The Premier League money is flawed security because it can be withheld from the club under the rules. Something acknowledged by the bank in the debenture. Its not like real property or even book debts.
Ehab Speaks
- Thread starter hovetiger
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The Premier League money is flawed security because it can be withheld from the club under the rules. Something acknowledged by the bank in the debenture. Its not like real property or even book debts.
Which makes me think it might be security for a capped overdraft limit.
But we won't find out until May 2018 when accounts will be due for 2016/17 unless the owners volunteer the information beforehand.
The devil is in the detail we don't get to see. 18months of tv payments is anything up to £150m at current rates. The bank will want a return on its investment. The question is how much risk they are willing to take.
£60m (arbitrary figure) for future returns of £150m is a good deal. Relegation probably reduces 18 months of tv money to £90m? Still a pretty good deal for little risk.
Allams get £60m (again, arbitrary) plus £10m for Livermore plus £10m for Snodgrass. Pay £1m for 6 month loan. Then change the sale price for the club to £1.
Just one potential scenario.
Quite possibly.
However, to say the security is flawed is wrong. It can be withheld but the chances of that being done are very minimal, and given that other clubs have done similar deals in the past (I.e borrowing funds against parachute payments) highlights to me a number of lenders consider it adequate security. Which I fully understand why.
You have to weigh up the risk and in my opinion the risk of the funds not being paid to the club is quite small.
We can only speculate, however, given their past track record, I look at it negatively.
As I have said above, the risk to the bank is minimal in my eyes, and depending on how much they have borrowed the risk to reward is worth doing.
This year's £100 million is already spent which is why they have gone to the bank. That leaves two years parachute payments. If that money isn't spent on players and keeping the club competitive then it could remain with the Premier League leaving the bank with next to nothing. The money from Livermore's sale will be over two or three years and this season's portion will have paid for the employment of Silva, his staff and this window's transfer deals. The only way the Allams will get any money back is either by ripping off the banks and putting us into administration or by staying in the Premier League. From what I've seen I suggest its the latter.
Hull City Tigers Limited is insolvent without the support of the Allams. If the club goes into administration after the Allams get repaid and sell the club how much of the Premier League money will the bank get? They get what's left, if anything, after the football creditors have been paid. I'd expect any bank to look at the risks before making the decision to lend any money.
Oh I completely agree, and I've said it numerous times the bank will weigh up the risks, but to me the risk is minimal. If Hull City remain a Premier League club we would easily be able to be 'competitive' in this league without further funding from the Allams. To think we couldn't be is wrong as a number of clubs, such as Burnley have the same income as us and compete.
In compensation and to pay for Marco Silva's team. Presumably Phelan will get the full value of his contract so its just a question of whether Marco Silva's backroom staff are cheaper. than Phelan's.
I haven't said that though. I think the security covers a bridging loan to try and keep us in the Premier League. I may be completely wrong but I think some of the payments for the £23 bank loan have been rearranged in order to finance this month's transfer activity. As a result the bank have asked and got the charge.
Allamhouse gave up its charge on the Premier League money in April, no doubt because they thought the bank might want some security down the line. All guesses though.
I don't think so, just the Premier League monies. Doesn't anything left get distributed amongst the championship clubs?
Only relegated clubs get the parachute payments, if you get promoted again, they cease.
I thought so - Obi was talking about 2 years parachute payments and I naturally assumed they would cease - cheers
The bank will work on the basis that we will be relegated, we're favourites to do so and they have to work on a worst case scenario anyway, there's no way they'll base any of their calculations on us staying in the Premier League.
I don't disagree..... My view is still the same, the risk of not getting said parachute payments (Which is their security) is very minimal.
I posted earlier that if we go bankrupt/admin whatever, Allam Marine will only get 10% of debt. However Allam Tigers will only pay out 10%. So no net loss to them?
By selling the debt to the bank now (Allam Marine get all the money now), the bank will receive 10% of the debt, and Allam Tigers will still only pay out 10%. Massive gain for Allams. So these selling loans are manoeuvring for bankruptcy? Discuss
I know nothing about corporate finance, just as you know a hell of lot of common sense.
By selling the debt to the bank now (Allam Marine get all the money now), the bank will receive 10% of the debt, and Allam Tigers will still only pay out 10%. Massive gain for Allams. So these selling loans are manoeuvring for bankruptcy? Discuss
I know nothing about corporate finance, just as you know a hell of lot of common sense.
