Seems we may not be the only ones with money & survival problems

[dubai_phil]

According to the article, 50 football league clubs are not paying their tax bills on time in order to provide cash-flow.

 

 

http://www.telegraph.co.uk/sport/football/3443142/Football-League-clubs-owe-50million-in-unpaid-taxes--Football.html

 

Now I advocate survival as the only viable plan, but if this many clubs have money problems, and all of them hope for the sale of a few "stars" to fill up the piggy bank in January, what if nobody actually has any money to spend by then...

 

ouch

[jeff leopard]

The article is based on a fascinating programme on radio four last night on how the tax man is keeping all these teams afloat.

 

They used the example of Luton who have gone into administration, and had all their debts paid by him taxman, three or four times in little over ten years. Asnd then each time they've over-spent on players and gone under again. They've got an unpaid tax bill of £2.5 million and when they asked the chairman if this would ever be paid he almost fell of his chair laughing.

 

And also the w@nkers who trade in distressed businesses, like the guy who bought York City for £1, sold their ground and walked away with £400,000, leaving the club broken and homeless. They can do this twice before the FA will can intervene.

 

So many big clubs in financial tatters, so many chairmen desperate to sell up and get out.

[monkadill]

Maybe we are ahead of the survival game - look at Liverpool finacial worries with possibiltys of player sales; http://www.skysports.com/story/0,19528,11095_4489027,00.html

[dubai_phil]

Maybe we are ahead of the survival game - look at Liverpool finacial worries with possibiltys of player sales; http://www.skysports.com/story/0,19528,11095_4489027,00.html

 

http://www.telegraph.co.uk/sport/football/leagues/premierleague/liverpool/3444844/Credit-crunch-could-force-Liverpool-to-sell-Fernando-Torres-and-Steven-Gerrard-Football.html

 

Same story here. They have to pay 30mil in interest alone which is their annual profits.

 

It is just plain wrong that the 'old" financial system allowed somebody to borrow all that money to take over a business and then dump the debt onto the business they bought.

[Mustapha Fag]

Anyone know what the Glazers debt is? And did they put all that debt on to the Mancs? That must be a few million

[Guest Hacienda]

Anyone know what the Glazers debt is? And did they put all that debt on to the Mancs? That must be a few million

 

Man Utd have the debt from the Glaziers buying them and it runs into the 100s of millions.

[Roman]

Anyone know what the Glazers debt is? And did they put all that debt on to the Mancs? That must be a few million

 

About £600 million I seem to recall. And yes, the Glazers bought the club basically by getting the club to sell itself to them - they took out massive loans secured against the collateral of the club. Without the Glazers' takeover, Man U would be one of the most, if not the most profitable sports club of any kind in the world.

[Red_No_7]

Man Utd have the debt from the Glaziers buying them and it runs into the 100s of millions.

 

 

 

Red Football Limited - Notes to the financial statements (continued)

 

31 Post Balance Sheet Events;-

 

"Subsequent to the balance sheet date on 16 August 2006 the Company entered into a new Senior Facilities Agreement arranged by JP Morgan plc which amounted to £575 million in aggregate. The new Senior Facilities Agreement provided four term loans and a revolving credit and bank guarantee facility of £50 million. Two of the Company's subsidiary undertakings, Manchester United Limited and Manchester United Football Club Limited were also parties to the new Senior Facilities Agreement, as borrowers under the Revolving Credit Facility, and guarantors for the facilities borrowed by the Company. The new facilities were utilised by the Company to repay the existing term loan and revolving credit facilities (which included early redemption fees of £1,700,000) and also to make a loan to the immediate parent Company Red Football Joint Venture Limited to facilitate the redemption of its preferred securities.

 

Manchester United Limited and Manchester United Football Club Limited have provided security for £425 million of the new facilities by way of first fixed and floating charges over their assets and undertakings.

 

The new facilities have terms between 7 and 10 years from the date of the agreement and the term loans have an average life of 8.1 years"

 

Interest Calculations

 

 

LIBOR currently 6.63% (as at 1/1/08)

Loan A - 7 year term - £75m LIBOR + 2.125% = 8.755% pa = £6.566m pa.

Loan B - 8 year term - £150m LIBOR + 2.625% = 9.255% pa = £13.882m pa.

Loan C - 9 year term - £150m LIBOR + 3.000% = 9.630% pa = £14.445m pa.

Loan D - 10 yr term - £150m LIBOR + 5.500% = 12.13% pa = £18.195m pa*

Total payable £53.088m pa

 

Working Cap - Revolver 7 year term £50m – drawing information unknown

-------------------------------------------------------------------------

 

Then,

 

Red Football Joint Venture Limited - Notes to the financial statements (continued)

 

31 Post Balance Sheet Events;-

 

The same as above, followed by

 

"On 11 August 2006, the Company entered into a PIK Loan Agreement in the amount of £138 million and used the proceeds together with a loan from its subsidiary undertaking Red Football Limited to redeem its discount preferred securities at an aggregate amount of £354.1 million which included an early redemption premium of £13.2 million. The PIK Loan has a term of 11 years and accrues interest (which is added to the loan amount) at a fixed rate of 14.25% per annum. The PIK Loan is secured against the shares of Red Football Limited."

 

 

Interest Roll-Up (14.25% fixed 11/8/2006 to 11/8/2107)

 

The damage that can be done at 14.25% a year for just 11 years;-

 

Date Bal Int Cap & Int Total

 

8/2006 £138.000m £19.665m £157.665m

 

8/2007 £157.665m £22.467m £180.132m

 

8/2008 £180.132m £25.668m £205.801m

 

8/2009 £205.801m £29.326m £235.127m

 

8/2010 £235.127m £33.505m £268.633m

 

8/2011 £268.633m £38.280m £306.913m

 

8/2012 £306.913m £43.735m £350.648m

 

8/2013 £350.648m £49.967m £400.616m

 

8/2014 £400.616m £57.087m £457.704m

 

8/2015 £457.704m £65.222m £522.927m

 

8/2016 £522.927m £74.517m £597.444m

 

8/2017 £597.444m to be redeemed 11/08/2017

 

[dubai_phil]

Top info Red no 7 thx.

 

It somewhat knocks the wind out of GM's sails with his attack on Lowe last week for setting a fixed term interest rate of 8.something% on our mortgage.

 

I had heard the interest rate was high, but how stupid does that look now with rates where they are?

 

Good grief, if we actually DO survive the next few months, we may actually pass an in admin Liverpool & Mancs as we come back up from L1.....

[Roman]

Top info Red no 7 thx.

 

It somewhat knocks the wind out of GM's sails with his attack on Lowe last week for setting a fixed term interest rate of 8.something% on our mortgage.

 

I had heard the interest rate was high, but how stupid does that look now with rates where they are?

 

Good grief, if we actually DO survive the next few months, we may actually pass an in admin Liverpool & Mancs as we come back up from L1.....

 

And I notice the Glazers have brilliantly tied themselves to LIBOR. That must hurt!

[angelman]

to be honest, the Premier League has been so greedy and the clubs so unrealistic about running their clubs, that they all deserve to collapse. So little money gets filtered down so it is not a surprise that things are going tits up in the lower leagues and if all the Premiership clubs went bust, I doubt that it would affect the Championship too much. I suppose that the biggest difference would be the transfer market but there seem to be so few players coming up from lower leagues (and especially English ones) that this might not be such a big deal.

 

I also think that there should be a rule that your losses in a year should be directly linked to your turn-over, with points deducted if they are broken. That way it would stop the likes of Chelsea running up a £75m loss, down 7% on the year before, on a gross turnover of £223.3m (2006/7 figures) and not having to worry about it because of their owner being able to throw money (in the form of a interest free loan) at them and carry on regardless, when any other business would be bust.

 

In 06/07 Chelsea's wage bill was 71% of turnover (down 5% from the previous year) which is one of the main problems. My little brain has worked that out to be £158m on wages and salaries!!

[stevegrant]

Good grief, if we actually DO survive the next few months, we may actually pass an in admin Liverpool & Mancs as we come back up from L1.....

No we won't.

 

The massively significant difference between us and clubs like Liverpool and Manchester United are that they can call on millions of fans across the world to put money into the club's coffers in exchange for whatever crap merchandise product is available at the time.

 

For every 3000 ManYoo fans who decide they don't want anything more to do with the Glazer idea and go away and support FC United of Manchester, there will easily be another 3000 waiting to buy their season tickets, even if the prices have just gone up 25% on the previous season.

[angelman]

apparently Chelsea have a worldwide fan base of 90 million. I wonder how many more ManU and L'pool have?

[Roman]

No we won't.

 

The massively significant difference between us and clubs like Liverpool and Manchester United are that they can call on millions of fans across the world to put money into the club's coffers in exchange for whatever crap merchandise product is available at the time.

 

For every 3000 ManYoo fans who decide they don't want anything more to do with the Glazer idea and go away and support FC United of Manchester, there will easily be another 3000 waiting to buy their season tickets, even if the prices have just gone up 25% on the previous season.

 

See? You're already thinking of Man U as a CCC club. In the Prem, the only numbers that really matter are not season tickets sold but the numbers of zeros in the price for the television rights.

[stevegrant]

apparently Chelsea have a worldwide fan base of 90 million. I wonder how many more ManU and L'pool have?

Is that figure just the one in Peter Kenyon's deluded head?

 

I could conceivably accept that there may be that many Liverpool or ManYoo fans worldwide, but Chelsea?! They've only been a big club for 5 minutes.

[stevegrant]

See? You're already thinking of Man U as a CCC club. In the Prem, the only numbers that really matter are not season tickets sold but the numbers of zeros in the price for the television rights.

The revenue the likes of United and Arsenal bring in directly through the turnstile is actually about the same (if not higher) than the broadcasting revenue.

 

Liverpool and Chelsea are probably a bit behind on that front, simply due to the number of people they can fit into their grounds.

[dubai_phil]

No we won't.

 

The massively significant difference between us and clubs like Liverpool and Manchester United are that they can call on millions of fans across the world to put money into the club's coffers in exchange for whatever crap merchandise product is available at the time.

 

For every 3000 ManYoo fans who decide they don't want anything more to do with the Glazer idea and go away and support FC United of Manchester, there will easily be another 3000 waiting to buy their season tickets, even if the prices have just gone up 25% on the previous season.

 

The Liverpool issue is clear, their loans have to be refinanced in a market where nobody wants to lend money. bear in mind they have to spend 30mil a year on interest which with Anfield at it's current capacity is their annual profit, so where does their transfer budget come from next year?

IF they can get some banks to agree to re-finance (but probably at higher interest) then they have an issue that interest could exceed profits - sell Torres to pay the bank!!! wow would make Lowe look like a saint in comparison.

IF they cannot re-finance then they have to reduce debt in January - as per the article - ouch goodbye Gerrard & Torres..... Where then would the mess end?

 

Man U have longer term secured debts at the moment, but that is not to say that their bankers will not have some problems and could want money back to pay off other creditors? Where are JP Morgan these days?

That one is far more stable than the Liverpool mess.

 

DIC may still come to the rescue but they have their own problems right now, so yes I was being light hearted but.

[Roman]

The revenue the likes of United and Arsenal bring in directly through the turnstile is actually about the same (if not higher) than the broadcasting revenue.

 

Liverpool and Chelsea are probably a bit behind on that front, simply due to the number of people they can fit into their grounds.

 

I should have spelled out my point more clearly. The reason the TV rights are the only numbers that matter are precisely because it's a huge part of their earnings, and the most vulnerable to change.

 

My son's an Arsenal fan, and after about ten years of going to matches as a 'red' member, he's now officially accepted on to their ST waiting list. He's number 33 thousand and something on the list and is predicted to get his season ticket in 2054! So of course the big clubs will continue filling seats.

 

But the TV industry is in the crapper right now, and the consensus is that Sky and Setanta will not be close to offering the sorts of numbers they do now in the next round of allocations.

 

That spells trouble for highly leveraged clubs - even for ones who can fit 75,000 odd fans into their grounds.

[holepuncture]

apparently Chelsea have a worldwide fan base of 90 million. I wonder how many more ManU and L'pool have?

 

Man Yoo have around 350million fans world wide, or 5% of the worlds population. According to Deloitte Football Money League 08 ~(i think!)

 

And despite Beckham, the yanks are yet to take interest in the PL/the big four....

[holepuncture]

See? You're already thinking of Man U as a CCC club. In the Prem, the only numbers that really matter are not season tickets sold but the numbers of zeros in the price for the television rights.

 

The revenue the likes of United and Arsenal bring in directly through the turnstile is actually about the same (if not higher) than the broadcasting revenue.

 

Liverpool and Chelsea are probably a bit behind on that front, simply due to the number of people they can fit into their grounds.

 

I think another important factor is the Champions League, as this generates both extra matchday and broadcasting revenue pretty much guaranteeing a distinct competitive advantage over the rest of the league system. With and extra £20-30m in broadcasting revenue for a reasonable outing in the CL, plus matchday attendence eg; Arsenal's reported £3m gross per home game, the 'big four' have a substantial and almost unbridgeable financial gap (Jurys out on Man City and QPR!) over its competitors.

[dubai_phil]

I think another important factor is the Champions League, as this generates both extra matchday and broadcasting revenue pretty much guaranteeing a distinct competitive advantage over the rest of the league system. With and extra £20-30m in broadcasting revenue for a reasonable outing in the CL, plus matchday attendence eg; Arsenal's reported £3m gross per home game, the 'big four' have a substantial and almost unbridgeable financial gap (Jurys out on Man City and QPR!) over its competitors.

 

Valid points, but the problem at this moment for all of them is the domino effect from LIVERPOOL.

 

many points on here about size of fanbase and income are also valid, but if you read the Telegraph article the key point is that they have

1) Profits of 30mil a year and interest payments of 30mil a year - that is INCLUDING all their current income sources - tv, attendances and merchandising

2) Their BANK LOANS are due for renewal very soon. Anybody tried talking to their bank manager lately? Liverpools' advisors have already gone bust

 

So will Liverpool have to pay back 350 million quid in January? It is a source of concern, after that who knows what will happen to future tv rights sales value? What would actually happen to football IF that happened? Gordon Brown can't bail one out and not all the rest........

 

http://www.telegraph.co.uk/sport/football/leagues/premierleague/liverpool/3444844/Credit-crunch-could-force-Liverpool-to-sell-Fernando-Torres-and-Steven-Gerrard-Football.html

Edited 12 November, 2008 by dubai_phil