So Priestfield back in the hands of Gillingham FC with no debt! So great news, what's your thoughts? http://www.kentonline.co.uk/kentonline/sport/2011/august/25/paul_scally.aspx UTG!!
The bit that I find intersting from a financial point of view is "The net effect is that the stadium is back with the football club and there is no debt on it." My interpretation of the last accounts (though I would stress I'm not an accountant) was that GFC (ownership 75% Paul Scally) was considerably in debt, but that the stadium appeared to be owned (either directly or indirectly) by GFC Holdings (ownership 100% Paul Scally) which would have been guaranteeing the debt against the asset of the stadium. I'm not really sure where the other company, Priestfield Developments, came into the picture. If anyone can illuminate the situation I'd be fascinated to know, just out of interest. It is obviously great news that the stadium is now back in the hands of the club, but am fascinated to know how the club has gained even a £1m asset without incurring further debt. I think it is fair to assume that there will be sub-agreements to this arrangement, some or all of which may, or may not, be revealed in the next set of accounts. However as the current financial year ends in May 2012, and the accounts need not be lodged with Companies House for several months afterwards, we may not find out a great deal more than Mr. Scally presently wants us to know for another 15 months or more.
Rather than edit (again) my earlier post I think I understand the historic situation more clearly now. The 2009-10 accounts indicate that GFC Holdings Ltd (ownership 100% Paul Scally) owned 75% of Gillingham Football Club PLC and 100% of Priestfield Developments Ltd. The accounts of GFC PLC and Priestfield Developments were consolidated into the accounts of GFC Holdings, which show an asset of freehold property valued at £10.1m in the accounts. So I guess that that was in fact held by Priestfield Deveopments. The 2011-12 accounts are going to make interesting reading, eventually.
The whole thing seems a little odd to me as a layman, and like many I am suspicious about the lack of details around the deal, but Mrs BSG who is a chartered account assures me that the hush-hush mentality is common in these sorts of deals. Now for the conspiracy bit... The end of last season Scally said that the club had overspent and needed to cut its cloth accordingly, so few big earning players have left. All of a sudden there is an article in the KM with Scally saying that there will be no external investment with the club into L2. All of the sudden six new players turn up and some on big wages (Lee, Whelps and Framps would be big earners I assume) and the club manages to find away to own its own ground, making the club alot more attractive to investors. Hmmm.....
For fear of probably sounding dumb here...but if GFC PLC and Priestfield Developments were consolidated into GFC Holdings, does this mean in fact that the ground is still owned in a roundabout way by the same company or at least 75% by the same person? Sorry but this has all lost me!
Err, sort of ... probably The problem is that there is no real meat in the KentOnline article. One assumption that I am making is that the stadium is now on the books of GFC PLC, although even that isn't clear. If that is the case, and assuming there are no other changes in shareholding / assets, then PS would still own 75% of GFC (the club that we actually support as we know it) through GFC Holdings. But it would make the club a more attractive asset as a club that depends on a third party landlord is never going to be readily saleable. It's not only the asset of the ground, but the simple fact that a football club needs somewhere to play. I seem to recall all sorts of problems at Crystal Palace when Ron Noades sold the club, but not the ground. Although there are confidentiality agreements in place we don't know precisely what is covered by those agreements, and there may be changes in finance arrangements or shareholding that will require to be advised to Companies House, the details of which would be available in the relatively near future on payment of the appropriate fees. The statement as is certainly provokes far more questions than it gives answers, but my initial reaction, and still my reaction now based on the content of the statement, is positive. Whether or not we'll get to know more before the 2011-12 accounts are eventually made available is of course debateable. I think it would be useful and helpful, and indeed a positive PR exercise for PS if he could make available more details of the revised structure and financing of the club (GFC PLC), which I'm sure he could do whilst still keeping confidential the appropriate parts of the agreement. I look forward to seeing an accountant's or merchant banker's view on this, and to give some idea of what sort of deal might have been done when they eventually see the story. I know that will also only be speculation, but I'm intrigued by the whole situation.
This gets curiouser and curiouser. Inter-group transactions can make sense to generate tax losses but valuations have to be realistic and there is no evidence that any part of the group generates any profit anyway. Priestfield Developments certainly generates losses. Something that cost £10M does not suddenly become worth £1M without real repercussions so there is only half a story being told here and it would really stink except for the fact that it must be good news for Gillingham fc ltd to own its ground debt free even if it is not totally insulated from all this fishy business elsewhere in the group. Most importantly, as itsim recognises, it does really mean that the club is saleable again if scally wants to sell it. How this all fits together with the welcome loosening of the pursestrings to fund the new players is equally mysterious but it might be a gamble capable of paying off. A well managed club near the top of its league with decent crowds will attract interest. I wonder what the Venkys will do when they get booted out of Blackburn. i wonder what happened to that money Gaddafi had set aside to buy a football club. i wonder why the Middle East has turned to chaos since Scally went to live in Dubai?
brb I thought the Venkys had given you the boot after your failiure to arrange relegation last year. i suppose it just goes to show that some refs are not bent after all. i take it you are not involved in the overthrow of Gaddafi given your responsibilities to moderate at not606.
I don t understand how Scallys company paid 10million but now Mr Scally has bought it for 1 million. It seems very strange but could be as he said it the deal of the centery for Gillingham.
Perhaps Paul Scally really does have GFC's best interests at heart. I believe so as a lot has been achieved over the last 15 years or so. More in that time than in the entire history of GFC. We may not ALL love you Paul, but some of us actually appreciate what you have done for the club and actually achieved for it. Thanks.
Buying the studium with one company for £10m, and then selling it back to the club (which he majority owns) for £1m to clear debts sounds a bit suspicious to me. Either Scally considers the club to be his most valuable asset and therefore being debt free would help find more investment, or something a bit more dodgy is going on. This deal stinks of corruption to me. I hope it isn't, but thats the feeling I get.
Love or hate him, Scally is no fool. I am confident that the deal is 100% above board. As I said a deal like this being done without being public is common, so there is no cloak and dagger stuff going on just some accounting magic that we won't understand
