• The forums will be unavailable for a few hours on Saturday 6th June, when they do return they will initially be in a degraded state with some features missing, but normal posting/reading will be possible. The main website will not be affected by these updates.
    New user registrations are currently disabled.
    Some other features of the forum are also currently disabled.

New buyers put off by £20 million hole in accounts

Status
Not open for further replies.
Grumpy Old Man said:
They were more than absorbed by amounts still owing on transfer in, the Alvarez case, and the fact that, in May 2018 when these deals were going through, the clubs costs far exceeded its income.
Click to expand...
I can't remember word for word but I do remember Donald in an interview saying the Alveraz deal was a shock and they went back to short to ask for help with it, and I'm sure he said he did help towards it financially but not sure if figures were given
 

Red and white TID said:
I’m not having a go at you in the slightest, I’m making an observation that they obviously didn’t do enough DD or at least didn’t do it well, if they didn’t know Alvarez was suing SAFC at the time of taking over, I don’t think that’s unfair to say.
Click to expand...

The second case wasn't well known at all, at least to the wider fanbase. It was never disclosed in the accounts as a liability or as a contingent liability (something you put in the accounts as a potential expense, but where the judgement is that it's less than 50% likely to actually arise). To me, that suggests either the case wasn't known about at the time of the takeover, or that the legal advice given to the club was that the possibility of the second case arising was remote. Whether or not whoever did the DD should have got a second opinion on that would depend on their assessment of whatever was known to the club. Who knows, maybe a second opinion was taken and it was along the lines of the first. That's speculation of course; none of us will ever know what happened in the DD that took place. Either way, the result, when it came though, did seem to be a shock to all concerned.
 
Grumpy Old Man said:
The second case wasn't well known at all, at least to the wider fanbase. It was never disclosed in the accounts as a liability or as a contingent liability (something you put in the accounts as a potential expense, but where the judgement is that it's less than 50% likely to actually arise). To me, that suggests either the case wasn't known about at the time of the takeover, or that the legal advice given to the club was that the possibility of the second case arising was remote. Whether or not whoever did the DD should have got a second opinion on that would depend on their assessment of whatever was known to the club. Who knows, maybe a second opinion was taken and it was along the lines of the first. That's speculation of course; none of us will ever know what happened in the DD that took place. Either way, the result, when it came though, did seem to be a shock to all concerned.
Click to expand...
Second case was about loss of earnings wasnt it, think you're right in that it caught them by surprise. They mentioned a few times about legacy transfer payments but I struggle to believe that these amounted to £20m+. They mentioned oviedo a few times but he signed 2 years prior for £6m so something doesnt add up. That said we wont have gotten the £20m up front and I think a lot of it would have been swallowed up by paying off the likes of Rodwell, Djilobodji and Ndong I'd imagine (although I think I recall SD saying we'd got a nominal fee for at least one of the latter two)
 
Ashley In!! said:
The thing that always amuses me with threads like this is people who haven't been on for a while deciding to read them from the start just to make sure they don't miss anything important.

It's up to 119 pages this morning and i've been getting notifications from my posts on the first few pages.

Quiet morning @Mackemed? Where are you up to now? :lol:
Click to expand...
Important? On here? Givower man.
 
The Beautiful Game said:
Second case was about loss of earnings wasnt it, think you're right in that it caught them by surprise. They mentioned a few times about legacy transfer payments but I struggle to believe that these amounted to £20m+. They mentioned oviedo a few times but he signed 2 years prior for £6m so something doesnt add up. That said we wont have gotten the £20m up front and I think a lot of it would have been swallowed up by paying off the likes of Rodwell, Djilobodji and Ndong I'd imagine (although I think I recall SD saying we'd got a nominal fee for at least one of the latter two)
Click to expand...
You can't tell how it's made up but in the July 18 accounts it's there in black and white that we had total creditors of £20.1m due to be paid in 12 months, £15,132,592 of that was due for players (God knows what the other £5m was for). It also says there was a further £3.5m due for players after July 2019. So at the time they bought the club £18.6m was due to be paid for players we'd bought before July 2018. Depends how we structured deals, could have been for players signed 1, 2, 3 or more years earlier. Oviedo might have been 4 £1.5m instalments paid across 4 years, so £3m owed when they bought the club, we'll never know the structure of the deals.
 
seggaman said:
So, let me see if I have understood this properly. Donald borrowed money from the club to help him buy the club and now doesn't have to pay it back?
What weird sorcery is this? No wonder noone will touch the club.
Click to expand...
To be fair, that's exactly how the Glazers bought Man Utd. Just add a zero to the amounts involved!
 
mikemanc said:
You can't tell how it's made up but in the July 18 accounts it's there in black and white that we had total creditors of £20.1m due to be paid in 12 months, £15,132,592 of that was due for players (God knows what the other £5m was for). It also says there was a further £3.5m due for players after July 2019. So at the time they bought the club £18.6m was due to be paid for players we'd bought before July 2018. Depends how we structured deals, could have been for players signed 1, 2, 3 or more years earlier. Oviedo might have been 4 £1.5m instalments paid across 4 years, so £3m owed when they bought the club, we'll never know the structure of the deals.
Click to expand...
I guess a portion of that would have been the add ons for Ndong as well? Would they appear in that even though they were unlikely ever to be met? Our transfer net spend over the previous two years before they took over and their first year must be about £50m in our favour
 
MickeyV said:
What about the Rodwell and Cattermole settlements? Do we know what is outstanding in those deals?
Click to expand...

You never get anything at that level of detail. I would have thought Rodwell was fully settle in 2018/19, but there are no guarantees. Cattermole is a different matter; although he moved before the 2018/19 year end, any wage support would undoubtedly have extended through the season and will be a wage cost in 2019/20.
 
Grumpy Old Man said:
You never get anything at that level of detail. I would have thought Rodwell was fully settle in 2018/19, but there are no guarantees. Cattermole is a different matter; although he moved before the 2018/19 year end, any wage support would undoubtedly have extended through the season and will be a wage cost in 2019/20.
Click to expand...
I suppose if you sweep enough crap under the carpet, it starts to look a bit lumpy!
 
The Beautiful Game said:
I guess a portion of that would have been the add ons for Ndong as well? Would they appear in that even though they were unlikely ever to be met? Our transfer net spend over the previous two years before they took over and their first year must be about £50m in our favour
Click to expand...

No, addons are usually shown as a contingent liability and only put through the books as and when they are triggered (at which point they'll be in trade creditors until paid. It's shown as a note in the accounts of most football clubs. There was no such note in last year's accounts for the club. I was critical of this, and did mention this to CM last June. I also gave him a copy of Burnley's accounts as a model of how it should be done; they're a shining example of how to communicate with the wide range of stakeholders there are associated with a football club. I am deeply unimpressed with the current auditors; I'm really not sure they understand exactly how wide the range of interested parties is.
 
The Beautiful Game said:
I guess a portion of that would have been the add ons for Ndong as well? Would they appear in that even though they were unlikely ever to be met? Our transfer net spend over the previous two years before they took over and their first year must be about £50m in our favour
Click to expand...
If we were unlikely to pay I think it would be included in contingent liabilities rather than this balance, that deals with payments/receipts that are less likely and usually based on something happening to trigger the cashflow rather than you simply haven't paid an invoice. But then you're always more prudent with cash out so you account it at a lower threshold than you would cash in. edit - @Grumpy Old Man beat me to it

In terms of deals agreed it might be £50m in favour but I know from looking at the accounts over the last few years we've always tended more towards the buy now pay later so I'd expect the cashflow to be a long way from net £50m in as we've paid a lot of cash out for deals arranged years before.
 
Grumpy Old Man said:
No, addons are usually shown as a contingent liability and only put through the books as and when they are triggered (at which point they'll be in trade creditors until paid. It's shown as a note in the accounts of most football clubs. There was no such note in last year's accounts for the club. I was critical of this, and did mention this to CM last June. I also gave him a copy of Burnley's accounts as a model of how it should be done; they're a shining example of how to communicate with the wide range of stakeholders there are associated with a football club. I am deeply unimpressed with the current auditors; I'm really not sure they understand exactly how wide the range of interested parties is.
Click to expand...
Interesting, cheers
mikemanc said:
If we were unlikely to pay I think it would be included in contingent liabilities rather than this balance, that deals with payments/receipts that are less likely and usually based on something happening to trigger the cashflow rather than you simply haven't paid an invoice. But then you're always more prudent with cash out so you account it at a lower threshold than you would cash in. edit - @Grumpy Old Man beat me to it

In terms of deals agreed it might be £50m in favour but I know from looking at the accounts over the last few years we've always tended more towards the buy now pay later so I'd expect the cashflow to be a long way from net £50m in as we've paid a lot of cash out for deals arranged years before.
Click to expand...
Be interesting to see how much of that £50m we've actually had so far
 
Last edited:
Grumpy Old Man said:
No, addons are usually shown as a contingent liability and only put through the books as and when they are triggered (at which point they'll be in trade creditors until paid. It's shown as a note in the accounts of most football clubs. There was no such note in last year's accounts for the club. I was critical of this, and did mention this to CM last June. I also gave him a copy of Burnley's accounts as a model of how it should be done; they're a shining example of how to communicate with the wide range of stakeholders there are associated with a football club. I am deeply unimpressed with the current auditors; I'm really not sure they understand exactly how wide the range of interested parties is.
Click to expand...
I've sensed an ongoing cozy relationship.
 
Status
Not open for further replies.
Back
Top