Apart from them saying they wouldn't 'take' money out of the club (which could be interpreted differently - ie after it has been paid for)....Still don't see any difference in whether the owners use club funds to pay the instalment, instead of taking the money out of the club as profits and then using that to pay the instalment which they could do. Either way the club remains in the same financial stance. Shouldn't we be more worried about there not been any other buyers waiting in the wings to take over should they walk away? We'd end up with AFC Barnsley at best.
I thought Peter Doyle created the two companies , and took out a loan against the the ground at some ridiculous interest rate , Cryne and Council paid off that loan for ownership of the company
I genuinely have no idea what to think on all this. All way too complicated for me to understand - and I suspect that’s by design. I’m becoming more jaded by the day though, that’s for sure. We’re owned by a multi national corporation that’s hoovering up football clubs like monopoly pieces. It seems inevitable that they will be traded against each other in some way, and we are now just a part of a portfolio. And as with any portfolio, if part of it stops making sense I have absolutely no doubt they will dispose of it. They did it with Nice. The higher up the football pyramid you go, the worse this $hit gets. I’d genuinely rather have a Club that I love being a part of, playing non-league, than have all this.
@55&counting - Looking at Oakwell Holdings accounts the initial cash paid was £6.3m. This was also equal to the loans that Patrick had outstanding to BFC at the time of the sale. So he basically got back the money he had loaned to the club. He had also previously written off £5m of loans and gifted close on £2m. The follow up instalments are set out as £1m pa over 5 years, broadly equal to the cash that was on balance sheet at the time of the sale.
Reading some of the recent debate on this, it looks like Doyle was the first one to separate the two, for his own reasons. Cryne inherited that and put in place the existing structure for the club and ground, which he specified at the time was for the protection of the assets against a rogue owner.
From memory, he used the assets of the club to secure a loan through Sterling Consortium or somesuch, at not very favourable terms IIRC. That then had to be settled to allow the club to be sold on. Think it was then that the ground & land were separated from the club, but I'll stand correcting on any of that.
When you have a terminal illness you can't just say okay Cancer give me another year just got to find a better buyer for my football club. I'm sure they came across well and were saying all the right things. Some fans have been lording them up ever since they were apparently billionaires but proof is in the pudding.
The best source information on this are the Oakwell Holdings accounts immediately post-acquisition (those from 1/6/17 to 30/11/18). These show a debt of £1m due within one year, and a further £3m due after more than one year, which form the basis of the installments that have become the subject of the dispute between the ownership. They also show cash in hand of £7.4m and a liability owing to the shareholders of £6.3m, which is the initial consideration figure referred to above. Those accounts also show Oakwell Holdings holding an investment of £2m at the end of that year, which is presumably it's 20% shareholding in BFC Investment Company Ltd (the Hong Kong parent company), which tells us that the book valuation of the club at acquisition was £10m. This looks about right when referenced against the initial cash receipt of £6.3m in the quoted post and a further £4m of future instalments becoming payable. The reference to Patrick's loans in @Archerfield's reply are also a timely reminder on the difference between his stewardship and that of the new ownership. Cryne made several loans to the club to keep it afloat which he consistently maintained would only ever be repaid if the club was promoted to the Premier League or as part of a sale, which is ultimately what transpired. In contrast, the new owners have done the complete opposite by withdrawing funds from the operational side of the business, at a time where they're also referencing the challenges of a liquidity issue, to partially fund their own liabilities arising from taking ownership.
Another owner would be ideal however if they haven't spent any of their own money on the club would we be any worse with a community run club?
Just for clarity, there's no suggestion that the £6.3m consideration paid at acquisition didn't come from their own resources, or that of the installment payments subsequently made prior to the legal dispute with the Crynes. The issue is with the use of operational funds to pay the most recent £750k installment.
What's the difference between how they did it and taking money out as profit, then using that money to pay the £750k? I don't really see the issue with the way they did it, all roads lead to Rome. It sucks, but it's permissible isn't it?
In reality there is none. Because we can't get clear answers around the ground issue, long standing staff are leaving and results are absolutely shiiiite then everything's up for grabs.
Well, if you mean via a dividend, then that sum would have been taxable. Masking it as a business expense and charging the expense to the Profit and Loss Account means that it has not been taxed.... yet.
Being permissible and acting in the best interests of the company don't equate to the same thing. No-one can stop them doing what they did, but it was very clearly not beneficial to the operational activities of the football club for them to do so. Extracting funds via dividends to shareholders requires that there are sufficient reserves available for these to be declared, so there's ultimately a cap on the extent to which you can do this, and there's a formal process to be followed to declare and pay one. The treatment adopted, as we've just discovered, is very much behind the scenes and only becomes public knowledge long after the event. More fundamentally, in my opinion, is that they're using income streams from the investment to pay for the cost of the investment while at the same time devaluing it by making it financially weaker. Red Rain pointed out in an earlier post that they're essentially paying Oakwell Holdings in a manner which devalues their own investment in the parent company. From my perspective, as a supporter, I'm not concerned about the relative merits, or otherwise, to the various shareholders. The issue is that £750,000 has been extracted from the football club at a time of economic uncertainty and which resulted in the company reporting a financial loss as a direct consequence of the payment having been made.
If the club was in profit (which it's not, and reserves are pretty much spent), a dividend out would require tax to be paid on the profit and application of the dividend tax. The responsibility of a director is to make decisions that are in the best interest of the company you are a director of. Whose interest is it in for a company to pay £750k on behalf of someone else? Particularly at a time when reserves are dwindling and the directors have already stated that they are struggling because others are paying over the odds. This approach weakens the football club. It benefits the 80% owners. There have been some very good points raised by the multiple qualified accountants, many of which have been supportive of the owners prior to this transaction.
Yes, essentially a settlement of the historic loans made by the Cryne family to keep the club afloat and now converted to share capital held by the Hong Kong entity.