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1 hour ago, Fox85 said:

I know that but if I was a billionaire I don't know whether I would need to borrow money. Why borrow money and pay back more when you already have billions.

 

That was my thinking 

 

 

Unsure you're aware how business works?

 

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1 hour ago, AjcW said:

Distinct lack of financial knowledge in this thread lol

 

The key is CASH FLOW.

 

We get a but tonne of money in the summer (120m)

But we need that money now 

So we've got that money now

And we'll pay it back in the summer

 

Thanks

what happened to the seventy odd million (after CT) that we made y/e dec 2017 ???

 

i would hope the reason for the loans is either tax advantages or caution re king power's position to just finance a large project without problems

Edited by st albans fox

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I think this is pretty normal business practice tbh, even with the mega rich companies. They always have in depth working relationships with banks and being loaned money. There are probably a number of benefits to doing this in the short-term and I imagine this is no different. It probably just accelerates our plans to start on the new training ground and stadium expansion, rather than spending the next few years having to build up the £100million cash ourselves. Easier to get it now and then pay it back in ongoing instalments over the next few seasons. As others have said, I would have thought King Power might have loaned us the cash, but perhaps better this way for tax reasons or maybe even a company that size would struggle to accumulate £100million in cash so quickly. Who knows, but certainly nothing to worry about I don't think. 

 

I do believe that our transfer budget will take a hit over the next few seasons though, but that would happen with or without this loan, as some sacrifices will have to be made to spend so much on the infrastructure. I think it will very much be a case of Puel being given the money he makes off of sales only. Maguire will go in the summer for this reason I believe and that is why we signed Soyuncu and Benkovic. 

Edited by STUHILL
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1 hour ago, Fox85 said:

I know that but if I was a billionaire I don't know whether I would need to borrow money. Why borrow money and pay back more when you already have billions.

 

That was my thinking 

 

 

They can probably use their own business money to make a profit elsewhere bigger than the interest on the loan.

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1 hour ago, Babylon said:

It's not all liquid cash for starters, his business is valued at billions. But in terms of cash in the bank it's probably far less than you can imagine. I thought they would perhaps loan the club the money themselves, via Kingpower, but we we just don't know the ins and outs to speculate. The court case against them could have been a factor in not wanting to go that route, who knows.

Thanks for clearing that up.

Just wasn't sure that's all.

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Nothing unusual..I give my wages to my wife..then she lends me money,then I then borrow money from her,which was mine in the first place...

It all boils down to the same thing........My fking  account is always empty...:bounce:

 

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2 hours ago, MattP said:

What rate are we borrowing at?

No idea, but in a globally low interest rate environment and presuming LCFC have a clean record, it must be low.

 

Also may be an element of a carry trade in this, given the pounds rapid decline since June 2016. I'm guessing the Baht has gained against the pound, so better for the owners to fund working capital in borrowed pounds.

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1 hour ago, Babylon said:

It's not all liquid cash for starters, his business is valued at billions. But in terms of cash in the bank it's probably far less than you can imagine. I thought they would perhaps loan the club the money themselves, via Kingpower, but we we just don't know the ins and outs to speculate. The court case against them could have been a factor in not wanting to go that route, who knows.

I dunno, I can imagine quite a little.

 

To paraphrase Han Solo.

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If we have to be more frugal going forward, that is positive as the should prevent our recruitment team from bank-rolling Sporting Lisbon in future years.

 

More importantly, knowing just how successful KP is as a company, I am certain they acting 100% in our best interests.  We have no need to worry about this. 

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Any estimated idea what the capacity will be when the stadium is expanded?

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2 minutes ago, Koke said:

Any estimated idea what the capacity will be when the stadium is expanded?

I vaugely remember 40k being quoted, with potential to expand more. 

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8 hours ago, AjcW said:

Distinct lack of financial knowledge in this thread lol

 

The key is CASH FLOW.

 

We get a but tonne of money in the summer (120m)

But we need that money now 

So we've got that money now

And we'll pay it back in the summer

 

Thanks

Correct.

 

But of course, we've banked the summer's money now. So come the summer we are relieved of the loan (assuming relegation is avoided) but find ourselves with no working capital again.

 

It's an interesting development. And a sign that the club, like Chelsea, cannot/and will not be bankrolled for ever (nor should it if we are ever to be sustainable)

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7 hours ago, davieG said:

They can probably use their own business money to make a profit elsewhere bigger than the interest on the loan.

This

 

its called ‘opportunity cost’.  You look at where investment money can do better elsewhere in your business portfolio 

 

You factor it into any business case you develop that requires investment and if it doesn’t beat your ave. investment rate of return you either don’t do it or find an alternative way of funding it (loan)

 

i guess King Power employs a bean counter somewhere who can work this kind of stuff out…

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10 minutes ago, Wolfox said:

This

 

its called ‘opportunity cost’.  You look at where investment money can do better elsewhere in your business portfolio 

 

You factor it into any business case you develop that requires investment and if it doesn’t beat your ave. investment rate of return you either don’t do it or find an alternative way of funding it (loan)

 

i guess King Power employs a bean counter somewhere who can work this kind of stuff out…

That's a great explanation. I never get business finance very well but I understood that. And your theory is entirely plausible. Thanks matey

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On ‎08‎/‎01‎/‎2019 at 00:51, urban.spaceman said:

 

Macquarie are indeed well known for getting the most out of a deal for their Clients. :unsure: This loan will be sliced up and sold to preferred Clients around the world given the fact that it is backed by the TV money. 

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On 08/01/2019 at 13:42, st albans fox said:

what happened to the seventy odd million (after CT) that we made y/e dec 2017 ???

 

i would hope the reason for the loans is either tax advantages or caution re king power's position to just finance a large project without problems

It’s easy. 

 

Construction companies are paid every 28 days. The TV money and Mahrez transfer money comes say every 3 months. Therefore they keep the existing money like you mention servicing the club whilst the loan services the regular 28 day payments.

 

Just to add, anyone worried about this - take a look at Watford’s finances. £59m debt in 2017 and since loaned another £60m!

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Leicester City take out bank loans to help finance £100m training ground and King Power stadium expansion projects - Leicestershire Live

An artist's impression of the training centre at Leicester City's new training ground An artist's impression of the training centre at Leicester City's new training ground(Image: Leicester City FC/KSS Design Group)

Leicester City have taken out two bank loans as they press ahead with the build of their new training ground and the development of the King Power Stadium.

City have borrowed from Australian multinational Macquarie Group to help fund their big infrastructure projects, taking out loans in October and December. 

The club’s new training headquarters in Seagrave could potentially cost £100million, while a similarly grand investment will be needed to expand the King Power Stadium, with plans to develop Filbert Way in their initial stages.

The first loan revolves around Riyad Mahrez’s switch to Manchester City, with Leicester factoring the £60m transfer fee in order to receive it up front.

Leicester City enter talks with Monaco over Youri Tielemans   

The deal to sell Mahrez to the Premier League champions was agreed last summer, Leicester and Man City settling on a payment plan of three instalments.

Man City paid a portion up front with two £18m instalments to follow on July 31, 2019, and July 31, 2020.

The Abu Dhabi-backed club will now pay those instalments directly to the bank with City taking a loan to receive the cash immediately.

The second, larger loan, taken out in December, has been guaranteed against the TV money City will receive from the Premier League at the end of the next two seasons.

As long as City are not relegated this term, those central payments will total between £200m and £250m, depending on the club’s finishing league positions and how often their matches are broadcast.

Manchester City paid £60million to sign Riyad Mahrez from Leicester City Manchester City paid £60million to sign Riyad Mahrez from Leicester City(Image: Michael Regan/Getty Images)

The loan figure is unknown and may not necessarily match the combined TV money figure.

It is believed that both loans were planned in City’s budget and are not as a consequence of the death of owner Vichai Srivaddhanaprabha, who tragically passed away in the helicopter crash outside the King Power Stadium three months ago.

The evolution and development of City was a big part of Khun Vichai’s visionfor the club.

He said last year: “Evolution is crucial to keeping our club moving forward, to remaining an established, successful, competitive force in the Premier League, to continuing to create memories for generations to come.

“The development of our proposed new training ground at Seagrave and the potential expansion of King Power Stadium are both are exciting strides forward for Leicester City in the coming years.

Leicester City's Demarai Gray helps fund private search for missing Cardiff striker Emiliano Sala   

“Our ambition is to continue to grow and develop, to continue to reach for success, together.

“We aim to make projects such as our training ground and stadium developments sources of pride for the Leicester community, whose support continues to underpin everything we aspire for.”

Building work has started on the new training complex, based at the 185-acre site of the former Park Hill Golf Club off the A46, after the plans were approved by Charnwood Borough Council in October.

Although the training ground and stadium will take priority, it is not expected to impact heavily on City’s dealings in the transfer market.

However, there has been a slowdown in spending since Claude Puel came to the club with an estimated net spend of £25m in the three transfer windows he has overseen – the fourth lowest figure of the 20 Premier League clubs in that period.

The first-team entrance to the training centre at Leicester City's new training complex

 

City made record profits of £92.5m in 2016-17 off the back of their successful Champions League campaign.

With no European football, the figures for the 2017-18 season, likely to be released in March, will be considerably lower, although it is expected City will again post a profit.

 

https://www.leicestermercury.co.uk/sport/football/football-news/leicester-city-bank-loans-training-2475803.amp?__twitter_impression=true

 

 

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I think this is the right move, the club have tried investing in the playing squad with little results. An expanded stadium and a better training ground would set the club up to be in the top league long term.

 

The biggest issue is that the loan tied into the TV money makes it vital that we stay in the league for the next two seasons. Relegation could be disastrous! It does worry me that the desire for safety without risk is at odds with the win now mentality amongst the supporters which I can see causing problems.

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31 minutes ago, mancunianfox said:

I think this is the right move, the club have tried investing in the playing squad with little results. An expanded stadium and a better training ground would set the club up to be in the top league long term.

 

The biggest issue is that the loan tied into the TV money makes it vital that we stay in the league for the next two seasons. Relegation could be disastrous! It does worry me that the desire for safety without risk is at odds with the win now mentality amongst the supporters which I can see causing problems.

Thankfully, it seems the rest of the mid-table is generally as shitty and inconsistent as we are so we still have a good chance at winning the Everton Cup.

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Correct. And finishing 8th instead of 12th actually will make a financial difference, if anyone was in any doubt. It's a bit more complicated then 'well we won't get relegated so it doesn't matter!!'

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53 minutes ago, mancunianfox said:

I think this is the right move, the club have tried investing in the playing squad with little results. An expanded stadium and a better training ground would set the club up to be in the top league long term.

 

The biggest issue is that the loan tied into the TV money makes it vital that we stay in the league for the next two seasons. Relegation could be disastrous! It does worry me that the desire for safety without risk is at odds with the win now mentality amongst the supporters which I can see causing problems.

I don't believe they'd risk all the TV money but merely a portion of those funds would be used to repay the loan, be very irresponsible of the club to utilise all of those funds.

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