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New buyers put off by £20 million hole in accounts

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Abu Dhabi Red and White said:
Do you think this is legal/ethical/typical practice?
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Legal, yes.
Ethical, if you think there are ethics in M&A then, sadly, you're wrong. Personally, I don't see any problem in using club money to pay a club debt. The flummery to hide the last £25m of debt was brainless - it should just have been left in the club.
Typical, no, more uncommon. But in a deal like this, nothing is off limits.
 

Grumpy Old Man said:
No, no, no, no, no. That part of the deal had nothing to do with the cost of the shares in the club. It was purely to pay off the debt that Short had moved into Drumaville to give the impression of debt free (although the club really wasn't). That part was always gong to met using some of the parachute.
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Pay short, buy the club. Same thing. Let's not use technical jargon to complicate things.
 
ighty seven said:
but the parachute payments went towards financing a club debt which is kind of what they’re designed for, am I wrong? Or are you saying the SBC loan was taken out by an external company (Drumaville) and had nothing to do with the club (SAFC LTD.)? So the clubs money was used to pay off a debt taken on by an external party?
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Short moved the debt from SAFC to Drumaville; I can't be sure of the actual mechanics of that. It was the same debt, without doubt, and the intention was purely to give the impression that the club was debt free. Drumaville was a non-trading compnay with no plausible reason to take out a loan. It was a bit of corporate cosmetic surgery.
prehab26 said:
Pay short, buy the club. Same thing. Let's not use technical jargon to complicate things.
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Would you have been happier if the £25m had been left in the club and paid off using the parachute?
prehab26 said:
Pay short, buy the club. Same thing. Let's not use technical jargon to complicate things.
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It's not technical jargon. It accurately reflects the substance of the deal.
 
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Grumpy Old Man said:
Short moved the debt from SAFC to Drumaville; I can't be sure of the actual mechanics of that. It was the same debt, without doubt, and the intention was purely to give the impression that the club was debt free. Drumaville was a non-trading compnay with no plausible reason to take out a loan. It was a bit of corporate cosmetic surgery.


Would you have been happier if the £25m had been left in the club and paid off using the parachute?


It's not technical jargon. It accurately reflects the substance of the deal.
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so basically the clubs parachute money went towards paying off a debt ran up by the club. Again, that’s what parachute payments are designed for? To stop clubs defaulting on debts, money owed on outstanding transfer fees etc??? So what have they done wrong here (Donald and Methven)? Trying to sell the club at too high a price? £40m when they’ve only put up £15m of their own money?
 
Tin hat on , Charlton fan here. There are so many similarities that seem to be happening at SAFC which have happened at CAFC. Board takeovers that are welcomed at the time by the majority after unpopular regimes. Voices from certain fans warning about the new owners not listened to as everyone is just delighted to see the back of the previous lot. We were told the club had been sold for £50 million lock stock and barrel. It soon came out the new owners had bought the club for £1 with an agreement to pay the £50 mill within 5 years. The freehold ownership of The Valley and training ground remains with Roland Duchchatalet. Since January the new lot have fallen out after one of them was found to be asset stripping the club with false invoices. Why are these chancers allowed to get involved ? The EFL fit and proper test is a joke. We have just had two Rumanian board members appointed , one of which was recently involved in a money laundering court case , he passed the EFL test.
 
Ghandi Floss said:
Wouldn’t you have thought though that a club/company, who’s nearly whole customer base already had a lack of faith and suspicion about them, wouldn’t have wanted to add to that?
If they didn’t have anything to worry about.
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Part of the problem is that accountancy firms aren’t signin a lot of accounts off at the moment because they can’t effecively audit the company in question (for example, how do you do a stock check if you can’t go on site?). On top of that, it’s impossible to sign Companies off as going concerns at the moment.

Not saying that it’s necessarily the accountants but it’s entirely possible.
 
ighty seven said:
so basically the clubs parachute money went towards paying off a debt ran up by the club. Again, that’s what parachute payments are designed for? To stop clubs defaulting on debts, money owed on outstanding transfer fees etc??? So what have they done wrong here (Donald and Methven)? Trying to sell the club at too high a price? £40m when they’ve only put up £15m of their own money?
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Probably more like £30m they are in a hole for I reckon.
 
prehab26 said:
Yep. Pockets not deep enough and football wise, he is incompetent. Bad owner, poor decisions and it's costing us b
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The only thing he seem gifted at is grifting many of the fans. I've seen little to suggest madrox have been in it for the long haul the absence of a coherent plan is shambolic and screams out short term smash and grab raid.

But now with football covid turmoil I can't see where madrox goes from here... The games up and monies running out
 
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Grumpy Old Man said:
It's very simple and has any number of equivalents up and down the leagues.


They could simply look at the fallout and reverse the decision to write off the balance.
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Or ask the buyers for £20m less. Which would in effect kick the £20m can further down the road with the next owners “benefitting“ from the FLs incompetence/desperation/incompetence and Madrox/ES joint chicanery. :lol:

This is gonna be a smb staple for decades alongside Mr Smith and The Strawmen (good band), Jimmy Hills late KO and the North Stand extension.:lol: Still it’ll help future safc historians pad their books out.
 
ighty seven said:
so basically the clubs parachute money went towards paying off a debt ran up by the club. Again, that’s what parachute payments are designed for? To stop clubs defaulting on debts, money owed on outstanding transfer fees etc??? So what have they done wrong here (Donald and Methven)? Trying to sell the club at too high a price? £40m when they’ve only put up £15m of their own money?
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The way it had to be done created a balance between SAFC and Madrox because Madrox were the signatories for the deal. If the deal had gone as originally planned, the parachute would have gone straight to Drumaville. That's actually against PL rules, so it had to come to Sunderland first. There are two factors causing discontent here. Firstly, the mixed messages coming from the owners about whether that money would be put back into the club. As you say, the money went on discharging a club debt, but there is one moral argument saying that the club has been deprived of the benefit of the parachute. It really is arguable either way. Secondly, that after writing off this balance, Donald's asking price is too high. Totting things up, they've spent £12.7m on the shares, put around £7.5m of their own cash back in, plus the £9m FPP loan (which hit the club as share capital). That leaves them needing about £30m to break even.
 
Johnnyh said:
It’s very simple to you GOM because it’s your job. I had a ltd company and still have a rental property business but I still come out of meetings with my accountant sometimes struggling to take it all on board. But please keep up the good work and please don’t be put off by the odd poster with a bad attitude shall we say.
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That’s the terminology marra. All “the professions“ use It to bamboozle the people who pay their wages. Do you blame them?
 
Grumpy Old Man said:
The way it had to be done created a balance between SAFC and Madrox because Madrox were the signatories for the deal. If the deal had gone as originally planned, the parachute would have gone straight to Drumaville. That's actually against PL rules, so it had to come to Sunderland first. There are two factors causing discontent here. Firstly, the mixed messages coming from the owners about whether that money would be put back into the club. As you say, the money went on discharging a club debt, but there is one moral argument saying that the club has been deprived of the benefit of the parachute. It really is arguable either way. Secondly, that after writing off this balance, Donald's asking price is too high. Totting things up, they've spent £12.7m on the shares, put around £7.5m of their own cash back in, plus the £9m FPP loan (which hit the club as share capital). That leaves them needing about £30m to break even.
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i’d guess nobody is going to pay £30m, so then what? He puts more money in or borrows more, which means the asking price continues to rise?
 
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