It depends at what level the guarantee has been put in. It could mean that if the club is unable to pay the full cost of the loan then they'll make up the difference, in which case the club would be ****ed before they took a personal hit, but it would probably mean the club was better off than them not guaranteeing it as it should mean you got a lower rate of interest to pay (less risk for the bank = lower rate of interest charged, as you see with mortgage rates varying by size of deposit) It could also mean that they're jointly liable, in which case, if the club is unable to pay it for whatever reason then you'd likely be safe, there'd be no point in the bank pursuing you for it and getting xp/£ by destroying you when if they pursued the owners they'd be able to get all of it from them. If you were after £1M in damages because of something I'd done in partnership with Bill Gates, you wouldn't waste your time suing me to get about £50k when you knew he was jointly liable and could pay the full lot if you sued him. It's very old school. Look up the principles of stoozing and deficit banking. Both involve borrowing at a low/zero interest rate and putting the money into a higher interest rate savings account to generate a profit for yourself. Using those two methods so far I've saved myself about £55k over the life of my mortgage. (It'll be more than that by the time I've finished, that's how much I'd have saved if I stopped now) All the owners are doing is saying they need £15M putting in QPR. They can either take it out of their other investments and give up a 5% return, or they can keep receiving 5%, but have to give 3% to the bank. In the first one they get nothing, in the second they still get a 2% return. The future return from QPR is the same either way. As far as profits go, I believe the shares in QPR are owned by the owners through their holding companies (I might be thinking about when it was Flavio and Bernie though), that will allow them to take their share of the QPR losses and deduct them from the profits their other businesses make. So if Air Asia are making £200M a year profits and QPR are making £100M losses Tony Fernandes can take £66M (as 2/3 owner) and knock it off the profit, so Air Asia would then only have to pay tax on £134M.
But if interest rates are near zero anyway how can the borrowing rates be lower than savings return? Most savings accounts are only paying 1-2% and borrowing is about 3.5-8 %? I get what your saying about off setting mortgage interest rate with savings but it does not sound like this is what they are doing.
I think you won't get a better answer than that from Riccardo, but don't confuse domestic loans and savings like your mortgage and building society account with leverage on the scale that these blokes do it. Their money works for them 24 hours a day, every day. For people like us, our money works for the banks and building societies, we get whats left. As stated on another thread, this loan is likely a tester, to open a line of credit with Barclays HK, ensure that they understand and agree with the numbers, and finance capital spends on the training facility and new stadium. Essentially they have tested the business plan with money men and found it sound. Whether we should or do trust the judgement of the money men is another question entirely.
For all the visitors drawing comparisons to Portsmouth, the differences are numerous. The purpose of rich guys getting loans has been explained above and it really is standard practice on capital expenditure. The board were obviously waiting for football matters (less said about that the better) to be decided before unveiling their plans. How easy would it be for owners who had overstretched to shrug their shoulders and say the plans were conditional upon our survival? Ours haven't and are starting to build the foundations that the club needs to move forward. They're not shutting up shop and any penny pinching appears to be on the field moreso in terms of getting rid of players that aren't adding to the team than a reluctance to pay wages. We've been set back a couple (hopefully no more) of years due to relegation but the plans are coming into full motion. That as opposed to clubs that look to maintain the status quo, we're looking to grow.
TF is better off getting a loan if he can use that £15m to invest elsewhere and get a higher return than the interest rate.
He is sticking the lot on us ...v Stoke It's in play time .... What? You wanna another one Crouch to score Next 43/7 Book early with Foxy bingo
Instead of using a savings account they have it invested in other businesses. Those businesses are making profits that mean they get paid more as a dividend than they would if they had it in a bank, and it's also more than they're getting charged to borrow from the bank. You could say they should just put the £15M they've borrowed into those other businesses, but they're looking for long term gains as well as short term ones, and QPR's return should be greater thanks to a new stadium than the other business is offering. Borrowing from the bank allows them to get both profits in the future without giving up on the other investment income now, and it's the cheapest way to do that.
Nonsense .............. TF has already organise that clients flying 'first class' receive complementary tickets to games, week in, week out. It's called 'value adding' which allows TF to market QPR to the Asian market. I'm now hoping that he kicks off an Australasian leg, so we fellow RRRR'rsssss supporters can tag along to the occasional game .............. just to make up the numbers! Aussie
