PIF, PCP, and RB Sports & Media

[B-more Mag]

54 minutes ago, madras said:

If that's so has anyone an idea of how much that would be ?

The technically correct answer is we don’t know for sure. The amount of the loan facility would be in the loan agreement, but that document is not filled in Companies House (the point of filing security agreements in Companies House is just to put “the world” on notice that the receivable are subject to the existence of the lender’s interest, not the specific amount). But the answers about it being no more than the amount of the relevant streams are conceptually correct. 

[relámpago blanco]

50 minutes ago, HTT II said:

I’ve already mentioned it, but once the WC is over, we have all our ducks in a line which we are already doing now with the CEO, DOF and a legal counsel, PIF will spend big. I say big, just look at what has already been spent, over 150m on transfers, probably another 50m on wages and training ground and stadium improvements and of course over 300m to buy the club and half a billion to get the thorny issue of BEIN sports removed. People shouldn’t worry about anything, not least a business using what is basically a line of credit facility for immediate cash flow purposes, especially with FFP in mind, it’s all good!

 

 

 

Well put

[Jackie Broon]

3 hours 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. 

 

 

I think you're wrong there, directly injecting cash would be an associated party transaction as far as I can see from the PL's rules:

 

Rule A.1.17 An “Associated Party” is a Person that is associated with the Club.

1. A Person is associated with a Club if that Person:

(a) has Control or joint control over the Club;

(b) holds a Holding in excess of 5% of Shares;

 

A.1.18. “Associated Party Transaction” means, in respect of any Club, a Transaction that is, whether directly or indirectly, between: (a) a Club and an Associated Party;

 

E.51. Each Associated Party Transaction must be submitted to the Board (in such form and including such detail as required by the Board) in order for the Board to conduct a Fair Market Value Assessment of it.

 

Although, indirectly injecting cash through payment for shares would not be.

 

Neither would make a difference to FFP other than providing secure funding to cover the allowed losses. But it does seem to make sense for the club to have a credit facility to have cash immediately available. 

 

 

Edited July 27, 2022 by Jackie Broon

[JonBez comesock]

10 minutes ago, Jackie Broon said:

 

I think you're wrong there, directly injecting cash would be an associated party transaction as far as I can see from the PL's rules:

 

Rule A.1.17 An “Associated Party” is a Person that is associated with the Club.

1. A Person is associated with a Club if that Person:

(a) has Control or joint control over the Club;

(b) holds a Holding in excess of 5% of Shares;

 

A.1.18. “Associated Party Transaction” means, in respect of any Club, a Transaction that is, whether directly or indirectly, between: (a) a Club and an Associated Party;

 

E.51. Each Associated Party Transaction must be submitted to the Board (in such form and including such detail as required by the Board) in order for the Board to conduct a Fair Market Value Assessment of it.

 

Although, indirectly injecting cash through payment for shares would not be.

 

Neither would make a difference to FFP other than providing secure funding to cover the allowed losses. But it does seem to make sense for the club to have a credit facility to have cash immediately available. 

 

 

 

Didn’t Tottenham just do this ? Pumped £150 in directly

[Jackie Broon]

8 minutes ago, JonBez comesock said:

Didn’t Tottenham just do this ? Pumped £150 in directly

 

It was indirectly through issuing and purchasing shares. So did our owners earlier this year.

 

But that probably takes a bit longer to organise than having an immediately available loan facility.

 

 

Edited July 27, 2022 by Jackie Broon

[Gaztoon]

3 minutes ago, JonBez comesock said:

Didn’t Tottenham just do this ? Pumped £150 in directly

 

 was a loan from the owner I think.

[relámpago blanco]

Some people, especially on twitter see this as a bsd thing which it's not. It could actually be that they've decided to drop and extra 150 m on players this window

[Bompeter]

33 minutes ago, Jackie Broon said:

 

I think you're wrong there, directly injecting cash would be an associated party transaction as far as I can see from the PL's rules:

 

Rule A.1.17 An “Associated Party” is a Person that is associated with the Club.

1. A Person is associated with a Club if that Person:

(a) has Control or joint control over the Club;

(b) holds a Holding in excess of 5% of Shares;

 

A.1.18. “Associated Party Transaction” means, in respect of any Club, a Transaction that is, whether directly or indirectly, between: (a) a Club and an Associated Party;

 

E.51. Each Associated Party Transaction must be submitted to the Board (in such form and including such detail as required by the Board) in order for the Board to conduct a Fair Market Value Assessment of it.

 

Although, indirectly injecting cash through payment for shares would not be.

 

Neither would make a difference to FFP other than providing secure funding to cover the allowed losses. But it does seem to make sense for the club to have a credit facility to have cash immediately available. 

 

 

 

 

I'm confused by your terminology - what do you believe the difference between "directly" and "indirectly" injecting cash is?

 

When I'm talking about PIF injecting cash, of course I mean "through payment for shares", i.e a direct equity injection which is the only way for the owners to put cash into the club outside of raising debt via a shareholder's loan.

 

It would not be an associated party transaction. Associated party transactions are commercial transactions that impact the P&L. How could you make a 'Fair Market Value Assessment' of a debit cash/credit equity transaction? You couldn't.

[toonfanlondon]

This is purely a cashflow thing and has nothing to do with FFP which is done on accounting profits or losses. Its not our owners doing something smart to get around FFP (as I have seen mentioned in some places) this cash is an advance on income for the year, if next year our expenses are more then our income and that totals more than is allowed under FFP (lots of articles out there that tell us how much we are allowed to lose in the next few years) then we will fall foul of FFP.

 

The question is why do we need to get an advance on cash if we have rich owners who can loan it to us or provide cash injections as they did when they first took over to fund the January transfer window. In my view them doing this isn't concerning. They may have got a good interest rate and one that is favourable to PIF using their own cash. Its likely they will use a combination of advances and their own cash going forward. 

 

Any arms length sponsorship deals are separate and will help with FFP as well as cashflow. They will help with FFP as our income will increase meaning we can spend more money on wages, and players (amortised through the P&L). They will help with cashflow as hopefully they will be for more money then we receive now.

 

In summary this is almost certainly part of their business plan when they bought the business and nothing to worry about.

 

 

 

 

[Jackie Broon]

4 minutes ago, Bompeter said:

 

I'm confused by your terminology - what do you believe the difference between "directly" and "indirectly" injecting cash is?

 

When I'm talking about PIF injecting cash, of course I mean "through payment for shares", i.e a direct equity injection which is the only way for the owners to put cash into the club outside of raising debt via a shareholder's loan.

 

It would not be an associated party transaction. Associated party transactions are commercial transactions that impact the P&L. How could you make a 'Fair Market Value Assessment' of a debit cash/credit equity transaction? You couldn't.

 

You used the term "directly" I was just using your terminology. Sorry I assumed by "Owner’s directly injecting cash into the club isn’t a related party transaction" you were referring to owners transferring funds directly into the club's account.

 

But, that doesn't alter my original point that there is benefit in the club having a loan facility immediately available rather than having to arrange the issue and purchase of shares each time funds are required, particularly given the complexities of each member of the consortium having to provide their relative share. 

[Joey Linton]

3 hours ago, Fantail Breeze said:

Going to wait to hear what Grumpy thinks.

He thinks there's no evidence the owners have put any money into the club yet. I honestly wouldn't let him look after my kid's pocket money.

[Bompeter]

4 minutes ago, Jackie Broon said:

 

You used the term "directly" I was just using your terminology. Sorry I assumed by "Owner’s directly injecting cash into the club isn’t a related party transaction" you were referring to owners transferring funds directly into the club's account.

 

 

Well owners transferring funds into the club's bank account with no corresponding increase in equity would be completely illegal, so no I wasn't referring to that. 

 

4 minutes ago, Jackie Broon said:

But, that doesn't alter my original point that there is benefit in the club having a loan facility immediately available rather than having to arrange the issue and purchase of shares each time funds are required, particularly given the complexities of each member of the consortium having to provide their relative share. 

 

Why are people assuming that if the club needs £100m it would have to be funded 80/10/10 between PIF/the Reubens/Staveley? That would be an extremely unconventional funding arrangement and almost certainly isn't the case. 

[midds]

Not going to pretend I know how or why this has happened, no clue whatsoever. But I do know that in the past few weeks/months we've appointed 3 people who were specifically chosen for their expertise in running large football clubs behind the scenes. 

 

We've also dropped £90m+ in January, and £60m+ this summer already. This is already on top of the billion the Saudis spent to drop the piracy claims which allowed them to drop a further £300m+ to buy the club and doesn't include the cash spent on SJP or the plans to upgrade the training facilities. It's pretty clear they're in this for the long haul and not exactly pissing about, they want to row the club asap and if bringing forward the guaranteed payments id what they've decided to do then I'm going to let them get on with it. I reckon they know exactly what they're doing and it'll all make sense in due time, I'm just going to roll with it and look forward to Friday night. 

[NWMag]

21 minutes ago, Bompeter said:

 

Well owners transferring funds into the club's bank account with no corresponding increase in equity would be completely illegal, so no I wasn't referring to that. 

 

 

Why are people assuming that if the club needs £100m it would have to be funded 80/10/10 between PIF/the Reubens/Staveley? That would be an extremely unconventional funding arrangement and almost certainly isn't the case. 

I can only speak for myself but I assumed it would be split 80/10/10 because that’s the split of the ownership? 
 

i may be wrong I have little to no business knowledge however if I was in a 50/50 business for example I would expect any investment to be equally split, so assumed the same would apply here 

[Dr Jinx]

Every club has some form of credit facility, we had one with Barclays under Ashley, now it’s a new company essentially, so this is just a formality that would have been done at any stage. New ownership chose HSBC.

 

It might have a bearing on summer spending or may be irrelevant.

 

Not sure what all the arguing has been about.

[Jackie Broon]

7 minutes ago, Bompeter said:

 

Well owners transferring funds into the club's bank account with no corresponding increase in equity would be completely illegal, so no I wasn't referring to that. 

 

Would it actually be illegal? Admittedly it is not my area of expertise but as far as I can tell it's perfectly legal for an owner of a company to gift money to their company. Anyway, that is beside the point.

 

Quote

Why are people assuming that if the club needs £100m it would have to be funded 80/10/10 between PIF/the Reubens/Staveley? That would be an extremely unconventional funding arrangement and almost certainly isn't the case.

 

Because it's pretty much universally thought to be the case (you're the first person I've seen suggest that it might not be funded that way) and IIRC fillings on Companies House suggest that to be the case.

 

 

[Kanji]

6 minutes ago, Dr Jinx said:

Every club has some form of credit facility, we had one with Barclays under Ashley, now it’s a new company essentially, so this is just a formality that would have been done at any stage. New ownership chose HSBC.

 

It might have a bearing on summer spending or may be irrelevant.

 

Not sure what all the arguing has been about.

 

 

Prob because PCP/Amanda v Barclays case too! 

[BonesJones]

15 minutes ago, NWMag said:

I can only speak for myself but I assumed it would be split 80/10/10 because that’s the split of the ownership? 
 

i may be wrong I have little to no business knowledge however if I was in a 50/50 business for example I would expect any investment to be equally split, so assumed the same would apply here 

 

PIF not paying for everything is like you inviting a homeless guy out for food and expecting him to chip in.

 

I think Reuben and PCP are there for other matters really. Reuben maybe for the land, PCP for the general running of it all. Could be wrong.

[Dr Jinx]

1 minute ago, Kanji said:

 

 

Prob because PCP/Amanda v Barclays case too! 

Oh yeah, that for sure. If you’re in the position to pick and choose a bank to work with you’re hardly going to go with them after how they carried on.

[et tu brute]

30 minutes ago, Jackie Broon said:

 

Because it's pretty much universally thought to be the case (you're the first person I've seen suggest that it might not be funded that way) and IIRC fillings on Companies House suggest that to be the case.

Kieran Maguire stated this was the case just now on the Loaded Mag YouTube channel. 

 

[Keegans Export]

55 minutes ago, NWMag said:

I can only speak for myself but I assumed it would be split 80/10/10 because that’s the split of the ownership? 
 

i may be wrong I have little to no business knowledge however if I was in a 50/50 business for example I would expect any investment to be equally split, so assumed the same would apply here 

Your assumption about the split is wrong. It means any money taken out (eg dividends) is split 80/10/10 but not money going in. 

 

For example, I own 60% of a business, my business partner has the other 40%. If I chose to drop £600k of my own money into the business, my partner doesn't have to add £400k of theirs. It just adds +£600k to my Directors account (which is basically a record of who is owed what by the business or vice versa).

[et tu brute]

5 minutes ago, Keegans Export said:

Your assumption about the split is wrong. It means any money taken out (eg dividends) is split 80/10/10 but not money going in. 

 

For example, I own 60% of a business, my business partner has the other 40%. If I chose to drop £600k of my own money into the business, my partner doesn't have to add £400k of theirs. It just adds +£600k to my Directors account (which is basically a record of who is owed what by the business or vice versa).

Mind Kiernan Maquire was indicating that split for money going in was correct snd he give an example of how that would work also. Can't obviously comment on your business workings, but he's the football finance expert.

 

 

Edited July 27, 2022 by et tu brute

[Bompeter]

13 minutes ago, et tu brute said:

Kieran Maguire stated this was the case just now on the Loaded Mag YouTube channel. 

 

 

He didn't. He was responding to a question which assumed this was a given, but didn't say that that happened to be the funding arrangement in place at NUFC (how would he have any knowledge of that any way? It's not like any reputable source has ever reported on it).

 

That sort of arrangement would be completely unworkable here - Staveley is a relative pauper compared to the billionaire Reubens or the Saudis. It would massively restrict the scope of the business' operations. 

 

 

[Abacus]

1 minute ago, Keegans Export said:

Your assumption about the split is wrong. It means any money taken out (eg dividends) is split 80/10/10 but not money going in. 

 

For example, I own 60% of a business, my business partner has the other 40%. If I chose to drop £600k of my own money into the business, my partner doesn't have to add £400k of theirs. It just adds +£600k to my Directors account (which is basically a record of who is owed what by the business or vice versa).

 

What you're describing is a loan to the business. He was talking about investment through share capital rather than a loan.

 

Where you can't just issue more equity to one party only without diluting the ownership percentage of the others, is all.

[Keegans Export]

Just now, et tu brute said:

Mind Kiernan Maquire was indicating that split for money going in was correct snd he give an example of how that would work also. Can't obviously comment on your business workings, but he's the football finance expert.

 

 

 

Absolutely, and it could be that the 80/10/10 split is what has been agreed between the three parties but it doesn't have to be.