Debt is a lit cheaper than equity. It is even more cheap when it's a debt to yourself.
Loan interest due will be deductible from CAFC's UK tax liability. Loan interest received by Staprix may be taxed at a low rate in Belgium (cannot bring myself to Google belgian tax rates on a Sunday).
A new buyer will take on all liabilities hence why the sale of a club at a notional value of a quid don't reveal the true picture ie Bolton could sell for a pound tomorrow but new owner immediately inherits £40m of debt day one.
Unless negotiated otherwise I expect Duchatelet will get all his spend back plus interest. Will also likely make a profit on top of that with increased sale value assuming we aren't relegated.
I make no pretensions to be a tax expert (company or personal) but it might be that losses from Charlton can be group relieved against Belgian (Staprix) income to reduce Roland's overall corporate tax liabilities.
I don't have a scooby re the group structure but I reckon there is more chance of Murray winning the Australian Open (Andy not Richard or perhaps that should read Richard not Andy) than Duchatelet not offsetting Charlton losses against tax somehow.
EDIT: Should have said that I am assuming no UK corporation tax liability for Charlton as we are forever being told the Club is in a loss situation.
So ultimately we are a vehicle to reduce his overall tax bill?
Must admit I was rather concerned about the strange idea of hosting the POTY evening on a Saturday, and despite the agreement to discuss this afterwards? Really cannot see what was so wrong with the format in the first place. Of course any longstanding event like this needs to be refreshed and try some new ideas, but I get the impression that the 'club' just do not value the excellent work that Ian, and Jean have done. Just feel they do not want the 'fans' to be directing and managing this, or at least be seen to be. Whatever the reason, they had better get cracking.
Debt is a lit cheaper than equity. It is even more cheap when it's a debt to yourself.
Loan interest due will be deductible from CAFC's UK tax liability. Loan interest received by Staprix may be taxed at a low rate in Belgium (cannot bring myself to Google belgian tax rates on a Sunday).
A new buyer will take on all liabilities hence why the sale of a club at a notional value of a quid don't reveal the true picture ie Bolton could sell for a pound tomorrow but new owner immediately inherits £40m of debt day one.
Unless negotiated otherwise I expect Duchatelet will get all his spend back plus interest. Will also likely make a profit on top of that with increased sale value assuming we aren't relegated.
I make no pretensions to be a tax expert (company or personal) but it might be that losses from Charlton can be group relieved against Belgian (Staprix) income to reduce Roland's overall corporate tax liabilities.
I don't have a scooby re the group structure but I reckon there is more chance of Murray winning the Australian Open (Andy not Richard or perhaps that should read Richard not Andy) than Duchatelet not offsetting Charlton losses against tax somehow.
EDIT: Should have said that I am assuming no UK corporation tax liability for Charlton as we are forever being told the Club is in a loss situation.
So ultimately we are a vehicle to reduce his overall tax bill?
It may not be his principle motivation, nobody seems to know what that is for sure, but nevertheless gives a nice bit of bunce to him I suspect.
Must admit I was rather concerned about the strange idea of hosting the POTY evening on a Saturday, and despite the agreement to discuss this afterwards? Really cannot see what was so wrong with the format in the first place. Of course any longstanding event like this needs to be refreshed and try some new ideas, but I get the impression that the 'club' just do not value the excellent work that Ian, and Jean have done. Just feel they do not want the 'fans' to be directing and managing this, or at least be seen to be. Whatever the reason, they had better get cracking.
I agree Ken. I think that part of the problem is that she cannot put her name on it and take any credit.
The bit where they shrug and talk about hiring managers in good faith really REALLY irritates me.
Where is the 'good faith' in not bothering to find us a proper manager for over two months? What 'good faith' can they have possibly had in a guy that had never managed at a level even close to the championship? Someone that had given his stamp of approval on several players that they are now trying to shift on loan deals, because they can't cut it? That isn't good faith at all, it is complete wilful negligence.
"I am sorry I tried to administer this suppository with a large cactus, it was done in good faith..."
Debt is a lit cheaper than equity. It is even more cheap when it's a debt to yourself.
Loan interest due will be deductible from CAFC's UK tax liability. Loan interest received by Staprix may be taxed at a low rate in Belgium (cannot bring myself to Google belgian tax rates on a Sunday).
A new buyer will take on all liabilities hence why the sale of a club at a notional value of a quid don't reveal the true picture ie Bolton could sell for a pound tomorrow but new owner immediately inherits £40m of debt day one.
Unless negotiated otherwise I expect Duchatelet will get all his spend back plus interest. Will also likely make a profit on top of that with increased sale value assuming we aren't relegated.
I make no pretensions to be a tax expert (company or personal) but it might be that losses from Charlton can be group relieved against Belgian (Staprix) income to reduce Roland's overall corporate tax liabilities.
I don't have a scooby re the group structure but I reckon there is more chance of Murray winning the Australian Open (Andy not Richard or perhaps that should read Richard not Andy) than Duchatelet not offsetting Charlton losses against tax somehow.
EDIT: Should have said that I am assuming no UK corporation tax liability for Charlton as we are forever being told the Club is in a loss situation.
So ultimately we are a vehicle to reduce his overall tax bill?
I highly doubt it would be a prime motivator but could well be an associated benefit.
Given the prime objective of wanting to break even and maybe turn a profit I doubt he's with us for tax reasons as lots of more efficient methods to reduce tax/ incur tax benefits. ...investing in Danny Dyer films for instance.
My worry is that unless our clubs fortunes change long term, for instance us becoming a Premier League club which to be blunt is never going to happen under this regime without a serious philosophy change, he is making us unsellable whenever he does get bored, retires etc.
As he has no chance of selling a struggling Championship club/half decent League 1 club for any where near the amount he paid plus all the debt with interest he is piling on to our club.
He does not seem the type to write it off just to sell, so are we then faced with a fire sale of every saleable asset the club has?
It is why i don't sign up to the idea he saved us, feels like he has just delayed an even worse fate in a few seasons time.
From watching that depressing video, my take on is that the regime and people around them are so deluded with their own self importance that keep giving them enough rope and eventually they will hang there selves falling right into our hands.
It's a box-ticking exercise. KM can now tells the media (the ones she doesn't talk to, remember) that she has met with fans and everyone now appreciates her passion for the club and her inspirational leadership. Other than that, can't really see what was achieved.
Just watched the video, and while yes there are many things already mentioned on here, one thing that concerns me is while it was good to see lots of key topics being discussed there didn't seem to be many (if any) actions taken away by club staff.
For example the coach arrival times for away games was discussed, some felt they arrived too early for the Hull and Huddersfield games because there was nowhere for fans to go with the remote location of those grounds. But on the flip side there was also merit in the comments that it's better to arrive 1.5 to 2 hours early in case of traffic problems and that it does also allow fans to have a drink at the pub too.
It was debated but did anybody from the club take on the responsibility of owning that issue, maybe do some research and come up with a policy? e.g if there is no pub or nearby facilities then the coach will stop at the nearest services and arrive at the ground for 2pm, but where there are pubs or nearby facilities then the coach will arrive 1.5 to 2 hours early. I know i'm re-hashing what was said but it was debated and left at that, so what's going to happen now with it is my point or is nothing going to happen and it gets debated again next time?
That's just one example and certainly don't wish to mean that as an offence to the fans who attended but I just feel the whole point of meetings is to raise issues, debate them, somebody to take action if appropriate, share the results and then close the issue and move on. And while I feel many issues were raised by fans and debated with the club, unless I missed them it just seemed no real actions came out from the meeting (which should be driven by club staff) on many of the issues apart from maybe Player Of The Year?
We are trying to get to the bottom of how exactly he has exited Standard. The Socios speak bitterly of him emptying the bank account of €30m but stop short of saying he did anything illegal. That sounds to me like he had loaned Standard the money, and recalled it when he exited. It is also now increasingly said that Venanzi didn't have anything like the money to meet RDs asking price, so he has quietly done a deal with him. It may involve RD getting a cut of player sales as part of the repayment terms.
I think it is important to get to the bottom of the Standard sale, because it will tell us a lot about what he will look for in selling us.
I have a hard time believing Standard ever had €30m sitting in a bank account. It may be that he'd lent them money, and had SL borrow the money to repay the loans, but who would lend them that much money? I doubt they have the assets to cover such a loan.
Not saying Roland didn't extract as much as he could, but this sounds a bit excessive.
Apologies to both Everetts and note to self to listen more carefully.
On the loans, is the interest rate 3.5%? If so, that's not well above market rate and below a quasi-equity return. Quasi-equity debt is anywhere between 5 and 10% depending on credit rating of the borrower.
Hard private equity cash targets a 11-14% return.
Thanks for this. It's not quite answered my concern though.
David Joyes is a qualified CFO so I presume when he used the term quasi equity that's what he meant. Until now my understanding of quasi equity was that it provides a halfway house between equity investment and a straight loan, typically returns being delivered from future revenues.
I'm sure it's more complex than that. The thing is, in my understanding I can see a benefit to, say, Richard Murray investing on that basis, but I'm struggling to see one for Staprix given that they wholly own the club. All future revenues are theirs anyway. So interest might provide a return - but if as Joyes implied we shouldn't worry because the capital is essentially equity, the interest is absolutely irrelevant as well isn't it?
I might need a lesson on quasi equity, although David has described it to me in the past as 'essentially equity' - in which case, again, why charge interest?
(EDIT: I suspect there are tax reasons involved in this somewhere).
The difference between debt and equity for an investor is firstly priority over the assets in the event of insolvency; debt is paid back before any money is repaid to shareholders (equity owners). Secondly, interest must be paid on debt, whereas dividends for shareholders is discretionary.
So it makes no difference to Duchalet, in theory, whether he gets interest or dividends and he gets his money back whether debt or equity because he controls the Board who decide dividends. Problem is you only pay a dividend out of profits.
When an owner injects capital into a loss making business to secure equity rather than make a loan, the investment will be worthless if the company goes bust and debts exceed asset value, so it is virtually a gift. If the business assets don't cover debt, then you lose whether a creditor or a shareholder if the business is wound up.
I think Joyes is suggesting that although Duchalet holds debt, the capital invested is just as exposed as equity so is "quasi equity" in the sense that he stands to lose his capital, so is close to being a gift, but it would be reasonable to ask for clarification. it doesn't address the fact that Duchalet is getting interest on debt in the meantime, while he wouldn't be able to get a dividend on equity until the club is making a profit.
Had a chance to watch some of it (too painful to watch it all).
It is good that it is on video. It's a brave and open thing to do and it lets people see what is said and not said by both sides so well done the club on that.
I'm not sure tht KM, TK or some other staff come out of it very well. Many questions are dodged or answers fudged and as @MartinCAFC says above there are very few firm actions arising. It appears as if the staff just want to get it out of the way.
I did think Felicity looked a bit shocked with Ian Wallis @killerjerrylee said he wasn't going to be involved in a Saturday event as it seemed as if they had assumed he and Jean @Fanny Fanackapan would just go along with what was suggested (which was very vague given that it is only 12 weeks away). The bottom line was "The players don't want to do it on a Sunday so everything has to change.
I thought @rikofold did very well to try and pin them down and hold them to account although they did as much as they could to not answer the questions or dodge them. The "we didn't speak to Varney as the club isn't for sale" but "we didn't speak to him because we didn't know what he was offering" doublethink was one of many examples. I thought he did as much as he could and his tongue must have been painful at the end so much biting of it had taken place
Most of the club staff continue to see the fans as the enemy who have nothing to offer unless they want their free labour (player of the year) and as an incovineince to be got over rather than a invaluable resource and knowledge bank. If they did they would be making firm action points.
As an example of how dysfunctional the senior management team is it is perfect.
Ok, I am not at all financially qualified, but I am a co-director of a business in which I have an equity investment. My understanding is that you can take a return on equity through dividend payments but only if the company is profitable.
Otherwise you make a director's loan, then you can take interest out regardless of whether the company is profitable or not - I believe this is what RD is doing. The interest repayment then hits the P&L of the company, making it even less profitable. The latter may have tax advantages but I am not in any way qualified / knowledgeable enough to say that.
Well, you can have equity called "preference shares". These tend to pay a fixed interest rather than a variable dividend and have the right to be paid out ahead of ordinary shareholders in the event of insolvency. But who knows whether that's relevant here?
Just watched the video, and while yes there are many things already mentioned on here, one thing that concerns me is while it was good to see lots of key topics being discussed there didn't seem to be many (if any) actions taken away by club staff.
For example the coach arrival times for away games was discussed, some felt they arrived too early for the Hull and Huddersfield games because there was nowhere for fans to go with the remote location of those grounds. But on the flip side there was also merit in the comments that it's better to arrive 1.5 to 2 hours early in case of traffic problems and that it does also allow fans to have a drink at the pub too.
It was debated but did anybody from the club take on the responsibility of owning that issue, maybe do some research and come up with a policy? e.g if there is no pub or nearby facilities then the coach will stop at the nearest services and arrive at the ground for 2pm, but where there are pubs or nearby facilities then the coach will arrive 1.5 to 2 hours early. I know i'm re-hashing what was said but it was debated and left at that, so what's going to happen now with it is my point or is nothing going to happen and it gets debated again next time?
That's just one example and certainly don't wish to mean that as an offence to the fans who attended but I just feel the whole point of meetings is to raise issues, debate them, somebody to take action if appropriate, share the results and then close the issue and move on. And while I feel many issues were raised by fans and debated with the club, unless I missed them it just seemed no real actions came out from the meeting (which should be driven by club staff) on many of the issues apart from maybe Player Of The Year?
Welcome to "my" world, Martin.
Your brief description of the meeting is a concise but accurate one of every FF meeting that has taken place since this regime arrived.
Very little, if anything is resolved, at least to the satisfaction of those fans attending. Anything of importance to us is normally rushed through with the mantra of " We have to move on as there's so much still to discuss"....
I cannot believe that any FF representatives exit a meeting with a sense of satisfaction. Frustration is the accurate word, I believe and I honestly don't see anything of note changing however much it's spun as being communication between fans & the Club.
"Their" words are just that.
Actions, at least any that are to the "customers'" advantage will be at a premium....sadly.
For example the coach arrival times for away games was discussed, some felt they arrived too early for the Hull and Huddersfield games because there was nowhere for fans to go with the remote location of those grounds. But on the flip side there was also merit in the comments that it's better to arrive 1.5 to 2 hours early in case of traffic problems and that it does also allow fans to have a drink at the pub too.
I was drinking in a pub 5 minutes from the KC from about noon. Not sure why anybody arriving at the ground that early couldn t ask the local OB where they could have a drink.
How do the players get there as well....oh, they said they want it to be on a Saturday straight after a match so they will all get dropped off at the valley in their club tracksuits ready for the do.
Comments
Really cannot see what was so wrong with the format in the first place. Of course any longstanding event like this needs to be refreshed and try some new ideas, but I get the impression that the 'club' just do not value the excellent work that Ian, and Jean have done. Just feel they do not want the 'fans' to be directing and managing this, or at least be seen to be.
Whatever the reason, they had better get cracking.
Where is the 'good faith' in not bothering to find us a proper manager for over two months? What 'good faith' can they have possibly had in a guy that had never managed at a level even close to the championship? Someone that had given his stamp of approval on several players that they are now trying to shift on loan deals, because they can't cut it? That isn't good faith at all, it is complete wilful negligence.
"I am sorry I tried to administer this suppository with a large cactus, it was done in good faith..."
Given the prime objective of wanting to break even and maybe turn a profit I doubt he's with us for tax reasons as lots of more efficient methods to reduce tax/ incur tax benefits. ...investing in Danny Dyer films for instance.
As he has no chance of selling a struggling Championship club/half decent League 1 club for any where near the amount he paid plus all the debt with interest he is piling on to our club.
He does not seem the type to write it off just to sell, so are we then faced with a fire sale of every saleable asset the club has?
It is why i don't sign up to the idea he saved us, feels like he has just delayed an even worse fate in a few seasons time.
For example the coach arrival times for away games was discussed, some felt they arrived too early for the Hull and Huddersfield games because there was nowhere for fans to go with the remote location of those grounds. But on the flip side there was also merit in the comments that it's better to arrive 1.5 to 2 hours early in case of traffic problems and that it does also allow fans to have a drink at the pub too.
It was debated but did anybody from the club take on the responsibility of owning that issue, maybe do some research and come up with a policy? e.g if there is no pub or nearby facilities then the coach will stop at the nearest services and arrive at the ground for 2pm, but where there are pubs or nearby facilities then the coach will arrive 1.5 to 2 hours early. I know i'm re-hashing what was said but it was debated and left at that, so what's going to happen now with it is my point or is nothing going to happen and it gets debated again next time?
That's just one example and certainly don't wish to mean that as an offence to the fans who attended but I just feel the whole point of meetings is to raise issues, debate them, somebody to take action if appropriate, share the results and then close the issue and move on. And while I feel many issues were raised by fans and debated with the club, unless I missed them it just seemed no real actions came out from the meeting (which should be driven by club staff) on many of the issues apart from maybe Player Of The Year?
Not saying Roland didn't extract as much as he could, but this sounds a bit excessive.
So it makes no difference to Duchalet, in theory, whether he gets interest or dividends and he gets his money back whether debt or equity because he controls the Board who decide dividends. Problem is you only pay a dividend out of profits.
When an owner injects capital into a loss making business to secure equity rather than make a loan, the investment will be worthless if the company goes bust and debts exceed asset value, so it is virtually a gift. If the business assets don't cover debt, then you lose whether a creditor or a shareholder if the business is wound up.
I think Joyes is suggesting that although Duchalet holds debt, the capital invested is just as exposed as equity so is "quasi equity" in the sense that he stands to lose his capital, so is close to being a gift, but it would be reasonable to ask for clarification. it doesn't address the fact that Duchalet is getting interest on debt in the meantime, while he wouldn't be able to get a dividend on equity until the club is making a profit.
It is good that it is on video. It's a brave and open thing to do and it lets people see what is said and not said by both sides so well done the club on that.
I'm not sure tht KM, TK or some other staff come out of it very well. Many questions are dodged or answers fudged and as @MartinCAFC says above there are very few firm actions arising. It appears as if the staff just want to get it out of the way.
I did think Felicity looked a bit shocked with Ian Wallis @killerjerrylee said he wasn't going to be involved in a Saturday event as it seemed as if they had assumed he and Jean @Fanny Fanackapan would just go along with what was suggested (which was very vague given that it is only 12 weeks away). The bottom line was "The players don't want to do it on a Sunday so everything has to change.
I thought @rikofold did very well to try and pin them down and hold them to account although they did as much as they could to not answer the questions or dodge them. The "we didn't speak to Varney as the club isn't for sale" but "we didn't speak to him because we didn't know what he was offering" doublethink was one of many examples. I thought he did as much as he could and his tongue must have been painful at the end so much biting of it had taken place
Most of the club staff continue to see the fans as the enemy who have nothing to offer unless they want their free labour (player of the year) and as an incovineince to be got over rather than a invaluable resource and knowledge bank. If they did they would be making firm action points.
As an example of how dysfunctional the senior management team is it is perfect.
Your brief description of the meeting is a concise but accurate one of every FF meeting that has taken place since this regime arrived.
Very little, if anything is resolved, at least to the satisfaction of those fans attending. Anything of importance to us is normally rushed through with the mantra of " We have to move on as there's so much still to discuss"....
I cannot believe that any FF representatives exit a meeting with a sense of satisfaction. Frustration is the accurate word, I believe and I honestly don't see anything of note changing however much it's spun as being communication between fans & the Club.
"Their" words are just that.
Actions, at least any that are to the "customers'" advantage will be at a premium....sadly.
How often does a leopard change its spots ?
This might be because they would have to pay DNC for the use of Crossbars and then pay staff to organise it.
Just out of curiosity, who owns the POTY trophy? Is it the FF or the clubs..??
Geez, Tony got his ex-employers a good deal there didn't he?