Friday 22 January 2010

Glazer's £500 million bond issue successful

So all week Ive been reading how NOBODY was gonna touch these United bonds with a bargepole...too high risk, too inflexible, way too deep in a recession yadda yadda yadda.

I understood the press would take this line. Its a very nice way to get us United fans backs arched up like a rabid dog. It doesn't take much for people to want to start bricking the windows at Old Trafford, if they think they have a valid excuse.

As it turns out, the bond issue was successful at a canter, just as i have been saying it would. Bonds in the biggest name in global football are very attractive to top line investors. There is virtually zero probability that United would ever go 'bust' even if the Americans sucked every last penny out of the club..and that is because the truly massive names of football are recession-proof. Profits may go up and down, but ultimately shirts will always be sold, TV rights will always be stupidly high, and even if bankruptcy was just around the corner, there would be a United fan with enough cash to take on the mantle. As for the bonds, the Glazers got their £500m from just 50 private investors who are all deemed as 'low risk' in financial terms. The money now means that the club can now quickly service its high interest debts such as the PIK loans and hedge layman's terms you cant under estimate how this moves the financial goal posts for the business

All of this is part of the reason i personally haven't banged on about the debt per say. This bond issue was ALWAYS going to work and come to fruition. Now the trick is to see what the Glazers actually do with the money. Of course, i think this has done nothing to impact the rise in tickets and merchandise sales, on the contrary actually. But as long as the rises are acceptable in my eyes then you wont hear me get on a soap box about it. You see.. i view things like tickets and shirts purely as 'product' If i deem that product to be above its worth, i simply don't buy it. Having worked for many years in the music industry i have seen the same happen with CDs. When we were all 'boom and bust' rich 10 years back, you picked up a CD for £ those equivalent CDs are less than £7. Its simple economics that equates to supply and demand. If the day comes that i think my season ticket is too costly..i will bin it. Yes, with a very heavy heart but i would do it. The £1.50 a game rise from last year didn't bother i said to many, I'm more bothered about the extortionate price of petrol or train tickets..these are things to get upset about in a recession.

Quietly I'm hoping that we see a bit of a splurge in the transfer market now but im not holding my breath. Klass Jan Huuntelar would be an interesting signing..and i think he would be easily tempted to come to United. But he would not be my first choice signing. All of this doesn't change the way i feel about how the club is being run. The Glazers need to be up front NOW about everything..they need to communicate with the supporters. They know they're on a hiding to nothing, but as owners its their duty to be vocal..even those muppets at Liverpool have a better dialogue (bar a stupid director son)

So today in financial terms, things look a tad rosier. Yeah i know there will still be fans who don't give jack sh*t about this and want the Glazers out unconditionally. I too want the Glazers to go, but this is gonna be a subtle and long drawn out protest. Id like to see those United fans that do give a sh*t to get into the ground early before kick offs to protest and sing, rather than taking their seats five minutes before kick off and then fcuking off ten minutes before the end. Id like to see them wear the green and gold NHFC colours and to make it known that WE are not going anywhere. I normally get into the ground an hour before kick off..mainly due to superstition..but i still get that buzz sat there in my seat observing the stadium i have grown up in. I do wonder why others don't. Maybe that last pint in the pub is way too important. So much for all this bleating on about the meaning of 'club' The Glazers have got it good and they know it.

I will leave you with this one last point: The Glazers have openly said that the ability for them to run the club well (and that means making THEM alot of money) is highly sensitive to the success of the team on the pitch. Do you think this means they wont invest in the team?!! If so, it would make them out to be a bunch of dodgy market traders rather than billionaire businessmen. The liquid cash is now there to spend. If i was them i know exactly what i would do next.

*no offense made to market trader*



  1. Rob - really depends on your definition of success. This was always going to be over-subscribed. 500m is a fraction of the 45bn bond market. BUT the yield has been pushed up to 9%, which is 45m a year in interest alone.

    Now the real rape of United begins. You need to read the analysis on FT Alphaville... at least 79% of all cash will be sucked out of the club each year until 2017 so quite where this money to invest in the transfer market is coming from... I've no idea.

    As for success. Equals fourth spot in the league. Herin we become Liverpool.

  2. The Emir of Qatar is an interesting guy...I recall his interview with Ed Bradley on "60 minutes" about 4 years ago re: the modernization of Doha, et al.

    United's worth $2 billion: $2b Enterprise Value - $1.2b debt - $250m family equity = Glazers pocket roughly $500m exclusive of taxes if they sell the squad: About a 20% pretax annual return on the original $250m family investment.

    Regarding what they should do next: I like your idea of Nani + Berbatov + cash for Silva and Villa.