Yes and no. The SMC lent some money to its holding company to pay off part of the mortgage. The rest is future payments on the holding company's mortgage plus losses on the disposal of fixed assets of around half a million.
Name change or not the Allams have cost 4 long term pass sales in our household alone & of the group I sit with there will now be 10 empty seats waiting for new Premiership plastics to take if we stay up, or possibly to remain vacant for some time if we go down
I'm not renewing next season, I've had enough. I'm not as gobby as some on here when it comes to the anti Allam stuff but actions speak louder than words. Plenty on this forum will yap away like a little dog all day long but that's about it, when it comes to the crunch it means **** all. On a side note, the worst thing this new supporters group could do was have Mark Cretin as their leader. He comes across as an immature bell end and I know a fair few who think the same as me. Whilst he's in a position of power they've got no chance. Endex.
I'm sure that to you, Imperial and Peter Staxton, things like that are a simplified version, but is there a way of wording it in a way that a thicko like me could try to grasp? Some sort of analogy to a mortgage or something I've some familiarity with? I can appreciate that lots can get missed when they're dummed down to that level.
Tsk Isn't it obvious? Will someone put this into simple terms for DMD the rest of us can have a glance too....just to check your simplified version is correct you understand
I thought I'd kept it simple! Erm, you own two properties, one with a small interest only mortgage (SM) and one with a huge interest only mortgage (HM) You rent them both out. The rent on SM is higher than interest, making you a profit. The rent on HM is lower than interest, making you a loss. As you own both you can offset loss on HM against profit on SM, leading to a small net profit on which you end up paying tax. Not sure that really helps. The thing about companies is that each one is a separate legal entity and thus any money owed can generally only be claimed from the company, not the shareholder (the limited in a company name refers to limited liability - if the company doesn't have the money then it can't pay you and it will either be wound up or creditors can come to an agreement to get some money back if they think they will get more of their money back (pennies in the pound better than nothing) - whereas a person who owes money can be hounded into bankruptcy. Borrowings are generally secured against assets to limit the borrowers liability (you don't keep up repayments = bank gets your house). The club has a lack of assets and therefore will struggle to get finance (someone might provide funding but the extra risk of no security would mean a higher interest rate being charged for the increased risk - the 5% interest on the loan from allamhouse is much lower than a commercial loan rate (I seem to remember Bartlett's Investec loan being something like 14%). When Allam bought the club it had a lot of tax losses and these have been offset against the profits of Allamhouse over the last few years. The loan from Allamhouse is there to provide City with cash for day to day operations. If the club becomes profitable then it should have enough cash to support itself and chunks of the loan can be transferred back to Allamhouse. I've kind of gone off on one there TL;DR.
Thanks Imperial, and DMD for asking the question as I was always baffled by this Company Accountancy lark myself. But this is a relatively neat explanation. It is slightly perturbing that clubs such as Southampton, Newcastle, and Crystal Palace, (and by this selection, I mean traditionally non-top-6/non-Champions League clubs) are declaring profits. While we still seem to be struggling in debt to a sociopathic madman whose only idea to make the club profitable is to change the name!
No, SM doesn't exist in London and HM is a 1-bed flat in Stockwell. Buck palace is more like a FHM and we need to import more Chinese to live there because they can't individually afford the rent (think I'm going political and it's time to hit the hay)
I don't think we have solvency issues unless we are relegated but he does have to make some choices about what he can spend his money on. The FFP rules put limits on his wage bill and require him to make profits or convert his loans into equity. Our income determines how much we can spend in the transfer market and on wages, as does the rate at which he wants to repay his loans. We may have a problem if he keeps buying players on credit hoping we'd have an high enough league position to pay them when they became due. He might then have to sell in order to meet the payments. Whilst we have players to sell we shouldn't have a liquidity or solvency problem. Hope that makes sense.
If you build marine generators you need parts, services and labour. You pay the wages at the end of each month. You have a credit account for the parts and services, which may be monthly or usually a bit longer. This gives you time to manufacture and sell the generators. The costs of the parts and services will usually be greater than the cost of labour. If you have a sticky patch you ring up the supplier and say look one of my customers hasn't paid, he's promised he'll pay at the end of the month. You have a short term liquidity problem which could be solved by the supplier saying "ok, pay at the end of next month when you've being paid". In football you have very little in the way of services or parts. Its mainly labour and very expensive labour. You don't have the option of putting them off till next month or the month after, so you have to find the cash. Bartlett found the cash by selling Michael Turner and borrowing from banks. Assem Allam found the cash from Allamhouse and, last season, a bridging loan. What the accounts do not show is when the loan was taken out, at the beginning of the season when we were buying players or in the middle because we were waiting for payments from the TV money or towards the end. When the loan was taken out would tell you different things about the reason why. Hope that makes sense.
S so if he only owned City he'd be losing money But because he makes generators as well he pays less tax on this profits because of the money he is losing with City And because it's all only loans anyway if both make enough money he can get that back ?
Agreed Dennis, el thicko will ask summat daft in a minute you watch.... I didnt think we did that now? I'm grateful for some of these explanations but its also why i like having an accountant in charge of us playing with his own money. I'm sure over a year ago obi you were saying what he had to do and he was ****ed etc etc on CI, exiled joined in, but he did something you hadnt thought of?
The last accounts showed we owed £9.5 million in transfer fees. I'm not sure what I said. He's not playing with his own money though he wants the Hull tax payer to give him over £6 million and pay the balance of the RBS loan, nearly £2 million, because that's what could happen if the Council buy the SMC for a quid. If the Council refuses his generous offer he'll have to continuing paying the RBS mortgage, pay for all the improvements to the ground demanded by the Premier League, BT and Sky, pay for its general upkeep, pay for any structural problems with the ground, continue to improve the squad, pay higher wages because of the increased TV money, meet the repayments on his existing transfer fees and if he wants his money back find a way of making the loan and interest repayments. If we stay in the Premier League then our income is not going to increase substantially. He gets half a million from Hull FC and the rest comes from Hull City Tigers Limited. We have no academy like Southampton, so no pot of gold from developing young players and selling them. Our income is dependent on our Premier League position, our cup runs, the amount of time we're on the TV and whatever match day and commercial revenue he can generate.
It was summat about he "definitely" has to turn the loan into shares or equity. Which he didnt. All the above he's doing, again, i'd much rather have an accountant running us for this reason.
At least Nostradamus made an effort and wrote in vague quatrains. Anyway, it's not summat daft, it's several summat dafts. So, does it look like we're being run to a sound, sustainable business model? I'd guess one part (the SMC) is being presented as the poor relation to benefit the other two? Are the Allams in a position to walk away with a profit if any payments they've already received are taken into account? Is there a possibility that they'll sell the club, but keep the loans to Allamhouse attached to it with the new owners repaying it to them, or is a clean break the only realistic option? As far as the ffp goes, is it a standard fine on some sliding scale, or would we suffer for being recidivists? I struck me that in the scheme of things, our fine wasn't a deterent if the over spend gained a place higher in the league.
