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Revealed: The Glazer family's staggering £1.1billion debt that will stun Manchester United fans
Topic Started: Jun 7 2010, 01:51 AM (460 Views)
AntMcfc
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The Glazer family's ability to keep control of Manchester United is in doubt again after it emerged the American owners are struggling with debts of £1.1billion.

The revelations, to be made by BBC's Panorama programme on Tuesday night, expose £400million of previously unknown debt and cast more uncertainty over how much money manager Sir Alex Ferguson will be given to strengthen his squad this summer.

The programme Man Utd - Into the Red centres on the Glazers' ailing shopping-mall empire, run by their company First Allied Corporation, and is based on the findings of City analyst Andy Green, a United supporter who has joined the anti-Glazer green and gold campaign.

Green said: 'The Glazers have called the US property market appallingly badly. They borrowed more money at inflated valuations right at the top of the cycle.

'These are people who tell us not to worry about Manchester United debt because they are great businessmen. In their core business in the US they got it absolutely wrong.'

Green found the Glazers owe almost £400m on mortgages on 63 of their 64 shopping malls. Many were taken out with Lehman Brothers before the company went bust, triggering the global recession in 2008.

Green's findings also show that many of the malls fail to generate enough income to cover the mortgage, and he claims the Glazers have been so badly caught out by the collapse in US commercial property values that some of their properties are in negative equity.

The banks are so worried about the loans that 28 of First Allied's shopping centres have been put on a 'watch list', and Green discovered that four have gone bust in the last two years.

On one property alone owned by First Allied -Crosswoods Commons in Columbus, Ohio - the Glazers have negative equity of more than £1.4m after the receiver who took control of the site in February admitted he was struggling to find a buyer in the recession and expects to sell for less than £1m.

Green said: 'Around a quarter of them cannot pay the interest on their mortgages already. Another quarter are coming off interest-free deals and, when those interest-free deals end, those shopping centres won't be able to pay their mortgages either.

'So the whole thing adds up to a real cash-flow problem for the Glazer family.'

As well as showing their present financial difficulties in America, the investigation also raises a question mark about the Glazers' takeover of United in 2005.

The family borrowed £500m to buy the club and paid the remaining £272m in cash, but Green has discovered that they remortgaged 25 of their shopping centres in the six months before the takeover.

He said: 'One has to ask: was the cash they put into Manchester United just debt, but from somewhere else?'

The Glazers' leveraged buy-out of United has since plunged the club £700m into the red. Combined with the £70m the family owe against their NFL team, the Tampa Bay Buccaneers, news of First Allied's £400m debt pushes the total past the £1bn mark.

The key issue hanging over the Glazers, say Panorama, is how they continue to service their debts. With some of United's payment in kind (PIK) loans soon to be charged at a toxic 16.25 per cent, it questions whether the Glazers can stay in control even though they maintain the club are not for sale in the face of public interest from the Red Knights consortium.

The Glazers declined to comment about First Allied. A spokesman has said the family do have debts of at least £1bn but added they have assets worth more than double that.

However, Panorama also point out that Tampa Bay are in the bottom three of the NFL's wage table, while United have yet to make a major signing since Cristiano Ronaldo was sold to Real Madrid for £80m a year ago amid doubts over Ferguson's transfer budget.

United claim the manager has access to up to £100m for new players, and chief executive David Gill has insisted the PIK repayments have nothing to do with the club.

When asked about counter- claims by a Glazer source that the family may indeed use the club's money to pay off those loans in the future, a United spokesman said: 'The club stand by everything David Gill told BBC radio and that the PIKs have no recourse to the club's assets.'

Neither the Premier League, the FA or new sports minister Hugh Robertson were willing to be interviewed by Panorama.

But Wigan chairman Dave Whelan, who considered buying a majority stake in United for just £11m 20 years ago, said: 'I don't think anybody can be satisfied with how Manchester United are being run because we're talking of three-quarters of a billion pounds of debt.

'That can't be the right thing to do and cannot be the right thing for professional football in the UK.'

Panorama: 'Man Utd – Into the Red' will be shown on BBC1 on Tuesday at 10.35pm.
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DaG
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What investor in the world would take over this mess?
Edited by DaG, Jun 7 2010, 01:52 AM.
https://twitter.com/mediocentroEN
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rollingstone
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Really don't care anymore, Madrid will soon become my #1 club.
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AntMcfc
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rollingstone
Jun 7 2010, 01:53 AM
Really don't care anymore, Madrid will soon become my #1 club.
:laughcry:
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MrM
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Fucking yanks! I swear their aim is to fuck up everything in this world..
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Phil
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rollingstone
Jun 7 2010, 01:53 AM
Really don't care anymore, Madrid will soon become my #1 club.
:cheers:
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diego
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i seen loads of problems during my 40+ years of supporting united, this is just another chapter in the saga of the club, what i can't understand and never will, is how someone is allowed to buy a successful business with a loan and pass the debt onto the business, surely there should be a law protecting successful businesses from this potential trap door
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MrM
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Well it doesn't take much to pass the FA's ownership/chairman takeover test... Fucking shambolic that thing is!!
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MattyCantona
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We could just open a money-printing factory. :deepthought:
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Mr. LVG, this is Ed. Ed's the winner for our Key103 'Meet Van Gaal' competition.
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diego
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MattyCantona
Jun 7 2010, 04:33 PM
We could just open a money-printing factory. :deepthought:
we are already that for the glaziers, thats why they refuse to sell
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AntMcfc
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United debt falls below £400m for first time in Glazer era

A strong start to the season and new sponsorship deals have reinforced Manchester United's confidence they will hit this year's financial targets despite lower first-quarter earnings.

United, English champions a record 19 times, said they had cut debt to £359.7 million, down 17 per cent from a year earlier, after a listing on the New York Stock Exchange in August that left the American Glazer family firmly in control of the club.

It is also the first time the club’s debt has dropped below £400m since the Glazers took over in 2005.

A vocal section of United supporters have argued that the cost of servicing debts following the Glazers' £790m leveraged buyout of the club in 2005 have hampered its ability to compete with rival clubs at home and abroad.

"We have been very pleased at how the year has started both on and off the pitch," executive vice chairman Ed Woodward told analysts on a conference call.

"Based on our first-quarter results and current visibility we remain confident that we can achieve our previously stated targets for fiscal 2013 - revenue between £350m-360m and adjusted EBITDA of 107-110 million pounds," he added.

United, reinforced by the summer hiring of Japan's Shinji Kagawa and Dutchman Robin Van Persie, lead the Premier League after finishing second behind local rivals Manchester City last season.

United have also already qualified for the knockout stages of the Champions League after a costly early exit last season from Europe's most lucrative club competition.

United shares traded 12 cents lower at $12.86 in New York shortly after the opening on Wednesday. They floated at $14 in a listing that valued the club at $2.3 billion.

Investors have generally been wary of sporting franchises, concerned that their financial fortunes are too tightly linked to sporting success.

United argue that their global fan base and a buoyant TV rights market for the Premier League give them sound financial underpinnings.

For the three months to end-September, a reduction in broadcast revenue pushed underlying core earnings (EBITDA) 15 per cent lower.

However, United said most of the decline was down to the scheduling of matches - the club played only one Champions League game in the period - and would be recouped.

United, who claim to have 659 million followers worldwide, signed 10 new sponsorship deals in the first quarter, the most eye-catching being a $559m agreement with General Motors to have the Chevrolet brand on the club's famous red shirts from 2014.

The presence of Kagawa in their ranks has also led to a number of deals with Japanese firms. A 24 percent rise in revenues from all its commercial deals helped to push total revenues up three per cent to £76m.

Profit from continuing operations was up to £20.5m against a loss of £5m a year earlier, a figure that was boosted by a tax credit which the club said related to it moving to certain U.S. tax bases.

Chelsea, who won the Champions League in May, said last week they had made a profit in 2011-12, returning to the black for the first time since Russian oligarch Roman Abramovich bought the club in 2003.
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rollingstone
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Viru
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Sound. The IPO seems to have been positive. As soon as this debt is paid off we are going to be a fucking imperial force.
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ZeeZoo
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We're such a big brand it's unreal, no sports club comes close.
BELIEVE
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Vardy’s Mum
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Wish we were this progressive and not so fiscally conservative.
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