Badger

There's nothing like intelligent debate is there? And this is nothing like it! Do you really have to be so offensive to a dedicated City fan just because they have a different viewpoint to you? It really doesn't help your case as it suggests a lack of capacity for reasoned thinking.

I'm not sure that it was ever "defined." As it seems that MA is charging interest on the money he is lending us, the main difference for this this "model of self-funding," is that we are paying interest to a director rather than to a bank. There is a not insignificant advantage to this in that a director is less likely to foreclose, but interest is still interest and it means that there will be less money to spend on the team than if we had not borrowed in the first place. It's a shame that we took up the urge to borrow loads just as interest rates were moving to a generational high.

Now I'm confused - is self-funding good now? I thought is was the root of all evil?* *BTW that is not a point specifically addressed to you - I know how sensitive you are to these things.

Why do you think that it failed at Villa? Did they not need a leader and motivator and a damn good coach?

And so far at least, he has charged interest on the money he has lent us, meaning that we have less money, not more. Using the car metaphor that seems to have been introduced, not only are we still unable to buy a Ferrari, but now we are going to have to sell the Fiat because we can't afford to run it. Can you rent mopeds?

I think the term is "fair weather supporter:" only loyal when things are going well. Frankly, we're better off without them.

That is quite literally, the multi-million pound question! The fact that he has taken money last year, is not encouraging - but I suppose he may feel when we are in receipt of parachute payments it is not quite as critical. The other thing he could do (I think others have) is to turn the interest due into further debt which he can claim when (if) we regain PL status, or alternatively use the debt to buy equity in the future. (I'm sure you know this 😁)

Is he the one who has stopped supporting the club as some form of "protest?" (Presumably because we didn't take on enough debt?)

TBF, Gibson has spent over £200 million to make Middlesborough a mid-table Championship club, with visits to the PL less frequent than our own.

Some clubs (e.g. Southampton) were paying about 9% above the Bamk's base rate in 2021 to MSD and an Australian bank (Macquarie) was rumoured to be charging more, which would suggest a commercial rate of c 14% (for highly geared football clubs - nb look at the rate of administration). In this case, 11% could be seen as a pretty good deal!! (Rather hoping that we don't pay this much.) Given obvious attempts to reduce the wage bill etc, would you dare venture an estimate of debt levels from this year's accounts (+/- 50%)? I was under the impression, perhaps erroneously, that they may decline this year as a result of the actions taken.

With interest rates at a generational high, it is the worst time imaginable to become highly geared.

I don't think that many in the championship do as it would rather defeat the purpose of subsidising the club to gain premier league riches! It is much more common in the PL, but then there's more money to play with. The other thing, obviously, is how the debt is owed - if it is external debt, as some of ours is, currently at least, interest is unavoidable. If MA intends to continue to do so, we need to get our debt down quickly, or it would weaken our long-term advantages at Championship level - player sales being the obvious solution.

Wages do not count as part of the calculation. As I've tried to explain the fees are written down over time. What you view as "profit" is probably not the same as it is accounted for in accounting terms.

As suggested above it's due to amortisation and players developed through the academies. An academy player is more or less pure profit. Amortisation involves writing down the value of a player's registration over time. e.g. If you buy a player for £10 million on a five year deal, his registration is written down over 5 years, - @ 2 million p.a. Therefore, after 4 years, he will only be valued at £2 million - if a club then sells him for say, £4 million, it has made a profit of £2 million, even though it paid £10 million originally.

No - he just highlighted Brighton in green because it is the club he is discussing. He always does this. It is a bit confusing because Brighton at the bottom so the change in colour might appear to be significant

Just to add a few facts to this... 1. At the end of 2022 their net debt stood at nearly £400 million. Fortunately for them, it is almost all owed to their owner, who charges no interest. Our new owner has already shown that he is not doing that and, like most owners, has charged interest on the money he has lent. 2. They have made one of the lowest profits from player trading in the PL (see below). 3. Brighton's wage bill in 2022 was lower than Norwich's (you could justifiably say that it was better utilised!). Although there is much to admire about the way Brighton is run, their current success is less to do with their "plan" and more to do with the fan owner who has happily continued to pump tens of millions a year into the club. The solution to the premier league gulf is obvious - just get an owner who is prepared to give hundreds of millions into the club* without any expectation (as far as I can see) of getting it back. The solution is obvious - the way of achieving this is less so. * Averaging £30 million pa

Whilst I agree with the main thrust of your point - the club is unlikely to face a serious financial crisis and become unable to meet its liabilities. However, the simple fact that we are paying large amounts of interest means that we have either to spend less on wages/ transfers and/or increase revenue from player sales. We would clearly be much better of without the external debt and the director's loans/ preference shares for which interest is charged. A market-based rate of interest could see most of our gate revenue taken up by interest payments and we are likely to be paying more than our rivals. The debt weakens our competitive position and makes promotion less likely over the next few years.

Agree. The squad assembled last year was the most expensive we have ever assembled.

The biggest problem will be with us for years, I fear - we are nearly £100 million in debt, and depending upon how we refinance the shorter term debt, next year's interest payments could be the same as, or exceed, gate receipts!

No. I don't think £100 million would solve it though - to make it truly competitive you would need salary caps the same for all clubs - which won't happen and which I disagree with anyway. My wish (again naive) is for the super league to come along and the "big clubs" to leave English football.

Not really sure that there is a "clear pattern." Burnley, Palace, Southampton survived for years without spending very much + I don't think Brentford have spent that much - they year they stayed up we went down, we spent more. Fulham yo-yod for years despite huge expenditure + even after £700 million are only one bad season away from relegation. I'm not saying £100 million would be unhelpful but I don't think that it would equalise things that much.

I am reluctant to disagree with you Shef, because your knowledge in this area is certainly far greater than mine, so it's probably something I haven't understood but if I've understood you correctly you are suggesting that the aim was a balanced budget but it built in "ambitious" targets for revenue growth including player sales and spent on the assumption that these would be achieved (which the Webber's failed to achieve)? If I am correct, I would still hold the BOD accountable for the debt - you surely don't spend before you've got it - especially when it includes optimistic plans for revenue growth?

I don't think it would solve the problem. Even with money, most premier league quality players don't want to go to promoted clubs. There is a hierarchy of teams that players top players have in the Premier League, promoted clubs are at the bottom. Essentially, promoted clubs get players that nobody else in the premier league wants.

The budget will have been agreed at board level - the SD could not spend money without BOD approval, so he cannot be blamed for th debt. Obviously the players we bought are his responsibility, but buying players of premier league quality is always a struggle for newly-promoted club. IMO, the biggest fault was deciding upon a strategy of "risking the future, with a gamble on the present."

Agree. IMO it's irresponsible to acquire this much debt. With current interest rates, it's quite possible that we will pay more in interest than we receive in gate receipts.