King Power Writes Off Entire Club Debt

[taupe]

2 hours ago, Ginger_Filbert said:

Should free up approx £14m per year in interest payments. 

Would we have been paying interest on these loans? The ones from KP that is, not the bank loans. If KP were prepared to write-off the loans then it'd not surprise me if they were interest free (either specifically or effectively)

 

I'd guess the interest on loans would have been a factor in FFP, so depending on how these KP loans were structured then it might give us a teeny bit more wiggle room* but, in general terms, this does not mean we can go out and splash cash on new players. 

 

*I wonder how close to the FFP wire we are? With Sharkey and Perez going (and not Veste and Cags) I wonder, combined with this writing-off, if it has nudged us back on the right side of the line.

[CosbehFox]

1 minute ago, Le Renard said:

Well I think it has put the rumour to bed that Kingpower were selling in the short to medium term.   It doesn't make financial sense to wipe out the debt owed to them and then sell the club.  

Completely differ on this tbh. Only have to see how the recent Chelsea deal was delayed until the debt situation was agreed 

[taupe]

37 minutes ago, Tommy G said:

the interest on I/co debt was probably accruing and not settled in cash anyway.

Yes, that was along the lines of my thinking too.

[CosbehFox]

Just now, taupe said:

Would we have been paying interest on these loans? The ones from KP that is, not the bank loans. If KP were prepared to write-off the loans then it'd not surprise me if they were interest free (either specifically or effectively)

 

I'd guess the interest on loans would have been a factor in FFP, so depending on how these KP loans were structured then it might give us a teeny bit more wiggle room* but, in general terms, this does not mean we can go out and splash cash on new players. 

 

*I wonder how close to the FFP wire we are? With Sharkey and Perez going (and not Veste and Cags) I wonder, combined with this writing-off, if it has nudged us back on the right side of the line.

FFP has very little to do with this because FFP is largely based on your revenues - if you revenues can service wages + debt, you are fine 

[Raj]

Can he wipe out the Governments debt too?...sorry wrong thread!!!

P.S well done Top...Top man!

[taupe]

Just now, CosbehFox said:

FFP has very little to do with this because FFP is largely based on your revenues - if you revenues can service wages + debt, you are fine 

My thinking is that the interest on the loans would be an expense item to be deducted from revenue, hence a factor (albeit a small one) in the FFP calculation. Agreed though, the writing-off of the loan itself has no real FFP consequence. 

[taupe]

4 minutes ago, CosbehFox said:

Completely differ on this tbh. Only have to see how the recent Chelsea deal was delayed until the debt situation was agreed 

With you there. A (relatively) debt-free club is a more attractive proposition.

 

NOT that I'm saying KP are selling, I think it DOES show commitment.  

[Bourbon Fox]

2 hours ago, AKCJ said:

Nah, I see him at most home games.

He's usually giving it large to away fans outside the Barley Mow - getting the Stellas in and handing out the chop, barneying with plod in a goggle jacket and vintage Sambas. Top Boy they call him. Loves the culture.

[TrentFox]

I don’t claim be hot on the intricacies of finance, but anyone trying to rationalise this away ‘matter-of-fact’ like needs a serious word with themselves. This is extraordinary. We really are blessed. 

[ClaphamFox]

1 minute ago, taupe said:

My thinking is that the interest on the loans would be an expense item to be deducted from revenue, hence a factor (albeit a small one) in the FFP calculation. Agreed though, the writing-off of the loan itself has no real FFP consequence. 

Exactly, although that hasn't prevented a steady stream of twitter uses raging about how we've 'dodged FFP' 

[CosbehFox]

3 minutes ago, taupe said:

My thinking is that the interest on the loans would be an expense item to be deducted from revenue, hence a factor (albeit a small one) in the FFP calculation. Agreed though, the writing-off of the loan itself has no real FFP consequence. 

That’s my understanding of it. Given King Power in regards to this debt could decide the interest though hence it’s much of a muchness when it comes FFP

[Ginger_Filbert]

1 minute ago, TrentFox said:

I don’t claim be hot on the intricacies of finance, but anyone trying to rationalise this away ‘matter-of-fact’ like needs a serious word with themselves. This is extraordinary. We really are blessed. 

Agreed but there’s plenty on here with agendas against our/foreign/billionaire owners. 

[gurru991]

22 minutes ago, lifted*fox said:

Top could bend over, drop his pants and reveal a tattoo around his arsehole that says IM C-O-MMITTED TO LCFC and people on here will still come up with some absolute nonsense reason why he's selling or seemingly not bothered.

 

 

Unfortunately the forum in particular and the western world in general is loaded with conspiracy theorists who will embrace a theory and stick with it come hell or high water.

[Tommy G]

10 minutes ago, taupe said:

My thinking is that the interest on the loans would be an expense item to be deducted from revenue, hence a factor (albeit a small one) in the FFP calculation. Agreed though, the writing-off of the loan itself has no real FFP consequence. 

Exactly my thoughts. Be interesting how the interest rate is affecting the cost of our borrowings from banks, an element will be a fixed margin and some of it will be exposed to interest rate fluctuations - there’s no getting away from it unless the finance guy has been clever and bought an interest rate cap product 😎

[Tommy G]

Can someone check Tops season ticket card and see how many times he’s been through the turnstiles this season. Bet he’s had to queue aswell!

[CosbehFox]

21 minutes ago, Ginger_Filbert said:

Agreed but there’s plenty on here with agendas against our/foreign/billionaire owners. 

Wouldn’t call it agendas. It’s a difference of opinion on a sport where the financial figures are increasingly eye watering. 
 

Personally I find it sad and a further disattachment of a football club from its commmunity. Some of us will always find to tough to understand why someone with no bond to the city is willing to throw money at it with little to no return unless they sell up for profit. I actually think King Power’s naivety in footballing sense actually makes it a less of a worry. 

 

I fear for the first billionaire owned football club to fall though 

When we hit harder teams before, whilst still millions, it was possible with local businessmen to have a consortium who could act as custodians. I just don’t see how that’s possible with a club which has debts over £200m. The consequences are huge. 

 

Portsmouth are probably the nearest example we’ve had and they ain’t half been through the mill since their PL days. 

Edited 1 February 2023 by CosbehFox

[coolhandfox]

2 hours ago, Ginger_Filbert said:

Should free up approx £14m per year in interest payments. 

Interest on owner loans (6%) and finances leases (8%) is only accrued and not paid.

 

So nothing was saved monetary wise.

 

 

 

Edited 1 February 2023 by coolhandfox

[TrentFox]

15 minutes ago, Ginger_Filbert said:

Agreed but there’s plenty on here with agendas against our/foreign/billionaire owners. 

One of the things that has really surprised me this season - over an and above how irritatingly pants we have been for large parts of it - is the capacity of some people to hate/belittle/find fault. It really has been extraordinary. 

[Corky]

Huge gesture that hopefully will bring some clarity to the situation regarding any worries that the debts might be called in. 

 

Figures are enormous but that is modern day football, sadly.

[MPH]

3 hours ago, tom27111 said:

Cool.

 

When's he going to relieve the manager of his duties?

 

we can afford to now 

[urban fox]

The interest would either be paid, therefore reducing income and cash flow, or accrued, thereby increasing the debt, which one way or the other would have to be repaid at some point.

This means that the club are c.£14m p.a. better off, with improved cash flow allowing future investment (also dividends for shareholders) and increases their credit rating for raising guture loans where required.

It is a win win.

[st albans fox]

14 minutes ago, coolhandfox said:

Interest on owner loans (6%) and finances leases (8%) is only accrued and not paid.

 

So nothing was saved monetary wise.

 

 

 

Yes but it may have to be in the neg column in ffp calcs.  if it isn’t then uefa may still want it to be added (in the same way that you can’t have inflated investment ). 
 

If we look at souttar, the fee is 15m over five years which is 3m per season on the neg column. 6% of 184m is 11m per season. That’s a significant sum to put towards fees (effectively 55m of purchases over five years), irrespective of salaries 

[Guest Chocolate Teapot]

Struggle to see how this is a big deal.

[coolhandfox]

2 minutes ago, st albans fox said:

Yes but it may have to be in the neg column in ffp calcs.  if it isn’t then uefa may still want it to be added (in the same way that you can’t have inflated investment ). 
 

If we look at souttar, the fee is 15m over five years which is 3m per season on the neg column. 6% of 184m is 11m per season. That’s a significant sum to put towards fees (effectively 55m of purchases over five years), irrespective of salaries 

Not sure how it works. The interest is recorded in the P&L so I assume the interest is seen as expenditure in the FFP calcs. 

 

We just don't pay it, it just gets added to the overall debt to the owner. 

 

 

[lifted*fox]

10 minutes ago, TrentFox said:

One of the things that has really surprised me this season - over an and above how irritatingly pants we have been for large parts of it - is the capacity of some people to hate/belittle/find fault. It really has been extraordinary. 

 

It's tiring af. I don't visit / post here anywhere near as much in the past but it's pure doom & gloom echo chamber 90% of the time and people wonder why everyone in the real world isn't as angry, it's probably because they're dealing with a myriad of other problems and football, despite not being great right now is still only a 90 minute escape from the other bullshit they're going through and they don't spend 24/7 winding themselves up into a frenzy like some on here.