QPR REDUCE LOSSES

The club haven't written off £60m, the owners have and they can afford to! Football is almost never a profitable investment, it's a rich mans hobby and the sorts of money involved to the likes of Fernandes and especially the Mittals is nothing really. There's no real difference to the owners giving that money then money generated through sponsorship, it's money from a non revenue generated source used to fund the club, it makes perfect sense to do as it stops the club being hit with a big fine under FFP which the owners would end up covering anyway. The club is clearly moving in the right direction with reducing running costs and the owners have rightly taken the hit for previous bad spending. All the finances will be handed to the FA and so will not be dodgy at all, some people on here clearly don't like to be proved wrong about the intentions of our owners!!

 

This will all be detailed in the accounts. There's an Exceptional Income entry in P&L accounts for £60 million, offsetting the loan in the liabilities column. These two cancel themselves out and that's sorted as far as the club goes. The shareholders will declare a loss on their personal returns for £60 million, offsetting that against whatever they earn, and resolve any tax implication with HMRC or wherever they pay their taxes. All verified and signed off as approved before anyone announced anything.

 

It's not like the owners have given away £60 million. They will get it back when/if they sell the club.

Example:
-Club valued at £200 million
-The owners are owed £60 million by the club

A buyer would then have to pay the owners £140 million and take on the debt. If the club didn't have any debt towards the owners then the buyer would have to pay £200 million.

The owners will get their money either way.


It's still good news to see the losses reduced and heading in the right direction. The club is in a much more stable financial position.

 

If there is a credit entry in the Profit & Loss of £60m it means that without the write off/gift the loss would have been £69.8m and a very different scenario....

 

Exactly why this has been done. and why it's good that the shareholders have taken on the responsibility for the poor financial state rather than allowign the club to carry the burden for their previous mistakes.

It shows we have owners that are learning, that are aware of their mistakes, and that have the club's stability and future as a priority.

 

I have stated all along that the previous years accounts would have carried provisions that allowed for the club to post far better results in the latest published ones.

I expect a big thank you is needed for Rebecca Capelhorn. The chances that we were ever going to show losses that would inflict a massive FFP fine were always beyond my comprehension.

Fines are what we pay accountants to avoid!

 

Your misled certainty about footballers paying tax reveals a lot about you. Footballers do pay tax on their wages. Loop holes around this do not exist any more. If you are aware of a scam around this then please let me know and I will have my wage directed through the same scheme.

They do however exist on their commercial earnings/image rights. And the top top players who share this with their clubs their image rights do negotiate deals to enhance their share of these rights in agreement for lowering their wages. The image rates are paid into a company they set up and to which different tax rules apply. But don’t worry SWP isn’t getting enough in image rights to off set this so mr tax man still gets his 45%

Think of the loan like your mortgage. QPR had a mortgage for £65m and had to by back £x a month. This has been written off so this outgoing over the year was brought down to zero.

 

Understand this they have written it off because the alternative was a bigger fine to go with the loss

TF and co aren’t at the club to make money. There here because it’s a fun play thing for very wealthy men and in TF’s case his ego and his business benefit from the fame and exposure it courts.

But no they don’t want to lose more money then necessary or any money if possible but they recognise it’s a possibility. As demonstrated by their behaviour.

This £65m in loans they were due back but to keep the debt was counter productive because it would have meant incurring a fine. By writing it off they have lost this money!! It’s gone!!

Bulk of the clubs cash flow is spent on wages and signings. Andy Johnson £45k a week then leaves on a free. That money’s gone there’s no come back. Too make money they need to win competions, stay in the prem and pick up the tv money, and sell players for a profit.

The only prospect that they will make money back is in a Mike Ashley sort of way and draw money on the profits the club makes but do do that we would need to be an established premier league side. So that’s not too daunting a prospect in the scheme of things especially as its unlikely in more than one sense.

Secondly would be to do a Karl Oyston and ruthlessly nick all the parachute money and run a bare minimum club but this would damage TF as a person and consequently his Air Asia brand so this obviously never would happen

To back up your certainty and highlight my apparent naivety can you explain the “there will be other ways to get them the money owed”. Just to add some substance to this (remembering that a loan written off means no money is actually owed)

If the owners ever do get their money back they and the club will both have done very well.

Football is now a loss leader for Sky. Even they have given up trying to make money out of football. If it gets too expensive I will remove the sports add on and go down the pub when a game’s on I want to see or watch it on line.


Sorry Dave but you sound a bit like a stereotypical looney lefty just ranting about people with lots of money and scattering out meaningless undefined statements like the ‘bubbles going to burst’ and people struggling

“60 million quid like it was nothing when people are struggling is not good and i believe its a lie anyway”

What the hell does that mean? Would you like them to have not written off the cash and incurred further fines?... “when people are struggling”… you really are difficult to put right because your scattering off unconnected points in all different directions.


We are discussing the QPR accounts there is no need to bring in charity or assessments agains the latest assessment of how we now define poverty. This isn’t the place for a debate about the sort of unconnected issues you are raising.

 

As Wormwood has rightly pointed out, the writing off of the debt is likely to have had a favourable impact on the reported profit or loss. The debt will have sat as a liability on the club's balance sheet, so if its written-off this will have been debited under double-entry bookkeeping and the resulting credit will have had to go somewhere, presumably against earnings, unless there's been some clever accounting sleight of hand performed by the new FD. Without this debt write-off, therefore, its quite possible that a £10 million loss would have been a £70 million loss and thus comparable to the prior year.

Dave therefore might have a point.

Obviously we shouldn't ignore the pain that the shareholders would have felt in writing off £60 million, but there may be favourable tax consequences to partially offset the impact of this on them as individuals.

None of this says anything other than the club was living horrendously beyond its means. Certainly its real operational income was significantly less than its operational overheads, and probably remains so.

It would not surprise me if this imbalance between income and expenditure continues markedly into 2014 and today. Are the shareholders going to write-off another chunk of their debt to mask further substantial losses, or have actual, tangible cost savings been realised since?

 

Quite the opposite, I would have thought. What reduces the value of the business is its substantial cost base compared to lower earnings. If a creditor tears up your obligation to him it can only be a good thing (taken in splendid isolation

 

Good news indeed. And they say lawyers are crooked?????????!! At one fell swoop we can be transformed from a club making disastrous financial decisions to one which has only made a modest loss by the simple device of the owners kissing the money good bye. A painful lesson for them and one which hopefully they will not be repeating. But to put it in Norway's terms i.e "We're in a much sounder financial health. The owners long term commitments looks more assured" seems a tad silly to me. We're not. As a business we are not profitable. The owners won't be committing long term to anything if they are going to have to repeat the gesture year after year. However we should all thank them that they have taken responsibility for their errors. The icing on the cake would be if they could work out a way to sue the various bloodsuckers who have filled their boots over the last few years.

I do feel much more confident now that we can face relegation knowing that it would not place us in danger of financial meltdown, we would have a chance to develop at a sensible pace, could afford to challenge for promotion and that we won't be committing financial suicide in one reckless gamble after another to avoid it.

 

? some strange stuff on here.

I don't share Dave's outrage but he is right in that this is a shocking way to do business. But it's the owners that are the mugs, club is in a slightly better position as a result.

They have only written off £60m of the £177m lent in the 2013 accounts. They may well have lent more since then (in fact they must have as we are still operating at a loss, unless we have asked a bank or Wonga to cover it) we are still at least £120m in hock to them. I have never heard any of them promise to write off the whole debt, I'd like to see the link to that if anyone has it.

The overall debt is not added to or taken away from the annual P&L, it sits there in the background. Reducing the annual loss by 85% is still a pretty staggering achievement. Who would have led this drive? The CEO and Finance Director in most circumstances. We have two vacancies for these positions.

The revenue of the club is all revenue, sponsorship is no different to gate money or funds earned through player sales. The most important element is TV money. I'm pretty sure that no premiership club can support itself through gate money alone. Gates could contribute more for us, but they will never come near to covering the wage bill.

The housing development plus stadium is the way the owners get their cash back. If it happens.

Who the **** is going to pay £200m for QPR Norway? Assets - the land the crappy stadium sits on and a few players. Goodwill/brand value - zero except for a few thousand idiots like us.

Here's the state of play for premiership clubs at the end of 2013 season:

http://www.theguardian.com/football/2014/may/01/premier-league-accounts-club-by-club-david-conn

A few with profits (Swansea with £21m is impressive) many with much higher debts than even us, but none I think paying their players 128% of turnover, like we did. This is what we must have changed, plus not spending as much on transfers, but it was a crazy situation to get into.

I can't be arsed to look at FFP again, but if it isn't designed to stop billionaire owners 'free gifting' clubs to buy success*, then it's even more useless than I thought.

The full accounts will be interesting reading, and still good news overall, but far from out of the woods.

* Football club owners: your team can be relegated even if you spend your last penny on it.

PS. Didn't see Uber's post before writing this. He is more likely to be right than I am.

 

Hardly seems like a normal operating mortgage or loan. If the credit for writing off the shareholders loans is credited the P&L all in the 13/14 Accounts then I guess it must be as exceptional income. But we'll see the detail in the Accounts eventually.

 

Peter, I agree 100% !!

Brilliant news for the supporters and the ongoing financial condition of the club.

A big Thank you to TF and the Board.

 

It would be Exceptional Income, as I suggested above.

 

It's encouraging to see how many financial experts we have on here.

 

What does it reveal about me exactly?

...and where was the certainty that you refer to?

 

The Profit & Loss account will make interesting reading.....the trading loss will be around £69.8m before Exceptional Items and that is where the write off will be highlighted.

 

If that's the case it's a transparent scam and the underlying finances are still dire. If they had written off the whole £177m would it show that we made a £110m profit? While actually making a £70m operating loss?

Stroller you are right, my financial expertise comes from a few months as a business journalist 35 years ago, I strongly suspect everything that I posted above, apart from the link, is wrong. Oh well.

 

That's how it should be shown Stan but at the moment it's all speculation on our part.....the only thing that points to this is the claim to have reduced costs by £22m but as we were starting from a base of around £140m (?) in the 2013 accounts (wages alone were £110m from memory) there is no way that the trading loss alone would be the £9.8m reported given reduced income.......there has to be the Exceptional Item.