Like any business, bills fall due throughout the year. Transfer instalments, severance payments etc etc.
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Club loan taken out
- Thread starter DonaldDownTheWing
- Start date
Which then begs the question why would anyone (e.g., Macquarie) want to be on the other side of this loan deal?
Mowgli
Striker
Because they make millions of interest for guaranteed money in a few months.
As soon as I asked the question, it occurred to me that it's high risk, high reward. vs. low risk low reward, and each segment has its specialists.
Grumpy Old Man
Striker
By the time of the loan, we'd have had most of the 25/26 payment. By front end, I mean July/August. The loan effectively covers this January and the summer. It's worth noting that this isn't strictly a loan in the sense of getting cash. It's actually a loan facility, to be drawn on at need. An overdraft arrangement is a better comparison here than, say, a mortgage.
My dad always told me “The only way the bank will lend you money is if you can prove you don’t need it.”
El Gen
Striker
most rich people have limited liquidity
many big companies are saddled with billions of debt
But with interest rates quite low it's cheaper to borrow than sell assets and lose a percentage in tax
mackembhoy
Striker
MadMackem10
Winger
It's a bugbear I have when some people talk about billionaires, they act they walk up to a cash machine and see a balance of £1,000,000,000. For someone like Musk to become liquid, it would involve selling some of his Tesla stock, and the more stock he sells the more the value of those shares drop.
Spartan
Striker
big debate going on in California at the moment about how to get the billionaires to pay any tax at all.
They fund ther lifestyle by taking loans from their own company (which will never be repaid) Because a loan in theory does have to be repaid it's not counted as a 'tax event" and so the loan capital is tax free. If they sold shares in their own buisness they'd be liable for capital gains tax and maybe income tax.
As one of them once said " tax is for the little people" .
one of the reasons Musk is so successful is he DGAF what people think. He's got tax accountants providing him with his living expenses without selling stock or paying taxes and staying within the law.
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vinegar hill
Striker
I don’t think there’s many instances of rich owners using a lot of their own money to finance clubs.
They simply guarantee loans if the worse were to happen.
Then if they sell the club on the debt is taken on by the new owner.
They simply guarantee loans if the worse were to happen.
Then if they sell the club on the debt is taken on by the new owner.
contrarian
Central Defender
Bank of England base rate only 3.75%. That's relatively low. You can earn more on your money than it takes to borrow it.
mackembhoy
Striker
Aye but this thread is about borrowing money
Up his experion score to around 60.
Yes the base rate is low and borrowing is relatively cheap.
I don’t need to tell you we were far from rich growing up, do I?
Yeah I know there was no security over club assets per se. Presumably to be repaid on the receipt of 26/27 monies?
Grumpy Old Man
Striker
We may not actually have borrowed anything yet. As it's not a fixed loan, but more like an overdraft arrangement, the amount owing could yo-yo; football clubs have "lumpy" cash flowa, where large amounts can go in or out in a single transaction.
