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New buyers put off by £20 million hole in accounts

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Grumpy Old Man said:
The implication is that Madrox now own the SoL and would retain it on a sale. That is totally wrong. Madrox owns the shares in Sunderland. Sunderland owns the SoL. If Madrox sells Sunderland, the SoL goes with it. If Madrox changes hands, then the freehold is still with Sunderland.
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Ah right cheers
 

Grumpy Old Man said:
If anyone purchased Sunderland, the balance, if in place, would have had to be dealt with in the purchase price, so Donald would actually require a larger sum to cover that repayment on top of his asking price. In other words, any new owner would have to commit to an immediate cash injection into Sunderland on top of what they paid for the shares, in a way that they'd be entirely unable to recover. However, I'm far from convinced that it's actually legally enforceable because of the nature of the transaction; equally, I'm far from convinced that it isn't. It's got expensive law suit written all over it.

Let's try an put this into numbers. Looking at the amount that Donald has put in pre-write off and pre-FPP loan, comes to about 18m (covering the shares and £5m of the parachute put back in). So that's his baseline for the shares. Add on to that the £20m he needs to repay the debt, and you get £38m. For that, the buyer actually gets shares valued at £18m, and a club not owed money with, effectively, his cash in there in a way that can't be recouped from a future sale. That, to me, is deeply unattractive.

With the debt removed (and again, ignoring post write-off movements), Donald could break even on an £18m sale, and the new owners could put capital in as and when if a way they could get back in future. Far more attractive to the buyer. Subsequent movements of £2.5m more coming in as loan, and the FPP loan coming in as share capital have now moved Donald's break even number up to around £30m, but the principle still holds.

Now, it's indisputable that the first scenario is better from the fan's perspective. The club gets all the cash. But the owner is left having paid around £40m for a club worth half the amount. It's not so good for the club, but it could improve the chances of the club being moved on.
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You mention Donald's breakeven rising to 30m when you add in the 2.5m and the FPP loan. Presumably if he sells to FPP that figure goes back down to 21m?
 
Grumpy Old Man said:
Stop posting outright untruths, MADROX DOES NOT OWEN THE STADIUM - SUNDERLAND LTD DOES.
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would you please be kind enough to explain the makeup of directors of Sunderland Ltd as I’m confused . I’m not trying to be confrontational with you I am just concerned about the future of the club ao have supported for 35 years.

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Grumpy Old Man said:
No. That would have to involve Madrox buying the stadium from Sunderland. Remember, legally, Madrox, Sunderland and Donald are all separate person. Sunderland own the SoL, simple as that, and EFL regulations (not to mention HMRC) require that transfers between related parties (ie any companies with common management or ownership) is at fair value. The SoL was last valued at £93m.
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Good news. What about a default on the FPP loan. There’s no risk of club and ground being separated via that is there? Have to assume that FPP have honest intentions but it’s difficult to be sure as they’ve said nothing publicly.
 
Grumpy Old Man said:
I read him as actually saying that Madrox owned the stadium itself (ie ownership had moved to them from Sunderland). That's dangerously wrong. As the stadium is on the books of Sunderland, then if Sunderland is sold, the SoL goes with it.
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can this position be changed by the owners?
 
Grumpy Old Man said:
No. That would have to involve Madrox buying the stadium from Sunderland. Remember, legally, Madrox, Sunderland and Donald are all separate person. Sunderland own the SoL, simple as that, and EFL regulations (not to mention HMRC) require that transfers between related parties (ie any companies with common management or ownership) is at fair value. The SoL was last valued at £93m.
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grumps your wasting your time and effort, half of these are mags dressed as SAFC and loads are biting at it.
 
Mayflower said:
would you please be kind enough to explain the makeup of directors of Sunderland Ltd as I’m confused . I’m not trying to be confrontational with you I am just concerned about the future of the club ao have supported for 35 years.

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First, you need to filter out people who are no longer officers. Click the box saying that and you're left with 4 names - Angela Lowes (secretary and director, so two entries), Stewart Donald, Neil Fox, and Juan Sartori. There's nothing remotely sinister in this. Two are major shareholders in Sunderland's holding company, Neil Fox is Donald's right hand man, and Lowes is the FD. This is all totally normal. When Sunderland changes hands, Donald, Fox and Sartori will resign and be replaced by representatives of the new owners.

One of the key elements in company law is the concept of legal personality. In law, a company is a person just as much as a human being. So, even though there are common names amongst directors, Madrox and Sunderland are very much separate entities, with their own rights. The fact that Madrox owns Sunderland's shares does not affect Sunderland's ownership of its own assets. So, the freehold of the SoL is still in the books of Sunderland, where it has been since it was built. When Madrox sells the shares in Sunderland, the SoL will go with it.
Mayflower said:
can this position be changed by the owners?
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No, except by an arms length price purchase. The SoL is currently valued at just under £93m.
The Cabbage said:
Good news. What about a default on the FPP loan. There’s no risk of club and ground being separated via that is there? Have to assume that FPP have honest intentions but it’s difficult to be sure as they’ve said nothing publicly.
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There's a risk after any change of ownership - you only need to talk to Villa and Derby fans about that. Personally, I think it's either mindbogglingly stupid or an act of desperation, but it can never be rules out under any owner.
 
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North Yorks Mackem said:
Of course that 20 million pounds, if invested wisely in the club, could have a significant impact on the value of the club (in a positive way).

This is money owed to the club and the current owners have written it off for personal gain and to the detriment of the club. I dont think this point needs to be over complicated tbh.
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Please explain how it is .
A: Owed to the club?
B: How is it for the owners personal gain adn the detriment of the club?

The money did what it was intended to do by making the club more sustainable by clearing the SBC loan, A club debt payed off with the club's money.

If however, SD is trying to get that 20 million as profit included in the sale price then that's a different thing altogether
 
Ericsgate said:
Not sure I agree, just thing rationally about the economic landscape and consider if FPP really are going to ride in as White Knights?

It has been an incredible chain of events, some unfortunate and some absolutely reckless that have led to this.

The Global pandemic (very unfortunate event) is going to sink many failing institutions with weak balance sheets.

Given all the uncertainty in the world, the economy and especially the leisure industry who in their right mind is going to make an investment to take on the liabilities of a business that haemorrhages cash as Sunderland A.F.C. does?

I get the “potential” of the club argument but as was demonstrated in the last decade (when underwritten by a wealthy benefactor prepared to make substantial losses) that potential barely scrapes a place in the Premier League. There are so many biggish clubs with similar aspirations in the Championship and there will be some with parachute money ran far more prudently.

The TV revenue gravy train in the Premier League is destabilised and in all likelihood will be less lucrative in future years.

What serious “investor” things they can play the long game to realise a profit with those risks being so high?

Would FPP not find better places to allocate their cash during a global depression? If Madrox defaults on the loan to FPP would the tangible worth of property (Stadium and training complex) not be a safer guarantee on their funds?

I only ask the questions but I honestly believe people do not realise how far down the “road to perdition” the club has gone and, therefore, how unattractive a purchase proposition it is.

Supporters, like you, of course voice opinions led by emotions. Investors on the other hand do not.
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Well that’s really fuckin cheered me up.
 
vinegar hill said:
Well that’s really fuckin cheered me up.
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Sick of pointing out he's a mag, he spent ages on here pretending to be a Sunderland fan, that says it all. He won't make a point worth arguing, it's a wind up.

If FPP were gonna take us over, I'm sure they'd want it to be sustainable and eventually profitable, but a lot of the talk at the time was they were interested in investing in the region as well. So they weren't gonna be here to try and cynically take money out, that's always more likely with those investors who aren't as wealthy, which we are at the mercy of right now.
 
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