54 Posted July 27, 2022 Share Posted July 27, 2022 Just now, Kid Icarus said: Guessing about everything you said. About why the money's being borrowed, about us being 'forced' to take a loan out - you're just guessing and then drawing a conclusion from your guesswork. Especially given the majority of other clubs tend to do this. Link to post Share on other sites More sharing options...
Jackie Broon Posted July 27, 2022 Share Posted July 27, 2022 I suppose it might make sense in that all related party transactions need to be pre-approved by the PL, which could potentially cause a cash flow issue. A credit facility would give the club immediate access to money if there is a delay caused by PL approval of a related party transaction? Link to post Share on other sites More sharing options...
Kanji Posted July 27, 2022 Share Posted July 27, 2022 (edited) A lot of clubs do this FYI. Many clubs wanted the PL to take out a master financing plan for PL clubs to utilizie that was leveraged against TV money...this would then be drawn upon (each club's share would be tied to the TV money owed to them) to handle cash flow - particularly the smaller clubs. I don't think or know if this ever got done, but I believe the league did not want to be in that business and so it was up to the clubs do that. Again, every club is entitled to the TV money, some choose to advance it (like we are) and some don't. If the interest isn't terrible then its absolute no brainer to do so. If your debt is manageable, debt is fine. It's when you're over leveraging and don't have a proper backer to support the debt in a full backstop that you're at risk. Further, and this is very very important, there is nothing to say the PIF don't "issue shares" like they did in the past to pump more money into the club in addition to this. It's NOT one or the other, exclusively FYI. This is a perfect example of us using the tools necessary and available to us whilst being self sufficient and hopefully using it to our maximum benefit. Edited July 27, 2022 by Kanji Link to post Share on other sites More sharing options...
mighty__mag Posted July 27, 2022 Share Posted July 27, 2022 4 minutes ago, Bompeter said: Guessing about what - that we aren’t being bankrolled by the Saudis? Not really. If we were the club wouldn’t be raising external debt secured against future TV revenue, and needlessly incurring more interest costs as a result. Of course we're not being bankrolled by the Saudis, yet! Our club is under total scrutiny, the time will come, so exploiting other avenues is necessary I guess. Link to post Share on other sites More sharing options...
Bompeter Posted July 27, 2022 Share Posted July 27, 2022 2 minutes ago, Jackie Broon said: I suppose it might make sense in that all related party transactions need to be pre-approved by the PL, which could potentially cause a cash flow issue. A credit facility would give the club immediate access to money if there is a delay caused by PL approval of a related party transaction? Owner’s directly injecting cash into the club isn’t a related party transaction and wouldn’t need approval from the PL. PIF could put a billion into the club and it wouldn’t have anything to do with FFP (actually spending that amount and incurring the subsequent amortisation obviously would though). But there are no limitations on equity injections. Basically, there’s no reason to do this if PIF were willing to put (more) cash into the club. If you think that’s a desirable or undesirable thing is everyone’s own personal opinion. Link to post Share on other sites More sharing options...
Decky Posted July 27, 2022 Share Posted July 27, 2022 I know fuck all about finance but I’m gonna guess this is either normal procedure or we’re using a loophole to get round FFP to get more transfers in. Next summer our ability to spend might be different once we get a new sponsor etc, something they were expecting to do this summer. Link to post Share on other sites More sharing options...
gdm Posted July 27, 2022 Share Posted July 27, 2022 27 minutes ago, Bompeter said: What are you even on about man? What’s your actual disagreement with what I’ve posted? You nor I have a single clue what it means. Stop going on like you do Link to post Share on other sites More sharing options...
HaydnNUFC Posted July 27, 2022 Share Posted July 27, 2022 (edited) Personally think it's great that Bompeter/Penn is putting this cutting edge financial analysis on here before sticking it in the Telegraph. Great stuff. Edited July 27, 2022 by HaydnNUFC Link to post Share on other sites More sharing options...
The Prophet Posted July 27, 2022 Share Posted July 27, 2022 6 minutes ago, Kanji said: A lot of clubs do this FYI. Many clubs wanted the PL to take out a master financing plan for PL clubs to utilizie that was leveraged against TV money...this would then be drawn upon (each club's share would be tied to the TV money owed to them) to handle cash flow - particularly the smaller clubs. I don't think or know if this ever got done, but I believe the league did not want to be in that business and so it was up to the clubs do that. Again, every club is entitled to the TV money, some choose to advance it (like we are) and some don't. If the interest isn't terrible then its absolute no brainer to do so. If your debt is manageable, debt is fine. It's when you're over leveraging and don't have a proper backer to support the debt in a full backstop that you're at risk. Further, and this is very very important, there is nothing to say the PIF don't "issue shares" like they did in the past to pump more money into the club in addition to this. It's NOT one or the other, exclusively FYI. This is a perfect example of us using the tools necessary and available to us whilst being self sufficient and hopefully using it to our maximum benefit. Cheers for the insight. Link to post Share on other sites More sharing options...
Anderson Posted July 27, 2022 Share Posted July 27, 2022 (edited) It's a credit facility to help manage short-term cash flows. It doesn't seem like anything to get particularly excited or concerned about tbh. Also worth noting we don't appear to be borrowing the full amount of the TV money up front, that's simply what's available to us and what we've offered as security. Edited July 27, 2022 by Anderson Link to post Share on other sites More sharing options...
JonBez comesock Posted July 27, 2022 Share Posted July 27, 2022 6 minutes ago, Decky said: I know fuck all about finance but I’m gonna guess this is either normal procedure or we’re using a loophole to get round FFP to get more transfers in. Next summer our ability to spend might be different once we get a new sponsor etc, something they were expecting to do this summer. 95% of clubs do this nothing to see here Link to post Share on other sites More sharing options...
Kanji Posted July 27, 2022 Share Posted July 27, 2022 (edited) 9 minutes ago, Bompeter said: Owner’s directly injecting cash into the club isn’t a related party transaction and wouldn’t need approval from the PL. PIF could put a billion into the club and it wouldn’t have anything to do with FFP (actually spending that amount and incurring the subsequent amortisation obviously would though). But there are no limitations on equity injections. Basically, there’s no reason to do this if PIF were willing to put (more) cash into the club. If you think that’s a desirable or undesirable thing is everyone’s own personal opinion. Ok so let's play this out for 1 moment - 1) PIF inject cash into the club, 500m as you say. With absolutely no restriction or approval needed from the PL. OK. 2) Once club spends say 500m, it's subject to the FFP regulations. OK. Conclusion: So it absolutely does matter, because once you spend it, you're subject to FFP calcs. Which, need non related party injections of cash (IE: a completely unrelated 3rd party commercial partner) for the purposes of the calculations to deem compliance to the rules. Edited July 27, 2022 by Kanji Link to post Share on other sites More sharing options...
relámpago blanco Posted July 27, 2022 Share Posted July 27, 2022 It's just normal behaviour for any organisation. Link to post Share on other sites More sharing options...
Bompeter Posted July 27, 2022 Share Posted July 27, 2022 2 minutes ago, Kanji said: Ok so let's play this out for 1 moment - 1) PIF inject cash into the club, 500m as you say. With absolutely no restriction or approval needed from the PL. OK. 2) Once club spends say 500m, it's subject to the FFP regulations. OK. Conclusion: So it absolutely does matter, because once you spend it, you're subject to FFP calcs. Which, need non related party injections of cash (IE: a completely unrelated 3rd party commercial partner) for the purposes of the calculations to deem compliance to the rules. No, you’re completely wrong. Whether the club raises £50m/£100m/£100bn from an owner’s injection of capital, or from the raising of external debt, it makes absolutely no difference whatsoever for FFP purposes. Again - if you spend £100m of owner’s money, or £100m of HSBC’s money, they’re both treated exactly the same for FFP purposes. This transaction has nothing to do with FFP or related party rules - it just doesn’t, soz. Link to post Share on other sites More sharing options...
Johnny Posted July 27, 2022 Share Posted July 27, 2022 Why people took this as a bad thing? We don't want the Saudis, at least we prefer not to owned by the Saudis. And this is prove that we aren't owned by the Saudi. So this is a good thing. Link to post Share on other sites More sharing options...
Anderson Posted July 27, 2022 Share Posted July 27, 2022 (edited) 16 minutes ago, Kanji said: Conclusion: So it absolutely does matter, because once you spend it, you're subject to FFP calcs. Which, need non related party injections of cash (IE: a completely unrelated 3rd party commercial partner) for the purposes of the calculations to deem compliance to the rules. Not entirely sure on this - the RPT stuff is about sponsorship deals being used to circumvent it isn't it? Not sure there'd be any distinction between related party/external loans as they have no effect on P&L. Assuming we're still talking cash via PIF or HSBC this is... Edited July 27, 2022 by Anderson Link to post Share on other sites More sharing options...
KDT Posted July 27, 2022 Share Posted July 27, 2022 Nobody knows anything. Link to post Share on other sites More sharing options...
madras Posted July 27, 2022 Share Posted July 27, 2022 1 minute ago, Bompeter said: No, you’re completely wrong. Whether the club raises £50m/£100m/£100bn from an owner’s injection of capital, or from the raising of external debt, it makes absolutely no difference whatsoever for FFP purposes. Again - if you spend £100m of owner’s money, or £100m of HSBC’s money, they’re both treated exactly the same for FFP purposes. This transaction has nothing to do with FFP or related party rules - it just doesn’t, soz. But surely the origin of the money matters to FFP ? Link to post Share on other sites More sharing options...
relámpago blanco Posted July 27, 2022 Share Posted July 27, 2022 Anyone who reads anything into this knows fuck all about how organisations operate. Link to post Share on other sites More sharing options...
Anderson Posted July 27, 2022 Share Posted July 27, 2022 Just now, madras said: But surely the origin of the money matters to FFP ? Only if it's classed as income. Link to post Share on other sites More sharing options...
NWMag Posted July 27, 2022 Share Posted July 27, 2022 Just now, madras said: But surely the origin of the money matters to FFP ? But PIF wouldn’t be a related party would they? As they are the owner. a related party as far as I’m aware would be say aramco, who have no link to Newcastle United but do have a link to PIF? Link to post Share on other sites More sharing options...
Pixelphish Posted July 27, 2022 Share Posted July 27, 2022 I wish he'd stuck with the literary themed usernames. Link to post Share on other sites More sharing options...
Bompeter Posted July 27, 2022 Share Posted July 27, 2022 2 minutes ago, madras said: But surely the origin of the money matters to FFP ? No, the origin of revenue matters for FFP. Not cash. The raising of finance (whether it’s from the owners or externally) doesn’t touch revenue. Link to post Share on other sites More sharing options...
Kanji Posted July 27, 2022 Share Posted July 27, 2022 (edited) 6 minutes ago, Bompeter said: No, you’re completely wrong. Whether the club raises £50m/£100m/£100bn from an owner’s injection of capital, or from the raising of external debt, it makes absolutely no difference whatsoever for FFP purposes. Again - if you spend £100m of owner’s money, or £100m of HSBC’s money, they’re both treated exactly the same for FFP purposes. This transaction has nothing to do with FFP or related party rules - it just doesn’t, soz. What? Unless I've missed something: 1) TV money is considered an approved stream of cash and is considered income 2) Owner injection of cash is not considered income, its equity, you can spend equity but you need income from non related parties If the above didn't apply, then Man City wouldn't have been fudging around with massive sponsorship deals and sketchy commercial deals etc. Edited July 27, 2022 by Kanji Link to post Share on other sites More sharing options...
relámpago blanco Posted July 27, 2022 Share Posted July 27, 2022 Just now, Kanji said: What? Unless I've missed something: 1) TV money is considered an approved stream of cash and is considered income 2) Owner injection of cash is not considered income, its equity, you can spend equity but you need income from non related parties If the above didn't apply, then Man City wouldn't have been fudging around with massive sponsorship deals and sketchy commercial deals etc. Exactly Link to post Share on other sites More sharing options...
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