The Great Big Debt Thread

[Ani]

I'm totally lost by this latest news. Burnden Leisure has secured a loan from a finance company, but doesn't Eddie and his many millions own Burden Leisure. I know he's trying to sell the club but why the loan. Can someone please explain in terms that someone who doesn't know a thing about company finances might understand.

 

We had a loan facility already it was secured by the parachute payments. As these are now finished we have to secure the loan in another way. It is now covered by the value of land and the fact we have money coming in from TV deals.

 

Cost of a loan is based largely on the risk of you defaulting, so if secured interest rate drops. With parachute payments finishing we need to give security or the rate on the loan would go up.

 

It seems like a nothing story, but there be more behind it, it could maybe free up some capital or it might be a sign that the funds are drying up quicker than expected, but more likely a nothing story IMO. Companies do stuff like this all the time.

Edited August 27, 2015 by Ani

[Casino]

i still don't see why eddie doesn't just bung 300 million more at it

 

the bigger the debt the more interest he can get

[ex_midlandwhite]

We had a loan facility already it was secured by the parachute payments. As these are now finished we have to secure the loan in another way. It is now covered by the value of land and the fact we have money coming in from TV deals.

 

Cost of a loan is based largely on the risk of you defaulting, so if secured interest rate drops. With parachute payments finishing we need to give security or the rate on the loan would go up.

 

It seems like a nothing story, but there be more behind it, it could maybe free up some capital or it might be a sign that the funds are drying up quicker than expected, but more likely a nothing story IMO. Companies do stuff like this all the time.

The only slight concern I had was that it seems the facility isn't with Barclays now but this other financial institution, I'd guess the loan will be more expensive with them?

[Horwich]

We also borrowed about £2.5 from the warbies last season.

 

We need a sale asap

[LeggyMountbatten]

We also borrowed about £2.5 from the warbies last season.

 

We need a sale asap

 

Don't forget the £5.5 million in July from the sale and lease back of the car park

[Sweep]

, unless it's a stop gap until a deal to buy the club is in the pipeline. 

 

Let's be real here, that's just not happening anytime soon  -  and it's hardly a surprise given our predicament

[rochdale white]

Where are they a mystery.

 

Did you not see the list of players we signed. They don't sign for free. Fuck me. These are audited accounts not some bullshit a pisscan is passing about

Part of the problem is these fucktards hear the phrase "free transfer" like for Baptiste, and take it literally, forgetting the massive signing on fee these cunts get for letting their contracts run down and moving!

[Sweep]

i still don't see why eddie doesn't just bung 300 million more at it

 

the bigger the debt the more interest he can get

 

plus we'd get promoted with that sort of war-chest, so would recoup it in TV money within a few years anyway.

 

Everybody wins!

 

I'll get on the phone to ED now, I think he's not thought this through properly

[Sweep]

Part of the problem is these fucktards hear the phrase "free transfer" like for Baptiste, and take it literally, forgetting the massive signing on fee these cunts get for letting their contracts run down and moving!

 

That's a bit harsh - you can hardly blame the players for this, they only get paid what a club is willing to offer them. I wouldn't say it's a problem a player running his contract down if so he chooses

[Spider]

Eddie Davies has a mock up of the moon landings in his garage. Fact.

[Mounts Kipper]

Eddie Davies has a mock up of the moon landings in his garage. Fact.

With Gartside not Armstrong inside the spaceman suit.????

[Horwich]

It does show that as a club, we have been mis-managed for a number of years

[Youri McAnespie]

Why doesn't he get someone to nick his private jet and torch it on a school playing field? He could give us the insurance payout...

[Take Hunt Off]

Which ever way you cut it its worrying especially if

The loan is merely to cover existing running costs.

I'm not a Garside knocker but I think he should explain to the fans just exactly were BWFC are financially at the present time.

[gonzo]

They are educated guesses that I can believe.The suggestion that Dougie spent £9.8 million during the 2013/14 season on mystery signing on fees for loan players from the 2nd Div and the like is ludicrous.

The accounts are audited by an impartial accounts firm and approved by HMRC.

 

Go through the list of players signed and work out the coatings. Jay Spearing cost over £2.5 million for a start.

 

Are you misreadig the figure?

[davidjack]

A few other things of note whilst I was going through them:

Net cash spend on players 2004-2014 = £60m

Net cash spend on players 2007-2014 = £54m

Net cash spend on players 2013-2014 = £13m (proves that we went shit or bust at bouncing straight back up)

 

Does it not strike people as odd that £13m of a £60m net spend between 2004 and 2014, according to the club's figures, came in the final one of those years? When we made, relatively speaking, fuck all signings? So 2004-2013 (when we signed, among others, Speed, Anelka, Elmander, Muamba, Cahill, Steinsson, Taylor, Knight, Sean Davis, Ricketts, Lee) we spent £47m...then, in just ONE year - when we were cutting right back and begging and borrowing players, we spent £13m?!

Edited August 27, 2015 by davidjack

[Casino]

if we are all very lucky, edward will get back to us with the answers

 

however, id hazard a guess that as touched on earlier, payments are phased, so you could sign somebody in 2012 but not pay until 2014

[Eddie]

A few other things of note whilst I was going through them:

Net cash spend on players 2004-2014 = £60m

Net cash spend on players 2007-2014 = £54m

Net cash spend on players 2013-2014 = £13m (proves that we went shit or bust at bouncing straight back up)

 

Does it not strike people as odd that £13m of a £60m net spend between 2004 and 2014, according to the club's figures, came in the final one of those years? When we made, relatively speaking, fuck all signings? So 2004-2013 (when we signed, among others, Speed, Anelka, Elmander, Muamba, Cahill, Steinsson, Taylor, Knight, Sean Davis, Ricketts, Lee) we spent £47m...then, in a year when we were cutting right back, we still spent £13m?!

We recouped cash though in those years.

 

FY07 to FY12 we spent £86m and recouped £45m

 

FY13 and FY14 we spent £16m and recouped £3m

[zurichwhite]

Net cash spend, we received fees from player sales pre 2013

[Eddie]

if we are all very lucky, edward will get back to us with the answers

 

however, id hazard a guess that as touched on earlier, payments are phased, so you could sign somebody in 2012 but not pay until 2014

This is also a factor, the cash flow shows cash in and out within the financial year, this doesn't however mean that it all relates to the purchases/sales in those years.

 

One off the top of my head which I think might be inflating the 2014 £9.8m would be cash paid to Liverpool for N'Gog. I'm sure I remember that deal was structured with quite a few future payments

[jules_darby]

Would they not be using accrual based accounting Eddie?

 

Apologies if it's a stupid question

[ex_midlandwhite]

Would they not be using accrual based accounting Eddie?

 

Apologies if it's a stupid question

Jules, for profit and loss I'd say probably yes, the figures Eddie is looking at is purely cash flow, when cash went in and out and that gets reported in the period the cash was paid or received.

 

The cash flow statement is a separate part to the profit and loss and also balance sheet in a report and accounts.

[Eddie]

Would they not be using accrual based accounting Eddie?

 

Apologies if it's a stupid question

Ex midland has pretty much said it spot on. P&L and balance sheet are accruals basis. The cash flow however just reconciles the movement in cash from the opening figure to the closing figure and cannot therefore be prepared on the accruals basis.

 

For me the cash flow is the most important statement in the accounts. The P&L and Balance sheet can be affected by clever accounting/non cash items etc, the cash flow is purely how your cash has moved in the year and how you have financed this movement.

 

Profit making companies will generally be showing how much of that profit is cash profit, and what they have done with it (investment, capital spend, pay shareholders etc)

 

Loss making companies show how much of the loss is a cash loss, what other spending you have had (capital spend, paying back loans etc) and therefore what cash you have received in order to finance this

[jules_darby]

Thanks lads

 

Very glad we have an FD

[Sweep]

 

 

however, id hazard a guess that as touched on earlier, payments are phased, so you could sign somebody in 2012 but not pay until 2014

 

I seem to recall something in the press a few years ago, that suggested signings between English/British clubs generally involved stumping up the cash at the point of transfer, but it is/was very common for transfer fees on the continent (and also between English and European clubs) to be stretched out over the length of a contract.

 

So, you could buy a player for £9M, but in theory, pay £3M up front and then £2M per year for the next 3 years

 

The article I read pointed out that many clubs in Europe were still paying for players, that they had since sold on.....which sounds bonkers 

 

Anyway, I'm not sure what point I'm trying to make anymore.

 

As Horwich points out above, the fact that we are in excess of £150M in debt, whilst for a decade being in the "biggest" league (financially) in the world, shows that there has been a certain element of mismanagement.

 

Now I might be making this up....but didn't our Chairman say a few years ago that BWFC wouldn't find itself in trouble if the team was relegated, as provisions had been put in place with regards to not only players contracts, but also regarding "non footballing" activities

 

Maybe, just maybe........Anewman was right all along!