[Archived] Financial Weekly

[Iceman]

After reading through Nicko's thread,i was getting bored of all the financial talk being dicussed. Apologies if there is a thread for this mods,if not then im sure we can dicuss Rovers money matters here.

Hope the Mods are okay with this thread. Have fun Philip

Thanks

[dingles staying down 4ever]

Ahhh! Bless!

A thread dedicated to the bank of Malta and its branch manager Philip

[Iceman]

Indeed,so Philip feel free to discuss any Rovers finances in here. Just a question, did we make any profits last season,or did we break even?

[dingles staying down 4ever]

Another question for Phillip

Where did the biggest transfer budget that rovers had for a long time that you kept repeating during the summer go?

[Iceman]

It must be so difficult for any manager to be in charge of Rovers. If we dont sell Roque,the indications are that there is about 10 mill to spend. However if we do sell him for 18 mill, there should be at least another 10 mill to spend making it 20 mill. Now knowing Rovers, the initial money put aside for transfers, before any potential players being sold, will disappear into thin air. I dont quite understand that, and its why we constantly hear managers and players using Rovers to gain bigger clubs and even bigger pay days.

[Jan]

It must be so difficult for any manager to be in charge of Rovers. If we dont sell Roque,the indications are that there is about 10 mill to spend. However if we do sell him for 18 mill, there should be at least another 10 mill to spend making it 20 mill. Now knowing Rovers, the initial money put aside for transfers, before any potential players being sold, will disappear into thin air. I dont quite understand that, and its why we constantly hear managers and players using Rovers to gain bigger clubs and even bigger pay days.

The accounts are not yet available on Companies House website, but have probably been distributed to Shareholders, so this is conjecture as to numbers.

The simplistic answer was that at the last financial year end, before the effects of the credit crunch really started to bite, Rovers had a £20m overdraft facility which it was using. All cash that has come in since, and any potential "pot" that was not wasted on Grella, Carlos, Andrews, Robinson etc was probably banked. As it was banked, the bank said, "oh good, your overdraft has come down, so you won't need that much any more" and the facility was reduced, therefore effectively hampering any future purchases. I don't know what the overdraft stands at now, because if Bentley was sold on finance terms it's entirely possible that we have yet to see a single penny from the transaction (Arsenal having been paid their cut immediately, as is required, but the rest over 2 years- as with Duff to Chelsea).

That money will probably now, along with the extra that was earmarked for Carlos, go to paying the overdraft down, therefore any "pot" has effectively disappeared to the bank. Similarly, any remaining overdraft will probably have to be repaid using any proceeds from Santa Cruz.

While the banks were quite happy lending good money after bad- ie when the last accounts were drawn up to 30 June 2007- borrowing more to finance player development was probably possible. Now, with finance virtually impossible to find, the bank will want its money before we're allowed to spend any more.

That is the cash position. Do not be confused by the fact we've made an operating profit. Cash and profit are not the same thing and it is entirely possible to be profitable without having any cash. (See stores like Whittards and Officers club, both of whom were profitable but had debts they couldn't service to the bank's satisfaction. Hence they were bought out of administration whereas Woolies was unprofitable, so it hasn't been)

[broadsword]

As far as I know, the BoE hasn't pumped any more money into the supply than it usually does, so if the total amount of monmey in the supply is the same as before teh crunch, does that mean that banks are sitting on all thi smoney. Since no other beggar seems to have any.

[Jan]

As far as I know, the BoE hasn't pumped any more money into the supply than it usually does, so if the total amount of monmey in the supply is the same as before teh crunch, does that mean that banks are sitting on all thi smoney. Since no other beggar seems to have any.

Simple answer. YES. Banks have been boosted by the amount the government ploughed in, but after the scares of the past few months are hoarding it. Try to get a loan or a mortgage on decent terms and you'll find out how difficult it is. For businesses it's even worse.

[The Prof.]

The accounts are not yet available on Companies House website, but have probably been distributed to Shareholders, so this is conjecture as to numbers.

The simplistic answer was that at the last financial year end, before the effects of the credit crunch really started to bite, Rovers had a £20m overdraft facility which it was using. All cash that has come in since, and any potential "pot" that was not wasted on Grella, Carlos, Andrews, Robinson etc was probably banked. As it was banked, the bank said, "oh good, your overdraft has come down, so you won't need that much any more" and the facility was reduced, therefore effectively hampering any future purchases. I don't know what the overdraft stands at now, because if Bentley was sold on finance terms it's entirely possible that we have yet to see a single penny from the transaction (Arsenal having been paid their cut immediately, as is required, but the rest over 2 years- as with Duff to Chelsea).

That money will probably now, along with the extra that was earmarked for Carlos, go to paying the overdraft down, therefore any "pot" has effectively disappeared to the bank. Similarly, any remaining overdraft will probably have to be repaid using any proceeds from Santa Cruz.

While the banks were quite happy lending good money after bad- ie when the last accounts were drawn up to 30 June 2007- borrowing more to finance player development was probably possible. Now, with finance virtually impossible to find, the bank will want its money before we're allowed to spend any more.

That is the cash position. Do not be confused by the fact we've made an operating profit. Cash and profit are not the same thing and it is entirely possible to be profitable without having any cash. (See stores like Whittards and Officers club, both of whom were profitable but had debts they couldn't service to the bank's satisfaction. Hence they were bought out of administration whereas Woolies was unprofitable, so it hasn't been)

Janice, I cannot believe that an operation like the Walker Trust could not find a way of supporting a £20m overdraft if they wanted too. I know Rovers are a separate legal entity but if they really wanted to a £20m overdraft would be easily within their remit to organise - they could just transfer the overdraft to an inter company loan or holding.

As for the overdraft well if it's secured against correctly valued and substantial assets (which I'm assuming the Trust have) it's one of the few ways banks have left of making secure money or they have become so nervous they have lost their reason for existing (In which case the public subsidy should have never been given).

Please tell me this isn't so because if it is the whole banking sector is lost and I have to buy a safe, shotgun, and a big hound!

[jim mk2]

Simple answer. YES. Banks have been boosted by the amount the government ploughed in, but after the scares of the past few months are hoarding it. Try to get a loan or a mortgage on decent terms and you'll find out how difficult it is. For businesses it's even worse.

Off topic but if that is the case the banks should have been allowed to go bust and fully nationalised.

[The Prof.]

I'm no right winger but I would have let one go bust!

Then as the public is a significant shareholder I would sack a board member or two and replace them with someone who still wants to be in a risk oriented business.

Then I'd force them to lend on the basis that the Directors are using the possibility of a further scare to the detriment of the shareholders and to protect there own position - it's gone beyond a risk v profit situation this. It's now misuse of public funds.

It's back to the Lloyds names - fine while they are collecting but oh my oh my when they have to pay out......

[broadsword]

Simple answer. YES. Banks have been boosted by the amount the government ploughed in, but after the scares of the past few months are hoarding it. Try to get a loan or a mortgage on decent terms and you'll find out how difficult it is. For businesses it's even worse.

I think that is what's called "taking the pish".

[Majiball]

I think that is what's called "taking the pish".

How true, Curiously do I have the option of getting my £1000 pounds back?

[Paul]

Off topic but if that is the case the banks should have been allowed to go bust and fully nationalised.

This isn't the place but yes it is true. The banks have simply taken OUR money given to them by OUR government and stuck it in their own piggy banks. Clearly the government intended this money to be used to ease cashflow in many different areas. I have several customers who have found their standard overdraft facilities reduced significantly during the autumn. Cash has been very, very difficult to get from customers September - November though we saw a significant improvement in the middle two weeks of December.

With all respect to posters on here employed in the financial sector, I'm currently of the opinon the entire financial sector is run by a bunch of crooks and charlatans, they screwed up, we pay the price, we bail them out. Disgusting.

Anyway back on topic. I'm in full agreement with philip's analysis of the Bentley transfer, it comes as no surprise and has long been the case in transfer dealings. It does raise a question for me though. If we sell a player for say £15m is the entire sum accounted for in the year the transaction takes place or are the monies accounted for in the years in which they are received?

[Iceman]

It all comes down to what the trustees want for BRFC. At the end of the day,they could easily accomodate any day to day expenses and afford to give the manager a substantial amount to spend. Its in their best interests to see the club maintain its top flight status, in order for them to sell to any potential buyer/s. So why are they the trustees not willing to commit enough transfer money?

[broadsword]

http://www.wikio.com/video/713276

[Beta Ray Bill]

This isn't the place but yes it is true. The banks have simply taken OUR money given to them by OUR government and stuck it in their own piggy banks. Clearly the government intended this money to be used to ease cashflow in many different areas. I have several customers who have found their standard overdraft facilities reduced significantly during the autumn. Cash has been very, very difficult to get from customers September - November though we saw a significant improvement in the middle two weeks of December.

With all respect to posters on here employed in the financial sector, I'm currently of the opinon the entire financial sector is run by a bunch of crooks and charlatans, they screwed up, we pay the price, we bail them out. Disgusting.

Not strictly true. Certain banks needed the funding as they had lent long and borrowed short - ie they had loaned money out at better terms than they could now afford and were on the brink of losing the ability to service savings let alone provide any additional lendings. That would have been more catastrophic than a government bailout - think what is teh largest saving institution and mortgage provider in the UK and you'll understand why it couldn't be allowed to go to the wall.

Total mismanagement by the banks concerned to let it get to where it has, but if the demand hadn't existed in the first place, then the daft way of funding wouldn't have ever arisen.

It's far too simplistic to blame the banks alone, it's a vicious circle created well over 25 years ago. Or would the UK population have liked the mortgage queues and 6 month waiting lists for loans that existed in the 70s? No of course not. However, many banks lost all sense of reality and that's made what would have been a bad situation the terrible situation we're in.

No-one, from SMEs to personal borrowers to the government to the banks themselves complained in "the good times" and yet it's only the banks and to a lesser extent the government that is taking the rap now. If 'horizontal' lending had happened in the last 20 years, then there would have been outcry.

[The Prof.]

Not strictly true. Certain banks needed the funding as they had lent long and borrowed short - ie they had loaned money out at better terms than they could now afford and were on the brink of losing the ability to service savings let alone provide any additional lendings. That would have been more catastrophic than a government bailout - think what is teh largest saving institution and mortgage provider in the UK and you'll understand why it couldn't be allowed to go to the wall.

Total mismanagement by the banks concerned to let it get to where it has, but if the demand hadn't existed in the first place, then the daft way of funding wouldn't have ever arisen.

It's far too simplistic to blame the banks alone, it's a vicious circle created well over 25 years ago. Or would the UK population have liked the mortgage queues and 6 month waiting lists for loans that existed in the 70s? No of course not. However, many banks lost all sense of reality and that's made what would have been a bad situation the terrible situation we're in.

No-one, from SMEs to personal borrowers to the government to the banks themselves complained in "the good times" and yet it's only the banks and to a lesser extent the government that is taking the rap now. If 'horizontal' lending had happened in the last 20 years, then there would have been outcry.

Although it's the US sub prime mortgage sector that triggered this I remember working for a UK high street Building Society in the late ''80's. The 3x income mortgage was the first brought in then at that level and this was only on offer with an endowment! (Commission pays all the wages son). It was unethical then and I argued and left. Until 2 months ago it was 6x income (Well if they can't pay we get the house!).

Whole sector stinks to high nines. The 6 month wait and 10% deposit was fine - if you can't save your mortgage amount for 6 months how can you pay i for 25 years!!! Houses are overpriced by 200% in some areas compared to wages and this adjustment was long overdue.

[PAFELL]

It must be so difficult for any manager to be in charge of Rovers. If we dont sell Roque,the indications are that there is about 10 mill to spend. However if we do sell him for 18 mill, there should be at least another 10 mill to spend making it 20 mill. Now knowing Rovers, the initial money put aside for transfers, before any potential players being sold, will disappear into thin air. I dont quite understand that, and its why we constantly hear managers and players using Rovers to gain bigger clubs and even bigger pay days.

The answer is then, put a higher price tag on RSC. If there is a clause of £18m - a clause that could even mean, Rovers will only listen to clubs who offer £18m MINIMUM for RSC but the price is say £25 - 30m that the player will be sold for. Rovers could say to any club RSC is under contract to Rovers and will remain our player unless you meet what WE want for him today. In today's credit crunch market (which every club is affected by) we want £30m for RSC. If you don't meet that price - go away.

If money wise Rovers do not have to sell - RSC is under contract - so Rovers cannot be forced to sell. though I suppose RSC could always buy out his contract and then it is a different ball game.

[BiggusLaddus]

The answer is then, put a higher price tag on RSC. If there is a clause of £18m - a clause that could even mean, Rovers will only listen to clubs who offer £18m MINIMUM for RSC but the price is say £25 - 30m that the player will be sold for. Rovers could say to any club RSC is under contract to Rovers and will remain our player unless you meet what WE want for him today. In today's credit crunch market (which every club is affected by) we want £30m for RSC. If you don't meet that price - go away.

If money wise Rovers do not have to sell - RSC is under contract - so Rovers cannot be forced to sell. though I suppose RSC could always buy out his contract and then it is a different ball game.

If he has minimum release clause of £18m in his contract then that means that all offers that meet it must be accepted. Rovers can be forced to sell and will be if the right offer comes in. Just as happended with Bellamy and Duff before him.

When have you ever heard of a contract clause such as you have discribed above?

[unsall]

If he has minimum release clause of £18m in his contract then that means that all offers that meet it must be accepted. Rovers can be forced to sell and will be if the right offer comes in. Just as happended with Bellamy and Duff before him.

When have you ever heard of a contract clause such as you have discribed above?

Trust me, there is a clause in Rockys contract but it does not apply till the summer.............

[Iceman]

I dont think any release clause amount, can go beyond that unless a club ups the bid,to beat off competition for the players signature. Eg if Roque has an 18 mill release clause, Man City meets that amount,but Man United says we will offer 25 mill. Is it right to accept the higher amount,or is it about the initial release clause amount being met? Can anybody shed some light on that scenario?

[stuwilky]

I dont think any release clause amount, can go beyond that unless a club ups the bid,to beat off competition for the players signature. Eg if Roque has an 18 mill release clause, Man City meets that amount,but Man United says we will offer 25 mill. Is it right to accept the higher amount,or is it about the initial release clause amount being met? Can anybody shed some light on that scenario?

Why would any club bid higher than a release clause?

[PAFELL]

Why would any club bid higher than a release clause?

Surely it depends on how much a club wants the player.

Does not a club interested in another clubs player first need the permission of the selling club before even talking to the player. If a club really wants a player then they would be willing to make the selling club a better offer than another club.

If 2 or 3 clubs all bid the release clause - all offer the player the same type of contract - it comes down to the players choice which club he signs for. So I suppose the bidding would come down to who offers the player the best contract.

I do not know how these things work, but a players value is only what you are willing to pay and how much your team would benefit by having that player in your team.

[stuwilky]

But if a player has a contractual release clause that obliges the selling club to accept any offer of, say, £18m.

Then the buying club has nothing to gain by offering any more than £18m.