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That new shares issued story 11:03 - Jul 19 with 1241 views

Can someone with more financial savvy than me explain the difference between that and simply loaning us the money? From a risk to the club perspective.

i.e. does this create debt, or is it simply investment into the club that only gets reclaimed if the share value goes up when we are more successful?

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That new shares issued story on 11:06 - Jul 19 with 1217 views

STYG

If we are loaned the money, we have to pay it back and the club is then at risk financially.

If they do this, then essentially they are giving us the money, meaning it doesn't have to be paid back and we are not at risk.

Essentially the difference between giving a jobless mate £500 as a present and lending them £500 and expecting it back when it might put them deeper in the mire to do so.

That new shares issued story on 11:08 - Jul 19 with 1191 views

PhilTWTD

That new shares issued story on 11:06 - Jul 19 by STYG
If we are loaned the money, we have to pay it back and the club is then at risk financially. If they do this, then essentially they are giving us the money, meaning it doesn't have to be paid back and we are not at risk. Essentially the difference between giving a jobless mate £500 as a present and lending them £500 and expecting it back when it might put them deeper in the mire to do so.

To a degree, although not a huge amount of difference to the loans to ME as they were never made with the intention of them being paid back, other owners have loaned cash on a similar basis at other clubs. Although having said that, the loans probably did inflate the price when ME sold the club, although I assume the investment via this route would do much the same.

The most significant aspect from a practical angle is the lack of FFP impact, I'd say.

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That new shares issued story on 11:08 - Jul 19 with 1174 views

Cheltenham_Blue

That new shares issued story on 11:06 - Jul 19 by STYG
If we are loaned the money, we have to pay it back and the club is then at risk financially. If they do this, then essentially they are giving us the money, meaning it doesn't have to be paid back and we are not at risk. Essentially the difference between giving a jobless mate £500 as a present and lending them £500 and expecting it back when it might put them deeper in the mire to do so.

Its not a loan.

It's a share issue related to a cash injection.

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That new shares issued story on 11:09 - Jul 19 with 1172 views

XYZ

That new shares issued story on 11:06 - Jul 19 by STYG
If we are loaned the money, we have to pay it back and the club is then at risk financially. If they do this, then essentially they are giving us the money, meaning it doesn't have to be paid back and we are not at risk. Essentially the difference between giving a jobless mate £500 as a present and lending them £500 and expecting it back when it might put them deeper in the mire to do so.

I suspect it also gets around the salary cap restrictions if the funds come in as share capital (locked in) rather than as a loan (repayable).

That new shares issued story on 11:10 - Jul 19 with 1158 views

STYG

That new shares issued story on 11:08 - Jul 19 by PhilTWTD

Thanks.

I assume hypothetically Evans could have called the debts in, albeit we may have had no money to pay them or he'd be insisting on paying himself?

Presumably he made hundreds of millions in tax breaks from this system right? PMSL.

That new shares issued story on 11:15 - Jul 19 with 1107 views

PhilTWTD

That new shares issued story on 11:10 - Jul 19 by STYG
Thanks. I assume hypothetically Evans could have called the debts in, albeit we may have had no money to pay them or he'd be insisting on paying himself? Presumably he made hundreds of millions in tax breaks from this system right? PMSL.

Yes, he could potentially, but I don't think there was ever any intention to do so and he may have been able to sell on the debt with the club, I suppose, although obviously he didn't.

That new shares issued story on 11:20 - Jul 19 with 1055 views

chicoazul

That new shares issued story on 11:06 - Jul 19 by STYG
If we are loaned the money, we have to pay it back and the club is then at risk financially. If they do this, then essentially they are giving us the money, meaning it doesn't have to be paid back and we are not at risk. Essentially the difference between giving a jobless mate £500 as a present and lending them £500 and expecting it back when it might put them deeper in the mire to do so.

Wrong.

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That new shares issued story on 11:26 - Jul 19 with 1022 views

Sikamikanico

Its preferable all round. Club gets a cash boost.

Purchasing shares gives gamechanger a better asset that is easier to sell on. Its possible that the pension company has rules against lending money rather than using it to purchase assets.

That new shares issued story on 11:37 - Jul 19 with 957 views

PrideOfTheEast

That new shares issued story on 11:15 - Jul 19 by PhilTWTD
Yes, he could potentially, but I don't think there was ever any intention to do so and he may have been able to sell on the debt with the club, I suppose, although obviously he didn't.

The primary reason ME initially preferred to debt fund the club is because it's an easy route to extract cash if we're ever successful, e.g. get to the premier league, repay some debt looks a lot better than taking dividends etc.

That new shares issued story on 11:41 - Jul 19 with 918 views

PhilTWTD

That new shares issued story on 11:37 - Jul 19 by PrideOfTheEast
The primary reason ME initially preferred to debt fund the club is because it's an easy route to extract cash if we're ever successful, e.g. get to the premier league, repay some debt looks a lot better than taking dividends etc.

That is true, I can see the headlines in that situation, had it ever occurred. Think he might have looked to sell at that point though, and make his cash back that way.

That new shares issued story on 13:47 - Jul 19 with 699 views

HighgateBlue

That new shares issued story on 11:10 - Jul 19 by STYG
Thanks. I assume hypothetically Evans could have called the debts in, albeit we may have had no money to pay them or he'd be insisting on paying himself? Presumably he made hundreds of millions in tax breaks from this system right? PMSL.

You must really hate Evans to "presume" that he made "hundreds of millions in tax breaks". How on earth could he possibly have made hundreds of millions...?

That new shares issued story on 13:54 - Jul 19 with 658 views

HighgateBlue

One possible benefit is the SCMP consequence (the system that operates in place of the UEFA FFP systems that operate in other leagues). As far as I have ever been able to tell, a cash loan from parties connected with the club would not count as turnover for the purposes of the salary cap. However, there is nothing stopping certain sorts of capital receipts from constituting turnover for this particular purpose, and it may very well be that receipts from share issues would also fall within that category, allowing us to increase our wage bill higher than if the money were merely loaned.

As regards risk to the club, some might take the view that a loan creates a situation in which the owners could seek to enforce the loan further down the line, making the club insolvent if it cannot be paid. Also debt can be sold to third parties who might have a different attitude towards the club than Gamechanger. Ultimately it is the money of Arizona pensioners on the line, and some take the view that it would be surprising if those looking after that money could simply decide to write off the loans to be kind, rather than considering what duty they have to get best value for the pensioners.

Personally I have no evidence one way or another as to what they would do IF they ever injected a loan. Certainly those who thought that Evans would screw us over by insisting on repayment were not correct. I shall say no more about Evans.

The best explanation I've found of the SCMP situation is here:
http://www.financialfairplay.co.uk/scmp.php

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