City launch legal action against the Premier League | Club & PL reach settlement | Proceedings dropped (p1147)

[arbabarshad]

Not sure any owner of any business in their right mind, would sanction that unless they had some form of guaranteed annual return, or a payback schedule of the loan itself.

Spending a billion quid doesn't guarantee shareholder wealth, they'd probably prefer it to be spent on infrastructure!

Agree with this.

The risks attached to this industry are relatively higher than other industries. Therefore, shareholder loans would most certainly have guarantees against tangible assets and most likely be spent on infrastructure projects.

Sheikh Mansour has been shrewd, as you would expect, in investing the business over a period of time, resulting in capital growth. And has taken out significant chunk of his investment in the form of share sale to silverlake or the chinese. Therefore reducing his overall investment at risk should the CFG fail in future or go downhill, although that risk is also very well managed with the diversification across the globe.

 

[chris85mcfc]

Profitability is directly related to turnover. PSR being profitability and sustainability rules, is also related to turnover.

Interest or financing costs (external or shareholder loans) are usually a small amount in a P&L even if a business is highly geared. In your example of arsenal saving £25m a year, whilst it is a large amount in its own right, relative to turnover and some of the other costs such as players wages or amortisation, it is a small cost. So there is benefit in using shareholder loans (or was up until now) but if tested for arms length principle, it won't be a significant benefit going forward.

Probably crossed wires, as your original post said that it's based on turnover (money earned), but it's actually based on profitability (money retained).

I've not got figures to hand, but fairly sure Arsenal have made 'small' losses in the last couple of years (from memory), which are likely to still clear PSR. However, I'd imagine they'd be in a spot of bother if they have to retrospectively include the savings made from their shareholder loans?

Fairly sure I've seen someone else mention something similar as well.

 

[arbabarshad]

Probably crossed wires, as your original post said that it's directly linked to turnover (money earned), but it's actually directly linked to profitability (money retained).

I've not got figures to hand, but fairly sure Arsenal have made 'small' losses in the last couple of years (from memory), which are likely to still clear PSR. However, I'd imagine they'd be in a spot of bother if they have to retrospectively include the savings made from their shareholder loans?

Fairly sure I've seen someone else mention something similar as well.

Agree with both.

 

[MadchesterCity]

Yes, yes, yes, what a great idea! Wonder why no one has ever thought of it!? Brilliant.

But clubs have, Chelsea did it and Arsenal have 300M extra in the bank not scrutinised by FFP because of this?

 

[manimanc]

Makes you wonder how the rags could splurge millions and millions each season without any questions being raised.

 

[Albeeeert]

But clubs have, Chelsea did it and Arsenal have 300M extra in the bank not scrutinised by FFP because of this?

It doesn't work like that, they could have a trillion in the bank and give the club another trillion £ loan, they can only spend based on what they earn (with allowable losses of up to £105m over three seasons).

 

[The Future’s Blue!]

Makes you wonder how the rags could splurge millions and millions each season without any questions being raised.

Shhhhhhhhhh, nobody will notice.

 

[slbsn]

Reading the thread, I have seen some posters say shareholder loans or equity can be used to spend money on players etc. But shareholder loans are not money earned (turnover) which is what the PSR is based on.

Whilst the shareholder loans can help with cashflow or reduce some interest costs due to low interest rates (might not be allowed going forward if these are tested for arms length principle), these loans or even if converted to equity will not equate to turnover and therefore be not much help towards PSR.

You’ve missed the point. Currently interest free/low interest related party or AP loans don’t count for COSTS. When they do, COSTS increase unless converted to equity.

 

[arbabarshad]

You’ve missed the point. Currently interest free/low interest related party or AP loans don’t count for COSTS. When they do, COSTS increase unless converted to equity.

I kind of covered the point in my post so not disagreeing with it.

My point was money from RP or AP loans can’t just substitute turnover. It only helps by a very small amount (7%-8% of the overall loan amount per year over the last 1-2 years). Prior to that, it would be around 2.5% - 3%. So not necessarily material.

 

[BobbyBoy]

You’ve missed the point. Currently interest free/low interest related party or AP loans don’t count for COSTS. When they do, COSTS increase unless converted to equity .

Will interest against loans for stadium works not be excluded? With the previous FFP, infrastructure, academy and women's football was excluded, I would assume the interest on loans to cover any of the above would be treated in the same way? Everton, for example could probably make a case that all of their directors loans were for the stadium development.

 

[slbsn]

Will interest against loans for stadium works not be excluded? With the previous FFP, infrastructure, academy and women's football was excluded, I would assume the interest on loans to cover any of the above would be treated in the same way? Everton, for example could probably make a case that all of their directors loans were for the stadium development.

There won’t be a change to that part of the rule but PSR is changing anyway at the end of season

 

[slbsn]

I kind of covered the point in my post so not disagreeing with it.

My point was money from RP or AP loans can’t just substitute turnover. It only helps by a very small amount (7%-8% of the overall loan amount per year over the last 1-2 years). Prior to that, it would be around 2.5% - 3%. So not necessarily material.

Nobody suggested it would be anything to do with turnover. It’s about making costs fair to compare. It’s not that small - rates could easily be 10% (and unlikely to ever be sub 5%) compared to FMV and then you also have, potentially, 3 years of the cost in the equation. So it can be material. But clubs will simply convert to equity.

 

[The Stockport Iniesta]

Intelligent people can be deluded.

Or have an agenda, which I think is the main problem.

 

[salfordbluetrue]

Well i got it wrong, i fully expected it to get shoved under the carpet, unfortunately for the PL the awarding of damages, means the costs can not be hidden, Maguire estimates £80 million for the loss of earnings on the two sponsors, no idea of how much the sponsors can sue the PL for.
I have always considered this to be a grievance against the PL, and the 115 to be a disciplinary, that is as far as my brain works, so in a grievance the PL can not win, they can only be vindicated, so it was disappointing to see the PL claim victory, especially when you look at the wording, unproven as opposed to CAS`s no evidence, for me it was clear that the Panel had given the PL time to get their house in order, so the PL stance was extremely aggressive, with the Panel`s reputation at stake, they no doubt pulled the PL in and warned them, hence the change of stance, which should have been talking to the aggrieved party.
My view again not an educated one, is that the Leicester case damaged the 54, Fair and Accurate charges, it also damages the PL, that an independent panel did not pull this up, an appeal did. This City suing the PL also damages the PL`s case, 35 Failure to Comply charges, when City had given all the information needed,required and written in the rule book, will sit very badly when City can show this type of investigation was not used on other clubs, most noticeably Roman Abramovich`s £1,5 billion interest free loan to Chelsea, over a 20 year period.

 

[city2]

So the transport minister slags off P&O saying what a disgusting company they are and supposedly signed off by the government who then over the weekend beg forgiveness and how desperate they are for the 1B IN

 

[city2]

1B investment which is good for this country yet little ole City’s investment is not good enough

 

[Inca Roads Bert]

A great turning point in the history of City. Nobody had ever told the Pisscan to fuck off before and it was the beginning of the end for him, ushering in a period of blue dominance.

I think this turning point forced them to throw mud at Mancini's contract, and move the FFP goalposts successively, in order to create the current narrative through lawfare against City. To no avail.

 

[city2]

In my opinion City will take these fuckers to the cleaners

 

[mr t]

1B investment which is good for this country yet little ole City’s investment is not good enough

I read the Premier League rakes in nearly 4.5 billion a year from worldwide sponsorship and TV deals so they are not going to want to give that up easily…….

 

[Joe Donachie]

You’ve missed the point. Currently interest free/low interest related party or AP loans don’t count for COSTS. When they do, COSTS increase unless converted to equity.

Jesus if they started to go as far back as thaksin shinawatra and him having his money frozen and John wardle having to bail us out with staff and non playing staff wages payments, then we would be screwed lol