CornwallRam Posted February 25, 2012 Share Posted February 25, 2012 [size=3]I’m on a seven hour train journey from Leeds to Cambourne.[/size] [size=3]I’m bored and only have a sporadic internet connection so I can’t look up the figures.[/size] [size=3]I was just musing on GSE’s ‘miraculous’ financial management. Are we now less encumbered by debt than we were when they took over? Clearly, in absolute terms we are. We were around £31m in debt and are now, probably, around £19m in debt - £12m or so less. Seems pretty good that.[/size] [size=3]However, when a bank judges a customer’s credit worthiness they examine income. A customer with a salary of £50k can easily afford a £10k loan, whereas, a customer earning £10k may well struggle to repay a £5k loan. In absolute terms, the first customer would be more in debt, but still in a much better position.[/size] [size=3]Apart from cutting the debt, GSE have presided over a huge cut in turnover. Obviously there is the end of the parachute payments , but also attendances have fallen considerably, with (I would expect) a corresponding fall in revenue from merchandise and catering (I am informed that the catering contract has a clause where the payments vary in line with attendances, so less people in, less money from Delaware).[/size] [size=3]So, what does the debt look like when it is taken as a percentage of turnover? Are we really in a better position now than then?[/size] [size=3]P.S. I don’t know the answer, but I’m hoping that certain people on here can keep me entertained by discussing itJ[/size] [size=3] [/size] Link to comment Share on other sites More sharing options...
randombc Posted February 25, 2012 Share Posted February 25, 2012 [size=3]However, when a bank judges a customer’s credit worthiness they examine income. A customer with a salary of £50k can easily afford a £10k loan, whereas, a customer earning £10k may well struggle to repay a £5k loan. In absolute terms, the first customer would be more in debt, but still in a much better position.[/size] Just being picky, but that loan would only be 10% of your income rather then 50% so you would struggle more to pay it off? Link to comment Share on other sites More sharing options...
Deano Posted February 25, 2012 Share Posted February 25, 2012 I'd guess the club is financially better, yes. However, I don't support a bank. I don't sing on the stands about decimal points and pi. I go mental when a ball hits the back of the net. Not when an accountant remembers to carry the one. I simply cannpot be pleased about someone merely not letting a business go bust. That is a minimum standard, not a target. Link to comment Share on other sites More sharing options...
Asanovic Posted February 25, 2012 Share Posted February 25, 2012 I'd guess the club is financially better, yes. However, I don't support a bank. I don't sing on the stands about decimal points and pi. I go mental when a ball hits the back of the net. Not when an accountant remembers to carry the one. If we're not run well - you won't have a club to cheer on. Link to comment Share on other sites More sharing options...
CornwallRam Posted February 25, 2012 Author Share Posted February 25, 2012 Just being picky, but that loan would only be 10% of your income rather then 50% so you would struggle more to pay it off? Not sure I get your point. I'd hoped that I used an example which showed that someone who earned more could afford to pay off a bigger loan. I think my wording was OK, but perhaps that's just me? Link to comment Share on other sites More sharing options...
Deano Posted February 25, 2012 Share Posted February 25, 2012 If we're not run well - you won't have a club to cheer on. Yes because we all remember when the club ceased to exist under Maxwell. When Pickering went, we also stopped existing then. Link to comment Share on other sites More sharing options...
curb Posted February 25, 2012 Share Posted February 25, 2012 £12m or less, but that's with 2 x parachute payments in as well, which doesn't make it sound very impressive at all. They've put in £44m (equity, not direct debt) to keep us ticking over, but what happens when they want to sell? They'll obviously want to recoup that, so that amount then will get transfered to the new owners. Would other owners have been able to do any different? Billy and the LOG left us with a shocking squad on long contracts and high wages, that was the problem, but then GSE compounded it by signing more crap, then more crap, then more crap, then Nathan Tyson. Link to comment Share on other sites More sharing options...
CornwallRam Posted February 25, 2012 Author Share Posted February 25, 2012 If we're not run well - you won't have a club to cheer on. But is making the club smaller running it well? Clearly overstretching in the way that Portsmouth have done is very risky, but there is also some risk in failing to provide a product that satisfies your customers. Spending less is not, on its own, a sound business strategy. Link to comment Share on other sites More sharing options...
Asanovic Posted February 25, 2012 Share Posted February 25, 2012 But is making the club smaller running it well? Clearly overstretching in the way that Portsmouth have done is very risky, but there is also some risk in failing to provide a product that satisfies your customers. Spending less is not, on its own, a sound business strategy. No it isn't but the simple fact is the amount we were paying on wages wasn't sustainable, and before we build we have to cut. Link to comment Share on other sites More sharing options...
Asanovic Posted February 25, 2012 Share Posted February 25, 2012 Yes because we all remember when the club ceased to exist under Maxwell. When Pickering went, we also stopped existing then. I bet Portsmouth used to make comments like that. Link to comment Share on other sites More sharing options...
Deano Posted February 25, 2012 Share Posted February 25, 2012 I bet Portsmouth used to make comments like that. I bet Portsmouth will still exist in 10 years time. I bet they will be higher in the league than us as well. Link to comment Share on other sites More sharing options...
Asanovic Posted February 25, 2012 Share Posted February 25, 2012 I bet Portsmouth will still exist in 10 years time. I bet they will be higher in the league than us as well. Serious? They've been minutes from being wound up, even people associated with the club had them as gonners - you're obviously better qualified to make a judgement that they'll be in a better position than us in ten years time!! Link to comment Share on other sites More sharing options...
Deano Posted February 25, 2012 Share Posted February 25, 2012 Been. Had. Past tense kiddo. They will pull through. Big named teams always do. Link to comment Share on other sites More sharing options...
CornwallRam Posted February 25, 2012 Author Share Posted February 25, 2012 No it isn't but the simple fact is the amount we were paying on wages wasn't sustainable, and before we build we have to cut. But now, according to NC we have a lower wage bill than two thirds of the clubs in the division. TG has made it clear we will have little to spend in the summer...where does the building start, where is the plan for growth? Link to comment Share on other sites More sharing options...
Asanovic Posted February 25, 2012 Share Posted February 25, 2012 Been. Had. Past tense kiddo. They will pull through. Big named teams always do. Let's talk about the current. As things stand they're bottom of the league after having ten points docked off. Financial fair play, over the next few years, will probably become so stringent that docked points for non compliance will probably become a reality. So I'd rather avoid that. Link to comment Share on other sites More sharing options...
Asanovic Posted February 25, 2012 Share Posted February 25, 2012 But now, according to NC we have a lower wage bill than two thirds of the clubs in the division. TG has made it clear we will have little to spend in the summer...where does the building start, where is the plan for growth? Hendrick, O'Brien, Ball, Hughes, Bennett. Our youth products. Link to comment Share on other sites More sharing options...
curb Posted February 25, 2012 Share Posted February 25, 2012 The FFP won't make the slightest bit of difference, and it's not even been voted on yet. Link to comment Share on other sites More sharing options...
Deano Posted February 25, 2012 Share Posted February 25, 2012 Let's talk about the current. As things stand they're bottom of the league after having ten points docked off. Financial fair play, over the next few years, will probably become so stringent that docked points for non compliance will probably become a reality. So I'd rather avoid that. Well if you are satisfied with what the club is dishing up, that is great for you. It really is. If you enjoy us getting mullered by the teams higher up the table, consistently buying the belief that because they are spending more than us, that they will cease to exist soon, then really, I am pleased for you. We will soon win the league no doubt by virtue of being the only club not being wound up in a particular season... Personally I hate it when my team loses, but I guess not everyone is the same. Link to comment Share on other sites More sharing options...
Asanovic Posted February 25, 2012 Share Posted February 25, 2012 Well if you are satisfied with what the club is dishing up, that is great for you. It really is. If you enjoy us getting mullered by the teams higher up the table, consistently buying the belief that because they are spending more than us, that they will cease to exist soon, then really, I am pleased for you. We will soon win the league no doubt by virtue of being the only club not being wound up in a particular season... Personally I hate it when my team loses, but I guess not everyone is the same. Not sure where you've read that I'm satisfied with getting beaten, because I'm not. But I'll put up with this for a couple more seasons if it means at the end of it we have a team full of our own home grown products because to me that would be us doing it the right way. I also hate when my team loses, but I understand why it happens. It's not about teams spending more than us, it's about teams spending more than they can afford. Take Leicester as a case in point. They're 3 points above us, and not looking red hot for promotion, but must have one of the biggest wage bills outside the Premiership. What happens if they don't go up? Maybe get by for a season or so, but it's not sustainable - they'll either fall in to trouble, or will have to sell their big earners, making them no better than us in the end. If they go up then fair play, but I wouldn't promote that as a business model - Leeds United probably wouldn't either. I don't think 'we'll win the league by virtue of being the only club not being wound up in a particular season' - I think we'll be a good club with a great academy and alot of graduates in that academy in our first team. Like Middlesbrough, perhaps. Link to comment Share on other sites More sharing options...
CornwallRam Posted February 25, 2012 Author Share Posted February 25, 2012 Why is Leicester's spending any more unsustainable than ours? They are being bankrolled by rich investors. I believe that they will get promoted before we do. Once that happens, their finances will be far better than ours. OK, if their investors pull out, they will have a period of adjustment meaning they have little money to spend...just like us! There are far more examples of underfunded clubs getting relegated than bankrolled clubs going under. Link to comment Share on other sites More sharing options...
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