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Stevosevic

KP Debt to Equity

By Stevosevic, in Leicester City Forum

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CosbehFox

CosbehFox

Posted
Posted

I hate it. 

 

A PR move which keeps your KPFC on board. But in reality it's like paying your credit card off. Divides fans. 

 

And does absolutely feck all for us in reality. 

 

The use of his Dad in the PR article is awful. 

  • Like 1
RYM

RYM

Posted
Posted

Wasn’t the debt caused by his incompetence to run a football club?

 

What a weird reactive communication from the club. Not surprising I guess. 
 

KP OUT….

  • Like 3
HankMarvin

HankMarvin

Posted
Posted (edited)
6 minutes ago, RYM said:

Wasn’t the debt caused by his incompetence to run a football club?

 

What a weird reactive communication from the club. Not surprising I guess. 
 

KP OUT….

What are shareholder loans?

They do exactly what it says on the tin: it is money loaned to a club by their shareholders. They amount to a form of funding, a means for owners to inject cash into the football project without seeking equity in return. Typically these are long-term arrangements, often free of interest payments.

And clubs are certainly fond of them. Fourteen of the 20 Premier League teams in the 2022-23 season had shareholder loans recorded in their most recent set of accounts and City’s legal team were only too happy to highlight the extent of their use during this case. It was cited that £1.5billion ($1.96bn) out of £4bn total borrowings across the division — 37 per cent — were through shareholder loans.

“The main motivation (behind shareholder loans) is that it’s an easier mechanism for an owner getting their money back,” says Chris Weatherspoon, an accountant and financial analyst at the football website Game State. “If they put in equity, that’s them effectively giving up any right to a return, short of paying out dividends, which hardly any club does or even can do, as most are in a position of accumulated deficits, or making their money back when they sell up.

“It’s also more tax efficient. Interest costs on debt — if owners charge them — are tax-deductible for clubs, so reduce the club’s tax burden; dividend payments aren’t.

“Another point is that if there’s a need to plug a cash-flow gap quickly, lending money is easier than working through the mechanism of issuing shares.”

The Premier League, until this point, had excluded shareholder loans from APT rules, saying they would “encourage investment” in clubs. It also reminded us this week that 19 of the 20 members, City included, had been responsible for voting through the existing APT rules in 2021, with only Newcastle United abstaining.

 

City came hard at the Premier League when launching their legal challenge in June, saying the APT rules in place were “discriminatory and distortive”. They also called their existence “unlawful” and set about picking holes in a set of regulations designed to prevent clubs earning increased revenue through inflated commercial deals.

Edited by HankMarvin
Scotch

Scotch

Posted
Posted
25 minutes ago, urban.spaceman said:

I've heard he's planning a big financial reward for passing 85,000 posts in FT. :ph34r:

I'd prefer he offered a reward for anyone of our midfielders who can pass it to an attacker. 

  • Haha 3
  • Popular Post
Ricey

Ricey

Posted
  • Popular Post
Posted

Accumulate debt due to incompetence > Move it around due to upcoming rule change > Spin it as a sign of commitment.

 

Welcome to King Power.

  • Like 5
CosbehFox

CosbehFox

Posted
Posted
22 minutes ago, CosbehFox said:

I hate it. 

 

A PR move which keeps your KPFC on board. But in reality it's like paying your credit card off. Divides fans. 

 

And does absolutely feck all for us in reality. 


Now I’ve calmed down it looks like it’s taking advantage of something the PL have allowed in terms of debt. But the way they’ve packaged it up is pure PR

  • Like 2
HankMarvin

HankMarvin

Posted
Posted (edited)
15 minutes ago, Ricey said:

Accumulate debt due to incompetence > Move it around due to upcoming rule change > Spin it as a sign of commitment.

 

Welcome to King Power.

It’s not accumulated debt as such it’s funding provided by the owner from his own resources normally on the basis that the funding will be repaid to him by the company.

Edited by HankMarvin
ramboacdc

ramboacdc

Posted
Posted

I am shite with money, so I bet I am wrong, but doesn't this just mean we now owe Top £420m? He would want that back if he sold up with his own interest for sure.

HitchinFox

HitchinFox

Posted
Posted (edited)

Clever move. However, this bit made me laugh

"The Club remains grateful for the family’s unwavering support and for the long-term security they continue to provide."

 

Bit weird, as "the club" is wholly owned by the family. 

 

A bit like a car telling its owner that it is "grateful for the ongoing support in putting petrol in it".

 

 

Edited by HitchinFox
  • Haha 4
Seventyseven

Seventyseven

Posted
Posted
2 hours ago, Stevosevic said:

 

Does this strengthen us at all transfer wise? 

No.

 

It might help a bit longer term as new PSR rules mean interest is charged on any loans and this means it doesn’t happen.  

lcfcbluearmy

lcfcbluearmy

Posted
Posted
1 hour ago, Dahnsouff said:

Appreciating this and being discontented by their mismanagement at a board level are not mutually exclusive.

Exactly however this is why I’m not in the we need KP to sell and top out camp. I thoroughly believe we need change in the management of the day to day running of the club and have and will continue to voice that opinion. But I’m still holding out hope that we can do that without the club having to be sold as our owners do still invest a lot of money into the club it’s just not always been spent wisely

  • Like 4
Tielemans63

Tielemans63

Posted
Posted

Massive thanks to Top for putting a plaster over the self-inflicted stab wound the hierarchy at the club have created. We are truly grateful.

 

No doubt we'll see a very similar statement in 2027 after 2 more years of unfettered incompetence.

  • Like 1

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