Forward Planning - Loans (not .co.uk)

Discussion in 'The Hornets' Nest - Watford Chat' started by AshdonWFC, Jul 24, 2020.

  1. AshdonWFC

    AshdonWFC Prediction League Champion 2011/12

    I do not like the sound of this.

    Hopefully less concerning than it sounds, but could be a slippery slope to start ourselves on even in the current financial circumstances.

    https://www.watfordobserver.co.uk/s...s-watford-agreed-borrowing-facility-barclays/

    Watford have agreed a borrowing facility with Barclays to help bolster their revenue for next season.

    The move comes as the Hornets face the threat of relegation going into their final match of the campaign against Arsenal this weekend.

    Paperwork filed on Companies House yesterday shows the club has agreed to the facility with the bank, allowing them to loan against their broadcast monies for next season.

    The agreement means that should they avoid the drop, the club could then loan up to the amount they would be owed through Premier League broadcast revenue, or if they are relegated, they would be entitled to borrow up to the amount handed to them as parachute payments.

    With the club set to take a financial hit if they drop down to the Championship, the facility could provide them with some vital revenue for transfers and wages to help them try and climb back up at the first attempt.

    That loan could then be offset by any money gained from an immediate promotion.”
     
  2. Cassetti's Beard

    Cassetti's Beard First Team

    What could possibly go wrong!
     
    CarlosKickaballs likes this.
  3. GoingDown

    GoingDown "The Stability"

    Shouldn't this be in the Pozzo Love thread?
     
    Jumbolina, NorwegianOrn and Markoa$ like this.
  4. Markoa$

    Markoa$ Squad Player

    Supertommymooney likes this.
  5. sdc_watford

    sdc_watford First Year Pro

    Maybe we are going to be paying off better managers with higher salaries.
     
  6. folkestone orn

    folkestone orn Squad Player

    Will also help fund Deeney, Gray, Cathcart and Dawson's contact extensions!!!
     
    Happy bunny likes this.
  7. We hate 48

    We hate 48 Reservist

    The club already had such a facility in place to borrow from Barclays against the revenue for this season. That charge was dated September 2019. So that loan agreement has expired.

    As we enter a new season either in or out of PL the owners have decided to borrow against that revenue for season 20/21.

    More debt taken on to add to the £70m we already owe by way of loan and the £50m in outstanding transfer fees
     
    Jumbolina likes this.
  8. UEA_Hornet

    UEA_Hornet First Team Captain

    Surely the £70m borrowed against this seasons’ tv revenue will be imminently repaid?
     
    AndrewH63 and Arakel like this.
  9. Relegation Certs

    Relegation Certs Squad Player

    The forum accountants will have a field day with this.

    The irony that they themselves are penniless and debted up to eyeballs is lost on them, of course.
     
  10. Nothing unusual about a business having a borrowing facility

    How many forumites have an agreed overdraft?
     
  11. wfc4ever

    wfc4ever Administrator Staff Member

    Better get promoted at the first attempt then ?
     
  12. AshdonWFC

    AshdonWFC Prediction League Champion 2011/12

    Am not going to pretend to be an accountant for a second. But the implication of such a facility is that we plan to spend beyond our means next season or require liquid funds to operate how they want to.

    Less concerning if it’s a case that the debt is cleared at the end of the season with no issue... but let’s be honest, these things aren’t likely to be conducted in such a transparent manner.
     
  13. Relegation Certs

    Relegation Certs Squad Player

    any business that is debt free is not a well run business, especially considering the historically low interest rates.

    Of course this is far too complex for the average forumite to understand, considering their low IQ and torpid wits.
     
  14. RookeryLad

    RookeryLad Reservist

    They are doing this for cash flow purposes surely. Get the cash in to then spend on players in the transfer window and/or pay off any monies falling due over the break.

    Even more acute at the moment with no season ticket income and having paid a certain % of monies back in refunds.
     
    AndrewH63, Spoad and wfc4ever like this.
  15. a19tgg

    a19tgg First Team

    Don’t they do this already? And it’s not really living beyond our means as it’s money that’s guaranteed to us.
     
  16. folkestone orn

    folkestone orn Squad Player

    You obviously can't remember the Russo/Bassini days. Every other forum member seemed to be an accountant, if I remember correctly.
     
    wfc4ever likes this.
  17. hornetboy1

    hornetboy1 First Team Captain

    I don't see what the problem is. They are just borrowing against money they are guaranteed. A bit like a bridging loan.
     
  18. Arakel

    Arakel First Team

    That's not the case.

    They're merely getting a loan from the bank in advance of a guaranteed cash injection they'll be getting on [insert date]. It allows them to spend before the money would otherwise hit their accounts.

    It's essentially like a payday loan, only I'd assume without the same ludicrous interest rates.

    Also worth bearing in mind that being able to borrow against the facility doesn't mean you have to borrow against the facility. It gives them flexibility if they have a need to spend before the money technically hits the account.

    Nothing to be concerned about here.
     
    AshdonWFC likes this.
  19. a19tgg

    a19tgg First Team

    Also, when the money dries up if we don’t get promoted in a timely fashion, they won’t be able to do it because there won’t be anything to borrow against.
     
  20. Arakel

    Arakel First Team

    I think it's against a single season's TV money, like we did last season.

    The last agreement expired, so they're essentially renewing it.
     
  21. We hate 48

    We hate 48 Reservist

    I agree its somewhat speculation to say its more debt as we don't know what they borrowed-£70m or not very much-that's between the club and Barclays.

    As Arakel says they are able to borrow so its not definite they have or will. As its in the new financial year we will not know anymore until the FY21 accounts are published in March 2022 !

    I guess my concern is borrowing against next months pay cheque shows you cannot cope with your normal expenditure/income. Even BMuff have not (yet) borrowed in this way.

    Of course it might all be good business but i am afraid my concern is that no one else in danger of relegation has this level of debt/borrowing facility already and no one else has owners who have not put their own money in to support the clubs financial situation.
     
  22. a19tgg

    a19tgg First Team

    Yeah, I was essentially agreeing with you and just saying it’s not something they’ll be able to do when there isn’t any more money promised to us to borrow against, so it’s not really an issue.
     
    Arakel likes this.
  23. Arakel

    Arakel First Team

    I 100% agree if they need to do it to meet normal expenditure/operating costs, e.g. wages.

    I'd hazard a guess it's simply for transfer market flexibility, though. Allows them to do whatever they need to to land a transfer target without being tied to the dates of scheduled income (which might include income from outgoing transfers that paid in installments, as well as TV monies).

    With transfers being confined to limited windows it makes sense to try and find ways to secure spend ahead of transactions you know you will receive in the future. This sort of process also facilitates transfer spending when you're being paid in installments for your outgoing transfers, which I suspect we have our fair share of.

    Obviously if the money is needed to just remain a going concern then the picture changes significantly, but I don't think we've seen any reporting on those lines yet.
     
  24. AshdonWFC

    AshdonWFC Prediction League Champion 2011/12

    Appreciate the explanation, Arakel, cheers.

    In that case, carry on!
     
  25. a19tgg

    a19tgg First Team

  26. hemelhorn88

    hemelhorn88 Academy Graduate

    Proberly won't be the only club doing it. Between now and beginning of next season
     
  27. hemelhorn88

    hemelhorn88 Academy Graduate

    Proberly won't be the only club doing it. Between now and beginning of next season
     
  28. Arakel

    Arakel First Team

    a19tgg likes this.
  29. We hate 48

    We hate 48 Reservist

    So as at June 19 we have a ground valued at £26m, players valued in the books at £92m (so all pre Sarr) and a balance of the transfer fee due from Everton for Richarlison of £27m so a total of £145m in assets. I accept that the players might be worth more than £92m but at present ?

    Without player sales, the club-with all its £147m of revenue (84% TV) made a loss of £16m in that year

    Against these assets we have borrowed

    1/ £70m from this 23 Capital;/XXiii lot
    2/ Owed £50m in transfer fees
    3/ Borrowed £25m from Santander (against the transfer fee due from Everton)

    Total £145m

    So for every £1 of asset we have borrowed 100% against it and then post the year end we set up a facility to borrow more this time from Barclays against the TV money. That has now been renewed for next seasons TV income.

    We don't know if they borrowed anything but we spent money on Sarr, Dawson and Pussetto and have got to pay compo to Gracia, QSF and some to NP-against that we have the income from Lukebakio and Okaka-maybe all that balances out to nil but doesn't help with lower revenue in 19/20 (no cup run and lower PL finish) so likely the trading loss will be greater than that seen last season.

    That is my concern -its not a payday or bridging loan in isolation -we have borrowed up to the hilt against every asset we have and now we potentially need more money. Where is the owners capital or loans? No other club i am aware of has no tangible support from its owners and only external debt against every current asset and now future income when we spend more than we get in (without player sales) in what was a good year for revenue.

    Apologies for the long winded view
     
    Jumbolina likes this.
  30. hornetboy1

    hornetboy1 First Team Captain

    But we need better players and a new stadium. Someone has to pay for that.

    Even with the backdrop of this season getting so many things wrong, when it comes to finances, they seem to know what they are doing.
     
  31. The Voice of Reason

    The Voice of Reason First Team Captain

    See my post below C+ P from another thread re tomorrows match. Maybe we could get the cash if this were to happen.

    I see Lawro puts us down for 2-0 defeat tomorrow, he also puts down Villa & Muff to lose by the same score.

    If this scenario comes true I will be sooooooooooo pissed off, as that would mean the nightmare scenario of us losing out to Villa by that goal line malfunction that disallowed the CLEAR GOAL scored against them by Sheff Utd would be what sends us down :mad:

    PS Does that same incident effect whether or not Sheff Utd qualifies for Europe? If so I reckon there might just be a couple of compensation claims heading for the courts, especially as it would have cost not only us but Sheff Utd a LOT OF MONEY!!!

    However, if the court action were to take place I doubt it would have any effect on either of our league positions, as I think the target of the action would likely be "Hawk Eye" , which could mean that we might not lose out financially as we could get a BIG compensation payout from them for our loss earnings due to the failure of their equipment, which is something they have already admitted to publicly.
     
  32. wfc4ever

    wfc4ever Administrator Staff Member

    As a Villa fan said we could all point to VAR errors almost every game.

    But this wasn't just a subjective decision I guess.

    The system was broken and VAR weren't allowed to intervene.

    Does that make a difference?

    This wasn't just human error but a technical break down.
     
  33. The Voice of Reason

    The Voice of Reason First Team Captain

    Have we got any lawyers on this forum, if so what do you think, could we sue "Hawk Eye" for financial compensation if their equipment failure in the Villa v Sheff Utd. match is ultimately what ends up sending us down?

    I doubt it would make any difference to the football authorities, so our league position would probably not change, but a huge financial pay out would give us the funds to hopefully invest big in rebuilding our team and hopefully bounce back up at the end of next season.
     
    Last edited: Jul 25, 2020
    wfc4ever likes this.
  34. Robert Peel

    Robert Peel Squad Player

    Hopefully, then we can get £10m from the FA to buy some patio furniture and a panettone from Udinese for £13m.
     
  35. The Voice of Reason

    The Voice of Reason First Team Captain

    You may take the piss JP, but the "Hawk Eye" equipment failure was a pretty unique occurrence and there might just be a chance the courts might see it that way too and award us compensation, especially as "Hawk Eye" have already admitted their equipment was faulty.

    After all that failure could end up costing us more than £100,000,000 in lost revenue.
     

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