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1 hour ago, Badger said:

Given the new profit and sustainability rules that are coming in, is it not possible that English football will attract a new type of investor - income investors rather than growth. (Assuming that profit is the sole purpose which it probably isn't.) In the "new world" is it realty right to characterize football clubs as a high risk investment? 

Certainly restrictions of expenditure will make it easier for owners to take a steady income from buying football clubs that are reasonably successful with the possibility of capital growth and the attention/ kudos/ "sporting fun" that goes with the investment.

The new rules must also "de-risk" investments in solvent football clubs. With caps on football expenditure, there will no longer be the expectation that owners "give" the clubs tens of millions to get to the next level. It seems to me to be a pretty safe field for new owners. It might also enable us to get a better City stand as surely there is a good business case for this although, given interest rates, not as good as it has been for the previous decade.

You may be right but aren't the Glazers (in)famous for milking the cash cow that ManUre is through the interest and dividends they have taken out of the club? 

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5 minutes ago, shefcanary said:

You may be right but aren't the Glazers (in)famous for milking the cash cow that ManUre is through the interest and dividends they have taken out of the club? 

They’ve certainly not been doing it for the love of football (and part of me wishes they own it for many years to come!) 😜

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13 hours ago, nutty nigel said:

I'm really not sure about this. I understand these things from the cash trumps all viewpoint but also can easily see another way. I'll be amazed if Delia and Michael were to take the full dollar for themselves. There's always been a cynical view on here about the amount of money ending up in 'Delia's purse'. Of course the truth is nothing has yet. 

Let's see what happens. I just wish we could find a way to make this into a Rays Funds pledge.

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. 

Edited by Parma Ham's gone mouldy
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Thanks for clarifying @Parma Ham's gone mouldy. It is even more complicated than that house scenario because Michael and Delia have lent the club money in the past. To save the club having to pay back these loans they have converted them into, what at the time were worthless, shares. Again this has been viewed by some as a power grab where as I believe the truth is more part of their "not expecting to see the money again".

Something else I'm unsure of is what all this means for other shareholders. Michael Foulger is already happy but what of others who brought shares in the clubs time of need? 

**I never saw it as a criticism Parma👍

Edited by nutty nigel
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3 hours ago, king canary said:

The difficulty is who has the money to buy them? Is it going to more Man City/Newcastle type ownership? 

I'd say that's more concerning than difficult, there's plenty of middle eastern money around as they're shifting attention on sports.

Reason I say concerning is that already there's Man Utd fans saying they need investment such as City/Newcastle to compete anymore.  Surely this should be ringing an alarm bell somewhere?!

It's frustrating as hell that this is the accepted direction in sport.  And seemingly nothing is being done about?!  Of course the government want over-paid players feeding into the tax system so can't look at them.

All other organisations are as corrupt as hell.

It takes the **** really when the footballing world bends over and takes money from places they then want to oppose via rainbow arm-bands.  Absolute sickening joke.

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2 minutes ago, nutty nigel said:

Thanks for clarifying @Parma Ham's gone mouldy. It is even more complicated than that house scenario because Michael and Delia have lent the club money in the past. To save the club having to pay back these loans they have converted them into, what at the time were worthless, shares. Again this has been viewed by some as a power grab where as I believe the truth is more part of their "not expecting to see the money again".

Something else I'm unsure of is what all this means for other shareholders. Michael Foulger is already happy but what of others who brought shares in the clubs time of need? 

**I never saw it as a criticism Parma👍

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 

 

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1 minute ago, Parma Ham's gone mouldy said:

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 

 

That wasn't those loans. That was later loans that hadn't been converted into shares.

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6 minutes ago, nutty nigel said:

That wasn't those loans. That was later loans that hadn't been converted into shares.

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 

Edited by Parma Ham's gone mouldy

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2 minutes ago, nutty nigel said:

That wasn't those loans. That was later loans that hadn't been converted into shares.

The reason why the later loans were repaid was because they weren’t keen to convert that debt into yet more equity.

I’ve heard it said, from a pretty reliable source, that D&M were horrified when their previous debt conversions took their shareholding over 60% in the late noughties, where it stayed until MF undertook the season ticket rebate matching offer, following relegation to League One. 

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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 

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There's a couple of interviews around where MWJ explains this. I think the phrase he used in one was "by accident". I can't go looking for them now. 

However their common theme has always been "we don't expect to get anything back". Unfortunately altruistic investment is unusual and viewed with suspicion by many. 

Maybe altruistic investment could save the planet? Best not go there.

Oops I just did 😜

Edited by nutty nigel
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5 minutes ago, PurpleCanary said:

As Eric Burdon sang:

"I'm just a soul whose intentions are good,
Oh Lord, please don't let me be misunderstood."

😍

Great band often overlooked in what was a fantastic musical era.👍

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9 minutes ago, nutty nigel said:

There's a couple of interviews around where MWJ explains this. I think the phrase he used in one was "by accident". I can't go looking for them now. 

However their common theme has always been "we don't expect to get anything back". Unfortunately altruistic investment is unusual and viewed with suspicion by many. 

Maybe altruistic investment could save the planet? Best not go there.

Oops I just did 😜

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 

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6 minutes ago, Parma Ham's gone mouldy said:

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 

Well now, how about take it and give it to the community via the CSF.

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1 hour ago, Parma Ham's gone mouldy said:

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 

There was certainly an aspiration to be debt free, but how that’s achieved was always the question; further debt for equity swaps (with an increased shareholding) or loan repayments. Looks like they opted for the latter.

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3 hours ago, Parma Ham's gone mouldy said:

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’.

‘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.

 

Exactly why I am so frustrated. Up until this year, interest rates were at incredibly low rates; it would have been perfectly feasible for the club to have borrowed £40m to rebuild the City Stand, secured against a combination of future income and guarantees from Smith & Jones "equity in the house". The interest on repayments would have been both fixed and affordable even in tough seasons on the pitch. The increased revenue from the larger stand, additional season tickets would have funded squad development. A huge missed opportunity! 🤦‍♂️

Hindsight is wonderful, but really.

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3 hours ago, shefcanary said:

You may be right but aren't the Glazers (in)famous for milking the cash cow that ManUre is through the interest and dividends they have taken out of the club? 

Yes they are and they have, but they are more an exception than the rule. In the Glazer's case, if they get anything like the asking price they will have made a huge capital gain, which is probably too big to resist.

Moving forwards it is easy to see Football Clubs as a pretty reliable cash cow, with consistent dividends and a good chance of capital growth as well. 

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9 minutes ago, shefcanary said:

Exactly why I am so frustrated. Up until this year, interest rates were at incredibly low rates; it would have been perfectly feasible for the club to have borrowed £40m to rebuild the City Stand,

Could've used the Emi money and just signed a defensive midfielder from the £100m windfall for promotion.

We'd have a new stand in the works, but of course sat in the Championship.

...oh wait

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12 minutes ago, shefcanary said:

A huge missed opportunity! 🤦‍♂️

Hindsight is wonderful, but really.

It isn't hindsight though is it - many of us, yourself included have been saying this for years. The extra income from the ground would have more than offset interest charges and they had the opportunity to develop a non-football year round revenue-earning facility making use proximity to the station, and the parking facilities + which would have been a real boon.

The extra capacity would have been handy too 😉

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If I'm understanding this right is it possible to borrow against something that has no real value? The south stand nearly bankrupted our club.

 

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@shefcanary Having for years championed the mantra of, “there being no one out there looking to invest”, I would suggest that a ‘paper gain’ from their shares would have been something of a difficult sell as security to any potential lenders. 

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9 minutes ago, nutty nigel said:

As always the likes of @GMF can make my point much more eloquently.

It’s a nuanced point @nutty nigel. There’s no doubt that they’ve had approaches over the years, the question has always been their appetite to entertain those approaches. If you’re in their shoes, I’m sure they’ve had their share of time wasters and tyre kickers.

The other point, which stems from the concerns / frustrations of @shefcanary is that they’ve always been cautious about redeveloping the City Stand. Every time we’ve been promoted to the Premier League, every spare penny has either gone towards paying off debt and / or the playing squad. It’s always seemed like there’s never been a genuine desire to expand the infrastructure. 

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38 minutes ago, GMF said:

It’s a nuanced point @nutty nigel. There’s no doubt that they’ve had approaches over the years, the question has always been their appetite to entertain those approaches. If you’re in their shoes, I’m sure they’ve had their share of time wasters and tyre kickers.

The other point, which stems from the concerns / frustrations of @shefcanary is that they’ve always been cautious about redeveloping the City Stand. Every time we’ve been promoted to the Premier League, every spare penny has either gone towards paying off debt and / or the playing squad. It’s always seemed like there’s never been a genuine desire to expand the infrastructure. 

Yes they've had a few of those. Since 2009 I understand all approaches went through the execs, starting with Bowkett, who were licensed to sort the time wasters and tyre kickers but recommend the genuine offers. I understand Bowkett found none. We know Webber found one. Were there others? Depends how much store you put in people's honesty.

I know what happened with the south stand had a big bearing on willingness to redevelop the City Stand. I don't remember what those loans were secured against. Was it the mythical value of shares or something else?

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1 hour ago, nutty nigel said:

Yes they've had a few of those. Since 2009 I understand all approaches went through the execs, starting with Bowkett, who were licensed to sort the time wasters and tyre kickers but recommend the genuine offers. I understand Bowkett found none. We know Webber found one. Were there others? Depends how much store you put in people's honesty.

I know what happened with the south stand had a big bearing on willingness to redevelop the City Stand. I don't remember what those loans were secured against. Was it the mythical value of shares or something else?

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…

Edited by Parma Ham's gone mouldy
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52 minutes ago, Parma Ham's gone mouldy said:

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…

Nuanced is a word that's crept up on me over recent years. Never sure what it actually means. My best guess is to say that an issue has various and complicated ways of being explained. This certainly does have that. 

Why I said mythical is because since these conversations have been taking place on here these values have always been mythical. If a deal has been struck now then obviously it's not mythical. But when there's been no deal struck and no suitable offers made it was mythical. This was the point being made about reluctance to develop the city stand previously.

 

 

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1 hour ago, nutty nigel said:

Nuanced is a word that's crept up on me over recent years. Never sure what it actually means. My best guess is to say that an issue has various and complicated ways of being explained. This certainly does have that. 

Why I said mythical is because since these conversations have been taking place on here these values have always been mythical. If a deal has been struck now then obviously it's not mythical. But when there's been no deal struck and no suitable offers made it was mythical. This was the point being made about reluctance to develop the city stand previously.

 

 

Mythical should probably be replaced with hypothetical! 

They're unlisted securities and worth whatever someone is willing to pay for them. 

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16 minutes ago, GMF said:

Mythical should probably be replaced with hypothetical! 

They're unlisted securities and worth whatever someone is willing to pay for them. 

Happy to change those words.

What I'm trying to understand is how the city stand could have been replaced by borrowing against hypothetical share values.

Do you remember how was the south stand loan secured?

 

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In terms of valuation, Parma's house analogy seems very sensible to me.

As regards altruism, D&M in all probability took on the Football Club as a hobby knowing that it is vital to the community and in financial terms may have believed football was a losing game. The interest free loans may well be part of the same altruistic approach. All the more puzzling why Attanasio gets different terms for his loan. The highest admission prices in the EFL based on restricted supply in not developing the stadium and the bulging senior management pay bill dont come across as altruistic towards todays supporters.

 

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