Continued debt?
The minutes to the last Fans Council meeting appeared on f’book last night. I was surprised to read that the club are still £1.5 million (or there abouts) in debt. Was I alone in believing the Ibe sell on money had cleared the debt? Do we still owe the Wasps money lender or other sources of credit?
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I understood that Hayes was completely paid off with the Ibe money, but that there were still debts to other creditors remaining. However, I was under the impression these debts totalled £1.2m.
It might well have said £1.2m, I couldn’t remember.
Thanks for your clarification.
I've got a feeling we're never going to be totally out of debt...it's just a case of being able to handle it!
Have you got a link to the minutes? Is the training ground money included in that £1.2m do you know? Sorry, can't see it on FB.
Perhaps It's just the debt building up again?
Here you go: https://www.facebook.com/groups/216804932038995/513864615666357/
Thanks @Steve_Peart
It's actually nice to know we are challenging while still paying off debt, because in theory we will be that much stronger if/when the debt is gone.
It was my understanding that we retained the debts that were 'beneficial' in that they could be offset against tax and some forms of interest payments. Pretty sure that Mr Hayes debt was paid off.
True that. It would be nice to know the whole picture, as far as the rate (If any) the debt is being paid at.
Every company will always have an amount of debt. It's a problem if someone wants it back and you can't pay.
It was great to be able to pay off Hayes and we will never be debt free. To be honest we should never aim to be.
No-one likes the small budget - punching above our weight talk, but it's certainly worth bringing up every so often to those fans who totally disregard it
@malone I think mentioning 'small budget' like mentioning 'nazis' should mark the end of any thread.
@Right_in_the_Middle Forgive my ignorance, but why shouldn't we aim to be debt free? I don't know much about these things so I guess there's something I'm missing here, but to me the idea of our football club being completely debt free and running at a profit (even a small one) sounds wonderful.
@Jonny_King The club should aim to run at a profit however very few do. This should make the club cash positive and allow it to pay off operating debts when they fall due.
Owing money (or debt) and not incurring massive charges or loss of service is just normal business practice. Companies owe suppliers, banks, stakeholders and parent companies. As stated earlier this can be tax effective as well.
Bottom line for a survival of a football club is to have enough cash to pay HMRC. Most of the money you would owe them never touches your profit and loss account.
Well businesses will always have short term debts - someone will invoice for a bill (usually giving you thirty days to pay) and then there's a debt until it's paid. This is pretty much inevitable. It's also normal to have a longer term debts - to fund the initial set up of the business, or for expansion.
Debt it itself isn't a bad thing. It's entirely reasonable to borrow in order to fund something (a new premises, or development of a new product) that will increase profits in the future, and therefore has an in-built plan to allow the repayment of that debt. Problems arise when the borrowing is necessary to cover the ongoing running costs of the business, as then there is no plan for the repayment of the debt - other than just 'things will improve in time'.
Football clubs are not normal businesses though!
Indeed @Chris. As far as I see it @Jonny_King (like you I know nothing of running a business) football is a funny old game in that when you are on a good League run or in the Cup and doing well, attendances rise, and you get more money coming in. And the opposite can happen. Although you can control the debt with regard to the stadium, staffing and so on, that might not bring you the success the Gasroom demands, leading to accusations of lacking ambition so you might decide to take a risk and invest in player (s) for a promotion push hoping that the success will pay off...if it does or doesn't your investment is a success/disastrous debt! I think that's why after Torquay Day and Gaz taking over, we've been spoiled by the 'success' we've enjoyed despite not being awash with money if not always the style of football!
Excellent post @Wendoverman, no 'small budget' or 'punching above our weight' comments either! ;-)
Thanks @Right_in_the_Middle et al, every day's a school day and all that.