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Manchester United Special: How It All Went Wrong — Transcript

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0:00That interest cost is going to be close
0:01to 50 million pounds this year. Put that
0:03in terms of player wages, that's the
0:05spine of your team.
0:05>> United could sign three 275 300 grand a
0:08week players for what they are paying
0:10currently in interest.
0:12>> If you wanted to clear the debt and
0:14completely remove the Glazers, you're
0:16looking at something in the region of 4
0:19and 1/2 billion pounds. The thing to
0:21remember here is that because there is
0:22such a small pool of potential
0:24investors, that is a really tricky thing
0:26to do all in one go. In the last few
0:29years,
0:30>> there have been periods of time when
0:31I've been walking down Sir Matt Busby
0:33Way going to the games expecting us to
0:35lose. And that is an alien feeling. And
0:37I think the biggest frustration on all
0:39of this is it never had to be this way.
0:42>> You've gone from taking a club that's
0:43able to finance both its own
0:45requirements in terms of the playing
0:46side and the infrastructure side and
0:49have spare cash flow over top of that.
0:51Now you're getting into a situation
0:52where they have to borrow money even
0:53just to fund the playing side.
0:55>> There is a serious serious question mark
0:57over the quality of that playing group.
0:59>> So, what happens if Manchester United
1:01get relegated?
1:02>> Ha.
1:03>> Well,
1:08>> Good afternoon, Charlie. Wow. This is a
1:11different type of setup for us, isn't
1:12it, today? Normally my my
1:14my first question or sorry, my first
1:16question, my first statement is always
1:17good afternoon or good morning, Charlie.
1:18How are you? But now,
1:20>> Are you going to start with um should I
1:21say with our guest? Should I say hello,
1:22Jamie?
1:23>> And how how lovely it is to to see
1:26someone else sitting across the table
1:27[laughter] from me.
1:29>> No, no, it's all good.
1:30>> Pleasure to be here.
1:30>> I'm gently being edged out of things as
1:32you can [laughter] tell. Anyone watching
1:33slowly slowly pushed across a pushed
1:36across the desk. Uh but no, I will say
1:38first up, Jamie, it's brilliant to have
1:39you here. We'll give a very very brief
1:41introduction to the audience. Uh you are
1:43former Goldman Sachs analyst. You've
1:44worked across multiple industries on the
1:46financial side. Um and now you're
1:48applying your expert trade in should we
1:51say the world of football. We teased
1:53something last week to the audience who
1:54got very excited and in a lot of the
1:55comments around a a special show on
1:58Manchester United for lots of reasons
2:00I'm everyone can imagine.
2:01And actually some of the comments do you
2:03know the things that people said on
2:04prompt they said can you get Jamie
2:05Badger on the show? Little did they
2:07know?
2:08>> Bring in the badger as as what what the
2:10punters [clears throat] were saying and
2:11little did they know that the invitation
2:12had already been made and that badger
2:14was already booked. So welcome.
2:17>> Who would have thought it? The fact that
2:18I'm getting called out in YouTube
2:19comments amazes me but no it's great to
2:22be here. I'm looking to get like looking
2:24forward to getting into the detail. Yeah
2:27there's a lot there's a lot to unpack
2:28here I think.
2:29>> There's a lot to unpack here. We've done
2:30a lot of kind of looks at football clubs
2:32on the show.
2:34But this one
2:35we just feel now is the right time to go
2:37a little bit deeper and so for for
2:39everyone listening this is going to this
2:40is the focus of the show today. Right
2:42this is a proper special on Manchester
2:43United and
2:44I think it's important to say the
2:46broader state of Manchester United
2:48looking at it having stepped back and
2:50tried to address everything in one. So
2:54what I want everyone to understand is
2:55that we will be looking at part of the
2:56history of the club. We will be looking
2:59at some of the things that we have
3:00touched on before but stay with us
3:01because it's all very important to the
3:03broader story but I think the thing
3:05we're really excited about is to dig
3:07into some of the more recent history
3:10because while leverage buyouts and
3:12Glazer ownerships and all of that is
3:14relatively well known
3:16I think from Ratcliffe's inclusion in
3:18the Manchester United story onwards and
3:21most importantly what could happen
3:22moving forward is where there needs to
3:25be a little more analysis. And so that
3:28is what I think we're going to look at
3:29today all in one big picture.
3:33>> Well it's it's one of the most
3:34interesting sports business stories of
3:35our time
3:36and this takes back over the whole of my
3:38working life. In the late 1990s when I
3:41was a journalist United were
3:43you know in the in the period of their
3:44full ascendancy in the Fergie era
3:46and going through
3:49what we're going to discuss happened in
3:50the 2000s into the 2010s into 2020s and
3:54as Charlie says taking a panoramic view
3:56of it and I think rather as we did with
3:58a recent special on the Man City
3:59situation
4:01if you're going to fully understand
4:02what's happening now, you have to
4:03understand what what originally happened
4:06and why and the different driving forces
4:08and motivations and and the reason why
4:11certain structures were put in place,
4:12etc. And I think what Charlie and I felt
4:15is that both we and indeed other media
4:18platforms have, you know, dived in and
4:20dived out of this story at various
4:22different times looking at this or
4:23looking at that or having a think about
4:25this or that or what what's the
4:26implication of this or that.
4:28But we certainly haven't seen any point
4:30a real comprehensive full analysis of
4:34the history and the present bringing the
4:36two together with some proper
4:38authoritative detail-based um analysis
4:40around it.
4:41>> Well, yes, neither of us went to Goldman
4:42Sachs, neither of us are exited CFOs and
4:45I don't think either of us could
4:46actually claim to be deep in the world
4:48of now football finance uh
4:50reporting even if
4:52>> Well, I like to sit here every week and
4:53[laughter]
4:53>> We claim we are.
4:54>> I've got a couple of ankles in that um
4:56in in in [clears throat] that trough but
4:57but certainly not as as deep in as as um
5:00as Jamie is. So, you know, with that,
5:02Charlie,
5:03>> Well, with that,
5:03>> where do you want to kick it off?
5:04>> I I want to kick it off actually in
5:05something that we didn't talk about when
5:06we discussed this last time and this was
5:08very enjoyable to read when I was
5:10looking through Jamie's notes that he
5:11sent us because it actually went back to
5:13before the late '90s, Rupert Murdoch's
5:16BSkyB bid into Man Utd and McManuses'
5:20ownership and so I think it's worth
5:22starting off around the Edwards time.
5:25>> Yeah and
5:27this is going to be a story of I think
5:30great contrast and I think but also a
5:32lot of symmetry in terms of where we are
5:34today
5:36in respect of
5:37a club that hasn't been performing well
5:40for a period of time both on the pitch
5:42and arguably off the pitch and
5:45trying to turn that round whilst also
5:47building foundations for a better and
5:50stronger financial future. So, if you,
5:53you know, rewind back all the way to
5:55when Sir Alex Ferguson came into the
5:57club, on the pitch United hadn't been
5:59successful for a number of years, you
6:00know, infamously gone a very long time
6:03without winning a league title, talk of,
6:05you know a dressing room culture that
6:07was not
6:08conducive to
6:10strong on pitch performance, big
6:12drinking culture, and an academy
6:15system that really wasn't producing
6:17anything even though it had the history
6:19of the Busby Babes and there's a real
6:21part of United's legacy which I think
6:23sometimes does get forgotten. There is a
6:25long standing record and I forget the
6:27exact number of years but it goes back I
6:31think almost 100 years where United have
6:33had a academy graduate within every
6:35single match day squad. And I think one
6:37of the big things that Sir Alex Ferguson
6:38did when he first came in was actually
6:40revolution revolutionize that academy
6:42system. And the reason why that is
6:43important is if we fast forward to
6:46the Premier League years, that really
6:47was the bedrock through which United
6:50built up there I'd say off pitch
6:53competitive advantage over everyone
6:55else. This was a club that was
6:58growing its revenue base
7:00reinvesting in its squad, buying players
7:03it was
7:05improving its infrastructure both in
7:07terms of the academy
7:09and also its stadium. So within the 90s
7:14and stray slightly into the late 2000s
7:16but Old Trafford capacity was nearly
7:19doubled. And that was pretty much all
7:21done using the club's own cash flow.
7:23There was a little bit of debt but not
7:25that much. Um yeah when I look look at
7:27it in terms of financial um metrics,
7:30free cash flow is a really important
7:31number to focus on as well as EBITDA. So
7:34United's EBITDA which is a proxy for how
7:36much cash they're generating just from
7:37the underlying business
7:39that was positive every single year.
7:41They were actually profitable um even
7:43before player trading which as we all
7:44know in football is almost unheard of.
7:48The free cash flow is what then happens
7:50after you've had the investment into
7:53your playing squad in terms of transfer
7:55fees and what you're spending on
7:57infrastructure.
7:58So United were generating free cash flow
8:01despite doing all of those things and it
8:03was around 100 million um in that period
8:06up until when the Glazers came in.
8:08>> Wow. When he Is that total?
8:10>> Total cumulative free cash flow.
8:11>> So, total cumulative free cash flow over
8:13and above what they'd spent on improving
8:14the stadium, what they'd um spent net in
8:17terms of transfers and wages and and
8:19building up the academy and all this
8:20sort of stuff, they generated a hundred
8:22million on top of that. Now, during that
8:23period, as you all know says and we
8:25should remind people, they were a quoted
8:26company. They They were stock market
8:28listed company. So, were they paying a
8:30dividend during that time?
8:32>> They were. So, of that hundred million
8:34free cash flow, there was 63 million
8:37total dividends over that period that
8:39were also paid out. So, they still had
8:41money left over and cash accumulating in
8:43the bank balance after paying dividends
8:45to shareholders.
8:47>> [laughter]
8:48>> So, it makes It makes me laugh because,
8:50you know, when generally now, again,
8:52thinking about how we look at why we
8:55find excuses for clubs, this is my
8:56generally is, "Oh, they've gone big in
8:58the transfer market. Oh, they've just
9:00taken on X amount of debt to build a new
9:02stadium." To be able to do all of that
9:05Yeah, and generate it. So, this is the
9:06'90s, right? So, this is the early
9:07Premier League years. But, most
9:08importantly here also, you're a fan,
9:10right? So, we should actually say
9:11importantly for Jamie as a Man United
9:12fan.
9:13>> Yeah.
9:14>> How many titles were you looking at in
9:15those '90s?
9:16>> Uh so, '92, '93, '3, '4. So, the Well,
9:20the ones that they didn't win were '94,
9:22'95 and '97, '98.
9:25>> Okay, so I mean, that just shows you,
9:26doesn't it? The ones they didn't win.
9:27So,
9:28so so to add then the next bit onto
9:30this, not only were they doing all of
9:32this from the business side, they were
9:33winning.
9:34>> Exactly. And, you know, a big part of
9:36that is the net transfer spend that
9:39United had was negligible. So, there's
9:41often this this talk about, you know,
9:43Ferguson always spent big or broke
9:45transfer records. Look, like he did, but
9:48also, you know, United were making up on
9:49the other side where they were also able
9:51to get
9:51>> And then he didn't sign many players,
9:53did they? What he did was he isolated
9:55certain specific targets he felt could
9:57help him. But, the something he did
10:00which um and I think there's sort of
10:01misunderstandings about what Sir Alex
10:04Ferguson was
10:06in present-day football parlance, he was
10:08more like a sporting director because he
10:11was heavily involved in the academy, he
10:12was heavily involved in recruitment, and
10:14not so heavily involved in the actual
10:15coaching of the team. He He always had
10:17strong number twos who often took the
10:19coaching sessions.
10:20>> Yeah.
10:20>> So, his ability to transform that club
10:23came from a broad view that he was able
10:26to take over the entire
10:28the entire footballing side of the
10:29organization. And effectively, what
10:32we're saying here is even in as much as
10:33he is mostly remembered for winning
10:35titles.
10:36But actually, in some ways, he was a
10:38football business genius. Cuz he managed
10:40to fund the building or the rebuilding
10:43of the stadium
10:45and dividends
10:46out of unbelievably efficient football
10:49department performance. Cuz what he was
10:51doing was is bringing through young
10:53players and exposing them Remember the
10:55famous, you know, Alan Hansen saying,
10:58"You're not winning anything with kids."
10:59He was doing that against the grain.
11:01Like, it was not generally thought that
11:03you could start winning league titles by
11:05bringing through three, four, five young
11:06players a year into your first team
11:08squad. And Ferguson was doing that. And
11:10the value that generated, both in terms
11:12of their own transfer value, obviously
11:14lower wages that they were on in the
11:15early years of their career, but also it
11:17meant that when when it came to signing
11:19new players, he was able to isolate very
11:22specific superstars who would actually
11:24improve the team.
11:25>> Exactly that. And And it was
11:27you know, I I look at it and I say it it
11:29lowers the investment requirement in the
11:32team on a sustainable level. And it
11:35wasn't just through the '90s. It was
11:37that that carried on throughout Sir Alex
11:40Ferguson's reign. You know, if you think
11:41about the players of the class of '92
11:43that did stay with the club, you know,
11:44the Paul Scholes, the Ryan Giggs, the
11:46Gary Nevilles, they lasted well into the
11:482000s. And
11:51um I think that yeah, that often does
11:52get misunderstood or forgotten. And I
11:55think also alongside that, they did also
11:57ace the commercial side of things.
11:59>> Yeah.
12:00>> Commercial revenue at the point of the
12:01Glazers takeover was 50 million pounds,
12:04but it's streets ahead of others. I I
12:06think the closest was Arsenal at around
12:0832, 33 at that point in time. So, this
12:12was effectively the gold standard of how
12:15to run a football club.
12:16>> I think that's really interesting
12:17because again, history gets compressed
12:20when people look back at it. So, people
12:21say United performs unbelievably
12:22commercially. That was a sort of Ed
12:25Woodward
12:27era thing. He was brilliant commercially
12:28even though he wasn't so good in in
12:30terms of the playing performance side,
12:31but people forget that actually under
12:32Martin Edwards in the 1990s,
12:35>> Yeah.
12:36>> he he running that club built them up
12:38into this thing which was doing almost
12:40double the commercial revenue of their
12:42biggest rivals.
12:42>> And I think
12:44that when we think about when we bring
12:46all this together, one of the key
12:48financial metrics that I also look at is
12:50um cash conversion. So, we talked about
12:53EBITDA, which is effectively a proxy for
12:55cash flow generation.
12:57How good are you at converting that into
13:00operating cash flow? So, after you take
13:02into account all the bill like bills
13:04that you need to pay that you didn't pay
13:05historically,
13:06>> Yeah.
13:06>> how good were you at converting it? And
13:08this is important when we come to later
13:10on in the story.
13:11>> But, United's free um cash conversion
13:14was around about 100%. So, for every
13:17pound of money that they were making on
13:19the football side, they they were left
13:21with it to be able to spend on players
13:24or on the stadium.
13:25>> Okay. So, right here you have a very
13:27high-performing football club, a very
13:28high-performing business.
13:30It is on the stock market.
13:32The first time I guess we have a notable
13:35interest to discuss would be the BSkyB
13:37bid in was it 1998? So, Rupert Murdoch
13:40tried to buy the club for 600
13:44>> 623,
13:45I think number.
13:46>> Which was a big price.
13:47>> I mean, it the the price and you know,
13:50it's always interesting to look back
13:51over history.
13:53The price was phenomenal and the the
13:56valuation multiple, it was 7.1 times
13:59revenue. And that was a true equity
14:02uh to revenue multiple because United
14:04didn't have didn't have any uh or had
14:06minimal debt at the time.
14:08Um
14:10And that don't forget that was in 1998.
14:12It was at the start of the
14:13treble-winning season.
14:15You can understand if I put my hand if I
14:17put myself in the shoes of you know the
14:20directors of the club, you can
14:22understand why from a fiduciary
14:24point of view,
14:26they didn't really have much option
14:28other than to accept it.
14:29>> Quoted company, they had they had no
14:31option.
14:31>> Yeah.
14:32>> Yeah.
14:32>> Okay. So why doesn't it happen?
14:33>> The Manchester United fans. They you
14:36know there is a real and
14:37there are plenty of people who are
14:40um
14:41much better probably talk about the fan
14:44culture and exactly how close the fans
14:46are to the club, what it means to them
14:49and I think you know this this element
14:51that this is a club that we actually do
14:54own even though we don't we're not on
14:55the cap table, we do feel like we own
14:57it. The fans
14:59they're very educated and
15:02they could see you know the potential
15:04risks of what have what could happen in
15:06terms of you've got you know the biggest
15:08TV broadcaster owning the biggest
15:10football club and I think they saw it as
15:12a as a slight and something that just
15:13couldn't go ahead and so there was a lot
15:15of protests at the time and eventually
15:18um the deal ended up going to the
15:20competitions and competitions commission
15:22and got rejected.
15:24>> Because of that conflict?
15:25>> Because of because of that conflict and
15:27you know the the the awareness I think
15:28that the fans put forward around the
15:31deal.
15:31>> But what it probably does right is it
15:32identifies for the first time that
15:34actually hey
15:35this could be a deal.
15:37Yeah. And so starting to you know to
15:39>> Great point.
15:40>> You're just going to start now to have
15:42people potentially looking at this as a
15:43viable opportunity whether it's BskyB or
15:46eventually someone else.
15:47>> Cuz only quite recently Charlie at this
15:48point we're looking at 1998. What year
15:51was it that Michael Knighton had a deal
15:52to buy the club?
15:53>> 1989?
15:54>> 1989 yeah.
15:55>> Right? So we're talking about 9 years
15:56after Michael Knighton's on the pitch
15:58juggling a football on the pitch with a
16:00deal potentially to buy the club for
16:03>> 10 million.
16:03>> 10 million.
16:04>> 10 million.
16:04>> Right? So you're 9 years and that deal
16:07could have been done right? If he if he
16:09had actually had the money.
16:10>> Yeah.
16:10>> That deal would have been done.
16:12>> And I and I think it's also really
16:13important context in terms of when when
16:16you not when did United float right? It
16:18was 1991, right? So, making a
16:20supposition here, but it must have been
16:22on Martin Edwards' mind about how does
16:25he crystallize the value
16:28in terms of his ownership of Manchester
16:30United. And if he had been, you know,
16:33was running the club incredibly well and
16:35really setting the foundations for for
16:37that competitive advantage we talked
16:38about, he was selling down his ownership
16:41of the club throughout the whole of that
16:43period to the point in which
16:45>> Which period?
16:46>> 1991
16:47>> through to 2002.
16:49>> Yeah, right. So, effectively floating
16:51gave Martin Edwards, the then owner, the
16:53platform to gradually sell down his
16:55stake and realize value for what he'd
16:58created and for the asset which he
17:00owned.
17:00>> Mhm. Exactly. [clears throat]
17:01>> But selling down his stake ultimately
17:03turned out to be a problem,
17:05right? Because it opened again the doors
17:06for what we'll really move into, which
17:09was that complete takeover by the
17:11Glazers.
17:12>> Totally.
17:13>> The Irish The Irish were building a
17:15stake at the same time, and they were
17:17always a little bit ahead of the
17:18Glazers, weren't they? They always had a
17:19little bit more than the Glazers, and
17:20the working assumption was at the time
17:23that they would be the ones ultimately
17:25who took the club over.
17:26>> Irish being McManus and Magnier.
17:27>> And Dermot Desmond.
17:28>> Yeah. And Dermot Desmond, of course.
17:30>> Yeah, exactly. And so,
17:31>> Celtic fans outlet?
17:32>> You've got It's exactly that. You've got
17:35on the pitch performing incredibly well
17:38still,
17:39but you've also got executive level
17:41change. So, Martin Edwards was, you
17:43know, not only you selling down his
17:44stake in the club, but he was also
17:45stepping back. So, you had a new CEO
17:47come in, Peter Kenyon, who then
17:49subsequently went on to be the Chelsea
17:51CEO in 2003 when Abramovich came in
17:54charge. On pitch still performing really
17:56well, the stadium developments
17:58completed, so the cash flow generation
18:00that we we talked about earlier,
18:02it was actually improving because you're
18:04starting to see the impact of all of
18:07these prior investments coming through.
18:09Um you've then got
18:11the Irish
18:13taking this increasing their stake.
18:15You've got Sir Alex Ferguson potentially
18:18stepping away from the club.
18:20So, you you you kind of got this
18:22confluence of things going on which you
18:25know, if you were a prospective buyer
18:27coming into it, you're like, "Well, I've
18:28got a
18:29really good underlying
18:32business here which is going to generate
18:34me loads of cash.
18:36There's change going on both in the cap
18:37table level
18:39and at the executive level.
18:42Could I come in
18:44with a structure
18:45that can solve the problems of the cap
18:47table
18:48and get everyone happy?
18:50>> I think what you're saying is in terms
18:52of um the cap table for those who, you
18:54know, aren't sort of used to looking at
18:57finances in this way is the the layout
18:59of who the shareholders in the business
19:00are.
19:00>> Yeah.
19:01>> And in a normal stock market quoted
19:03business business, it's not really an
19:04issue because the shareholders are
19:06mostly institutional shareholders um and
19:09effectively there's an executive board
19:11with independent non-executives who run
19:13the business and the independent and the
19:14shareholders are largely um they buy and
19:17sell their stock depending on the on
19:18what they view view about the sort of,
19:19you know, the the direction of the
19:20business. Difference with a football
19:22club is it does tend to need to have
19:25a North Star, somebody who is actually
19:28in charge and who is making ultimately
19:30responsible for making the strategic
19:32decisions. And that had been Martin
19:33Edwards up until the turn of the
19:35century.
19:36And then we're moving into a situation,
19:39a sort of more multi-polar situation
19:41where you've got the Irish guys having
19:43built up their state to 30% and then
19:46you've got the Glazers, as Charlie said,
19:48gradually building their state towards
19:5030%. So, you're heading towards
19:51potentially quite a difficult situation
19:53where neither of them have quite tipped
19:55themselves into a situation cuz I think
19:56when you go above 30%, you have to make
19:58a offer for the whole share capital of
20:01of the business to all of the
20:02shareholders. Neither of them had quite
20:04triggered that. Um but they were both
20:07there as very significant forces inside
20:09the club. And at the same time, the
20:10Irish had fallen out with with Alex
20:13Ferguson over a horse, um a story that I
20:15broke as a journalist at the time.
20:17>> And you know, the fans were saying
20:18>> Yeah. Ready [laughter] Thank you very
20:19much.
20:20>> This didn't come up last night, but go
20:20on, Charlie, what happened? I mean, so
20:21>> So so so so so basically um
20:23>> It's worth a lot of money. It's
20:24>> so, so, so, you've got the Irish um
20:26coming in obviously getting involved in
20:27Man United, therefore getting to know
20:29Sir Alex Ferguson. Sir Alex Ferguson's
20:30great passion is horse racing.
20:32These are the the biggest horse racing
20:34guys in the world um with the biggest
20:36stud interest in the world. They decide
20:38to um make Sir Alex a gift of half of a
20:41young horse called Rock of Gibraltar.
20:43Very well-bred horse, but equally there
20:45are lots of well-bred horses. It could
20:46have come to nothing, but um such is Sir
20:49Alex Ferguson's magic touch that turns
20:51out to be an absolutely epically good
20:53horse. And not only an epically good
20:55horse, but given his breeding, go on to
20:57become an epically good stallion, at
20:58which point it becomes enormously
21:01valuable. Worth much more than most
21:03football clubs of that era.
21:04>> I mean, we're talking like two, three,
21:05400, 300 million.
21:06>> We're talking about two to 300 million,
21:08right? For for for one horse. And at
21:10that point, Sir Alex is sat there
21:11thinking, "My goodness me, I own half of
21:13a of a of a stallion worth a couple of
21:15hundred million quid. This is
21:17unbelievable." At which point he was
21:19directed to the fine print. Which said
21:21effectively actually you only own the
21:23economic rights of it as a racehorse,
21:25not in its stallion career. Now,
21:27ultimately it was going to go to the
21:28legals, um but there was an out-of-court
21:30settlement in the end by which they made
21:32a relatively small payment to Sir Alex
21:34to drop his claim. But it clearly
21:38um was toxic in terms of the
21:40relationship between the ultimate likely
21:42owners of the club, the Irish, and the
21:44guy who was Mr. Man United effectively
21:46running the biggest chunk of the club in
21:47Sir Alex Ferguson, who was effectively
21:48the sporting director. And I think from
21:50that moment on
21:52that that legal case onwards, I think
21:54their likelihood of becoming the owner
21:56of Man United significantly diminished.
21:59>> Totally. And and in effect, when you've
22:01got these two um major shareholders
22:04owning, you know, owning the the the
22:06biggest stakes in the club, if one
22:09becomes untenable, it's a question of,
22:11"Okay, well, how good an offer can you
22:13can you make us?" And the Glazers, as
22:17infamously we now we now know, made an
22:19offer of 790 million. And again, just
22:22the valuation marker at that point in
22:24time,
22:25it was five x revenue. So, it was less
22:28than than the Murdoch offer and it's
22:30worth remembering, you know, 2005, that
22:32was 2 years into, you know, Chelsea's
22:35sudden ascent, Abramovich's millions
22:37funding Chelsea as as you'll know,
22:39incredibly well.
22:40>> Yeah.
22:40>> And, you know, and at that point in
22:42time, I think that was the first time
22:44since the start of the Premier League
22:46where Sir Alex Ferguson had gone
22:48more than a year without winning the
22:50Premier League. So, you know, in terms
22:53of
22:53>> And in relative terms
22:55>> Cuz
22:55>> Arsenal were flying high at the same
22:56period, weren't they? This is the
22:57Invincibles period. That that sort of
22:59time. You've got Arsenal and Chelsea
23:01really like coming to a pitch and United
23:03absolutely competitive with them, but
23:05not dominant like they had been a few
23:06year a few years before when they'd been
23:08winning the Champions League as well.
23:09>> Exactly.
23:09>> Um so, what happened? Did effectively
23:12the Glazers make the Irish an offer
23:15which effectively then got extended to
23:16the rest of the shareholder base?
23:18>> It's Yeah, it's exactly that. And so,
23:20the the the price of 790, there was, I
23:22think, two around 220 million of their
23:24their own money um that that that was
23:27used to complete the deal. The rest was
23:28done um through debt.
23:31>> So, when you say their money, that is
23:32the Glazers' money.
23:33>> The Glazers put in 200
23:35>> 220.
23:36>> 220 million and then effectively there
23:37was 500 and
23:39>> Yeah, 500 and change
23:41>> 500 and change million of of debt.
23:43>> Right.
23:43>> With bank loans and PIKs, right? And
23:45that's the key.
23:46>> And PIK, yeah. And that was
23:47>> friends with PIKs on this show. We've
23:49talked about them a few times, but
23:51they're quite punitive.
23:51>> Do you want to Do you want to explain
23:53PIKs?
23:53>> So, 200 million at 10% becomes 220
23:56million, then there's 10% of 220
23:58million.
23:59>> It It basically means you don't pay the
24:00interest as you go along. The interest
24:02gets added to the debt.
24:03>> But in essence, they are
24:05they're they're very problematic
24:07potentially because
24:09what it builds on top can get very big
24:12very fast.
24:13>> Totally.
24:13>> And these were I mean, they were at
24:14about what I think it was what, 12 to
24:1614%? 14% 14.25% actually was initial,
24:19right?
24:19>> Yeah.
24:20>> And sorry.
24:21>> And And so, all of a sudden,
24:24you've got a club that was generating
24:28lots of revenue
24:30but also generating lots of profit. That
24:32money that would have gone on
24:34infrastructure,
24:36academy,
24:38um stadium, all of a sudden you've got a
24:41burgeoning interest bill that you've now
24:43got to pay.
24:44>> So, as Charlie said, the PIKs are
24:45rolling up, but in those early years,
24:47what that does mean is that the club
24:48itself is not paying interest, right?
24:50Because it's rolling up.
24:51>> Yeah.
24:51>> So, at what point do the full interest
24:53payments really start?
24:54>> So, it was right it was round about uh
24:562012, 2013, I believe, and that was
25:00the the
25:01the point at which um the club went on
25:03to the uh stock exchange in the US.
25:06>> Right, so it got trans- transferred out
25:08of the UK stock market onto the onto the
25:12US stock market.
25:13>> you mean is it got taken private first.
25:14It got taken Of course Sorry, sorry,
25:16you're right. The acquisition took it
25:17private, and then it was re-floated in
25:19the US, but only for 10-ish percent,
25:20right?
25:21>> Exactly. And so, it was the we'll get
25:23onto class A and class B shares uh later
25:25on, but it was the uh class A shares
25:28that had uh less voting rights um than
25:30the class B shares, and
25:33um the money that was raised
25:36uh
25:36>> from selling that 10%
25:37>> that 10%. Um half of it was used to pay
25:40down some of that uh LBO debt, and then
25:44what you had was a refinancing. And
25:46let's not, you know, let's not forget
25:48interest rates at that point in time,
25:502012, you're still kind of coming out of
25:52the financial crisis, interest rates had
25:54plummeted. And so, actually, the ability
25:56to refinance
25:57>> Mhm.
25:58>> uh at more acceptable rate was it so
26:01much easier than it would have otherwise
26:03been.
26:03>> Yeah, and can we, you know, let's talk
26:04more broadly just around the feeling in
26:06the club at the moment here, because
26:07this is linked to everything that has
26:10happened since then, and even what
26:11happens in the stadium today,
26:13>> Yeah.
26:13>> right? The fans literally went like this
26:16from great, what a what a what an
26:19amazing asset that we have, to now what
26:21seemed like what was fear, anger,
26:23frustration. They were they they they
26:24expect the club revenues to be paying
26:26off the interest on the debts that were
26:27accrued. They basically, you know,
26:28they've been bought with their own
26:29assets.
26:30>> Did Did that happen at the point of the
26:31takeover? Was fan unrest immediate on
26:34the point of the takeover?
26:35>> Yeah, it it was unrest and you know,
26:36there's plenty of people who covered
26:38this at the time um who
26:41were also, you know, they were
26:42incredibly smart people and who who
26:44could see what was coming down the
26:46track. And again, there was
26:49there was protest at the time. There was
26:50protest leading up to it. Um and they
26:53have continued ever since because I
26:55think, you know, there's plenty of
26:56people who had the foresight to say this
26:59is got a lot of risk attached to it and
27:02it isn't a sure fire thing that United
27:04can withstand it. And I think, you know,
27:06going back to this point about how close
27:08United fans are to the club and their
27:11feeling of attachment to it. And I know
27:13every fan is
27:14super attached to their club, but
27:16if you you got to think about it from if
27:18you think about it from a fan's point of
27:20view, like all of a sudden we're this
27:22we're this behemoth that can outbid
27:25anyone and effectively buy any player we
27:27want, you know.
27:28We went out and bought Juan Sebastián
27:31Verón for a world record fee. There was
27:33then Rio Ferdinand that came in. Yeah,
27:35Nemanja Vidić.
27:37Yeah, so
27:38>> Fergie was adamant about him, wasn't he?
27:40>> Um and he did he did do well, but we
27:44were going through we were going through
27:45a tactical change at the
27:46>> Had him at Chelsea as well.
27:48Yeah, he was.
27:48>> Um but you know, that was the
27:50environment that United fans were used
27:52to. And then all of a sudden you're
27:53saying, well, hold on a second.
27:56You've got a family that's going to come
27:58over,
27:59buy the club with debt, put that onto
28:02the club, and now we're going to have to
28:04start paying the interest.
28:06>> Cuz it is the fans paying the interest.
28:08This is the important thing. When you're
28:09in a club situation where I I've
28:11referenced this with reference to to
28:13Celtic,
28:14when you've got a situation where the
28:16owners, particularly in a quoted company
28:18situation as United had been and where
28:21Celtic are,
28:22the owners, I e. the listed company
28:24shareholders, do not
28:26as many do in football, fund the club.
28:28They have bought their shares in the
28:29club, but they do not fund it as other
28:32owners do, which is every year write a
28:33check. They sit there passively as
28:36either just being shareholders or
28:38sometimes receiving dividends even out
28:40of the club. So, it's a very different
28:41type of setup. It then gets taken
28:42private and
28:45Owens me a small bit of it gets floated
28:46in the US. And at the point of being
28:48taken private, they realize that this
28:49money that we all plow into the club
28:52through buying tickets, hospitality,
28:54merchandise, and all of the stuff that
28:56goes around it, that a big chunk of that
28:59is now going to have to be removed from
29:01our club
29:03to start repaying
29:05at some point
29:06>> Yeah.
29:07>> once the picks are rolled up to a
29:08certain level
29:09to to start paying the interest on on
29:12that loan. And that's where the unrest
29:13fundamentally starts.
29:15>> Totally. And it's it's it's not even
29:16repay the debt. It's actually just
29:18>> the interest.
29:19>> It's just paying the interest. So, that
29:21LBO debt is still sitting on the club
29:24today. It's actually a little bit higher
29:26because of the latest refinancing that
29:27was done in May of this year. That has
29:30all happened, but maybe the other
29:32question is why did the Glazers do this,
29:36right? Because sure, you're buying a
29:38club that is incredibly cash generative
29:40and you're putting an LBO down on so,
29:42you know, you can buy this club
29:44without having to use that much that
29:46much capital. But what are the other
29:48motivations that they potentially have
29:50here? Well, you know, they bought
29:53Tampa Bay Buccaneers back in 1995 for
29:56then world record fee for a US
29:58franchise.
29:58>> $190 million, I think it was, wasn't it?
30:00>> Exactly. And
30:03I think even at that point in time,
30:05there was a feeling in the market that
30:07there was not only a secular growth
30:09opportunity, as you would call it
30:11investment in investment circles around
30:13sport, but also potential for the
30:15valuations to rise. So, again, let's put
30:18that, you know, the the deal in context.
30:20790 million 5x
30:23revenue, while still rich, they're
30:25clearly making a play that, you know,
30:27that's a growth multiple. So, they're
30:29they're hoping that they can both grow
30:31the revenue base
30:33more than their competitors
30:37and also get a benefit of a a higher
30:39valuation in the future.
30:40>> Well, and also get just get the benefit
30:42of a rising tide, right? So, if you
30:43looked at the Premier League at that
30:45time, and I think it's
30:46worth going back to the early 2000s when
30:49um it was starting to had been for a
30:52little while starting to compete with
30:53Italy as the most revenue generative
30:55league, but it had not yet become
30:57dominant.
30:58But, if you had a bit of vision about it
30:59and said, "The direction of travel's
31:01clear here. The Premier League's going
31:02to become the globally dominant league."
31:04So, effectively what the what the
31:05Glazers are doing is they're buying the
31:07biggest asset in the league, which is
31:09about to become the globally dominant
31:11asset.
31:12Right, finger in the air, I reckon the
31:14value of both every club in that league,
31:16but particularly the biggest asset in
31:17that league is going to increase
31:19significantly.
31:21And during that 20 years, 23 years,
31:23whatever it might be, it's risen from
31:26the 700 the 700 million, which they
31:28bought it for to arguably around about 6
31:30billion, whatever it might be
31:31>> Yeah, I think it's yeah, 5 5 sterling
31:33>> So, so the so the So, the original
31:35investment thesis was absolutely
31:38correct.
31:39>> Totally.
31:40>> Well, no, but this is the always the
31:41challenge, isn't it, really? It's like
31:42they've actually done a great deal.
31:44>> Yeah, but as much as it pains me to say
31:46it, you know, they've done
31:48cash on cash return, if you think about
31:50what they initially put in versus what
31:52they've got out so far, you know, your
31:55uh I haven't actually done the maths on
31:56that, but it's probably around 15 times,
31:58which is 15x, which is what you will
32:01know better than like it's incredible.
32:03>> Yeah.
32:03>> That sort of cash on cash return. And
32:05they still own
32:06you know,
32:07the majority. [clears throat]
32:08>> It's also worth saying, you know, when
32:10it's to when the takeover happened,
32:12fine, there was a lot of unrest around
32:13it.
32:14Yeah, some of the numbers were horrific
32:15compared to what they would have been
32:16previously, and you're servicing now
32:17lots of cash that you didn't have to
32:19previously, but for the first what, 8
32:22years, 10 years Well, actually, I think
32:23if you actually package the first 10
32:24years, they won more trophies than they
32:25did in than the previous 10 years. They
32:29had a net transfer spend of 275 million.
32:31Revenue doubled. So, they were
32:33increasing how much money was coming
32:34into the club. And that's so, you know,
32:35as you saw last Vodafone was 9 million,
32:37went to AIG 14 million a year, then Aon
32:39at 20 million. So, you were gradually uh
32:42improving the value of the inventory,
32:44the core inventory.
32:45>> Yeah.
32:45>> The commercial team went from two to 150
32:47in the commercial department. Now, I
32:48know we'll talk about
32:49>> a It became a global operation, no?
32:50>> global operation, right? And there were
32:51license big licensing agreements in that
32:53as well, you know, so they reduced the
32:54reliance on things like match day
32:56because they were making lots of money
32:57in other areas. So,
32:59the business was growing and developing.
33:01The big change, of course,
33:03was when Ferguson left and for the first
33:06time on the pitch, the performance
33:09was called into question in ways that
33:10hadn't been before.
33:12And if you have
33:13If you have the fans going at the
33:15ownership, but the team is winning, you
33:17can just about navigate that because
33:19let's Let's be honest, right? People's
33:20contact with the team every single
33:22weekend is on that pitch, in that
33:23stadium. And if you If they're winning,
33:25then the fans are happy. But, if the
33:27team are losing
33:29and they hate the ownership, you've got
33:30a problem.
33:31>> Yeah, and and one thing I I would stress
33:33here is that even whilst
33:36United were winning, there was
33:38significant unrest amongst the fan base.
33:41The fan base have never um stopped
33:44protesting against this. You know, the
33:46green and gold campaign, which I believe
33:48started from a writer for a fanzine. Um
33:51that's that came in 2010. So, that was
33:53you know,
33:54at that point in time, uh you United
33:57were on the course for
33:59I don't know, we just won three Premier
34:01Leagues in a row. We'd won the Champions
34:03League in 2008, got to the final in
34:062009, the following season. Um so,
34:09United were
34:11arguably
34:12as strong on the pitch as they had ever
34:13been. You know, we we'd never Whilst
34:16we'd been good in Europe, we'd never
34:19done back-to-back in back-to-back
34:20finalists. And I don't think any other
34:22team had at that point. So,
34:24you know, that's I think that's one
34:25important thing. And I think also when
34:27we think about
34:29what happened on the commercial side, to
34:30your point,
34:32the
34:34one of the One of the things here is um
34:37how well did United perform versus
34:39everyone
34:41else?
34:42If you actually look at say Arsenal in
34:44the same period up until eventually when
34:46Sir Alex Ferguson left, um they grew
34:49their commercial income around three and
34:51a half times. Um they were starting from
34:53a smaller base. That's the exact same
34:55increase that Manchester United had. It
34:57was actually that 3 years after
35:00where United really put the turbo
35:02boosters on the commercial income where
35:03it grew from 150 million to around 270.
35:07And so, to your point about the
35:09performance and what was happening
35:13within inside the club, when you hear
35:15subsequent managers post Sir Alex
35:17Ferguson talk about how United had
35:19become a commercial club. When I look at
35:21the numbers,
35:23well, it actually does look like that
35:25because all of a sudden, you know, post
35:27Sir Alex Ferguson, the commercial growth
35:29just just flew. At what point
35:32do you think
35:34that from an ownership perspective, from
35:35a Glazer perspective, at what point do
35:37we start entertaining the opportunity
35:39or the necessity
35:41to start selling some shares, a
35:44potential full exit, some form of new
35:47equity injection, so we say or I I don't
35:49know. There's obviously been plenty of
35:51refinancing um occasions, but but at
35:54what point do you think during all of
35:55this that that starts to become more of
35:57a focus? Post Sir Alex Ferguson, to your
35:58point,
36:00there was still a lot of spending
36:01happening because the revenues for a
36:03considerable number of years were still
36:05going in the right direction. So, it
36:07allowed you you were still generating
36:09cash, you could still service the
36:11interest debt and increase spending,
36:13whether that's on wages or transfer
36:15fees. So, that was continuing to happen,
36:17but, you know,
36:19very well documented, the who they were
36:22buying and the way they were going about
36:24buying them in terms of putting together
36:26a unified squad was becoming less and
36:28less successful.
36:29>> And critically during this and this is I
36:31think so fundamental to where we're
36:32going to end up in the whole of this is
36:34that during that period,
36:36unlike in the period under Edwards
36:37during the 1990s,
36:39the club was not generating enough money
36:42to to pay the interest and sort out
36:44their playing side and invest in the
36:46infrastructure. So, the bit that was let
36:48let go effectively was the continued
36:50investment in the
36:52in the infrastructure side. So, you then
36:54see a period of 10 to 15 years for all
36:55of us who went to Old Trafford
36:57throughout this period as I did
36:59at various different times of the
37:00gradual degradation of the stadium
37:02itself.
37:03>> Leaky roof.
37:04>> Exactly exactly. And in and and this was
37:06this was
37:07this was coming it was happening and you
37:09could see it effectively
37:10that excess cash after transfer the the
37:12free cash flow number that we were
37:13talking about um
37:16that was then just all going on
37:17interest, right? So, they'd they'd
37:19basically okay, we know we need to spend
37:21in the playing squad. So, we're going to
37:22make sure that that happens.
37:24Um but all the other stuff
37:27we're going to
37:28stop doing that and pay [clears throat]
37:29down the interest cuz it's 30-odd
37:31million a year on average over this
37:32point in time. And then you kind of you
37:34go through a number of years on that and
37:37you know, they were still generating
37:39free cash flow the cash flow conversion
37:41that we were talking about was still
37:42good, but COVID then came. Around that
37:45time obviously you've got a a scenario
37:48where the cash flow generation for all
37:49clubs but particularly Manchester United
37:51goes down because you've not got fans
37:53going to the stadium
37:55issues with the TV broadcast noise
37:57because no one could play. And
37:58[clears throat] United still effectively
38:01tried to yeah, outside the specific year
38:03of 2020, they then still tried to spend
38:06their way through it. So, you had not
38:08soon after that you know
38:10the the year of Sancho, Varane, and
38:13Ronaldo and you know, during COVID I
38:15believe it was during COVID they opened
38:16up the credit facility.
38:17>> Yeah.
38:18>> So, just want to talk about that credit
38:19facility. What what you mean by that?
38:21>> So, this is this is effectively um a
38:24pool of cash that the club has access to
38:26to be able to fund the day-to-day
38:28operations that you can dip into.
38:30>> 200 million fund basically. Think of it
38:33more like a overdraft or like a credit
38:35credit line for for fans. So, you know
38:37>> essentially it it's it's um shorter
38:40term, right? So, it needs to be paid
38:42down, but ultimately it gives them
38:43access to 200 million
38:45on top of what they would normally be
38:47able to access.
38:47>> On a revolving basis.
38:48>> basis.
38:49>> So, the the interesting thing we just
38:50keep keep a look on the on the sort of
38:51the the big picture here. You've gone
38:53from taking a club that's able to
38:55finance both its own requirements in
38:57terms of the playing side and the
38:59infrastructure side and have spare cash
39:02flow over top of that. Now you're
39:04getting into a situation where they have
39:05to borrow money even just to fund the
39:07playing side. Right?
39:08>> Yeah.
39:08>> Now, the other thing I just want to put
39:10to you is the total amount of debt
39:12interest
39:14spend during that 20-year period, I
39:16believe is about a billion.
39:18>> Yeah.
39:19>> Which is more or less exactly the cost
39:21of the Tottenham Hotspur stadium.
39:24Right? So, if you just take it as a very
39:26sort of I know it's things that can be
39:27more complicated, but sometimes actually
39:29it's really quite straightforward. The
39:30total amount that Man United spent on
39:32debt interest during this period was the
39:34amount they would have required to build
39:36a new Old Trafford.
39:37>> go back to the animosity that any fan
39:38holds with this whole deal. If you're
39:40looking at this going, "Well, hang on a
39:41sec. We didn't need this in the first
39:43place because we were in a really strong
39:44position. You've then got hold of the
39:45club. You've used our assets to buy
39:46ourselves. You've laden us with debt for
39:48the next 20 years and that is now
39:49costing us growth."
39:51No wonder they've got a problem because
39:55we'll get into the new stadium. But
39:56yeah, if you're looking at how you grow
39:57and develop the club,
39:59you're now unable to do it in the
40:01traditional structures because you've
40:02already got so much debt in the club
40:04that you can't put more on top of it and
40:05still operate as a viable business.
40:06>> And you can see there's a crunch point
40:08happening, right? Because all of this
40:10this spending on players
40:13um that was going on to try and improve
40:15performance on the pitch,
40:17it it wasn't. You know?
40:19>> What's funny you say that. Yeah. Should
40:21should we should we just tap into that
40:22because I actually do think it is quite
40:24extraordinary.
40:24>> [laughter]
40:25>> Um it's important on the revenue point
40:27as well because in those 10 years, let's
40:28go 16-17 to today. In those 10 years,
40:31Man United have qualified for the
40:32Champions League five times out of 10
40:34years. Just qualified, right? So,
40:37everyone knows if you qualify for the
40:38Champions League, you're going to make
40:39more money in a year. Let's say
40:41uh let previously if you just got
40:43through to through the groups to the
40:45round of 16, you would would 40 to 50
40:48million.
40:49>> Commercial commercial triggers on top of
40:50that, Charlie.
40:51>> And commercial triggers on top
40:52>> So, I'd call it 70.
40:53>> Yeah, I I and and also um extra games.
40:56>> Extra games, match day.
40:57>> Yeah.
40:58>> Solidarity payments weren't probably
40:59quite in there yet, were they, Charles?
41:01>> Probably not. You know, just just
41:02getting
41:02>> They missed out on the
41:03>> Yeah, they did miss out on the
41:03>> Missed out on the
41:04>> Yeah, I get paid for just being Man U.
41:06>> Um
41:07>> So, you know, you miss out for 5 years
41:09and then in the new Champions League
41:10structure, in the last few years there's
41:11been more opportunities to make money
41:13onto it. So, let's say, you know, you
41:14could easily put that at 350 to 400
41:16million. Even even just then that's just
41:18from getting to round of 16, let alone a
41:20deeper run. Mind you, they have no right
41:22to be assessed as going any deeper
41:24because they in that time, in those 10
41:27years, even when they have been in the
41:28Champions League, they've been in the
41:29round of 16
41:32three times. Uh they got knocked out to
41:34Atletico in '21-'22 and they got knocked
41:36out to Sevilla in '17-'18 and they made
41:38a quarterfinal in '18-'19, knocked out
41:40to Barca. So, Spain is the scourge of
41:42United. The rest of it was group stage,
41:45right? Once actually at the bottom,
41:47wasn't it in '23-'24? They came last in
41:48the group.
41:49>> So,
41:50in this time, you got serious
41:51underperformance in Europe. Uh you have
41:53Premier League, they have two two second
41:55places and two thirds in 10 years and
41:58then a lot of sixths and one eighth and
41:59obviously a 15th, the worst ever
42:01position in that. Jose Mourinho's famous
42:03statement that the second place that he
42:04got with that Man United team was one of
42:06his greatest ever achievements. Everyone
42:07laughed at him, but I think now a few
42:09more understand what he actually meant.
42:11But, if you then look at the thing which
42:14we had just said at the beginning of the
42:15conversation had been
42:16>> so uh well managed and unique to
42:18Manchester United and how it spent on
42:20its players or what it didn't spend on
42:21its players and how it created the squad
42:23that we actually went and won trophies,
42:24that has completely disappeared.
42:26>> Yeah.
42:27>> 1.7 billion spent in that time.
42:31Uh and I mean, let's be honest, we were
42:33going through it, right? You're a fan
42:34and Charlie and I aren't. We kind of all
42:36agreed that maybe you could have you
42:39definitely had one success in that time,
42:42if you want to put um Bruno Fernandes in
42:44that category, and maybe you could have
42:45a half on Harry Maguire, but
42:46>> then actually, if you're spending 80
42:48million on a center back, you expect
42:49them to be Virgil van Dijk.
42:50>> Yeah.
42:51>> So, which Harry Maguire hasn't been. So,
42:54you know, we're talking about
42:56an extensive list of players over 50
43:00million
43:01spend
43:03that have failed in a Manchester United
43:04shirt.
43:05>> Yeah. And and then the kicker is,
43:07because of that,
43:09we talked before about the growing
43:11revenue, the improving commer-
43:14particularly driven by commercial
43:15income. Um apart from broadcasting
43:18income,
43:20United were basically ex-growth. You
43:22know, they weren't growing revenue at
43:24all because
43:25there hadn't been much investment into
43:27the stadium. So, you couldn't continue
43:29to churn
43:31match day revenue higher. And the
43:32commercial income, this is the key bit,
43:34you know, we talked before about that
43:36three-year cycle three-year period
43:38post-Sir Alex Ferguson,
43:39growing from 150 to 270, you were
43:42starting to see that growth not being as
43:45strong as it was. So, between that uh
43:48what would that be? Two two 2016 to uh
43:51last year or even current day, that
43:54commercial income has only grown on
43:56average 1 to 2% a year.
43:59>> I mean, in some ways, it's amazing and a
44:01testament to the strength of the United
44:02brand that it's even managed to be that
44:04stable given the level of performance.
44:07>> Yeah.
44:07>> Um cuz if you think about the premise on
44:09which a lot of the blue-chip sponsors
44:11came in was this is Man United. You
44:13know, we're if we're not top of the
44:15tree, we're pretty close to top of the
44:16tree pretty much all the time. So, to
44:18have a protracted period of time, as
44:20Charlie said, a 10-year period where
44:21they either don't qualify for Europe or
44:23for the Champions League, or if they do
44:25qualify, do badly in the Champions
44:27League, in terms of how a major global
44:29brand would see their commercial
44:31investment, that's absolutely critical.
44:34If you're not paying playing in those
44:35big quarter-final, semi-finals, and
44:37finals of the Champions League on a
44:38regular basis, you're not really one of
44:40the top clubs in Europe. And yet still
44:43they've been able to maintain their
44:44commercial income up here.
44:46You mentioned a crunch point. You just
44:47got through COVID. When is that crunch
44:49point hit?
44:50>> Uh so,
44:52the last salvo, as I call it, um
44:55is
44:56the Brentford game where we lost 4-0. Um
45:01>> And that's earlier. You had the same
45:01back line in that game than you did the
45:03other day against Bournemouth, almost,
45:04didn't you? I think
45:05>> Is that right? So, who was it, Charlie?
45:07>> It was Martinez, Maguire, Dalot.
45:10>> And I can't remember. Sure. Sure. Yeah.
45:13>> I mean, you lose 4-0, lose 4-0 at
45:15Brentford what, 21 22 22 23?
45:18>> Yeah.
45:19>> And then 4 years later at home to
45:22Bournemouth, you lose you lose 3-0 with
45:24the same back line.
45:26>> Yeah. And you know, this is one of the
45:28things that the fans really, really,
45:30you know,
45:32I'll be mindful of my language, but, you
45:34know, get annoyed about. And the crunch
45:37point was then after that game, United
45:40went into the transfer market pretty
45:42aggressively, delved deep into the
45:44credit facility.
45:45>> So, is that January '23 or is it January
45:47and then June?
45:48>> No, no. So, it was it So, that game
45:50happened just before the end of the
45:51summer transfer window.
45:52>> Yes. Okay, so it's actually that they
45:54went in at the end of that at the end of
45:55the summer transfer window. That's
45:56right. That game happened in mid-August
45:59'22.
46:01>> I believe so. I might be wrong.
46:02>> So, so they then had 2 weeks left or 2
46:05or 3 weeks left in that transfer window
46:07and they waited until that point.
46:08>> And you had and you had
46:10Casemiro come in
46:12for 60 million pounds
46:14on a very, very big contract. You also
46:16had Antony come in,
46:18I think it was for 85 million pounds
46:21if the reporting around this is correct,
46:23the the value that the club had had put
46:25put on Antony was absolutely nowhere
46:26near that, you know, less than half of
46:28that. It was really, you know, when I
46:30look at the numbers, just look at the
46:31numbers, it looks like to me that it was
46:33like one last bet as to how do we get
46:36back into the Champions League because
46:38we really need this to happen because
46:40growth has slowed, we've still got a
46:41really big wage bill, and we still need
46:44to service this interest cost, and the
46:46cash flow generation, whilst it's there,
46:49it's being used up to pay for all of the
46:53expensive transfers that haven't worked
46:55out in the past.
46:57>> Yeah.
46:58>> And that on that particular point, I was
47:00going to just pin you down cuz it's a
47:01bit that quite often gets lost in the,
47:03you know, people focus on the debt,
47:05understandably. They focus on the
47:06interest payments, totally
47:08understandably.
47:10But sometimes the bit that gets lost,
47:11not just at Man United, but at all
47:12clubs, is effectively the net cash spend
47:17on transfers. Because don't forget that
47:20most, I'm not saying to you, don't
47:21forget, I'm saying to viewers and
47:22listeners, don't forget that most
47:23transfers get structured over two,
47:25three, four, five years.
47:27So, effectively, if you've made a bad
47:29signing three years ago,
47:31you will still have transfer costs on
47:34that in the current year, even if that
47:35player left the club.
47:37>> Yeah.
47:37>> Um, so, talk us through where United
47:40have been in the last five years in
47:42terms of how much money they are
47:44spending on those failed, those historic
47:46failed transfers.
47:47>> I'll start kind of current day as to
47:49where we are, because it's it's still an
47:51issue that the club are they're having
47:53to work through. Um, albeit less with
47:56probably bad transfers, but, you know,
47:58you take the current revenue of the
48:00club,
48:01or take it to EBITDA in terms of, you
48:04know, your what's your profit and the
48:05cash that you'll be generating after,
48:08um,
48:09player wages, other people's wages, and
48:11other operating costs get taken out.
48:13United are currently sitting at, you
48:15know, just above 200 million. Is that
48:17the guidance?
48:18>> revenue 750, net revenue 66. So, it's
48:22700.
48:23>> It's So, it's this 670
48:24>> 670 was this year, right?
48:25>> Okay.
48:26They're projecting 750.
48:27So, let's just call it 700, right? So,
48:30total revenue 700.
48:31>> Extra 30, yeah.
48:32>> But or 50 less cuz we're in we're in the
48:34season after.
48:34>> Yeah, I know. I'm just saying, you know,
48:35that's their interest payment that
48:36you've just added on there.
48:37>> Well, that's try and keep the numbers
48:39round. [laughter] So, you've got 700
48:40revenue, you've got, um, your EBIT of
48:43200.
48:44>> 200.
48:44>> Right? And how much are they then paying
48:46in
48:48player
48:49>> So, this this year and this season, um,
48:53so, this is the figures or as of the
48:5530th of June,
48:57uh, 2026, um, 190 million.
49:01>> So, pretty much their entire
49:04operating profit.
49:06>> Yep.
49:06>> On on legacy transfers videos.
49:08>> Yeah.
49:08>> Exactly. And and this has been happening
49:10for the last two or three years.
49:12>> Wow. So, they were 190 million this year
49:15on transfers that have been done really
49:16within the last 5 years. So, then we're
49:18looking at players like Anthony,
49:19Casemiro, Rasmus Højlund, Mason Mount,
49:22Leny Yoro, Manuel Ugarte.
49:24>> For
49:25>> That's the type of player the Manchester
49:27United are paying for
49:28>> now. Right now.
49:29>> Yeah.
49:30>> Right?
49:30>> And so, when we talk about, you know,
49:33that cash flow generation, whilst it is
49:34still there, that 200 million, take off
49:37the interest, which this year will be
49:39closer to 50 million,
49:41then you've got all of those historic
49:43transfer fees still to pay.
49:44>> Yeah, it's a negative 40 straight away.
49:46>> Yeah. And so, and that has been going on
49:48for the last, you know, three or four
49:50years.
49:51>> Okay. So,
49:52surely it's time we must now bring in
49:55>> Yeah.
49:55>> Mr. Ratcliffe and INEOS.
49:56>> Sir Jim to you. Sir Jim.
49:59>> Sir Jim.
50:00>> Yeah.
50:00>> Um,
50:02what Can you
50:04I I think important because when he did
50:05come in,
50:07he came in as a minority
50:08>> Yeah.
50:08>> investor, but the club was also on the
50:10market for someone if they wanted to buy
50:12the whole club.
50:13>> Totally. So, the
50:14the dynamics of the deal brought and
50:16this is broadly speaking and and
50:18summarizing, you know,
50:20clearly the Glazers could see what was
50:22coming.
50:23Um, and actually the
50:24>> When you say could see what's coming,
50:25see what's coming in terms of this cash
50:26crunch.
50:26>> The the cash
50:27>> cash crunch.
50:27>> Yeah.
50:28>> And, you know,
50:29the other additional context here is
50:31like
50:31the playing squad had already started to
50:33be trimmed the year before Ratcliffe
50:35came in. You know, United let the
50:37contracts of the likes of Varane,
50:39Martial, who were on big wages,
50:42kind of go off the books. So, they knew
50:44that I My interpretation is they knew
50:46that they had to start trimming trimming
50:48things down. And so, you know, they were
50:50they were out there
50:52on the market, you know, when you can't
50:53get
50:54additional debt in terms of credit
50:56facility, you've you've got to go and
50:59find equity.
50:59>> So, the credit card at this point has
51:01been maxed out. Pretty much, pretty much
51:03they can't borrow anymore.
51:04>> Yeah.
51:05>> So now they have to access new equity or
51:07sell.
51:08>> Mhm.
51:09>> Was Were there any significant actual
51:10offers for the full club?
51:12>> Yeah, so you
51:13the
51:14the inner nerd in me who likes to read
51:17took a look at the offer document
51:19that was put out when
51:22the Sir Jim Ratcliffe deal happened and
51:25they
51:26give you a timeline of how the deal came
51:29to pass. As we all know there were or I
51:31say as most people will know there was
51:33two interested parties.
51:34>> Did they have to do that because it's to
51:36the it was to the quoted company?
51:38>> Yeah.
51:38>> Right, so they have to make those
51:39documents public.
51:39>> 10% still sitting on the New York Stock
51:41Exchange.
51:41>> Exactly.
51:42>> Yeah. Yeah.
51:43>> And
51:44you had
51:46interest from Qatar
51:48in Sheikh Jassim and
51:50Sir Jim Ratcliffe at the table and
51:53there's actually there's actually two
51:55documents
51:56that were published. One which was
51:58originally put out there which said that
52:00no proof of funds were
52:02ever given from the rival bid.
52:05Um
52:07that's now been redacted and if you go
52:08on to the SEC you can't find that.
52:11Not sure why.
52:12But if you look at the timeline
52:16it gives you an indication as to what
52:20potentially some of the motives might
52:22have been around Sir Jim Ratcliffe
52:24buying into the club. So there was a
52:26number of deals that were put on the
52:28table but I think the crucial one is
52:30that it was initially be
52:33a minority stake that would be that
52:35would be purchased but there was
52:37something called put and call option
52:39agreement between him and the Glazers.
52:43>> To sell your remaining shares to that
52:46entity who has bought the shares to
52:48date. So effectively
52:49let's say say Sir Jim Ratcliffe comes
52:51along he buys 25% the Glazers would then
52:54have the option to put the remainder of
52:56their shareholding onto Jim Ratcliffe at
52:58a pre-agreed price.
52:59>> Yeah.
53:00>> Within a certain timeline.
53:01>> Exactly. And on the other side of that
53:03>> Yeah.
53:04>> Sir Jim Ratcliffe had a call option,
53:05which was the right to buy those
53:07remaining shares at a certain price
53:11in the future. And that was 3 to 5 years
53:13in the future. So like, what can we what
53:14can we infer from that is that
53:17Okay, well Sir Jim Ratcliffe didn't
53:19necessarily have all of the money on his
53:21own balance sheet cuz at that point in
53:22time
53:23it was him personally buying it. It
53:25wasn't Ineos, even though there was
53:27provisions that allowed him to transfer
53:29over. So he clearly personally did not
53:31have all of the the money, but
53:33at potentially 3 to 5 years in the
53:35future, there was a feeling that he
53:37would have had it.
53:39So that that deal ultimately didn't get
53:41agreed upon.
53:42>> That put some call option did not
53:43happen.
53:44>> No. And so and so the the deal that
53:45ended up getting struck was for him to
53:47buy effectively a a quarter of
53:51Manchester United. And that was he was
53:53buying it not just off the Glazers, but
53:55because it was listed on the US stock
53:56exchange, he actually had to buy
53:59shares
54:00of the
54:02shareholders that that that own the club
54:04on the on the stock market. And and
54:05actually there's one thing I I didn't
54:07mention earlier with those put some call
54:08options. It was all focused on the class
54:11B shares. So the ones that had more
54:13voting rights and
54:15gave him effective voting control rather
54:18than the
54:19yeah, rather than the economic control.
54:21>> Cuz that was always a key, right? It was
54:22Jim Jim Ratcliffe coming in to
54:25operationally take over the club. That
54:27was part of that that was part of the
54:29narrative that relieved some of the
54:31initial pressure from the fan base.
54:32>> Yeah. Because it looked like the Glazers
54:34would be less
54:35hands-on involved if they ever really
54:36could have been classed as being
54:38hands-on involved. But ultimately, he
54:40would then start taking control of
54:41football operations.
54:42>> Exactly. And also as part of that deal,
54:44so it was an an initial amount of let's
54:46call it 25% for round numbers.
54:48And then he would over the kind of next
54:51period of time also invest $300 million
54:54of his own money to get a little bit
54:56more.
54:57>> Into the club. And that would be
54:58effectively what we call diluted
54:59capital.
55:00>> Exactly.
55:00>> So the the cash the Ratcliffe the extra
55:03Ratcliffe cash on top of the amount that
55:04he's paying for those 25%. The extra
55:06Ratcliffe cash would come in and the
55:08other shareholders, chiefly the Glazers
55:10but also
55:12the stock market shareholders, would
55:13then dilute by by that amount and that
55:16cash would then be the thing which is
55:18then
55:20solving this cash crunch that we
55:22discussed earlier on. Because the amount
55:23he pays for shares doesn't solve the
55:25cash doesn't solve the cash thing.
55:26That's going to pay shareholders for
55:28transferring their shares. It's that 300
55:30million that starts us deal with the
55:32issues that we've outlined earlier on.
55:34>> Does that 300 million at that point,
55:36also start to reduce the debt?
55:38>> No.
55:39>> Right. So critically, the debt is still
55:41there. And and by this point, after all
55:43the pick notes that Charlie was talking
55:45about, after all everything the
55:46refinancings that you've spoken about,
55:48at this point where has the debt got to?
55:50>> So at that point in time, the financial
55:53debt from the Glazer buyout was
55:57approximately the same. So there was a
55:58225 million dollar senior secured note
56:02and a like 450 million dollar term loan.
56:07So
56:09what's that call that? 600 675 million.
56:11And then the credit facility
56:13>> on top.
56:13>> 200 plus let's not forget transfer as
56:17well. Just putting all all the debt
56:18together.
56:19>> Yeah, so this is so financial debt
56:22versus operational debt. So I
56:26and this is actually how it's reported.
56:28The transfer debt it gets called
56:30football debt quite often, which is
56:31correct. But in terms of
56:34um
56:35how it's technically accounted for, it's
56:37not it's not like a loan, right? It's
56:39actually [clears throat]
56:40it's it's a bit like a bill that you've
56:42signed up for but you need to pay in the
56:43future. The thing that makes it
56:44difficult is sorry, thing that makes it
56:46different
56:46>> liability not a debt.
56:48>> Exactly.
56:48>> Okay, so minus the football debt really,
56:50we're looking at just under a billion.
56:52>> Uh yeah, so
56:53>> pounds.
56:55>> Bit less.
56:55>> See so you've got 700 plus the revolving
56:57credit facility
56:58>> 700 million dollars.
56:59>> dollars.
57:00>> So
57:00>> 900 million dollars plus facility, call
57:02it 700 million pounds.
57:03>> Yeah, exactly.
57:04>> Okay.
57:05Nice. Okay, well it it makes sense
57:07because I think the easy the easy number
57:08that is thrown around is 1.1 billion
57:10that's net debt, but that will be
57:11including football debt. So, it's
57:12important to then categorize all of
57:14that.
57:14>> 700 of financial debt, you've got 400 of
57:16football debt.
57:17>> Yeah. That's important, I think, for the
57:19operating constraints
57:21that
57:23uh in place as soon as that deal is
57:25done, right? So, as soon as you don't
57:27have someone that is going to buy the
57:29whole club and clear the debt.
57:31>> Yes. The Ratcliffe deal answers one
57:33question, which is the cash crunch. It
57:34does not answer the other question,
57:36which is the the the debt pile.
57:38>> And so,
57:40when you've got this deal that's been
57:41done,
57:43whoever is operating the club is having
57:46to do so still under that constraint
57:49that the financial debt is placed
57:52>> Okay. And and the football debt, as
57:54we've discussed.
57:54>> Yes. And the football
57:55>> Because, look, let's be honest, what
57:56what may have looked like a bit of a
57:58Hail Mary for a few has not turned out
58:00like that, hence why we're talking about
58:01this right now today, because the club
58:03is not in a very good position. Now,
58:05what happened since he came in? Well, we
58:07got a little bit of an injection of the
58:08INEOS jab, should we say? The Dave
58:12Brailsford coming into the football
58:13club. You got Dan Ashworth brought in as
58:16the as the man to kind of the football
58:19through a technical director, especially
58:21and very well respected Dan Ashworth.
58:22Right, if you're looking at, you know,
58:24what he'd done at Brighton and then
58:25Newcastle,
58:26that was very exciting for them to try
58:28and fix their footballing problems. We
58:29know that that hasn't gone to plan. When
58:31they did get rid of Erik ten Hag, they
58:32brought in Ruben Amorim. Seemed like the
58:34guy. Um
58:36as we know, wasn't the guy. Uh
58:39Dan Ashworth left. Jason Wilcox brought
58:41in. We know he's come under a lot of
58:43heat recently. On the other side of it,
58:45let's not forget that to your point of
58:48having to operate this business still
58:49with massive constraints, so Jim went on
58:52a pretty
58:54brutal um
58:56cost-cutting
58:57initiative. I think about 30%, wasn't
59:00it, of the workforce? Which was 400 and
59:02something jobs.
59:03>> Yeah, peak it went to
59:05peak the head count was around 1,100
59:07people, and it's got down to about 800
59:09as of the last set of accounts.
59:11>> Yeah. So, you know, every free canteen
59:13went, no Christmas parties, ticket
59:15prices raised.
59:17>> Yeah.
59:17>> Very important. Kids
59:19um pensioners
59:21>> 66 pounds. Yeah.
59:22>> 66 pounds. I remember he said, "Look, we
59:24turned an operating loss into an
59:25operating profit."
59:27>> Yeah.
59:28>> Then someone pointed out, "Yeah, but you
59:29just spent 16 million sacking Ruben
59:31Amorim."
59:31>> Yeah.
59:32>> Which was base And I think that's been
59:33reduced now cuz he was employed by
59:34Sporting Lisbon.
59:35Right? Yeah. But
59:37the point The point being massive
59:39changes happening here from an
59:40operational standpoint. Um
59:43to many they seemed like tiny drops in
59:45obviously what was a a very big ocean.
59:47However, that's not saying you shouldn't
59:48make some of those in business. We said
59:50We actually said we thought this could
59:51This would be the year where we'd learn
59:53a lot about Ratcliffe.
59:54>> About the project. About the plan.
59:56>> Yeah.
59:56>> Because of as well now the what looks
59:59like ever accelerating project of the
1:00:02new stadium.
1:00:03>> Yes.
1:00:04>> And to me bringing you into this, like
1:00:06let's really now drill into the stuff
1:00:10around the Ratcliffe deal.
1:00:12What looks like it's going to happen
1:00:14moving forward What options there are
1:00:15moving forward here because I think
1:00:17that's where fans care the most. What
1:00:19we've talked about is so important to
1:00:21understand. It's often the bit that's
1:00:23better reported. What's not often
1:00:24reported or hasn't been reported well to
1:00:26date has been how do we get ourselves
1:00:29out of the situation? Charlie and I have
1:00:30sat here on the show. I think I said it
1:00:32last week going, "How many times can you
1:00:34and I sit here discussing Manchester
1:00:35United asking the same types of
1:00:36questions?"
1:00:38We haven't necessarily had those
1:00:39answers.
1:00:39>> Totally. So, should we should we start
1:00:42with what are the options available
1:00:45broadly speaking, right? Wider picture.
1:00:47So,
1:00:48Look, in in
1:00:49>> What Sorry, what are the options to get
1:00:51out of this?
1:00:53What are the options moving forward?
1:00:54>> Exactly. The ultimate key here is how do
1:00:57you remove the debt, right? If you're
1:00:59going to do that at from an ownership
1:01:01perspective in terms of what kind of
1:01:03what kind of deals can be done here to
1:01:06change the ownership structure to
1:01:07effectively kind of put United back on a
1:01:11stable financial footing, right? You've
1:01:13got
1:01:15another minority coming in
1:01:17or a full buyout.
1:01:19And
1:01:21if we think about what the current
1:01:22ownership structure is and how the the
1:01:23business is operating um
1:01:27another minority partner coming in
1:01:29to me
1:01:31feels tricky.
1:01:32>> If we do this, we're still starting the
1:01:33same position where we've got to service
1:01:35a club that's laden with that because
1:01:36we're not another minority investment is
1:01:38highly unlikely to remove the biggest
1:01:39barriers of operating this club, which
1:01:40is still a massive amount of debt
1:01:43>> Yeah.
1:01:43>> sitting on top of the overall asset.
1:01:45>> Exactly.
1:01:46>> And the requirement to build a stadium.
1:01:48So, the combination it looks to me like
1:01:50if you take you've got a a massive debt
1:01:53pile, let's just call it a billion for
1:01:55sake of argument. You've then got the
1:01:57likely equity funding of a new stadium
1:02:00being another billion
1:02:02on top of that.
1:02:03>> Yeah.
1:02:04>> More or less.
1:02:04>> Well, yeah. There's again, so I think I
1:02:07think let's start with so minority
1:02:09>> is one option.
1:02:10>> Minority is one option, but
1:02:11realistically not.
1:02:12>> Yeah.
1:02:13>> Cuz to your point, we haven't actually
1:02:14mentioned this, that that interest cost
1:02:16is going to be close to 50 million
1:02:17pounds this year in cash, I think. Put
1:02:20that in terms of player wages, that's
1:02:22the spine of your team. That's three
1:02:23players on 275 grand a week. Um so, that
1:02:27just for real context
1:02:29that is what this debt is costing the
1:02:31club right now.
1:02:32>> That's incredible, isn't it? So, when
1:02:33you look at what made Liverpool suddenly
1:02:35a title-winning, Champions
1:02:36League-winning team
1:02:37>> Yeah.
1:02:37>> you're saying they signed Alisson and
1:02:38Van Dijk, we're just going two there.
1:02:40United could sign three 75, 300 grand a
1:02:44week players
1:02:45>> Yeah.
1:02:45>> for what they are paying currently in
1:02:47interest.
1:02:49>> Correct.
1:02:50>> Wow.
1:02:51>> Yeah.
1:02:51>> That's what I mean. Like when you break
1:02:52it when you actually break it down, you
1:02:54know, these big numbers can
1:02:56>> Yeah.
1:02:56>> it can get lost. seem important, but the
1:02:58importance of it does get lost. When you
1:02:59narrow that down into what it means for
1:03:00the club
1:03:01and the fans, of course.
1:03:03>> Yeah.
1:03:04>> That's stark.
1:03:05>> Exactly. And so, minority, probably not.
1:03:08So, does a full buyout happen? Right,
1:03:11and so who could be the types of
1:03:13investors that or individuals that would
1:03:16be looking to buy the club outright.
1:03:18You're looking at ultra high net worth
1:03:19individuals or private equity just given
1:03:22the the the the sums involved. Um
1:03:26and I think, you know,
1:03:27an important thing here is you know,
1:03:28we'll come back to to what we said
1:03:30earlier.
1:03:31The market usually gives you a signal as
1:03:34to what it's thinking, right? So,
1:03:37rewind back to when the Sir Jim
1:03:38Ratcliffe deal
1:03:40uh completed, there were really only two
1:03:42parties that were were talked about.
1:03:45Um
1:03:46the financial situation as we've just
1:03:48covered is pretty much exactly the same
1:03:51as what
1:03:52any investment case was at that point in
1:03:54time.
1:03:55So, you you got to ask yourself the
1:03:57question,
1:03:58how likely is it that
1:04:01people will come to the table now? And
1:04:02you know, one if you're looking at the
1:04:04ultra high net worth individual market,
1:04:05one of the individuals that was
1:04:07speculated,
1:04:08um Jeff Bezos, you know,
1:04:11he now owns a good chunk of Liverpool
1:04:13and potentially, you know, will be will
1:04:15be part of the consortium to take it
1:04:16outright. So, you know,
1:04:18there's big IPOs going on at the moment
1:04:20where new wealth will be created and so
1:04:22maybe there are there are some more
1:04:23individuals, but like you're looking at
1:04:24a really small sample set of um
1:04:28prospective buyers that have the
1:04:31financial firepower to actually even do
1:04:33this deal. You then think about, okay,
1:04:36well, whatever what other evidence do we
1:04:38have that something could change this
1:04:40current position? And I think that's
1:04:42where the refinancing that we we
1:04:44mentioned earlier um of some of that
1:04:46Glazer debt gives us some clues as to at
1:04:50least for one of the potential outcomes
1:04:52in the sense of what might INEOS be
1:04:54planning to do at the very least,
1:04:56whether they can do it is another thing.
1:04:58Is there another option there? So, the
1:04:59refinancing of the Glazer debt
1:05:01has opened a door or has to you shown an
1:05:04opportunity for [snorts] INEOS to take
1:05:07control of the club from 2029. So, yeah,
1:05:10there there is there is a route in which
1:05:12they can structure a deal
1:05:14to be able to solve the debt issue,
1:05:17right? And
1:05:19>> When you say solve the debt issue, what
1:05:20do you mean?
1:05:21>> It means removing it from the balance
1:05:24sheet of Manchester United.
1:05:26>> And transferring it to the balance sheet
1:05:28of Ineos.
1:05:29>> Exactly.
1:05:29>> Where where presumably they pay a lower
1:05:31interest rate as well because the
1:05:32collateral the collateral will be
1:05:33regarded as being better.
1:05:34>> Yeah, and look there will be a bunch of
1:05:36people in the comments, I'm sure,
1:05:38talking about the financial strength of
1:05:40if Ineos and so that is clearly a part
1:05:42of this equation, but
1:05:44>> It's got 10 billion pounds of debt of
1:05:45his own at the moment, hasn't he?
1:05:46>> Exactly. And um you know, trading at a
1:05:49discount, um which is usually not a good
1:05:51signal about what the market thinks
1:05:52about that that debt. And so
1:05:55Look, okay, let's take a step back,
1:05:57right? So
1:05:59you've got a you've got to solve the the
1:06:01cash issue, you've got to solve the debt
1:06:03issue, and ultimately you've got to
1:06:06convince the Glazers that it's worth
1:06:10selling, right? So you need to be able
1:06:12to put together an offer that's going to
1:06:14meet their financial needs and meet the
1:06:17needs of the club. Things to remember
1:06:18here is that because there are such a
1:06:19small pool of potential investors, that
1:06:22is a really tricky thing to do all in
1:06:25one go.
1:06:26>> What would be the total amount of cash
1:06:28required
1:06:29in your mind, just off the top of your
1:06:31head,
1:06:31>> Yeah.
1:06:32>> to complete that conundrum?
1:06:34>> So if you wanted to clear the debt and
1:06:37completely remove the Glazers, you're
1:06:40looking at something in the region of
1:06:434.5 billion pounds.
1:06:45>> And that's for the Glazers stake. Does
1:06:47that that that does not include
1:06:48Ratcliffe's stake?
1:06:49>> No.
1:06:50>> Right. So that's the Glazers stake, not
1:06:52Ratcliffe's and not the remaining people
1:06:53on the US stock market.
1:06:54>> Uh it effectively
1:06:55>> It would include them as well.
1:06:57>> Yeah.
1:06:57>> Okay. So you end up with 75% of Man
1:07:00United debt free for 4.
1:07:03>> 5.
1:07:04>> 4.5 billion, which would value it
1:07:06overall at 6.
1:07:07>> Yeah.
1:07:08>> Right?
1:07:09What's not to like? Well, the answer is
1:07:11you've got to fill the stadium.
1:07:12>> Stadium. Yeah. Because that's that's
1:07:13ultimately, you know, in order to
1:07:15satisfy the valuation needs of all wants
1:07:20of the Glazers, you have to be able to
1:07:22show that there is a path to future
1:07:26revenue growth. Let's take it all the
1:07:28way back to the beginning about how
1:07:30Martin Edwards ran the club. He was
1:07:32doing exactly that. In In effect, he was
1:07:36you know, relatively low net transfer
1:07:38spend because of the academy
1:07:40infrastructure that was built. He was
1:07:42expanding the stadium um to increase the
1:07:45capacity and then show that really,
1:07:48really strong cash flow generation
1:07:50between the turn of the millennium and
1:07:522005.
1:07:53So, you've almost got to have that same
1:07:55scenario again to be able to
1:07:58you know, convince someone to be able to
1:07:59do it.
1:08:00>> So, should we talk about the stadium?
1:08:01Cuz I don't feel like we've properly
1:08:02spoken about that and why it's so
1:08:04important. Charlie and I discuss weekly
1:08:06um the importance now of infrastructure,
1:08:09stadium builds as the main opportunity
1:08:11to increase the value of an asset when
1:08:13it is trading, should we say at the
1:08:15levels of a Manchester United. We use
1:08:17Chelsea as a very good example of to
1:08:18explain that saying that when Boehly and
1:08:20Co. bought it for 2.5 + 1.75, so if
1:08:24you're going let's say 4.25 billion
1:08:27in 2022,
1:08:29the first thing they really needed to do
1:08:31to make this work was to plot the build
1:08:33of that stadium and do absolutely
1:08:35everything that they needed to find that
1:08:36land,
1:08:37deal with the problematic neighbors
1:08:40and get [clears throat] the diggers in.
1:08:41That was how they were going to increase
1:08:43the value. That hasn't happened. We're
1:08:45now five five years into that project.
1:08:48The stadium will not be built by the
1:08:49time the Well, should we say Clear Lake
1:08:53needs that deal if it's going to be in
1:08:54this fund to be recognized. So, you got
1:08:57a problem.
1:08:58If you're looking at Manchester United
1:09:00now, as we've said, the real value, the
1:09:02real opportunity for growth has to be in
1:09:04the stadium. But,
1:09:05stadiums are expensive to build. Shock
1:09:07horror, everyone. Wow. You know, who who
1:09:09thought who thought that?
1:09:09>> And have become a lot more so recently.
1:09:11>> And interest rates a lot more a lot
1:09:13higher as well.
1:09:14>> Spurs. They secured very good
1:09:17uh interest on interest rates on their
1:09:19loans. I mean, about 3% until 2050
1:09:22something. I mean, very good, right?
1:09:25A billion.
1:09:26Um was was the cost of the stadium.
1:09:29Manchester United for a 100,000 seat
1:09:31stadium in Manchester is being projected
1:09:33at a 2 billion cost.
1:09:35>> Yeah.
1:09:35>> Now, if you're looking to finance that
1:09:37stadium,
1:09:38you could normally, let's just say, you
1:09:40know, forget about Manchester United,
1:09:41you could get financing against it. I
1:09:44take debt out and service that debt like
1:09:46Spurs over 30 years.
1:09:49Uh the problem with that for Manchester
1:09:50United is that, as we know, they already
1:09:52have a billion in debt. So, if that was
1:09:54put on top of Manchester United Football
1:09:56Club, that debt would suddenly hit 2
1:09:58billion.
1:10:00Servicing 2 billion in debt as a
1:10:02football business trying to live within
1:10:04the means of new football regulation and
1:10:07just actually any sort of manageable
1:10:08business
1:10:10is
1:10:11I'm I'll say virtually impossible.
1:10:13>> Yeah.
1:10:13>> So, we have a situation now where the
1:10:16main lever to pull for Manchester United
1:10:18to grow is to build a stadium, but they
1:10:19can't actually build it as Manchester
1:10:21United. How are we going to do this?
1:10:24>> Right. So, let's look at the loan
1:10:26document. So, this is the um
1:10:28new refinanced debt uh leverage buyout
1:10:32debt that was refinanced in May. So, the
1:10:34425 million dollar um loan became a 550
1:10:39million dollar loan. So, that that 550
1:10:42million dollars was used to pay off the
1:10:44425 earlier this uh earlier this year.
1:10:46And so, United had a bit of cash left
1:10:48over, which went to purchase the land.
1:10:50And it was actually, all things
1:10:52considered, whilst a high interest rate,
1:10:54it was pretty good and I think below
1:10:56where a lot of people were expecting it
1:10:58to be. And I think a big part of that
1:11:00was because that excess cash was going
1:11:02to be used to
1:11:04build an asset, effect or start building
1:11:06an asset to
1:11:08um effectively drive this incremental
1:11:09growth.
1:11:10>> 63 million, I think was the cost of the
1:11:11land. Is that right?
1:11:12>> Exactly. Yeah.
1:11:12>> Within that document, there's a few key
1:11:15things. The the the first one being
1:11:18um
1:11:19in June 2029,
1:11:22there is a clause which says that after
1:11:24that point, the debt
1:11:26can be repaid at par value.
1:11:30What that means is
1:11:32any interest that would be So, you see
1:11:34if you wanted to pay that off in 2029,
1:11:38typically you'd have to pay the interest
1:11:40that
1:11:41would have been due after that point in
1:11:42time, but they're saying at par value,
1:11:44now you can just pay back the 550
1:11:46million dollars. That's point one. Point
1:11:48two is there is a change of control
1:11:50clause.
1:11:51And what this this means is if there is
1:11:55a change of control, i.e. there is a new
1:11:59majority shareholder of the club, you've
1:12:01got two options. If it is a new third
1:12:06party that comes in and takes in a
1:12:07majority,
1:12:09you will actually be forced to pay back
1:12:12all of the debt. So, that's not just the
1:12:14550 million dollar
1:12:16term loan, it's the other 225 million
1:12:19and the revolving credit facility. So,
1:12:21>> When you say you, who? The new
1:12:23The new investor?
1:12:24>> The new investor would have to would
1:12:25have to pay that off at point zero. So,
1:12:27you're effectively adding 800 million
1:12:30pound requirement
1:12:32onto
1:12:34whatever it cost to buy the equity. So,
1:12:37that's if there is a new third party,
1:12:38but if there is
1:12:40an existing party within
1:12:42the shareholders,
1:12:43>> A.K.A. Jim Ratcliffe.
1:12:44>> then you do not have to
1:12:48or you're not obliged to pay off that
1:12:50debt immediately.
1:12:52And that's a really important point
1:12:54because then it opens up the doors like,
1:12:57well, okay,
1:12:58I'm assuming INEOS and Sir Jim Ratcliffe
1:13:00will also know that you can't fund the
1:13:03stadium by having the leverage buyout
1:13:05debt
1:13:06on the club. So, is there a way in which
1:13:09they could utilize their own balance
1:13:10sheet and their own assets to
1:13:13effectively
1:13:14raise some debts,
1:13:17pay off or transfer that debt over to
1:13:19the INEOS balance sheet and use that
1:13:22refinance that to pay off the LBO debt.
1:13:24>> Okay. But in this situation, are we
1:13:26talking about Manchester United Football
1:13:27Club holding the debt, any debt facility
1:13:30for the stadium.
1:13:32>> So, no, this is just getting rid of the
1:13:34LBO debt. But what that does is you mean
1:13:36you've got a debt-free club.
1:13:37>> Right. At which point you can then raise
1:13:39debt for the new stadium. Yeah. But
1:13:41realistically, the stadium needs to
1:13:43start or will start getting built maybe
1:13:45not before this is likely to happen
1:13:48because my understanding was 2029
1:13:50was when
1:13:51that opportunity presented itself. Is
1:13:54that wrong?
1:13:54>> Which opportunity?
1:13:55>> For Ratcliffe to exercise.
1:13:57>> Yeah.
1:13:57>> Or getting this just explained.
1:13:58>> The delivery time of the stadium has
1:14:00been revised recently. So, it's not the
1:14:04I think 2031 or 2032 original date. It's
1:14:08kind of been softly pushed back to 2035.
1:14:10>> Right. Okay. Which would then make a
1:14:122029
1:14:13>> Right. Cuz it means not starting until
1:14:142030 if you think about a 5-year build.
1:14:17>> So, suddenly
1:14:19this whole discussion, Charlie, that you
1:14:20and I had last time of separate entity,
1:14:23ring-fenced, new equity injections to
1:14:25build a stadium, new investors, the
1:14:27problems that creates down the line
1:14:28because all the money that's generated
1:14:30in the stadium then is not necessarily
1:14:31going back into the club. It's going to
1:14:33fund uh the current investors of that
1:14:35new stadium, and therefore the club
1:14:36isn't actually benefiting from all of
1:14:37this, which if Charlie and I are sitting
1:14:39here going, "Hey, clubs need to grow by
1:14:40building new stadiums," and they don't
1:14:41see the money from it, it just doesn't
1:14:42work and doesn't make sense. What we're
1:14:44actually saying now is that this that
1:14:46situation, that scenario, can be removed
1:14:49if
1:14:51Ratcliffe and or someone else
1:14:53>> Yeah.
1:14:53>> in 2029
1:14:55can either clear the debt or in Sir
1:14:57Jim's case
1:14:58shift it onto the balance sheet of INEOS
1:15:00and be able to basically make Manchester
1:15:03United a debt-free entity, therefore
1:15:05capable of raising debt for a new
1:15:07stadium
1:15:08and beginning the project.
1:15:09>> Exactly. And I think the other thing
1:15:11that you you touched on there is, you
1:15:13know, how might this be structured? The
1:15:15third point around these loan documents
1:15:17is there is a specific term term used
1:15:21called the new stadium group.
1:15:23Right. Which is effectively an entity
1:15:26through which you build the stadium,
1:15:27very similar to what Tottenham Hotspur
1:15:29did, and
1:15:31that then allows you, if you want to, to
1:15:32raise financing just purely within that
1:15:35vehicle or at the club. So it starts to
1:15:37give you a lot more options about how
1:15:39you go about this.
1:15:40>> But as Charlie said, and I really want
1:15:42to just re-emphasize what he said, the
1:15:44challenge there is if that separate
1:15:47vehicle ends up with a very high amount
1:15:49of financing on it.
1:15:50>> Yeah.
1:15:51>> And the servicing requirements of that
1:15:53debt are very very high. Then the entire
1:15:56point of building it in the first place,
1:15:58which is to increase the revenue
1:15:59available to the football club and the
1:16:00net
1:16:01>> revenue available to the football club
1:16:02rather disappears cuz it's being spent
1:16:03on interest and ultimately repayment. So
1:16:06it'll be a long long time under that
1:16:07under those under that It won't be 5 to
1:16:1010 years like Spurs and Arsenal. It's
1:16:11going to be 20 30 years before United
1:16:14would then feel the full benefit of
1:16:15that. So it's it's not a get out of jail
1:16:17free card, is it?
1:16:18>> No, not at all. And I think this is
1:16:20where the the mix of funding
1:16:23really starts to matter, right? So yes,
1:16:26debt is one option and in the loan docu-
1:16:29in the
1:16:30refinancing document
1:16:33we actually effectively got a soft
1:16:35indication of what private investors
1:16:39would
1:16:40willing to lend to the club. Roughly, if
1:16:43it's for stadium purposes, five times
1:16:47their EBITDA. So we come back to that
1:16:48number that you mentioned before, around
1:16:49200 million for our numbers, you know,
1:16:52five times that, that's a billion.
1:16:55So you're getting some of the way there.
1:16:57It's then what else? Another important
1:16:59thing here to point out is that 2
1:17:00billion number. As far as I can tell,
1:17:02it's based on the same cost per seat
1:17:04assumption as the Tottenham Hotspur
1:17:05stadium.
1:17:06>> Interesting.
1:17:06>> And so there has been significant
1:17:08inflation since then.
1:17:09>> Very very significant.
1:17:10>> And so I would pro- I mean, the analysis
1:17:13that I I've done is
1:17:15I would probably put the figure at
1:17:17closer to 3 billion pounds rather than 2
1:17:19billion pounds.
1:17:20>> Ooh.
1:17:21And how much
1:17:22just a quick one on this one because I I
1:17:24haven't had a look at the the master
1:17:25plan. Other than the stadium itself,
1:17:28what sort of extra-mural development is
1:17:29there which could be used to help sort
1:17:32of with with the financing? Is there a
1:17:33big hotel? Is there, you know, that kind
1:17:35of stuff?
1:17:35>> So, effectively, it appears that it's
1:17:38going to be some form of stadium
1:17:39complex, and there's going to be an
1:17:40entire regeneration of the area. And so,
1:17:43United own a lot of land within that
1:17:44area. And so, you know,
1:17:47it's the club have been made it very
1:17:49clear, and so have the local government,
1:17:51that the club is responsible for funding
1:17:54specifically the stadium element, and
1:17:57then the local government, there's going
1:17:58to be a requirement on them to do
1:18:00everything around it. So, the train
1:18:01station, the office the office blocks,
1:18:04etc. So, that that's one really, really
1:18:06important distinction, but that's still
1:18:09a 3 billion cost, and potentially one to
1:18:12assume EBITDA grows by that point in
1:18:14time.
1:18:15>> Ratcliffe tried to access public
1:18:16funding, didn't he?
1:18:17>> Well, he certainly tried to put some
1:18:18pressure on that on that situation. Um,
1:18:20and, you know, central to that at the
1:18:22time was actually Andy Burnham, who was
1:18:24who was the mayor of Manchester, who's
1:18:25now the prime minister. I think the
1:18:26situation that Burnham's got himself
1:18:28into right now would make that really,
1:18:29really difficult for him to to to push
1:18:31forward.
1:18:32Um,
1:18:33>> Okay, I've got one, Jamie. What happens
1:18:35if Manchester United get relegated?
1:18:37>> Ah.
1:18:39Well, I mean,
1:18:41the [laughter]
1:18:42where do you start with that question?
1:18:44Uh, you know, the the the pressure that
1:18:46would come from the fans would go to
1:18:49another level if you thought that was
1:18:51possible. And
1:18:53yeah, if you were watching the game
1:18:54[laughter]
1:18:54last night, you know, you've got a
1:18:57scenario where, you know, there's green
1:18:58and gold um balloons being thrown onto
1:19:00the pitch, tennis balls being thrown
1:19:01onto the pitch. We've had you know, in
1:19:03the past, fans um effectively cancel
1:19:07games. There was a game during COVID
1:19:08against Liverpool that was cancelled.
1:19:10>> point. I forgot about that.
1:19:11>> Yeah, so
1:19:12just to kind of give you an indication
1:19:14of what already has happened. So, that
1:19:15that'll be point one.
1:19:17Point two uh
1:19:19is just the financial health of the
1:19:20club, right? You're immediately taking
1:19:22off
1:19:24from 750 million um
1:19:27pounds today, your or this season,
1:19:31you're probably going to go down to at
1:19:32least 500 million. Right? Because you
1:19:35won't have any Champions League
1:19:36football. rest.
1:19:37>> Yeah, so this is this is that's just no
1:19:39champions no Champions League football,
1:19:42no Premier League well, you get the
1:19:43parachute payment rather than the
1:19:46normal
1:19:46>> 50 million rather than 120 million.
1:19:49>> Yeah, and yeah, there is one clause in
1:19:51the Adidas deal which we do know about
1:19:54that's public information which says
1:19:56there
1:19:57this season 90 million pound a year deal
1:20:00gets halved.
1:20:01>> Yeah.
1:20:01>> And they can also then start to they can
1:20:03if they want to serve notice.
1:20:06So you know, you're into a and this is
1:20:07before you even take into account other
1:20:09sponsorship deals, what happens with
1:20:11player contracts? Do they have
1:20:12relegation clauses in the like
1:20:13>> The reason I ask it it seems to many
1:20:15probably silly. Charlie and I asked the
1:20:16same thing of Spurs in February last
1:20:18year. We got lambasted for it. We got
1:20:19said, "Oh, you're clickbaiting." All of
1:20:21this.
1:20:21We generally were looking at a club fine
1:20:23in February and you know, we're in
1:20:25November now.
1:20:26But with the strength of the league at
1:20:28the moment, with the quality of football
1:20:29from top to bottom, with the
1:20:31performances Manchester United been
1:20:32putting in and with a squad like this as
1:20:34well where you know, just a change of
1:20:35manager I don't think it's a I mentioned
1:20:36the thing about the back four literally
1:20:37being the same for Brentford. There is
1:20:39there is a serious serious question mark
1:20:41over
1:20:42the quality of that playing group
1:20:44particularly in in defense. So
1:20:47I am asking it in a very serious manner
1:20:50because I don't think it is ridiculous
1:20:52now to look at these big clubs
1:20:54considering Manchester United finished
1:20:5515th two years ago
1:20:58to genuinely say, "Well, we're
1:21:00approaching this from you know, worst
1:21:01case scenarios downside scenarios." But
1:21:03you know,
1:21:04>> Yeah.
1:21:05>> This isn't this isn't a crazy question
1:21:06to ask.
1:21:07>> No, [clears throat] and as you can see
1:21:08like I actually I've done
1:21:11looked at the numbers which is how
1:21:12seriously I'm taking it and I wrote an
1:21:14article this weekend
1:21:16about it for for for you know, United We
1:21:18Stand that
1:21:19the fan scene. Um it's a very serious
1:21:22threat. Now, is there some solace?
1:21:26If I put my optimist hat on, potentially
1:21:28because one of the biggest stumbling
1:21:30blocks throughout all of this has been
1:21:33what price are the Glazers
1:21:35>> willing to accept?
1:21:35>> willing to accept.
1:21:36>> Yeah, that's it. That's been the
1:21:37elephant in the room throughout this
1:21:38latter part of this conversation, isn't
1:21:40it?
1:21:41>> And, you know, look, if you're if
1:21:43Manchester United get relegated, I just
1:21:45do not see a world in which they can
1:21:47hold out for the six to seven times
1:21:51revenue that, you know, they did for the
1:21:54Sir Jim Ratcliffe deal. You know, six
1:21:56and a half times equity is what
1:21:58Ratcliffe paid.
1:22:00You know, Championship
1:22:02valuations, even at the really high end,
1:22:06are three to four times at the very max,
1:22:09and those are probably pushing it. Maybe
1:22:11United can still charge a premium, but
1:22:13you're walking into
1:22:14a real situation.
1:22:16>> your revenues have gone out at 500.
1:22:18>> Yeah.
1:22:18>> Right? So so even if you say 4x, then
1:22:21you're at 2 billion.
1:22:22>> Yeah.
1:22:22>> Now, obviously we're in a freakish
1:22:23situation cuz you wouldn't be able to
1:22:25sort of compare Man United being for
1:22:27sale in the Championship with any other
1:22:28club that's ever been for sale in the
1:22:29Championship. But, um,
1:22:32at 2 billion,
1:22:34are there going to be the people out
1:22:35there who go, "Do you know what? This is
1:22:37this is a great moment. This is an
1:22:38opportunity"?
1:22:39>> Yeah. I think Jamie touched on something
1:22:41I won't go into cuz it'll bore people,
1:22:42but I think there's a really interesting
1:22:43point. Uh, there are a few very big IPOs
1:22:46that are likely to happen in the We are
1:22:48about to have a lot of very rich people,
1:22:51if these go through, running around and
1:22:53with sports assets being, you know, from
1:22:54a business perspective, now the favorite
1:22:56line is sport is the hedge against AI.
1:22:59This is an industry that a lot of people
1:23:01are looking at who wouldn't have done 15
1:23:03years ago.
1:23:04>> Totally.
1:23:04>> So,
1:23:05if we're making more billionaires
1:23:07capable of transacting at this level,
1:23:09would a club sitting in the Championship
1:23:11knowing that realistically you could get
1:23:12it for a what would be an excellent
1:23:14price
1:23:15and an opportunity to go and build on
1:23:16top of it being an opportunity they'd
1:23:18explore, I think so. Finally, Jamie, I I
1:23:20just want to I want to bring I I kind of
1:23:21want to bring the fan into it and just
1:23:24asking you from a fan's perspective,
1:23:26like where how do you view this now?
1:23:30Because there's so much toxicity around
1:23:32the club today, as we're recording this.
1:23:35Um, you know, yes, there was a very good
1:23:36win against Roma in midweek, but it was
1:23:38still
1:23:392-0 down.
1:23:40>> Yeah.
1:23:41>> You know, making it just horrendously
1:23:43difficult, I would imagine, for a fan to
1:23:44watch. The Premier League form has been
1:23:47abysmal. And the fact that I even just
1:23:48asked that question to you. So just from
1:23:50you know from a fan's perspective, how
1:23:52are you viewing all of this?
1:23:53>> The best thing I can say here is that
1:23:55and there are more times served United
1:23:57fans that will probably empathize with
1:23:59this than I than I ever could but
1:24:02in the last few years there have been
1:24:04periods of time when I've been
1:24:06walking down Sir Matt Busby Way
1:24:09going to the games not expecting us to
1:24:11win and actually not not
1:24:13worse than that expecting us to lose.
1:24:16And that is an alien feeling and I know
1:24:18>> Alien feeling for you for United fans.
1:24:20>> Yeah.
1:24:20>> All all all all too common for for for
1:24:23for many of the rest of us but I do
1:24:24understand.
1:24:25>> Yeah totally and so like this is
1:24:26completely like you know we are getting
1:24:28our dose of reality and
1:24:31I think it's it's it's
1:24:33it's just a really really strange place
1:24:35to be in and I think the biggest
1:24:36frustration on all of this is
1:24:39it never had to be this way.
1:24:41>> But once they were floated on the stock
1:24:43market all bets were off.
1:24:45>> Yeah.
1:24:45>> One last um question for the two of you.
1:24:47What price the double? What price
1:24:50United being in the bottom three and
1:24:52being saved by a Man City points
1:24:54deduction that plunges them into the
1:24:55bottom three?
1:24:56>> Oh [laughter] no.
1:24:58That's so true isn't it? We need We need
1:25:00Man U to finish 19th not 18th.
1:25:02>> So when you say we need Charlie you're
1:25:03presupposing that that the rest of us
1:25:05all want Man U to go down.
1:25:06>> I was looking at you.
1:25:07>> [laughter]
1:25:08>> I was looking at you. Come on.
1:25:08>> I'm fine.
1:25:09>> It'll be two it'll be two but yes you
1:25:10are right that if they finished
1:25:12>> That is the irony here. So the the
1:25:13actual bar to get relegated has just got
1:25:16lower. So it's not the Yeah it's it's or
1:25:18yeah could do. It's not the 35 to 40
1:25:21points that you would typically see.
1:25:22It's I actually haven't even looked at
1:25:24what it is
1:25:25in terms of the average points in 19
1:25:26>> Well we Well we think actually Charlie
1:25:28and I both think it's going to be very
1:25:29high this season because the teams who
1:25:31have come up have spent big and are very
1:25:33competitive.
1:25:34>> Commentary nine points was it? Ipswich
1:25:3611 Hull 11.
1:25:38>> So you know
1:25:38>> And I think there's a statistic no team
1:25:40has gone down who's come up with that
1:25:41many points at this stage of the season.
1:25:44So then we were saying you know if
1:25:45you're
1:25:46I'm going to say legacy Premier League
1:25:48if you're
1:25:48>> Yeah.
1:25:49the kind of palaces and Newcastles
1:25:52Sunderland bottom of the table at the
1:25:54moment Nottingham Forest and you know,
1:25:55it's I think that we think the
1:25:57likelihood is that it's going to be
1:25:58these teams that have been in and around
1:25:59the league for a few years rather than
1:26:01the teams that have come up.
1:26:02>> I mean
1:26:03I think we're
1:26:09probably thinking it's going to be 40
1:26:10points.
1:26:10>> Yeah, which it hasn't been for a while.
1:26:12>> Sunderland went down last year on 39.
1:26:13>> 39 so last season was more or less 40 to
1:26:15stay up.
1:26:16>> But because the promoted teams previous
1:26:18years have been so poor
1:26:20that has dropped to 30s and low 30s.
1:26:24So
1:26:26>> I mean look if you know, if if if there
1:26:29was
1:26:30Man City [laughter] getting a points
1:26:31deduction to save Man United. No, but I
1:26:34and I think it's when fans are watching
1:26:36the team, I think it's like there is
1:26:37this there is this very real it has
1:26:40seeped into I think the thinking which
1:26:42is like this is
1:26:43>> What's he what's he doing?
1:26:44>> against Bournemouth they look like a
1:26:45relegation outfit. If if that had been
1:26:47Hull City playing that way against
1:26:48Bournemouth you go Hull are doomed.
1:26:50>> Yeah.
1:26:52>> So
1:26:53on that note thank you so much for
1:26:55coming in Jamie.
1:26:56>> It's been a pleasure.
1:26:57>> Absolutely amazing to to kind of get
1:26:59that extra little bit of intellect into
1:27:01the room. But seriously I think um
1:27:03you know, this is a huge one of the
1:27:05biggest business stories
1:27:08with one of the biggest sports assets in
1:27:10the world businesses in the world.
1:27:13>> For sure.
1:27:14>> And I think it's really important that
1:27:15we understand what's going on and why
1:27:18everything is as it is today. So
1:27:20>> And from now on when there's a big
1:27:21football club
1:27:23finance story the cry will go out bring
1:27:24out the badger. Bring out the badger.
1:27:25Bring out the badger.
1:27:27>> [laughter]
1:27:27>> Bring out the badger. I like that. That
1:27:29we can title we can have that title
1:27:30somewhere.
1:27:31We're bringing out the badger. Jamie
1:27:33thank you so much for joining us.
1:27:34>> No Charlie
1:27:35both of you it's been a pleasure. Thank
1:27:37you very much.
1:27:37>> I'm just going to have a couple of
1:27:38beers.
1:27:39>> [laughter]
1:27:40>> Just a couple.
1:27:51>> Hey.

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