The Administration Thread

[jono]

21 minutes ago, PistoldPete said:

He has positive equity based on the purchase price of £81 m. But if he sells for £20m.. which Kirchner was reported to be unwilling to pay, (according to Nixon) then there could be negative equity. So a sale price below the current loan amount requires Morris to find money from elsewhere.

It could just be that he doesn't have any more money elsewhere.

 

Hey I don’t suppose any of us can ever know the intimate details but I am willing to bet MSD will only have lent money on a forced sale /worst case value and the loan will be comfortably below that low valuation. Banks want collateral from business that far exceeds what a building society wants from a private individual 

[hintonsboots]

35 minutes ago, Ram1988 said:

I do too

I pronounce you Man and Wife.

[Sparkle]

25 minutes ago, PistoldPete said:

He has positive equity based on the purchase price of £81 m. But if he sells for £20m.. which Kirchner was reported to be unwilling to pay, (according to Nixon) then there could be negative equity. So a sale price below the current loan amount requires Morris to find money from elsewhere.

It could just be that he doesn't have any more money elsewhere.

 

Cash maybe !

[Sparkle]

5 minutes ago, chipperram said:

The company hails from Birmingham......Mr P should now be doubly disappointed.

Your trying to spoil the entertainment aren’t you?

[Day]

With regards to the stadium, would I be right in thinking to buy the stadium it would be best if we was in League 1 as they don't have the same FFP rules. You can spend 60% of your turnover on wages, stadium sale wouldn't matter would it?

If we was to somehow survive, could we afford to buy the stadium back so it's owned by the club whilst not falling foul of FFP/P&S?

The new owners could buy it under a different company, we would be in the same position as we was under Mel though. 

Could be wrong, happy to be corrected, just a football fan not an accountant.

[duncanjwitham]

3 minutes ago, David said:

If we was to somehow survive, could we afford to buy the stadium back so it's owned by the club whilst not falling foul of FFP/P&S?

I don't think that affects FFP. We pay (e.g.) £20m, and a £20m asset appears on the books. There's no net change in profit/loss terms.

[PistoldPete]

4 minutes ago, David said:

With regards to the stadium, would I be right in thinking to buy the stadium it would be best if we was in League 1 as they don't have the same FFP rules. You can spend 60% of your turnover on wages, stadium sale wouldn't matter would it?

If we was to somehow survive, could we afford to buy the stadium back so it's owned by the club whilst not falling foul of FFP/P&S?

The new owners could buy it under a different company, we would be in the same position as we was under Mel though. 

Could be wrong, happy to be corrected, just a football fan not an accountant.

Efl will find some way of saying it’s against Ffp rules.  But I don’t think it is.

[PistoldPete]

13 minutes ago, Sparkle said:

Cash maybe !

Or readily realisable money. Some people say he has a house in Sandbanks in Dorset. Which would fetch a few Bob. 
 

Maybe his wife wouldn’t be too keen on selling especially if it’s jointly owned.

[Sparkle]

1 minute ago, PistoldPete said:

Efl will find some way of saying it’s against Ffp rules.  But I don’t think it is.

That doesn’t matter - rules or interpretation of them is there to be changed when the EFL want to depress more football supporters 

[DCFC27]

Hopeful of this week = whenever it actually comes together we have no idea 

[Maharan]

23 minutes ago, duncanjwitham said:

I don't think that affects FFP. We pay (e.g.) £20m, and a £20m asset appears on the books. There's no net change in profit/loss terms.

So you can (or could under previous rules?) sell your stadium to cover FFP losses, but the purchase price wouldn’t impact if the club bought it back? That can’t be right,surely? Can it?! If so, why wasn’t everyone doing it?

[Ken Tram]

I have avoided the liquidation topic since the speculation last season, so I have a bit to catch up on. Is the stadium the key blocker to a sale?

(If I have fallen foul of any "naming people" rules - please can the offending sentence be edited, rather than the entire post. Thanks!)

As I recall, the stadium is owned by Mel, having used a loan from the 3-letter American firm to buy it (I always get the 3-letter initials mixed up), using the academy as collateral. Is that correct?

And as I recall, this makes buying the club less attractive.

Last season, I assumed that the Americans would buy the club if we went into administration because being creditors for the stadium would somehow put them in a better financial position than anyone else. But I think I have read that the Americans have withdrawn as bidders?

Then David has just asked his question about whether buying the stadium would be financially advantageous if we were not in the Championship. (League 1) I would hope that the EFL would not doubly-punish us if we have to make financial payments related to the stadium to get out of Administration - I should think that the Administrators could negotiate that. If the stadium had not been bought/sold, we'd still have had our points deduction. Maybe a maximum of 3 more points if a new purchase of the stadium affected FFP, to bring the punishment up from 9 to 12?

Could the fans part-purchase the stadium as a one-off financial injection of some million pounds, to make the club sale more feasible, and maybe gradually sell those shares back to the club. Maybe it could be an investment (that can go down as well as down!). Or as a bond of some sort? (Not that many fan NHS have spare money, some do, and some have more than others. 

Could some sort of fan (part) purchase of the stadium, as shares or a bond, that were gradually bought back by the club be at all useful? (Not the crypto currency gamble thing that I read about!!!)

Edited January 11, 2022 by Ken Tram

[PistoldPete]

14 minutes ago, Maharan said:

So you can (or could under previous rules?) sell your stadium to cover FFP losses, but the purchase price wouldn’t impact if the club bought it back? That can’t be right,surely? Can it?! If so, why wasn’t everyone doing it?

Stamp duty for a start. Twice over.

[rammieib]

As for the statement from the Admins referring to two bidders - does this mean the second one is Ashley or the Crypto Currency farcical group from just before Christmas?

Has Ashley officially submitted a bid yet do we know or as per everything Is aw it was "He is going to".

[secretsquirrel]

2 hours ago, Elwood P Dowd said:

We know Mel owns the ground

We know that the Club leases the ground from Mel

As Mel owns the ground, allbeit with an intrest in it from MSD, how would Mel fund the loan payment to MSD if the club went into liquidation, what use is the ground without a football club

Its in Mel interest to sell the ground

Its also in Mels interest to get the sale of ground to include the amount of interest paid to MSD hence pushing the price up  creating another stumbling block

[RadioactiveWaste]

2 minutes ago, rammieib said:

As for the statement from the Admins referring to two bidders - does this mean the second one is Ashley or the Crypto Currency farcical group from just before Christmas?

Has Ashley officially submitted a bid yet do we know or as per everything Is aw it was "He is going to".

Only rumours - the administrators know, but there'll be confidentiality agreements.

I think it's reasonable to assume that Ashley is behind one of the bids because if he wasn't it'd have been put around by now.

That crypto thing was a scam and CK just got outbid and threw a strop over it.

[Ellafella]

1 hour ago, StarterForTen said:

Perhaps there is a rather large fleet of club cars that need selling….?!

Every silver cloud has a grey lining. Get yourself down there there's a bargain to be had   but dont kick the tyres! 

[Maharan]

33 minutes ago, PistoldPete said:

Stamp duty for a start. Twice over.

So what's to stop a wealthy owner, to whom stamp duty represents a drop in the ocean, undertaking the exercise to completely bypass FFP? 

[Gringo]

4 hours ago, Rich84 said:

And where does it say they will get £5m?

Why would the stadium be in MSD control, Mel doesn't owe them money, the club do and until the admin process is sorted nothing will happen there.

This is the problem with the whole scenario,  people making up stories ? 

Mel has given a personal guarantee on the MSD stadium/academy loans ( see companies house), if he does not pay instalments or redeem the loan he loses his house and all his possessions.

[duncanjwitham]

1 hour ago, Maharan said:

So you can (or could under previous rules?) sell your stadium to cover FFP losses, but the purchase price wouldn’t impact if the club bought it back? That can’t be right,surely? Can it?! If so, why wasn’t everyone doing it?

(I'm not an accountant proviso here, take with a pinch of salt etc etc...)

If the deal isn't an arms-length transaction (e.g. a Morris company selling to a Morris company), then the deal has to be done at 'market value' (i.e. valued by a 3rd party valuer in the case of property).  The only reason we were able to gain any profit from our deal was that the stadium was undervalued on our books at the time (having not been revalued for a while).  It was revalued from ~£40m to ~£80m, sold on, and we pocketed the difference.  Any other club where the stadiums real-world value is higher than it's current book value was free to do the same, as Villa and Wednesday (and maybe others?) did.

But if we were to buy it back (prior to going into admin), we would have had to sell it back for market value, which would basically have been for £80m again. So we gain nothing in that transaction in P/L terms (other than the stadium being back in our ownership, of course).  The same going forward, we could move it back to the other company, but it would be for very close to what we paid for it.

The only things that's changed now, is that it is an arms-length transaction. DCFC is 'owned' by the administrators, and the stadium by Morris, so he's free to sell it to us for whatever he likes, and his company will register the change in P/L (i.e. if he sells it back to us for £20m, he'll have to eat a ~£60m loss on it).  But from our point of view, there's no change, £20m cash goes out, a £20m asset comes in.  Of course we could in theory do the same trick, by moving our £20m asset to ourselves for it's true value of £80m, but that loophole has been closed by the EFL.