It’s a sorry state of affairs when the club we all love and cherish can raise at least $100 million on the stock exchange and not one penny- or cent- goes towards improving the playing squad. News that the Glazer’s have decided to try and raise much needed funds with a stock flotation should be good news but to paraphrase David Brent “it’s irrelevant news.”
Matt Scott writing in the Telegraph notes:
“The sale of shares – through the New York Stock Exchange favoured of the club’s American owners rather than the more obvious choice of London – will therefore effectively guarantee United $100 million in fresh money. This will be used to reduce the club’s debts.”
Scott then goes on to comment:
“Indeed, although United will become a leaner business, paying off up to 15 per cent of their outstanding debt, the new ownership format will not make a transformative difference to the club in anything but its ability to pay down debt.
“Currently, United are paying about £46.5 million a year in net interest; my rough calculations suggest the share issue will reduce that bill by up to £7 million a year in the future, although it may not even be that much.”
Call me negative but the interest payments each year going from £46.5 million to £39 million is hardly cause for jumping up and punching the air. It’s actually enough to make Reds even more disillusioned with the Glazers- if that’s even possible.
The idea that United can no longer compete financially with the likes of City, Real Madrid and Chelsea is hardly revelatory but when we’re raising enough money to feasibly rebuild the squad to Champions League challenging levels – and none of it is even going on players, we’ve actually reached a new nadir.
Sir Alex Ferguson has defended the Glazers since their arrival and has done a wonderful job of buying young talent, such as Chicharito, Phil Jones and the Da Silvas rather than established stars and still making United competitive.
The question is though when the club raises at least $100 million and none of it goes towards transfers is it time to start worrying whether we really are witnessing the start of a long decline should the Glazers remain at United?
Some experts say the club could even earn far more than the $100 million quoted in the Telegraph, but even then the chances of the money being spent on the team seem unlikely at best.
Writing in the Guardian David Conn noted:
[Speaking of the 231 page registration] Some eyewatering detail is provided in the necessary information for investors, besides the already famous admission that United’s debts risk “adversely affecting” the club. Indeed a legendary club, and with 20 years success in the Premier League era, United make huge money, from 76,000 supporters at Old Trafford, TV sales and all the sponsorships and commercial income the Glazers’ executives wring from the “brand”. Yet over the years, £500m has gone out to service the debts, and some of that is broken down.
In the nine months to 31 March this year, finance costs were £35m; in the year ended 30 June, 2011, United paid out £51.3m interest. That followed the hideous £108.6m paid out, in the year to 30 June 2010, when the Glazers last refinanced. That included £16.4m and £19.3m lost on dollar-to-pound exchange rates, and “a £11.9m one-time charge related to terminated interest rate swap agreements”. Supporters asking why Ferguson has not signed top European players to complement his still admirable faith in youth, can peer at that to see where some of their club’s money has gone. This stock market move is intended to reduce the debt and put United in a healthier position, but supporters see the financial interests of the Glazers at the heart of it.
There is an argument that raising more money -be it to furnish the debt or otherwise – can only be good for the club- yet the fact that we now see a statement contradicting the points David Gill and Sir Alex Ferguson have made regarding the Glazer’s ownership is cause for concern.
If enough money is raised then perhaps we will see it be used for players but I seriously doubt that, this to me seems like the Glazers simply trying to dig themselves out of a hole they put both themselves and the club in.
Am I being melodramatic? Is all this old news? Is the flotation actually a step in the right direction?
Answers on a brick through the usual window please- or you can comment below:
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