@Right_in_the_Middle said:
An accounting loss of £500k doesn't mean £500k of cash is needed to match it.
It pretty much does mean an extra £500k of income would be needed each year (or a reduction in expenditure) if we were making a £500k loss every year.
The club needs to carefully monitor cash flows (in addition to the accruals based income/expenditure that forms the basis of the annual financial statements) throughout the year, as there would need to be enough money in the bank to pay bills at times when there might not be much cash coming in, eg during the summer, or if there was a period during the season with a run of away games. If lenders are less willing to be flexible around overdrafts it increases the importance of good cash management.
@Chris said:
As an aside, is an individual buying a house through a mortgage spending more than their income?
With respect that is a strange analogy.
We all need somewhere to live and buying a property is in most cases an investment. Generally, nowadays a building society will only loan you an amount, which having evaluated your income, it considers you can meet the monthly repayments. Should you be unable to keep up the repayments you have an asset which can be sold that will cover the outstanding mortgage (other than in exceptional circumstances). If our club gets into serious debt what valuable assets do we actually have to repay it?
Don't worry they would never sell the ground and build houses on it...no way there are very strict stipulations....there is no value in Adams Park (c. Dev)
@Twizz said:
It's quite sad that you call this hilarious without addressing any of the points DevC raises, yet again
For your benefit, I'll address why: @DevC specialises in setting up a straw-man to argue against and misrepresenting the comments of others just so that he can make his straw-man argument.
Here he spends several paragraphs setting up a straw-man simply to misrepresent @micra's comments as being that £500k needs to be cut from the playing budget - something that he never said.
He also states as fact that there is "no prospect of revenue increase or non playing cost reduction", this is not a fact, and he couldn't possibly know if it was. What we do know is that commercial revenue is down (or stagnant?) on last year in a lower division when we had an experienced commercial director negotiating and bringing in our deals. Should we not be able to increase commercial revenue in a higher division?
Another DevC "fact": "the only alternative to give reasonable chance of getting through the season would be a massive cut in the playing budget" - again, not a fact. If the previous claim isn't a fact then this one also isn't.
And finally: "It’s just basic maths I am afraid." - no it isn't, it's presumptuous bollocks all designed simply to have a dig at @micra for no other reason than that is DevC's modus operandi.
In your defence, with a casual reading of his post you could come away thinking that it's written in good faith by someone knowledgable of the finances of the club. But this is DevC, you have to pick the outright lies out, read it again, and then work out what the ulterior motive was.
Thank you @drcongo for a substantive response. In so doing we can have a discussion and look at each others arguments. Who knows you may bring something up that I haven't thought of. Perhaps then I will realise you are right and I am wrong. Certainly others can look at arguments on both sides and judge for themselves where they believe truth lies.
So lets look at your response. As far as I know we were not talking about Micra's plan to chop the salary budget a bit, but about what a trust owned club would have to do to survive if loans were no longer available. Frankly if you face an imminent £500k hole, there is little point in following a plan that closes £100k of that gap unless you also have a plan to close the remaining £400k.
What I did say was The club management have already been trying to increase revenue and cut nonplaying costs. Unlikely to be sure of any upside here (indeed you would probably have to allow for a revenue fall if playing results were likely to worsen. You ignored that because it didn't follow your agenda. Do you disagree?
Now you are right I suppose, we could sack the off-field management and bring in a new commercial team no doubt incurring a significant cost in severance in so doing and possibly a significant increase in salary cost. It is possible in time that that new team may more than cover their salary and improve financial performance. It is possible by getting rid of all our experience and contacts, you may make things worse. Time would tell. It would be an extraordinarily brave man faced with a £500k hole to rely on hoping an unproven marketing team's targets for revenue and commit via player contracts to spend money you cannot be sure will be earned. Would you take that gamble?
And no, promotion from lg2 to Lg1 does not automatically mean an increase in commercial income. TV exposure is largely the same and realistically commercial income is largely made up of local businesses with owners that support the club. Commercial income for a small Lg1 club fishes in quite a small pond. If you lose a fish, there is no guarantee you will find another willing to pay the same let alone more.
So we are left with the same basic maths. We have revenue and off field costs that the existing management team have optimised to the best of their ability. There was a gap of a little over £500k between that for the last financial year we have and the salary budget we operated in that year. We cant rely on transfer revenue, we cant rely on FA cup runs, we cant rely on loans, we cant surely rely on a new management team hopes of future increased revenues so we would surely have no option but to very substantially decrease the playing budget.
So perhaps I could ask you your plan @drcongo assuming neither bid is accepted. Would you sack the management now and install a new one? Would you maintain the current playing budget (or something close to it) in the hope that the new team would be successful in raising very significant extra funds (either in new revenue or cost saved)? Do you gamble the existence of the club on a good cup run or Kortney Hause getting transferred? If you do not propose to cut the playing budget by the amount of the loss, what do you intend to do?
@Wendoverman said:
Don't worry they would never sell the ground and build houses on it...no way there are very strict stipulations....there is no value in Adams Park (c. Dev)
I have never said there is no value in Adams Park. I have said that in my view it would be extremely difficult to get residential planning permission on the site, so its value would be for commercial/industrial development, which is a much lower land value. The reason I say this is that the ground sits in an area zoned for employment use and councils are very reluctant to allow employment land to convert to residential. frankly if it was possible, it is extremely unlikely that the upper car park would still be used for once a fortnight car parking and not already be a housing estate, as no doubt would many of the factory plots along Hillbottom Road.
If you have evidence to the contrary, or even an informed reason to the contrary, as I have said before, please say what it is. Don't just make things up that people have never said.
It's the same tactics again. I'm not dignifying them with an answer Dev. Hopefully others now know how to read your posts too and can spot the outright falsehoods disguised as facts in this one also.
It is no surprise Drcongo that you have failed to outline a strategy, as requested, for how the club could avoid a very substantial cut to its playing budget if neither bid is accepted. Its so much easier just to insult people and then run away.
@Chris said:
As an aside, is an individual buying a house through a mortgage spending more than their income?
With respect that is a strange analogy.
We all need somewhere to live and buying a property is in most cases an investment. Generally, nowadays a building society will only loan you an amount, which having evaluated your income, it considers you can meet the monthly repayments. Should you be unable to keep up the repayments you have an asset which can be sold that will cover the outstanding mortgage (other than in exceptional circumstances). If our club gets into serious debt what valuable assets do we actually have to repay it?
It definitely wasn't an analogy. I was just making the point that even for individuals (or households) it isn't as simple as 'you shouldn't spend more than your income', so perhaps it isn't the most useful thing to rely on when considering more complex organisations.
You are entitled to your view @Wendoverman. Lets hope we never find out who is right.
If a landowner in that area could get residential planning permission, why do you think the upper car park is still a field and the factories are still factories? It doesn't make sense surely.
peter, I don't think we can assess which of the two bids is preferable at this stage (assuming two there will be). We can try to get our heads around whether the status quo is really an option. I would assume most of us would choose the status quo if it gave a strong chance of retaining even league 2 football. I am not sure I see how it can though.
Comments
Or we decide we dont need outside investment and elect another board to look at the prospects for remaining trust owned.
An accounting loss of £500k doesn't mean £500k of cash is needed to match it.
So even with the joined smallest playing budget apparently we still lose 500k a year?
Is our income really that paltry compared to over clubs our size.
other clubs lose a lot more than us Trev
Could I ask what you have in mind Mr Middle apart from depreciation which is minimal.
It pretty much does mean an extra £500k of income would be needed each year (or a reduction in expenditure) if we were making a £500k loss every year.
The club needs to carefully monitor cash flows (in addition to the accruals based income/expenditure that forms the basis of the annual financial statements) throughout the year, as there would need to be enough money in the bank to pay bills at times when there might not be much cash coming in, eg during the summer, or if there was a period during the season with a run of away games. If lenders are less willing to be flexible around overdrafts it increases the importance of good cash management.
well they must have better people running their clubs then .
perhaps. They may also be in huge debt. They may also have an owner that makes up the shortfall each year.
With respect that is a strange analogy.
We all need somewhere to live and buying a property is in most cases an investment. Generally, nowadays a building society will only loan you an amount, which having evaluated your income, it considers you can meet the monthly repayments. Should you be unable to keep up the repayments you have an asset which can be sold that will cover the outstanding mortgage (other than in exceptional circumstances). If our club gets into serious debt what valuable assets do we actually have to repay it?
Don't worry they would never sell the ground and build houses on it...no way there are very strict stipulations....there is no value in Adams Park (c. Dev)
For your benefit, I'll address why: @DevC specialises in setting up a straw-man to argue against and misrepresenting the comments of others just so that he can make his straw-man argument.
Here he spends several paragraphs setting up a straw-man simply to misrepresent @micra's comments as being that £500k needs to be cut from the playing budget - something that he never said.
He also states as fact that there is "no prospect of revenue increase or non playing cost reduction", this is not a fact, and he couldn't possibly know if it was. What we do know is that commercial revenue is down (or stagnant?) on last year in a lower division when we had an experienced commercial director negotiating and bringing in our deals. Should we not be able to increase commercial revenue in a higher division?
Another DevC "fact": "the only alternative to give reasonable chance of getting through the season would be a massive cut in the playing budget" - again, not a fact. If the previous claim isn't a fact then this one also isn't.
And finally: "It’s just basic maths I am afraid." - no it isn't, it's presumptuous bollocks all designed simply to have a dig at @micra for no other reason than that is DevC's modus operandi.
In your defence, with a casual reading of his post you could come away thinking that it's written in good faith by someone knowledgable of the finances of the club. But this is DevC, you have to pick the outright lies out, read it again, and then work out what the ulterior motive was.
Thank you @drcongo for a substantive response. In so doing we can have a discussion and look at each others arguments. Who knows you may bring something up that I haven't thought of. Perhaps then I will realise you are right and I am wrong. Certainly others can look at arguments on both sides and judge for themselves where they believe truth lies.
So lets look at your response. As far as I know we were not talking about Micra's plan to chop the salary budget a bit, but about what a trust owned club would have to do to survive if loans were no longer available. Frankly if you face an imminent £500k hole, there is little point in following a plan that closes £100k of that gap unless you also have a plan to close the remaining £400k.
What I did say was The club management have already been trying to increase revenue and cut nonplaying costs. Unlikely to be sure of any upside here (indeed you would probably have to allow for a revenue fall if playing results were likely to worsen. You ignored that because it didn't follow your agenda. Do you disagree?
Now you are right I suppose, we could sack the off-field management and bring in a new commercial team no doubt incurring a significant cost in severance in so doing and possibly a significant increase in salary cost. It is possible in time that that new team may more than cover their salary and improve financial performance. It is possible by getting rid of all our experience and contacts, you may make things worse. Time would tell. It would be an extraordinarily brave man faced with a £500k hole to rely on hoping an unproven marketing team's targets for revenue and commit via player contracts to spend money you cannot be sure will be earned. Would you take that gamble?
And no, promotion from lg2 to Lg1 does not automatically mean an increase in commercial income. TV exposure is largely the same and realistically commercial income is largely made up of local businesses with owners that support the club. Commercial income for a small Lg1 club fishes in quite a small pond. If you lose a fish, there is no guarantee you will find another willing to pay the same let alone more.
So we are left with the same basic maths. We have revenue and off field costs that the existing management team have optimised to the best of their ability. There was a gap of a little over £500k between that for the last financial year we have and the salary budget we operated in that year. We cant rely on transfer revenue, we cant rely on FA cup runs, we cant rely on loans, we cant surely rely on a new management team hopes of future increased revenues so we would surely have no option but to very substantially decrease the playing budget.
So perhaps I could ask you your plan @drcongo assuming neither bid is accepted. Would you sack the management now and install a new one? Would you maintain the current playing budget (or something close to it) in the hope that the new team would be successful in raising very significant extra funds (either in new revenue or cost saved)? Do you gamble the existence of the club on a good cup run or Kortney Hause getting transferred? If you do not propose to cut the playing budget by the amount of the loss, what do you intend to do?
Please stop lying @Wendoverman.
I have never said there is no value in Adams Park. I have said that in my view it would be extremely difficult to get residential planning permission on the site, so its value would be for commercial/industrial development, which is a much lower land value. The reason I say this is that the ground sits in an area zoned for employment use and councils are very reluctant to allow employment land to convert to residential. frankly if it was possible, it is extremely unlikely that the upper car park would still be used for once a fortnight car parking and not already be a housing estate, as no doubt would many of the factory plots along Hillbottom Road.
If you have evidence to the contrary, or even an informed reason to the contrary, as I have said before, please say what it is. Don't just make things up that people have never said.
It's the same tactics again. I'm not dignifying them with an answer Dev. Hopefully others now know how to read your posts too and can spot the outright falsehoods disguised as facts in this one also.
Also, that you have the audacity to say "Don't just make things up that people have never said" to someone else just beggars belief.
It is no surprise Drcongo that you have failed to outline a strategy, as requested, for how the club could avoid a very substantial cut to its playing budget if neither bid is accepted. Its so much easier just to insult people and then run away.
Match point Dev!
There are no insults in there and I don't answer to you. Stick your pompous demands for answers up your arse.
Deuce.
Getting closer to an insult @drcongo, ut appreciate it is more an instruction than insult at the moment.
really umpire? Not a foot in mouth fault?
For the avoidance of doubt regarding the value of AP - this from the Trust web site:
'Ownership of Adams Park (professionally assessed at £7million) is held within Frank Adams Legacy Limited (“FALL”).'
shame we dont have one then .
@LordMandeville , I am afraid the accounting valuation as a football stadium is not the same as the sale value for development.
It definitely wasn't an analogy. I was just making the point that even for individuals (or households) it isn't as simple as 'you shouldn't spend more than your income', so perhaps it isn't the most useful thing to rely on when considering more complex organisations.
PLAY NICE!!
And I believe you are wrong @DevC how dare you play the man!
@DevC I'm not really sure what we're debating anymore. We don't even know what the detail of the bids are.
If there are no bids then from what the Trust says it's into the mystic we go.
You could always volunteer Trevor!
You are entitled to your view @Wendoverman. Lets hope we never find out who is right.
If a landowner in that area could get residential planning permission, why do you think the upper car park is still a field and the factories are still factories? It doesn't make sense surely.
peter, I don't think we can assess which of the two bids is preferable at this stage (assuming two there will be). We can try to get our heads around whether the status quo is really an option. I would assume most of us would choose the status quo if it gave a strong chance of retaining even league 2 football. I am not sure I see how it can though.