[Archived] Our Debt

[Miker]

Miker - re Losses made on selling players:

If we paid eg £5m (including agents' fees) for a player on a 5 year deal then the cost for this will be split over 5 years, i.e. £1m a year. If this player was sold for £2m after one year then we'd make a £2m 'loss' on disposal of the player, being the difference between the sale price and the 'book value' (£4m).

This year I think we sold Diouf for nothing and Emerton for nothing which will have increased the 'loss', maybe even Chimbonda too. The fees capitalised on appointing Allardyce and sacking mid-contract might also have been released.

All this is independent of wages, and isn't affected by timing of transfer installments etc

When I looked I think the 'Additions' to players in the year was about £6m, which made sense as being Rochina, Formica, the loans and the contract extension fees for Robinson,Nelsen,Roberts etc (which are capitalised in the same way).

Thanks for that OJ, that's a lot clearer then. Although I'm not sure if Emerton and Diouf were release before July? Completely forgot about Chimbonda! We sold Fielding as well I think.

[Miker]

My maths is not great but I heard Jones on 60k a week that's 3 million a year??

Roque on the same amount at least that's 6 million??

Would be true if they were here for 12 months. Since they weren't, it would only be half of that. Plus, we don't really know what percentage of their wages we were paying. Not necessarily 100%.

[Miker]

I think with amount spent during the summer, reduced commercial income from having no shirt sponsor etc and if we sell several players in January you can see the figures from 1st july 2011 to 3oth June 2012 being something around a £30m loss or thereabouts.

This will be largely dependent on January I think. The Jones/Kalinic income will be in the 2011/2012 accounts. I'm not sure of exact figures we received and spent though. I was under impression we received around 25mil and spent around 15mil. If that was the case then I would imagine that 10mil would cover the gap between turnover and expenses. So as it stands I would imagine the balance to be close to zero.

So depending on our transfer activity in Jan, we'll either record a profit or a loss for the year.

Maybe OJRovers can clarify the figures a bit better than me.

[67splitscreen]

PJ's transfer was dated around the 13th June as concluded but some media had it as early as the 8th, yet in MU official site says he joined them on the 1st July but the deal was agreed prior to him leaving for the Euros.

The U21s were in Denmark, from 11th-25th June. Which is probably why MU only announced it officially on the 1st, maybe.

[blackburnblue]

Our pre-tax losses for 2011 have been reported at £18 million. Why? Where has this money gone? We weren't losing £18 million a year prior to 2010 so where is all this money now going? It is not going on players because the money from the sale of Phil Jones and Kallinic should have more than covered the fees for anyone who came in. The wages should also be well down on previous years as we have replaced a number of high earners with unproven foreigners/kids. What we are seeing at Ewood is nothing short of disgraceful. Don't listen to muppets like Fergie, Moyes, Coyle and Redknapp because they will all be front of the queue when the fire sale starts in 2012. Our club is being looted and we need answers.

[chris]

Our pre-tax losses for 2011 have been reported at £18 million. Why? Where has this money gone? We weren't losing £18 million a year prior to 2010 so where is all this money now going? It is not going on players because the money from the sale of Phil Jones and Kallinic should have more than covered the fees for anyone who came in. The wages should also be well down on previous years as we have replaced a number of high earners with unproven foreigners/kids. What we are seeing at Ewood is nothing short of disgraceful. Don't listen to muppets like Fergie, Moyes, Coyle and Redknapp because they will all be front of the queue when the fire sale starts in 2012. Our club is being looted and we need answers.

there is a thread called our debt mate, best discuss there

[The Prof.]

Very worried about news that the Rao's are seemingly having to go cap in hand to Saudi to finance some cash.

Why are they having to do this and what is this money being possibly secured against?...

Seriously. It's NW Championship income beyond the current mortgage with Barclays for Prem money. The Sheik's don't fancy it though and want a say in running the club. If they do get a loan just look for the interest rate. I suspect it will be Brightouse numbers as no-one is interested.

They're having to do this because no British banks will touch them considering the staggering loss we made this year....we've gone from triple A rating to "don't touch with a bargepole " rating in 12 months.

What he said!

[Miker]

PJ's transfer was dated around the 13th June as concluded but some media had it as early as the 8th, yet in MU official site says he joined them on the 1st July but the deal was agreed prior to him leaving for the Euros.

The U21s were in Denmark, from 11th-25th June. Which is probably why MU only announced it officially on the 1st, maybe.

Yes you're right sorry, I am getting my dates mixed up.

I believe that the fee received for Jones (8.7m) is listed on the last page of the accounts under "Post Balance Sheet Events" and would therefore not have been included in the official numbers for the account.

[The Prof.]

I think it's important people understand the intent and purpose of this statement. I haven't got round to reading the accounts yet but I am certain this or a similar assurance will be in the accounts.

When auditors review a company's accounts there is a duty on the auditors to ascertain the true financial status of the company. When a company is loss making, and there is no clear possibility of this changing, the auditors will seek assurances from the directors or owners to ensure future funds will be available to sustain these and further losses.

This is a legal requirement placed on the auditors who must be satisfied it is correct. If the auditors are not satisfied they either sign off the accounts with a written statement declaring their concerns or do not sign them off.

The various headlines we've seen recently have been created from this legal, financial requirement. I cannot find any recent direct quote from the Raos on the matter. The stories linked to the headline are the usual tabloid junk designed to fill column inches, sell newsprint and as such are worthless.

Without such a statement accounts could not be published and filed by Rovers.

Don't be fooled by any of this, there is no comfort for us here.

Correct me if I'm wrong Paul but;

1. The onus of proof is on the Directors for a future intention - i.e. the Auditor must believe what they say unless they can prove it's materially wrong. Therefore they are duty bound to sign off the accounts. This type of statement is a nonsense as they can change their mind due to circumstance (i.e. They don't secure a loan this week) or change of business strategy (i.e. Let's buy into pig farms instead - not likely I grant you).

2. Nothing will be done in this country even if they say stuff it - 'we tried our best and I'm not giving a penny to those ungrateful impoverished hillbillys.' File for protection.

Basically unless the Venky Hill Mob surrender ownership to the Omani's (who still see us as a better bet than Everton by the way) I suspect we're stuffed - either by interest rates on a loan, or by going under. I just can't see the Madame changing her mind though.

THIS should be enough to make a person unfit to run a company here - until it's been resolved. Fit a proper person my A$$.

http://www.brfcs.co.uk/2011/11/25/mrs-desai-faces-legal-problems-in-india/

You just knew it would surface sometime didn't you!

[Stuart]

I thought it was Qataris, not Omanis...?

[The Prof.]

I thought it was Qataris, not Omanis...?

Omanis need a Prem club soon

[Paul]

Correct me if I'm wrong Paul but;

1. The onus of proof is on the Directors for a future intention - i.e. the Auditor must believe what they say unless they can prove it's materially wrong. Therefore they are duty bound to sign off the accounts. This type of statement is a nonsense as they can change their mind due to circumstance (i.e. They don't secure a loan this week) or change of business strategy (i.e. Let's buy into pig farms instead - not likely I grant you).

I must stress I am not an accountant. It has always been my understanding, if the company is a going concern, the auditors must be satisfied sufficient funds be shown to be available to the company for it to continue trading. In Rovers case the auditors would need to be satisfied, i.e. believe, loans, additional income (perhaps planned player sales in a football club's case***) or parent company funding will be available for the company to continue as a going concern. It's my understanding if the auditors are not satisfied they will add a statement / rider to this effect. I believe it is incumbent upon the auditors to either receive and believe the assurances or make a statement expressing any concerns. As the auditors are KPMG it's unlikely they would sign off anything "dodgy."

Big four auditors cannot afford the risk to their reputation as Arthur Andersen found out with Enron - though the whole thing was a far more complicated than a football club and I couldn't even begin to understand it.

*** this is an opinion as an example - NOTHING MORE

2. Nothing will be done in this country even if they say stuff it - 'we tried our best and I'm not giving a penny to those ungrateful impoverished hillbillys.' File for protection.

I don't know.

Rovers are due to file accounts on December 31st. These should be available from Companies House shortly after that date.

[ruggles1995]

sorry if im in the wrong topic or whatever, but these rumours we owed the bank 10 mill by 23rd december im guessing we have now paid this or it was complete trash as talk about it seems to of dissapeared... ?

[The Prof.]

I must stress I am not an accountant. It has always been my understanding, if the company is a going concern, the auditors must be satisfied sufficient funds be shown to be available to the company for it to continue trading. In Rovers case the auditors would need to be satisfied, i.e. believe, loans, additional income (perhaps planned player sales in a football club's case***) or parent company funding will be available for the company to continue as a going concern. It's my understanding if the auditors are not satisfied they will add a statement / rider to this effect. I believe it is incumbent upon the auditors to either receive and believe the assurances or make a statement expressing any concerns. As the auditors are KPMG it's unlikely they would sign off anything "dodgy."

Big four auditors cannot afford the risk to their reputation as Arthur Andersen found out with Enron - though the whole thing was a far more complicated than a football club and I couldn't even begin to understand it.

*** this is an opinion as an example - NOTHING MORE

I don't know.

Rovers are due to file accounts on December 31st. These should be available from Companies House shortly after that date.

Thanks Paul. This is correct, I think you can show the money (i.e. to cover debt) but you don't have to play with it in the end.

sorry if im in the wrong topic or whatever, but these rumours we owed the bank 10 mill by 23rd december im guessing we have now paid this or it was complete trash as talk about it seems to of dissapeared... ?

Thought it was the 31st.

[ruggles1995]

Thanks Paul. This is correct, I think you can show the money (i.e. to cover debt) but you don't have to play with it in the end.

Thought it was the 31st.

Im more than likely wrong then. So we wait to sit tight on the 31st december then.

[longsiders1882]

I've seen lots of claims about Qatari's etc wanting to buy Rovers but can't seem to find anything to indicate that there was ever any offer or even articles relating to an expression of interest. Is this hearsay or is there public domain evidence of an offer?

[Tyrone Shoelaces]

On Sporting Live a couple weeks back, Nick Harris thinks the Rao family understand the financial problems which relegation brings – however, he also thinks they are not FULLY aware of the implications.

They soon will be !

[Paul]

I've seen lots of claims about Qatari's etc wanting to buy Rovers but can't seem to find anything to indicate that there was ever any offer or even articles relating to an expression of interest. Is this hearsay or is there public domain evidence of an offer?

Primarily the information came from reliable and respected sources on this MB. I don't recall seeing anything in the media.

[Stuart]

Primarily the information came from reliable and respected sources on this MB. I don't recall seeing anything in the media.

Longsiders makes a good point though. It's AMAZING that nothing leaked out.

In fairness though, my take on it is there was potential interest but no actual offer made.

[longsiders1882]

Primarily the information came from reliable and respected sources on this MB. I don't recall seeing anything in the media.

Cheers

[modes98]

I've seen lots of claims about Qatari's etc wanting to buy Rovers but can't seem to find anything to indicate that there was ever any offer or even articles relating to an expression of interest. Is this hearsay or is there public domain evidence of an offer?

From what I understand there were 2 members of this board who were heavily involved with trying to broker the deal and had contact with the Qatar people's respresentatives. The interest was there but no deal was done.

[John]

Unless there is a miraculous change of events, I think the Rao family are finished here – in the short time they have owned the club the damage they have inflicted is inexcusable and perhaps irrperable.

Don’t know why (if it did happen) they bought a property here, they won’t be welcome ever again anywhere near the club/Ewood.

[roverandout]

i will welcome them with a pitch fork and a torch, this is what they used to do when they suspected witches, well we have one now owning the club, kean and his fellow sychophants have already mentioned some kind of witch-hunt in the media!!!

[Mattyblue]

I am certinaly no financial guru, but for an operating loss to grow from 1.8million, to 18million after just a few months of Rao ownership is outrageous, is it not?

[Paul]

I am certinaly no financial guru, but for an operating loss to grow from 1.8million, to 18million after just a few months of Rao ownership is outrageous, is it not?

Matty I'm not being critical but the operating loss was not £18m but lower than that. The £18m quoted from the LT is the loss for the year. just to avoid any confusion:

Operating profit / loss is the difference between income and expenditure, i.e. the money earnt and spent in the year Income of £100, expenditure of £120 = an operating loss of £20. Reverse those figures and you have an operating profit for the period of £20.

Added to this operating profit / loss is player trading and a few other things.

The difference is important as a business making an operating profit is trading well in the year. It sells it's product for more than it costs to make. Other costs are then calculated which can create an overall loss or turn a loss into an overall profit.

In the case if a football club transfers are the biggest influence on these additional costs.