Today gave us the chance to see United’s latest financial results and what the IPO now means for the club. While the IPO has reduced Manchester United’s debt by £62.7m, which is a good thing, there is still a huge outstanding debt of £359.7m from the Glazer takeover in 2005. There is also the hidden question of the old and forgotten Payment In Kind Debts. The belief is that it has been hidden away in Delaware in another form. When that disappeared over a year or so ago it was £249m.
The overvaluation of the shares which the Glazer family wanted has been proven to be just that. Overvalued. They at first wanted between $16-20 per share and that was later lowered to $14. They’ve been hovering between $12-13 for the last month or so.
My view is that surely the Glazers would like to put more shares on the market and keep the same limited rules in place. Limited or next to no voting rights with the Glazers keeping complete control over the club for a slight overvaluation. Pulling that off again is very questionable due to the lower value of the current shares. The possible lower value of future shares would surely reduce demand and further devalue the club.
How the debt will be reduced in the future remains unknown but there are options. Using the club’s future cash flow from increased sponsorship deals such as the one signed with General Motors or the increase from future television rights, could see the debt reduced. The increase in TV rights next season could see the winners bank over £100m and the teams in the relegation zone could possibly be banking more money than the Premier League winners last season.
The next question isn’t just for United fans but for fans of all clubs. How do the Glazers and other owners plan to use the huge increases from selected revenues over the next few seasons? At United it could go many ways but the most likely two are an increase in players wages and reducing United’s or ‘Glazer’s’ debt. Neither are good in my eyes and both can be seen as a waste. The players are already paid huge amounts of money and it would be better if the debt was paid from other sources rather than the clubs revenues.
With United’s spending on debts and fees now reaching over £550m, it’s scary that there is £359m of debt still on the club with another £249m+ of Glazer’s personal debt hidden away. They have even resorted to selling of part off the club to achieve this. The press and fans have all been told the Glazers are meant to be long term owners but it’s certainly questionable now they have shareholders to impress.
Check out Andy’s blog on the ownership of Manchester United and follow him on Twitter – @WEWANTGLAZEROUT