Club Finances - new charge registered against club (Macquaire Bank Limited)

[An Away Move]

49 minutes ago, ClaphamFox said:

It is an altruistic move. The value of the shares can go up or down. A loan with interest is a guaranteed payment, which KP and Top have relinquished. The only way this financially benefits KP and Top is if the value of the shares soars and they end up selling the club at a higher value. 

So actually not altruistic if it increases the value of your sellable asset. 

[CloudFox]

This is very interesting news, and smart from Top/King Power. It certainly indicates they are trying to run the club sustainably, and not saddle it with debt, as most owners do.

 

This does not, however, mean the owners or the board should not be criticised when it is due. The board are accountable for Rodgers still being in charge. The board are the ones who—up until this statement—have remained quiet. And Top heads all of this up, so unfortunately he is accountable for the mistakes of those beneath him.

 

I don't doubt that Top loves this club, and I hope everyone appreciates what he and his family have done for Leicester City. However, we are a club, not a trophy cabinet. Trophies and success is wonderful, but existence and staying in the top flight are the most important, at the end of the day. And unfortunately, that tends to mean investing in signings or investing in youth. The former looks better following this window, but the latter is still to be found wanting.

 

You can appreciate the success and still be concerned about the future. They're not mutually exclusive.

Edited 1 February 2023 by CloudFox

[Benji]

Unfair to refer to it as simply bookkeeping when they're foregoing interest.  I don't know if it was secured but if it was it would also lose them some priority if things go tits up.  Football clubs (other than maybe United and the Glazers) don't pay dividends so these interest payments will have been a way of receiving at least some benefit from the club.

 

From a sale perspective, whenever that happens, it's largely irrelevant to KP as it's KP group debt not third party debt like HSBC/Macquarie.  Purchasers agree a deal value for a business which is reduced for debt / increased for cash, but the debt is still repaid by the borrower as part of any sale.  So the KP group would still receive the same aggregate amount on a sale either way, only now it would all be received for their shares whereas before it would have been split between the shares and repaid debt.

[st albans fox]

6 minutes ago, Benji said:

Unfair to refer to it as simply bookkeeping when they're foregoing interest.  I don't know if it was secured but if it was it would also lose them some priority if things go tits up.  Football clubs (other than maybe United and the Glazers) don't pay dividends so these interest payments will have been a way of receiving at least some benefit from the club.

 

From a sale perspective, whenever that happens, it's largely irrelevant to KP as it's KP group debt not third party debt like HSBC/Macquarie.  Purchasers agree a deal value for a business which is reduced for debt / increased for cash, but the debt is still repaid by the borrower as part of any sale.  So the KP group would still receive the same aggregate amount on a sale either way, only now it would all be received for their shares whereas before it would have been split between the shares and repaid debt.

You’re right about the debt repayment on sale aspect but I think it’s better to sell an asset debt free than to open any avenues of negotiation post valuation agreement. (Still no indication that there is any sale/investment in the offing).
 

this was announced yesterday once all transfer deals had been agreed even though it was done end December. Surely there must be a significance of doing it in 2022. Perhaps the thai tax dates run Jan to dec. 

 

[Babylon]

26 minutes ago, shiv said:

The two aren’t related. They did it in 2013 when we were in the Championship. It’s genuinely just a debt write off - which we should be grateful for tbh. Prior to Newcastle’s takeover Ashley took out money in the form of loan repayments. 

Indeed, if it was about what they suggest it’s a bloody weird time to do it considering relegation would see our value plummet far below their investment. 

[cityfanlee23]

1 hour ago, tylesta said:

Avoiding supporting the team!!! Some fan you are 

In the ground yes, I'm not going to spend my money travelling 3 hours just to watch the performances we are putting up at the moment, and the fact I'm not free to go most Saturdays anyway. 
Sorry, I forgot you had to be a season ticket holder and clap and cheer Brendan week in week out to be considered a "fan"

Let's call it a "strike" against watching bad football, believe it or not, none of us are forced to watch it 

Edited 1 February 2023 by cityfanlee23

[cityfanlee23]

I'm trying to work out if this move makes us more attractive to a buyer?

Pros:
- Club has less "debt"
- New owners would not be buying a club that owes repayments+interest to previous owner

Cons: 
- Prospective new owners now have to pay £194m more upfront to buy the club unless Top was to take a financial hit on the sale

Would a new owner rather pay £194m more upfront, or pay much less upfront and lose the interest long term? Not paying a huge sum upfront would surely leave room for investment in the team in the short term.
Are we a more attractive purchase now?

[Claridge]

3 hours ago, cityfanlee23 said:

I'm trying to work out if this move makes us more attractive to a buyer?

Pros:
- Club has less "debt"
- New owners would not be buying a club that owes repayments+interest to previous owner

Cons: 
- Prospective new owners now have to pay £194m more upfront to buy the club unless Top was to take a financial hit on the sale

Would a new owner rather pay £194m more upfront, or pay much less upfront and lose the interest long term? Not paying a huge sum upfront would surely leave room for investment in the team in the short term.
Are we a more attractive purchase now?

Probably borrow to buy it anyway, so would still be paying interest i suppose

[jamesmilner]

22 hours ago, cityfanlee23 said:

I'm trying to work out if this move makes us more attractive to a buyer?

Pros:
- Club has less "debt"
- New owners would not be buying a club that owes repayments+interest to previous owner

Cons: 
- Prospective new owners now have to pay £194m more upfront to buy the club unless Top was to take a financial hit on the sale

Would a new owner rather pay £194m more upfront, or pay much less upfront and lose the interest long term? Not paying a huge sum upfront would surely leave room for investment in the team in the short term.
Are we a more attractive purchase now?

On the cons .The new owners of any club , buy it for what they are willing to pay , not what a club wants, finances would be taken into account . Theres always a happy medium .  We all know that anyone who buys a football club, is in it for the ride , not profit . 

[cityfanlee23]

1 hour ago, jamesmilner said:

On the cons .The new owners of any club , buy it for what they are willing to pay , not what a club wants, finances would be taken into account . Theres always a happy medium .  We all know that anyone who buys a football club, is in it for the ride , not profit . 

yeah that’s a good point, so although Top has effectively moved the finances around, in reality if we go on a bad run and the club becomes less valuable, the chances of him getting his money back is much slimmer when that debt is now in the form of shares. 
 

So if we continue to struggle, it actually becomes harder to sell us unless Top is willing to take a big hit on the value of those newly created shares. 
 

With all this said though I believe him when he made his statement and I don’t think he’s going to sell. 

[jamesmilner]

On 02/02/2023 at 13:09, cityfanlee23 said:

yeah that’s a good point, so although Top has effectively moved the finances around, in reality if we go on a bad run and the club becomes less valuable, the chances of him getting his money back is much slimmer when that debt is now in the form of shares. 
 

So if we continue to struggle, it actually becomes harder to sell us unless Top is willing to take a big hit on the value of those newly created shares. 
 

With all this said though I believe him when he made his statement and I don’t think he’s going to sell. 

I saw the letter ALL staff got last year ,after recieving a wage bonus , wrote by Susan Whelan . LCFC are ok for a few years yet . 

[FoxesTez]

Accounts now overdue at Companies House which is odd…

 

Could just be a delay in submitting, of course. 

[themightyfin]

7 minutes ago, FoxesTez said:

Accounts now overdue at Companies House which is odd…

 

Could just be a delay in submitting, of course. 

Wouldn't be the first business to be late in submitting accounts to companies house. 

It's quite a regular thing. It does not mean there's anything sinister going on. 

[Sly]

I’d still like to know more about what Lou Shani does. What’s his involvement? He’s been here for years! 

[stu]

 

[coolhandfox]

Pretty standard stuff, just getting out hands on the transfer money early.

[Lako42]

Ready for us to swoop for some stars and ace's in January. 

 

 

Or a pay rise for Rudkin 

[urban.spaceman]

7 minutes ago, Lako42 said:

Ready for us to swoop for some stars and ace's in January. 

 

 

Or a pay rise for Rudkin 

He deserves it. 

 

 

[WoodyFox]

4 hours ago, stu said:

 

Need some money for NP's bumper contract as new head of academy

[st albans fox]

These loans possibly indicate what we sold players for 

Castagne looke like £12.5m 

Barnes looks like £34.5m

 

of course the first instalment may have been sig larger but in the past, it’s seemed like this is the norm.  we don’t know details such as whether we paid the loyalty bonus or if the buying club picked that up as part of the s/o fee due to the player, 

[Lesta2014]

7 minutes ago, WoodyFox said:

Need some money for NP's bumper contract as new head of academy

Don’t get my dreams going haha

[hejammy]

20 hours ago, coolhandfox said:

Pretty standard stuff, just getting out hands on the transfer money early.

At a cost of what though? How much of that money is lost in interest? 

[The Quick Brown Fox]

Using this to pay for the flowers from the proposal.

[st albans fox]

4 hours ago, hejammy said:

At a cost of what though? How much of that money is lost in interest? 

A lot more than 18 months ago! 

I would assume there is the ability to payback early and avoid  a chunk of interest.  And I also assume that the loans may not actually be drawn against - maybe they’re more facilities than loans but the fact we’ve drawn them up so soon likely reflects that we need cash flow now. 

[Ric Flair]

22 hours ago, st albans fox said:

These loans possibly indicate what we sold players for 

Castagne looke like £12.5m 

Barnes looks like £34.5m

 

of course the first instalment may have been sig larger but in the past, it’s seemed like this is the norm.  we don’t know details such as whether we paid the loyalty bonus or if the buying club picked that up as part of the s/o fee due to the player, 

I'd hazard a guess Barnes is paid in 4 instalments equalling the £45m transfer fee reported.