Championship finances.

[Canaryboy]

I personally think it's the latter and there's going to be some severe pain when, either he gets bored and wants out, or, when he comes to collect.

You are our resident finance expert Gazza (saw you reference that on another thread!).

If Ipswich were to fold and Marcus Evans Group (the holding company) were forced by administrators to write off the £86m in debt, would they be able to declare that as a loss on their balance sheet and carry forward that loss into future years for UK corporation tax purposes?

That was my first suspicion, whether Evans was building up a massive debt (by charging interest) to the point that it can no longer be sustained and pulling a trick whereby his main business could actually profit from the collapse as a creditor? 

Capital losses declared on a tax return against future capital gains?

 

[Din]

£86m? That's a bloody lot to say the least  

 

[Yellow Fever]

It'd be a shame if they had a good season and then collapsed financially! 

 

[morty]

Breaking news.....Blackburn, Leeds and Nottingham Forest all fail to meet Football League's financial fair play rules.

Transfer embargoes imposed.

 

[Canaryboy]

Breaking news.....Blackburn, Leeds and Nottingham Forest all fail to meet Football League's financial fair play rules.

Transfer embargoes imposed.

Not surprised about Forest or Blackburn, but Leeds is an odd one considering they don't really have any big name players in the squad! What a strange club! 

Jordan Rhodes will be off in January then, guess its true that he is on £50k a week. Shame we are in this division as they have two or three good players that I suspect will be attracting interest from the league above. Hanley and Cairney are class. 

This does make you wonder what the point in 'Financial Fair Play' is though, because despite 'cheating' none of them are in the top six, whilst no club with parachute payments have been given sanctions (look at the players Wigan have despite their attendances, for example).

 

[eatonparkboy]

It is easier for us non financial experts to follow an episode of Poirot than trying to understand the FFP rules.

 

[Monty13]

When you have 86million of debt most of your loss will be interest on the debt.

It's perfectly simple for well run clubs to maintain their financial position if they don't already have debt and they don't try and spend their way out of the League.

The problem is most clubs debts are already huge, we are lucky, and I have no worries about our financial viability in this league, especially with the new FFP laws kicking in.

 

[Monty13]

The headline in the EADT reads........

"New figures show Ipswich Town Football Club’s financial situation has improved since last year"

And the article ends with......

"The club’s debt has risen from £82.4million to £86million".

How on earth can the finances have improved when they are in more debt?

http://www.eadt.co.uk/sport/ipswich-town/new_figures_show_ipswich_town_football_club_s_financial_situation_has_improved_since_last_year_1_3878745

I know we all like to laugh at them but it's basic economics. If the amount you're losing each year is getting less than your financial situation is improving. Much like the country, even though they are still borrowing, they are borrowing less and reducing the deficit between what they are spending v costs and therefore reducing the amount they need to borrow. Unlike the country they will probably never pay off that debt unless they get promoted, stay there for a few years and spend virtually nothing extra.

 

[Canaryboy]

I know we all like to laugh at them but it's basic economics. If the amount you're losing each year is getting less than your financial situation is improving. Much like the country, even though they are still borrowing, they are borrowing less and reducing the deficit between what they are spending v costs and therefore reducing the amount they need to borrow. Unlike the country they will probably never pay off that debt unless they get promoted, stay there for a few years and spend virtually nothing extra.

Yes politicians like us to think that our countries financial situation is improving too. I like the comparison between Ipswich Town and the UK economy, very apt. Stagnated for years whilst wracking up an unsustainable debt that we have little prospect of ever being capable of repaying. The major difference between the two being that Ipswich can go through a process to have their debts written off or enter into a CVA, and the country can't.

 

[Canaryboy]

When you have 86million of debt most of your loss will be interest on the debt.

It's perfectly simple for well run clubs to maintain their financial position if they don't already have debt and they don't try and spend their way out of the League.

The problem is most clubs debts are already huge, we are lucky, and I have no worries about our financial viability in this league, especially with the new FFP laws kicking in.

That is a definite flaw in the system as it wasn't a 'standing start', we are lucky in that we've become debt free in advance of FFP coming into effect. Others are holding on to legacy debts and their interest payments are counted as an expense.

You do have to question whether this is actually an unfair system. What about the many clubs who have entered administration and come out debt free at some stage in the past? Also, what about clubs who rent their stadiums, as opposed to those who are still paying off debts for stadiums which they built and own themselves. Surely one has a greater net asset value so could actually be in a better position to take on debt in the first place whilst others may have wracked up debts without having much by way of their own assets (such as Leeds United). Also one has collateral for loans, and the other doesn't.  

And have I just inadvertently found a loophole for the rich oil barrens and Russian oligarchs? Couldn't they just built a stadium worth a lot of money and then pass ownership their club for £1? Silly system! 

 

[Monty13]

Yes politicians like us to think that our countries financial situation is improving too. I like the comparison between Ipswich Town and the UK economy, very apt. Stagnated for years whilst wracking up an unsustainable debt that we have little prospect of ever being capable of repaying. The major difference between the two being that Ipswich can go through a process to have their debts written off or enter into a CVA, and the country can't.

Well not quite, as I pointed out the countries financial situation is improving, because the debt increase year on year is being reduced, that is still an improvement, it's not just not an improvement on the overall amount of debt. And also not true, the country can declare bankruptcy, but we are the ones who would suffer, much like Ipswich towns creditors. 

 

[Monty13]

That is a definite flaw in the system as it wasn't a 'standing start', we are lucky in that we've become debt free in advance of FFP coming into effect. Others are holding on to legacy debts and their interest payments are counted as an expense.

You do have to question whether this is actually an unfair system. What about the many clubs who have entered administration and come out debt free at some stage in the past? Also, what about clubs who rent their stadiums, as opposed to those who are still paying off debts for stadiums which they built and own themselves. Surely one has a greater net asset value so could actually be in a better position to take on debt in the first place whilst others may have wracked up debts without having much by way of their own assets (such as Leeds United). Also one has collateral for loans, and the other doesn't.  

And have I just inadvertently found a loophole for the rich oil barrens and Russian oligarchs? Couldn't they just built a stadium worth a lot of money and then pass ownership their club for £1? Silly system! 

Surely it would be equally if not more unfair on the well run clubs if the badly run ones aren't punished? 

They could, but I would suggest they are not going to, none of these rich people really give clubs their money, this is the big lie about external investment. It will always need repaying one way or another.

 

[Canaryboy]

Well not quite, as I pointed out the countries financial situation is improving, because the debt increase year on year is being reduced, that is still an improvement, it's not just not an improvement on the overall amount of debt. And also not true, the country can declare bankruptcy, but we are the ones who would suffer, much like Ipswich towns creditors. 

Yes I understand what you meant. I just disagree entirely with the idea that our financial situation can be improving if our debt is increasing year on year, both in pounds sterling and as a percentage of GDP, and the interest paid on our debt is increasing year on year. I don't care how George Osborne wants to spin it. 

So I could go and put £10,000 on a credit card this year, make no repayments, and next year put another £5000 on the credit card. My financial situation is "improving" because I've only had to stick £5000 on the credit card, despite the fact that I've now got more debt (including interest from the first £10,000) and my interest repayments are at an all time high. That isn't an improving financial situation, that is a spiral of unsustainable debt which I'd have no real prospect of ever being able to repay. 

 

[morty]

That is a definite flaw in the system as it wasn't a 'standing start', we are lucky in that we've become debt free in advance of FFP coming into effect. Others are holding on to legacy debts and their interest payments are counted as an expense.

You do have to question whether this is actually an unfair system. What about the many clubs who have entered administration and come out debt free at some stage in the past? Also, what about clubs who rent their stadiums, as opposed to those who are still paying off debts for stadiums which they built and own themselves. Surely one has a greater net asset value so could actually be in a better position to take on debt in the first place whilst others may have wracked up debts without having much by way of their own assets (such as Leeds United). Also one has collateral for loans, and the other doesn't.  

And have I just inadvertently found a loophole for the rich oil barrens and Russian oligarchs? Couldn't they just built a stadium worth a lot of money and then pass ownership their club for £1? Silly system! 

But clubs have known for some years now that these rules were going to be imposed, and didn't they do it in stages?

 

[Canaryboy]

But clubs have known for some years now that these rules were going to be imposed, and didn't they do it in stages?

Some of them are run by crooks, it is the fans I feel sorry for. Although not Leeds fans, don't feel sorry for them. Especially the one who threw up in our carriage of the train back from Leeds on Saturday night, or the one who overheard me talking about Norwich and kept talking about combine harvesters (Yawn!). 

Who knows where we'd be if we sold out to the likes of Tony Fernandes, or even that Peter Cullum bloke who didn't even ever sound that interested in football or the club. We're a well run club off the pitch and should be grateful for that. 

 

[morty]

Some of them are run by crooks, it is the fans I feel sorry for. Although not Leeds fans, don't feel sorry for them. Especially the one who threw up in our carriage of the train back from Leeds on Saturday night, or the one who overheard me talking about Norwich and kept talking about combine harvesters (Yawn!). 

Who knows where we'd be if we sold out to the likes of Tony Fernandes, or even that Peter Cullum bloke who didn't even ever sound that interested in football or the club. We're a well run club off the pitch and should be grateful for that. 

Oh definitely, we should be extremely grateful, plenty aren't though lol.

But this is why I support FFP, as hopefully it should drive these people out of our game. I feel sorry for the fans too, but share your view on Leeds. Worst fans I have ever seen at Carrow road.

 

[Canaryboy]

Oh definitely, we should be extremely grateful, plenty aren't though lol.

But this is why I support FFP, as hopefully it should drive these people out of our game. I feel sorry for the fans too, but share your view on Leeds. Worst fans I have ever seen at Carrow road.

The best thing about living in South Yorkshire is that everybody hates Leeds, some common ground and always an ice breaker! 

 

[GazzaTCC]

You have to remember that these current rules were agreed between the then Championship clubs back in 2011/12 and, even then, the proposals were a compromise as not all clubs could agree on the form they should take.

Morty is right in as much as clubs had a three year time frame to comply and "get their houses in order". Some have, many haven't.

The theory behind FFP is well based, but the fact that that it still permits losses, and has just been revised to permit even bigger losses in future years, means that clubs still won't be run in commercially viable basis for years to come. That's somewhat self defeating

 

[morty]

You have to remember that these current rules were agreed between the then Championship clubs back in 2011/12 and, even then, the proposals were a compromise as not all clubs could agree on the form they should take.

Morty is right in as much as clubs had a three year time frame to comply and "get their houses in order". Some have, many haven't.

The theory behind FFP is well based, but the fact that that it still permits losses, and has just been revised to permit even bigger losses in future years, means that clubs still won't be run in commercially viable basis for years to come. That's somewhat self defeating

I wonder though, just how many clubs actually turn a profit, on a regular basis? I seem to remember that last season, if FFP were fully applied to the Premiership, only us, Arsenal and another I can't remember, would actually comply.

 

[morty]

It said on SSN earlier that QPR and Leicester are currently under investigation.