Friday, 10 August 2012

The MUFC IPO - why the club won't benefit for over two years...

So the Manchester United IPO has finally happened. Having failed in Hong Kong and Singapore, the Glazers and their increasingly desperate bankers ditched their own ludicrous $16-20 per share price range and the shares have limped on to the NYSE at a still very, very aggressive price of $14 per share.

The whole saga has been a grubby and unedifying spectacle in our club's history that does very, very little indeed to improve the club's finances. The whole exercise has only been undertaken to help the Glazer family with their cash flow problems.

From the latest SEC filing we have confirmation that at the lower issue price, the club will receive net proceeds (after underwriters' discounts and commissions) of c. $110.3m (around £70.7m).

The club will use all this $110.3m to repay $101.7m face value (£63.6m) of the 2017 US$ notes at a price of 108.375% of nominal value.

These US$ notes pay 8.375% interest so the annual saving before tax will be:

£63.6m x 8.375% = £5.3m per year

Because interest is tax deductible, this reduction in interest paid will increase taxable profits. As a consequence of the IPO, United will pay US Federal Income Taxes at a rate of 35%. The net interest saving  after tax will therefore be:

£5.3m x (1 - 0.35) = £3.46m per year

This net saving is the equivalent of the matchday income from one game at Old Trafford. It is just over 1% of the club's annual revenue and around 3-4% of EBITDA.

Before any United fans begin celebrating this tiny saving, there is a further sting in the tail.

The prospectus informs us that the club, and not the family, will bear the expenses of the IPO. From page 151 we can see that these expenses total $12.3m (c. £7.9m).

With so little debt repaid and United bearing the £7.9m of expenses, it will take until the end of 2014 for the club to even break-even from the IPO, let alone benefit financially.

And the Glazer family? They receive their $110m straight away.

That's "Glazernomics" folks.....!

LUHG


46 comments:

s7_MUFC said...

They've already sold additional 8.5 million shares on top of IPO so they will be receive around $220m.

Anonymous said...

Hi Andy,

You must bare in mind that the Glazers are looking to float 35% overall so this will not be the only cash raised and not the only cash going towards our debt. I think they are just seeing how much they can make, sooner or later they will float the other 25%. Just hope most of that goes towards our debt. Personally I think half will go towards PIK2 and half towards bond debt.

Mike.

smokey said...

Andy what about the new increased tax rate on our existing profits will the increase in tax meaning the we loose out when you consider increased tax on profit compared to coupon payments saved

andersred said...

Fair point Smokey, the 35% (vs UK 24%) will hurt for years....

anders

Anonymous said...

Unbelievable. we need em out

David said...

some satisfaction in seeing the glazers high valuation considerably reduced which I'm sure will seriously piss them off. MUST deserve much credit for their campaign over the past 7-10 days. In 2 years I'm sure Fergie will be off into the sunset, new ball game and the one thing the Glazers need is a continually successful club. Interetsing times ahead and as much pressure on the glazers as ever. Could'nt happen to a nicer bunch of twats

Anonymous said...

Anders
What was the point of the IPO? Reducing indebtedness was seemingly the goal for over a year and yet when they get the sniff of a market they backtrack and make little more than a token gesture in that regard.
They changed their mind somewhere between the 2nd and third amended drafts and the decision didn't hinge on what percentage of bonds could be redeemed with the proceeds from going public.

Some folks believe that follow on offerings will be used to reduce the debt still further. I think that's rubbish. I think it's pretty clear that the Glazers intend to use the Club's free cashflow to optionally redeem more of the bonds going forward. I fully expect heavy cash-out in the near term with a possible refinancing of the remaining debt in a couple of years.
A complete and utter waste of resources to make a bunch of profiteers even wealthier. We aren't so much a for-profit business as a for-profiteering business.
What particularly gets on my nerves is the endless penny pinching we engage in on the transfer market; as though we were a paycheck away from being destitute. As though we can't afford to spend the going rate. Total nonsense. "No value" in the transfer market is just another way of saying "more value" for our great owners.

Paul

Darren said...

There used to be a Football Club in M16.

Paul said...

In particular, we have and will continue to be subject to the challenges of operating in our industry. These challenges and risks include, among other things, competition for key players and other personnel, increases in operating costs, such as player salaries and transfer costs, and our ability to manage our growth efficiently. For example, net of profit on disposal of players' registrations, we realized a loss from continuing operations in two out of the last three fiscal years (largely the result of finance costs that have since been significantly reduced through our deleveraging in fiscal year 2010). After giving effect to the use of proceeds from this offering, we would have had total indebtedness of £345.4 million as of March 31, 2012. In addition, although we preliminarily estimate that our profit from continuing operations for our fiscal year ended June 30, 2012 was approximately £21 million to £23 million, such amount includes a tax credit estimated to be approximately £27 million to £29 million. Net of that tax credit, we expect that we would have realized a loss from continuing operations for our fiscal year ended June 30, 2012. See " — Recent Developments."

Anonymous said...

oh darren, you mean that club, it's long gone. i heard it died sometime in 2005.

Anonymous said...

Following on from what Smokey said - based on last years figures could you work out how much more the club would have paid in tax if it had to pay 35% tax on its profits rather than 24%?

The £3.46m net interest saving is even more meaningless if the increased tax rate on profit hits the club by a larger amount.

Other Paul said...

First off - great blog.

Second off - my point/rant:
With every new development in this sorry saga of a debt dance I find it more and more unbelievable that even the cash-centric Premier League allow its clubs to be run in such a disrespectful way.

The fan base will naturally reduce over the next ten years as the club ceases to be the dominant force it once was, after all people flock to success, and what then for the sponsorship deals, merchandising and overpriced-ticket sale?

Also there's a fair chance of the massive Asian market for English football shrinking as the leagues on that continent carry on their steady rate of improvement.

Where would Utd stand without their extra incomes each year? What if the sponsor deals were halved and the foreign markets went down by 60%?

Whilst FFP might even the playing field somewhat between Utd and City/PSG/Chelsea etc, Utd will be in severe danger of becoming the next Liverpool, a high placing, but still second tier team, suffering decades of disappointment and false dawns.

Further more, with this latest show of utter indifference to the club, what manager will the Glazers hope to attract in a couple of years time when Fergie leaves?

What will it take for the majority of fans to start boycotting the club on a weekly basis? A year away from Europe? The loss of Rooney to fund a Glazer investment elsewhere? Championship football? Don't think it couldn't happen, look how close Liverpool looked for a while the other season.

Until the IPO I had mixed feelings about the Glazers, I never liked them, they brought the club in a way which damaged it, and they kept messing about with the debt in ever expensive ways, but the team was alright(ish) and Fergie seemed happy enough.

But this latest money grab is just insane. Every move they make financially seems like another bad choice destined to cost the team and the fans.

If it came to it, what would happen to the club if enough payments were missed on the debt? A bank induced auction for the highest bidder I presume?

Maybe we should start a savings fund for the fan, sat there accumulating interest in the hope that one day, post Glazer we can own enough of the club to make our voices heard.

mufcsudan said...

Andersred,

I commend your work on this blog which has helped me and many United fans gain a better understanding of the financial mess that the Glazers have put United in.

Whilst greater and greater understanding of the issues seem to be growing among the fans, the one person who seems to be turning a blind eye to it all is Sir Alex. We know he is not stupid and therefore its reasonable to conclude that that he is either a proponent of the way the Glazers are running the club OR that he is ignoring the issues right in front of him (in which case he is negligent of his duties towards the club given his position as the foremost figure in United's history).

Ferguson has taught us fans over the years (by the way he has mercilessly culled players) that no man is bigger than the club; and if we have truly learned this lesson, surely we must come to the conclusion that the very same rule applies to Ferguson. And because of the 'no man is bigger than the club' principle United fans must be prepared to take Ferguson to task for his support (or negligence) of the Glazers actions.

No man is bigger than the club - and that includes the great man himself.

Anonymous said...

I'm a little confused by your tax analysis. As far as I recall, the profits of a foreign subsidiary of a U.S. corporation are only taxed in the U.S. to the extent that the profits are repatriated. I'm unclear why you think we'll be subject to U.S. taxes on U.K. earnings. This, combined with the proposed rate reduction from 35% to 28% and the possibility of adopting a territorial approach to foreign earnings, would seem to cast some doubts on your analysis.

andersred said...

Hi Anonymous at 03:31,

Your description of the tax situation is what I would have said until I read the F-1 which couldn't really be any clearer!

To quote:

"Following our reorganization in preparation for the offering, although we are organized as a Cayman Islands corporation, we believe that we will be treated as a US domestic corporation for US federal tax purposes. As a result, we will be subject to US federal income tax (currently at a statutory rate of 35%) on our worldwide income."

The very fact they are happy to accept this reverse tax arbitrage says a lot!

anders

Anonymous said...

Precisely, but such tax is only levied to the extent that the profits are repatriated. Why would their tax treatment differ from that of any other corporation domiciled in the U.S. for tax purposes. Indeed, given that they've been the wholly owned subsidiary of a U.S. corporation since the takeover, in what ways have their circumstances changed?

Anonymous said...

Absenting the matter of the tax rate that will be applied, should your analysis not reflect that the $12.3m in expenses will either be expensed or amortised in it's entirety?

smokey said...

With the reduction on the bonds outstanding and as a result club indebtedness could this mean that they would be able to refinance the existing debt at a lower coupon rate in the near future, could this be their game plan.

andersred said...

Anonymous @ 11.08'

That confused me too. Why would they repatriate unless they were paying dividends, which they aren't? The F-1 does say: "We will be subject to greater tax liability" as a statement of fact.

It may be that this should read "we may be subject...." and is just lawyerly prospectus paranoia.

If they do hang onto a UK corporation tax rate of 24% it would increase the annual net interest saving by c. £500k vs. my cakculation, not really material. It would still be almost two years before the expenses are recovered......

Anonymous @ 11.46

I can't think of any reason under IAS to amortise the expenses. Surely they will be expensed as incurred?

I was focusing on the cash impact anyway. It's usually the right way to look at football clubs IMO.

anders

Anonymous said...

Just out of interest Anders its been some time since you had a look at how the Glazers US businesses were faring. They still doing badly?

Anonymous said...

It would be usual to amortise the issue discount and expense any other expenses incurred in the transaction. Either way they generate a tax offset which has just as much of an impact on cash as the deductibility of interest payments. You seem to be selecting the facets of the tax code that you apply in order to bolster your argument.

They will, of course, start paying dividends fairly quickly - the "foreseeable future" statement is just boilerplate that's found in the F-1 of any company that's not currently paying dividends. And you are correct, the "U.S. tax treatment" statement is also boilerplate. It's important to remember that the F-1 is constructed with a major focus on avoiding subsequent lawsuits.

Anonymous said...

I have a further, more substantial, bone to pick with your analysis. If you look through the form of the transaction and instead focus on the substance you'll find you arrive at somewhat different conclusions. Prior to the IPO and the concurrent reorganisation, the Glazers were the 100% owners of the precursor entity. The substance of the transaction is that the Glazers sold 10% of their ownership in the public market and the proceeds were divided between the Glazers, Manchester United plc, and the issuing banks (and other providers of services in the transaction). What this makes clear is that the issue costs were paid by an additional dilution of the Glazers holdings and not in any sense by Manchester United plc (who were simply the recipients of part of the cash raised in the transaction. The form of the transaction is necessary for regulatory purposes, but that is not a reason to lose sight of the substance. When you say that United paid the issue costs you are violating your own credo of focusing on the cash flow. No cash that was formerly in United flowed out in the transaction - the expenses are attributed to the entity in a pro forma sense but have no cash flow consequence. (I suppose the best way to think of it is that it is not cash that somehow "should" have gone to United - that was never a possibility.) I understand that, when you're used to the rote analysis of financial statements, this is not a particularly appealing perspective, but it is the economic substance of the transaction.

Anonymous said...

Yawn.zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz
take a break andred

Anonymous said...

@ Anonymous 20:03

You have to translate what you said into plain English for Andy's followers. A lot of Andy's followers get dazzled by financial jargon in his analysis, but for us who work in the financial sector, it's just another language, very ordinary. We are not gods because we work in finance, but then again, some finance people have a high tendency to show deity-narcissim syndrome.

The cost of the IPO is not a cost borne by the club as such, its the cost of getting the $110.3m flow into the club.

In terms of the clubs's cash position, thinking on what the IPO did, $110.3m went into the club and no cash came out. The club lost nothing, the owners lost 10% of the club asset value.

So if the IPO was bad for the club's cash position, I'm all ears as to why!

Well done picking up the tax issue. Andy seems to focus too much on words in documents and not likely practical application. IPO is a high risk you get sued if you don't reveal everything - it's almost tantamount to NEED saying something as obvious as "If you cross a road, you run the risk of getting run over by a car". Andy's done this before when he was analysing the bond, talking about the sale of the ground, sale of Carrington, carve outs resulting in £m's being taken by the Glazers. None of that has happened!

Rob

andersred said...

I'm sorry Anonymous @ 20.30 but I don't agree.

You say:

"No cash that was formerly in United flowed out in the transaction - the expenses are attributed to the entity in a pro forma sense but have no cash flow consequence."

That is indeed true of the underwriting costs which were paid through an "additional dilution" as you describe, a reduction in net receipts. But that is not what I'm talking about.

The $12.3m I am talking about in this post are the expenses set out on page 151 of the F-1. It says (my emphasis)

"Set forth below is an itemization of the total expenses, excluding underwriting discounts and commissions, that we and the selling shareholder expect to incur in connection with this offering."

It goes on to say:

"All of the fees and expenses for this offering will be paid by us with existing cash on hand."

So you are incorrect, this $12.3m will be a cash out flow in Manchester United's cash flow statement. Very much a "cash flow consequence"of the IPO......

anders

Tacconi said...

I'm well aware that this has been done to boost glazers personal coffers, but anyway you look at it, and bearing in mind that it could have been much better, Uniteds debt being £63 million lower, has got to be a positive thing.

Anonymous said...

Indeed Anders.
The cash in from the IPO ( already net of underwriting discounts and commission) will be used to redeem bonds. Other explicit fees of about 8m (estimated $12.3m) will be cash-paid by the club- "All of the fees and expenses for this offering will be paid by us with existing cash on hand."

The F-1 "Recent Developments" section indicates that exceptional expenses for YE 2012 will rise from 6m(Q3 total) to 11m by year end; further proof that the explicit fees and expenses will be paid by the club.

Anonymous said...

Andy, I don't get the point of your analysis.

It's not like the club has taken out a loan for the IPO expenses. They paid £7.9m and immediately got £63.6m back. The consideration was not provided by the club, it was provided by the owners releasing 10% of the club's value to market. To me that is a big immediate benefit to the club as they bought the bonds, which can be readily turned to cash if the need arises. Incidentally, that's where the Ronaldo cash has gone. It can be turned back into cash at any time and made available for Sir Alex.

Rob

Anonymous said...

Rob,

You're trying too hard mate.

If anyone bought your side of the debate they could be forgiven for thinking the IPO was a masterstroke by the owners, and boy, are ManU grateful to have such geniuses at the helm.

In reality the club is being finacially ass-raped by the most vile owners we've ever had the misfortune to set our eyes upon.

You're technical explanations are nothing but a distraction. The only villains here are the Glazers.

Anders has my full support and without the likes of him to shine his light into the darkest recesses of United's finances, we'd be all the poorer.

His contributions are a million times more constructive than yours.

Have a nice day.

OnlyaRed

Anonymous said...

OnlyaRed

It's Man United or just United, NEVER ManU!!!

You are entitled to your opinion but thankfully your opinion doesn't affect me. I get very well paid for my opinions.

The Glazers are not great owners, they spotted an investment opportunity, which is what fund managers do too.

They knew the club made enough cash to pay the club's expenses, required investment in players and facilities and then some. They also saw the untapped commercial opportunities that could be developed.

The days when the club got all its money from the fans are long gone. Now the income from match day fans doesn't even pay the wages. The shortfall is made up from media and commercial which for the most part doesn't come directly from the fans.

Going back to topic, I think Andy's analysis has no real value and is misleading, nothing net has come out of the club or the fans from the IPO and the club has benefitted big time.

And no, no real effort on my part, just a quick 5 minutes on the couch ;-p

Good day to you too!

Rob

Anonymous said...

Rob thanks for your counterpoints,

It just seems a little disingenuous to suggest that Match Day income doesn't matter, when it's still the largest source of income and without it the club would be screwed.

The point of his analysis is the post IPO club is barely better off. In spite of the spin to the contrary, which you (I'm sure neutrally) are contributing to.

It would be nice, with Anders having corrected your error with the IPO fees payment, for you to admit your mistake. However with you likely working in the financial sector I won't be holding my breath.

I personally I value the analysis and the quality of the writing. When Anders gets something incorrect he's man enough to come out and admit. He hasn't this time and that's good enough for me. Perhaps you might like to set up your own blog, so we can get a better feel for you opinions.

Anonymous said...

Anonymous @ 19:40

Nope quite happy to admit when I'm wrong due to laziness in not researching. Despite my work, I still remember my working class roots from Eccles so I don't have deity-narcissism syndrome.

But then again, I'm not getting paid for thisoak no professional liability risks if I get it wrong. However, I do know the law on defamation at least and would be careful what I say here.

If you think the club is not significantly better off receiving the net proceeds of the IPO, then I and anybody with a more balanced perspective would disagree.

Btw, I didn't suggest fan income wasn't vital to the club, it is, just that the fans haven't lost out as much as the world peace chasers at MUST seem to be saying.

Regards, Rob

Anonymous said...

I get the impression that old Rob's spiel is a "tale told by an idiot, full of sound and fury, signifying nothing."

No Rob, neither the bonds previously repurchased nor the bonds about to be redeemed from the proceeds of the equity offering are convertible to cash. Both sets will be retired.
Do your homework, my good man; I hate to see guys paid handsomely for their financial opinion demonstrate such ineptitude. It makes those of us who actually know what we are talking about look bad.

Anonymous said...

Oh so page 4 of the quarterly report Q3 2012 is a load of crap?!

"As of 31 March 2012 we own £92.3 million of our senior secured notes.

These purchases were made pursuant to the Board's emphasis on prudent treasury management and improving the yield from its cash and cash equivalents balances. The purchased senior secured notes are being held by the Company and have not been retired. The senior secured notes may be sold back to the market in future depending on the capital and operating requirements of the business."

Do I get a pass for my homework, Sir?!

Rob

Anonymous said...

No Rob, alas, You don't pass. The Q3 accounts are so yesterday!
Please read the F-1 statement (either second or third amended version) for the most recent update on the repurchased bonds.

Oh hell, I will save you the effort- here you go:
"In addition, upon consummation of this offering, our senior secured notes previously purchased by us in open market transactions will be contributed to MU Finance plc and retired". [See "Use of Proceeds."]

So Rob, how many false claims have you actually made in this particular blog? I'm not keeping count or anything. Indeed, as you can gather from my tone, I'm genuinely distressed that a man paid so handsomely for his opinions could make such baseless claims; Particularly claims that can be easily refuted.

Anonymous said...

Ok, so now I had the motivation to read the IPO F-1. I'm playing with semantics, but technically the £92.3 million senior secured notes is still realizable although there is a statement of intent in the F-1 to retire them. The redemption notice period is at least 30 days per the bond prospectus, so the net IPO proceeds are in the clubs bank account. In addition, I note there is a lack of timing as to the date of the redemption, it doesn't say immediate redemption, so my previously unsubstantiated statement that the club has bonds it can sell and the IPO proceeds are still counted as cash still holds true to a limited degree at the time I made my statement.

Please feel free to point out any further inaccuracies in my statement, as you no doubt will.

Regardless of whether my statement can use the IPO proceeds and previously repurchased bonds that the club intends to retire as at a yet undetermined date as cash is correct in future, my point is that the club has benefitted immediately and significantly from the IPO because ultimately the debt will be paid down.

Ok, maybe fail on effort based on laziness for not reading the F-1, but pedantically, I could be correct to a degree. Agree?

Cheers! Rob

Anonymous said...

http://www.privco.com/manchester-united-ipo-alert-privco-calculates-manchester-united-fair-value-at-just-497-share-teams-14-share-ipo-price-overvalued-by-281-manu-could-fall-by-over-64-within-a-year-to-hit-reach-financial-valuation

what do make of this , if this happens it will be great for the fans !

Anonymous said...

Ok, just went through the F-1, the bond prospectus, and my observations and opinions on this comment page.
Let's go through what I said:
1. The cost of the IPO is not a cost borne by the club as such, its the cost of getting the $110.3m flow into the club. In terms of the clubs' cash position, thinking on what the IPO did, $110.3m went into the club and no cash came out.
As I was too lazy to read the IPO prospectus when I wrote this, I stand corrected that nothing left the club, £7.9m did in IPO expenses. However, that doesn't change the fact that the club is receiving £70.7m net from the IPO, net benefit to the club, £62.8m.
If anyone tells me that is insignificant and doesn't immediately benefit the club, then I would respectfully disagree, not only because of future loan interest savings but also because of the reduced risk of being less indebted.
2. Bond prospectus, cash leaving the club through the revolving credit facility, sale and leaseback of OT and Carrington, etc.
I don't believe any this has happened. If I am wrong, please feel free to correct me and I will stand corrected.
3. The secured notes being held by the club can be liquidated to finance signings and the Ronaldo cash
As I was too lazy to read the F-1 when I wrote this, this is half correct.
For clarification, this statement is correct going off the Q3 2012 and I stand by this statement as correct based on the Q3 2012 and before the F-1.
However, as was pointed out to me, the F-1 clearly states the intention of the use of proceeds. But why may I have grounds for believing I am half right on this AT THE TIME I WROTE IT? Currently, no redemption notice has yet been served and redemption will only be made 30 days after notice is served. So technically, the Q3 2012 assertions on the bonds still stand. After reading the F-1, I stand corrected, IF the redemption notice is indeed served. However, the Use of Proceeds statement is a "forward-looking statement", words such as "will" and "intend" are included to identify forward-looking statements. What the forward-looking statements may mean is that the club may choose NOT use the proceeds to retire the secured notes if there are strong grounds for doing so. In "strong grounds" I mean to be reasonable enough to defend the litigation risk of making misleading statements if the safe harbor defence under section 27A of the US Securities Act 1933 ("USSA 1933") cannot be used to mitigate the litigation risk set out under section 12 of the USSA 1933. If the forward-looking defence is valid, then the IPO proceeds and previously acquired secured notes are a source of cash to finance the club's expenses. However, I adit due to the clubs strong seasonal cash position it is likely the redemption notices will be served and my original assertion will prove incorrect. (cont.)

Anonymous said...

4. My take on the Glazer's taking money from the fans, or are not...
I stand by this point based on my explanation on how the income streams changed dramatically from traditionally being mostly all from local fans that traditionally financed the club's expenses and investment needs, to include the significantly increased incomes from media and commercial which do not DIRECTLY come from the loacal match day fans' pocket and arguably more so from the global fan base and the global reach of the Man United brand.
Yes the match day fan income is vital, but it doesn't mean the Glazer's are taking money from the local fans directly, they are taking it out of the increases in commercial and media income which should be attributable to ex-local fans. They saw that the total income paid for the club's expenses and investments in players and facilities and still had enough left over. They saw significant untapped income potential. They could see that the recurrent expenses of the club were being et by the recurrent income (i.e. from the match day fan base), so all they needed to do was finance the debt costs from media and commercial income streams, less of course any investment wanted by Sir Alex. That's why they bought the club at a price so over the odds.
Yes you could say the £350m+ paid in debt costs could have reduced ticket prices by half, but equally you could say the Glazers could have spent the money on paying for an all expenses paid week long alcohol fuelled orgy in Budapest for every member of MUST. They didn't. The c**ts!!! Why, because they own the club. Welcome to the concept of the risks and rewards of ownership. If the money wasn't spent on debt, the tax man would get roughly a third, and the rest would be sitting in the bank account earning next to nothing or be withdrawn by the owners in the form of dividends or loans.
As for ticket prices, I hate the comparison to the general inflation rate because it's downright misleading. The general inflation rate measures the depreciation effect of time on spending power. To use it to measure the unreasonableness of ticket price rises in isolation is flawed. You have to gauge it against the changes in price for similar goods, i.e. EPL ticket prices. It's like using the general inflation rate to judge the reasonableness of rises in say, bus fares or petrol, it's meaningless because of goods specific inflationary factors.
Also, the Glazers are not master of ticket prices, they are slaves to the price mechanism. They need to set the maximum average price that will get 75,000 people into OT every game. They have done that now. They haven't driven traditional fans from the club, the fans that were previously on the waiting list but can afford the tickets have driven the traditional fans away. If the more loaded fans didn't buy the higher ticket prices, or of the G&G boycott actually worked to any degree, the price would go down to get 75,000 bums on seats each game at OT.(cont.)

Anonymous said...

5. My view on Andy's analysis
I stand by the fact the analysis is misleading and pointless. The conclusion is that the IPO doesn't benefit the club significantly or immediately. Not true in my view, the club gets £62.8m net for the owners giving up 10% of the value of the club to the market. It's pointless to measure the IPO costs in relation to interest savings on a break-even basis. Doesn't mean anything. The IPO costs are have no correlation to interest savings. The IPO has allowed the interest savings attributable to the debt reduction from the IPO proceeds, but that's as far as the connection between the IPO costs and interest savings go. The interest savings are just an additional benefit to the net IPO proceeds of £62.8m.
6. My intentions
Firstly, I do appreciate the amount of work Andy puts into this blog and the insights he gives to finance layman. It takes a lot of balls to put yourself up to be shot at for no reason. My only hope is that adheres to the doctrine of professional objectivity more instead of being a willing propaganda mouthpiece. By doing this, he sacrifices his professional integrity in my view and that, as a fellow professional, saddens me. That's why I am contributing the balance to the debate. And for heaven's sake, I hope he's more careful what he says, if Sir Alex was not as generous and decided to do a D. Drasdo on Redcafe, Andy should be crapping bricks right now!
Cheers, Rob

Anonymous said...

So to summarise:
1)Rob was correct at the time based on the facts as he knew them. The fact that the said facts no longer hold has no bearing on how correct Rob is. Sure, I buy that. Afterall I believe the world is flat; I read it in an old history book. Perhaps scientists might have subsequently reached a new concensus, but I still subscribe to the flat-earth theory and I can furnish dated documentary proof to support my position.

2)Rob believes that the poor Glazers were powerless to resist a market based pricing mechanism wrt ticketing. The ancient gods demanded that excess demand be quashed and prices pushed to maximum affordability. The poor Glazers had to choice but to acceed to the demands of the gods and against their own wishes and interest they pushed up prices and introduced the ACS. Those pesky Gods and their meddlesome ways! The Glazers were the real victims here. And nobody appreciates their predicament.

3)Rob spends alot of his expensive time putting together and irrelevant and invalid defense to support his false claims. And confuses himself in the process.

An example:

"Currently, no redemption notice has yet been served and redemption will only be made 30 days after notice is served. So technically, the Q3 2012 assertions on the bonds still stand."

Well no Rob- The repurchased bond to which Q3 refers aren't subject to a redemption notice requirement.
They can be retired immediately. And have been- according to the F-1statement.

As a fellow professional, Rob, it saddens me to think that you are a fellow professional.

Anonymous said...

oof - KO!

Anonymous said...

rob just got a can of internet whup ass opened on him ha ha well done anon

Anonymous said...

Rob wrote As I was too lazy to read the IPO prospectus when I wrote this, I stand corrected that nothing left the club, £7.9m did in IPO expenses. However, that doesn't change the fact that the club is receiving £70.7m net from the IPO, net benefit to the club, £62.8m.

Could you please clarify something for me Rob. I assume the £7.9m which left the club for costs is a loss of £7.9m.
I also assume the net benefit of £62.8m which you say 'goes to the club' actually doesn't but goes towards the Glazer debt.
Would that be correct?

SoccerLimey said...

I'm not good at this stuff so bear with me.

You state that "The club will use all this $110.3m to repay $101.7m face value (£63.6m) of the 2017 US$ notes at a price of 108.375% of nominal value", and yet later you say that The Glazer family get the $110m right away.

I'm assuming that The Family gets the money but the club only gets the interest savings ?

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