It is happening again

[dylanisabaddog 5,021]

1 hour ago, PurpleCanary said:

I think the precise details are unclear because  the company is registered in Delaware, and so doesn't have to reveal them. But the two Americans who came in were not minority investors in the usual sense of the word as it is applied to what could happen at Norwich City. They didn't put in millions for no control over the club. Their millions bought them each a stake about equal to Parrish's.

I think that's the point I was trying to make. Palace simply can't be compared to us. 

Very much back of a fag packet calculation but if I won Euro millions and offered to introduce £50m to NCFC in the form of share capital those shares would give me no power whatsoever. The majority shareholders would still hold around 55% and would be able to out vote me on anything. As I say, that is very much back of a fag packet and assumes the club is worth £150m but it does illustrate why no one in their right mind would buy in. I love Norwich City as much as anyone but for that sort of money I would want slightly more than just a seat in the posh bit. 

Someone suggested on this forum somewhere that the bequest to Tom might have strings attached preventing him from selling. That is obviously possible and if it is the case we may be stuck with this ownership model for a good few years yet. The obvious problem with that model is that it requires talented people like Webber and Farke to make it work. One wrong appointment could see it go badly wrong very quickly. 

PS. I don't actually want a seat in the posh bit, just in case you're wondering. 

[PurpleCanary 5,587]

13 minutes ago, dylanisabaddog said:

I think that's the point I was trying to make. Palace simply can't be compared to us. 

Very much back of a fag packet calculation but if I won Euro millions and offered to introduce £50m to NCFC in the form of share capital those shares would give me no power whatsoever. The majority shareholders would still hold around 55% and would be able to out vote me on anything. As I say, that is very much back of a fag packet and assumes the club is worth £150m but it does illustrate why no one in their right mind would buy in. I love Norwich City as much as anyone but for that sort of money I would want slightly more than just a seat in the posh bit. 

Someone suggested on this forum somewhere that the bequest to Tom might have strings attached preventing him from selling. That is obviously possible and if it is the case we may be stuck with this ownership model for a good few years yet. The obvious problem with that model is that it requires talented people like Webber and Farke to make it work. One wrong appointment could see it go badly wrong very quickly. 

PS. I don't actually want a seat in the posh bit, just in case you're wondering. 

Absolutely. It is a false comparison. In fact S&J's holding is now only about 51 per cent, so potentially your move would see it drop below 50 per cent, but they could always ensure they kept it above that level, or rely on Foulger to vote his substantial shareholding with theirs.

As to the point about Tom, there was mention at the time the Nephew Plan was announced of some kind of trust to oversee things, but it was never made clear who might be on this trust and what powers, if any, it would have, and whether it would just be for any interregnum before Tom took full control, or would carry on once he achieved that. I did at the time muse aloud as to whether the pink un journalists might care to find out...

[horsefly 4,318]

5 minutes ago, dylanisabaddog said:

Someone suggested on this forum somewhere that the bequest to Tom might have strings attached preventing him from selling.

I'm not sure about that Dylan? I know that an aunt of mine wanted to leave a house to a relative in her will with the condition that it could not be sold by them but must be kept in the family and handed on. However, she was told that such a condition had no legal force (despite everyone affected being happy with that arrangement). I think it had something to do with a legal principle that states that a bequest can't stipulate how the individual in receipt of the property bequeathed disposes of that property in the future. She was, however, able to include a requirement that stipulated that in the event that the property was sold certain other relatives must receive a certain sum of money from the proceeds. How accurate my recollection of this is in regards to the law I can't guarantee, but I think it's pretty much right.

[cornish sam 966]

53 minutes ago, Badger said:

There is a very detailed thread on this by Swiss Ramble. This shows that following our premier season our net debt feel from 22.6 million to a cash positive position of 29.5 million (later in the thread it is pointed out that this misleading as the club needed ££10 million to pay a short term loan and £18 for a deferred tax bill - covid, I  presume). Other details in the thread:

Wage bill rose from £51 million to  £90 million. (Higher that Watford's btw, despite what someone said earlier)

We had a short-term bank loan (£10.5 million at 5.2%) which had to be paid back in May 2021.

We spent 18.5 million on transfers (the average 16-20 was £19.8million, but this is skewed by he 34.8 million we spent in 15-16 to guarantee that we did not get relegated!)

Our profit on player sales was the lowest in the EPL that year, although it will be higher this year after selling Godfrey and Lewis. The same season Palace made £46 profit on player sales, Watford £22 million, Southampton 21 million, Burnley £7, Brighton £5 million, for example. Profiting on player sales is very much the model for all clubs.

We had no paid directors (the same year Steve Parish at CPFC received 2.6 million -beaten only by Spurs and Man Utd).

Our commercial income was very good for a club our size - credit to Ben Kensall - £21 million - better that Southampton, Fulham, Burnley , Palace, Watford, Brighton, Bournemouth, Huddersfield (not all clubs had published their accounts at this stage, so previous years clubs were used for the table).

There is a very detailed thread on Swiss Rambles twitter thread which will tell you more (need to go back to Novemeber 2020 so takes some finding - hence the delay) - worth looking at.

Could part of the reason that our wages were higher than Watfords be that ours included promotion bonuses as well?

[dylanisabaddog 5,021]

6 minutes ago, PurpleCanary said:

Absolutely. It is a false comparison. In fact S&J's holding is now only about 51 per cent, so potentially your move would see it drop below 50 per cent, but they could always ensure they kept it above that level, or rely on Foulger to vote his substantial shareholding with theirs.

As to the point about Tom, there was mention at the time the Nephew Plan was announced of some kind of trust to oversee things, but it was never made clear who might be on this trust and what powers, if any, it would have, and whether it would just be for any interregnum before Tom took full control, or would carry on once he achieved that. I did at the time muse aloud as to whether the pink un journalists might care to find out...

Thanks for that. I had it in my mind that Smith & Jones owned around 65% but clearly you're right (although I've no idea if Preference shares have voting rights attached - do you know?) 

The figure of just over 51% means it is highly unlikely that anyone else would invest as issuing just a small number of shares could see Smith and Jones lose their majority status

[dylanisabaddog 5,021]

2 minutes ago, cornish sam said:

Could part of the reason that our wages were higher than Watfords be that ours included promotion bonuses as well?

No. The general accounting principle is that the wages (and all other expenditure) are allocated to the period to which they relate. 

[PurpleCanary 5,587]

2 minutes ago, dylanisabaddog said:

Thanks for that. I had it in my mind that Smith & Jones owned around 65% but clearly you're right (although I've no idea if Preference shares have voting rights attached - do you know?) 

The figure of just over 51% means it is highly unlikely that anyone else would invest as issuing just a small number of shares could see Smith and Jones lose their majority status

S&J used to have well over 60 per cent but it has been coming down.To all intents and purposes it is only the ordinary shares that have voting rights.

[Badger 2,413]

39 minutes ago, dylanisabaddog said:

Very much back of a fag packet calculation but if I won Euro millions and offered to introduce £50m to NCFC in the form of share capital those shares would give me no power whatsoever. The majority shareholders would still hold around 55% and would be able to out vote me on anything. As I say, that is very much back of a fag packet and assumes the club is worth £150m but it does illustrate why no one in their right mind would buy in. I love Norwich City as much as anyone but for that sort of money I would want slightly more than just a seat in the posh bit. 

Sorry, I am not clear about this - do the US investors have a majority shareholding - it would give CPFC a very low valuation?

[dylanisabaddog 5,021]

5 minutes ago, horsefly said:

I'm not sure about that Dylan? I know that an aunt of mine wanted to leave a house to a relative in her will with the condition that it could not be sold by them but must be kept in the family and handed on. However, she was told that such a condition had no legal force (despite everyone affected being happy with that arrangement). I think it had something to do with a legal principle that states that a bequest can't stipulate how the individual in receipt of the property bequeathed disposes of that property in the future. She was, however, able to include a requirement that stipulated that in the event that the property was sold certain other relatives must receive a certain sum of money from the proceeds. How accurate my recollection of this is in regards to the law I can't guarantee, but I think it's pretty much right.

I'm sure you're right about that in terms of a straightforward bequest of shares but I think it is possible to put the shares into a Trust. I assume that would mean that the shares were owned by the Trust not by Tom. I'm way out of my depth here by the way. Does anyone want to own up to being a Solicitor? 

[dylanisabaddog 5,021]

5 minutes ago, horsefly said:

I'm not sure about that Dylan? I know that an aunt of mine wanted to leave a house to a relative in her will with the condition that it could not be sold by them but must be kept in the family and handed on. However, she was told that such a condition had no legal force (despite everyone affected being happy with that arrangement). I think it had something to do with a legal principle that states that a bequest can't stipulate how the individual in receipt of the property bequeathed disposes of that property in the future. She was, however, able to include a requirement that stipulated that in the event that the property was sold certain other relatives must receive a certain sum of money from the proceeds. How accurate my recollection of this is in regards to the law I can't guarantee, but I think it's pretty much right.

I'm sure you're right about that in terms of a straightforward bequest of shares but I think it is possible to put the shares into a Trust. I assume that would mean that the shares were owned by the Trust not by Tom. I'm way out of my depth here by the way. Does anyone want to own up to being a Solicitor? 

[horsefly 4,318]

2 minutes ago, dylanisabaddog said:

I'm sure you're right about that in terms of a straightforward bequest of shares but I think it is possible to put the shares into a Trust. I assume that would mean that the shares were owned by the Trust not by Tom. I'm way out of my depth here by the way. Does anyone want to own up to being a Solicitor? 

I'm no lawyer, honest! but I think you're right that a trust would be the only way for them to prevent the shares being sold on by Tom. I'd be surprised however, if they took this route. Who knows?

[Badger 2,413]

6 minutes ago, dylanisabaddog said:

I'm sure you're right about that in terms of a straightforward bequest of shares but I think it is possible to put the shares into a Trust. I assume that would mean that the shares were owned by the Trust not by Tom. I'm way out of my depth here by the way. Does anyone want to own up to being a Solicitor? 

I am not a solicitor but have recently set up a trust. As I understand it, there is a lot of discretion to the trustees - I have written a letter of intent to future trustees but my understanding is that it is not binding.

If I am correct, a lot would depend upon who the Trustees are.

Edited July 28, 2021 by Badger

[dylanisabaddog 5,021]

8 minutes ago, Badger said:

 

12 minutes ago, horsefly said:

I'm not sure about that Dylan? I know that an aunt of mine wanted to leave a house to a relative in her will with the condition that it could not be sold by them but must be kept in the family and handed on. However, she was told that such a condition had no legal force (despite everyone affected being happy with that arrangement). I think it had something to do with a legal principle that states that a bequest can't stipulate how the individual in receipt of the property bequeathed disposes of that property in the future. She was, however, able to include a requirement that stipulated that in the event that the property was sold certain other relatives must receive a certain sum of money from the proceeds. How accurate my recollection of this is in regards to the law I can't guarantee, but I think it's pretty much right.

I'm sure you're right about that in terms of a straightforward bequest of shares but I think it is possible to put the shares into a Trust. I assume that would mean that the shares were owned by the Trust not by Tom. I'm way out of my depth here by the way. Does anyone want to own up to being a Solicitor? 

[dylanisabaddog 5,021]

11 minutes ago, Badger said:

Sorry, I am not clear about this - do the US investors have a majority shareholding - it would give CPFC a very low valuation?

Apologies all. The site is wobbling at my end. In short, the ownership of Palace is unknown. The majority shareholding is held by a Delaware company and the owners of that company don't have to be declared in line with Delaware law. 

Mere mention of Delaware raises eyebrows in accountancy and legal circles. And HMRC. 

[horsefly 4,318]

2 minutes ago, Badger said:

I am not a solicitor but have recently set up a trust. As I understand it, there is a lot of discretion to the trustees - I have written a letter of intent to future trustees but my understanding is that it is not binding.

If I am correct, a lot would depend upon who the Trustees are.

I'm sure that's right badger. There is an expectation that the trustees will abide by the wishes of individual who created the trust, but it is not fully binding. Of course what is rigorously required is that the trustees can't personally benefit/profit from the trust.

[dylanisabaddog 5,021]

6 minutes ago, Badger said:

I am not a solicitor but have recently set up a trust. As I understand it, there is a lot of discretion to the trustees - I have written a letter of intent to future trustees but my understanding is that it is not binding.

There are different sorts of Trust. Solicitors have tried and failed in the past to break up the Trust that binds ownership of John Lewis for example. 

[Jim Smith 2,349]

1 hour ago, dylanisabaddog said:

I think that's the point I was trying to make. Palace simply can't be compared to us. 

Very much back of a fag packet calculation but if I won Euro millions and offered to introduce £50m to NCFC in the form of share capital those shares would give me no power whatsoever. The majority shareholders would still hold around 55% and would be able to out vote me on anything. As I say, that is very much back of a fag packet and assumes the club is worth £150m but it does illustrate why no one in their right mind would buy in. I love Norwich City as much as anyone but for that sort of money I would want slightly more than just a seat in the posh bit. 

Someone suggested on this forum somewhere that the bequest to Tom might have strings attached preventing him from selling. That is obviously possible and if it is the case we may be stuck with this ownership model for a good few years yet. The obvious problem with that model is that it requires talented people like Webber and Farke to make it work. One wrong appointment could see it go badly wrong very quickly. 

PS. I don't actually want a seat in the posh bit, just in case you're wondering. 

I agree with what you say but the point about control is irritating because as I recall our owners expressly said in the past that nobody should own a controlling majority in the club (after the Chase experience) before going on to acquire exactly that. 

[Jim Smith 2,349]

26 minutes ago, Badger said:

Sorry, I am not clear about this - do the US investors have a majority shareholding - it would give CPFC a very low valuation?

I think they own 19%. Parrish has a similar stake and I think there are 2 or three others including possibly a fan related entity? 

[hogesar 9,769]

1 hour ago, Badger said:

There is a very detailed thread on this by Swiss Ramble. This shows that following our premier season our net debt feel from 22.6 million to a cash positive position of 29.5 million (later in the thread it is pointed out that this misleading as the club needed ££10 million to pay a short term loan and £18 for a deferred tax bill - covid, I  presume). Other details in the thread:

Wage bill rose from £51 million to  £90 million. (Higher that Watford's btw, despite what someone said earlier)

We had a short-term bank loan (£10.5 million at 5.2%) which had to be paid back in May 2021.

We spent 18.5 million on transfers (the average 16-20 was £19.8million, but this is skewed by he 34.8 million we spent in 15-16 to guarantee that we did not get relegated!)

Our profit on player sales was the lowest in the EPL that year, although it will be higher this year after selling Godfrey and Lewis. The same season Palace made £46 profit on player sales, Watford £22 million, Southampton 21 million, Burnley £7, Brighton £5 million, for example. Profiting on player sales is very much the model for all clubs.

We had no paid directors (the same year Steve Parish at CPFC received 2.6 million -beaten only by Spurs and Man Utd).

Our commercial income was very good for a club our size - credit to Ben Kensall - £21 million - better that Southampton, Fulham, Burnley , Palace, Watford, Brighton, Bournemouth, Huddersfield (not all clubs had published their accounts at this stage, so previous years clubs were used for the table).

There is a very detailed thread on Swiss Rambles twitter thread which will tell you more (need to go back to Novemeber 2020 so takes some finding - hence the delay) - worth looking at.

Really interesting, thanks.

[cornish sam 966]

46 minutes ago, dylanisabaddog said:

No. The general accounting principle is that the wages (and all other expenditure) are allocated to the period to which they relate. 

Thanks, so the £51m in 2019 included promotion bonuses and the near £90m would presumably have been much higher if we had have survived, which surely must dispell some myths people are keen to spout on here about our the wages we pay....

[dylanisabaddog 5,021]

12 minutes ago, cornish sam said:

Thanks, so the £51m in 2019 included promotion bonuses and the near £90m would presumably have been much higher if we had have survived, which surely must dispell some myths people are keen to spout on here about our the wages we pay....

Every time we are in the Championship the accounts include a provision for bonuses in case we are promoted. I've no idea if there are bonuses related to staying up but I doubt it. As a rule of thumb the accounts will include salaries and bonuses earned in the accounting year regardless of whether they have actually been paid. 

The wages we pay are extremely/dangerously high in comparison to turnover but our maximum wage bill is calculated every year on the basis that we are going to come bottom. That's part accounting principles, part Premier League rules and part acceptance of reality! 

[cornish sam 966]

23 minutes ago, dylanisabaddog said:

Every time we are in the Championship the accounts include a provision for bonuses in case we are promoted. I've no idea if there are bonuses related to staying up but I doubt it. As a rule of thumb the accounts will include salaries and bonuses earned in the accounting year regardless of whether they have actually been paid. 

The wages we pay are extremely/dangerously high in comparison to turnover but our maximum wage bill is calculated every year on the basis that we are going to come bottom. That's part accounting principles, part Premier League rules and part acceptance of reality! 

So if the bonuses don't get paid then are they readded to the following years accounts? Am surprised that we wouldn't include a survival bonus for the first year, but I guess.the bonus would have to be written into the initial contract as opposed to announced as a one off when we got there...

 

Thank you for the extra detail as well in all this, whilst I would like to be a full blown FPA I fear I'm not even on the back of a rizla packet yet...

[king canary 7,681]

2 hours ago, Badger said:

Our profit on player sales was the lowest in the EPL that year, although it will be higher this year after selling Godfrey and Lewis. The same season Palace made £46 profit on player sales, Watford £22 million, Southampton 21 million, Burnley £7, Brighton £5 million, for example. Profiting on player sales is very much the model for all clubs.

We had no paid directors (the same year Steve Parish at CPFC received 2.6 million -beaten only by Spurs and Man Utd).

I don't think most sensible people have any objection to profits being made from player sales when you're there and established- it is the sensible thing to do. The issue is none of these clubs were making those player sales upon promotion. Of course we could make it work, stay up and be trailblazers but skepticism is understandable here.

Also, personally, I don't object to directors making money if the club is doing well and they are involved. For instance if Webber was on the board I'd have no issue with him being a paid director. 

[Badger 2,413]

42 minutes ago, king canary said:

The issue is none of these clubs were making those player sales upon promotion.

That's not true though. Sheffield Utd made £4 million profit on player sales in 19-20, following a profit on player sales of £14.2 million the year before. Contrary to what a poster said earlier (not you) nearly all clubs rely on player sales as part of their model.

Incidentally, for the same season (19-20) when we were relegated and Sheff Utd finished 9th, their wage bill was £11 million lower than ours + Watford's was £5 million lower. Yet a poster earlier stated as if it were a simple matter of fact that our wages were lower than these clubs

I am replying to you but I don't think that it was you who made these points, but I can't recall who it was.

[Badger 2,413]

52 minutes ago, king canary said:

I don't object to directors making money if the club is doing well and they are involved.

Perhaps - but to be the 3rd highest paid director in the UK, when you are a part owner, might be seen by some as questionable. It does suggest that Parris has done very well out of his small investment in CPFC - but then again, he saved them from administration so perhaps he's worth it.

[Badger 2,413]

1 hour ago, cornish sam said:

So if the bonuses don't get paid then are they readded to the following years accounts?

I'm not an accountant but had a small company. Costs or revenue that are paid/ received after the year end go back to the year when they arose. It's normally a pretty simple matter, because you have months to submit your accounts: it doesn't really affect your cash position, except because it can influence your profit/ loss, it may have tax consequences.

If you set aside money for staying up bonuses, and don't need to pay them, your cash position at the end of year will be higher. We had $43.9 million in cash, so this could include bonus payments, I suppose (I don't know) - but a lot of this was already accounted for (a tax bill and a loan repayment).

[dylanisabaddog 5,021]

1 hour ago, cornish sam said:

So if the bonuses don't get paid then are they readded to the following years accounts? Am surprised that we wouldn't include a survival bonus for the first year, but I guess.the bonus would have to be written into the initial contract as opposed to announced as a one off when we got there...

 

Thank you for the extra detail as well in all this, whilst I would like to be a full blown FPA I fear I'm not even on the back of a rizla packet yet...

No it doesn't work like that. The accounts for any company detail income earned whether or not actually received and expenditure incurred whether or not paid. It's an accounting principle which is commonly misunderstood. If you do understand it then you have a brain like mine which isn't a good thing. 

With the Spurs accounts, they will have deducted PAYE from wages on a monthly but that is paid to HMRC three weeks after the end of the month. And VAT is paid quarterly so all the VAT that Spurs charged in a 3 month period will be due but not paid over at the accounting date. In the Covid year there was a tax holiday so companies were allowed to hang on to it for longer. 

The other possibility with Spurs is that HMRC have caught them doing something naughty and they were in the process of negotiating a settlement at the time the accounts were submitted. I've no idea if that is the case but the figure you pointed out in your original post certainly looks large🙄

If the bonus didn't get paid,because we didn't get promoted the provision made in the accounts would simply be rolled over to the next year. 

Edited July 28, 2021 by dylanisabaddog

[king canary 7,681]

19 minutes ago, Badger said:

That's not true though. Sheffield Utd made £4 million profit on player sales in 19-20

Errn...no they didn't.

Sheffiled United spent about £60m that season. You'll have to show me who they sold for £4m more than that...

[dylanisabaddog 5,021]

4 minutes ago, king canary said:

Errn...no they didn't.

Sheffiled United spent about £60m that season. You'll have to show me who they sold for £4m more than that...

Yes they did. I'm afraid that you don't understand how it works 

http://priceoffootball.com/football-transfers-and-creative-accounting-protect-me-from-what-i-want/

[Badger 2,413]

2 minutes ago, king canary said:

Errn...no they didn't.

Sheffiled United spent about £60m that season. You'll have to show me who they sold for £4m more than that...

 

They did- see below. £4.1 million for 2020, just over £40 million from 2011-20.

You cannot tell whether Sheffield Utd will continue to make a profit on player sales. As you say they spent over £60 million during the season - whether they make a profit or not depends upon what they sell them for. My point was simply in response to what someone said earlier saying that Norwich were the only club who has to profit from player sales - as I said above, I don't think it was you.