One comment about Smalling I saw somewhere that I thought was a good point was that we’re all jumping up and down about him now but a few weeks ago we’d have all said “Who? No Arsene, we want a big name striker!”

I like the idea of a talented player who supposedly loves the club coming here (though if he loved the club that much would he go elsewhere in the first place?) but that’s heart ruling head. Business first – would he be ready to play in our team and make a contribution this season if he did come here?

A few seasons time and I wonder how you’ll enjoy playing in the lower leagues, yes going into administration will do that to you.

Well like Liverpool they’re in deep water financially. They have a two main debts that require re-financing, a £518,695,008 bank loan at 7.5% interest and a £175,479,008 Payment-in-Kind at 14.5% interest. The issue is that the terms state that the loan interest must be paid off before the PIK can be cleared. And at 14.5% the PIK is growing at £25+ million a year, with the total interest bill at £41.9 million for the current financial year. And on top of it all the current revenue barely pays off the interest bill. In fact they would have made a £30+ million loss last season had it not been for the sale of Ronaldo. A bond issue and the sale, then re-leasing of the the training facilities would free up enough money to pay off a significant portion of the loan debt and clear the PIK. Thus putting them on much more balanced footing, as the bonds would be at a reasonable rate of 8.5% or so. This £130 million figure is misleading. What it actually is is the resulting cash from said bond issue and sale of training grounds used pay off a significant portion of the PIK debt, which is in the Glazer’s name but [I]secured over the assets of the club[/I].

Liverpool similarly are in strife as they have three main debts, a £359,000,000 Bank loan at 10% interest, a second Bank loan of £58,200,000 at 5.5% and £2,400,000 at a Cayman Trust at 5%. The £359 million loan is largely a debt incurred as a result of the new stadium currently being planned. While the other two debts are more miscellaneous. Now the issue is that Liverpool currently does not produce enough revenue to cover its interest payments. Last financial year saw a £41 million loss, mainly due to interest payments totalling £36.5m, despite highest ever turnover at £161 million. As a result Liverpool have no money available for the purchasing of players, other than what can be raised through selling fringe members of the squad.

The main issue for both of the above clubs is the levels of interest, over huge debts.

Now compare with Arsenal’s debts. A long-term bond of £244,900,000 at a fixed rate of 5.3% (secured over the stadium), a £47,000,000 bank loan at Libor + 2-2.5% and £26,400,000 loan debentures at 2.5%. These are all manageable debts at low rates, that will be cleared in the next decade or so. Additionally the Highbury Square project generated £88,287,000 last year and there are still some 75-100 apartments still to be sold which should potentially generate £40-60 million. And the board had the foresight to create a fund which the banks are not allowed to access for interest or other payments, into which goes 70% of the value of transfer fees from sold players. And this fund is to be used for future transfer fees and contracts of new/current players.

All in all it makes me glad to support the club I do. Lucky to have a money-wise board and manager, and have a share-price and debt level that makes a takeover very unlikely. (Each share trades for £8,500 avg. price, thus £528,844,500 in equity and the £318,300,000 in debt would mean that any potential buyer would need to raise at least £100 million and then saddle the club with another £400 million in debt, which simply is not feasible for almost anyone out there as they would likely be unable to clear £700 million in debt in the foreseeable future.)

No one’s going to file for administration as long as they keep paying what they owe so it’s rather a moot point but I’ve never been one to shy away from technicalities to further an argument.

On the Smalling front (vague and obvious attempt to drag it back on topic) I think he could do well for us but I won’t be overly heart broken should he not sign. Sad though it is, my main reason for wanting him to sign is so Man Utd do a Ramsey again.

Sorry mate.. your reply: Worst. Flame. Ever.

Said by the guy who didn’t address a single point I made.

Worst.Response.Evar.

What is infuriating to United fans is that this debt that’s burdening the club and surely inhibiting transfer activity and such was put on the books solely to facilitate the takeover of the equity of the club by the Glazers. Everyone’s entitled to an opinion, but if you want to get into the morality of the respective debts in question, I think you could make a case that what the Glazers have done with the debt (namely, putting it on the club’s shoulders) smells foul. Particularly when you compare it to a situation where debt is taken out to pay for a stadium. The latter’s done for the explicit purpose of ensuring the continuity of the club and the livelihoods of all stakeholders. The former employment of debt was done for the explicit benefit of one group, the Glazers, and at the same time, putting the club and its stakeholders at far greater risk than it was facing a short time ago. Can United pay its bills or even buy players? Yes. Can they do it as easily as they could do it had they Arsenal’s finances? No. Interesting subject, nevertheless. As an Arsenal fan, I dearly hope someone like Kroenke doesn’t try to buy the club via the leveraged buyout.

To your most recent reply…

I agree with the first paragraph. If there is a ban on unstable clubs trading then I think it would need to be at least Europe-wide or it would cause as many problems as it solves I think. The leagues in different countries are in competition with one another to attract the best players to the leagues because all the clubs in that league make more money when people want to go and see a match with star players in it.

As for the second… actually agree with that too, I’m not sure that it was ever in doubt that we were better of than Man Utd, nor why people seem to think that is what I said.

Tom’s comment at 9.07am said he didn’t understand why Man U were allowed to buy when others were not.

My reply was supposed to indicate that Portsmouth were teetering on the edge of administration and were banned from transfer activity because they hadn’t paid for their last set of transfers and owed clubs money (actually I’m sure I read that they owed us money which doesn’t seem right, weren’t all their signings from us frees or loans?). For all their many faults, Manchester United have been paying the bills. God knows how, but they have and that’s all the FA & UEFA look at right now.

Seems simple to me.