The "bubble payment "

[esmer]

Where will the money for the bubble/balloon payment actually come from?

Also, am I right in remembering that the accelerated staff payments from the GTs are actually a loan from the GTs to the club and at some point the club will have to find that money also to pay back the loan?

Yes Doc, the staff payments are a loan from the GTs to the Club. They were treated as such to negate any difficulties with PAYE/NI payments. The plan was for the GTs to be paid back the amounts that the staff would have received under the terms of the repayment plan - ie over the five year period. The GTs would then use that repaid loan money to fund other club related and/or community projects.

When the original Football Creditor payment schedule was announced we were told that the additional £1 million pa profit from the new stand would pay for the balloon/bubble - but that would have needed the new stand to be fully operational by October 2014.

If the Stand is operational by October 2015 as is now the plan then we will still be £1 million short. No detail has been made available as to how that shortfall will be made up.

Begs the question - what happens if the new stand doesn't realize that level of increased profit (if it ever gets built). The money will have to come from James Brent or one of his companies or the debt will have to be re-scheduled.

 

[Pogleswoody]

Where will the money for the bubble/balloon payment actually come from?

Inflation?? :coat:

 

[mike gss]

We don't have to pay for a fcuking elephant as well do we???

 

[Baby Face Johnson]

£1million per year additional profit? Absolute cloud cuckoo land, even if it does ever get built. If that is the plan, we are up a certain creek without a certain instrument :banghead:

 

[Lundan Cabbie]

£1million per year additional profit? Absolute cloud cuckoo land, even if it does ever get built. If that is the plan, we are up a certain creek without a certain instrument :banghead:

I'm pretty sure the claim was £1-2 million TURNOVER. Not profit.

 

[Baby Face Johnson]

£1million per year additional profit? Absolute cloud cuckoo land, even if it does ever get built. If that is the plan, we are up a certain creek without a certain instrument :banghead:

I'm pretty sure the claim was £1-2 million TURNOVER. Not profit.

Me too but I think Damon suggested that the plan was that the £2million balloon payment would be made up of two years' worth of profit from the new ministand, hence my cloud cuckoo land comment. I'd be amazed if even the turnover increased by that amount without some timely success on the field. It won't be built in time anyway, even if the fanciful £1 million per year *profit was achievable. Just where exactly is the balloon payment going to come from?

*cloud cuckoo land if this was Mr Brent's plan, not that Damon suggested it.

 

[GreenSam]

Basically we're gonna really struggle to make that payment. That's not based on any insider knowledge- it's just common sense.

We've got very little to sell to be able to pay it. Someone could loan it to us but then we'd only owe whoever loaned it to us. Which would then cripple us for a much longer period than just up to October 2016. And this is all in the context that we're running at a huge loss anyway.

Hate to be a doom-monger but I personally still think we could be feeling the pinch up to ten years after leaving admin, let alone five. And that's if we haven't gone back into it by then.

 

[Damon.Lenszner]

£1million per year additional profit? Absolute cloud cuckoo land, even if it does ever get built. If that is the plan, we are up a certain creek without a certain instrument :banghead:

I'm pretty sure the claim was £1-2 million TURNOVER. Not profit.

Me too but I think Damon suggested that the plan was that the £2million balloon payment would be made up of two years' worth of profit from the new ministand, hence my cloud cuckoo land comment. I'd be amazed if even the turnover increased by that amount without some timely success on the field. It won't be built in time anyway, even if the fanciful £1 million per year *profit was achievable. Just where exactly is the balloon payment going to come from?

*cloud cuckoo land if this was Mr Brent's plan, not that Damon suggested it.

I was also confused by the terminology and specifically asked JB at a PASB meeting if the projected figure was additional turnover or additional profit - the answer was 'additional net revenue'.


“It will generate, we estimate, between £1m and £2m per year of net additional income depending on which league we are in, which will enable us to differentiate ourselves from other clubs and move more quickly back up the leagues and then sustain a position. It is an absolute no-brainer for the club.”

Read more: http://www.westernmorningnews.co.uk/New ... z2zgznZAUq

 

[Tugboat]

.

 

[The Doctor]

So it's all incredibly risky. Everything depends on...

1. the new stand actually being built at all
2. the new stand being built in time to generate useful revenue towards this payment
3. the new stand actually generating sufficient useful revenue

All three of these things seem decidedly uncertain to me (that it will be built, that it will be built quickly, that it will generate the projected revenue).

I presume there is a back-up plan...

 

[TynanWozGr8]

There is Definately a backup plan - it's called administration

None if the figures add up - it's bloody cloud cuckoo land - can we really rely on a man who has had three businesses go thro this year

We desperately need a successful season to boost crowds and draw Man Utd away in the fa cup

 

[PL2 3DQ]

There is definitely a backup plan - it's called administration

None if the figures add up - it's bloody cloud cuckoo land - can we really rely on a man who has had three businesses go thro this year

We desperately need a successful season to boost crowds and draw Man Utd away in the fa cup

I would be hoping for a big team away in the FA Cup.

 

[Damon.Lenszner]

Just hypothetically Graham - a £4million valuation on the reduced size freehold and a 75% loan to value would still require
a £1 million deposit. A £3million loan at 6% commercial mortgage rate over 25 years on an interest only basis would mean repayments of £180,000 per year - £15,000 more than the rent (at division 2 rate), the stadium once again in private hands, the club once again raising cash against the stadium to pay off debt and we would still need to borrow for the £1million deposit.

Graham your knowledge of Commercial Property deals far exceeds my own and I would stand happily corrected if these figures are painting too black a picture.

 

[Tim Chown]

As we know the loss of 10 points can have devastating consequences.

Indeed, we'd now be one point off relegation. League 2 has been very tight this season.

 

[cheshiregreen]

Just hypothetically Graham - a £4million valuation on the reduced size freehold and a 75% loan to value would still require
a £1 million deposit. A £3million loan at 6% commercial mortgage rate over 25 years on an interest only basis would mean repayments of £180,000 per year - £15,000 more than the rent (at division 2 rate), the stadium once again in private hands, the club once again raising cash against the stadium to pay off debt and we would still need to borrow for the £1million deposit.

Graham your knowledge of Commercial Property deals far exceeds my own and I would stand happily corrected if these figures are painting too black a picture.

I was being hypothetical Damon to explain a potential way out, but I did include the HHP land in the calculation for which James Brent already owns the freehold. He would add the stadium freehold to that with all its inherent dangers for future ownership. That substantially changes the potential loan to value and ability to obtain a loan on more favourable terms. It will have the risks as you have indicated.

The Football Creditor debt is just that a debt to the 300 or so individuals (although the staff element of that has been settled by the GTs accelerated payments and is subject to a separate repayment schedule). We have two full seasons of unbudgeted income to reduce that debt by either transfers, unexpected cup runs or increased attendances and commercial income. Who knows the FC debt could be reduced to much more manageable levels depending on the team's performance in those two seasons.

The main danger is not administration because the FC repayments could still be rescheduled or renegotiated for a longer term but a points deduction for non-compliance with a Football League term agreement as part of the exit from administration and the transfer of the Football League share. As we know the loss of 10 points can have devastating consequences.

I know some of this debate is happening on the Grandstand thread but there really is a lot of important points covered on this thread.

In summary then

1)the GTs money is only a loan.
2)The club has to pay £2m by October 2016
3)No sign of when the Grandstand work will start or, more importantly, some revenue arise from it.
4) In addition, the Club is committed to the repayments to PASTD (£330k, I think).

Not a very rosy picture it seems.

Given this scenario, I imagine that should we receive any decent offers for any player over summer or indeed in the January window, then it may be difficult to turn these down. Of course, accepting bids for our better players could be counter productive for revenue generation in the long run, especially as we hope to be promotion contenders next season.

Perhaps, over the summer, we will get some further clarity on the Board's strategy.