Administration

[Pseud O'Nym]

Slightly off topic, but I've not seen any mention on this forum of BDO's report on footbal finance from last year http://static.bdo.uk.com/assets/documents/2013/08/BDO_football_report_2013_13_08_13.pdf contains some interesting insights into the insanity of some clubs' finances.

[SydenhamRoyal]

I don't believe the club either will, or is at risk, of going into administration, but I have heard that there is a risk, and this via someone very close to the Board. s.

I see what you did there

Yes that's right - I have said that I have been told, by someone close to the board, that there is a risk of going into administration, but that I don't believe there is a risk.

[multisync1830]

I don't believe the club either will, or is at risk, of going into administration, but I have heard that there is a risk, and this via someone very close to the Board. s.

I see what you did there

Yes that's right - I have said that I have been told, by someone close to the board, that there is a risk of going into administration, but that I don't believe there is a risk.

So what do you know that this apparent board member doesn't that concludes you to believe he's lying?

[Ian Royal]

Sydenham knows that the board member knows he posts on HNA

[Royal Rother]

And there IS a risk of course.

If we are not able to raise money from player sales and reduce the wage bill significantly (like massively) then it must be a very real possibility.

But I'm sure both of the above will be achieved.

[multisync1830]

And there IS a risk of course.

If we are not able to raise money from player sales and reduce the wage bill significantly (like massively) then it must be a very real possibility.

But I'm sure both of the above will be achieved.

It depends on how much fight there is left in the chairman.

[Royal Rother]

I wouldn't have thought he'd have much to do with it.

The accountants will say, this is the cash we need to bring in, and this is next year's wage bill.

And SJM will say "Nicky, Nigel, Nigel etc.... now make it so."

[3points]

Directors of a company have an obligation to file for insolvency if the company's outflows are forecast to be higher than their inflows, with no prospect of the imbalance being funded through its shareholders or its lenders. If BZ is saying he will stop funding the club and SJM cannot or will not put any more money in, then there are three options:
1) find a new owner who will fund the club (a la Leeds Utd) - this has been happening for some time now as we all know and is the preferable option; or
2) cut your costs dramatically so they match your inflows (which is clearly the process that has started and expect to see more back room and administrative staff being made redundant soon) and sell you valuable assets; or if these fail
3) file for administration / liquidation. However, football administrations are slightly different than those of normal companies as all "football creditors" have to be paid in full (ie players wages, outstanding club transfer fees, etc). So even in administration the club couldn't just dump the contracts of its highly paid players

Without knowing the full extent of the ongoing losses it is difficult to determine how much of 2) will be required (or is actually possible) to stop 3) from happening

[PieEater]

You missed the 4th option which is what we have done previously....

Intentionally run the club at a loss to fund a more competitive squad but with the intention of selling players to cover the loss at the of the season and balance the books. (See Gylfi and Shane)

[Hoop Blah]

RR - quite simple. The club has signed a deed of assignment for the PL money, and there's a charge over the rest of the club's assets. The deed of assignment effectively moves the credit risk away from the football club onto the Premier League. So the risk of non-payment is virtually nil. You assess the risk on the entity that actually pays the money - happens all the time in the world of debt finance. The Vibrac security loan docs and deed of assignment are all registered at Companies House

Indeed.

Not £20m advanced and secured on £23m of future income.

Essentially it is though. We've (supposedly) taken out a loan to advance that income and Vibrac will charge us interest for doing so. The values involved aren't really relevant (I made those up) because once they've got the title against the guaranteed income there isn't a risk so it's not like taking a normal assest as security.

[Royal Lady]

Someone said on Twitter that the players hadn't been paid for 3 months, but I really can't believe that, or one of the players would have surely spoken out by now (though some of their performances might be explained if that were the case!)

[Cape Town Royal]

Slightly off topic, but I've not seen any mention on this forum of BDO's report on footbal finance from last year http://static.bdo.uk.com/assets/documents/2013/08/BDO_football_report_2013_13_08_13.pdf contains some interesting insights into the insanity of some clubs' finances.

I like the review of clubs interviewed asking about the state of their finances..

Scottish Premier league - No clubs reported that their club was in 'grave danger or at risk of going into Administration'.............. err Hearts!!

[Pepe the Horseman]

Someone said on Twitter that the players hadn't been paid for 3 months, but I really can't believe that, or one of the players would have surely spoken out by now (though some of their performances might be explained if that were the case!)

Yep, that's bollocks.

[Royal Rother]

RR - quite simple. The club has signed a deed of assignment for the PL money, and there's a charge over the rest of the club's assets. The deed of assignment effectively moves the credit risk away from the football club onto the Premier League. So the risk of non-payment is virtually nil. You assess the risk on the entity that actually pays the money - happens all the time in the world of debt finance. The Vibrac security loan docs and deed of assignment are all registered at Companies House

Indeed.

Not £20m advanced and secured on £23m of future income.

Essentially it is though. We've (supposedly) taken out a loan to advance that income and Vibrac will charge us interest for doing so. The values involved aren't really relevant (I made those up) because once they've got the title against the guaranteed income there isn't a risk so it's not like taking a normal assest as security.

I have literally no idea why you are being so obtuse.

3points clearly states that there is a charge on the rest of the club's assets, not just on the future income.

[maffff]

Salaries paid in full and on time.
Taxes paid in full and on time.

Madejski is still doing things the right way.

[ZacNaloen]

the only question is whether that money is being supplemented or we have just been skirting the bottom of the pot.

[andrew1957]

I just don't get the Administration issue kept being touted around. Unless SJM is so naïve that he let AZ return to Russia with the club's cheque book, I very much doubt the situation is as bleak as is being rumoured. It simply sounds like we are paying the likes of Pog and Drenthe far too much and the club are desperate to reign in the wage bill - no more and no less.

Not scotching the rumours is probably mostly to do with managing the fans expectations as if we get to August with any sort of squad and the club are not in Admin, then the fans will be relieved even if we have sold McCleary, Gunter, ALF et al to balance the books.

[melonhead]

I just don't get the Administration issue kept being touted around. Unless SJM is so naïve that he let AZ return to Russia with the club's cheque book, I very much doubt the situation is as bleak as is being rumoured. It simply sounds like we are paying the likes of Pog and Drenthe far too much and the club are desperate to reign in the wage bill - no more and no less.

Not scotching the rumours is probably mostly to do with managing the fans expectations as if we get to August with any sort of squad and the club are not in Admin, then the fans will be relieved even if we have sold McCleary, Gunter, ALF et al to balance the books.

its his club, and his cheque book, he can pretty much do what he likes with both
tbh tbf

[Ian Royal]

Admin is a threat in a season or three if we can't significantly cut the wage budget. It's that point we'll start racking up debt with outside creditors, because of the big decrease in income that's coming. As long as we can pay our tax, we'll probably avoid it because our main creditors are Anton and SJM and they're unlikely to force us that way.

[West Stand Man]

I just don't get the Administration issue kept being touted around. Unless SJM is so naïve that he let AZ return to Russia with the club's cheque book, I very much doubt the situation is as bleak as is being rumoured. It simply sounds like we are paying the likes of Pog and Drenthe far too much and the club are desperate to reign in the wage bill - no more and no less.

Not scotching the rumours is probably mostly to do with managing the fans expectations as if we get to August with any sort of squad and the club are not in Admin, then the fans will be relieved even if we have sold McCleary, Gunter, ALF et al to balance the books.

its his club, and his cheque book, he can pretty much do what he likes with both
tbh tbf

Not according to UK law he can't.