Doesn't have to be profitable. The receiver just collects the rent and pays it to the bank. One of the wonders of English law. I thought that under Bartlett it was reasonably profitable and he took close to a million a year salary to reduce the reported profits. Its a long time since AN posted the accounts so I may be mistaken.
I've made up the figures for the purposes of illustration. If Hull City AFC pay £1.5 million a year rent and Hull FC pay £1 million then the receiver would collect that money and use it to pay the mortgage. If the SMC's running costs were £2.5 million a year Hull City Council would receive no rent because income would be £2.5 million and expenditure would be exactly the same, so no profit. Which is what has happened over the past 12 years, more or less. If after the payment of the mortgage and receiver's fees there was a shortfall to pay other creditors then tough that isn't the banks problem but the SMCs. Its a bit more complicated in reality, but in effect the clubs play at the KC and all the bank can do is collect the rent and take its mortgage payment out first before everybody else. The SMC also pays for the privilege of having the receiver as his wages come out the rent as well.
Sorry Obi, but I'm afraid that's nonsense. If the SMC didn't pay it's operating costs(staffing the stadium etc), then there would be no games staged and therefore no rent paid, as the stadium simply couldn't operate. Effectively mortgaging the £2m a year SMC income from the Premier Club is the only way that I could see that they could possibly justify the deal and even then it still required a dodgy associate at RBS.
Sorry to tax your brain, but who took out the mortgage, as the council own the property paid for from the share issue of K. Communications? Normally the mortgage is given based on the property being the asset, but this goes back to my original point in what TG said, that they would not allow this?
Edit, I reckon a few people on this forum have called it right. The similarities are there for all to see. I'm not sure if all of the Essex banking community are as bent as pigs tails but as a football club we have been rather unlucky due to the relationship between some of them and our owners.
It certainly looks dodgy as ****, the council seem to be claiming they weren't in a position to stop it, rather than it being something they approved of.
That it what started this discussion, there was a remark Terry G made after a meeting with AA saying they wouldn't allow the Allam's to borrow money against the freehold of the KC. I asked the question isn't this tantamount to what Bartlett did to fund the buying of City.
The SMC borrowed money from the bank and they obtained a mortgage on the lease. The mortgage gives them certain rights, such as the ability to appoint a receiver, to make sure they get paid. If you have the time here is a guide to what a Law of Property Act Receiver can do, it also answers OLM's point, about whether games can be played in a round a bout way. http://www.fieldfisher.com/media/1687801/LPA-Receivers.pdf I may have written it badly, but the receiver manages the business but ensures the bank gets its mortgage paid first.
The problem is that the risk in making the loan is far higher than a mortgage based on leaseholder interest would normally be acceptable.
That is my feeling, I have had dealing with banks, and the leading just does not have the security what I would understand banks ask for.
Try not to get side tracked mr Happy, follow the money. Who was the main beneficiary of this questionable loan?
In other words there was no offer to buy the ground, just some obscure offer to invest £20M into some equally obscure development plan that altered its image more in 3hrs that a bloody Chameleon! Aye, okay lads.
You seem to be making heavy weather of it. Oh, sorry, I forgot, you don't like or approve of folk responding to your daft posts do you.
