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.
You are right re the additional capital expenditure and any losses he's covered through financing - that is clearly an expense he will want to recover. The additional accrual of debt through 3% interest compounding can and likely will be wiped out to get a sale through though as it's unlikely anyone will pay the total figure. I expect Roland will keep the holding company that owns the debt and carry this forward as a loss to offset against his taxes elsewhere.
So that figure of £55m is probably inflated slightly - I don't know how much of the debt on the club comes from acquisition, expenditure and accrual of interest to guess the likely sale price net of interest accrural. Someone else might though!
If the price he paid for the club was simply to take on the 18m debt then he only needs a bid more than the difference between the current debt and the 18m to make a profit?
Dear me, I hope you are not an accountant.
In his defence (what am I doing defending DOUCHER?) I think he is saying that if the current debt is around £53m and the starting debt was around £18m then a bid of more than £35m would turn a profit for RD.
Which I think is correct, but I can't see how the club is worth more than the £35m while it is in League 1 making a loss.
If the current debt is £53m, that is what the current debt is! Selling the club for £35m will mean he loses money because he has sold the club and has to write-off the remaining debt! The fact is he's not going to get tens of millions more than the club and it's assets are worth, simply because he doesn't want an embarrassing loss on a club he has no interest in. He can be as stubborn as he likes but refusing decent offers means he just continues to carry the risk and the ongoing losses. I am pretty sure Roland Duchatelet (and even Meire) understands this and will have to cut a deal at some point. I would be seriously concerned if anyone paid him well over the odds as it would question their judgement and sanity.
I'd like to know the breakdown of the alleged £55m debt,
If we assume as a premise that the original £18m is 'real' debt then how much of the additional £37m is 'real' debt and how much an arbitrary interest charge by Staprix?
I'd like to know the breakdown of the alleged £55m debt,
If we assume as a premise that the original £18m is 'real' debt then how much of the additional £37m is 'real' debt and how much an arbitrary interest charge by Staprix?
That’s pretty easy to work out, as long as you use the Baton accounts not the CAFC Limited ones. Although the whole debt is to CAFC Limited he has only charged Baton the interest on the £18.6m, which I am guessing is a hedge against FFP. Or just an attempt to hide the fact he’s charging the club £500k a year and rising on the cost of its own acquisition.
The annual charge was about £1.5m in 2015/16 (3 per cent on £54m). The interest compounds year on year but obviously was less when the debt was lower. Say £5m roughly at a guess. Then there’s £10m wasted on transfer fees for failed signings, plus Meire’s related contract dealings.
Some people have always argued this interest doesn’t matter because it isn’t actually taken out - which goes back to the question of what he gets when he sells.
For people arguing the club will still owe Staprix (some of) the debt on acquisition, that may be true. But remember that the debt in 2014 was also (mostly) to a holding company owned in the BVI and that was transferred to Staprix. That is, the debt to the spivs and their mates was transferred to RD by the sale.
If the price he paid for the club was simply to take on the 18m debt then he only needs a bid more than the difference between the current debt and the 18m to make a profit?
Dear me, I hope you are not an accountant.
In his defence (what am I doing defending DOUCHER?) I think he is saying that if the current debt is around £53m and the starting debt was around £18m then a bid of more than £35m would turn a profit for RD.
Which I think is correct, but I can't see how the club is worth more than the £35m while it is in League 1 making a loss.
Precisely - if he paid nothing for the club but simply took on the debt then what I said is correct - if he paid money on top of taking the debt then its not correct but that is why it had a question mark at the end - Should have expected the silly comments from know it all dimwits I guess.
If the price he paid for the club was simply to take on the 18m debt then he only needs a bid more than the difference between the current debt and the 18m to make a profit?
Dear me, I hope you are not an accountant.
In his defence (what am I doing defending DOUCHER?) I think he is saying that if the current debt is around £53m and the starting debt was around £18m then a bid of more than £35m would turn a profit for RD.
Which I think is correct, but I can't see how the club is worth more than the £35m while it is in League 1 making a loss.
Precisely - if he paid nothing for the club but simply took on the debt then what I said is correct - if he paid money on top of taking the debt then its not correct but that is why it had a question mark at the end - Should have expected the silly comments from know it all dimwits I guess.
But the debt was owed to the previous owners wasn’t it. So it was an ‘asset’ for the previous owners. By taking over the debt I assume he essentially bought the debt at par from the previous owners meaning he had to give them the £18M of whatever it was but instead of extinguish the clubs debt completely he essentially mirrored the amount and made it owed to Starprix. Or Are you saying the previous owners literally wrote off their entire indebtedness and took a huge loss on their sale. In which case a Championship club was essentially given away and now RD wants to sell a LeagueOne club for millions? Seems odd to me.
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.
If the price he paid for the club was simply to take on the 18m debt then he only needs a bid more than the difference between the current debt and the 18m to make a profit?
He would also need to get back whatever he paid initially for the club, less any cash he might have taken out, as well and no one is going to pay anywhere near that amount. The man has destroyed value and clearly doesn't have a clue what he is doing.
Am I missing something? Roland takes on £18M debt. Ramps it up to £55M through stupidity. Then gets £37M for the club and therefore makes a profit because the new owner gives him £37M and takes on the debt of £18M? Surely then the new owner would have paid £55M?
Even if your figures are correct Doucher - i.e. 53-35=18, It's not the same as you are including the £18m debt as an asset. It, clearly, is not as most football clubs never repay their debts.
If we use your example then if he walks away and leaves £100m, in the bank for the new owners, and extends the debt/loan to £153m he is also breaking even. Is that right?
He will of course arranged matters in such a manner that he gets tax relief on his losses - if the tax charge on his main company is anything to go by. But his investment in Charlton will have been a big failure on his part by any normal financial standards - which I am sure will hurt his ego if nothing else; hence the bitterness aimed at Charlton supporters.
If the price he paid for the club was simply to take on the 18m debt then he only needs a bid more than the difference between the current debt and the 18m to make a profit?
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Am I missing something? Roland takes on £18M debt. Ramps it up to £55M through stupidity. Then gets £37M for the club and therefore makes a profit because the new owner gives him £37M and takes on the debt of £18M? Surely then the new owner would have paid £55M?
Whatever, hope he's gone very soon.
We don’t know what the current debt is and not of all it is real debt, debatably, but for argument’s sake if it’s £55m and RD ultimately gets less than £55m back then he has made a loss. Henry is right.
If anyone wants to understand what is RD's real loss they need to follow the cash he has paid out less (on investments and loans) less any cash he is likely to receive from the sale. Believe me it will be a negative figure - otherwise we will have a gullible idiot as our new owner.
I think the point that was being made (maybe I misunderstood) is that the debt is repayable at a future point in time (if we get to premier league) therefore no cash is required at purchase stage just consent to leave it on the balance sheet.
The consideration the new owners would be the cash payment
As I understood it on purchase RD acquired the existing debt and funds operating costs at £1m per month say for 36 months. (Crudely ignoring the loan backs and intra company lending)
So if he could get new owners to pay him 36m (to recoup cash spent) and also take on the debt he inherited (and any further created since) then he would recoup any outlay as the initial debt never gets paid for but just passes through ownerships until the premier league is reached....on the gamble that the rewards would be worth that liability.
Having read further it doesn't seem that is necessarily the case.
Comments
So that figure of £55m is probably inflated slightly - I don't know how much of the debt on the club comes from acquisition, expenditure and accrual of interest to guess the likely sale price net of interest accrural. Someone else might though!
If we assume as a premise that the original £18m is 'real' debt then how much of the additional £37m is 'real' debt and how much an arbitrary interest charge by Staprix?
Maybe we can guess the next theme...i am going for unwanted Xmas gifts ...just given my collection of 8 unused scarves to the cancer research shop
The annual charge was about £1.5m in 2015/16 (3 per cent on £54m). The interest compounds year on year but obviously was less when the debt was lower. Say £5m roughly at a guess. Then there’s £10m wasted on transfer fees for failed signings, plus Meire’s related contract dealings.
Some people have always argued this interest doesn’t matter because it isn’t actually taken out - which goes back to the question of what he gets when he sells.
:-)
As ever Doucher changes his stance whenever new evidence is presented and claims he was right.
Whatever, hope he's gone very soon.
If we use your example then if he walks away and leaves £100m, in the bank for the new owners, and extends the debt/loan to £153m he is also breaking even. Is that right?
Wouldn't wish that on my worst enema....
...except maybe Daisy & Roly.
The consideration the new owners would be the cash payment
As I understood it on purchase RD acquired the existing debt and funds operating costs at £1m per month say for 36 months. (Crudely ignoring the loan backs and intra company lending)
So if he could get new owners to pay him 36m (to recoup cash spent) and also take on the debt he inherited (and any further created since) then he would recoup any outlay as the initial debt never gets paid for but just passes through ownerships until the premier league is reached....on the gamble that the rewards would be worth that liability.
Having read further it doesn't seem that is necessarily the case.