|An Uncomfortable Truth|
Written by TBT on Thursday, 22nd Feb 2018 16:27
The Marcus Evans group of companies numbers over 30 different organisations and having a lame duck subsidiary running at a loss has its merits in terms of taxation.
ITFC is right at the bottom of the ME Group in terms of profit/loss and absolutely nobody within that Group cares one jot.
The initial plan was to invest in the team, reach the Premier League and flog the club immediately. Marcus Evans, a Chelsea fan, proclaimed himself as an “admirer” of Ipswich Town in his first statement and I recall thinking at the time that this was a strange word to use. A supporter would have used very different terminology.
I’m afraid nobody within the Marcus Evans Group, including Ipswich’s managing director (another Chelsea supporter) actually care about the quality of the football, the dwindling attendances and the fall of this once great club.
I won’t be in the slightest bit surprised if they extend the current manager’s contract because he is one of the few really good operators that has no ambition, will not constantly moan to the board about lack of funds, pick up a massive salary and keep ITFC in the Championship.
It is not too hard to survive in this league, the first principle you adopt is to concentrate on not losing. Forget about going on the front foot against average lame ducks like QPR and Bolton, focus on their respective strengths and nullify them.
Since I first watched Town beat Coventry 4-0 on a Tuesday night in 1974 I have been following the team on a home and away basis. It has been my life, my obsession, the one single thing I think about more than anything else if I’m truly honest. Sadly that passion is disappearing because I find it’s hard to care if the owners don’t.
I won’t be renewing our three season tickets after over 40 years and it sickens me to the core that Marcus Evans doesn’t care.
These people will go down in history as those that dismantled a great institution that was an important part of our lives but guess what? They don’t care.
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|DurhamTownFan added 16:40 - Feb 22|
No, I don’t believe they do care.
What can we do to stop this happening? Fans no longer have the funds to buy a club and all its debt. Only other rich people can buy a club these days and who is rich enough in Suffolk or interested enough?
|Orwellblue added 17:08 - Feb 22|
It's very sad times at the moment.
I'm the same as you, season ticket for the last 35 years and I never thought I would be as close to giving up our 2 tickets as I am now.
I love the club and it really hurts to see what is happening currently.
|Illinoisblue added 17:09 - Feb 22|
Could you expand more on this statement: "ITFC is right at the bottom of the ME Group in terms of profit/loss and absolutely nobody within that Group cares one jot"
Assume you have all the relevant numbers from the other MEG divisions to make that claim?
|sparks added 17:20 - Feb 22|
The opening paragraph is simply wrong. A loss is a loss.
|naa added 17:40 - Feb 22|
sparks: no it isn't. You can write the loss off against the tax to be paid on profit from other companies.
Why else do you think companies like Starbucks and Amazon run at a 'loss' in the UK.
This blog is quite right. Marcus Evans just needs a manager who will keep us in this division on almost zero funds and Mick is that man.
Wouldn't surprise me at all if he stayed. He's relying on the blind loyalty of fans to keep a core of them coming (and he's probably right).
|sparks added 17:45 - Feb 22|
naa- I cannot believe how many times this has to be explained to people on TWTD. Corp tax is 20%. So with a £6m, you can set off and reduce the tax burden by 1.2m (20% of £6m). However you have still lost 4.8m... Do you see?
|monty_radio added 17:59 - Feb 22|
I never understand this claim that the manager doesn't moan - him telling you that he doesn't moan is moaning. Him telling you that other clubs have zillions, but he just gets on with the gig is moaning. Him telling you e.g. this very week, that he has his squad of 19 to pick from is.....?
|delias_cheesy_flaps added 18:22 - Feb 22|
Another two or three years of MM!!!
It would be local football or rugby for me I’m afraid.
Dare I say it I’d rather we got relegated trying to entertain what fans we have left in an effort to entice back the thousands who have already left.
|TBT added 18:52 - Feb 22|
Firstly Durham Town Fan, "what can we do to stop this happening?" Is exactly the right question. I don't have an immediate answer but we all care about this club and there are tens of thousands of us, with varying financial clout that can change this situation.
Sparks, it isn't as simple as a corporation tax calculation. Having failed to get promotion and therefore immediately losing about 90% of the anticipated sale value, ITFC becomes a comparatively insignificant financial pawn in a low stakes game - ITFC, UEFA Cup winners of 1981 are no more than that. ME are now stuck with an entity that is very unlikely to reap any benefits and so the strategy changes to one of stagnation with a tiny depreciation in overall Group profits.
Either way my friend, are you denying that they don't care about the future of our football club?
|naa added 19:57 - Feb 22|
Sparks. That sounds fair enough, except that it's a well known strategy in business, so it can't be as straightforward as you suggest, otherwise companies wouldn't deliberately lose money through cunning accounting, to avoid paying tax
|naa added 20:03 - Feb 22|
Sparks. Actually thinking about it. Evans is just stacking the debt against the club. If he ever sells he'll cover the debt. But seeing as the debt hasn't actually cost him as much as it's worth (due to tax offset and the fact that he bought our initial debt for a massive discount) he will effectively make plenty of money. Assuming he ever finds a buyer of course.
|DazBent added 21:37 - Feb 22|
This is clarity amidst the s*** being thrown by everyone associated with the club. A sinking ship with a severe structural fault upstairs. It is difficult to remember a time when being an Ipswich fan was an exciting part of life. A victory this season feels underwhelming and defeat is boredom.
It is difficult to stay positive in these situations, but sometimes in a trough no horizon can make it seem worse than it really is. Looking to a future time it seems like ME will be around but a new manager could breath fresh air into the feeling of being an Ipswich fan. We are far from being a Premier league outfit but perhaps a different manager will make Saturday and Tuesday a better day out than it currently is and there is a good good chance that next season we will be led by a different set of personnel.
This all said, there is no doubting that this is a low point for the club. After 9 years without beating Norwich to concede in the last touch of the game, a month after the club unveiled Magical Vegas as our financial crutch with the average game being about as thrilling as a commute home. The problems at the top have created an inertia about the club with supporters beggining to forget why it is they have always gone to Portman Road. We are all in pain together.
|Coastalblue added 22:20 - Feb 22|
The Club is in a sad and poor state that's for sure, but making assumptions doesn't really help and I suspect there are a few in the piece.
|RegencyBlue added 22:26 - Feb 22|
I don’t pretend to know what is in it for Evans but what I do know is that his regime is slowly killing our club.
And in response to the inevitable ‘his money saves us’ comments I would ask this question. Saves us for what?
|nineteenseventyeight added 23:17 - Feb 22|
Evans had 2 big throws of the dice, Keane and Jewell, both went pear shape. To reap back what he can he has hired a guy that can keep our heads above water on the lowest outlay in transfer funds, McCarthy is doing the job that's expected of him. Evans has gone financially shy, his Millionaires toy didn't work out.
|MicksZzzTactics added 03:45 - Feb 23|
Maybe you really are so called 'Tax Expert' @sparks ... and then again maybe you ain't! ... but in any event your patronizing & DEAD SIMPLE math with the well known public available figure of "20% Corporate tax in the UK" (your post from 17.45) is fairly far from ehmm aligned with the very basic 'IDEA' of more or less DELIBERATELY running a business, often *among a larger group of companies*, with a loss (and ever-growing debt), exactly as @naah implied in his later responses.
....and nor does your little piece of elementary math ehmmm coincide much at all with what an ex. colleague of mine, who is the closest thing to a 'Tax Expert' that I personally know (he is a man of many trades, lawyering & tax-accounting being among them, but above all he is a terrific number cruncher, who as a matter of fact did have a fairly glorious stint once of exactly helping setting up businesses and seriously rich blokes to basically pay as little as possible in total tax all around the globe!), explained to me in late 2016 of what MOST LIKELY was Marcus Evans & 'The Marcus Evans Group' bigger PLAN with Ipswich Town FC incl. buying it's debt (at a favorable price) which then henceforth is owed to himself! And also seemingly very joyfully continuing to own the club DESPITE doing so *nowadays* with blatantly obvious very very minuscule amount of genuine ambition & at an annual loss!
And it sure wasn't in order to just shave off or save a "mere" mill (or 1.2 mill) by way of the standard 20% UK corporate tax as you imply is all he "gets out of it", as compensation! Rather my ex. colleague spun a very intricate tale & theory which fundamentally evolved around various concepts within the field of taxation of how a sizable debt and/or annual loss potentially can be tax-deductible *elsewhere* in a big corporate group of companies, as well as what is known within the field as "LOSS RELIEF" or more specifically "Group Relief".
Which all-in-all, as I understand it, basically works by one member of a group surrendering it's losses (and I think quite possibly even total debt too if i recall correctly) to another member of the group, which can then deduct that loss etc. from its total profits, thus reducing the amount of corporation tax payable by THEM! ....who obviously don't necessarily has to be based in the UK and thus adherring to UK laws & rates etc.!
But whatever the very current "semi-shady" fiscal reality is when looking at pros & cons of owning ITFC anno 2018 the way ME & 'The Marcus Evans Group' do (did anybody actually mention the alleged abundance of various awesome "addresses" of theirs in notorious & exotic 'monetary places'??? :-) lol :-) just joking!) ....well I have to side predominantly with @naah here, in the sense that I'm very positive that neither the real tax-accounting nor any part of it's inherent math is REMOTELY as straightforward as for instance you @sparks repeatedly try to portrait it.
|tallguy6767 added 04:12 - Feb 23|
@sparks consider yourself owned by the zzz tactics ! Lol.
Bottom line is Evans doesn't give a toss !! And the only ones that are suffering are the fans.
|doctorbuzz added 06:51 - Feb 23|
Sparks is right -the max relief is 19% or whatever so there is no benefit in making losses in a low tax environment.
|naa added 13:16 - Feb 23|
doctorbuzz, that would sound very convincing if only there weren't plenty of companies doing exactly that. They aren't doing it for fun.
|naa added 13:23 - Feb 23|
Personally, I'm sceptical about our losses. Until this season we got some of the best gates in the division (higher than some Premier league clubs), we have one of the lowest wage bills in the division, we well in credit for transfer fees over the last five years yet somehow we lose £6m every year.
It's within Evans interests for us to lose him the most money.
He can offset them against profit to reduce his taxes and he just adds the amount to the total the club owes him. So if the losses were somehow increased it would be in his favour.
|longtimefan added 15:49 - Feb 23|
naa, So our publicly available accounts with listed income and expenditure are a work of fiction then? I suggest you contact the HMRC and let them know - I'm sure they'd be interested!
|longtimefan added 16:23 - Feb 23|
naa, what other multi-national companies do is to run there UK subsidiaries at a loss by charging them inflated prices for access to product, materials, IPR etc so that they make a paper loss. This isn't really a loss as those products, materials etc don't really cost them anywhere near what appears on the UK accounts. They then use this "loss" to avoid paying tax in the UK, while the real profits (generated from the inflated charges to the UK business) are taxed offshore at a low rate. That is patently not what is happening at ITFC. ITFC makes a loss that could well be used to offset other tax at other UK ME businesses but it's only a percentage of a real loss, not a paper one.
As to MicksZzzTactics comments, he has a lot of fancy words but still ends up with basic loss offsets which will be no more beneficial than 21% of the loss. If you want to understand Group Relief read: http://www.tolleytaxtutor.co.uk/taxtutor/files/subscriber/business-tax/corporati
|OohArrPaulGoddard added 18:58 - Feb 23|
The basic accounts are on the club website. I think in the most recent year we made a loss of around 4 million although some of this was debt interest so presumably paid to ME. In the year we sold Tyrone Mings we actually made a profit. That year the club made more from that one player sale than all the gate income. Tv revenue is almost as much as gate income. I think if we made no player sales ME would need to put in around £5 million a year. Fans do not have the power they used to as they are only around 30-40% of total income. I am not sure Marcus has put as much in as Mick claims. £100 million is debt is not the same as £100 paid into the club. Our highest every paid for a player is still by George Burley in the season we were relegated, not the Marcus Evans. However Marcus is in charge now and he will run it how he sees fit. If he wants to run it like this he should drop season tickets prices as we still pay one of the highest in the league for low entertainment and as most of his income comes from elsewhere it would not effect income that much. Perhaps not as much as losing another couple of thousand fans this season. Sad times.
|TBT added 20:23 - Feb 23|
I happen to agree with MicksZzzTactics however we are all missing the point. The complex accounts of the M E Group can be analysed forever but the fact is ME and his gang don’t care about ITFC whatever way you cut it and we need to do something. We averaged 25,000 in 2005 and on Tuesday night there was 9,751 in the ground. They don’t care about this and we do!
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|naa added 08:48 - Feb 24|
Ok thanks for clearing some of this up.
So, we can say that some of our loss is actually payment to Evans. We can also say that the loss can be used to offset his profits in other areas and that all of the loss is being put against the club so, in the longer term Evans could clear it off his books, despite the fact that the debt didn't cost him anything like as much as it's valued at.
I guess he needs to decide what he wants to do then as it still looks to me as though getting us promoted and selling us would be the best business decision, but clearly he isn't interested in that option so we do need to ask ourselves why.
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