PIF and RB Sports & Media

[Abacus]

4 minutes ago, Anderson said:

 

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.

 

Although, if a related party loan charged zero interest, I'd guess that zero interest now wouldn't be deemed at fair market value and would probably be subject to endless PL quibbling.

 

In practical terms, we have to live within our means either way, and the strategy has to be to grow our means.

 

A capital injection doesn't solve much there, since whilst you may not need to pay interest on it, it dilutes the other owners.

 

I think it's purely related to having access to cashflow, as I can't see any of these things mattering much for FFP.

[BoSelecta]

Regardless of any Saudi money we’re obviously going to spend the TV money, it’s not either or. This is just a means to manage cash flow of that TV money. The Saudis can still inject as much as they want on top.

 

All spending (Saudi injected, HSBC funded or otherwise) has to play along with FFP restrictions. 

 

[relámpago blanco]

5 minutes ago, buzz said:

Worrying

[LV]

49 minutes ago, ponsaelius said:

PIF could put their own money in and then take back out again at a far better rate than what they're going to get off HSBC. That's the alarming thing to me - not sure I see any reason to do it this way.

Its something to do with FFP and all clubs are doing it. You can’t just inject cash any more, but for some reason you can borrow it.

 

Im way behind on this thread so hopefully there’s a financial/ FFP expert here who can in explain it to me in words of less than 3 syllables 

[Bompeter]

5 minutes ago, 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. 

 

 

 

This doesn’t bring forward the recognition of TV revenue into the P&L. I think that’s the mistake you’re making. This transaction will have no impact on the income we report in our financial statements, which is why it’s not relevant to FFP 

[Happinesstan]

if it's about cashflow then it doesn't really matter if it has any effect on FFP, as long as it improves our ability to spend money.

[Kanj]

1 minute ago, Bompeter said:

This doesn’t bring forward the recognition of TV revenue into the P&L. I think that’s the mistake you’re making. This transaction will have no impact on the income we report in our financial statements, which is why it’s not relevant to FFP 

 

Mate, I know that. TV money is INCOME, which is fine. It does not change anything.

 

Your comment on PIF being able to inject money is what I'm on about . If we were allowed to just take owner injections of cash and go bananas we'd be doing Chelsea and Man City. Surely you know they really can't do that anymore either because you can't compete in any competition anymore if you're not operating by the rules - and the rules on spending are tied to INCOME. 

 

There is a reason why the club are currently hampered by FFP regulations and PL red-tape on related party sponsorships. Our current lack of income doesn't support a meteoric rise increase in wages, heavy transfer spending, the accounting on amortization etc etc (sustainably speaking). This is why nearly every article talks about the commercial side being slower burn and the club's inability to get a real top drawer commercial done so far. The league created new rules around sponsors because they feared PIF would instruct aramco, etc to drop in massive record breaking sponorship deals as a way to create income for the club to spend. That hasn't happened / maybe won't ever happen. 

 

 

[54]

Just now, Bompeter said:

This doesn’t bring forward the recognition of TV revenue into the P&L. I think that’s the mistake you’re making. This transaction will have no impact on the income we report in our financial statements, which is why it’s not relevant to FFP 

Yes but FFP is looked at over a three year period, and TV revenue is a legitimate form of cashflow. So by using a loan from a bank we can spend the TV money now, which will then be offset by the TV money coming in throughout the season. Owners just putting money into the club would just be equity which wouldn't be able to be offset in any way through a form of revenue stream. 

 

Like many other people have said, this is a very common practice across the football landscape, hardly worth talking about.

[LV]

18 minutes ago, Johnny said:

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.

Whats your line up for the Forest match? 

[relámpago blanco]

I don't think we'll see any further investment from PIF until next summer once the sponsorship deals are sorted.  I expected that all along.

[Bompeter]

6 minutes ago, Kanji said:

 

Mate, I know that. TV money is INCOME, which is fine. It does not change anything.

 

Your comment on PIF being able to inject money is what I'm on about . If we were allowed to just take owner injections of cash and go bananas we'd be doing Chelsea and Man City. Surely you know they really can't do that anymore either because you can't compete in any competition anymore if you're not operating by the rules - and the rules on spending are tied to INCOME. 

 

No-one is suggesting we should be going bananas with spending. My point is - and I’m not sure how else to phrase it at this point - is that this transaction with HSBC has nothing to do with navigating FFP rules. It doesn’t impact our reported revenue in any way.

 

It’s purely and exclusively a cash flow move - the club doesn’t have sufficient cash on its books currently, and the owners aren’t able or willing to inject sufficient cash to cover planned operations, so the club has taken out a loan instead. That’s it.

 

 

Edited July 27, 2022 by Bompeter

[Bompeter]

10 minutes ago, 54 said:

Yes but FFP is looked at over a three year period, and TV revenue is a legitimate form of cashflow. So by using a loan from a bank we can spend the TV money now, which will then be offset by the TV money coming in throughout the season. Owners just putting money into the club would just be equity which wouldn't be able to be offset in any way through a form of revenue stream. 

 

Like many other people have said, this is a very common practice across the football landscape, hardly worth talking about.

I’m sorry, this is incorrect and misunderstands accounting and how it interacts with FFP rules.

 

Of course spending financed by the owners now could be ‘offset’ by future TV (and other commercial) revenue. Let’s say we plan to spend £x amount of future TV income now - we can do that by selling off the rights to that revenue in return for external debt financing, or we could do that by the owners fronting the cash. The FFP impact of either scenario is identical.

 

And you’re right that it’s common practice - not for clubs owned by wealthy states though.

 

 

Edited July 27, 2022 by Bompeter

[Guest HTT II]

Club in (finally after Ashley) making sensible and sound business decisions shocker!

[54]

10 minutes ago, Bompeter said:

I’m sorry, this is incorrect and misunderstands accounting and how it interacts with FFP rules.

 

Of course spending financed by the owners now could be ‘offset’ by future TV (and other commercial) revenue. Let’s say we plan to spend £x amount of future TV income now - we can do that by selling off the rights to that revenue in return for external debt financing, or we could do that by the owners fronting the cash. The FFP impact of either scenario is identical.

 

And you’re right that it’s common practice - not for clubs owned by wealthy states though.

 

 

 

Man City did it last season: Here

 

(If i'm reading the statement correctly)

 

 

 

Edited July 27, 2022 by 54

[relámpago blanco]

Man city did this last year

 

https://find-and-update.company-information.service.gov.uk/company/00040946/filing-history

[Yorkie]

1 hour ago, Yorkie said:

Putting the debate about who is bankrolling us to one side, didn't we do this right before we signed Miggy?

 

Yes.

 

 

Newcastle United strike loan with Barclays to cover transfer funds: What it means for the future

 

United arranged the facility with Barclays in effect to advance them the Premier League central prize money that is due towards the end of the January transfer window and the summer. It appears it has been partly used to pay for the Miguel Almiron transfer fee and cover some costs.

 

While fans may ask where the money paid in August to them has gone – along with the money recouped from Aleksandar Mitrovic and further sales in the summer – the club’s position is that there are “peaks and troughs” in their cashflow during the season which need to be “managed”. Arranging this external facility is one way of doing it, rather than borrowing money from Mike Ashley – which they did during the Championship season.

 

The facility is referred to as an “arrangement” by the Premier League. Barclays will pay Newcastle the amount due to them by the Premier League in one lump sum and, rather than distribute them to Newcastle, they will pay back the bank.

The money has been used to pay for transfers rather than paying Ashley back his loans, although some club funds have been diverted for that this season. Newcastle senior officials have always insisted that Ashley’s loans do not have an impact on United’s ability to sign players and that there was money to spend on the “right players”.

[et tu brute]

10 minutes ago, 54 said:

Man City did it last season: Here

 

(If i'm reading the statement correctly)

 

 

 

 

The fact he has had 3 or 4 accounts now with the same agenda, tells you everything you need to know.

[Hhtoon]

27 minutes ago, Bompeter said:

No-one is suggesting we should be going bananas with spending. My point is - and I’m not sure how else to phrase it at this point - is that this transaction with HSBC has nothing to do with navigating FFP rules. It doesn’t impact our reported revenue in any way.

 

It’s purely and exclusively a cash flow move - the club doesn’t have sufficient cash on its books currently, and the owners aren’t able or willing to inject sufficient cash to cover planned operations, so the club has taken out a loan instead. That’s it.

 

 

 

 

You're right, nothing to do with FFP. However, I don't think it's particularly worrying either. PIF are exactly what it says on the tin - an investment fund that will be expected to generate returns on investments. They will undoubtedly have measured up whether allowing one of their other non-investment vehicles (let's be honest, we offer other benefits rather than returns) to pay X amount of interest on borrowing against future guaranteed income, rather than using their cash on actual investments offering y return. 

 

I suspect y > x and ergo here we are. 

 

I'm sure when needs be they'll pump cash in, but they just don't need to in this instance.

[Ben]

Get the cunt spent.

[Eveready]

I'm not well versed on FFP but surely this is a purely cash transaction which has no impact on FFP (unless the interest payments are included in the cost side of FFP).

 

I don't understand how someone said above that shareholder's aren't allowed to put money into clubs any more because of FFP.  I can't find anything about it and find it extremely odd, but happy to be proven wrong.

 

A shareholder's loan would've surely been the most sensible option on paper as it would incur low interest and you would imagine that PIF has enough cash sitting around that it wouldn't be an issue.  I'd imagine that the ownership structure could be an issue with PIF owning 80% maybe the other partner's didn't want to contribute and this could effect the equity split until the loan is repaid?  If interest isn't included in FFP costs then I don't see any real downside with what they're doing with HSBC though.

 

Either way for FFP in the long term - trying to get as much of the deal paid upfront as we can afford as will likely result in a lower overall fee and therefore FFP cost would probably be the best bet.  I'm guessing this could be their thinking in trying to generate as much cash as possible now.

 

Edit: grammar

 

 

Edited July 27, 2022 by Eveready

[Fantail Breeze]

Going to wait to hear what Grumpy thinks.

[UncleBingo]

8 minutes ago, Fantail Breeze said:

Going to wait to hear what Grumpy thinks.

Major Major reckons we're going bust.

 

One for the teenagers.

[madras]

21 minutes ago, Eveready said:

I'm not well versed on FFP but surely this is a purely cash transaction which has no impact on FFP (unless the interest payments are included in the cost side of FFP).

 

I don't understand how someone said above that shareholder's aren't allowed to put money into clubs any more because of FFP.  I can't find anything about it and find it extremely odd, but happy to be proven wrong.

 

A shareholder's loan would've surely been the most sensible option on paper as it would incur low interest and you would imagine that PIF has enough cash sitting around that it wouldn't be an issue.  I'd imagine that the ownership structure could be an issue with PIF owning 80% maybe the other partner's didn't want to contribute and this could effect the equity split until the loan is repaid?  If interest isn't included in FFP costs then I don't see any real downside with what they're doing with HSBC though.

 

Either way for FFP in the long term - trying to get as much of the deal paid upfront as we can afford as will likely result in a lower overall fee and therefore FFP cost would probably be the best bet.  I'm guessing this could be their thinking in trying to generate as much cash as possible now.

 

Edit: grammar

 

 

 

Wasn't the "pay it all up front as it gets a cheaper deal" plan Ashley's plan ?

[Bompeter]

50 minutes ago, 54 said:

Man City did it last season: Here

 

(If i'm reading the statement correctly)

 

 

 

 

Can’t get the link to work but is it CFG’s

massive Barclays deal? That was for infrastructure spending across their City Football Group and wasn’t secured against the TV revenue. It’s also a decade in to the Abu Dhabi project when they have extremely mature revenue streams. Very different deal commercially to our short-term debt financing secured against TV revenue. 

[Eveready]

Just now, madras said:

Wasn't the "pay it all up front as it gets a cheaper deal" plan Ashley's plan ?

It was definitely an excuse he used but if we use the Pope deal as an example we paid £10m with payments spread.  Burnley then went and got early financing for the future payments, which let's say cost them £500k.  We could likely have struck a deal for £9.75m with the full amount paid upfront.  We save £250k on FFP, Burnley get £250k additional cash.  I don't think they care about FFP but if the cash is available then it's a win-win.