Administration?

[James]

We've been over this before. People are allowed to say that they are interested in bidding, they just aren't allowed to talk about what they see in the data room.

[Dave]

We've been over this before. People are allowed to say that they are interested in bidding, they just aren't allowed to talk about what they see in the data room.

 

Supposition, just like the other theory.

 

I agree with him that Shepherd not running his mouth is significant though.

[Incognito]

Of course the worst case scenario would be a la Ken Bates' at Leeds,whereby he (Ashley), puts the club into the hands of the receivers and then buys it back.

 

 

Imagine that.

[Mistle17]

Of course the worst case scenario would be a la Ken Bates' at Leeds,whereby he (Ashley), puts the club into the hands of the receivers and then buys it back.

 

 

Imagine that.

 

No. I just cant...

[colinmk]

I am pretty sure now we are heading for administration. Would it not cost Ashley a lot more to go into administration than to sell the club for a cut-price though?

[Parky]

Is there anyone else interested in us though? I mean the Profitable lot were never really bidding, the Malaysians were pretend (apparently) the Austrians were friends of Llambias, is FFS the only one left? Are the Americans still in the picture? If they have signed an agreement we just don't know. The fact Freddie is quiet means something.

 

I don't think anyone has bid bar FS.

 

I also think 60m is a fair price taking into consideration the other financial instruments the buyer will have to deal with.

[Parky]

We've been over this before. People are allowed to say that they are interested in bidding, they just aren't allowed to talk about what they see in the data room.

 

That's all bollocks.

[CaliMag]

Of course the worst case scenario would be a la Ken Bates' at Leeds,whereby he (Ashley), puts the club into the hands of the receivers and then buys it back.

 

 

Imagine that.

 

Ken Bates was playing with other people's money though. Ashley can't do the same because he would be ripping himself off.

[Parky]

Of course the worst case scenario would be a la Ken Bates' at Leeds,whereby he (Ashley), puts the club into the hands of the receivers and then buys it back.

 

 

Imagine that.

 

Ken Bates was playing with other people's money though. Ashley can't do the same because he would be ripping himself off.

 

[bealios]

Putting a club into administration involves appointing an independent third party insolvency practitioner who's role it so maximise return to creditors. Even if that is only Ashley, it would involve selling the club as a going concern i.e. a functioning football club. This would make more money than just selling our stadium and the players, which are really the only assets, by themselves, particularly since the terms of the stadium lease will restrict it to use for the purposes of Newcastle United Football Club - its worthless unless the whole club is sold.

 

From a purely financial point of view, Ashley as the only creditor would lose out by a massive amount if he took the administration route rather than just selling to any party at a cut price. The only real difference to what he is doing now is that rather than being fully in control of what is being sold, an independant accountant is in control of what is being sold, rather than Ashley.

 

Administration tends to be used when you want to get a functioning business out of the other side, with the creditors taking a certain (usually very low) percentage of the loans that they are owed. You usually lose what you have put in, in terms of shares. So if they put the club in administration, an accountant would be looking to sell the clubs assets to a new vehicle as a going concern (like Leeds), and the creditors (Ashley) would get a low % of his £100m "loan". He would get nothing for the share investment, after all of the fees were taken into account.

 

Put it this way, if Ashley said "I'll sell the club for £60m and only expect £20m of the loan back if you get promoted within the next 3 years", then he would still be a lot better off than administration. That's why I think its unlikely, since anyone would snap his hands off for that deal, particularly what we have been told about the offers at around £100m, however they were structured.

 

So its fairly unlikely that he would opt for administration where there is a chance of getting even a part of the price he paid for the shares. I suspect the difficulty we are having at the moment is that any bidders are putting in place bids which are very low AND involve writing off the whole loan.

 

When Leeds was sold, there were a load of third party creditors, and the rationale for going into administration meant they didn't have to be paid in full.

 

 

[Dave]

http://www.shieldsgazette.com/nufc/United-39won39t-go-into-administration39.5501667.jp

United 'won't go into administration'

 

Published Date: 28 July 2009

 

NEWCASTLE United is not in danger of going into administration, club sources confirmed tonight.

 

There were rumours that owner Mike Ashley would make the move in the absence of a buyer willing to meet his £100m asking price.

 

But with Ashley – who has loaned the club a further £100m to pay off debts – as the major creditor, such a move is understood to be highly unlikely.

 

With the Championship season set to start on August 8, efforts are continuing to find a new owner.

[Dave]

'Confirmed' without actually saying anything, as usual.

[Pilko]

The last few words of that article drive me fucking insane. "efforts are continuing".

 

The thing that seems quite weird is that if Ashley was so desperate to wash his hands of the club, he'd be going all out to sell it. But to me, Seymour Pierce, Ashley, Llambias, everyone: they don't seem arsed about getting rid of it quickly. Surely a sale should be push and pull, not just one (pull, in this case seemingly).

 

I just get this vision of them sitting in an office with all the fans on, shirts unbuttoned, with faces like smacked arses sitting staring at the phone, waiting for it to ring. Something is a bit fishy about this whole sale, there doesn't seem to be any urgency from Ashley whatsoever, which I find funny because he's a man who thinks in cold hard cash, and our players wages alone will be draining money from his coffers every single day that goes by.

[LesPaul]

People from a certain town south of the Tyne want a public holiday for Mike Ashley

Village

[Dave]

As if someone they don't already know about is going to just pipe up now and say 'Hey, I'll give you £100m mate'.

[James]

The last few words of that article drive me fucking insane. "efforts are continuing".

 

The thing that seems quite weird is that if Ashley was so desperate to wash his hands of the club, he'd be going all out to sell it. But to me, Seymour Pierce, Ashley, Llambias, everyone: they don't seem arsed about getting rid of it quickly. Surely a sale should be push and pull, not just one (pull, in this case seemingly).

 

I just get this vision of them sitting in an office with all the fans on, shirts unbuttoned, with faces like smacked arses sitting staring at the phone, waiting for it to ring. Something is a bit fishy about this whole sale, there doesn't seem to be any urgency from Ashley whatsoever, which I find funny because he's a man who thinks in cold hard cash, and our players wages alone will be draining money from his coffers every single day that goes by.

 

Another conspiracy of mine is that he thinks he can get us back up if he can keep all the players here. he's going to block any move away, blame it on others when they complain, and then try to appease them with Shearer on Sept 1st.

[Dave]

And when Shearer tells him to go fuck himself...

 

[Dave]

http://www.timesonline.co.uk/tol/sport/football/premier_league/newcastle/article6731008.ece

From The Times

July 29, 2009

 

Newcastle United deny rumours of administration

 

George Caulkin

 

Senior figures at St James' Park have categorically denied that Mike Ashley will place Newcastle United into administration if a buyer for the relegated club does not emerge over the coming weeks.

 

With negotiations regarding Newcastle's prospective sale proceeding at a painstaking pace and with the new Coca-Cola Championship season imminent, rumours about Ashley's intentions have intensified on Tyneside in recent days.

 

Chief among those has been that Ashley, the sportswear retailer, would consider administration as a means of cutting his losses on a club who have already cost him upwards of £250 million.

 

Such a scenario - which would bring the club an automatic ten-point deduction from the Football League - has been discussed openly by players and staff at Newcastle's training ground, but sources at the club and close to the sale process have insisted that it is not being considered. “It's just not an option,” one said.

 

The inference is that Ashley's regime would continue should none of the three substantive bidders for Newcastle who have been in detailed discussions with Seymour Pierce, the investment bank charged with handling the sale, proceed with a takeover. It has been reported widely that Newcastle are being run on a day-to-day basis through a bank overdraft of £35million or more.

 

Sounds like they've made a few phone calls.

[James]

Llambias: Hi guys, sorry Mike wasn't able to sell you this summer, potential buyers wouldn't let him, I'm sure you can appreciate it is all out of your hands. We asked Shearer but he wants to do MOTD thats out of our hands as well I'm afraid, but don't worry, Mike watched the SBR match on TV and has found a perfect inspirational manager for you. Here he is, Howard Wilkinson. Got to dash off bye.

[Incognito]

Llambias: Hi guys, sorry Mike wasn't able to sell you this summer, potential buyers wouldn't let him, I'm sure you can appreciate it is all out of your hands. We asked Shearer but he wants to do MOTD thats out of our hands as well I'm afraid, but don't worry, Mike watched the SBR match on TV and has found a perfect inspirational manager for you. Here he is, Howard Wilkinson. Got to dash off bye.

 

You wouldn't put it past him for sure.

[Guest jimmyc84]

Are there any benefits for Ashley personally if he were to put us into administration?   

 

As Ashley would be the major creditor, administration would seem an odd move financially. But Ashley could probably take his losses at Newcastle, which would be close to £250m, and set them against profit at his other companies, such as Sports Direct. Ashley’s tax liability would then be reduced and his loss not so great.

 

 

Oh. s***. 

 

 

Breathing a little easier after having a quick word with a mate. 

 

Do explain!

 

In simple terms, he couldn't set the capital loss on the sale of his 100% stake in NUFC against trading profits of his other companies like Sports Direct.

 

The only time the capital loss on the sale of NUFC would be of any use to him is if he were to sell loads of his other investments at a massive profit, which is unlikely given the recent performance of Sports Direct etc.

 

But....What if he liquidated it??

 

No idea! 

 

I'll ask him.

 

 

just logged on to comment on this.

 

first thing to realise is that ashley is not taxed on the profits of either sports direct or nufc. the companies themselves are taxed on the profits and pay corporation tax.

 

any distributions to ashley, i.e. salary or dividends will be taxed on ashley. he will pay income tax on these distributions.

 

if ashley sells shares, i.e. by selling nufc shares, he will make a capital gain or loss. a capital gain will result in capital gains tax being paid. a capital loss can be offset against other gains arising in the year, or carried forward for use against gains arising in future years. a capital loss CANNOT be relieved against income except for in very rare circumstances such as a loss on shares of small unquoted trading companies - a relief to encourage investment in start up businesses. so not really relevent here.

 

if an asset is deemed to have become worthless - in practice less than 5% of their original cost (i.e. nufc shares in the event of liquidation), a negligable value claim be made. this deems the shares to have been sold and immedietly reacquired at current market value thereby creating an artificial loss. this loss can then be claimed against gains arising in the 2 tax years prior to the asset becoming of negligable value.

 

so to summarise - ashley will not be able to relieve his capital loss on nufc against his income for tax purposes.

 

If the club does go into liquidation then there is more chance that he could relieve it against a capital gain as the claim may be made for previous years.

 

if his loss is 250 million - capital gains tax is currently 18%. so carrying losses forward to use against all gains for the rest of ashley's life would see relief of a value up to 18% * 250 million = 45 million.

 

sorry for the length, but i do know a fair bit on the tax front so thought i ought to chime in 

[Dave]

quayside is back to ease all our worries (or hopes...).

[Dave]

Or jimmyc84.

 

So basically it's all bollocks unless he put us into liquidation, which would still not see him 'save' much at all?

[JH]

“It's just not an option,” one said.

 

Quite possible one of the greatest source-quotes in the history of journalism

 

The Times and Shields Gazette are just taking a wild stab in the dark. They know as fuck all much as we do.

[Guest jimmyc84]

Or jimmyc84.

 

So basically it's all bollocks unless he put us into liquidation, which would still not see him 'save' much at all?

 

i think and hope so. the only advantage of the shares going into negligable value is that a loss can be offset against gains in the previous two years as well as being carried forward. i'm not sure if he has sold assets recently anyway?

 

as i say, his potential saving would be up to 45 million - if he made gains exceeding £250 million over the rest of this life. but i'd expect he wouldn't get to realise this until he sold his holding in sports direct as this ought to be his most valuable asset.

 

when you think 5% interest on 45million is 2.25 million per year, getting it in dribs and drabs over the rest of his life isn't nearly as attractive as just selling the club to F Shepherd for 60 million now.