Leicester City Finance FFP Tomfoolery ?

[Monaco_Totty]

Some folks will worry about how certain clubs operate nowadays.

Well, Leicester City chairman Thai business man Aiyawatt Srivaddhanaprabha, based in Bangkok earlier this January wiped out £194m of debt owed by the club to King Power in a show of his commitment, records state !

So for the year-ending 31 May, 2022 including lifting the FA Cup (2021), the Club retained its primary playing assets while making further significant investments in player acquisitions & salaries.

As their expenditure over recent years has been "supported" by loans from their "parent company King Power" but as of now all of those repayments & relevant interest have now effectively been relieved after they were converted into shares via a "debt-to-equity" conversion. 🤐
So, King Power have basically backed City’s spending through loans over the past few years.

As the interest payments were never cash payments they just got added to the value of the debt. Charging interest on a debt that was never going to be paid is a bit farcical.

So obviously from an FFP perspective if you are no longer going to be charging interest then that is one less expense in your FFP calculations. So there is a benefit in how they've been doing their business within FFP rules presently.

Adding this summers sales of Maddison, Barnes & Castagne for £106 million an interesting way plus £111.2 million parachute payments to do "football business".

They now are targeting more income by the expansion of their East Stand at King Power Stadium & the retail, leisure & office facilities that are planned for outside the ground.

But the fact that they don’t expect the loan to be repaid doesn’t mean the owners may not get their money back someday as if they sold the shares with the value of PL clubs continuing to rise they should still make a tidy profit - key being "PL club".
Crazy, crazy game ! 🤑

Who are the mighty King Power. https://en.m.wikipedia.org/wiki/King_Power

[hopelesslyoptimistic]

Some folks will worry about how certain clubs operate nowadays.

Well, Leicester City chairman Thai business man Aiyawatt Srivaddhanaprabha, based in Bangkok earlier this January wiped out £194m of debt owed by the club to King Power in a show of his commitment, records state !

So for the year-ending 31 May, 2022 including lifting the FA Cup (2021), the Club retained its primary playing assets while making further significant investments in player acquisitions & salaries.

As their expenditure over recent years has been "supported" by loans from their "parent company King Power" but as of now all of those repayments & relevant interest have now effectively been relieved after they were converted into shares via a "debt-to-equity" conversion. 🤐
So, King Power have basically backed City’s spending through loans over the past few years.

As the interest payments were never cash payments they just got added to the value of the debt. Charging interest on a debt that was never going to be paid is a bit farcical.

So obviously from an FFP perspective if you are no longer going to be charging interest then that is one less expense in your FFP calculations. So there is a benefit in how they've been doing their business within FFP rules presently.

Adding this summers sales of Maddison, Barnes & Castagne for £106 million an interesting way plus £111.2 million parachute payments to do "football business".

They now are targeting more income by the expansion of their East Stand at King Power Stadium & the retail, leisure & office facilities that are planned for outside the ground.

But the fact that they don’t expect the loan to be repaid doesn’t mean the owners may not get their money back someday as if they sold the shares with the value of PL clubs continuing to rise they should still make a tidy profit - key being "PL club".
Crazy, crazy game ! 🤑

Who are the mighty King Power. https://en.m.wikipedia.org/wiki/King_Power

Key things in that MT are the sales of players and parachute payment: in FFP terms.

[WTF11]

Some folks will worry about how certain clubs operate nowadays.

Well, Leicester City chairman Thai business man Aiyawatt Srivaddhanaprabha, based in Bangkok earlier this January wiped out £194m of debt owed by the club to King Power in a show of his commitment, records state !

So for the year-ending 31 May, 2022 including lifting the FA Cup (2021), the Club retained its primary playing assets while making further significant investments in player acquisitions & salaries.

As their expenditure over recent years has been "supported" by loans from their "parent company King Power" but as of now all of those repayments & relevant interest have now effectively been relieved after they were converted into shares via a "debt-to-equity" conversion. ��
So, King Power have basically backed City’s spending through loans over the past few years.

As the interest payments were never cash payments they just got added to the value of the debt. Charging interest on a debt that was never going to be paid is a bit farcical.

So obviously from an FFP perspective if you are no longer going to be charging interest then that is one less expense in your FFP calculations. So there is a benefit in how they've been doing their business within FFP rules presently.

Adding this summers sales of Maddison, Barnes & Castagne for £106 million an interesting way plus £111.2 million parachute payments to do "football business".

They now are targeting more income by the expansion of their East Stand at King Power Stadium & the retail, leisure & office facilities that are planned for outside the ground.

But the fact that they don’t expect the loan to be repaid doesn’t mean the owners may not get their money back someday as if they sold the shares with the value of PL clubs continuing to rise they should still make a tidy profit - key being "PL club".
Crazy, crazy game ! ��

Who are the mighty King Power. https://en.m.wikipedia.org/wiki/King_Power

Not really that crazy, and not restricted to football either. There are many examples where an owner of a business converts debt (either the original loan or the interest on such loans), to equity, thereby increasing their stake in the organisation and their potential profit should there be a sale of the organisation or a floatation on whichever stock exchange they favour. Financial engineering has been going on all over the place since the markets were de-regulated in the mid0-eighties.

At least in the case of Leicester the "workings" have been declared, are above board and legal and the owner is a person of some repute, unlike many others we know of, hmmm?

[Monaco_Totty]

Not really that crazy, and not restricted to football either. There are many examples where an owner of a business converts debt (either the original loan or the interest on such loans), to equity, thereby increasing their stake in the organisation and their potential profit should there be a sale of the organisation or a floatation on whichever stock exchange they favour. Financial engineering has been going on all over the place since the markets were de-regulated in the mid0-eighties.

At least in the case of Leicester the "workings" have been declared, are above board and legal and the owner is a person of some repute, unlike many others we know of, hmmm?

Accepting gist of your reply but Leicester City's true FFP & its continuous generous helping hand from the King Power's "cash cow" duty-free biz (operating courtesy of Thai Govt sanctioned monopoly) "IS" certainly a game changer into how other clubs operate, is it not ?

Putting aside concerns from other Thai companies who rightly support free competition in that every company should be allowed to compete 'freely' & in a 'fair market'

I'd like to add what are their reasons for owning the club now?
Is it to win matches & titles, is it to make money or to promote the image of Thailand & give it further avenues into the society and business environment of Western Europe ?

If you are one in the camp that believes football clubs can & should be a representation of their area then that’s a major shift change to the game for those holding such traditional values.

Suvarnabhumi International Airport, Thailand’s main gateway handles some 62 million passengers.
For many its too big to allow only one Duty-free concession operator who also have the monopoly on all Thailand's airports, currently too.

For FFP presently, wages, transfer costs & other such financial burdens are included within the regulations for scrutiny.
Whereas capital investment in assets such as training grounds, stadium expansions with offices & hotel facilities are not included.

Yes if money is spent on Leicester infrastructure (stadium, training facilities etc) then the club still have a debt owing.
Yes they'll also have a valuable asset on their books to show for it (similar to if you or I took out a mortgage to buy a house).
Yes, if the debt is ever called in, it’s easier to secure alternate borrowing against a valuable asset.

But as City fans all know the Srivaddhanaprabha family had bought the ground from an American pension fund manager through their K Power Holdings company.
Concerned fans wanted their stadium to be declared a 'community-asset' stating they had no reason to believe that King Power has plans to sell the stadium or club, however one day that time may come but obviously the stadiums other attractions being built such as hotels, shopping malls would'nt be included in any such sale.

Far to many articles being written in instances where owners are deprioritising financial support for their club as returns on investment from some of their other interests melt away or are in danger of ceasing.

Gotta remember Vichai Srivaddhanaprabha who died in the awful helicopter crash rose from relative obscurity becoming one of Thailand’s richest & best-connected business people during years of military/political turmoil in the south-east Asian country.

He navigated coups & sporadic deadly conflicts to take his place within a handful of Bangkok based oligarchs who'd amassed vast wealth thanks to their dominance inside certain Thailand industries to which his son has inherited.

So yes like many, I also do have concerns how a club can become a vehicle to accumulate wealth by diverting funds via FFP current rules in current operation, not just in UK but Europe too.
Further other issues of concerns in such type of owners like at Leicester who acquire more than one club to own - which for football is not a healthy situation, imo.

A level playing field with the might of Thailand economy behind you, some would say ?

[WTF11]

Accepting gist of your reply but Leicester City's true FFP & its continuous generous helping hand from the King Power's "cash cow" duty-free biz (operating courtesy of Thai Govt sanctioned monopoly) "IS" certainly a game changer into how other clubs operate, is it not ?

Putting aside concerns from other Thai companies who rightly support free competition in that every company should be allowed to compete 'freely' & in a 'fair market'

I'd like to add what are their reasons for owning the club now?
Is it to win matches & titles, is it to make money or to promote the image of Thailand & give it further avenues into the society and business environment of Western Europe ?

If you are one in the camp that believes football clubs can & should be a representation of their area then that’s a major shift change to the game for those holding such traditional values.

Suvarnabhumi International Airport, Thailand’s main gateway handles some 62 million passengers.
For many its too big to allow only one Duty-free concession operator who also have the monopoly on all Thailand's airports, currently too.

For FFP presently, wages, transfer costs & other such financial burdens are included within the regulations for scrutiny.
Whereas capital investment in assets such as training grounds, stadium expansions with offices & hotel facilities are not included.

Yes if money is spent on Leicester infrastructure (stadium, training facilities etc) then the club still have a debt owing.
Yes they'll also have a valuable asset on their books to show for it (similar to if you or I took out a mortgage to buy a house).
Yes, if the debt is ever called in, it’s easier to secure alternate borrowing against a valuable asset.

But as City fans all know the Srivaddhanaprabha family had bought the ground from an American pension fund manager through their K Power Holdings company.
Concerned fans wanted their stadium to be declared a 'community-asset' stating they had no reason to believe that King Power has plans to sell the stadium or club, however one day that time may come but obviously the stadiums other attractions being built such as hotels, shopping malls would'nt be included in any such sale.

Far to many articles being written in instances where owners are deprioritising financial support for their club as returns on investment from some of their other interests melt away or are in danger of ceasing.

Gotta remember Vichai Srivaddhanaprabha who died in the awful helicopter crash rose from relative obscurity becoming one of Thailand’s richest & best-connected business people during years of military/political turmoil in the south-east Asian country.

He navigated coups & sporadic deadly conflicts to take his place within a handful of Bangkok based oligarchs who'd amassed vast wealth thanks to their dominance inside certain Thailand industries to which his son has inherited.

So yes like many, I also do have concerns how a club can become a vehicle to accumulate wealth by diverting funds via FFP current rules in current operation, not just in UK but Europe too.
Further other issues of concerns in such type of owners like at Leicester who acquire more than one club to own - which for football is not a healthy situation, imo.

A level playing field with the might of Thailand economy behind you, some would say ?

Accepting that the Thai government is likely to assist those who seek to be successful in whatever venture they see fit, it's hardly surprising to see them doing just that for the entities you refer to. That isn't going to change any time soon, if ever. Neither are the EFL or the FA going to step in to apply any form of sanction where such "state aid" is evident, they have no particular appetite for "extra-territoriality" when it comes to their view of football governance. Not saying they shouldn't take a more active role, simply that they won't.

Counsel of despair? Perhaps, but I'd rather see efforts expended into areas where they can have an effect, and more specifically where they (the efforts) would benefit LUFC. Frankly, I suspect that if LUFC were owned by the Srivaddhanaprabha family, and were supported to the same extent that Leicester has enjoyed, there would be a deafening silence wrt such support.

There is no such thing as a "level playing field" (metaphorically and not physically speaking anyway!), there are myriad examples in all leagues of sovereign state support, absentee owners who are apparently prepared to see the club they own go to the wall (Ask Reading supporters how they are feeling atm), "famous faces" investing in clubs (a la Wrexham) and every shade of "expertise" in between.

[hopelesslyoptimistic]

Accepting that the Thai government is likely to assist those who seek to be successful in whatever venture they see fit, it's hardly surprising to see them doing just that for the entities you refer to. That isn't going to change any time soon, if ever. Neither are the EFL or the FA going to step in to apply any form of sanction where such "state aid" is evident, they have no particular appetite for "extra-territoriality" when it comes to their view of football governance. Not saying they shouldn't take a more active role, simply that they won't.

Counsel of despair? Perhaps, but I'd rather see efforts expended into areas where they can have an effect, and more specifically where they (the efforts) would benefit LUFC. Frankly, I suspect that if LUFC were owned by the Srivaddhanaprabha family, and were supported to the same extent that Leicester has enjoyed, there would be a deafening silence wrt such support.

There is no such thing as a "level playing field" (metaphorically and not physically speaking anyway!), there are myriad examples in all leagues of sovereign state support, absentee owners who are apparently prepared to see the club they own go to the wall (Ask Reading supporters how they are feeling atm), "famous faces" investing in clubs (a la Wrexham) and every shade of "expertise" in between.

The cynical might (with some justification) think that FFP etc are intended to entrench and maintain the monopoly of those bigger clubs looking down on the rest as they pull up the rope ladder.

So long as clubs are solvent and their owners don’t spend money they don’t have then to some extent they should be allowed to go for it.

If the bodies that oversee the game want a fair and level playing field then there might need to be salary caps and some form of draft a la USA. Quite like football as it is in that regard.

Think the 49ers have made a pretty decent start so far and pleasant not to have constant media comms all the time is a relief.

Next 36 months and stadium redevelopment will truly tell but they seem to understand how important a successful team is and to invest to achieve that.