Implications of relegation to league 1 (Mods can we condense all league 1 threads into one)

[Babylon]

1 minute ago, CL Fox said:

Still defending them 🤣

Who the f*** is defending them. If wanting to state facts is "defending" then I'm so sorry. 

[Babylon]

9 minutes ago, suffolk fox said:

Question was about parachute payments.  As I stated, we probably have already spent the money, weather that be on loams, tv rights, Macquarie etc, however,

you still get the parachute payments on a 3 year rolling period reduced each year.  I do agree though, money has already been earmarked or spent.

I'll say it again, we don't know what our position is. Just because we've secured a loan against X money doesn't mean we spent X money. Those details simply aren't out there, we might know a little more when the accounts come out but they are always behind. 

Edited 16 March by Babylon

[Tommy G]

12 minutes ago, CL Fox said:

Still defending them 🤣

No he's trying to explain some basic finances

[marketharboroughfox]

12 minutes ago, Babylon said:

I'll say it again, we don't know what our position is. Just because we've secured a loan against X money doesn't mean we spent X money. Those details simply aren't out there, we might know a little more when the accounts come out but they are always behind. 

This looks like a wildly optimistic take. Loans secured against transfer fees I can accept as a somewhat normal practice for a lot of clubs, but it's certainly not normal to take them out against parachute payments (though Burnley did it somewhat recently also). It points to a serious cash flow problem.

[Gamble92]

7 minutes ago, marketharboroughfox said:

This looks like a wildly optimistic take. Loans secured against transfer fees I can accept as a somewhat normal practice for a lot of clubs, but it's certainly not normal to take them out against parachute payments (though Burnley did it somewhat recently also). It points to a serious cash flow problem.

It's okay, Top loves the club that much he'll clear all the debt himself. 

 

👀

[Sly]

4 minutes ago, marketharboroughfox said:

This looks like a wildly optimistic take. Loans secured against transfer fees I can accept as a somewhat normal practice for a lot of clubs, but it's certainly not normal to take them out against parachute payments (though Burnley did it somewhat recently also). It points to a serious cash flow problem.

I understand why we would do it to aid cash flow though. 
 

Ultimately if we know what income we will receive from an asset (I’m in this case parachute payment), taking it all at once isn’t an issue. We just need to be in a position to cover the costs in subsequent years like the parachute payments are meant to cover.

 

The challenge is, we don’t know what they’ve done with that cash. 
 

We made profit on player transfers this year. 
 

Have taken out loads to get the money in.

 

Our wage bill decreased.

 

Attendances are still amongst the highest in the division. 
 

We could have stopped paying for King Power Property group etc for all we know and therefore are in much stronger position financially. 
 

It’s all creative accounting and a bit of jiggerey pokerey. 

[Dreadnought]

 

[Gamble92]

30 minutes ago, Babylon said:

Who the f*** is defending them. If wanting to state facts is "defending" then I'm so sorry. 

You have done a lot in the past. 

[Terraloon]

33 minutes ago, Babylon said:

We don't know what's been spent, we only know what our borrowing was secured against. 

 

For example, whilst we secured a loan against TV rights previously, it stated in the accounts that £9m was owned against the TV rights facility. So at that point a £9m loan was secured against an £80m incoming. 

 

I think people need to distinguish between what we actually borrowed and owe, and what it was secured against. 

 

If you borrow £20k to buy car and secure it against your house, you don't owe the value of your house. The details are far more intricate that just security = X and thus we must also have borrowed X. 

 

You are right in one sense as we simply don’t know what the current state of the club’s borrowings is but who or indeed which even remotely well run entity would have the number or type of charges that currently are registered unless there wasn’t a need to generate immediate cash ?
As for your analogy well if you can’t pay the loan on the £20k car you loose your house.

[floz]

14 minutes ago, Dreadnought said:

 

Doesn't sound good to say the least. A score below 40 puts us in the high risk credit score rating suggesting suppliers are at a high risk of not being paid. But next season 'we promote'  so there's always that.

[Babylon]

14 minutes ago, Gamble92 said:

You have done a lot in the past. 

I’m sure you’ll have no problem pulling up loads of examples of that then won’t you. 

[Babylon]

31 minutes ago, marketharboroughfox said:

This looks like a wildly optimistic take. Loans secured against transfer fees I can accept as a somewhat normal practice for a lot of clubs, but it's certainly not normal to take them out against parachute payments (though Burnley did it somewhat recently also). It points to a serious cash flow problem.

It’s not optimistic to say you can’t really sit here and say we’ve spent all our parachute payments when we might not have done. As we may very well have done. 
 

It’s an entirely agnostic point of view. 
 

 

[Babylon]

26 minutes ago, Gamble92 said:

It's okay, Top loves the club that much he'll clear all the debt himself. 

 

👀

They’ve written off hundreds of millions. The question is, are Kingpower in a position to be able to do so again should the need arise. They have done previously, but the situation has changed over there drastically. Again, it’s another “nobody knows” situation. 
 

They could, feasibly with the stroke of a pen wipe it all off. They could also feasibly be as broke as we are. 

[Chrysalis]

1 hour ago, Babylon said:

We don't know what's been spent, we only know what our borrowing was secured against. 

 

For example, whilst we secured a loan against TV rights previously, it stated in the accounts that £9m was owned against the TV rights facility. So at that point a £9m loan was secured against an £80m incoming. 

 

I think people need to distinguish between what we actually borrowed and owe, and what it was secured against. 

 

If you borrow £20k to buy car and secure it against your house, you don't owe the value of your house. The details are far more intricate that just security = X and thus we must also have borrowed X. 

 

I get your point, but what is the logic of taking out a pay day loan and then not spending it?

[Tommy G]

10 minutes ago, floz said:

Doesn't sound good to say the least. A score below 40 puts us in the high risk credit score rating suggesting suppliers are at a high risk of not being paid. But next season 'we promote'  so there's always that.

Will just make negotiations with normal day to day creditors (and new ones) more of a challenge. 

[marketharboroughfox]

33 minutes ago, Sly said:

I understand why we would do it to aid cash flow though. 
 

Ultimately if we know what income we will receive from an asset (I’m in this case parachute payment), taking it all at once isn’t an issue. We just need to be in a position to cover the costs in subsequent years like the parachute payments are meant to cover.

 

The challenge is, we don’t know what they’ve done with that cash. 
 

We made profit on player transfers this year. 
 

Have taken out loads to get the money in.

 

Our wage bill decreased.

 

Attendances are still amongst the highest in the division. 
 

We could have stopped paying for King Power Property group etc for all we know and therefore are in much stronger position financially. 
 

It’s all creative accounting and a bit of jiggerey pokerey. 

In bold is the biggest concern I have, I'm really not convinced we'd have enough cash in League 1 without that money and without selling more than just players. I like some of the optimism you have about doing a bit of creative accounting, but I've got a hard time believing it. I think we're a lot closer to a Chansiri scenario than some people want to admit.

[marketharboroughfox]

13 minutes ago, Babylon said:

It’s not optimistic to say you can’t really sit here and say we’ve spent all our parachute payments when we might not have done. As we may very well have done. 
 

It’s an entirely agnostic point of view. 
 

 

What would be the purpose in borrowing against parachute money if we weren't planning on spending it this financial year?

[Lambert09]

10 minutes ago, Babylon said:

They’ve written off hundreds of millions. The question is, are Kingpower in a position to be able to do so again should the need arise. They have done previously, but the situation has changed over there drastically. Again, it’s another “nobody knows” situation. 
 

They could, feasibly with the stroke of a pen wipe it all off. They could also feasibly be as broke as we are. 

If the latter is true, which I suspect it is… then why not sell the bloody club!!!! 

[Gamble92]

19 minutes ago, Babylon said:

I’m sure you’ll have no problem pulling up loads of examples of that then won’t you. 

Funnily enough I remember an exchange between us both years ago about the loans. You said everyone operates like this so it's fine. 

 

Well done Columbo.  

[grobyfox1990]

My colleague (who is originally from near Leicester) is a Man U fan and is considering getting an ST next year to see some live football. We're back at that stage again, like the mid-late 2000s, a 22k attendance of which loads of people are there just coz.

Edited 16 March by grobyfox1990

[Babylon]

1 hour ago, marketharboroughfox said:

What would be the purpose in borrowing against parachute money if we weren't planning on spending it this financial year?

The point is how much, not whether we have. 

[Babylon]

1 hour ago, Gamble92 said:

Funnily enough I remember an exchange between us both years ago about the loans. You said everyone operates like this so it's fine. 

 

Well done Columbo.  

Loads of clubs use loans. There is zilch intrinsically wrong with doing so. The loans haven’t got us into this mess.

Edited 16 March by Babylon

[marketharboroughfox]

4 minutes ago, Babylon said:

The point is how much, not whether we have. 

Well the question of how much is answered by the documents filed in Companies House.

[Babylon]

1 hour ago, Chrysalis said:

I get your point, but what is the logic of taking out a pay day loan and then not spending it?

The deals don’t mention amounts, only security do they not. It provides a credit line, which could mean us using 1%, or 10% or 100% of the secured amount, that’s what we don’t know. I’m sure we’ve probably used it, doesn’t mean we’ve used all of it. 

[Gamble92]

2 minutes ago, Babylon said:

Loads of clubs use loans. There is zilch intrinsically wrong with doing so. The loans haven’t got us into this mess.

Like others have said though, we have taken them out against parachute payments and that suggests there is something not right. 

 

As does the Christmas pay fiasco. A few experts have said you only do this when there's no money to actually pay anyone. 

 

You're right that loans alone haven't got us into this mess. Rodgers started this. But the cracks were showing before. This club has never been run well under King Power. The initial spending spree under them alone could have seen us in this mess until Pearson and his staff got here.

 

The loans against TV money and parachute payments are careless. The ones, like you say, against guaranteed player transfers are fine. 

 

We are so close to not having a club because of these people and they don't seem to give a shit.