£10m FFP Bill

[Curtains]

10 minutes ago, ramblur said:

That's bound to be true though, curtains. Because of the amount he's put in at Championship level, and because a large amount of that hasn't really generated value, nobody's going to give him his money back ( and thus pick up the tab for his mistakes) whilst we're still a Championship Club. The only chance he has of gaining ( if he wants to) is by becoming a Premiership club.

In certain ways, it's quite similar to the situation that the late Nigel Doughty faced. A certain amount of his equity was held in share capital, but the majority was loan capital, injected via a holding company ( and classed as 'investment' within this holding company). He actually impaired all these amounts as they went in - a sure sign that he didn't expect to get his money back whilst in the Championship. If the gumps had been promoted, he could have reversed the impairments and started getting partial repayments of his loan, if he wished. The big difference between this and Mel's situation is that Mel will never simply be able to draw cash from DCFC to repay loans,because the loan isn't to the Club, it's to his own investment company, nothing to do with the Club.

There's a massive difference between share equity and loan capital loaded onto a club, something which some seem completely unable to understand ( or maybe now do, but want to hold onto a flawed position, to save face). With the former, cash can't simply be drawn out of the club, whilst with the latter it can ( just as external lenders could be paid).

Going back to the gumps, something occurred which many didn't understand. No fool (even Fawaz) was going to actually pay money to inherit a mass of debt, money that hadn't given value to the club, so a big wedge of this was converted to equity, but this didn't mean the Doughty family were beneficiaries of such equity. All that would have happened would have been that Fawaz would have paid (probably a pretty nominal)amount to acquire the share capital ( including that converted), and then the benefit to the Doughty family would have been the repayment of whatever loan capital remained ( and they should have been pretty grateful for that, as they were in a pretty weak bargaining position). Thus the real takeover value would have been this loan (£30m? I can't remember), plus whatever was paid for the equity, a far cry from the mound of negative equity that existed before conversion. 

This is very informative.

Thanks Ramblur. 

[Ramet]

23 minutes ago, HantsRam said:

He wouldn't necessarily lose ALL the money he had put in.

@RamNut is giving the business perspective, @ramblur the accounting one and both are correct in their respective fields. The rest of us are simply "enthusiastic amateurs".

Mel has put in 95m. And he cannot (legally) get any part of that back out of DCFC the club. So he could sell DCFC the club.........and if he got 50m for it, he's lost and if gets 95m+ for it he will win.

What RamNut is pointing out (I think - and apologies if I am putting words in your mouth) is that Mel has put the 95m into the club in stages and has effectively been putting in some more to DCFC to cover losses. He might get fed up of doing so. He can't get his 95,m back (except by sale) but he can stop putting more in.

DCFC is reliant on Mel continuing to put money in. And the business question would be.......if Mel wants out at any point, then how likely is it that he can find someone who is prepared to put 100m up front (to give to Mel) and then be happy to put money into DCFC year on year to cover the further losses that arise.

Doesn't sound that appetising a business proposition does it?

Of course the grail is promotion. But if we achieve that and its worth 150m or whatever, then does that mean Mel could take his cash back out and leave DCFC short of the cash it would need to be competitive? Don't know, because I don't know which legal entity would receive the cash.....if the prem prize money gets paid to DCFC then perhaps Mel is no better off.......he now has a profitable football entity, but he can STILL only extract cash via profits and dividends.......this is where the accountancy experts know what is going on more than I.

Key point summary:

Mel cannot "bust" DCFC overnight

Mel can stop putting more in and DCFC will run out of cash (it'll be curtains for DCFC lol)

Mel can sell and get some money back...........

 

A very fair and balanced  summay. Im very sure he wont and doesnt have any intention of parting company. But just because he has openly said " we need to get our house in order" doesnt mean there is no money to move us forward. Everything has a price to sell at and the manager will have to balance things, that doesn't mean we HAVE to sell but we are gonna have to balance the books to allow change. if selling vydra for 15mill buys x3 players for frank at 5mill each it may help build the squad. also remember only a season ago alot were writting vydra off. Every club if ran correctly will always try to improve the asset to make it worth more and then sell when there stock is high.  We would all love great players to stay forever but as a club we are a small fish in a pond with sum much bigger fish in it, and until we become one of the elite we will always be a selling club.

[CornwallRam]

2 hours ago, RadioactiveWaste said:

What do people expect out the academy anyway?

Transfers out to mostly cover costs of running it?

Regular first team squad players?

Regular first team starters?

Big money star players?

It'll probably be another 6 years of sustained investment before the first two look even likely, bar a couple of fluke awesome players turning up. It takes a long time to build,a lot of commitment, and even then likely not produce as many first team players as we'd like. However, I'm sure it helps the club in a lot of ways to have a well respected academy, builds the footballing culture, engaged the young, engaged the community, give fans a sense of continuity etc.

 

Enough players produced to justify the £5m or so every year which Mel spends on it.

My feeling is that chasing the cat 1 status was a mistake whilst we are in the Championship. I don't believe that we will attract enough quality youngsters to justify running a full on football factory. The best kids not living locally will always want to go to Premier League (or big foreign) clubs, leaving us to get lucky with the occasional local lad or late developer. I reckon that a cat 2 or 3 academy would be more than adequate for that scenario.

Also, it's very unlikely that a DCFC manager will want to risk playing many youngsters whilst every point counts towards promotion. In this division, there is no virtue in being mid table, and mid table gives kids the best chance to get some first team football.

BUT...

It's Mel's money. Academy spending is exempt from FFP. Consequently, as long as Mel is prepared to keep bankrolling the maximum FFP losses and the unnecessarily fancy academy, it doesn't do us any harm at all. In fact, I also  suspect that some academy resources might be utilised by the senior players, so it could be a way of moving some of the club's costs outside the FFP calculation.

What will be irritating is if Mel starts to use the academy cost as a reason to put the first team on an austerity footing. 

If I were Mel I'd also be asking Darren Wassall why our most promising academy products always seem to be injured. Is it just fluke or are we doing something to cause the problems?

[ramblur]

16 hours ago, RadioactiveWaste said:

On "sustainability", weren't GSE covering £5-7m annual losses under austerity football?

 

Apparently, we've been 'bankrupt' ever since 07/08, rather than just living beyond our means, with owners willing to make up the difference. But, hey, why use the correct term when you can introduce a bit of sensationalisation? Hadn't realised you could be bankrupt for 10 years , yet still be afloat.

On another note, and partially on health grounds, I've now become fed up with reporting on financial matters. It particularly galls me that I've spent countless hours over the years,that certain individuals have benefited from, yet still felt free to make snide comments. The last round of posts ( out of character, but quite deliberately so) have been payback, and I only wish I could have turned my attention to one or two others as well. I know many will have found it distasteful, but it's made me feel a lot better.

I'm sorry for all of those who've enjoyed my posts over the years, without feeling the need for carping comments, but my mind's firmly made up, and not a spur of the moment decision. Because I don't want to see things that are obviously wrong, and feel the need to enter the fray again, I'm going to cancel my membership to make absolutely sure this doesn't happen. Spending a few minutes on accounts for my own benefit, rather than hours that certain individuals might benefit from, suddenly seems a very attractive proposition, and will certainly help my health.

I wish (most) of you well, and hope you enjoy many good Rams seasons. For the few who have my email address, it hasn't changed. Some time ago @G STAR RAM seemed to give the impression that I had his ad. I never did, nor has he ever had mine, and we've never exchanged mail.

I hope you all enjoy the analysis of the ' group' accounts, which are far removed from the Club accounts that matter. I hope you'll all at least be able to have a laugh.

Up The Rams ( no better last words)

[RamuelLJackson]

Take care, Ramblur. I've appreciated your finance perspectives over the years

[eddie]

@ramblur

I appreciate everything you have ever posted on here, and I share your frustrations. I too have had numerous run-ins with certain individuals, and I find it tiresome in the utmost.

Good luck, and all the very best for the future.

[ramblur]

3 minutes ago, eddie said:

@ramblur

I appreciate everything you have ever posted on here, and I share your frustrations. I too have had numerous run-ins with certain individuals, and I find it tiresome in the utmost.

Good luck, and all the very best for the future.

Thanks eddie - we go back a long time. A lot of this is health based, and I should probably have done this ages ago. It apears that membership cancellation takes 7 days, so I'll be around for a while ( but my finance posting is well and truly over). In many ways I wish it could have been a clean break, but my mind's firmly made up. Thanks for your kind words, and enjoy your season tickets!

[ramblur]

31 minutes ago, RamuelLJackson said:

Take care, Ramblur. I've appreciated your finance perspectives over the years

Thanks Ramuell. It's been a pure pleasure to post for the benefit of most, including you.

[Van der MoodHoover]

34 minutes ago, ramblur said:

Apparently, we've been 'bankrupt' ever since 07/08, rather than just living beyond our means, with owners willing to make up the difference. But, hey, why use the correct term when you can introduce a bit of sensationalisation? Hadn't realised you could be bankrupt for 10 years , yet still be afloat.

On another note, and partially on health grounds, I've now become fed up with reporting on financial matters. It particularly galls me that I've spent countless hours over the years,that certain individuals have benefited from, yet still felt free to make snide comments. The last round of posts ( out of character, but quite deliberately so) have been payback, and I only wish I could have turned my attention to one or two others as well. I know many will have found it distasteful, but it's made me feel a lot better.

I'm sorry for all of those who've enjoyed my posts over the years, without feeling the need for carping comments, but my mind's firmly made up, and not a spur of the moment decision. Because I don't want to see things that are obviously wrong, and feel the need to enter the fray again, I'm going to cancel my membership to make absolutely sure this doesn't happen. Spending a few minutes on accounts for my own benefit, rather than hours that certain individuals might benefit from, suddenly seems a very attractive proposition, and will certainly help my health.

I wish (most) of you well, and hope you enjoy many good Rams seasons. For the few who have my email address, it hasn't changed. Some time ago @G STAR RAM seemed to give the impression that I had his ad. I never did, nor has he ever had mine, and we've never exchanged mail.

I hope you all enjoy the analysis of the ' group' accounts, which are far removed from the Club accounts that matter. I hope you'll all at least be able to have a laugh.

Up The Rams ( no better last words)

I admire your expertise and clarity of explanation. Apologies if you have felt frustrated by my well intentioned, but imperfectly formed attempts at understanding and hope you enjoy life from hereon.

 

Good luck.

[ramblur]

5 minutes ago, HantsRam said:

I admire your expertise and clarity of explanation. Apologies if you have felt frustrated by my well intentioned, but imperfectly formed attempts at understanding and hope you enjoy life from hereon.

 

Good luck.

Thanks. You've never been anything approaching a problem to me, and are one of the better contributors imo. All the best.

[cheron85]

2 hours ago, curtains said:

Ok so Mel if he sold wouldn’t necessarily lose money then 

Depends how much he got for it when/if he sells - So far he paid to buy it - And has invested some money - If he sells for more than he's so far spent then he'll make money - If he sells for less he won't

But I can't imagine he's planning to sell any time soon otherwise I would have thought Lampard wouldn't have signed

[RoyMac5]

57 minutes ago, ramblur said:

On another note, and partially on health grounds, I've now become fed up with reporting on financial matters...Because I don't want to see things that are obviously wrong, and feel the need to enter the fray again, I'm going to cancel my membership to make absolutely sure this doesn't happen. 

Seems a bit extreme @ramblur, there's always the football to comment on and what of the U23s now Jody is here? It's going to be an exciting ride! ?

Why not just ignore ALL the financial posts entirely and stick with the football? It's like giving up fags, difficult at first but then easier with time. Until you find yourself thinking I should have stopped years ago. Plus then when you're around 'smokers' you can look down on them with disdain for their pitiful behaviour! ?

We'll miss your footy comments and they're what counts!

[Wolfie]

1 hour ago, ramblur said:

Apparently, we've been 'bankrupt' ever since 07/08, rather than just living beyond our means, with owners willing to make up the difference. But, hey, why use the correct term when you can introduce a bit of sensationalisation? Hadn't realised you could be bankrupt for 10 years , yet still be afloat.

On another note, and partially on health grounds, I've now become fed up with reporting on financial matters. It particularly galls me that I've spent countless hours over the years,that certain individuals have benefited from, yet still felt free to make snide comments. The last round of posts ( out of character, but quite deliberately so) have been payback, and I only wish I could have turned my attention to one or two others as well. I know many will have found it distasteful, but it's made me feel a lot better.

I'm sorry for all of those who've enjoyed my posts over the years, without feeling the need for carping comments, but my mind's firmly made up, and not a spur of the moment decision. Because I don't want to see things that are obviously wrong, and feel the need to enter the fray again, I'm going to cancel my membership to make absolutely sure this doesn't happen. Spending a few minutes on accounts for my own benefit, rather than hours that certain individuals might benefit from, suddenly seems a very attractive proposition, and will certainly help my health.

I wish (most) of you well, and hope you enjoy many good Rams seasons. For the few who have my email address, it hasn't changed. Some time ago @G STAR RAM seemed to give the impression that I had his ad. I never did, nor has he ever had mine, and we've never exchanged mail.

I hope you all enjoy the analysis of the ' group' accounts, which are far removed from the Club accounts that matter. I hope you'll all at least be able to have a laugh.

Up The Rams ( no better last words)

 ?

[Shipley Ram]

@ramblur

Sorry to see you go, I've always liked your financial analysis, and found it useful to understand that side of things, although I never said so.

[ramblur]

6 minutes ago, RoyMac5 said:

Seems a bit extreme @ramblur, there's always the football to comment on and what of the U23s now Jody is here? It's going to be an exciting ride! ?

Why not just ignore ALL the financial posts entirely and stick with the football? It's like giving up fags, difficult at first but then easier with time. Until you find yourself thinking I should have stopped years ago. Plus then when you're around 'smokers' you can look down on them with disdain for their pitiful behaviour! ?

We'll miss your footy comments and they're what counts!

Thanks Roy, you've often made me smile a lot. The trouble is, whenever something like 'The Baron' or 'The Mail' articles came along, I'd always feel duty bound to put members' minds at ease. For some reason, these kind of things get lapped up, as do things on players' wages/ transfer fees etc, and they've all got something in common. Mind you, it seems garbage info is better than none for some.

My health's worse than it's ever been, and quite simply I need to save myself from myself.

Loved your 'cool down' post - got the impression you thought I might be on the way to a ban?. Quite ironic really.

I gave up smoking years ago, which brought all these autoimmune problems onto me ( hardly ever saw a GP whilst smoking, and never the inside of a hospital.) My advice to anyone trying to give up would be to do it gradually, over a long period. Don't give your system a shock, although some get away with it. I curse to high heaven the day I gave up'

Anyway, all the best.

[ramblur]

6 minutes ago, Shipley Ram said:

@ramblur

Sorry to see you go, I've always liked your financial analysis, and found it useful to understand that side of things, although I never said so.

Thanks, Shipley. All the best, mate.

[Wolfie]

Well I'm going to miss @ramblur's analysis a lot.

Maybe we should have a single "Ramblur's Finance" thread, which is locked for anyone except him, so he can explain accounts stuff as and when (and we can all use it for reference), but he doesn't have to deal with the repetitive questions etc from the less informed (like me)?

Just a thought

 

[Boycie]

He’ll be back again. ?

[ramblur]

22 minutes ago, Boycie said:

He’ll be back again. ?

How much do you want to bet?

I'm not a gambler, but I don't mind certainties?

[Boycie]

6 minutes ago, ramblur said:

How much do you want to bet?

I'm not a gambler, but I don't mind certainties?

You’ve just won me my bet lol!?