Yesterday's Sunday Times' headline reads "How Singapore wrested Man Utd's US$1 Billion IPO from HK", conveniently forgetting that HKEX does not list loss-making companies? Trash reporting........
I am a Man U fan, but as an investor, I will not touch it. Negative NTA, huge debts and the interest repayments are nuts !!!
Ya, that was my initial feel....
True, but in the red (financially) sure is taxing.
If you wanna study Utd's accounts, you will realise that it has been applying liberal helpings of spin to present the financials in the best possible light. No matter how hard you look at the press release, you still won’t see the word LOSS appearing. Of course, at an operating level, there’s no doubt that this is a truly impressive set of figures, but the fact is that Manchester United only make profits until they make interest payments, as their enormous debts to the banks and hedge funds soak up all the profits from the playing side.
It is clear that United have no problem generating cash. In fact, the club is a veritable cash machine, which is what attracted investors in the first place, and this year they reported an excellent net cash inflow of £104 million. So what do the club spend all that lovely cash on? The answer is interest payments – and lots of them. This year United’s net interest payment was a jaw-dropping £42 million, coming from seven months of interest on bank loans and five months of interest on the bond issued on 29 January. As the interest rate on the bond is higher than the bank loans it replaced, next year’s interest payment will cost even more at around £45 million.
In 2009, the club only made a profit by selling their best player and this has to be a cause for concern for the fans, who will worry that more players will be sold in the future in order to balance the books. Else, they have lost money 4 out of 5 previous years. Bull market.
