Some Tweets Saying We Have Borrowed Against Future Season Ticket Sales

[The Kraken]

The problem NOW is that this fortune isn't available up front to newly promoted teams

 

In which case a prudent loan (and thoroughly acceptable one IMO) would be to secure against incomes from this season; TV monies and prize money yet to be paid for finishing at worst 20th in the Prem. We haven't done that, we've perhaps taken a bolder step, which is why the loan is attracting concern.

[Gemmel]

Then I disagree. Even if we are loaning money to provide interim cashflow, its is still being borrowed from next year's income streams.

 

No it's not . Next years income streams is just the guarantee. Assuming payment milestones are met (In line with the TV / Prem payments to us) then the whole thing is null and void by the end of the season

[egg]

Yes

 

No! Read the MG01. The charge is against all assets of the club.

[The Kraken]

No it's not . Next years income streams is just the guarantee. Assuming payment milestones are met (In line with the TV / Prem payments to us) then the whole thing is null and void by the end of the season

 

As you say, assuming payment milestones are met. We don't know what those milestones are, or when they are due to be met. If it's a loan based upon repayments over longer than one year then we would potentially be spending next year's income to pay off this loan. Hence why I said I'd have no problem with a loan secured against this season's income, as that would indicate the repayment term to be shorter.

[egg]

In which case a prudent loan (and thoroughly acceptable one IMO) would be to secure against incomes from this season; TV monies and prize money yet to be paid for finishing at worst 20th in the Prem. We haven't done that, we've perhaps taken a bolder step, which is why the loan is attracting concern.

 

But we don't know what we have or haven't done. This may be 10m payable from prize money, or a 75m gamble based on staying up. Either way its a secured debt which appears to be a change of course.

[The Kraken]

But we don't know what we have or haven't done. This may be 10m payable from prize money, or a 75m gamble based on staying up. Either way its a secured debt which appears to be a change of course.

 

We don't, I agree. As above, I would be more comfortable with a loan secured against this season's (2012-13) funding. Instead it is secured against earnings in season 2013-14, which IMO inceases the potential risk factor.

[Dig Dig]

remind me again, what are we supposed to have borrowed this money against, is it this year's ST sales and TV revenue or is it next year's as well ? The title says FUTURE SEASON TICKET SALES, the link Turks put up says future revenue and current assets I think.

 

It's not future season ticket sales, it's future TV revenue.

[Matthew Le God]

We don't, I agree. As above, I would be more comfortable with a loan secured against this season's (2012-13) funding. Instead it is secured against earnings in season 2013-14, which IMO inceases the potential risk factor.

 

If we go down we will have guaranteed money from parachute payments.

 

£16m in 2013/14

£16m in 2014/15

£8m in 2015/16

£8m in 2016/17

 

Couldn't the loan be secured against them?

[The Kraken]

If we go down we will have guaranteed money from parachute payments.

 

£16m in 2013/14

£16m in 2014/15

£8m in 2015/16

£8m in 2016/17

 

Couldn't the loan be secured against them?

 

Of course it could; but it already is secured against 2013-14 TV money OR parachute payments. I don't understand your point compared to mine though. If the loan were secured against 2012-13 payments, that would indicate the loan will be fully repaid by the end of this season. The loan is secured against 2013-14 payments, therefore its possible that the repayments run to the end of the 2014 season. Securing payments against the full extent of the parachute payments could then mean the term of the loan extends to 2017.

 

All speculation, as the exact terms of the loans are unknown; but loans secured against short term payments seem more comfortable to me as they are paid off quicker; at the moment there is the unknown risk that this loan will be paid off from incomes earned next season.

[kpturner]

If we go down we will have guaranteed money from parachute payments.

 

£16m in 2013/14

£16m in 2014/15

£8m in 2015/16

£8m in 2016/17

 

Couldn't the loan be secured against them?

 

Yes it could be - but what happens when we spend it all then get relegated?

[CB Fry]

If we go down we will have guaranteed money from parachute payments.

 

£16m in 2013/14

£16m in 2014/15

£8m in 2015/16

£8m in 2016/17

 

Couldn't the loan be secured against them?

 

 

 

Is it a good thing to effectively spend four years worth of parachute payments in one transfer window?

 

I thought parachute payments were supposed to be there to aid the descent into the lower league. Like a parachute. Not to borrow against.

[egg]

Of course it could; but it already is secured against 2013-14 TV money OR parachute payments. I don't understand your point compared to mine though. If the loan were secured against 2012-13 payments, that would indicate the loan will be fully repaid by the end of this season. The loan is secured against 2013-14 payments, therefore its possible that the repayments run to the end of the 2014 season. Securing payments against the full extent of the parachute payments could then mean the term of the loan extends to 2017.

 

All speculation, as the exact terms of the loans are unknown; but loans secured against short term payments seem more comfortable to me as they are paid off quicker; at the moment there is the unknown risk that this loan will be paid off from incomes earned next season.

 

I echo that. The added concern is the additional security floating over all assets. It suggests tv revenue may be insufficient.

[Big Bad Bob]

Of course it could; but it already is secured against 2013-14 TV money OR parachute payments. I don't understand your point compared to mine though. If the loan were secured against 2012-13 payments, that would indicate the loan will be fully repaid by the end of this season. The loan is secured against 2013-14 payments, therefore its possible that the repayments run to the end of the 2014 season. Securing payments against the full extent of the parachute payments could then mean the term of the loan extends to 2017.

 

All speculation, as the exact terms of the loans are unknown; but loans secured against short term payments seem more comfortable to me as they are paid off quicker; at the moment there is the unknown risk that this loan will be paid off from incomes earned next season.

 

Is it possible that it is a short term loan and that the securities are in case we do not pay it off by the end of this season??

[The Kraken]

Is it possible that it is a short term loan and that the securities are in case we do not pay it off by the end of this season??

 

Yep, of course that's possible. That said, I'd ask some questions:

 

1) If we don't/can't pay it off this season, why not? And what effect does it have on next year's budget if revenues from that season are diverted to repay the loan?

 

2) If the intent is to pay off the loan within this season, why not secure it against guaranteed payments from this season?

[The Kraken]

These are the last 4 paragraphs into Everton's similar loan deal. It's a different club and we don't know our particular loan terms yet, of course, but there's a lot to take from it.

 

The loan is a one-year facility for £14m, replacing a mortgage agreed with Investec 12 months previously, in which this season's central funds were signed over to the bank.

 

That Investec loan was a departure from the terms of the 2009 agreement with Barclays, in which only the same season's Premier League funds were borrowed against to assist with cashflow.

 

To sell future seasons' income is intrinsically more risky, both for the lender and the mortgager. There can be no guarantees that Everton will even be in the Premier League next season, and although there has been no disclosure of the interest-rate terms, that risk is normally priced into what yield the creditor must pay, making the rate more expensive.

 

Everton are insouciant about the deal, insisting that even if the worst happens they could cover it from the bumper parachute payments from the Premier League. But that income is meant as a relegation cushion, not to cover cashflow difficulties

[Thedelldays]

I think it is safe to say...relegation this season would be a disaster....

[Big Bad Bob]

Yep, of course that's possible. That said, I'd ask some questions:

 

1) If we don't/can't pay it off this season, why not? And what effect does it have on next year's budget if revenues from that season are diverted to repay the loan?

 

2) If the intent is to pay off the loan within this season, why not secure it against guaranteed payments from this season?

 

Maybe the bank won't securitise against this season!

 

If, come the end of the season, we haven't paid them off and we've spent this season's dosh then they have nothing to grab. So it is sensible to get first dibs on money that we are guaranteed to have/be having come the end of the loan term!!

 

I don't think I've explained it very well but I know what I mean....

[The Kraken]

Maybe the bank won't securitise against this season!

 

If, come the end of the season, we haven't paid them off and we've spent this season's dosh then they have nothing to grab. So it is sensible to get first dibs on money that we are guaranteed to have/be having come the end of the loan term!!

 

I don't think I've explained it very well but I know what I mean....

Well that's ideal for the lender; yes.

 

What this all suggests to me is that this isn't a loan to help with cash flow, its more than that. Hopefully we'll find out the loan amount and perhaps even repayment terms are not too onerous.

[Gemmel]

I think it is safe to say...relegation this season would be a disaster....

 

For sure - It makes sense to invest upfront, to give ourselves a chance, but if it fails, it really would be a disaster

[Big Bad Bob]

Well that's ideal for the lender; yes.

 

What this all suggests to me is that this isn't a loan to help with cash flow, its more than that. Hopefully we'll find out the loan amount and perhaps even repayment terms are not too onerous.

 

Maybe we're borrowing now ready to put in a major bid for 3 or 4 PL quality defenders come the January transfer saga..

[Scummer]

 

2) If the intent is to pay off the loan within this season, why not secure it against guaranteed payments from this season?

 

Because the point of security is to give the lender certainty that they'll get their money if we don't make the repayments. You couldn't secure it against this season's payments, as by the time we defaulted we'd have already spent them.

 

So in fact, I'd say the fact that it is secured against next season's payments is actually a very good indicator that the plan is to pay it off before then.

[Thedelldays]

Well that's ideal for the lender; yes.

 

What this all suggests to me is that this isn't a loan to help with cash flow, its more than that. Hopefully we'll find out the loan amount and perhaps even repayment terms are not too onerous.

I think it was to get a group of players in now....we know the fees(ish) is around £28m...making us the 7th biggest spenders in europe (this is saints we are talking about here)...with that will come hyper inflated agent fees and signing on fees.....I very much doubt we had that sort of money up front...considering we are (or trying to at the mo) making major improvements to the training ground......

 

that is my hope anyway.....I just cant see NC buying a club from admin and allowing us to be put in such a risky state...I think all will be fine..maybe makes relegation less of a welcome outcome (if it ever was) and add that bit more pressure on nigel to succeed...but we wanted decent players and they cost hard fukin cash....

 

just hope this is sensible transaction and not a "drunk on premier legaue like pompey" sort of direction

[Window Cleaner]

Well that's ideal for the lender; yes.

 

What this all suggests to me is that this isn't a loan to help with cash flow, its more than that. Hopefully we'll find out the loan amount and perhaps even repayment terms are not too onerous.

 

But the fact that the loan is secured on future revenues does tend to suggest that the Swiss have,for whatever reason, pulled the plug right? I mean up until now whatever we've needed has come from the owner and his estate,now NC is having to go directly contrary to his statement a couple of years back and borrow money against future revenues.

[Window Cleaner]

I think it was to get a group of players in now....we know the fees(ish) is around £28m...making us the 7th biggest spenders in europe (this is saints we are talking about here)...with that will come hyper inflated agent fees and signing on fees.....I very much doubt we had that sort of money up front...considering we are (or trying to at the mo) making major improvements to the training ground......

 

that is my hope anyway.....I just cant see NC buying a club from admin and allowing us to be put in such a risky state...I think all will be fine..maybe makes relegation less of a welcome outcome (if it ever was) and add that bit more pressure on nigel to succeed...but we wanted decent players and they cost hard fukin cash....

 

just hope this is sensible transaction and not a "drunk on premier legaue like pompey" sort of direction

 

But NC didn't buy the club, Markus did, he had money and seemingly met our every need for 3 years, it's very easy to talk about not contracting debt when your boss has it by the bucket load and is willing enough to dob it over whenever you ask. When there's no more funding from the well, you have to eat your words and go cap in hand to someone else who has dosh to lend.

[Thedelldays]

But NC didn't buy the club, Markus did, he had money and seemingly met our every need for 3 years, it's very easy to talk about not contracting debt when your boss has it by the bucket load and is willing enough to dob it over whenever you ask. When there's no more funding from the well, you have to eat your words and go cap in hand to someone else who has dosh to lend.

meeting our every need when alive was pittence when it came to premier league money....the cost of ramirez alone probably near our transfer budget from -10 to promotion against coventry

 

I agree that we are now probably going to be self sufficient...which means, doing what the likes of everton are doing.....

 

you never know, we may get another gift in the future....feck knows

[trousers]

Because the point of security is to give the lender certainty that they'll get their money if we don't make the repayments. You couldn't secure it against this season's payments, as by the time we defaulted we'd have already spent them.

 

So in fact, I'd say the fact that it is secured against next season's payments is actually a very good indicator that the plan is to pay it off before then.

 

I've been bashing my head against a brick wall for best part of 10 pages trying to explain this simple concept but you've articulated it a lot better than I've been able to do. Cheers!

[Window Cleaner]

meeting our every need when alive was pittence when it came to premier league money....the cost of ramirez alone probably near our transfer budget from -10 to promotion against coventry

 

 

Nowhere near it, we have spent a shedload on players since we rose from the ashes, at Coventry (h) 28/4/12 it was probably somewhere round about 20 million.

[Big Bad Bob]

I've been bashing my head against a brick wall for best part of 10 pages trying to explain this simple concept but you've articulated it a lot better than I've been able to do. Cheers!

 

Hey, I articulated the same thoughts not 10 posts before him

[jayrivers]

People saying that if we get relegated then we have already spent the parachute payments may not be correct!

 

If the loan is paid off this season then that's fine. The lender would rather it be secured against something more long term. For instance if you take a loan out for your company and secure it against your house, doesn't mean you're going to sell your house to pay it off. Worse case they have something to fall back on.

 

If indeed we did have to use parachute payments we will also be generating money from player sales.

 

But then as others have said no one knows how much the loan is, it doesn't mean all the parachute money. Could only be £1-£2 million by then. All speculation!

[Thedelldays]

Nowhere near it, we have spent a shedload on players since we rose from the ashes, at Coventry (h) 28/4/12 it was probably somewhere round about 20 million.

dunno...probably..

 

nigels net spend was £3mish.....so he spent £15m.....cant remember how much pardew spent....but you are right..

[The Kraken]

But the fact that the loan is secured on future revenues does tend to suggest that the Swiss have,for whatever reason, pulled the plug right? I mean up until now whatever we've needed has come from the owner and his estate,now NC is having to go directly contrary to his statement a couple of years back and borrow money against future revenues.

 

I just find it strange we spent close on £30M on players and then had to go get a loan. And I know you disagreed but I think its very close to £30M from what has been released (Ramirez £12M, Rodriguez £6m, Mayuka £3.5M, Yoshida £2.5M, Clyne £2.5M, Gazzaniga £1M, Davis nominal); that is around £27M or £28M not including signing on fees etc, so its a substantial sum whatever.

 

I would also speculate that the backing from the Liebherr family has now ceased. Whether it happened recently, hence committing to that sum of money then having to get a loan to pay for it, that's another question.

[trousers]

Hey, I articulated the same thoughts not 10 posts before him

 

I doff my cap to you too sir. A good team effort!

[Thedelldays]

I just find it strange we spent close on £30M on players and then had to go get a loan. And I know you disagreed but I think its very close to £30M from what has been released (Ramirez £12M, Rodriguez £6m, Mayuka £3.5M, Yoshida £2.5M, Clyne £2.5M, Gazzaniga £1M, Davis nominal); that is around £27M or £28M not including signing on fees etc, so its a substantial sum whatever.

 

I would also speculate that the backing from the Liebherr family has now ceased. Whether it happened recently, hence committing to that sum of money then having to get a loan to pay for it, that's another question.

 

I remember people suggesting that the £33m...that was written off could have well been the last.....

if that is that with them...even if they handed NC the club (which they may have effectively done) then we still got and have been very lucky...as long as we dont fuk up the legacy from Markus that was built is such a short and remarkable time

[jayrivers]

I remember people suggesting that the £33m...that was written off could have well been the last.....

if that is that with them...even if they handed NC the club (which they may have effectively done) then we still got and have been very lucky...as long as we dont fuk up the legacy from Markus that was built is such a short and remarkable time

 

Yep, and I would hope that by getting a secured loan this would preserve the legacy. But then I'm taking the positive approach of the being a short term thing to over cash flow and will be pretty much paid off by the end of the season. And then based on the fact we wouldn't need to spend a much next year to consolidate further

[The Kraken]

Because the point of security is to give the lender certainty that they'll get their money if we don't make the repayments. You couldn't secure it against this season's payments, as by the time we defaulted we'd have already spent them.

 

So in fact, I'd say the fact that it is secured against next season's payments is actually a very good indicator that the plan is to pay it off before then.

 

So your saying that if the loan was secured against this season's money, the loan company couldn't call it in if we defaulted. But if its secured against next season's funding it could be.

 

And by the way; the loan is also secured against club assets; not just the TV money. So the charge would revert to those assets if the club defaulted.

[SaintBobby]

So far, I'm pretty untroubled by this. (although it may indicate that the Liebherrs aren't writing blank cheques).

 

A simple explanation would be:

 

1. In order to have a fighting chance to stay in the Prem, the club judged it needed to spend £30m on players. This is an upfront cost, the potential benefit of which is spread over four or five years.

2. If we stay up, no problems. We pay off the loan and keep getting huge premiership TV wonga.

3. If we get relegated, we sell off players to payback the loan. So, Ramirez gets sold for, say, £12m+. Lallana for £8m-ish and we rebuild from the Championship.

[Thedelldays]

surely, if the loan is so short term..I cant see how we cant pay it

[The Kraken]

So far, I'm pretty untroubled by this. (although it may indicate that the Liebherrs aren't writing blank cheques).

 

A simple explanation would be:

 

1. In order to have a fighting chance to stay in the Prem, the club judged it needed to spend £30m on players. This is an upfront cost, the potential benefit of which is spread over four or five years.

2. If we stay up, no problems. We pay off the loan and keep getting huge premiership TV wonga.

3. If we get relegated, we sell off players to payback the loan. So, Ramirez gets sold for, say, £12m+. Lallana for £8m-ish and we rebuild from the Championship.

 

Yeah, that's a gambling strategy that's never gone wrong for any other club before. No worries at all; I must have imagined Pompey having troubles with the same strategy recently.

[70's Mike]

Interesting and Concerning

[jayrivers]

surely, if the loan is so short term..I cant see how we cant pay it

 

Depends how much it's for though surely? If its £10 million which is covered by payments we are due this year for TV etc...? Could have been for the amount Bolonga wanted for Ramirez up front and this was the most efficient way of handling it?

[Bearsy]

It's a shame Markus ain't still around. I reckon he'd of bankrolled all this no problem, bless him.

[egg]

I've been bashing my head against a brick wall for best part of 10 pages trying to explain this simple concept but you've articulated it a lot better than I've been able to do. Cheers!

 

That's one interpretation. But, why the need to borrow? Why give security over more than the tv revenue?

[Window Cleaner]

Interesting and Concerning

 

 

Interesting yes, concerning not really, the Swiss were never going to fund us for ever and a day anyway. Just dispels the rumour that we're the 5th richest club in the Universe or whatever, we're PL minnows who'll do well to survive.

[Big Bad Bob]

That's one interpretation. But, why the need to borrow? Why give security over more than the tv revenue?

 

Maybe the lenders are covering all bases, I mean what if the PL go tit's up this year and can't pay off TV money etc (much like OnDigital!!)

[egg]

Maybe the lenders are covering all bases, I mean what if the PL go tit's up this year and can't pay off TV money etc (much like OnDigital!!)

 

Possibly. Maybe that the tv money alone gave insufficient security for the amount borrowed.

[paris]

Is the initial document shown at the start of this thread authentic , i'm guessing someone has checked right ?

[The Kraken]

Is the initial document shown at the start of this thread authentic , i'm guessing someone has checked right ?

 

Rational Rich downloaded the document from Companies House; post 77.

[Jimmy_D]

If it's a loan intended to be paid before the end of this season, but secured against income from next, could well be for tax reasons.

[NickG]

Well I for one am shocked that we need to borrow money; I thought we still had a nice thick financial cushion from Markus behind us.

 

I am wondering if this was part of the reason why we spectacularly failed to reinforce the weakest part of the team - our defence - over the summer. NC clearly had his mind set on sexy attacking signings, and there was not much money left for defence so we either didnt bother and crossed our fingers the defence was up to it or we were tight-fisted in negotiations over defenders.

 

Either way, it seems the party is over....

 

you've got to laugh at the ignorant childish tantrums and panic on here!!

 

specatacularly failed to reinforce?? England U21 right back, Japanese international CB and Polish international GK - maybe not as much as we ideally want or need but hardly failing to reinforce!! lol

 

tell me, as you talk in facts, how much was loan for? what will it be used for? How is our cash flow? Has the family back gone? which defenders did we under bid for?

 

Or could it be, you know f all and enjoy a good cry?

[The Kraken]

If it's a loan intended to be paid before the end of this season, but secured against income from next, could well be for tax reasons.

 

Explain please.