profit and sustainability

[eddy779h34]

Looking forward to the future and I'm no expert in financing

But... surely Derby County will have a higher profit figure than all of League one and nearly all of The Championship
therefore our total season spend if we get new investment should see us out spend other clubs on the fact that we have higher gate receipts and a stronger sponsorship pull, so our total yearly income for profit and sustainability should be a lot higher than other teams

With the right management it should see us push to a pretty quick return to the Championship if we get relegated

Can someone correct me or confirm I am reading this right ??

So if we can start with a clean slate its not all doom and gloom

[Trickytreesreds]

not necessarily so.
I'll tell you what happened to us.

1. our core support 16000 stayed the same, but the semi committed/ floaters vanished.
2. Less income from the league we was in. TV/sponsors/league cuts
3. Gate pricing fozen/dropped
4. Couldn't hold on to better players- money/the stigma of that league.
Took us 3 seasons to get out
5. the quality of football/referees is dire. Don't expect anything resembling pretty.

Clubs bigger than you, have been in there as well. It isn't guaranteed anyone bounces straight back.

[swaledale]

not necessarily so.
I'll tell you what happened to us.

1. our core support 16000 stayed the same, but the semi committed/ floaters vanished.
2. Less income from the league we was in. TV/sponsors/league cuts
3. Gate pricing fozen/dropped
4. Couldn't hold on to better players- money/the stigma of that league.
Took us 3 seasons to get out
5. the quality of football/referees is dire. Don't expect anything resembling pretty.

Clubs bigger than you, have been in there as well. It isn't guaranteed anyone bounces straight back.

We should be Ok with 4 as I can't think of players that I would want to hold onto.

[Andy_Faber]

not necessarily so.
I'll tell you what happened to us.

1. our core support 16000 stayed the same, but the semi committed/ floaters vanished.
2. Less income from the league we was in. TV/sponsors/league cuts
3. Gate pricing fozen/dropped
4. Couldn't hold on to better players- money/the stigma of that league.
Took us 3 seasons to get out
5. the quality of football/referees is dire. Don't expect anything resembling pretty.

Clubs bigger than you, have been in there as well. It isn't guaranteed anyone bounces straight back.

All good points, but for anyone suggesting relegation 'might be good for us' - look at the Mighty Sunderland

[Ramshank72]

All good points, but for anyone suggesting relegation 'might be good for us' - look at the Mighty Sunderland

Beat me to it. It will be a long battle to come back, hopefully we don't drop any lower. BUT, at least we will have a club for the foreseeable future if this take over happens, something that could quite easily have vanished in the last few months.

[macstheman]

Beat me to it. It will be a long battle to come back, hopefully we don't drop any lower. BUT, at least we will have a club for the foreseeable future if this take over happens, something that could quite easily have vanished in the last few months.

Couldn't agree more, all that matters at this juncture is SURVIVAL as a club! What happens after that is for the future, it's the here and now that counts.
No club, no future!

[ramAnag]

Couldn't agree more, all that matters at this juncture is SURVIVAL as a club! What happens after that is for the future, it's the here and now that counts.
No club, no future!

Agree with that completely but today’s DT appears to reveal the staggering scale of the debt.

Seems now to be in the region of £64,000,000! Broken down as follows...£29m to HMRC...£20m to MSD Holdings and £15m to miscellaneous creditors.

I’m not remotely accountancy minded, but it seems to me that everything appears, at the moment, to be a case of ‘two steps forward, three steps back’. For those who understand such matters better than me...how do we get out of this mess and how can we seem remotely attractive to any potential buyer with debts of such a scale?

In short...how can the future of OUR club go on to be profitable and sustainable with figures like those above.

[Andy_Faber]

Agree with that completely but today’s DT appears to reveal the staggering scale of the debt.

Seems now to be in the region of £64,000,000! Broken down as follows...£29m to HMRC...£20m to MSD Holdings and £15m to miscellaneous creditors.

I’m not remotely accountancy minded, but it seems to me that everything appears, at the moment, to be a case of ‘two steps forward, three steps back’. For those who understand such matters better than me...how do we get out of this mess and how can we seem remotely attractive to any potential buyer with debts of such a scale?

In short...how can the future of OUR club go on to be profitable and sustainable with figures like those above.

There's two steps to this, IMO and based on distant dealings with administrators in a big company rather than being one

Step1, The 'snapshot' debt has to be dealt with, so the 64 mill as at the point of 'administration'

If there was someone out there willing to pod out £64 mill straight off, we wouldn't be having the discussions we are now, the cheque would have been deposited, debtors paid off and controls set for a destination of The Prem.

But there won't be. Someone will be looking for a bargain. So the administrators will be looking to reduce that 64 mill as much as possible - to nil would be lovely, but that's not likely with big guns like HMRC to deal with. Bear in mind that while the administrators might be arguing with HMRC that it would be better to get a percentage of what they are owed (by negotiation and a continuing club) than bugger all (by liquidation), HMRC are quite capable of opting for the latter either to set an example to others or, to be frank, just out of spite. Remember they have bloody big pockets

Its not worth guessing at the settlement figure or figures at the mo, but for some of the amounts, and twists and turns in the process, read the wikipedia page on the Leeds admin saga. Safe to say though that there will be a pecking order for repayment according to the size of the debt, the size of the creditor, the nature of the debt (secured, unsecured etc) and how bloodyminded individual entities are. The rules on 'preferential' creditors has changed since the Leeds fiasco, and for certain there's now an EFL rule that clubs owed transfer fees cannot accept discounts even if they want to (because if they did, the debtor club (Derby) would be ejected from the League).

In parallel with this, the administrators will be looking for buyers who are willing to stump up the eventual settlement and take ownership of the club/company. Working with creditors on one side and potential buyers on the other will as mentioned be done in parallel - the better the creditor deal, the more attractive the club/company and therefore the more potential buyers, but of course there MAY be NO buyers at the best creditor settlement negotiated, at which point liquidation comes into play

If a settlement is agreed in principle that a buyer can accept, the administrators will put the settlement agreement (details of which are shared amongst all creditors) to the creditors and they vote on it. If passed, the club/company is sold to the buyer, and debtors are paid their settlement figure (either in full immediately or on whetever credit terms are agreed)

So that's the snapshot dealt with, onto step 2,Sustainability

The sustainability bit is 'back to business' - on an ongoing basis, the club/company needs to be able to service its debt and AT LEAST make a loss small enough to pass FFP tests (if the owner is just buying the club as a plaything and wants to partly bankroll the club) and AT BEST return a nice juicy profit and an increase in resale value (if the owner is commercially minded - because if those two criteria don't apply, a hard nosed businessman would just invest elsewhere)

In essence this second stage makes the club/company little different to any other club (or for that matter any other company), and the simple business model is (ticket sales plus TV revenue plus merch sales plus player sales) must exceed (player salaries plus staff salaries plus player purchases plus other costs), that model taking into account of course the tax obligation.

Sorry if that's not what you were after

And, being blase for a mo, the numbers are just numbers. If you come from an environment where thousands or tens of thousands, for instance, are the common currency, then tens of millions are a bit mindblowing. I spent decades creeping upthat scale but my mind still got frazzled when people talked about billions and tens of billions as if it was small change

[swaledale]

Agree with that completely but today’s DT appears to reveal the staggering scale of the debt.

Seems now to be in the region of £64,000,000! Broken down as follows...£29m to HMRC...£20m to MSD Holdings and £15m to miscellaneous creditors.

I’m not remotely accountancy minded, but it seems to me that everything appears, at the moment, to be a case of ‘two steps forward, three steps back’. For those who understand such matters better than me...how do we get out of this mess and how can we seem remotely attractive to any potential buyer with debts of such a scale?

In short...how can the future of OUR club go on to be profitable and sustainable with figures like those above.

Thats why Morris put the club into administration rA, because he couldn't service the debts (or didn't want to!).

So the administrators will negotiate with creditors, those who are preferred such as HMRC and attempt to agree reduce those debts. Unsecured or non preferential creditors are unlikely to get anything.

Now why would a creditor such as HMRC accept a reduced payment? Well if the alternative is to put the club into liquidation, then all they will get is whatever can be raised from a sale of assets shared with other preferred creditors. So basically the administrators job is to reduce liabilities, and sell the club for as much as possible to meet the remaining liabilities.

Obviously a potential buyer will want to pay as little as possible, but if Morris was trying to sell the club for £80 million, to buy it out of administration could be £40 million.

The administrators ideal scenario would be 2 or 3 competitive buyers who would participate in an sort of auction to achieve as high a price as possible, but they may end up with only one.

[ramAnag]

[QUOTE=Andy_Faber;39915036]

Sorry if that's not what you were after

[QUOTE]

Actually it was...excellent answer...thank you.

P.S. Yours too Swale.