Macquarie Loan for Parachute Payments Rolled Over

[Robo61]

18 hours ago, filbertway said:

 

 

Edited 15 January by Robo61

[Terraloon]

1 hour ago, Claudio Fannieri said:

Agreed, when you look at the cold hard facts the likes of Winks, Soumare and Daka will cost us somewhere in the region of £7.5m -£10m this season in wages, bonuses etc, so if we cannot shift them in this transfer window we are stuck with them and that means we need £3.75m - £5m just to service that commitment for the remainder of the season, so imagine what level of cash we need to run the whole club for the rest of the season, it’s absolutely eye watering stuff. 
 

The club has an opportunity to massively cut its cloth in the summer but make no mistake this is going to be brutal and need some innovative thinking and leadership to stand any chance of building some sustainable future and success on and off the pitch. 

It is as you say going to be brutal. 

 

What I believe will be inevitable is that money available for players will need to  drop not just by say 10% but more like 75% but in an attempt to mitigate the club will be cutting staff from every department and that will include the commercial team which as a consequence will mean that likely income from hospitality / sponsorship etc will drop like a stone. 

 

In addition I suspect that the £2.5 million required as a minimum to maintain Cat 1 academy status will be considered un affordable and so it goes on. A cut here a cut there and that slope gets steeper

 

The average Championship club without Parachute payments has income around  £30 million I can’t see how with the costs that LCFc carry that other Championship clubs simply don’t such as  two training grounds one of which will be costing I would imagine in excess of £5 million Pa , is affordable,

Add to that  Business Rates will become more costly over the next couple of years , the increase in the minimum wage and employers nic will hurt massively in areas where there are significant numbers that simply can’t be dispensed with such as stewarding  .Well unless you close areas of the ground off that is. 
 

What’s the next level of pain up from brutal ?
 

 

 

 

 

 

[5waller5]

3 hours ago, Terraloon said:

As stated earlier in this thread there isn’t anything that’s been put in the public domain that tells us how much , if anything, of the PL Parachute payments have been drawn down .

 

I have thought long and hard about the possibility that this is just a facility and is there just in case and that really could be the case but the more I try and rationalise all this I come to the conclusion that the extension off the security period extending from Jan 27 to June 27 suggests that either the money due by way of parachute payments up to Jan 27 have or are being drawn down in this season.

 

The PL don’t pay parachute payments in one annual instalment they are paid more regularly ( I believe every couple of months) so simply put LCFC can’t wait for these regular payments a to appear .

 

As you say it’s easier to understand  using this facility as a factoring facility but it comes down to this , and yes I though it’s not rocket science, 

 

1) The club are spending far more than it can earn

2) Kicking the can down the road both from a financial and regulatory has reached the point where it can’t be kicked any further and this is a slippery slope that I simply can’t see how the club can navigate 

It’s only anecdotal, but in my experience, almost every business that I’ve dealt with that used factoring were in serious trouble, either massively restructured or liquidated, within a year or two. 
 

in fact, when I faced having to make redundancies I explored factoring and decided it simply made the problem worse and delayed the inevitable. 
 

Using these loans for limited situations was understandable but is a drug that’s hard to resist and we seem completely hooked now

[Spanner73]

14 hours ago, Grebfromgrebland said:

I'd love to know the the 12 -18 month plan is for the club, they definitely have one.

A plan ? 
Khun Top with a plan 🤣🤣🤣

[FoxKent_88]

The unfettered mismanagement of the club is appalling really. Made worse by the fact no one is held accountable and the owner cba 

[Stadt]

Loathe to blame PSR rather than our own mismanagement but when you're constantly in the shit, it makes it really hard to sell players below their book value. You have to incur larger wages, bonuses, insurance for an extra 12/24/36/48 months because a -£4m hit is really costly with -£45m headroom over 3 years. PSR regs prevent getting your house in order in the short term.

 

On the flip side, Top deserves this all on his head for replacing the FD internally and the distinguished Chief Exec with somebody wildly out of the depth.

[foxinsocks]

5 minutes ago, Stadt said:

Loathe to blame PSR rather than our own mismanagement but when you're constantly in the shit, it makes it really hard to sell players below their book value. You have to incur larger wages, bonuses, insurance for an extra 12/24/36/48 months because a -£4m hit is really costly with -£45m headroom over 3 years. PSR regs prevent getting your house in order in the short term.

 

On the flip side, Top deserves this all on his head for replacing the FD internally and the distinguished Chief Exec with somebody wildly out of the depth.

You make a really interesting point - PSR shoudl not prevent clubs form selling a play at belw book cost... as tghe players price is a market valuation and may well fall... if the club cant sell then tyhery are force to carry on paying them.  Surely this isn't what thery want?

[Stadt]

4 minutes ago, foxinsocks said:

You make a really interesting point - PSR shoudl not prevent clubs form selling a play at belw book cost... as tghe players price is a market valuation and may well fall... if the club cant sell then tyhery are force to carry on paying them.  Surely this isn't what thery want?

It's baking in unsustainable practises. Say we sold Faes for £3m now to get his £45k pw (speculative, with a relegation deduction clause) wages off the books. We take a PSR hit of about £1.5m but we've just freed up about £3.25m in wages. When a club has multiple poor years it's really hard to find the escape velocity to get out of regulatory trouble because you can't sell to raise fast cash and cut the wage bill.

 

Also as already well established it incentivises selling academy players which is hardly encouraging sustainability either. Look at Newcastle selling Anderson and Minteh just to waste it on Wissa type signings. Just scrap the regulations, let teams spend what they want.

[Chelmofox]

3 minutes ago, Stadt said:

It's baking in unsustainable practises. Say we sold Faes for £3m now to get his £45k pw (speculative, with a relegation deduction clause) wages off the books. We take a PSR hit of about £1.5m but we've just freed up about £3.25m in wages. When a club has multiple poor years it's really hard to find the escape velocity to get out of regulatory trouble because you can't sell to raise fast cash and cut the wage bill.

 

Also as already well established it incentivises selling academy players which is hardly encouraging sustainability either. Look at Newcastle selling Anderson and Minteh just to waste it on Wissa type signings. Just scrap the regulations, let teams spend what they want.

If its harder to get out of the sh1t, then the rules make it easier just to give up and let the club go into administration. As for how it deals with academy players - something should have been done to address this a long time ago.

[filbertway]

I'd agree with the above, although if the club actually budgeted 4/5 years in advance, which they should be doing if they are amortising deals over this period of time. Then they should have a plan for different scenarios.

 

I imagine they're treating it much the same way I would do with a credit card and just spend like a lunatic and then let future me deal with the consequences.

 

[coolhandfox]

1 hour ago, Stadt said:

Loathe to blame PSR rather than our own mismanagement but when you're constantly in the shit, it makes it really hard to sell players below their book value. You have to incur larger wages, bonuses, insurance for an extra 12/24/36/48 months because a -£4m hit is really costly with -£45m headroom over 3 years. PSR regs prevent getting your house in order in the short term.

 

On the flip side, Top deserves this all on his head for replacing the FD internally and the distinguished Chief Exec with somebody wildly out of the depth.

The issue with PSR is that it operates on a three-year cycle, while most clubs sign players on five-year contracts. This is primarily done to comply with PSR by spreading transfer costs over a longer period and protecting their investment.

 

The downside is that clubs become locked in, making it harder to get their finances in order.

 

A sensible change would be to switch PSR to a five-year cycle.

[Stadt]

43 minutes ago, coolhandfox said:

The issue with PSR is that it operates on a three-year cycle, while most clubs sign players on five-year contracts. This is primarily done to comply with PSR by spreading transfer costs over a longer period and protecting their investment.

 

The downside is that clubs become locked in, making it harder to get their finances in order.

 

A sensible change would be to switch PSR to a five-year cycle.

Yep, one bad window f ucks a club because you're firefighting in year 2 and 3. We deserve it because we were first in trouble in 22-23 (?), hence selling Fofafa for £70m-ish and buying Faes for £15m-ish and only last summer had a relatively (for our standards) big net spend. It was only this summer we started shifting deadwood and spending less.

 

A stich in time saves nine and we thought let's course correct about 280 stitches in. We don't spend much on transfers but we've just never had the wage bill under control. I suspect will still be at about 90-100 % of wages/turnover. The trouble comes next year, we'll have to sign circa 10 players whilst we still have some whopping losses in our 3 year window. Plus a material pay out we'd hope.

[Stadt]

Also thanks @Terraloon for the insight, it's hard to navigate this stuff

[Terraloon]

4 hours ago, 5waller5 said:

It’s only anecdotal, but in my experience, almost every business that I’ve dealt with that used factoring were in serious trouble, either massively restructured or liquidated, within a year or two. 
 

in fact, when I faced having to make redundancies I explored factoring and decided it simply made the problem worse and delayed the inevitable. 
 

Using these loans for limited situations was understandable but is a drug that’s hard to resist and we seem completely hooked now

Not sure I would agree fully with that.

 

I know quite a few companies ,mostly very small who use factoring  for a variety of reasons but  often it saves them significant time and resources by not having to chase debt enabling them to concentrate on carrying on doing the day job as it were. 
 

[AjcW]

3 minutes ago, Terraloon said:

Not sure I would agree fully with that.

 

I know quite a few companies ,mostly very small who use factoring  for a variety of reasons but  often it saves them significant time and resources by not having to chase debt enabling them to concentrate on carrying on doing the day job as it were. 
 

I agree that the transfer fee forwarding is sensible, as long as used wisely. Because that is literally a debt owed.

But I think it's ridiculous describing TV money as debt owed.... it's always been paid monthly rather than as a lump sum. A few people are describing the Premier League as if they're causing cash flow problems.... but they've never changed their processes. Expecting an organisation to hand out 1.5 billion pounds at once, when the money probably comes to them in installments too is ridiculous  

 

I don't think getting an advance on TV money is sensible, especially not an advance on TV money we might never receive!

[Grebfromgrebland]

2 hours ago, Stadt said:

Loathe to blame PSR rather than our own mismanagement but when you're constantly in the shit, it makes it really hard to sell players below their book value. You have to incur larger wages, bonuses, insurance for an extra 12/24/36/48 months because a -£4m hit is really costly with -£45m headroom over 3 years. PSR regs prevent getting your house in order in the short term.

 

On the flip side, Top deserves this all on his head for replacing the FD internally and the distinguished Chief Exec with somebody wildly out of the depth.

PSR is a very cleverly designed trap for smaller clubs to deal with. It basically ensures their positions in the hierarchy are cemented. 

[Stadt]

15 minutes ago, Grebfromgrebland said:

PSR is a very cleverly designed trap for smaller clubs to deal with. It basically ensures their positions in the hierarchy are cemented. 

I half-agree. Since it's been implemented in England at least there's probably been more variation in the top 6/7 than there's been in the preceding period. In theory it should help Man United but it hasn't at all. Man City have lost their grip slightly. Liverpool benefitted but spunked a load, badly, as soon as they could. 

 

It punishes rank incompetence and that's the one thing we've been the best at. Villa are always teetering on the edge but because they recruited a top manager - they're fine. If your model is sustainable then it almost works in favour 

[Chelmofox]

1 hour ago, coolhandfox said:

The issue with PSR is that it operates on a three-year cycle, while most clubs sign players on five-year contracts. This is primarily done to comply with PSR by spreading transfer costs over a longer period and protecting their investment.

 

The downside is that clubs become locked in, making it harder to get their finances in order.

 

A sensible change would be to switch PSR to a five-year cycle.

But if they did that, wouldn't clubs just start issuing 7 year contracts?

[Corky]

1 hour ago, Stadt said:

Yep, one bad window f ucks a club because you're firefighting in year 2 and 3. We deserve it because we were first in trouble in 22-23 (?), hence selling Fofafa for £70m-ish and buying Faes for £15m-ish and only last summer had a relatively (for our standards) big net spend. It was only this summer we started shifting deadwood and spending less.

 

A stich in time saves nine and we thought let's course correct about 280 stitches in. We don't spend much on transfers but we've just never had the wage bill under control. I suspect will still be at about 90-100 % of wages/turnover. The trouble comes next year, we'll have to sign circa 10 players whilst we still have some whopping losses in our 3 year window. Plus a material pay out we'd hope.

Giving senseless long contracts to Vestergaard and Thomas isn't helping. We won't gain any value from them.

[Stadt]

1 minute ago, Corky said:

Giving senseless long contracts to Vestergaard and Thomas isn't helping. We won't gain any value from them.

Choudhury too. These are players that even small sales make an outsized impact PSR wise. This would have been proved by the McAteer sale but we never learn.

[Terraloon]

1 hour ago, AjcW said:

I agree that the transfer fee forwarding is sensible, as long as used wisely. Because that is literally a debt owed.

But I think it's ridiculous describing TV money as debt owed.... it's always been paid monthly rather than as a lump sum. A few people are describing the Premier League as if they're causing cash flow problems.... but they've never changed their processes. Expecting an organisation to hand out 1.5 billion pounds at once, when the money probably comes to them in installments too is ridiculous  

 

I don't think getting an advance on TV money is sensible, especially not an advance on TV money we might never receive!

In a way when it comes to using the facility for transfers is clever in that yes there is a charge  to LCFc but to partly mistake those costs  clubs that buy a player on the never never pay interest so the costs are to a degree offset. So I am broadly neutral on these type of agreements but like you when it comes to the TV / PL monies that is far from a great idea.

[Mickyblueeyes]

Really keen to hear how this is great ownership from Cliff “shag my wife” Ginetta, Ian Bason and every tit on here who complains about “bed wetting”, “entitlement” and “over reaction”. 
 

Please let us know via your infinite wisdom. 
 

thanks and kisses.

[Foxin_Mad]

2 hours ago, coolhandfox said:

.

 

A sensible change would be to switch PSR to a five-year cycle.

A sensible change would be to scrap the whole PSR thing, it doesn’t work

[foxinsocks]

4 minutes ago, Foxin_Mad said:

A sensible change would be to scrap the whole PSR thing, it doesn’t work

I agree.  It shoukd only introduce curbs when spending is not cashflowed or debts were becoming unsustainable... the idea was to stop "shit or bust" owners.

 

I still believe owners should put up a bond that they lose if a club goes into admin... to stop them walking away without loss

Edited 15 January by foxinsocks

[Sky Blues]

3 hours ago, Chelmofox said:

If its harder to get out of the sh1t, then the rules make it easier just to give up and let the club go into administration. As for how it deals with academy players - something should have been done to address this a long time ago.

The present predicament is not the fault of the rules. Constantly breaking the rules over a lot of years also isn't the reason. The problem was spending too much for what was mediocrity in the end. Having 3 or 4 players on the same money as most 1st teams in the Championship that are just average was never going to end well.