United's debt

[Blanchflower]

No way they can afford :modric:

 

[Kris]

£64m of debt, they're now floating there club on the Stock Exchange, that's what Spurs did back in 1984 (Date?)

 

[jazz15c]

I would hate to see him play ANYWHERE in this country, Citeh would be the least objectionable option. He'll go abroad IMO.

There is however, a far larger issue here.

How the fuck can United, or any club for that matter be allowed to continue to buy players and pay them ludicrous wages whilst they are £400 million in debt??

I appreciate that they are a global mega-brand and turn over a massive profit each season, making the debt be classed as 'manageable', but that profit should go solely towards repaying this debt.

Players should not be allowed to be purchased whilst in debt.

If I go to a shop and I don't have any money to spend, could I buy anything???

Looking at it from a Spurs point of view, how is it fair for us (a well run club, that CHOOSES to operate within its means and in profit from season to season) to compete with any club that is willing to put itself in potential financial peril in this way???

 

[Smoked Salmon]

I would hate to see him play ANYWHERE in this country, Citeh would be the least objectionable option. He'll go abroad IMO.

There is however, a far larger issue here.

How the fuck can United, or any club for that matter be allowed to continue to buy players and pay them ludicrous wages whilst they are £400 million in debt??

I appreciate that they are a global mega-brand and turn over a massive profit each season, making the debt be classed as 'manageable', but that profit should go solely towards repaying this debt.

Players should not be allowed to be purchased whilst in debt.

If I go to a shop and I don't have any money to spend, could I buy anything???

Looking at it from a Spurs point of view, how is it fair for us (a well run club, that CHOOSES to operate within its means and in profit from season to season) to compete with any club that is willing to put itself in potential financial peril in this way???

The reality is that most major business that have debt problems will be able to secure loans and facilities to keep functioning, irrespective of the debt, if the future looks like the business is recoverable.

I think that if you start telling football clubs that they cannot base functionability on profit projections then you are not treating them the same as other businesses. Lets be realistic here, your motivation, and most fans' motivation, in seeing such a restriction is not so much to see good business practices as it is to deprive the team in question of an advantage on the pitch.

 

[Schoolboy'sOwnStuff]

I would hate to see him play ANYWHERE in this country, Citeh would be the least objectionable option. He'll go abroad IMO.

There is however, a far larger issue here.

How the fuck can United, or any club for that matter be allowed to continue to buy players and pay them ludicrous wages whilst they are £400 million in debt??

I appreciate that they are a global mega-brand and turn over a massive profit each season, making the debt be classed as 'manageable', but that profit should go solely towards repaying this debt.

Players should not be allowed to be purchased whilst in debt.

If I go to a shop and I don't have any money to spend, could I buy anything???

Looking at it from a Spurs point of view, how is it fair for us (a well run club, that CHOOSES to operate within its means and in profit from season to season) to compete with any club that is willing to put itself in potential financial peril in this way???

The reality is that most major business that have debt problems will be able to secure loans and facilities to keep functioning, irrespective of the debt, if the future looks like the business is recoverable.

I think that if you start telling football clubs that they cannot base functionability on profit projections then you are not treating them the same as other businesses. Lets be realistic here, your motivation, and most fans' motivation, in seeing such a restriction is not so much to see good business practices as it is to deprive the team in question of an advantage on the pitch.

Yes. Although I wouldn't consider a business with debt 'problems' a viable going concern.

However, harnessing manageable debt as a way to manage cash-flow and stimulate growth is standard business practice. Why not borrow £1,000 at 5% interest to use to make a profit of £1,200?

And United's bank(s) would call the debt in if they didn't think they could service it, so they must think that the debt is worth it.

 

[VirginiaSpur]

Most of United's debt at the moment is a result of their leverage buyout. From a cash-flow standpoint it's my understanding that they're very solid, so they don't have any problem servicing the debt.

Compared to Chelsea and City, whose cash flows are fucked beyond measure and don't have half the revenue stream that United can boast of.

 

[Schoolboy'sOwnStuff]

Most of United's debt at the moment is a result of their leverage buyout. From a cash-flow standpoint it's my understanding that they're very solid, so they don't have any problem servicing the debt.

Compared to Chelsea and City, whose cash flows are fucked beyond measure and don't have half the revenue stream that United can boast of.

Precisely.

Anyway, aren't you supposed to be getting drunk to celebrate victory over your oppressive overlords? :avbfacepalm:

 

[VirginiaSpur]

Anyway, aren't you supposed to be getting drunk to celebrate victory over your oppressive overlords? :avbfacepalm:

Speaking pedantically, the 4th doesn't celebrate victory. Far from it. The 4th celebrates the signing of the Declaration of Independence and the common agreement that, by acts of tyranny, Britain could no longer make a legitimate claim of sovereignty.

So, the war hadn't even really started in earnest, yet.



But no, my 4th was depressing. I spent the entire day cleaning carpets.

 

[Schoolboy'sOwnStuff]

Anyway, aren't you supposed to be getting drunk to celebrate victory over your oppressive overlords? :avbfacepalm:

Speaking pedantically, the 4th doesn't celebrate victory. Far from it. The 4th celebrates the signing of the Declaration of Independence and the common agreement that, by acts of tyranny, Britain could no longer make a legitimate claim of sovereignty.

So, the war hadn't even really started in earnest, yet.



But no, my 4th was depressing. I spent the entire day cleaning carpets.

Cleaning drink-induced vomit from carpets?

 

[Belgian Spur]

This whole debt concept/discussion is a hard one. In a normal capatalist system what Manure does is standard practice and if they repay their loans/interest and still make a profit than there is nothing wrong with it.

It's like buying a house with a loan , if you are economically viable and the bank gives you a loan you will be in a massive debt compared to your yearly earnings but that doesnt mean you are cheating (something that Chelsea and City are in a way doing).

BUT this whole system came tumbling down recently as we all know , in short all the money that goes around in the system is fictive , it does not represent a real value but an anticipated value and that is where the danger lies for clubs with huge debts.

We have a system in the Belgian jupiler league where a club needs to get its financial licence and prove that the activa are worth more than the debts and so on , this means (in some ways unfortunately) that a city/chelsea system is just nog allowed in our league. You need to be economically viable as a club to get a licence, year in year out.

 

[Blanchflower]

This whole debt concept/discussion is a hard one. In a normal capatalist system what Manure does is standard practice and if they repay their loans/interest and still make a profit than there is nothing wrong with it.

It's like buying a house with a loan , if you are economically viable and the bank gives you a loan you will be in a massive debt compared to your yearly earnings but that doesnt mean you are cheating (something that Chelsea and City are in a way doing).

BUT this whole system came tumbling down recently as we all know , in short all the money that goes around in the system is fictive , it does not represent a real value but an anticipated value and that is where the danger lies for clubs with huge debts.

We have a system in the Belgian jupiler league where a club needs to get its financial licence and prove that the activa are worth more than the debts and so on , this means (in some ways unfortunately) that a city/chelsea system is just nog allowed in our league. You need to be economically viable as a club to get a licence, year in year out.

Football isn't like any other business - you have to spend tens of millions of pounds 'buying' your staff each year otherwise you fall behind.

Other businesses with large amounts of debt have far more tangible assets.

 

[Éperons]

Think Progress had something about Man U today:

One such international company, the English soccer club Manchester United, is filing to go public on the New York Stock Exchange, and will benefit from the lax regulation that America now offers. The JOBS Act weakens protections put in place in the early 2000s after Enron and similar scandals. Under the law, Manchester United — which earns less than $1 billion in revenue — classifies as an “emerging growth company,” thus avoiding more stringent business regulations.

As the New York Times’ Dealbook notes, United will be exempted from many American securities laws:

Manchester United will not need to file quarterly reports, report material events, file proxy statements or disclose extensive compensation information, all of which American companies must do. Under a different S.E.C. rule adopted in 2008, Manchester United also does not need to report financials under the generally accepted accounting principles used in the United States, but can instead rely on international financial reporting standards.

Critics of the JOBS Act warn that the slackening of reporting requirements of IPO companies increases the likelihood of fraud and manipulation. Even a majority of bankers believe the law opens the door to accounting scandals.

For the Glazers, the American family that owns Man U., the U.S. can also offer a much more attractive shareholder structure than other nations. As it stands, United’s ownership is saddled with $655 million of debt and is largely unpopular with fans. The Glazers may be willing to sell shares to reduce their debt, but they do not want to relinquish voting control over the company. America’s “dual-class” shareholder structure — where the Glazers could get 10 votes per share versus one vote for a public investors’ share — would mean they won’t have to.

I don't fully understand all this business stuff, which is why I read Swiss Ramble, but this does not look particularly honest.

(The unquoted sections of the article take some not terribly pertinent shots at Republicans, fyi)

As my friend said, the US is turning into the "Cayman Islands of financial disclosure".

 

[BrooklynYid]

Think Progress had something about Man U today:

One such international company, the English soccer club Manchester United, is filing to go public on the New York Stock Exchange, and will benefit from the lax regulation that America now offers. The JOBS Act weakens protections put in place in the early 2000s after Enron and similar scandals. Under the law, Manchester United — which earns less than $1 billion in revenue — classifies as an “emerging growth company,” thus avoiding more stringent business regulations.

As the New York Times’ Dealbook notes, United will be exempted from many American securities laws:

Manchester United will not need to file quarterly reports, report material events, file proxy statements or disclose extensive compensation information, all of which American companies must do. Under a different S.E.C. rule adopted in 2008, Manchester United also does not need to report financials under the generally accepted accounting principles used in the United States, but can instead rely on international financial reporting standards.

Critics of the JOBS Act warn that the slackening of reporting requirements of IPO companies increases the likelihood of fraud and manipulation. Even a majority of bankers believe the law opens the door to accounting scandals.

For the Glazers, the American family that owns Man U., the U.S. can also offer a much more attractive shareholder structure than other nations. As it stands, United’s ownership is saddled with $655 million of debt and is largely unpopular with fans. The Glazers may be willing to sell shares to reduce their debt, but they do not want to relinquish voting control over the company. America’s “dual-class” shareholder structure — where the Glazers could get 10 votes per share versus one vote for a public investors’ share — would mean they won’t have to.

I don't fully understand all this business stuff, which is why I read Swiss Ramble, but this does not look particularly honest.

(The unquoted sections of the article take some not terribly pertinent shots at Republicans, fyi)

As my friend said, the US is turning into the "Cayman Islands of financial disclosure".

 

[VirginiaSpur]

meh, relative changes in regulation aren't quite as important as the overall picture.

Overall, the United States' financial and regulatory structure with regards to accounting principles and financial disclosure is pretty much the model for the rest of the world.

-- That is -- pretty damn good. It will never be perfect, and shit will happen like the sub-prime mortgage fiasco that precipitated this whole global mess but, as we've seen, plenty of countries were holding shitty assets on their books.

So, it's not exactly fair to say that the U.S. is turning into the "Cayman Islands of financial disclosure." On the contrary, there's a reason why US treasuries + the dollar rise on news of the European Union crisis, because relatively speaking the landscape is more thoroughly understood within the US and financial reporting is typically strong to excellent. It's one reason why I'd say people are excessively hasty in proclaiming the imminent collapse of America's global strength and influence, because international markets disagree. Overall, the world seems to place more confidence in the US' economic strength than most any other.

Many European countries tend to be excessively bureaucratic anyways -- and this is in no way a shot at European Socialism -- which is a limiting factor in economic vibrancy and growth.

 

[Éperons]

dog my buddy was kidding but what about this specific legislation yo.

 

[VirginiaSpur]

It's cool. Just hard to read sarcasm through black and white text.


With regards to the legislation, I know very little about it. On the whole, I think it's all relative. The incidence of financial fraud is reportedly quite low. I believe there's been a bit of movement over the past few years to weaken some of the legislation passed in the aftermath of Enron and Worldcom, etc., because it's felt to be restrictive, but not overwhelmingly relevant to the wider economy.

Explicit fraud also tends to be self-defeating and unsustainable over time. That is, virtually any accountant would likely have to know-how to commit one-time embezzlement or fraud, to get themselves out of a jam, or whatever -- and no amount of legislation will change that -- but introducing that precedent, it becomes a matter of "well, I got away with it before, so there shouldn't be a problem this time." It isn't long before accounts and metrics no longer reconcile and people start wondering what's going on, or an economic crunch means that people want to cash out and your Ponzi scheme collapses.

I wouldn't know where to begin on multi-national corporations and complicated systems of ownerships across multiple stock exchanges, though.

Real problem in the US at least isn't fraud, but economic rent seeking by the big banks and poor oversight + management by the Fed (in my opinion).

 

[Coalhada]

I don't fully understand all this business stuff, which is why I read Swiss Ramble, but this does not look particularly honest.

Me too, which is why I start reading the Swiss Ramble, get a few sections in, start to lose interest, start skimming and eventually just go from one brightly coloured graph to the next.

 

[Dannyboy]

There are so many clubs working on 'manageable debt' that it has become standard practice...it is bullshit but there we go, such is life.

 

[Schoolboy'sOwnStuff]

I have a manageable debt. It's called a mortgage.

Because I am in debt in this way, does that mean I shouldn't be able to spend money on other stuff?

My bank clearly thinks I am worth the risk of lending me the money because they believe I can repay it and pay the interest.

That's how it works.

 

[Éperons]

My friends (a lawyer and a consultant) respond:

The problem with this article is that it conflates federal and state corp law. The dual share structure discussed (whereby the glazers get ten votes to one for common public shares) is available under state law, ie they have to incorporate in a US state. Even the most lax state corporate laws give shareholders rights to corporate info, although it is not as easy to get as the standard public SEC disclosures exempted by JOBS (don't get me wrong, JOBS is bad). So they can't hide everything from everyone, while also getting to raise money by selling shares with no practical voting power.

the difference between GAAP and IFRS isn't that big a deal. the dual share structure isn't that big a deal (tons of companies do it - NYTimes, WaPo, Facebook, etc) either but I always think its a shitty thing to do.

Matt Taibbi went off on this legislation (surprise) back in April, but he unloaded on Obama, not the Republicans. His key point:

Ostensibly, the law makes it easier for startup companies (particularly tech companies, whose lobbyists were a driving force behind its passage) to attract capital by, among other things, exempting them from independent accounting requirements for up to five years after they first begin selling shares in the stock market.

…

There's just no benefit that the JOBS Act brings to an honest startup company. In fact, it puts an honest company at a severe disadvantage, because now it has to compete against other, less scrupulous companies that can simply make their projections up on the backs of envelopes.

…

In the same way, get ready for an avalanche of shareholder suits ten years from now, since post-factum civil litigation will be the only real regulation of the startup market. In fact, there are already supporters talking up future lawsuits as an appropriate tool to replace the regulations being wiped out by this bill.

The JOBS Act seems like it will invite a replay of the disastrous tech-stock bubble of the late nineties. That mess was made possible by a historic collapse in accounting standards, with the great investment banks the pioneers of the collapse. In the old days, in the fifties and sixties for instance, you would never take a company public that wasn't profitable at the time of the IPO, or didn't have a multi-year track record of solid revenues.

My unanswered question (so far) is: if shareholders have access to info that is not terribly different from the SEC filings, then what on earth do non-shareholders have access to in those first five years? Taibbi makes it sound like the company can tell whatever kind of story it wants (Man U.! Debt Free in 2013!)