Generic clubs in financial crisis Thread

[Svlad Cjelli]

That's a pretty staggering level of debt for Bolton but I think most of it is owed to the owner who one presumes is reasonably comfortable with it and isn't going to start calling it in (in a similar way as we owe Madejski and Chelsea owe Abramovich).

To lose that amount of money in one year, a third of their debt, seems odd too.

Always assuming that the owner (and Madejski, Abramovich etc) don't die, get seriously ill, get put in prison, get extradited and so on.....

You have to wonder why people put money into clubs (or allow it to build up as debt) but don't actually give it to the club (as they'd need to in Germany for the club to be allowed to spend it as "income"). If you can spare it, just hand it over - if you can't, dont - but whatever you do don't leave it hanging over the club as a liability.

[Svlad Cjelli]

BTW - they're not as good as being there, but if anyone's interested can I recommend these two presentations from Dr John Beech, the foremost academic expert on football finance?

Just how broken is football's financial model?
&
How to spot the financial crisis before it breaks

[swansea jack]

That's a pretty staggering level of debt for Bolton but I think most of it is owed to the owner who one presumes is reasonably comfortable with it and isn't going to start calling it in (in a similar way as we owe Madejski and Chelsea owe Abramovich).

To lose that amount of money in one year, a third of their debt, seems odd too.

Always assuming that the owner (and Madejski, Abramovich etc) don't die, get seriously ill, get put in prison, get extradited and so on.....

You have to wonder why people put money into clubs (or allow it to build up as debt) but don't actually give it to the club (as they'd need to in Germany for the club to be allowed to spend it as "income"). If you can spare it, just hand it over - if you can't, dont - but whatever you do don't leave it hanging over the club as a liability.

Abramovich has already converted it into equity but, yes, ze Germans are reaping the rewards of biting the bullet first. Will be interesting when ze Kaiser eventually nudges out Blatter...

The Bolton loss initially seems odd but Elmander is on a free next summer and looks like Cahill is being touted already.

[Hoop Blah]

That's a pretty staggering level of debt for Bolton but I think most of it is owed to the owner who one presumes is reasonably comfortable with it and isn't going to start calling it in (in a similar way as we owe Madejski and Chelsea owe Abramovich).

To lose that amount of money in one year, a third of their debt, seems odd too.

Always assuming that the owner (and Madejski, Abramovich etc) don't die, get seriously ill, get put in prison, get extradited and so on.....

You have to wonder why people put money into clubs (or allow it to build up as debt) but don't actually give it to the club (as they'd need to in Germany for the club to be allowed to spend it as "income"). If you can spare it, just hand it over - if you can't, dont - but whatever you do don't leave it hanging over the club as a liability.

I presume it's an accounting issue for either the individual or the club. In Bolton's case it looks like the money is all owed to the benefactors companies and so it might complicate things a little, or I guess simplify them perhpas.

It's not money owed to the banks or the taxman though so I guess it doesn't really matter in the grand scheme of things.

[Svlad Cjelli]

That's a pretty staggering level of debt for Bolton but I think most of it is owed to the owner who one presumes is reasonably comfortable with it and isn't going to start calling it in (in a similar way as we owe Madejski and Chelsea owe Abramovich).

To lose that amount of money in one year, a third of their debt, seems odd too.

Always assuming that the owner (and Madejski, Abramovich etc) don't die, get seriously ill, get put in prison, get extradited and so on.....

You have to wonder why people put money into clubs (or allow it to build up as debt) but don't actually give it to the club (as they'd need to in Germany for the club to be allowed to spend it as "income"). If you can spare it, just hand it over - if you can't, dont - but whatever you do don't leave it hanging over the club as a liability.

I presume it's an accounting issue for either the individual or the club. In Bolton's case it looks like the money is all owed to the benefactors companies and so it might complicate things a little, or I guess simplify them perhpas.

It's not money owed to the banks or the taxman though so I guess it doesn't really matter in the grand scheme of things.

Only in the short-term, barring the above .....

[Hoop Blah]

Donating would obviously appear to give the club a more secure future and financial health, I'm not disagreeing with that but the headline of Bolton being £100m in debt is a little misleading.

It's not ideal of course, but not quite the horror story it first appears. Who knows what the guys will says, he might just be leaving his whole fortune to the club!

[rabidbee]

I thought that directors weren't simply allowed to gift money to their businesses but had to loan it?

[roadrunner]

Bolton's results came out this week - they lost £34.5M last year.

According to SSN last night their total debt now stands at £93 million

Ooh.. well Their model has been signing bosman's on expensive wages, right?
Some people have lauded that approach.

Um..

Johan Elmander £8.2m
Nicolas Anelka £8.0m
Matthew Taylor £5.2m
Gary Cahill £5.0m
Fabrice Muamba £5.0m
El Hadji Diouf £4.0m

[Svlad Cjelli]

I thought that directors weren't simply allowed to gift money to their businesses but had to loan it?

Don't think so. But in any case they can always convert it to equity, so they increase their shareholding in return for the money. Abramovich as done that at Chesea (but not to all of what he has put in).

[Super_horns]

http://www.watfordobserver.co.uk/sport/ ... on=success

We're still in the S**T

Sarries leaving might not help but we are due to get high earners off the wage bill next summer..

[Nick Shorey my Lord!]

The Glazers pay off (really?) £200m of debt leaving the club with a smaller bite size debt of £500m.

[TheMaraudingDog]

Looks like they've sold a stake in the club

[roadrunner]

Looks like they've sold a stake in the club

Sky Sports News understands that the Glazers will use their own money, and not the club's, to settle the debt, which carries an annual interest rate of more than 16%.

Joel Glazer, the co-chairman of Red Football, has signed the document which has been sent to the holders of the loan, who are mainly hedge funds.

The document says Red Football will "pre-pay 100% of the outstanding loan on November 22".

United's debt is estimated at more than £700m so this repayment would mean the debt is solely the bond agreed earlier this year worth more than £500m.

A spokesman for the Glazers has declined to comment.

The move may help to reassure United fans who have been concerned about the debt burden on the club after chief executive David Gill last month insisted supporters should not be unduly worried by the figures.

Gill said: "I can't speak for any other club, but the United fans should not be concerned.

"We have a long-term financing structure in place, excellent revenues that are growing, we are controlling our costs (yet the debt is increasing) - total wages are 46% of turnover - and we can afford the interest on our long-term finance.

"In our opinion if something changed in the ownership this club will survive and continue - it is covering the financing cost more than adequately.

"We still have cash to invest in players and to give good contracts to players and we are comfortable with the business model."

[Bandini]

Looks like they've sold a stake in the club

Sky Sports News understands that the Glazers will use their own money, and not the club's, to settle the debt, which carries an annual interest rate of more than 16%.

Which is entirely consistent with what TMD wrote.

[roadrunner]

Looks like they've sold a stake in the club

Sky Sports News understands that the Glazers will use their own money, and not the club's, to settle the debt, which carries an annual interest rate of more than 16%.

Which is entirely consistent with what TMD wrote.

I apologise if I've misunderstood, but TMD allured to the Glaziers selling some of the club to raise the money but the above suggests they've used their own money. It doesn't say they sold their shares in the club.

[Bandini]

If they received money for the shares, it would be their money, not the club's money. The shares are assets owned by the Glaziers (either directly or through intermediary companies), not the club.

[PieEater]

Alternatively they could have got a cheaper loan that charges less than 16% interest and the overall debt is the same.

The fact they haven't commented on where the money is from makes me suspect that is the case, if they really were reducing the overall debt you'd think they want some PR for doing it, and they don't have a spare £200m without selling assets (as MD says)

[TFF]

Why would anybody want to buy Wednesday with £27m of debt when they can let it go into admin and pick the club up for a song, debt free?

[Tony Le Mesmer]

Why would anybody want to buy Wednesday with £27m of debt when they can let it go into admin and pick the club up for a song, debt free?

Exactly.

Which is why the 10 point penalty is such a joke. Its nothing.

Clubs should be helped to survive, but if it means wiping out most of your debt, that survial should be at a lower level.

[Svlad Cjelli]

Why would anybody want to buy Wednesday with £27m of debt when they can let it go into admin and pick the club up for a song, debt free?

Exactly.

Which is why the 10 point penalty is such a joke. Its nothing.

Clubs should be helped to survive, but if it means wiping out most of your debt, that survial should be at a lower level.

Yep. Under a proper regulatory regime - with on-going checks on debt - clubs should never go into administration so it should all be academic. But the way it works at the moment the FL & PL sit on their hands until it all comes crashing down - and then dump a penalty onto the clubs concerned, just as the time they most need help.

If the 10 point penalty was a deterrent we'd hardly ever see it imposed.