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How much is the clubs debt?

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Grumpy Old Man said:
I haven't said that - I've said what his breakeven number is. That's a long way from saying he could or should get it.
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I really enjoy reading your posts- very enlightening.

As an aside, is there anyway of estimating if our debt will have risen by the end of the season, or whether the austerity measures will have reduced it?
 

robcal said:
I really enjoy reading your posts- very enlightening.

As an aside, is there anyway of estimating if our debt will have risen by the end of the season, or whether the austerity measures will have reduced it?
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I did that, but it takes me forever to find my posts to link them :)

I estimated that it might have gone up by about £10m during 2016/17, and then fall back to 2015/16 levels by the end of this season. The main uncertainty is the wage bill, which could throw my calculations out by a fair bit. I'll have a better idea once the 2016/17 accounts are released, probably by the end of next month.
 
Grumpy Old Man said:
I can debunk that one as well :)

They're one of America's biggest pension and life assurance companies with about $37bn under management, and are in turn owned by blue chip New York investment bankers Guggenheim Partners. It's just possible that Short might have bumped into a director socially, but the deal looks strictly arms length from the paperwork. Although the amount of our loan probably gets lost in the roundings of their accounts.
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Hmm im all out of conspiracy theories for the time being then! :lol:
 
Grumpy Old Man said:
£40m of the SBC loan replaced an existing overdraft; the remainder was new borrowing. Probably taken out because Short was out of cash. Short's total investment is, by my reckoning around £105m. The figure I've heard most widely quoted for the amount paid to the Irish was £30m. For that, he got a Jersey company whose main asset was a £96m loan to the club. Effectively, he bought that loan on the cheap. Since then, he's turned that loan, plus another £5m into shares, and loaned the club another £69m. So we get his input as £30m purchase price + another £5m shares + £69m loans = £105m. That's his breakeven number on selling.
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I must admit that's nowhere near as bad as I thought mind. I thought he might be -£190m which he would of course have no chance of getting back.

He might not think so, but even if he was to sell for £30m, to have lost 'only' £75m would not be THAT bad for 10 years of premier league club ownership. Zero is better or a profit even, but how much has Roman ploughed into Chelsea (for at least many many rewards admittedly).
 
So when the 'take over' didn't happen and short seemed to sell on (or move) debts to another company. If Sunderland went into administration, and get offered 10p per £, would he get the total agreed loan money from the company he sold the debt to even though they would get 10%?
 
DocSavage said:
So when the 'take over' didn't happen and short seemed to sell on (or move) debts to another company. If Sunderland went into administration, and get offered 10p per £, would he get the total agreed loan money from the company he sold the debt to even though they would get 10%?
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Honestly mate all hypothetical. Short will manage the debt until he finds a buyer or he loses everything.
 
DocSavage said:
So when the 'take over' didn't happen and short seemed to sell on (or move) debts to another company. If Sunderland went into administration, and get offered 10p per £, would he get the total agreed loan money from the company he sold the debt to even though they would get 10%?
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He hasn't sold any debt to anyone. There are debts owed to him, and debts owed to SBC. They're entirely separate. SBC's debt is secured, Short's isn't. In administration, the odds are that Short loses everything, football creditors are paid in full, and SBC get most or all of their money back.
 
Grumpy Old Man said:
He hasn't sold any debt to anyone. There are debts owed to him, and debts owed to SBC. They're entirely separate. SBC's debt is secured, Short's isn't. In administration, the odds are that Short loses everything, football creditors are paid in full, and SBC get most or all of their money back.
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Would I be right to assume that the tax man would be first in line for payment in the event of the club going bust?

If a club consistently posting losses can owe the tax man anything outside of employer NI that is :eek:
 
Grumpy Old Man said:
At 31 July 2016 (the year end for the last published accounts), there were the following debts: Security Benefits Corporation £67.9m, Parent company (Drumaville Ltd) £69.4m. Total £137.3m

Against this can be offset: Investments £23.4m and cash £26.9m.

Source: Sunderland Limited financial statements for the year ended 31 July 2016.

There are no later figures in the public domain.
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Net debt of £87m at July 2016 then

We can take a guess at the 18 months since

Money in £48m

Pickford £25m
van Aanholt £14m
Borini £5m
Kaboul £4m

Money out £30m

Ndong £13m
Djilobodji £8m
McNair / Love £5m
Gibson / Oviedo £4m

Net money in £18m makes debt £69m

Hopefully no operational losses since with wage reductions (aside from you know who)

There's other player movements but none significant, except any I've forgotten.
 
SAFC_ABZ said:
Would I be right to assume that the tax man would be first in line for payment in the event of the club going bust?

If a club consistently posting losses can owe the tax man anything outside of employer NI that is :eek:
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No, HMRC lost their preferred status a few years ago. That's one of the reasons why they so aggressively chuck winding up orders around, normally just to frighten companies into coughing up.

If you're making losses, then clearly you won't be paying corporation tax; you will have to hand over all PAYE and both employer's and employee's NI. Losses can also be carried forward to offset against future profits - the club has the best part of £200m in unused losses.

ozcat said:
Net debt of £87m at July 2016 then

We can take a guess at the 18 months since

Money in £48m

Pickford £25m
van Aanholt £14m
Borini £5m
Kaboul £4m

Money out £30m

Ndong £13m
Djilobodji £8m
McNair / Love £5m
Gibson / Oviedo £4m

Net money in £18m makes debt £69m

Hopefully no operational losses since with wage reductions (aside from you know who)

There's other player movements but none significant, except any I've forgotten.
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That's not quite right as most fees are paid in instalments. At 31/7/16 we owed a total of £35m to other clubs; £19m payable in 2016/17, and the other £16m this season and potentially beyond. At the same date we were owed £9m by other clubs, £8m due on 2016/17.

So we get something like

2016/17 Out £19m brought forward, plus say 40% of the 2016/17 purchase = £16m Total £35m out
2016/17 In £8m brought forward plus say 40-45% of Van Aanholt (£5m) + Kaboul Total £17m

Net ouflow £18m. Possibly a modest trading cash inflow with increased PL money (although £24m was received before the year end) and some wage reductions with some higher earners leaving in 2015/16. Possible overall cashflow even, but more likely a £5-10m outlow.

2017/18 Outflow £16m from 2015/16 plus £another £40% of the 2016/17 plus summer 2016/17 total £33m
Inflow £1m from 2015/16 plus remainder of Van Aanholt and 50% of Pickford, loan fees for Borini and the others (the transfer fee for Borini isn't payable until this summer Total £30m
Still leaves a transfer outflow of around £3m.

We go into next year with about £15m still owing on Pickford, and fees due on Borini, Lens N'Dong, etc. So, potentially up to £25-30m there.
 
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Grumpy Old Man said:
£40m of the SBC loan replaced an existing overdraft; the remainder was new borrowing. Probably taken out because Short was out of cash. Short's total investment is, by my reckoning around £105m. The figure I've heard most widely quoted for the amount paid to the Irish was £30m. For that, he got a Jersey company whose main asset was a £96m loan to the club. Effectively, he bought that loan on the cheap. Since then, he's turned that loan, plus another £5m into shares, and loaned the club another £69m. So we get his input as £30m purchase price + another £5m shares + £69m loans = £105m. That's his breakeven number on selling.
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Can you guess at the situation as it stands now, after the cost cutting, parachute payments and player sales? Do you think all of that will have gone into paying the general upkeep and covering for our fall in revenue, or will some of it have paid down some debt?
 
Grumpy Old Man said:
No, HMRC lost their preferred status a few years ago. That's one of the reasons why they so aggressively chuck winding up orders around, normally just to frighten companies into coughing up.

If you're making losses, then clearly you won't be paying corporation tax; you will have to hand over all PAYE and both employer's and employee's NI. Losses can also be carried forward to offset against future profits - the club has the best part of £200m in unused losses.



That's not quite right as most fees are paid in instalments. At 31/7/16 we owed a total of £35m to other clubs; £19m payable in 2016/17, and the other £16m this season and potentially beyond. At the same date we were owed £9m by other clubs, £8m due on 2016/17.

So we get something like

2016/17 Out £19m brought forward, plus say 40% of the 2016/17 purchase = £16m Total £35m out
2016/17 In £8m brought forward plus say 40-45% of Van Aanholt (£5m) + Kaboul Total £17m

Net ouflow £18m. Possibly a modest trading cash inflow with increased PL money (although £24m was received before the year end) and some wage reductions with some higher earners leaving in 2015/16. Possible overall cashflow even, but more likely a £5-10m outlow.

2017/18 Outflow £16m from 2015/16 plus £another £40% of the 2016/17 plus summer 2016/17 total £33m
Inflow £1m from 2015/16 plus remainder of Van Aanholt and 50% of Pickford, loan fees for Borini and the others (the transfer fee for Borini isn't payable until this summer Total £30m
Still leaves a transfer outflow of around £3m.

We go into next year with about £15m still owing on Pickford, and fees due on Borini, Lens N'Dong, etc. So, potentially up to £25-30m there.
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Isn’t that all cash movements however?

Are the figures not counted into debt / receivables upfront when the transaction is done?
 
ozcat said:
Isn’t that all cash movements however?

Are the figures not counted into debt / receivables upfront when the transaction is done?
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Where cash ends up in the accounts depends on the nature of the receipt and payment. Double entry bookkeeping and all that. You have to look at the cash flow in its totality, to assess how the debt is likely to move.

For players, the double entry bookkeeping is along the lines of:

On purchase, debit intangibles, creditors, and as, payments are made, debit creditors, credit cash.
On sales debit debtors, credit profit or loss on sales, and as payments come in debit cash, credit debtors.

Those movements were what I was trying to reflect. On top of that are all the other usual trading cashflows.

ftmsafcftm said:
Can you guess at the situation as it stands now, after the cost cutting, parachute payments and player sales? Do you think all of that will have gone into paying the general upkeep and covering for our fall in revenue, or will some of it have paid down some debt?
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My own guess was that at the end of this season debt will be roughly were it was at 31/7/16. The major uncertainty in that guess was the wage bill. Parachute payments will cover only running costs, transfer income will only meet outstanding amounts due from previous transfers.
 
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