The club's debt now stands at £23m, of which £15m is made up of the bond issue taken up largely by directors (which includes the £6m of loans that were due to be repaid in 2008), £7m takes the form of bank loans and £1m is the overdraft. Thus £22m of the £23m is now long-term debt, reflected by the reduction of the overdraft from £9m to £1m.
If we get relegated next year the club's income could fall to £8m (perhaps £11m if we stay up). Out of this £1.2m has to be paid off our long term bank loan, making a total of £1.5m with interest. This leaves £6.5m (£9.5m if staying up) to pay wages and operating costs. I understand tghat the business rates on the stadiumn are £1m a year alone. If one adds in water, gas, electric, rent, equipment, depreciation these costs were over £11m alone in 2007/8.
Some of these costs could be cut, just as wage costs have already been, but it is going to taken drastic surgery to balance the books. Indeed, breaking even probably won't be achievable, but we can't afford big losses.
8 comments:
It's not looking good, our wage bill last June was £20m. Working out which players left and who signed, it's probably around £15m now, still far too high for The Championship, nevermind League One.
So in a nutshell Wyn,are the options-:
A)Hope for a takeover.
B)Hope the directors continue to bail us out.
C)We go out of business?
Or we go into administration
If we go into Administration will the Directors lose the £15m they put into the club last year?
As it stands the only benefit of going into Administration is that you get to reduce the debts - by say 90% (10p in the pound). If the majority of the debts are to the Directors, and the majority of the running costs are to the players that we would not want to give free transfers to, I don't see any benefit of going into Administration unless it is on route to filing for bankruptcy.
Besides, despite their shortcomings, I have every faith in the Directors to continue to support the club as we would do if we were in a position to do so.
It does, however, make the decision to keep Parkinson seem more sensible, even if undesirable.
If we go into administration, we will dodge £8 million of debt in return for a meaningless 10 point deduction this season (we are already down), and possible a 10 point penalty next season - which is not impossible to overcome.
I reckon we will see some fancy footwork in a Ken Bates styleeee.
As for the directors writing-off £15 million of loans - they know the chances of those ever being repaid, went out the window when Pards failed to deliver.
My main criticism is the "speed of action". We kept Dowie too long before getting rid - we should never have gone the Les Reed route and wasted 7 games or whatever. Then Pards was allowed to fob us off with all that heartstrings gumpf about "loving the players and disappointed dressing rooms etc " - we should have ditched him after the Cardiff defeat (we were dreadful for 90minutes.
I did the rounds of the old Div 3 last time (5-1 defeat at Blackpool sticks out in my mind) - not sure i've got the heart for it again.
After the Forest Cup game, at least we know what our season tickets/gates are going to be next season. Probably 5000 ST's and 3000or 4000 casuals. I hope the Target 10000 committee is ready for another go !
What happens though if the administrators do not accept the current board's proposal? The directors could lose the club to another consortium.
I think they genuinely expect to get some of that money back if they sell the club.
If we go into administration after relegation looks certain we might end up with a 15 point deduction like Leeds suffered.
That could well mean we are in tier three for years.
Here is a suggestion to save money, sack Mr waggott. What has he done since he arrived into the job?
"The club's debt now stands at £23m, of which £15m is made up of the bond issue taken up largely by directors" which means that the benefactors have accepted there is no reasonable prospect of getting that back, it only remains in the accounts because of technical accounts presentation rules, 'red-tape' to the layman. The club thus will only ever have to repay around £8m, while it owns all its real estate, the value of which is many times £8m - no cause for concern here.
Administration is a way off yet I suspect: the overdraft and short term debt has been slashed, so long as the club keeps paying the VAT and PAYE bill (the most common creditor over which bad football club administrators trip) then Chappell & Co can be trusted to manage the cashflow for some time to come. Chappell's statement in the accounts is exhaustive and way more revealing than he is obliged to be. With willingness for this degree of transparency I think we can trust them to steer the club through the currently treacherous waters. What is less certain is the ability of the football management to identify the method and personnel required to win any matches. All remaining "expensive" players have to be shed to best protect the short term survuval of the business, does Parky have the nouse to inspire and contrive victories, let's hope so. Evidence to date is admittedly nil.
Happy New Year all.
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