Open Letter To Ellis Short/Petition

[WHD]

So what you want is for us to be the only club in British football who has no debt but are happy that we may be in the conference league because of it?

No, I want us to exist as a club in the future instead of going bust. I don't want us to be relegated at all, and I think that could have been avoided with better management and the transfer budget we had. As it is, we appear to be going down and there's nowt anyone can do about it.

All three clubs promoted last season had bigger debts, all three had a higher wage to turnover ratio, most clubs in the championship have debts, we have one of the highest incomes in the league.

You need to look again, we have one of the highest football debts in Europe, 13th in fact:

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Yet we are the only one outside a top league. The three promoted teams last season did not have more debt than us.

You think that is better than a new owner who might just make a better job of running us?

I think unless they have serious cash and are prepared to spent it, a change of ownership is pointless.

Stop making out that we cant do anything because of this debt.

Clueless.

The SBC loan is due in July 2019. If it's not paid or restructured they will call in the administrators and then they may no longer be a club. The club's number one priority at the moment is paying off this loan, so yes, we "can't do anything" until that issue is concluded.

In a word, he can't. There are practical and legal reasons why he can't demand repayment of the amount die from the club to Drumaville. Practical, in that the club's bankers would simply bounce the attempted payment, and legal, in that it would result in immediate insolvency, and the payment would represent an unfair preference under the terms of s.239 of the Insolvency Act 1986. Any administrator could and would demand the money was returned. The alternative would be to place the club in administration. Under the terms of their security, this could only be done with the permission of SBC. In administration, any football debts and SBC would be ahead of Short in the queue, and his shares would be worthless. He's lose everything. The only way he can recoup anything is via an orderly sale.

But could he just walk away, cut his losses and let the club go insolvent?

 

[PitYacker]

No, I want us to exist as a club in the future instead of going bust. I don't want us to be relegated at all, and I think that could have been avoided with better management and the transfer budget we had. As it is, we appear to be going down and there's nowt anyone can do about it.



You need to look again, we have one of the highest football debts in Europe, 13th in fact:

You must be logged on to see external links

Yet we are the only one outside a top league. The three promoted teams last season did not have more debt than us.


I think unless they have serious cash and are prepared to spent it, a change of ownership is pointless.


Clueless.

The SBC loan is due in July 2019. If it's not paid or restructured they will call in the administrators and then they may no longer be a club. The club's number one priority at the moment is paying off this loan, so yes, we "can't do anything" until that issue is concluded.


But could he just walk away, cut his losses and let the club go insolvent?

Keep digging up old news thats not actually acurate...

 

[Grumpy Old Man]

No, I want us to exist as a club in the future instead of going bust. I don't want us to be relegated at all, and I think that could have been avoided with better management and the transfer budget we had. As it is, we appear to be going down and there's nowt anyone can do about it.



You need to look again, we have one of the highest football debts in Europe, 13th in fact:

You must be logged on to see external links

Yet we are the only one outside a top league. The three promoted teams last season did not have more debt than us.


I think unless they have serious cash and are prepared to spent it, a change of ownership is pointless.


Clueless.

The SBC loan is due in July 2019. If it's not paid or restructured they will call in the administrators and then they may no longer be a club. The club's number one priority at the moment is paying off this loan, so yes, we "can't do anything" until that issue is concluded.


But could he just walk away, cut his losses and let the club go insolvent?

If he wants to lose around £105m+ (his estimated total investment to 31/7/16 plus anything he's put in since), yes. Even then, SBC may not let him do it, if they think it compromises the amount of money they could recoup.

 

[chriswallace85]

To be honest I would happily see us do a Man City or Chelsea not that that will happen.

I assume you mean Leicester - Chelsea have never been in the third tier. Went close once but that's it.

 

[WHD]

Keep digging up old news thats not actually acurate...

It was from last month. Have you got anything more up to date and more accurate?

Where did you get your information from that the three promoted clubs last season had more debt than us?

 

[PitYacker]

I assume you mean Leicester - Chelsea have never been in the third tier. Went close once but that's it.

Nah I mean I don't mind someone coming in with bags of cash who has no affinity with English football and just wants to chuck it away on making us successful...

 

[WHD]

If he wants to lose around £105m+ (his estimated total investment to 31/7/16 plus anything he's put in since), yes. Even then, SBC may not let him do it, if they think it compromises the amount of money they could recoup.

So after July 2019 (assuming the SBC loan is paid), there is nothing stopping him?

 

[Dilligaf60]

5,835 signatures up to now.

 

[PitYacker]

It was from last month. Have you got anything more up to date and more accurate?

Where did you get your information from that the three promoted clubs last season had more debt than us?

The news is from accounts submitted prior to 2016, and it does not include a lot of clubs who owe their owners more. Brighton actually where close to 200m in debt the season before they went up. Even Huddersfield had debts of c60m and their wages to turnover was something like 120%.

Our current wage bill is reported to be £35m in a year we got £45m parachute payments and £40m in player sales.

I'm not saying we should spunk loads of money but we could and should have strengthened our squad.

 

[Grumpy Old Man]

So after July 2019 (assuming the SBC loan is paid), there is nothing stopping him?

The SBC loan will not be repaid in full. That's simply impossible on any assessment of the club's future cash flows. Part of it will need to be replaced by a new loan, which will undoubtedly have the same standard terms of security which means that administrators can only be appointed with the agreement of the lender. By the way, SBC could appoint administrators at any time if they feel the recoverability of the loan is in question; it doesn't require a default or non-payment. So the answer is, most likely not. And, given that insolvency is the only thing that guarantees Short loses everything, why do you appear convinces that he might do it?

The news is from accounts submitted prior to 2016, and it does not include a lot of clubs who owe their owners more. Brighton actually where close to 200m in debt the season before they went up. Even Huddersfield had debts of c60m and their wages to turnover was something like 120%.

Our current wage bill is reported to be £35m in a year we got £45m parachute payments and £40m in player sales.

I'm not saying we should spunk loads of money but we could and should have strengthened our squad.

You're making the mistake of underestimating the cash outflows. At the end of 2015/16 we owed other clubs £over £20m more in outstanding fee instalments than we were owed. Moyes then spent another £33m. So that's £40m coming in to pay more than £50m to other clubs. The debt will hardly have moved.

 

[WHD]

And, given that insolvency is the only thing that guarantees Short loses everything, why do you appear convinces that he might do it?

I'm not convinced, I just think it is a possibility, if as reported, he is putting money in to cover losses, there may come a time when he realises he's not going to be able to sell the club for anything near the amount that will recover what he's put in, and it's costing him more money the longer he keeps hold of the club, so he could just decide to say "fuck it" and pull the plug.

 

[chriswallace85]

He isn't but, in any organisation, if the gaffers evidently don't give a shit, it filters down to the factory floor. This is no different.

The club's remit was still to win football matches which shouldn't have been beyond the realms of expectation given we had dropped down a level.

 

[WHD]

and it does not include a lot of clubs who owe their owners more.

It includes Newcastle who owe it all to their owner, why would it show them and not others?

It also shows us, when half our our debt is effectively owed to the owner.

 

[Grumpy Old Man]

I'm not convinced, I just think it is a possibility, if as reported, he is putting money in to cover losses, there may come a time when he realises he's not going to be able to sell the club for anything near the amount that will recover what he's put in, and it's costing him more money the longer he keeps hold of the club, so he could just decide to say "fuck it" and pull the plug.

In which case administration, and the near certainty of new owners. As far as I can see, no English club which has played in the top two divisions has failed to be bought out of insolvency. Look at it this way, someone out there could get a 48,000 capacity stadium, a state of the art training complex and a debt-free football club for a knockdown price.

 

[chriswallace85]

Nah I mean I don't mind someone coming in with bags of cash who has no affinity with English football and just wants to chuck it away on making us successful...

Ahhh right. I'd be ower the friggin' moon with that.

 

[PitYacker]

The SBC loan will not be repaid in full. That's simply impossible on any assessment of the club's future cash flows. Part of it will need to be replaced by a new loan, which will undoubtedly have the same standard terms of security which means that administrators can only be appointed with the agreement of the lender. By the way, SBC could appoint administrators at any time if they feel the recoverability of the loan is in question; it doesn't require a default or non-payment. So the answer is, most likely not. And, given that insolvency is the only thing that guarantees Short loses everything, why do you appear convinces that he might do it?



You're making the mistake of underestimating the cash outflows. At the end of 2015/16 we owed other clubs £over £20m more in outstanding fee instalments than we were owed. Moyes then spent another £33m. So that's £40m coming in to pay more than £50m to other clubs. The debt will hardly have moved.

We do get money in as well you know? We also sold 20m worth of players. We are a bit shit at selling players for the right amount but we do sell players.

The simple fact is that we could and should have strengthened. Going down will cost us more than staying up.

 

[Grumpy Old Man]

We do get money in as well you know? We also sold 20m worth of players. We are a bit shit at selling players for the right amount but we do sell players.

The simple fact is that we could and should have strengthened. Going down will cost us more than staying up.

I did allow for that. I've done the spreadsheets. The debt isn't moving significantly. And money-wise, there's a paradox, The main income element next year will be the second year parachute payment, which is the same whatever division we're in. League 1 FFP is a salary cap (60% of turnover), so it's likely that wage savings would be more than loss of gate and other income. I'm not saying going down is a good thing, but we might actually be more profitable in League 1 than in the Championship.

 

[PitYacker]

I did allow for that. I've done the spreadsheets. The debt isn't moving significantly. And money-wise, there's a paradox, The main income element next year will be the second year parachute payment, which is the same whatever division we're in. League 1 FFP is a salary cap (60% of turnover), so it's likely that wage savings would be more than loss of gate and other income. I'm not saying going down is a good thing, but we might actually be more profitable in League 1 than in the Championship.

You are probably right due to the parachute payments and stripping the squad to the bare bones of its arse, the issue is then getting back out of that league. We will never agree on it, but if we'd had different owner with a different mentality we would not be in this predicament. Just the interest rates on the loan would have been enough to strengthen us, and so if Short had not farmed out the debt we would be better off instantly. As I say Short has done the maths and is doing whats best for him, not for us.

 

[WHD]

League 1 FFP is a salary cap (60% of turnover), so it's likely that wage savings

How does that effect players currently under contract? Are you saying the club will be obliged to cut their wages?

 

[Carteron]

I'm no expert by all means, but he wants to sell and seemingly £50m is his price. I don't know any billionaires, but shouldn't our efforts be going into showcasing what could potentially be here. Granted we aren't going to magically get 40k there on Saturday with a white hot atmosphere driving us to a 3-0 win, but shouldn't any efforts to get public attention be focussed on showing where the club could get to with solid, sensible investment, and an ethos where we are all in it together.

How we do this I'm not sure, but there are some bright sparks on this board who must have some ideas.