Debt versus mel spend

[Archied]

For me at this point that is the crux of the matter and what mel Morris will be ultimately judged on,

which is it ? 
has mel as a rich fan come in and pumped his own money into the club to chase the premiership or has he somehow been building up massive debts that could cripple the club if we failed to go up ( covid not withstanding) 

It’s  a mess that perhaps the pr during mels early tenure has covered up , ie club taken to the wire debt wise ,

the truth is you often only find out what people are really about when the crap hits the fan ( as always it’s us fans it hits??‍♂️), let’s hope he turns out to be a real ram to the core 

could really do with somebody clarifying whether mel has been financing and risking his own doe or risking the clubs survival to chase his vision

Edited May 21, 2021 by Archied

[G STAR RAM]

Certainly up until June 2018 he was pumping his own cash in. 

What has happended since then is a mystery but if you read between thr lines it would appear everything since this point has been financed by debt.

No problem with him borrowing against the ground. The ground was mortgaged when he took over and by all accounts he has borrowed roughly the same amount that he had previously paid off.

The loan against the training ground appears to have been used to cover the drop in turnover since Covid.

Then there is reportedly a debt of £20m to HMRC for what I assume is PAYE since Covid, if this facility is there I don't see the point in not using it.

Overall Im not massively concerned about the debt and would be surprised if there arent a large number of clubs in the same boat.

[Spanish]

1 hour ago, G STAR RAM said:

Certainly up until June 2018 he was pumping his own cash in. 

What has happended since then is a mystery but if you read between thr lines it would appear everything since this point has been financed by debt.

No problem with him borrowing against the ground. The ground was mortgaged when he took over and by all accounts he has borrowed roughly the same amount that he had previously paid off.

The loan against the training ground appears to have been used to cover the drop in turnover since Covid.

Then there is reportedly a debt of £20m to HMRC for what I assume is PAYE since Covid, if this facility is there I don't see the point in not using it.

Overall Im not massively concerned about the debt and would be surprised if there arent a large number of clubs in the same boat.

presumably you infer 3rd party debt, the only worthwhile asset we have is the debt owed by Mel to the club for purchasing PP.  3rd party debt would need to be secured against something.  All seems very odd and maybe it is just gossip?

[RoyMac5]

3 hours ago, Archied said:

For me at this point that is the crux of the matter and what mel Morris will be ultimately judged on,

For me there's no way to make a final judgement until Mel leaves the Club.

To put it mildly things haven't gone as he/we would have hoped BUT we are still in the Championship, and still in the game! So major 'disappointments' for me, but reserving final judgement - c'mon Mel there's still time to end with a flourish! #COYR

[jimtastic56]

We probably won’t find everything out until Mel leaves and writes a book. ( with lots of pictures of himself in). I suspect there are a lot of football people out there who have taken him for a ride and filled there boots on the back of DCFC

[Rab a dab doo]

8 minutes ago, jimtastic56 said:

We probably won’t find everything out until Mel leaves and writes a book. ( with lots of pictures of himself in). I suspect there are a lot of football people out there who have taken him for a ride and filled there boots on the back of DCFC

There are a lot who have tried to recently. (A certain Arab and Spaniard come to mind)

[Ambitious]

I think it's a difficult one, because no one bar Mel and a few very close to him really know his financial situation. It's all good having a high net worth, but typically it doesn't translate well at all into cash. 

I think Mel, like most, was perhaps very cash rich when he came into the club and didn't really think too much about the long-term effects. I would suggest by his actions of managing his cash flow that he's now not very cash rich and hence why he wants out so badly because the club is becoming an anchor around his neck. You can't blame him for the pandemic, obviously, but it's accelerated his need to get out before he physically can't fund us. We will be back to a low wage bill this coming season (circa £10-12m) which should be manageable for us. 

If not, we simply need to get Wayne Rooney to fight one of the Paul brothers in order to raise the capital to keep us going. 

[kevinhectoring]

4 hours ago, Archied said:

For me at this point that is the crux of the matter and what mel Morris will be ultimately judged on,

which is it ? 
has mel as a rich fan come in and pumped his own money into the club to chase the premiership or has he somehow been building up massive debts that could cripple the club if we failed to go up ( covid not withstanding) 

It’s  a mess that perhaps the pr during mels early tenure has covered up , ie club taken to the wire debt wise ,

the truth is you often only find out what people are really about when the crap hits the fan ( as always it’s us fans it hits??‍♂️), let’s hope he turns out to be a real ram to the core 

could really do with somebody clarifying whether mel has been financing and risking his own doe or risking the clubs survival to chase his vision

Just to confuse things:  true that MM is not using his own £ if he finances the club’s losses thru borrowings in the stadium company. BUT it’s reported he has guaranteed some of that debt. So that’s his pecker on the line  The accounts - when filed - won’t shed any light on this

[kevinhectoring]

1 hour ago, Spanish said:

 the only worthwhile asset we have is the debt owed by Mel to the club for purchasing PP.  

the club has guaranteed the MSD debt. And has given security over all its assets to support the guarantee. So the worthwhile asset you talk about is worthless to the club until the stadium company debt is paid off 

[Spanish]

21 minutes ago, kevinhectoring said:

the club has guaranteed the MSD debt. And has given security over all its assets to support the guarantee. So the worthwhile asset you talk about is worthless to the club until the stadium company debt is paid off 

the asset can't worthless otherwise it would be written down.  An administrator for DCFC would pursue that debt by any means to obtain repayment.  But are you saying it is worthless because DCFC have already borrowed and fully secured that asset to a third party.  If that was the case we have(guessing)borrowed 90% against that asset to pay our daily running costs.  Is that what you are inferring?

[G STAR RAM]

2 hours ago, Spanish said:

presumably you infer 3rd party debt, the only worthwhile asset we have is the debt owed by Mel to the club for purchasing PP.  3rd party debt would need to be secured against something.  All seems very odd and maybe it is just gossip?

We also have a long term lease on the ground.

What do you think is gossip?

[Spanish]

Just now, G STAR RAM said:

We also have a long term lease on the ground.

What do you think is gossip?

£60m of debt given no accounts have been produced

[Spanish]

11 minutes ago, G STAR RAM said:

We also have a long term lease on the ground.

What do you think is gossip?

you make a good point about the long LH and TBH I have no experience of sale and leaseback arrangements apart from knowing they have to meet critical standards to avoid being seen a pure financing.  In other words I don't think you can double count (assume the lease has value).  I just don't know enough about this bit

[kevinhectoring]

2 minutes ago, Spanish said:

the asset can't worthless otherwise it would be written down.  An administrator for DCFC would pursue that debt by any means to obtain repayment.  But are you saying it is worthless because DCFC have already borrowed and fully secured that asset to a third party.  If that was the case we have(guessing)borrowed 90% against that asset to pay our daily running costs.  Is that what you are inferring?

To reflect the stadium co financings, the club accounts will only need to show a note referring to the guarantee by the club. And as things stand, there’s no need to write down the receivable under accounting rules. But the receivable literally belongs to MSD. So an administrator of the club can’t pursue the debt until the secured debt is repaid in full. 
 

So yes, thru the guarantee,  leverage has been put on the club to finance the stadium sale. But we don’t know how much leverage, because we don’t know how much of the stadium co debt was guaranteed by MM and how much by the club. But I’d guess it’s way below the 90% number you mention. 
 

none of this matters if MM makes a good sale. As @iRampointed out ages ago, the MSD debt has a high interest rate (was 9% reported?) so if our buyer is suitably loaded they will pay it off in a jiffy absent swingeing prepayment penalties 

[Spanish]

10 minutes ago, kevinhectoring said:

To reflect the stadium co financings, the club accounts will only need to show a note referring to the guarantee by the club. And as things stand, there’s no need to write down the receivable under accounting rules. But the receivable literally belongs to MSD. So an administrator of the club can’t pursue the debt until the secured debt is repaid in full. 
 

So yes, thru the guarantee,  leverage has been put on the club to finance the stadium sale. But we don’t know how much leverage, because we don’t know how much of the stadium co debt was guaranteed by MM and how much by the club. But I’d guess it’s way below the 90% number you mention. 
 

none of this matters if MM makes a good sale. As @iRampointed out ages ago, the MSD debt has a high interest rate (was 9% reported?) so if our buyer is suitably loaded they will pay it off in a jiffy absent swingeing prepayment penalties 

lost me a bit.  Did MSD lend money to DCFC and take a charge on PP as security prior to the sale to Mel/another entity?  If you haven't got time to humour me don't worry?

[kevinhectoring]

5 minutes ago, Spanish said:

lost me a bit.  Did MSD lend money to DCFC and take a charge on PP as security prior to the sale to Mel/another entity?  If you haven't got time to humour me don't worry?

MSD lent to stadium co after the stadium sale and after the gabay loan. The cash was presumably used indirectly to fund losses in the club.  The Loan was guaranteed by all companies in MM’s DCFC empire and secured over all of their assets. If you have an anorak, put it on and go to the companies house file for the club and look at the filings under ‘charges’. It’s actually quite interesting to piece it together. What’s also interesting is that the legal documents filed are clearly written in a way that makes it all hard to follow. 
I hope I’ve got this right I’ve not looked at it for ages 

[Spanish]

31 minutes ago, kevinhectoring said:

MSD lent to stadium co after the stadium sale and after the gabay loan. The cash was presumably used indirectly to fund losses in the club.  The Loan was guaranteed by all companies in MM’s DCFC empire and secured over all of their assets. If you have an anorak, put it on and go to the companies house file for the club and look at the filings under ‘charges’. It’s actually quite interesting to piece it together. What’s also interesting is that the legal documents filed are clearly written in a way that makes it all hard to follow. 
I hope I’ve got this right I’ve not looked at it for ages 

So there could be a joint and several over the assets of a wide ranging set of companies that received no direct benefit from the loan.  If the debt is £60m or x capital plus y interest you have to wonder where that money has gone.  Don't look great does it.  If it is complex I dare say multiple anoraks will be required and then likely that the effort is not worthwhile

[G STAR RAM]

4 hours ago, Spanish said:

£60m of debt given no accounts have been produced

The loans are avaiable to see in the public domain (though the amounts are open to speculation).

MM has been quoted on the HMRC debt so take that at face value as being correct.

We know the EFL ruling re Keogh although I suspect this will be challenged. 

The Cocu/staff payoff amounts seem very suspect given what was said at the time but who knows.

I dont think it is unreasonable to assume DCFC/MM have accumulated debts of £60m over the last 3 years.

[Spanish]

14 minutes ago, G STAR RAM said:

The loans are avaiable to see in the public domain (though the amounts are open to speculation).

MM has been quoted on the HMRC debt so take that at face value as being correct.

We know the EFL ruling re Keogh although I suspect this will be challenged. 

The Cocu/staff payoff amounts seem very suspect given what was said at the time but who knows.

I dont think it is unreasonable to assume DCFC/MM have accumulated debts of £60m over the last 3 years.

I think it may be the contingent cross company guarantee that maybe more of a problem referred to by @kevinhectoring.  The ownership structure is a web of companies and I'm not sure which ones represent the sale of DCFC

Did Mel refer to the quantum of the debt to HMRC?

[Archied]

So the bit I’m trying to figure is ,,,, is most of this debt due to covid problems or have we been getting deep before the covid stuff with us fans unaware that the club was being dangerously hocked up to its eyeballs whilst we thought mel Morris was financing us ?

Edited May 21, 2021 by Archied