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Parma Ham's gone mouldy

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Parma Ham's gone mouldy last won the day on November 7

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  1. I desperately hope you are right @littleyellowbirdie and you may be. Though my experience is that companies often make these decisions when they at their weakest strategic point. Buyers ‘never cry stinking fish’ and they certainly adhere to the Italian principle of ‘Bella figura’ in all things at all times (or at least until the deal is done). Hence @nutty nigel ‘s very salient point. I’ve seen lots of companies sing lots of sweet songs for an unrealised equity gain, or an opportunity to take a low risk bet for a strong upside, or to have acute nostrils for the smell of a Ferrari owner who is struggling to afford maintenance bills and petrol. Now is not the time to be naive or too credulous. Other than inheritance, individual wealth is typically derived from business ownership, not paper rounds. Rich people like playthings. Attanasio is not particularly rich. As @shefcanary and @GMF have said, a serious bit of deep dive due diligence is the minimum starting point. Even this doesn’t prevent the next sale though. This is why the AGM question was so important. The dreaming has stopped. Delia’s belief - so important personally - is weakened. The facts are laid bare. We had great people, great ideas, great momentum. We lost it all through awkward sporting and financial compromises, because we don’t have the money. The Annual Report 2022 states dynamically and repeatedly that top level football is the entire mission goal for the company, it drives other decisions. It is in black and white. So that is either true. Or it isn’t. One leads to Attansio. The other leads to ‘Little old Norwich’. The wheel is come full circle indeed. Parma
  2. Of course this is right. It is exactly why what happens to the equity gain is so important Selling is also always about who the buyer sells to next. So what incentives exist or are offered - visible or not, recognised by others or not, spotted by professional market risk evaluators or not - matters massively. People may or may not say or do anything to get what they want. Delia is doing this though @nutty nigel, the ultimate call is hers. As I said earlier ‘You wait 25 years for another Delia, then none come along at once’. They waited and waited for another Delia - maybe or maybe not rejecting ‘camels coming up Carrow Road’ and who knows? Maybe a cowboy or two. And now the whole Norwich world could be in a stateside pocket of the owner of an American finance firm with no great links to Norwich and only a fairly recent - and secondary - interest in the sport. I do not believe that this was the exit dream. I do not believe that this was the legacy vision. I do not believe this is the ideal plan. As heard at the AGM: ‘Is Attanasio’s involvement and financial input a recognition that the top level sporting ceiling of the self-sustaining model has been reached?’ Zoe Webber: ‘Yes’ Parma
  3. And the wheel is come full circle. Who gains from the equity gain at that point? ’Give’ it to Attanasio as a thanks, sweetener, on trust?** Keep it? Find some kind of ratcheted agreement committing the buyer to certain actions (now or in the future)?* Parma *legally quite tricky **a buyer might also insert a reverse clause to cover in case of equity gain value dropping. This might be a cute move if the seller has a nice asset, but no recourse to scale cash. Either way eventually a number has to be put on it. The equity gain.
  4. In bocca al lupo ..cugino mio @PurpleCanary…the safest of safe hands this week …saluto ai tutti voi PUPetti A warming trip to sunny Spain this week for: Real Madrid W vs Alhama W - Home win …. As for @littleyellowbirdie’s BTTS Pick, I think staying in the Primera W is good for: Villarreal vs va Atletico Bilbao ️ Parma
  5. An excellent example of the value of intangibles. Parma
  6. Let me be clear, the reference to the Glazers was only to indicate the real world importance - not mythical or hypothetical - of the share value gain for @nutty nigel. This is where the £4bn - £5bn they - as individuals, not the club - now stand to receive comes from. The use of Pik notes and reverse leverage was an example at the extreme end of the spectrum of aggressive borrowing for context. Not an endorsement of it, or even necessarily a rejection of a very conservative approach. Manchester United is also certainly recognised as a profitable company, which has not been typical in football. It is also well understood that typically - though not necessarily - individuals own shares. It should however be noted that football club owners - who may own shares individually in an annually loss-making football club business - may still make a fortune selling their shares. This is the equity gain. Norwich have lost money - or perhaps been self-sustaining, or made a very little profit - for 25 years. Nevertheless the original (say) £5m input is now worth (say) £50m upon sale. Other fans of other clubs might see an owner - say Mike Ashley - ‘making’ this kind of profit on shares and ask why he didn’t make a quid-pro- quo investment in the club. Particularly if he had promised ‘never to take a penny out’ Thus ‘leveraging’ the individual’s ‘theoretical’ share value gain for use - which is real upon selling - in the company might well be considered a reasonable expectation of a football club owner in context. Parma @GMF @BigFish @littleyellowbirdie @shefcanary @essex canary @PurpleCanary
  7. Well you are deflecting to a side issue, though it once again reverts back to whether and how you use any equity. If you now have no cash - even though previously you could afford to buy a football club (house) in the first place - you don’t leverage the equity in the company to build the new City stand because you haven’t got the cash to pay the monthly interest instalments. You do nothing with the equity and ignore it. You have no monthly payments to make, though the club has no new City stand. Then one day - upon selling - the equity that you could have previously leveraged and didn’t (because you have no ongoing cash), then becomes a £50m win for you and your family. That you maybe don’t want, need or intend. Though it would be equally daft to ‘give it’ to whoever comes next (and who probably does have the ongoing cash to leverage it). It’s an unusual situation. Parma
  8. Here you go @nutty nigel The Glazers used reverse leverage to use the existing equity inherent to Manchester United, to raise the funds to buy the company. The equity win is now how they make a huge return on their investment (much of which they have extracted from the business itself). Delia will also receive such equity return - let’s say approximately £50m - upon any sale to Attanasio. The equity can therefore be used in any number of ways. It is also often a primary focus for any buyer-owner in terms of the ‘cash out’ day. Parma This is from The Guardian today: Nils Pratley on finance Glazer’s supposedly reckless financial Man Utd gamble has proved a triumph Nils Pratley Malcolm Glazer’s purchase of the team was an enormous risk. As his sons prepare their exit, they appear on the precipice of victory Wed 23 Nov 2022 19.00 GMT Share on Facebook Share on Twitter Share via Email The Glazers, assuming they find a buyer, will depart Old Trafford as loathed by Manchester United fans as they were on arrival. They won’t give a damn, obviously. Malcolm Glazer, the penny-pinching patriarch who led the £800m takeover in 2005, was never hard to read and nor are his sons. They are interested in sporting success to the extent that it delivers financial success for them. By the time Glazer died in 2014, the club’s equity was valued by the market at £1.5bn, which was a commercial triumph given the thin sliver of hard cash, as opposed oodles of debt, that supported the buyout. Leverage turned a good investment into an excellent one – for the Glazers, that is, rather than the club. Strange as it now sounds, 17 years ago many thought the family would fall flat on its face. Yes, Rupert Murdoch’s BSkyB had bid £623m for Man Utd in 1998 (and been blocked by competition authorities) but the value of TV football rights, some argued, would deflate with the popping of the turn-of-the-century dotcom bubble. The club’s revenues in the 2003-04 financial year were only £169m, so £800m looked a severe overvaluation. In late 2002, shares in Man Utd fell as low as 100p; Glazer paid 300p. To get the deal done, the American was forced to the limit. Irish property and horse-racing tycoons JP McManus and John Magnier held a combined 28.7% stake, and the duo never knowingly undersell anything. They rebuffed Glazer’s first bid and rolled over only when the price was improved. Financial pips squeaked as the buyer had to pay interest at 14.25% – paupers’ terms – on the notorious PIK, or payment-in-kind, a higher-risk tranche of debt. It took until 2010 to get the PIKs off the books. The first half of the gamble, in effect, was that Sir Alex Ferguson would get the club into the Champions League every year, that Old Trafford would remain full, that merchandising revenues could be boosted and Premier League TV rights had further to rise. On all scores, Glazer was correct. The moment of maximum financial danger passed when a minority stake was sold by listing Man Utd in New York in 2012. The second half of the Glazer years has been a quieter financial affair. Before Monday’s announcement of a sale process, the stock had gone roughly sideways for a decade. The hundreds of millions of pounds being paid by the club in debt interest payments, plus the post-Ferguson decline on the pitch, also weighed on the valuation. The real game for Glazers, then, has always been about the exit. If the £4bn-plus speculation is to be believed, they are about to win for a second time. Their victory will feel dispiriting to many. But one has to concede that a supposedly reckless financial gamble has proved anything but. Football just keeps inflating, which only feels obvious with hindsight.
  9. It’s not mythical. It is realised one way or the other when you sell. Say to Attanasio. A process that has started already. What was theoretical is now real. The ‘equity in my house’ metaphor is reasonably good. You can borrow - say - £50k from the nominal £500k equity and buy a new kitchen and bathroom. If the old kitchen and bathroom were shabby, you could even argue that the gain in the overall price you could now achieve for your house (with new kitchen and bathroom) equates more-or-less to the £50k you borrowed. Equally you might leave the equity alone as you have no income at all, your are living in a lovely home, though you could not find the £500 per month to pay off the ‘new mortgage’ from the £50k you borrowed for the kitchen and bathroom refit. In football terms you might characterise it thus: The Glazers leverage every little bit of equity gained as often as they can, at very high interest rates (see Pik notes) - as they are pushing the limits - then spend some on the club, use some to pay off other debts (‘rolling them over’ often at new rates), then try to make more commercial money (which they really have), then pay yourself dividends and bonuses from the company (somewhere well north of £1billion from within the funds of United PLC I believe). Or You never touch it like Delia and Michael. You don’t really even talk about it much. Like it isn’t there. But look above at the Glazers. Look at the billions they siphoned. Now look at what they are selling for. £4bn? £5bn? It is simply not enough to say ‘sweet lady…terrible American’ @nutty nigel Nuanced as @GMF says. Parma Post script: If you ask me personally, I think sweet lady and terrible American is probably bang on..but that isn’t the point…
  10. Yes, yes, yes. I love Delia too. And the - say - £50m gain in the value of the shares? What do we do about it? Take it or give it to Attanasio? Parma
  11. Interesting @GMF My understanding was that the company wanted to clean up all loans and liabilities as far as possible, at that time. I assumed that the possibility of some form of corporate structure change was viewed as possible. That they had some credible interest in the club. Or were at least keen to actively explore it at that moment. Delia and Michael must have been ‘happy enough’ with that to go along with it. Or perhaps it was more pressured? Parma
  12. I could edit out ‘those’. I was not making a distinction between different transactions. They took that money anyway. My belief is that ‘the company’ rather insisted they did. Any previous Conversion into shares may well have been more profitable than holding onto cash of course! (Again, intentional or otherwise). The can is here. As we have said before, what Delia has done - and I agree with you - is no doubt entirely altruistic. The gain is the gain though isn’t it? How might ‘people’ judge Mike Ashley in precisely the same scenario? Parma
  13. One of the first things that was done ‘by the company’ during the McNally-era first ascent to the Premier was to pay Delia & Michael - I think it was +/- £1.5m - for those loans. Parma
  14. It is really quite simple. If you buy a house for x in 1995 and hold onto it until 2022, then you are likely to have high equity in that property. If you own majority shares in an football club, the gain on the value of those shares can be broadly equated to ‘equity in my house’. You can jog along and ignore the equity. Or you can go to the bank and get ‘cash’ out to build a conservatory or a new kitchen. Or you just leave it there. But it is there. You may hit hard times. You may not be able to afford your rising electricity bill, you may not buy a new car. You might even be going into your overdraft and have no cash available for anything. Though the equity gain in your house is still there. Your neighbours who also have no cash because of high bills, also do not buy new cars or go on holiday. Though they rent their house. Despite appearances from the outside - both neighbours seemingly look in the same situation - they are very different. One has £500,000 in equity they could access because they have no mortgage, and the others have nothing and no way to raise further money. Their situations are fundamentally different. ‘Not wanting to talk about the equity’… or…’we never did it for the equity’….is not really a commercial thought process. It is there. It is there because the football club - through all its on-field and off-field operations, the growth in football clubs worldwide, the increases in sky monies et al - has gone up in value. Other clubs and owners could and do leverage this gain. It is a personal gain from owning the shares in the club. It can be kept or handed on to children and Nephews. It is there however. Now that you come to sell, the can that you have been kicking down the street, can’t be kicked any further…there is no more street. It is a bit awkward isn’t it? Take the massive win yourself, turn your £5m into £50m, buy yachts, houses and cars and holidays. You are quite entitled to. Hand over the reins to a ‘new trustee’ and she or he gets the win. To leverage for anything. To keep. To hand on to their Nephew in due course. Why would you do that? Or maybe take some, a lump that is not too egregious, create some kind of structure whereby the new trustee has to build a new stadium, expand the training ground, invest in players, (sort of) amortising the ‘in the future’ share gain? If you were a sharp investor that might look like a really sweet deal. You get all the glory of making tangible improvements, you might add a few bob to keep Buendia, get Skipp and Eriksen, all of which is really only quid-pro-quo offset against the share gain you’ve been ‘given’ The asset likely rises further in value because of your (sort of free-to-you, nice and popular and public!) structural investments, so your future share gain increases, so the overall asset value of the club increases, so when you sell to the next American fund you can concretise your gain! Lovely @nutty nigel if you read more closely, rather than criticising Delia and Michael, I am trying to protect them. Parma Post script: ..and as a corollary other shareholders. As @GMF has said, a ‘sweetheart’ deal based on ‘trust, friendship, goodwill and legacy’ can de-facto dilute the value of all shareholdings.
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