Macquarie Loan for Parachute Payments Rolled Over

[Sky Blues]

7 hours ago, Terraloon said:

 

What would constitute an overspend ? An accounting loss would you make allowances for “ good spending on things like infrastructure?

 

Seems to me you are advocating 

 

1) Keep a version of FFP. Particularly the requirement to produce and live within an agreed business plan.

2) Ignore FIFA regulations around stability of contracts

3) Set conditions that would almost certainly mean no club would ever allow a player of theirs go out on loan to the struggling club

I think what you have demonstrated is that there are massive issues whichever or whatever method you try and adopt to try and keep clubs financially stable.

I don't want to constantly see clubs in a financial mess. It has taken 25 years for us to get to here since relegation from the Prem. 

 

1 You say FFP. I say change FFP. A rich owner? Let them put the money in but as a gift and not loans. 

 

2 Stability of contracts comes with the financial stability of the clubs paying the wages. 

 

3 What you're saying is clubs should be allowed to have loans they can't afford. Take the average wage and stick to it for loans. Let the Prem sides that hoover up all the promising players take the financial hit. These players will still go out on loan as they need game time. 

 

At the moment FFP is designed to help the big clubs and hinder the rest. It needs changing. 

[Sly]

The reason so many clubs went into administration in 2002 was the collapse of ITV digital. They couldn’t pay the football league what they owed, as they had terrible subscription numbers, leading to them losing up to £1m per day by the time they collapsed. They went into liquidation with debts of over £1b. That is eye watering in reality. 
 

When you consider it was reported that they’d effectively paid £1.2m for coverage of Bradford Vs Forest in the “Championship” and only 1,000 people watched. You can see why the business failed. Sky wouldn’t do a deal with ITV Digital to show the matches either, as I guess, longer term, they knew they’d get a better deal with the football league on matches once they’d gone.

 

Unfortunately as clubs had budgeted for a slice of this income (as every club does now with Sky), then this lead to so many clubs entering administration du to complications from ITV Digital. We were just the biggest club impacted, as we were at the top of the football league at the time.

 

Bradford, Halifax, Barnsley, Notts County, Port Vale, Ipswich, York and ourselves were all hit and went into admin with 12 months. Others tried to limp on an maybe paid a greater price in all honesty by not going into administration sooner. 
 

However, consider this, Sky now has dwindling customer numbers as it tries to compete with Netflix, Apple and Amazon amongst others. If they were to fall, then football in Britain would be really ruined if those other streaming platforms gave Sky, the same treatment it gave ITV Digital, as they’re reliant on its income. 
 

If Sky couldn’t pay us our money, King Power would either have to either cover the loan, or place us back into administration. 

[Globalfox]

1 hour ago, Sly said:

The reason so many clubs went into administration in 2002 was the collapse of ITV digital. They couldn’t pay the football league what they owed, as they had terrible subscription numbers, leading to them losing up to £1m per day by the time they collapsed. They went into liquidation with debts of over £1b. That is eye watering in reality. 
 

When you consider it was reported that they’d effectively paid £1.2m for coverage of Bradford Vs Forest in the “Championship” and only 1,000 people watched. You can see why the business failed. Sky wouldn’t do a deal with ITV Digital to show the matches either, as I guess, longer term, they knew they’d get a better deal with the football league on matches once they’d gone.

 

Unfortunately as clubs had budgeted for a slice of this income (as every club does now with Sky), then this lead to so many clubs entering administration du to complications from ITV Digital. We were just the biggest club impacted, as we were at the top of the football league at the time.

 

Bradford, Halifax, Barnsley, Notts County, Port Vale, Ipswich, York and ourselves were all hit and went into admin with 12 months. Others tried to limp on an maybe paid a greater price in all honesty by not going into administration sooner. 
 

However, consider this, Sky now has dwindling customer numbers as it tries to compete with Netflix, Apple and Amazon amongst others. If they were to fall, then football in Britain would be really ruined if those other streaming platforms gave Sky, the same treatment it gave ITV Digital, as they’re reliant on its income. 
 

If Sky couldn’t pay us our money, King Power would either have to either cover the loan, or place us back into administration. 

Very true but with one caveat. If the TV money failed then both the EPL and EFL would be forced to close PSR and look to allow deep pocket owners unrestricted ability to invest and cover the shortfall. The reality is that Sky are unlikely to fail but the next TV contract may see lot lower revenues. The people who will feel the immediate pinch are players. Mass layoffs to smaller squads, large reductions in salaries and payments and that’s what the PFA knows is likely. For Leicester the question is would Top step up? Despite everyone’s doom I believe he has the resources but would he want to. I suspect while his mother is alive and well he will once she is out of the picture I think the answer will be no.

[Terraloon]

2 hours ago, Sky Blues said:

I don't want to constantly see clubs in a financial mess. It has taken 25 years for us to get to here since relegation from the Prem. 

 

1 You say FFP. I say change FFP. A rich owner? Let them put the money in but as a gift and not loans. 

 

2 Stability of contracts comes with the financial stability of the clubs paying the wages. 

 

3 What you're saying is clubs should be allowed to have loans they can't afford. Take the average wage and stick to it for loans. Let the Prem sides that hoover up all the promising players take the financial hit. These players will still go out on loan as they need game time. 

 

At the moment FFP is designed to help the big clubs and hinder the rest. It needs changing. 

What you suggest would be a recipe for financial meltdown 

 

I apologise for what is going to be a very long comment. Here we go!

 

Let’s look at 1.On the face of it sounds fair enough but look at how many clubs have been  built the club based on owners cash injections and then bang they  the owners either can’t afford, don’t want to  carry on injecting cash or they pass away.?

In a way it  seems to many  that may be where LCFC find themselves now.

What we have at the moment is far from satisfactory but limiting owner cash injections to a degree has  restricted clubs vulnerability going forward.Look at what’s happening even now at Sheffield Wednesday there will always be examples where clubs still get into financial difficulties.
 

If you took away all limits and controls in terms of owners believe me we wouldn’t just be witnessing the odd club going into administration you would see clubs suffer full blown insolvency. It actually might suit some owners to see the demise of a club.

Owners injecting cash through equity increases the % of shares that benefactor owns.

 

Majority shareholding of say 51% is one thing.When a shareholder gets up to 75% or over that enables special resolutions to be steamrollered through.

 

Once the ceiling of 90% is broken through then the owner can effectively do what they want and any remaining shareholders have no choice but to relinquish their share.

 

Whilst there are constraints around developing on a clubs ground mainly driven by input from Sports England property developers will be out there looking for opportunities.

 

Prior to the introduction of financial regulation in football it was commonplace for the HC ( High Court) to be presented with literally dozens of WUO( winding up order) monthly.
 

In the main these WUO came as a consequence of HMRC not being paid for PAYE/NIC and VAT. Clubs used sums owing to aid cash flow. I don’t know if you have ever had any dealings with cash flow  but for a business like football it’s incredibly difficult to keep a handle on matters. VAT on certain transfers, vat of gate receipts all have to be paid indeed  some times even before payment has been received.Wages have to be paid irrespective of the income delivery and with that tax and nic becomes payable even if there isn’t money in the bank and very quickly one outstanding debt becomes two outstanding debts then three and so on.

 

 HMRC do have enforcement powers but  very few clubs have assets enough for the tax  authorities to secure the debt against tangible  assets  that can be seized and sold at public auction.So ultimately as one months debt stacks up on top of the the previous months unpaid liability . That was commonplace  around 2003

 

It came to the point where compliant clubs , those clubs that did pay their liabilities on time,  were  being impacted because they more  often than not lost out in terms of promotion/ relegation to clubs that  had injected significant cash suddenly hit the financial buffers when that cash was no longer available(  see above)  those non compliant clubs didn’t face any footballing consequences for their reckless approach . Even entering administration did little to nothing as most assets were either owned by or subject to a charge held by the owner or by a company who knew that at some point they would turn a profit down the line.

 

The governing bodies panicked and had no choice but to introduce penalties for clubs that suffered an insolvency event but that wasn’t enough it was felt that the governing bodies needed to put into place some sort of early warning system and with it try and put brakes on reckless spending.
 

Hence why clubs now have to provide advance financial information and if those projections suggest there will be issues then that’s when you get things like transfer embargo’s . Previously all they had to do was provide annual accounts.

 

It might not be evident but the number of WUOs has reduced dramatically as a consequence of the financial contrails now in place.
 

Stability of contracts is massively under threat following yet more involvement of the European courts. Bosman was bad enough, Webster less so but what clubs are now potentially going to have to face is players exercising close to the same rights as any other employee is other industries in that they will be able to say bye and walk for no fee .

 

I didn’t say that clubs shouldn’t be able to have loans that they couldn’t afford . You stated that clubs that are financially challenged shouldn’t be able to pay for a loan. My point was let’s say club a) has a player they want to put out on loan and there are say two clubs that would like to take him on loan and fit the criteria playing wise. One isn’t allowed to pay a fee because they are under financial pressure the other can pay something. Who do you reckon that player will go on loan.

 

Thats enough for today from me . Have a good weekend, we’ll not too good !

 

 

 

 

[Corky]

3 hours ago, Sly said:

The reason so many clubs went into administration in 2002 was the collapse of ITV digital. They couldn’t pay the football league what they owed, as they had terrible subscription numbers, leading to them losing up to £1m per day by the time they collapsed. They went into liquidation with debts of over £1b. That is eye watering in reality. 
 

When you consider it was reported that they’d effectively paid £1.2m for coverage of Bradford Vs Forest in the “Championship” and only 1,000 people watched. You can see why the business failed. Sky wouldn’t do a deal with ITV Digital to show the matches either, as I guess, longer term, they knew they’d get a better deal with the football league on matches once they’d gone.

 

Unfortunately as clubs had budgeted for a slice of this income (as every club does now with Sky), then this lead to so many clubs entering administration du to complications from ITV Digital. We were just the biggest club impacted, as we were at the top of the football league at the time.

 

Bradford, Halifax, Barnsley, Notts County, Port Vale, Ipswich, York and ourselves were all hit and went into admin with 12 months. Others tried to limp on an maybe paid a greater price in all honesty by not going into administration sooner. 
 

However, consider this, Sky now has dwindling customer numbers as it tries to compete with Netflix, Apple and Amazon amongst others. If they were to fall, then football in Britain would be really ruined if those other streaming platforms gave Sky, the same treatment it gave ITV Digital, as they’re reliant on its income. 
 

If Sky couldn’t pay us our money, King Power would either have to either cover the loan, or place us back into administration. 

The late 90s/ early 00s were an awful time financially. Before ITV Digital you had Palace and Portsmouth in administration. Coventry and Sheffield Wednesday were relegated from the Premier League in real distress. Wimbledon, before the relocation, were in tatters. Derby briefly went into administration around a year after we did.

 

As you say, the Football League just isn't an attractive product. This talk about making all games available and removing the blackout won't make it more so.

[Chrysalis]

19 hours ago, Terraloon said:

Some of this I don’t believe you are 100% correct

 

The ground according to the last accounts ( yes they are over a year out of date ) wasn’t at that point paid for by LCFC it was subject to an HP agreement with KP. The accounts in question state that the balance owing at that point circa £26 m has to be paid in full by June 26

 

You say that PSR is basically legalised cheating  yet it was the clubs that voted for it but your point about spending more because of bigger revenues not quite sure that really makes sense because the allowable losses at all levels are the same for all clubs within their respective leagues. There is a valid argument that the allowable losses should be a % of turnover as opposed to fixed numbers the fact it isn’t gives a greater advantage to clubs with  smaller turnover 
 

You then talk about all clubs having the same salary cap and spending limit but how would you determine the cap ? Would you be ok with say LCFC only being allowed to spend the same as the lowest income generating club in the Championship? Bear in mind that it no doubt costs far more to run LCFC than it does say Oxford but how would that play out if spending was equalised ?
Maybe if we want a truly competitive competition should the cap be based on a Div2 club ?
 

I personally think that any club going into administration ,(do we mean standard administration or a pre packed type ?) shouldn’t just  face automatic points deduction they should be relegated.

 

 

 

For sporting fairness, you have the same spending cap for every entity, basing it on revenue it isnt a level playing field, I dont know why you struggling to understand that.

I would do fixed cap on squad spend, and this cap is reduced if the club is in debt.  Forced action of some kind, if get to point wages, bills, taxes stop been paid.

Edited 17 January by Chrysalis

[Chrysalis]

18 hours ago, Sky Blues said:

It still doesn't change the fact that they changed the rules for points deductions on administration after you went into administration with massive debts. 

 

I don't agree with the way they deal with it now. A club that's skint loses 10 points so their attendances get hit costing them money. On top of this the club would then be in danger of getting relegated. It's kicking a club when it's down. 

Did you see davieG's post? plenty of clubs before and after us, including clubs after us before the rules changed.

If you cant at least keep things accurate then I cant have a rational discussion with you.

[Terraloon]

19 minutes ago, Chrysalis said:

For sporting fairness, you have the same spending cap for every entity, basing it on revenue it isnt a level playing field, I dont know why you struggling to understand that.

I understand it all too well.

 

What would the spending cap you propose be based on say in the championship? 
 

If you arent going to have clubs with greater income allowed to spend more then you have to set the cap at the club with the lowest income level. In 23/24 Oxford Utds income in the championship was £8.44 million. You ok with it being set at level ? What was LCFC wage bill in 3/4 £100+ million ?
 

Edit.

You added to your earlier post so I will add further.

 

You talk about fixed squad cost. How would you determine the level on a league by league basis ? If you reduce the level based on debt as you suggest ( sounds reasonable)  isn’t that removing that level playing field ? 

Edited 17 January by Terraloon

[Chrysalis]

9 hours ago, Terraloon said:

I understand it all too well.

 

What would the spending cap you propose be based on say in the championship? 
 

If you arent going to have clubs with greater income allowed to spend more then you have to set the cap at the club with the lowest income level. In 23/24 Oxford Utds income in the championship was £8.44 million. You ok with it being set at level ? What was LCFC wage bill in 3/4 £100+ million ?
 

Edit.

You added to your earlier post so I will add further.

 

You talk about fixed squad cost. How would you determine the level on a league by league basis ? If you reduce the level based on debt as you suggest ( sounds reasonable)  isn’t that removing that level playing field ? 

I dont know if you trying to pick it up apart, but I will answer.

 

The big difference between reducing spending limits based on debt and revenue, is that the former is a obvious direct risk to the club, if we taking the health of clubs seriously then debt should be part of the system.  Also yes, the income of the lowest club would be a big part in the spending allowance, this would also incentive things like more equally spread TV revenue, as then a larger spending limit from the smallest club also means a larger spending limit for the biggest club.

Excess income could be used to make the sport more accessible, lower ticket prices, stadium investment, local schemes for the area etc.

There is no perfect standard, but this would be a clear improvement over what we have now, and level playing field spending limits are already a thing in other sports, its not a untested concept.

Edited 18 January by Chrysalis

[Terraloon]

10 hours ago, Chrysalis said:

I dont know if you trying to pick it up apart, but I will answer.

 

The big difference between reducing spending limits based on debt and revenue, is that the former is a obvious direct risk to the club, if we taking the health of clubs seriously then debt should be part of the system.  Also yes, the income of the lowest club would be a big part in the spending allowance, this would also incentive things like more equally spread TV revenue, as then a larger spending limit from the smallest club also means a larger spending limit for the biggest club.

Excess income could be used to make the sport more accessible, lower ticket prices, stadium investment, local schemes for the area etc.

There is no perfect standard, but this would be a clear improvement over what we have now, and level playing field spending limits are already a thing in other sports, its not a untested concept.

Could pick this apart without an awful lot of effort to be honest .

 

 

 

 

 

 

[Chrysalis]

5 hours ago, Terraloon said:

Could pick this apart without an awful lot of effort to be honest .

 

 

 

 

 

 

Thats a reason to keep the nonsense have now?  People look for flaws as an excuse to keep an inferior system.

[HarryDee8]

How much does Leicester city as a football club owe them?  I'm guessing the parachute payments will also stop,

 

I'm wondering what there stance will be on relegation

[Lesta Legend]

Just now, HarryDee8 said:

How much does Leicester city as a football club owe them?  I'm guessing the parachute payments will also stop,

 

I'm wondering what there stance will be on relegation

Posted elsewhere but

 

[fuzzymizzit]

1 minute ago, Lesta Legend said:

Posted elsewhere but

 

We are absolutely cooked

[HarryDee8]

I think we owe them £98m

 

The sale of fatawu = max £20m

 

Sell belvior training ground. 

 

Any profit we make will have to go to them for the next few years. 

[Ian Nacho]

I'm sure we can get Harry Soutar to have a word. 

[VLC86]

2 minutes ago, HarryDee8 said:

I think we owe them £98m

 

The sale of fatawu = max £20m

 

Sell belvior training ground. 

 

Any profit we make will have to go to them for the next few years. 

Any profit we make? How do you recon that materialises itself?

[HankMarvin]

15 minutes ago, VLC86 said:

Any profit we make? How do you recon that materialises itself?

It’s all hypothetical, it’s not inconceivable that Top converts more loans to equity like we have seen twice since 2023 

[Paul_DMU]

Would anyone buy the training ground especially for what the club would want for it? It's such a niche/high risk investment. Can't help but feel it will only be purchased at a significantly reduced price when the situation becomes even more dire 

[FoxesTez]

49 minutes ago, HankMarvin said:

It’s all hypothetical, it’s not inconceivable that Top converts more loans to equity like we have seen twice since 2023 

That doesn’t give us any cash to be able to repay the bank loans…

[Osavo]

49 minutes ago, HankMarvin said:

It’s all hypothetical, it’s not inconceivable that Top converts more loans to equity like we have seen twice since 2023 

That doesn't equate to any profit. 

[Gamble92]

1 hour ago, HarryDee8 said:

I think we owe them £98m

 

The sale of fatawu = max £20m

 

Sell belvior training ground. 

 

Any profit we make will have to go to them for the next few years. 

Combined with a few other sales and then Top will have to fund some of it. Or put us into Administration. 

 

I still think we will find a buyer even with that debt though. 

[HankMarvin]

39 minutes ago, FoxesTez said:

That doesn’t give us any cash to be able to repay the bank loans…

isn’t there an indirect knock on effect if other debt is cleared. 

Edited 22 April by HankMarvin

[ozleicester]

Sell Seagrave to KP Polo club... rent it back

[FoxesTez]

21 minutes ago, HankMarvin said:

isn’t there an indirect knock on effect if other debt is cleared. 

It will reduce the creditor position which would be beneficial in the event of administration, but that’s probably about it. Doesn’t help in any way with fixing the cash flow issues that may see us heading towards administration.  

Edited 22 April by FoxesTez