Friday, May 24, 2013

The history of Manchester United's debt

Last night United announced to the New York Stock Exchange that it was repaying around half of its outstanding bonds using a new bank loan from Bank of America. This will reduce the club's interest bill from around £31m per year (pro-forma post the IPO) to around £21m per year.

This blog sets out how United's debt has risen and fallen since the 2005 takeover and how much it now costs.

The history
For completeness, the table below shows flow of borrowings and repayments from the original takeover up to the most recent (March 2013) accounts. Initially the debt sat in either a subsidiary of Red Football Limited or Red Football Joint Venture Limited. Following the pre-IPO reorganisation, MU Finance Limited holds the debt for the new parent, Manchester United plc.

The table above can be more easily summarised in this graph, which shows the total gross debt at each stage.

The story is one of rising debt after the takeover as the preference shares accumulated rolled up interest. These were repaid in the 2006 refinancing, adding to the debt on the club itself and bringing in the famous PIKs. By June 2010 after the bond issue, total debt including the PIKs had spiralled to a terrifying £753m. 

The story thereafter is well known. The PIKs were mysteriously repaid (at a cost of £249m) in late 2010. The club spent around £90m (the Ronaldo cash) buying back the bonds it had just issued. Last year another £63m of bonds were repaid from the element of the IPO proceeds that the Glazers didn't keep.

By the end of March this year, the debt (made up overwhelmingly of the remaining bonds plus a small MUTV loan and the mortgage on the freight terminal) was down to £367.6m. The figure oscillates with the movement between £ and $.

The costs
As I have frequently pointed out, the interest bill from all this debt has totalled c. £350m  since the takeover and the total cost (including fees, derivative losses and debt repayments) is almost £600m. Paying interest has taken far more of the club's cash than has been spent on transfers.

The annual  interest cost is falling however, both in absolute terms and as a proportion of profits. From over 80% of EBITDA (cash profits) going on interest in 2006, next year the figure will be around 12%.

The future
I have predicted before that the club would refinance as quickly as possible (there are penalties on repaying bonds early but these expire over time).

Over the next three to five years the club should generate enough cash to pay the remaining sum off. It is tax efficient to keep some debt, and future dividends may take priority over further repayment.

The reduction in the amount and cost of United's debts is an unequivocal good thing.

The question for supporters is who benefits? Will David Moyes be given significant funds? Will ticket prices continue to be frozen (or indeed will the club contemplate reversing some of the 50% plus hikes they implemented after the takeover)? Or will the extra cash from TV deals, commercial income and a lower interest bill flow out of the club in dividends.

Most major football clubs reinvest the bulk of their money back into fans and football. In England at clubs like Arsenal, Liverpool and United, profit still remains the focus. On the weekend the German model is on display at Wembley, that's too often the English way of football.


Thursday, May 23, 2013

Manchester United Highlights Index: Season 2010/2011

Reserved for future uploads

Manchester United Highlights Index: Season 2012/2013

Reserved for future uploads

Player of The Year Awards & Champions Parade in Manchester (2013)

Player of The Year Awards

Video: MPEG4 Video (H264) 720x404
Audio: 48000Hz stereo [English]
Length: 53:16

Hotfile: Pt1 Pt2 Pt3

Manchester United Champions Parade

Video: MPEG4 Video (H264) 720x416
Audio: 48000Hz stereo [English]
Length: 03:13:00


Manchester United Highlights Index: Season 2008/2009

Reserved for future uploads

Manchester United Highlights Index: Season 2009/2010

Reserved for future uploads

Monday, May 20, 2013

WBA v Manchester United 19-05-2013 MOTD Highlights HD

Video: MPEG4 Video (H264) 1280x720 25.00fps
Audio: Dolby AC3 48000Hz stereo [English]
Length: 17:16

Hotfile: Pt1 Pt2

Monday, May 13, 2013

Manchester United v Swansea City 12-05-2013 MOTD & Homemade Highlights HD (Fergie's Last Match at Old Trafford)

Extended Homemade Highlights in HD 720p + Pre & Post Match with Celebrations (Sky Sports)

Video: MPEG4 Video (H264) 1280x720 25.00fps
Audio: AAC 48000Hz 6ch [English]
Length: 15:39 + 17:41 + 03:48 + 14:15 + 25:13 + 44:18 min

01. Pre Match ShowDepositfiles or Hotfile: Pt1 Pt2

02. First Half Highlights: Depositfiles or Hotfile: Pt1 Pt2

03. Half TimeDepositfiles or Hotfile

04. Second Half Highlights: Depositfiles or Hotfile: Pt1 Pt2

05. Post Match Part 1: Depositfiles or Hotfile: Pt1 Pt2 Pt3 Pt4

06. Post Match Part 2: Depositfiles or Hotfile: Pt1 Pt2 Pt3 Pt4

Match of The Day Highlights

Video: MPEG4 Video (H264) 1280x720 25fps
Audio: Dolby AC3 48000Hz stereo [English]
Length: 19:24

Hotfile Pt1 Pt2

Sunday, May 12, 2013

Manchester United v Swansea 12-05-2013 Highlights & Post Match Celebrations

MOTD Highlights SD

Video: Xvid 608x336 25.00fps
Audio: 48000Hz stereo [English]
Length: 20:14


Goals & Post Match (MUTV)

 Video: MPEG4 Video (H264) 700x394 25.00fps
Audio: 48000Hz stereo [English]
Length: 11:13


Post Match Celebrations SD (Sky Sports)

Video: Xvid 624x352 25.00fps
Audio: 48000Hz stereo [English]
Length: 39:27