Top four next year.....
- Thread starter SIR_KENNY_KLOPP_KING
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I think this view is myopic tbh. Everything is based on GROWTH. Utd's share price reflects their past (and thus predicted revenue growth) that is hinged on success. Sure Utd won't shrink fast, football fans are a loyal lot, but in an age of 'super clubs' and increased global competition, they need to be winning new fans over every year....not letting City, Madrid, Barca, PSG, Bayern, Chelsea or Liverpool et al win them. Growth drives everything. No winning team = no growth.
As for Liverpool, our revenues nearly halved after 5 years without CL football. We dropped out of the Forbes top 10 revenue clubs and our fan base stagnated. The growth we are seeing now, since FSG took over was healthy to date but from a low base when compared to Utd, far easier to grow an under-performing business......The growth this year and if we qualify for CL football for the next 5 years will be unprecedented and put the last couple of years into perspective...as for Utd, if they fail to qualify for CL football next year, regardless of fan base (ours never really shrunk either), they will stagnate and eventually shrink with regards to revenue. Both will have the net effect of a share loss and much, much more than $200m wiped off the value of the company. If i was an executive there, I know what I'd do.....obviously, within a overall strategy.....but I'd spend now and I'd spend big. The clock is ticking.
As you pointed out, the Glazers haven't risked one red cent with Utd.....ever! They leveraged the purchase price against the club and have floated a % of the club on the market to raise capital (and pay down some of that debt)......They take a healthy 'service/managemente charge' out of the club each year and watch as their asset grows at a pace unseen in the past....they've gone from a $800m to a $3b (market cap) business in the space of their tenure, while their revenue has not even doubled......As Tobes quite rightly pointed out, they're in it for the net gain of the asset. (nice that we can agree on something close season!) As it stands, they'll be looking to pocket a a billion dollars for a zero net risk over what, eight to ten years or so......not bad work if you can get it! Do you really think that they'd risk that?
TBH, most clubs (and businesses) with Utd's leveraged financial model have failed badly.....just look at our own problems in the recent past. Utd had scale and growth and unprecedented success driving both in their favour.....so it has worked for them.....but take away the success and this will, undoubtedly, be diminished.
I'm not arguing about the model but I am arguing that this TINA type mentality is dangerous. The only income that United are going to lose in the short term is CL money. Even if that happened for 2 seasons it does not truly prejudice their present ability to attract even more sponsorship income. After all when was the last time that United won the European Cup? I truly believe that you have your eyes transfixed on the wrong strategic target. The Glazers, by acting cautiously are risking nothing. Make the wrong 'emergency' investment now and the true cost will be much much higher.
Wrong strategic target? When did I mention winning the CL? I've mentioned a winning team and qualifying for the CL.....which are both necessary to achieve sustainable revenue/Net income growth AND subsequently share price stability/increase
In bold are the only 'strategic' targets that matter. Any listed company have the same (relatively SHORT TERM) goals, like it or not.
The Glazers only risk is the valuation of the club. That's their one and only goal. If there is a risk that there asset will decline in value, they will have to invest, it's not even an argument that they won't.... There actions so far suggest that they fear such a decline. Indeed, during Moye's tenure, over $200m was wiped of the value of the club.
TINA actually has f**k all to do with it, that's originally a model comparing bond yield with equity yield. No doubt some t**tish consultant picked it up and used it in other areas but essentially, If the equity is shipping capital value then any investor would be out, TINA Turner so to speak...that's a given in any market!! If a business is under-performing but has to deliver to the street, there are generally a few options:
1. take a shed load of cost out of the business to show stable net profit growth, despite stagnant or declining revenue (not an option for Utd)
2. Increase your prices, delivering increased operating margins at fixed cost and thus growing your bottom line exponentially (not an option for Utd)
3. As you were: only applicable if (a) it's a private company and growth is less of an issue or (b) The market trend is the same for all, so you can still take 'share' in a declining market with steady investment (not an option/applicable for Utd)
4. INVEST: Put your organisation back into contention via increased INVESTMENT and continue to deliver GROWTH or the platform for growth (This has to be the only option for Utd)
The only question is how much more. So while in Utd's case, I really do not see an alternative to massive investment, unless the Glazers are happy to see another few hundred million $'s wiped off their prize asset. I doubt they'd be happy to do that though. Who would?
Dave - remind us what did you for a living again?
Totally agree KKK
You're only agreeing with KKK because you NEVER agree with dave. It's a ****ing conspiracy. I feel a popcorn moment coming on
I see that your not a Corporate Strategist. If you were then you'd be far more familiar with TINA being an acronym for There Is No Alternative which is the limited standpoint that you are taking. The one thing it is not is a model comparing bond yield with equity yield. The mere fact that you believe that there are only 2 possible strategic targets says to me that you haven't got a clue as to what your talking about.
Dave - remind us what did you for a living again?
Totally agree KKK
Thing is, I only took on commissions that I knew that I was competent to undertake and where I was confident that I knew what I was talking about - unlike KKK
You're only agreeing with KKK because you NEVER agree with dave. It's a ****ing conspiracy. I feel a popcorn moment coming on
No mate, I'm agreeing with KKK as he's largely spot on, on this subject.
Me and Dave have agreed on plenty of stuff btw, I mean he can't be wrong 100% of the time can he?
I know what it stands for ffs! I also know where it originated.......Shall we play bullshit bingo?
And because I have evaluated all of the potential options and come to a different conclusion to you means that i don't have a clue what i'm talking about, whereas you do? Even though, your 'business as usual' suggestion seems implausible....even by the Glazers?
Have heard it all now. Maybe if I'd thrown in a couple of TLA's(three letter acronyms) I'd of been taken more seriously?
No mate, I'm agreeing with KKK as he's largely spot on this subject.
Me and Dave have agreed on plenty of stuff btw, I mean he can't be wrong 100% of the time can he?
#devilsadvocate
I know what it stands for ffs! I also know where it originated.......Shall we play bullshit bingo?
And because I have evaluated all of the potential options and come to a different conclusion to you means that i don't have a clue what i'm talking about, whereas you do? Even though, your 'business as usual' suggestion seems implausible....even by the Glazers?
Maybe if I'd thrown in a couple of TLA's(three letter acronyms) I'd of been taken more seriously?
How can you have "evaluated all the potential options" when you insist that there are only 2? Doesn't figure. My safety first (as you put it) option is only implauseable to myopic thinkers following your short term view.
Now go back and look at what has happened to the majority of leveraged buyouts in the USA. They appear to fall into 2 camps. Firstly the quick turn around and sale. Secondly the keepers wherein the whole strategic focus of the owners changes over time. I'm guessing that the Glazers are now in the second group and are therefore using a different set of criteria to you upon which to make their decisions.
I assume that you haven't been hired by the Glazers then?
I'm perfectly satisfied with my performance as an operational manager, executive, consultant and teacher and am now happily retired. Therefore I would not be available to the Glazers even if they did wish to consult.
Now I wonder just what you have achieved? (if we are being personal)
Sure, they use a different set of criteria. This changed the second that they became a listed company. Their one and only goal remains to grow the value of MUFC. I don't think that's changed, ever.
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