OFFISHAL CONFRIMATION of the CONFIMRED

[Royal Rother]

Dai put in £90m+ into the club, but it was given in the form of a loan rather than just pumping in money.

For simplicitity let's just say that Dai "borrowed" the money. The debt remains owed. Hence why the sale process was both protracted and complex. Both the ground and training complex are valuable tangible assets.

For additional simplicity / to avoid potential for confusion, if Dai borrowed the money, he still owes it to whomever he borrowed it from.

Neither Couhig nor RFC owe that money to the lender - if there is one.

[Reading4eva]

Fair play to Dai then. What a thoroughly nice chap.

Its less of that and more than he has invested money so poorly that he has to accept a loss. Kind of art of business. Invest sensibly, grow and then sell on and its worth more than you paid whereas do what Dai did, go mad and make poor decisions and make a significant loss. And he gambled and he lost

[Sutekh]

Please can we HoF this, all this debt responsibility talk is making my head hurt.

[Franconian Royal]

needed to get in before someone shuts this down.

But are we basically saying that the 90mill is just a bubble that never bursts? been reading all of the comments made by the knowledgeable ones here, but still can't get my head around it.

[rabidbee]

Yes.

You own a company. You put in your own money. You hope one day your company will make a profit. When it does, you take back the money you put in. If it never makes enough profit, you never take back your money.

[Esteban]

needed to get in before someone shuts this down.

But are we basically saying that the 90mill is just a bubble that never bursts? been reading all of the comments made by the knowledgeable ones here, but still can't get my head around it.

Someone sent the this the other day, which helped me get my head around it. I'm taking his word for it, as I'm not an accountant!

At the moment, we don't know exactly how the deal was structured, as we have no sight of the accounts. We'll have to wait for them to be published to really get into it. This is how I see it working though:

Imagine Dai had put £90m in cash into a giant glass jar and gave it to the club. The money could have come from Dai's pocket, he could have borrowed it from somebody, or it could have been a combination of the two.

The club then spent that £90m cash, but instead of Dai asking for that £90m back in cash, he instead said to thw club he sees the value of the glass jar as minus £90m.

When Dai sold the club to Couhig, he sold the glass jar as part of the deal too. Dai chose to sell everyhing for £25m, so Couhig owns the club, the training ground, the stadium and this glass jar.

Dai has lost the £90m. If he did borrow any of that money, Dai still has to repay it. That responsibility is his alone and divorced from the club.

This is where it gets a bit complex...

When Couhig decides to sell, he can sell that glass jar with the club again. However, if he sells the club for £35m - a profit of £10m - he can reduce the value of the glass jar to minus £80m. From a tax point of view he would be reducing the value of the loan to the club and that £10m is therefore tax free.

It's in Couhig’s interest to keep the debt with the club for that reason, but it is just an amount on the club's accounts. Crucially, the responsibility for paying back the original debt was retained by Dai when he sold up.

All that being said, Couhig could take back the money at any point by selling off assets, etc, but he has said multiple times that's not his end game.

[PieEater]

So Couhigs gamble is that he can turn around this "distressed asset" of a club and make a profit and offset the tax on that profit by reducing the losses.

The problem is that the club will cost him £5m to £10m a year to run, I can't see him getting more that £40-£50m if he sells us in the championship, so if he doesn't get us there in 2 to 3 years it's going to cost him.

[Snowflake Royal]

So Couhigs gamble is that he can turn around this "distressed asset" of a club and make a profit and offset the tax on that profit by reducing the losses.

The problem is that the club will cost him £5m to £10m a year to run, I can't see him getting more that £40-£50m if he sells us in the championship, so if he doesn't get us there in 2 to 3 years it's going to cost him.

The club cost approx £50m when Dai bought us almost a decade ago. We now have a better training ground.

Couhig could plausibly sell for over £50m back in the Championship.

There's room to up our income and reduce our spending on 23/24 when we started the season with the likes of Ejaria, Yiadom, Holmes, McIntyre etc on Champ wages, plus Carroll, Bouzanis, NGW, then Button, Smith, Wing, Savage, Knibbs, Dean likely on decent L1 money.

This coming season we have basically no one on legacy contracts, and basically no previous regime failures hanging around not contributing but getting paid. With a decent chance of being able to make a big sale to offset the losses.

I don’t think it would take much, with a bit of care and ingenuity, to get under £5m loss next season and close to break even.

[Franconian Royal]

needed to get in before someone shuts this down.

But are we basically saying that the 90mill is just a bubble that never bursts? been reading all of the comments made by the knowledgeable ones here, but still can't get my head around it.

Someone sent the this the other day, which helped me get my head around it. I'm taking his word for it, as I'm not an accountant!

At the moment, we don't know exactly how the deal was structured, as we have no sight of the accounts. We'll have to wait for them to be published to really get into it. This is how I see it working though:

Imagine Dai had put £90m in cash into a giant glass jar and gave it to the club. The money could have come from Dai's pocket, he could have borrowed it from somebody, or it could have been a combination of the two.

The club then spent that £90m cash, but instead of Dai asking for that £90m back in cash, he instead said to thw club he sees the value of the glass jar as minus £90m.

When Dai sold the club to Couhig, he sold the glass jar as part of the deal too. Dai chose to sell everyhing for £25m, so Couhig owns the club, the training ground, the stadium and this glass jar.

Dai has lost the £90m. If he did borrow any of that money, Dai still has to repay it. That responsibility is his alone and divorced from the club.

This is where it gets a bit complex...

When Couhig decides to sell, he can sell that glass jar with the club again. However, if he sells the club for £35m - a profit of £10m - he can reduce the value of the glass jar to minus £80m. From a tax point of view he would be reducing the value of the loan to the club and that £10m is therefore tax free.

It's in Couhig’s interest to keep the debt with the club for that reason, but it is just an amount on the club's accounts. Crucially, the responsibility for paying back the original debt was retained by Dai when he sold up.

All that being said, Couhig could take back the money at any point by selling off assets, etc, but he has said multiple times that's not his end game.

thanks for this. still don't get it , but you've done a strong job trying to give the info.

[The Royal Forester]

It's going to take me longer to understand this "There is a debt, but there isn't" situation, than it took to sell the club. So, is the debt invisible or just hidden in plain sight?

[SpaghettiHoop]

I've assumed the £90m is owed to another company within the Dogwood/Redwood Group and not to any third party (Dai or someone else). The amount could be repaid or not according to what's most advantageous to the owners.

[rabidbee]

I've assumed the £90m is owed to another company within the Dogwood/Redwood Group and not to any third party (Dai or someone else). The amount could be repaid or not according to what's most advantageous to the owners.

It’s owed to the owners. It won’t be repaid until it doesn’t take money out of their own pockets to repay it, obviously.

[Snowflake Royal]

It's going to take me longer to understand this "There is a debt, but there isn't" situation, than it took to sell the club. So, is the debt invisible or just hidden in plain sight?

Basically, there is no debt, unless you're HMRC.

[Sutekh]

How big is this glass jar, presuming it must be a whopper to be able to hold this £90m? Does the £90m include the cost to purchase said glass jar or is that another debt in another glass jar? Do such glass jars need to be kept apart for tax purposes?

[The Royal Forester]

How big is this glass jar, presuming it must be a whopper to be able to hold this £90m? Does the £90m include the cost to purchase said glass jar or is that another debt in another glass jar? Do such glass jars need to be kept apart for tax purposes?

But there is no debt. the glass jar is empty! So, the £90 million must be on the shelf in the (huge) cupboard.

[Winston Biscuit]

is the glass jar kept in the trophy cabinet?

[SpaghettiHoop]

Surely you'd need more than one glass jar for £90m?

[Winston Biscuit]

I had a giant glass jar for collecting coins in 30 years ago and it stayed in the corner of the bedroom for years, when I finally went to tip it over to pour the money out and give it a count, the bottom of the jar just fell off. Came off quite neatly tbf. Just hope the club have considered this.

[Winston Biscuit]

I bought my first electric guitar and amp with the money in my jar. Just something else for those at the club to ponder on I guess

[Brogue]

don't believe what you see in the movies guys. a million pounds in £50 notes doesn't take up much room. its not inconceivable that there is a jar out there big enough to fit 90 mill in