy is a risky thing to do. Not something I want my club doing, that's for sure. As for your other points - most of them are based on wildly erroneous assumptions and fallacies. Perhaps I'll get into it later, but this has all been discussed in other threads on the subject. I feel as though the general (and correct) consensus was that a Glazer style takeover (the only type plausible at the moment) is not what our club needs and will do a great deal to set us back. At the moment we are a financially responsible club that is going through a relative tight period due to the new stadium, but is remaining competitive on the pitch and has a strong plan for the future. I highly doubt the powers that be will allow over a decade of great work be undone so rapidly.
Because Man U spent a lot more money that they didn't have then we did: http://sportsillustrated.cnn.com/2008/writers/gavin_hamilton/05/06/glazer.united/index.html - suffered a £58 million loss last year - owe a total of £764 million to their various creditors - owe £56 million in outstanding transfer fee installments to other clubs - owe £152 million to hedge funds at a rate of interest of 14.25 percent and cannot find anyone willing to take on the debt at a more reasonable interest rate And my favorite: - "leveraged" buyout (May 2005) loaded liabilities onto a club which had previously been debt-free
Rick B debunked this at length. It really is frustrating that you can't read existing material instead of posting misinformation like this. Utd are leveraged to the hilt and need to adopt a high risk strategy. Arsenal has nearly the same revenues, but debt is more than balanced out by the Highbury development. In other words, in some years, Arsenal will be left with the commercial clout of Utd - with zero debt. That is precisely why dodgy russkies want a piece of it - the club is asset rich and undervalued and they want to take a whopping profit on it - they certainly aren't interested in helping you win the league. People need to realise that Arsenal is run as a very profitable business. Both Chelsea and Utd are run at BIG losses.
Exactly. The Glazers have no choice but to try to grow the overall value of the club faster than the debt. Then when they eventually sell down or out, they can repay all the debt and be left holding the pie. In the meantime, that means lowering costs everywhere, rampant marketing, and enormous price hikes. No sensible owner of Arsenal would do these things. What you need to be worried about is the current owners taking the profits - because by running such a nice balance sheet - the current value of the club is enormous. EDIT: The new thing those figures show - apart from the rollover on the PIK debt at the absurd interest rates - is Utd's new 'Hire Purchase' transfer strategy.