No idea what its for, reads like it could just be an overdraft type thing. The people in charge know far more than me and most fans about running a multi million pound business and rich people dont tend to make decisions that cost them money so im going to file this under meh
From what I can gather this is a credit facility as opposed to a loan. The club utilise it as and when needed. For any of you in business think along the lines of invoice finance / factoring type of thing.
From 'Grumpy Old Man' with his permission, "Looks like this is the working capital facility talked about. The lender is Akira BV, whose holding company is the majority shareholder of the Louis-Dreyfus Group. It's secured on the stadium and surrounding land. There's no real detail on the agreement itself in the charge document, but essentially it looks like a glorified mortgage/overdraft facility. There's no counterpart showing for SAFC, so this appears to relate to Sunderland Ltd only. It's essentially an overdraft facility. It's essentially for working capital and cash flow. Could be as simple as ducks in a row for future investment. It has to be assumed that the facility is cheaper in interest than a simple overdraft. The other possibility is that there investment plans in place which will require additional short term cash, possibly more than one plan, depending on how things develop over the coming months. The thing with a facility is that you only use it if you need to, and then only to the extent that you need to. It's far more flexible, and potentially less onerous, than taking out a fixed term loan for a set sum (like the loan Short took out with SBC)."
In my humble opinion I think this gives a more structured way to help to develop plans for player recruitment and off field financing, which could help to speed up squad and stadium developments. Of course it could also be the start of some major investments into the club ( been rumoured on and off for a few years now) as it also gives investors surety that the club has a sound financial footing.
I always get a sense of unease when the clubs assets, ground and land get put up for guarantees. Sure it's probably standard practice but just feel uneasy with it. It won't be a case for alarm, just my personal feeling towards it.
It is standard in all the ones I've been involved with over the years. Secured borrowing is less expensive than unsecured.
Oh yeah, I get it just get a sense of unease with it. Think my logical mind just wants a billionaire to put his own money available when needed instead of wanting a glorified overdraft facility.
It is normal business practice. Just look at the difference in interest rates between a secured loan and an unsecured loan. It will save the club money which should then be available for other purposes. I mean what's the alternative the owners just writing out cheques at the end of the season to clear any deficits, that worked well previously. The main thing is to get the club running as a professional business and I have more faith in our current owners doing that than certain other owners we've had recently. Anyway as others have said we have little to no influence on what the club does or doesn't do. We just then up at 3 o'clock on Saturday hoping for a good performance, 3 points and a few beers
Just for fun I thought I'd have a look on other forums to see what current levels of hysteria had been reached regarding KLD's latest financial steps. I had no doubt there'd be the usual allegations of asset stripping, devious deals and 'his mam's pocket money' ... I was right of course. It's funny when people, who clearly have little idea of football finance, and probably have a credit card debt, feel obliged to show their ignorance. This one is typical, actually complaining that the club should be aiming to get decisions right in the transfer market and operate profitably There are endless demands for KLD to 'show some ambition', spend more and more money on more players and pay off others they don't like ... ... but it's not by running the club professionally and sustainably, it's by him ploughing through his own money and signing cheque after cheque. There's one thing sure, the only way he'll 'get rich' off Sunderland is by making the club a success, Short ploughed in his own money and lost it all. "The lending of money, or the using of facilities is the norm and nothing to much to worry about. The fact that we have an owner that will no longer use his own money, and is gambling on using promotion or player sales to service debt and fund the club is more worrying. This places huge pressure on the club to get every decision right in the transfer market to turn profit. The fact that this debt is secured against the stadium, when the facility is from a close family members company, is terrifying." So basically it's fine to get decisions wrong, and run the club at a loss, as long as it's the owner who's losing out ... ... seriously, it's sometimes better not to say the things, out loud, that you hear in your head.
Best reason I saw for the loan was from otr, three words... though for effect I wish the poster had used just the one. Monorail. Made me smile anyway.
How is using the stadium, our greatest asset, as security on an overdraft facility, "selling the crown jewels"
I totally understand that but my initial feeling is that it gives us cash flow stability that all companies need to operate effectively, coupled with the fact that it is only a lease hold agreement which if I am correct means that the collateral I.E the Stadium or training grounds are only really at risk after significant default of the funds if or when used sounds like a very good option to have as it allows quick fund liquidation as and when required for example if a player becomes available foe x price but the selling club only want a cash deal with a straight up transfer and our finances possibly restricted by FFP or whatever they call it now are not readily available due to how previous deals have been structured IE payments received over terms of deal (sell a player for 20 million and receive 5 Million a year for 4 years of his new contract for example), this could lead to a shortfall in certain cases. This option would give us financial flexibility to use this arrangement as a sort of cheap bridging loan. Obviously it has to be used sensibly and wisely and not abused by the board and owners, but I think in general they have shown that they are shrewd and trustworthy in that repect. The above is me just spit balling on 1 possible scenario and as I said earlier it also shows shrewd financial awareness and also shows potential investors that we are serious about the team and the project, so for me more upside than down side. But I do understand your reservations because debt is still debt and mostly people do not fully grasp that debt is only really bad if not managed, that's why some of th most wealthy and powerful people on the planet still use credit and loans to purchase things as it still gives them legal and insurance cover and to a certain degree some liability protection.
You'd know all about that wouldn't you considering your Donald and Methvens best mate. Bali Mumba, Sam Greenwood, Josh Maja, Joel Asoro, Logan Pye, James McConnell, Jay Turner-Cooke, Luca Stephenson. All left for pennies to either pay bills, keep the lights on or were awfully handled (Mumba going on loan to South Shields). Tried to sell Dan Neil as well for pennies but he turned it down, probably why you dislike him so much now I think about it.
