[Football] QPR finally settle FFP dispute

[NooBHA]

I disagree.

The £17 million is being paid out over ten years, factor in the four year delay in reaching the settlement and it has a present value cost of £8.4 million. Contrast that to the £168 million of PL broadcasting rights and parachute payments earned by QPR since promotion in 2014 and there’s only one winner for me (two if you include the accountants and lawyers).

I agree your synopsis, although I think there is a ''pluspoint'' to it.

The ''incidental loan'' injected by the owners into QPR was lost to them, in that it looks like it was ruled that it had to be ''converted to equity''. And that sets a ''case law'' precedent, albeit not a ''binding case law'' because EFL Regulations can't really be binding in General Law I wouldn't have thought.

I agree that the Club QPR as a whole benefited but Owners themselves might think twice about going down this Avenue in the future if their investment is almost certainly going to be lost to them.

 

[El Presidente]

I agree your synopsis, although I think there is a ''pluspoint'' to it.

The ''incidental loan'' injected by the owners into QPR was lost to them, in that it looks like it was ruled that it had to be ''converted to equity''. And that sets a ''case law'' precedent, albeit not a ''binding case law'' because EFL Regulations can't really be binding in General Law I wouldn't have thought.

I agree that the Club QPR as a whole benefited but Owners themselves might think twice about going down this Avenue in the future if their investment is almost certainly going to be lost to them.

From a legal perspective you’re probably right, but as QPR had zero means to repay the loans the owners have merely swapped a bad debt for a worthless piece of paper. Only impact it has on the club is it further dilutes Mittal’s (already small) share in the club.

The EFL have tried to claim the fine is £42m, its a fifth of that in reality.

 

[NooBHA]

From a legal perspective you’re probably right, but as QPR had zero means to repay the loans the owners have merely swapped a bad debt for a worthless piece of paper. Only impact it has on the club is it further dilutes Mittal’s (already small) share in the club.

The EFL have tried to claim the fine is £42m, its a fifth of that in reality.

He would still have been within his rights to call in the loans at anytime in the future.

In hindsight your post made me think. This could potentially aid QPR. Without outstanding loans in the future accounts, it makes it a more viable proposition to investors further down the line but in terms of the Owners, they have lost that investment plus maybe another £10m in legal costs over a 3 year period

 

[Triggaaar]

The cost to the owners in real terms is actually more than the original fine.

How so? They've written of loans from themselves, but that just means the club (that they own) is now worth more.

Who it goes to is irrellevant

No it isn't. Owners are regularly putting money into a club and writing it off, but there's a limit how much you can do that for FFP purposes.

If the EFL give a club a fine and the club just go 'oh ok, I'll give myself some more of my money', that's hardly a punishment.

 

[NooBHA]

How so? They've written of loans from themselves, but that just means the club (that they own) is now worth more.
No it isn't. Owners are regularly putting money into a club and writing it off, but there's a limit how much you can do that for FFP purposes.

If the EFL give a club a fine and the club just go 'oh ok, I'll give myself some more of my money', that's hardly a punishment.

Directors/Owners are a separate Entity to the company/club.. You or many other may see them as the same Entity but they are most definitely NOT

The owners loaned the club however many million it was. They were forced to convert the loans to Equity which is worth zero to them quite literally

So once upon a time they had several million they loaned to the club. Now they don't have those millions - In anybody's book, they have lost that money

 

[Triggaaar]

As some of you may know, [MENTION=6886]Bozza[/MENTION] and I run a football finance website. This is our take on how the EFL have capitulated and the winners are the accountants and lawyers

http://priceoffootball.com/qpr-ffp-fine-everything-counts-in-large-amounts/

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Dipsy.

 

[Triggaaar]

I disagree.

So do I.

The £17 million is being paid out over ten years, factor in the four year delay in reaching the settlement and it has a present value cost of £8.4 million.

Well no it doesn't. Not unless you're using a ludicrous figure for interest calculations.

Contrast that to the £168 million of PL broadcasting rights and parachute payments earned by QPR since promotion in 2014 and there’s only one winner for me

But the fine was never supposed to match the extra earning that promotion brought. They should have been made to pay the original fine, I don't see why the League have settled for so much less, but it's still more than you predicted they'd pay.

 

[Triggaaar]

Directors/Owners are a separate Entity to the company/club.. You or many other may see them as the same Entity but they are most definitely NOT

The owners loaned the club however many million it was. They were forced to convert the loans to Equity which is worth zero to them quite literally

So once upon a time they had several million they loaned to the club. Now they don't have those millions - In anybody's book, they have lost that money

I disagree. The club they own is now worth more money, because it has less debt. How much more is it worth? Pretty much the amount of debt they wrote off. If they want to build back up the club's debt to themselves, they can do that easily enough with dodgy loans to the club, and behaviour like Archer and Stanley.

Or if the club is not worth anything, then as El P said, they wouldn't be getting that loan back anyway. The owners are wealthy enough that they can support the club anyway, and they hope it will eventually be in the PL again, and then their asset will have more value.

 

[El Presidente]

So do I.

Me too.

Well no it doesn't. Not unless you're using a ludicrous figure for interest calculations.

8%

But the fine was never supposed to match the extra earning that promotion brought. They should have been made to pay the original fine, I don't see why the League have settled for so much less, but it's still more than you predicted they'd pay.

1: Fine should act as a disincentive. I don’t this this does.
2: Agreed
3: Agreed
4: What did I predict?

 

[El Presidente]

Dipsy.

We’re finished, you and I.

 

[Easy 10]

Brutal.

 

[El Presidente]

The owners loaned the club however many million it was. They were forced to convert the loans to Equity which is worth zero to them quite literally

So once upon a time they had several million they loaned to the club. Now they don't have those millions - In anybody's book, they have lost that money

If you lend £100 to someone and they earn £0 a year then you won’t receive the money back. The loans were junk, worthless pieces of paper with a nominal but no market value....just like the shares.

 

[Triggaaar]

8%

Yes, ludicrous.

4: What did I predict?

Well I'm not looking it up now, but you said QPR had too much legal might for the EFL (I think that's mostly been shown not to be the case, even though they settled to too little), and I think you were expecting a fine under £10m, although it's so long ago I could be wrong. And I know you'll argue that's what they've got by using an 8% interest calculation, but that's disingenuous IMO. The owners can't earn that rate on their £17m while they delay payment, and the charities that are missing out won't be missing out to the tune of 8%.

 

[El Presidente]

Brutal.

That’s how you like it sweet cheeks x

 

[Triggaaar]

We’re finished, you and I.

Tinky is bigger, but that boy has never been in a fight, and never will be. He's a lover, not a fighter. Dipsy would fight to the death if he had to.

 

[El Presidente]

Yes, ludicrous.

Well I'm not looking it up now, but you said QPR had too much legal might for the EFL (I think that's mostly been shown not to be the case, even though they settled to too little), and I think you were expecting a fine under £10m, although it's so long ago I could be wrong. And I know you'll argue that's what they've got by using an 8% interest calculation, but that's disingenuous IMO. The owners can't earn that rate on their £17m while they delay payment, and the charities that are missing out won't be missing out to the tune of 8%.

If the club borrowed money from the markets to allow the fine to have been paid immediately that would have been a fair rate. Manchester United were paying interest at 14.25%-16.25% on borrowings when acquired by the Glazers, 8% for a company with far lower and less predictable cash inflows, and which loses money each year is if anything a conservative rate.

 

[AmexRuislip]

From a legal perspective you’re probably right, but as QPR had zero means to repay the loans the owners have merely swapped a bad debt for a worthless piece of paper. Only impact it has on the club is it further dilutes Mittal’s (already small) share in the club.

The EFL have tried to claim the fine is £42m, its a fifth of that in reality.

How does one write off £60 million, in order to avoid a fine for breaching FFP regulations?

 

[El Presidente]

They said the £60m loan write off was a negative expense, thus reducing losses from £69m to £9m.

 

[El Presidente]

Tinky is bigger, but that boy has never been in a fight, and never will be. He's a lover, not a fighter. Dipsy would fight to the death if he had to.

Tinky is BADASS

 

[AmexRuislip]

They said the £60m loan write off was a negative expense, thus reducing losses from £69m to £9m.

Thank you.
Its fascinating stuff to read, if you're not feeling guilty about anything

https://www.efl.com/-more/governanc...appendix-5---financial-fair-play-regulations/