If I buy a house for £18k, spend another £37k doing it up (so £55k in total) and then sell it for £20k have I made A. a £2k profit or B. a £35k loss.
If you say A then I have some magic beans I'd like to sell you.
Except that is not what is happening.
He bought the house for 18. Spent 37 on improvements but put it on credit card. He owns the credit card company and pays interest to himself. When he sells for 20, he turns the debt and credit card company over to the new owners and pockets the 2 difference between 18 and 20.
Why would anyone agree to take 37k of debt off of his hands? Aren't they then effectively paying 57k for the club?
I think you mean mil not k
Getting confused between houses in Rotherham and football clubs now, sorry.
I think what is upsetting people is the idea that he will profit from a relegated club. Well, whether we are relegated simply is not a factor if he can find a buyer.
Newcastle is probably going to sell for a £90M profit despite being relegated twice and on pace for perhaps a third time. Much like CAFC, Ashley has gone into debt to himself. It currently stands at something like £129M. You bet he won't be eating that debt. And I doubt Rolly will either.
At least Ashley did not charge interest in debt he created himself.
If I buy a house for £18k, spend another £37k doing it up (so £55k in total) and then sell it for £20k have I made A. a £2k profit or B. a £35k loss.
If you say A then I have some magic beans I'd like to sell you.
Except that is not what is happening.
He bought the house for 18. Spent 37 on improvements but put it on credit card. He owns the credit card company and pays interest to himself. When he sells for 20, he turns the debt and credit card company over to the new owners and pockets the 2 difference between 18 and 20.
Why would anyone agree to take 37k of debt off of his hands? Aren't they then effectively paying 57k for the club?
As an enterprise value, yes. Which is exactly why I believe it has not been sold. Buyers want him to take a haircut on debt and I suspect he is refusing.
If I buy a house for £18k, spend another £37k doing it up (so £55k in total) and then sell it for £20k have I made A. a £2k profit or B. a £35k loss.
If you say A then I have some magic beans I'd like to sell you.
Except that is not what is happening.
He bought the house for 18. Spent 37 on improvements but put it on credit card. He owns the credit card company and pays interest to himself. When he sells for 20, he turns the debt and credit card company over to the new owners and pockets the 2 difference between 18 and 20.
Why would anyone agree to take 37k of debt off of his hands? Aren't they then effectively paying 57k for the club?
As an enterprise value, yes. Which is exactly why I believe it has not been sold. Buyers want him to take a haircut on debt and I suspect he is refusing.
Or they want to pay a realistic price and he wants an unrealistic one.
Newcastle are in the Premier League so totally irrelevant comparison.
If I buy a house for £18k, spend another £37k doing it up (so £55k in total) and then sell it for £20k have I made A. a £2k profit or B. a £35k loss.
If you say A then I have some magic beans I'd like to sell you.
Except that is not what is happening.
He bought the house for 18. Spent 37 on improvements but put it on credit card. He owns the credit card company and pays interest to himself. When he sells for 20, he turns the debt and credit card company over to the new owners and pockets the 2 difference between 18 and 20.
Why would anyone agree to take 37k of debt off of his hands? Aren't they then effectively paying 57k for the club?
Of course they are. They've paid £20K +£37K = £57K. This really is maths for 5 year olds.
I'm just saying that if the £18m debt remains and is passed on to the new owners, he would only need an offer of circa £35m to break even so anything higher would be a profit. Not that he will get that of course.
And you had the front to try and belittle me for studying economics.
I'm just saying that if the £18m debt remains and is passed on to the new owners, he would only need an offer of circa £35m to break even so anything higher would be a profit. Not that he will get that of course.
So the offer would still have to be £53M in total.
This is correct under the BODMAS principle of solving equations...
And most people are forgetting that the interest accrued on the debt is notional and whilst it will count as a loss on the accounts it's not a functional loss in terms of investment he has made and not recouped.
In fact he can potentially take the loss forward and apply it against future taxes to recoup his other losses. @Covered End unfortunately it's not that simple!
So the Bolton fella who ran up £130m of debt to himself then wrote it off made £130m or did he lose it or break even or are the new owners £130m up or are some of you sooooo fucking weird it’s scary .
All this pretend debt can’t just be knocked and forgotten about at some point it has to be paid off unless you go the admin route , only if there is some miracle link to promotion to prem league then we pay you extra blah blah blah which is madness
You read some of the waffle on here and it makes me think fucking hell i might be above average in brain content , although common sense is probably more appropriate I only got 3 o-levels
Apologies for interrupting the on-going 'discussion'/disagreement' re what RD paid or wants. Any news on a takeover? After seeing nearly 100 new posts I thought something had happened one way or another.
I go to the pub and see my mate Slater. Slater is in a bad way, he is skint and needs to sell his car, unfortunately he borrowed £1,800 from the bank to buy his car. I say it is okay Slater, I’ll go to the bank with you tomorrow and pay off the debt if you give me the car for nothing. Slater agrees, receives no money and hands the car over to me.
I borrow £1,800 from my savings account go to Slater’s bank and give them the £1,800. I then, for some unknown reason, put a different engine in it that makes it go even worse than it did before, I take out the red seats and replace them with slightly darker red ones, I put in new heater ducts but don’t connect them to the heating matrix, etc – this costs me £3,700. To pay for this I have to borrow from my savings account again. I have now borrowed £5,300 from my savings account.
Since I put the new engine in it is drinking far more petrol and going slower than ever, it is costing me £100 extra for every month that I keep it. I decide it is time to sell.
I find a mug who will pay me £2,000 for it, I take the £2,000 and pay it in to my savings account.
My wife then says to me - we need to get the bathroom done why is there £3,300 missing from the savings account? I then look her in the eye with a completely straight face and say don’t worry my darling I took that money and I invested it in a car and made £200. And she says to me “you are a financial genius.”
So the Bolton fella who ran up £130m of debt to himself then wrote it off made £130m or did he lose it or break even or are the new owners £130m up or are some of you sooooo fucking weird it’s scary .
All this pretend debt can’t just be knocked and forgotten about at some point it has to be paid off unless you go the admin route , only if there is some miracle link to promotion to prem league then we pay you extra blah blah blah which is madness
You read some of the waffle on here and it makes me think fucking hell i might be above average in brain content , although common sense is probably more appropriate I only got 3 o-levels
I thought I was reasonably intelligent ... the last few dozen posts have made me realise I haven’t got a fucking clue what is going on.
I go to the pub and see my mate Slater. Slater is in a bad way, he is skint and needs to sell his car, unfortunately he borrowed £1,800 from the bank to buy his car. I say it is okay Slater, I’ll go to the bank with you tomorrow and pay off the debt if you give me the car for nothing. Slater agrees, receives no money and hands the car over to me.
I borrow £1,800 from my savings account go to Slater’s bank and give them the £1,800. I then, for some unknown reason, put a different engine in it that makes it go even worse than it did before, I take out the red seats and replace them with slightly darker red ones, I put in new heater ducts but don’t connect them to the heating matrix, etc – this costs me £3,700. To pay for this I have to borrow from my savings account again. I have now borrowed £5,300 from my savings account.
Since I put the new engine in it is drinking far more petrol and going slower than ever, it is costing me £100 extra for every month that I keep it. I decide it is time to sell.
I find a mug who will pay me £2,000 for it, I take the £2,000 and pay it in to my savings account.
My wife then says to me - we need to get the bathroom done why is there £3,300 missing from the savings account? I then look her in the eye with a completely straight face and say don’t worry my darling I took that money and I invested it in a car and made £200. And she says to me “you are a financial genius.”
Comments
Newcastle is probably going to sell for a £90M profit despite being relegated twice and on pace for perhaps a third time. Much like CAFC, Ashley has gone into debt to himself. It currently stands at something like £129M. You bet he won't be eating that debt. And I doubt Rolly will either.
At least Ashley did not charge interest in debt he created himself.
Newcastle are in the Premier League so totally irrelevant comparison.
Perhaps GCSE maths is what you need.
And most people are forgetting that the interest accrued on the debt is notional and whilst it will count as a loss on the accounts it's not a functional loss in terms of investment he has made and not recouped.
In fact he can potentially take the loss forward and apply it against future taxes to recoup his other losses. @Covered End unfortunately it's not that simple!
Quick maffs
And it's nearly Christmas
All this pretend debt can’t just be knocked and forgotten about at some point it has to be paid off unless you go the admin route , only if there is some miracle link to promotion to prem league then we pay you extra blah blah blah which is madness
You read some of the waffle on here and it makes me think fucking hell i might be above average in brain content , although common sense is probably more appropriate I only got 3 o-levels
That’s better. Thanks for bearing with me.
I borrow £1,800 from my savings account go to Slater’s bank and give them the £1,800. I then, for some unknown reason, put a different engine in it that makes it go even worse than it did before, I take out the red seats and replace them with slightly darker red ones, I put in new heater ducts but don’t connect them to the heating matrix, etc – this costs me £3,700. To pay for this I have to borrow from my savings account again. I have now borrowed £5,300 from my savings account.
Since I put the new engine in it is drinking far more petrol and going slower than ever, it is costing me £100 extra for every month that I keep it. I decide it is time to sell.
I find a mug who will pay me £2,000 for it, I take the £2,000 and pay it in to my savings account.
My wife then says to me - we need to get the bathroom done why is there £3,300 missing from the savings account? I then look her in the eye with a completely straight face and say don’t worry my darling I took that money and I invested it in a car and made £200. And she says to me “you are a financial genius.”