Boro Debt restructured

[Bruce]

FFP (P&S) allows £39m to be lost over 3 consecutive seasons IF the owner injects £24m of Equity, OR extends loans that are guaranteed to convert to equity.
Given nobody externally knows the precise definition of those Group Undertakings (loans) it is highly possible that at least an element of the Group loans were specified as convertible to equity.

The guy who does the P&S analysis on the Bristol City fans forum seemed to reckon that we were looking at a P&S loss after offsets of around £30m in the three year cycle to 22-23 so Gibson definitely had to convert some loans to equity. Possibly, as you say, some of the loans came with a commitment to convert them to equity by a certain point.

Because P&S looks backwards it doesn't really affect how much money we can spend in the future but it does indicate that he will convert more loans into equity down the line if needed to enable us to spend at the higher limit of £39m/3 years. I still reckon that his plan is to clear the decks as much as possible so he can spend big in one season rather than endless losses that don't allow us to compete financially with the parachute clubs.

 

[Steve Bee]

When you already have near enough 100pc, how do you keep converting?

 

[sugee jung]

He's such a good person, Steve Gibson.
He is so dedicated to the team. If it were me, I wouldn't be able to do this.
Carrick should stay with the team for a long time if he has such a good boss.
If it were me, I would stay with the team until I got fired.

 

[Matt]

When you already have near enough 100pc, how do you keep converting?

you issue more shares, which in turn reduces the value of the existing shares (I think).

 

[1finny]

why doesnt SG post this info himself

Have you ever seen a thread where both admin and SG post (taps nose)

 

[indeedido]

The guy who does the P&S analysis on the Bristol City fans forum seemed to reckon that we were looking at a P&S loss after offsets of around £30m in the three year cycle to 22-23 so Gibson definitely had to convert some loans to equity. Possibly, as you say, some of the loans came with a commitment to convert them to equity by a certain point.

Because P&S looks backwards it doesn't really affect how much money we can spend in the future but it does indicate that he will convert more loans into equity down the line if needed to enable us to spend at the higher limit of £39m/3 years. I still reckon that his plan is to clear the decks as much as possible so he can spend big in one season rather than endless losses that don't allow us to compete financially with the parachute clubs.

Then the Bristol City guy is wrong. For a start he will simply not know the P&L for the year to June 2023, it has not yet been published.

For 3 years to June 2022 there was a change to the FFP/P&S calculation due to Covid.
The calculation used numbers for 4 seasons. 2019 + (average of seasons 2020 and 2021) + 2022.
Loss Before Tax was £50.6m under this calculation.
The Academy/All U21 spend £15m (at £5m per season).
Depreciation of Fixed Assets £9.2m.
Covid allowance £7.5m
Community spend £3m (at £1m per season).
Fixed Asset Revaluation (unrealised) £2.7m.

The FFP calculation for the 3 year period to June 30th 2022, will be a loss of c£13.2m.
This is within the £15m limit without any equity injection/converting loans.

The calculation for the year to 2023 will include Profit from Sale of Registration of Spence and Tavernier, neither of whom had book value. The entire fee will appear as Profit as a line in the P&L - as every season. This is an EFL regulation.
However MFC will suffer from losing the benefit of counting 2019 in the calculation - our last year of Para payments. I still believe the club with this Player Sale profit will be within FFP lower loss of £15m.
That GON have injected £107m of equity, therefore the allowable £24m over the 3 year period, makes it irrelevant anyway.

 

[r00fie1]

I had to put up with so many insults and so much abuse last time these affairs were discussed that I thought why should I even try and sort this out.

Hi Rob.
Can you ask at fans forum [ref: catering] if we can have Vegetarian pasties instead of that Balti stuff please?

 

[SilentProf]

I think it must be to help the club with those loans it’s been taking out against player transfer fees. The banks will want guarantees those loans are secure and huge debt on the balance sheet is a risk. It means nothing to FFP as that’s only over a 3 year period so historic losses beyond that and the overall debt value have no impact on FFP. It’s one reason FFP isn’t really fit for purpose.

 

[Bruce]

Then the Bristol City guy is wrong. For a start he will simply not know the P&L for the year to June 2023, it has not yet been published.

Well that has to be estimated but you can make a first stab.

He thinks we probably broke the £15m limit 21/22 you don't. Depending on 22/23's P&L figures we will either break it again or not. It's now a moot point and it is highly likely that some of the losses covered by GON in the last 3 years were specified for conversion to equity at a certain point which is why we have been getting contradictory rumours about the EFL looking at us closely. Presumably it has been along the lines of
EFL: you're breaking the 15m limit, what you going to do about it?
GON: I'll commit to convert some loans to equity by...
EFL: OK. We're watching you closely.

 

[fmttmadmin]

Hi Rob.
Can you ask at fans forum [ref: catering] if we can have Vegetarian pasties instead of that Balti stuff please?

Hi Roofie - we have a Green Weekend planning meeting next week - a National EFL initiative working with FSA and individual clubs. Vegetarian food is the first priority for this weekend when we hope to make as big a publicity splash as possible. Hopefully that will be successful and mean that vegetarian food can be a bigger part of the food on offer at the stadium.

 

[Soutra]

I think it must be to help the club with those loans it’s been taking out against player transfer fees. The banks will want guarantees those loans are secure and huge debt on the balance sheet is a risk. It means nothing to FFP as that’s only over a 3 year period so historic losses beyond that and the overall debt value have no impact on FFP. It’s one reason FFP isn’t really fit for purpose.

Those aren't loans. It's debt factoring. The bank pays MFC 90% (or whatever is agreed) of the value of the transfer fee right away. Then the bank collects the full amount from Ajax (or whichever club it is) over the period agreed in the transfer agreement.

There's no risk to MFC at all. The bank carries ALL the risk. If Ajax or whoever it is defaults, it doesn't make a jot of difference to MFC.

 

[r00fie1]

Hi Roofie - we have a Green Weekend planning meeting next week - a National EFL initiative working with FSA and individual clubs. Vegetarian food is the first priority for this weekend when we hope to make as big a publicity splash as possible. Hopefully that will be successful and mean that vegetarian food can be a bigger part of the food on offer at the stadium.

Excellent!

We dont have to go all "Forest Green Rovers", but the days of fat-laden minced-cow-pie or battery-henned-flesh + glup, with stacks of salt, are hopefully on the way out.

Interesting to see just how much, salt, fat and glup is added to the "Chicken Balti" pies.

Disposable wooden forks and spoons to replace the plastic ones too [Many clubs have already done this] - and cut out the practice of coating the fries with stacks of salt before they are served [please].

A few of those tiny salt sachets encourages less use of salt, which can only be good for health.

In addition "Sugar Free" drinks [with Sweeteners] are more harmful than those made with processed natural sugar. They are synthetic "sugar" substitute and can damage the pancreas over a period. Much better to have natural drinks without sugar or sweeteners.

We dont want to kill off the fans of the future by filling them with fat, salt, sugar, monosodium glutamate, synthetic "sugar" and processed rubbish - otherwise RED FACTION wont last another ten years!!!!
​

 

[Laughing]

Excellent!

We dont have to go all "Forest Green Rovers", but the days of fat-laden minced-cow-pie or battery-henned-flesh + glup, with stacks of salt, are hopefully on the way out.

Interesting to see just how much, salt, fat and glup is added to the "Chicken Balti" pies.

Disposable wooden forks and spoons to replace the plastic ones too [Many clubs have already done this] - and cut out the practice of coating the fries with stacks of salt before they are served [please].

A few of those tiny salt sachets encourages less use of salt, which can only be good for health.

In addition "Sugar Free" drinks [with Sweeteners] are more harmful than those made with processed natural sugar. They are synthetic "sugar" substitute and can damage the pancreas over a period. Much better to have natural drinks without sugar or sweeteners.

We dont want to kill off the fans of the future by filling them with fat, salt, sugar, monosodium glutamate, synthetic "sugar" and processed rubbish - otherwise RED FACTION wont last another ten years!!!!
​

View attachment 68442

For the last 3 months I have been salt free due to blood pressure.

I miss salt.

 

[indeedido]

Well that has to be estimated but you can make a first stab.
View attachment 68433
He thinks we probably broke the £15m limit 21/22 you don't. Depending on 22/23's P&L figures we will either break it again or not. It's now a moot point and it is highly likely that some of the losses covered by GON in the last 3 years were specified for conversion to equity at a certain point which is why we have been getting contradictory rumours about the EFL looking at us closely. Presumably it has been along the lines of
EFL: you're breaking the 15m limit, what you going to do about it?
GON: I'll commit to convert some loans to equity by...
EFL: OK. We're watching you closely.

We agree on most things Bruce, especially the Loan/equity conversion, making the FFP worry irrelevant.
The numbers and calculations you include from Bristol guy above are I believe incomplete from an FFP/P&S perspective.
The Profit starting point is Profit Before Tax, not the Operating Profit quoted above.
The Allowance is understated as it does not include Community Spend which is significant at MFC.
The Profit from Revaluation of Fixed Assets is also allowable from an FFP perspective, which they do not include.

We are rinsing through the last year that will be Covid loss impacted in the calculation. I am confident that Gibson will have us within that £15m 3 year limit, as I think there will be swings and roundabouts with 2019 and 2023 accounts re impact on 3 year FFP from the 2022 calculation and undoubted safety.
Revenue and Profit from player sales much higher in 2019 than 2023 (despite Spence and Tav) but wages and amortisation much higher in 2019 v 2023.
Until the 2023 Accounts are published, we won't know.

 

[Kowalski]

Hi

We agree on most things Bruce, especially the Loan/equity conversion, making the FFP worry irrelevant.
The numbers and calculations you include from Bristol guy above are I believe incomplete from an FFP/P&S perspective.
The Profit starting point is Profit Before Tax, not the Operating Profit quoted above.
The Allowance is understated as it does not include Community Spend which is significant at MFC.
The Profit from Revaluation of Fixed Assets is also allowable from an FFP perspective, which they do not include.

We are rinsing through the last year that will be Covid loss impacted in the calculation. I am confident that Gibson will have us within that £15m 3 year limit, as I think there will be swings and roundabouts with 2019 and 2023 accounts re impact on 3 year FFP from the 2022 calculation and undoubted safety.
Revenue and Profit from player sales much higher in 2019 than 2023 (despite Spence and Tav) but wages and amortisation much higher in 2019 v 2023.
Until the 2023 Accounts are published, we won't know.

Hi Indeedio, do you know what have been changed in respect to FA revaluations? I have looked and not had any luck. Thanks.

 

[indeedido]

Hi

Hi Indeedio, do you know what have been changed in respect to FA revaluations? I have looked and not had any luck. Thanks.

No, I only know what the revaluation of Fixed Assets numbers reported in the Accounts were.
Not exactly sure specifically which Long lease assets were revalued.
Or whether there have been any recent changes to what is allowable from a P&S/FFP perspective re Revalution of FA's.

 

[Bruce]

We agree on most things Bruce, especially the Loan/equity conversion, making the FFP worry irrelevant.

I honestly don't know nearly enough about the details to assess the accuracy of the figures. I can tell from the outside that there was definitely some concern from within the club about breaching the lower limit of the P&S figures hence the article from Johns earlier in the season. It doesn't look likely that we were ever at risk of breaching the higher limits unless we went on a spending spree.

We are clearly in a process of bearing down on our P&S balance as much as possible. I presume that is to allow us to spend big when the time arrives rather than simply being the new normal.