The thread was started with the phrase "This is exactly why we can't hang about in this league, with lack of external investment."
Not sure if investment is the right word either, but he's injected £50m+ of new loans since 2007, which, as has already been pointed out, will be almost impossible to repay without Premier cash
I would have thought their financial position makes them pretty vulnerable. I'd like to say I sympathise, but we have been there ourselves, in the past.
I'd say it is likely need to sell somebody before the cut off point for the next FFP assessments. For the 2014/15 season the maximum loss is £6m rather than £8m, and for 2013/14 their loss would have been greater than £8m if they hadn't sold Creswell for £2m.
Sorry I'd of forgotten we were having this debate...When I've got some spare time I'll create an excel graph showing Ipswich's annual turnover, their total debt, and the cost of servicing that debt (using 5.4% as the interest rate) from 2007 onwards, perhaps that will help you to understand how their financial situation is not "improving".
Their latest accounts only show that they are one step closer to insolvency, whether they took a smaller step than last year or not. Insolvency being the point at which a business cannot meet its obligations to lenders. That's what sharp annual increases in the cost of servicing debt against a fast declining turnover symbolises to me, hence why I consider the position to be "worsening".
And of course we know that almost all of the 'improvement' on their loss came from the sale of an asset, £2m for Cresswell, are you expecting them to be able to continue to sell assets each year or not? Their debt is now about 630% of their turnover! They only just pulled themselves below the FFP threshold by selling their best player.
I've always felt that there were too many accountants in government and too many economists in business, so perhaps this is why we are just not on the same wavelength (on this subject, I'm sure we can find lots of things to agree with when it comes to football)
If anything this shows us that comparing the UK economy with Ipswich Town's finances was and is a bit of a silly idea, and lets hope we never see the day that our national debt is 630% of our GDP, because then we'd really be in trouble!
But surely you can see how deep in the sh*t Ipswich are just based on that figure alone? Before we won promotion to the Premier League our debt accrued over many years was somewhere around 90% of our turnover wasn't it? We paid it off over three years of Premier League football.
Promotion is the only realistic hope that Ipswich have of being able to decrease their level of debts, but each year they borrow money trying to achieve it Premier League football must become less and less likely? If more of their money each year is going towards servicing a growing debt (even selling their best players to subsidise it), then less and less of their turnover is going towards maintaining a playing squad capable of winning promotion.
There is just no prospect whatsoever of them being able to reduce their debt without a promotion.
Sorry I am a bit late to the party but I can answer this one - yes and maybe.
As touched upon earlier though, how much has Evans actually put into Ipswich?
Thanks, posts crossed. It looks like Corporation tax losses can be carried between companies in a group if controlled by a holding company, which Ipswich Town are. So it is quite possible that Evans is using interest on the debt to wrack up losses, not actually taking money off of Ipswich (just adding it to the money they owe him), but then transferring the losses to his holding company, where presumably he can get a big discount off of the tax bill of the holding company or one of his primary profitable businesses within the group. All very clever.
But if both companies are UK resident it should be a zero sum game; as the interest accrues in the trading company and is deducted a matching credit will accrue in the creditor company and will be taxable. The losses in trade co could be surrendered for use by hold co but that will only net off the position - no one wins overall.
Quantitative easing is also a large part of the reason why youth unemployment has been so high too, because of the effect it had on annuity rates. Had to be done though.
My understanding is that QE affects annuity rates because they are largely based on gilt yields, and that the knock on effect of QE (buying lots of gilts) is that it pushes up the price of the gilts which remain on the open market, which is why the yield falls. Another factor was that investors moved from high risk to low risk investments after the financial crash, that also pushed up the price of gilts and drove down yields.
I can see that, annuities tend to be back by gilts (normally index-linked gilts) because people want protection against inflation. There was some talk that bond yields had dropped because people tend to swap out of riskier investments as they get near to retirement, with the baby boomer bubble reaching that point all at one time there was concern equities and bonds could be hit. I don't think it has materialised but with so much intervention it is difficult to say what actual prices would be.
Oh yes don't get me wrong Evans is either a shrewd businessman or a corporate monster whichever way your view tilts! He's not doing it out of his love of ITFC!
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