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Clegg: Town’s Debt Not a Concern
Clegg: Town’s Debt Not a Concern
Tuesday, 20th Sep 2011 14:51

Town chief executive Simon Clegg says fans shouldn’t be concerned about the level of debt that the Blues have built up during their continuing push to get back into the Premier League.

The club’s inter-company debt stood at £55 million at the end of the financial year to June 2010, the most recent set of accounts.

That figure is made up of owner Marcus Evans’s annual injection to cover losses, plus his initial investment and £36 million relating to the debt purchased from financial institutions — the Norwich Union bond which built the new stands and the club’s overdraft with Barclays - when he became Town’s major shareholder in December 2007.

Clegg told TWTD: “The owner continues to back the club. He came into the club with his eyes wide open and has the resources to fund the ongoing expansion of the club and the purchase of new players.

“There is an inter-company debt and we’re well aware of that, but it is not something which is of major concern to me or the football club. There is nothing externally due to any creditors beyond the group, aside from £2 million in historic loan notes.”

Clegg says that that being the case, fears that the club might return to administration at some point in the future are misplaced: “As we are structured at the moment, I can’t see that there is any chance of re-entering administration.

“It’s a situation where one of the owner’s companies owes money to another of his companies but ultimately both are owned by him.”

Regarding plans for reducing the debt, Clegg says this would be something which would be looked at once the club is in the top flight with the specifics decided nearer the time: “This is hypothetical and it would be wrong to speculate on how future Premier League monies would or would not be used. The focus at this present time is to get ourselves into a situation where this becomes a reality.”

Town’s player wage bill was 85.3% of turnover in the year to June 2010 and Clegg confirms that this year’s figure isn’t going to be any lower.

However, the Championship recently agreed in principle to introduce UEFA’s Salary Cost Management Protocol, which would mean reducing player wages to 60% of turnover, something Clegg admits will be tough for the club to implement: “We’re all under pressure from the Football League to move towards some sort of break-even model and that will be challenging going forward. We have to adhere to whatever rules and regulations the Football League put in place.

“There was an agreement in principle at the AGM in the summer and the devil is in the detail and we are not at the detail stage yet.”


Photo: Action Images



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suffolkpoker added 15:12 - Sep 20
The only good thing about the loan its owed to another oj marcus evans business.
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Tractamatt added 15:17 - Sep 20
Please forgive my ignorance in such matters but what is a "historic loan note"
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runningout added 15:17 - Sep 20
As fans dont take us for fools Mr Clegg... You seem to be naive in your attempt to emotionally blackmail our supporters with unreasonable ticket and consumable pricing at PR. Attendance v Cov was embarrassing and Mr Cleggs dept is totally responsible.
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GerryCreaney added 15:18 - Sep 20
"Clegg says this would be something which would be looked at once the club is in the top flight"

Next year then ;-)
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PhilTWTD added 15:21 - Sep 20
TractaMatt

Loan note details here: http://www.twtd.co.uk/news.php?storyid=12236
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cornishnick added 15:27 - Sep 20
What happens if ME gets fed up and walks out? Does he take the debt with him or does the club owe him £55M?
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vestanpance added 15:31 - Sep 20
That's quite a lot of hypothesising.
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TractorMan added 15:38 - Sep 20
Cornishnick - Sheepshanks structured the deal in such a way that we an only ever owe him around £8 - £10m he paid for the "debt".

If he walked away or sold, any new owner would only owe this amount.

With the way Evans's companies are structured, losses here are offset against profits elsewhere to reduce tax liabilities.
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hype313 added 15:53 - Sep 20
Isn't pinning your hopes on promotion and paying off debts a bit like Northern Rock offering 120% mortgages on the hope that house prices would rise year on year...

We know what happened with that..
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alfromcol added 15:55 - Sep 20
runningout added 15:17 - Sep 20
As fans dont take us for fools Mr Clegg... You seem to be naive in your attempt to emotionally blackmail our supporters with unreasonable ticket and consumable pricing at PR. Attendance v Cov was embarrassing and Mr Cleggs dept is totally responsible.

The attendance against Coventry, of which I was 1, involved a number of factors, not least that it was an evening KO, Coventry are not top class opposition, the match was on Sky and Town's form and the level of entertainment provided in the the months before last night has been poor.

Not all of these are Cleggs fault
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sonian_blue added 16:22 - Sep 20
Are any of these in fact Cleggs fault alfromcol?

I would suggest not.
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tractordamage added 16:39 - Sep 20
Sonian_Blue and Alfromcol...thanks for having a grasp on reality and knowledge.
How can someone NOT know why there was a small attendance last night?! Incredible.

It seems 'runningout' is our new ignorant berk or village idiot!! Lots of opinionated trolling to enjoy in the next few weeks then. Jas999 either has a new account or he's got competition.

I would have thought all those people lacking social skills would be in the Big Brother house right now. Clearly not - there's still a couple of them around trying to scandalise everything about Ipswich.
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olimar added 16:39 - Sep 20
Tractor man re the below:

"Sheepshanks structured the deal in such a way that we an only ever owe him around £8 - £10m he paid for the "debt".

If he walked away or sold, any new owner would only owe this amount."

The second part of that is true, the first part isnt.

The club have to repay that debt IN FULL at an unspecified point in the future (presumably with PL football).

If MEG sell the club, they are only allowed to sell on the "ownership" of that debt for £8m.

In other words, if Marcus Evans decided to sell the club the day after he bought it, for the exact same amounts he paid for it, then the club would have still represented better value than before he came along.

Because there used to be an outstanding debt of £36m to external parties, which any buyer would have been saddled with. But post-ME, that debt is only £8m but could potentially represent a £28m profit to the buyer in the event the club repay it in full.

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broomfield123 added 16:44 - Sep 20
In all fairness to clegg he gets told what to do by evans. After all we all have to do as the boss tells us
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nearly50yearsblue added 16:44 - Sep 20
I have a set of the clubs accounts,£60 million,June 2010,next accounts due mid 2012.
Marcus Evans bought a debt of £32 million,for about 20%,then injected £12 million.
Thats £44 million in total,( minus 80% out of the £32 million)
How come we now owe £60 million and we only came out of administration 7 years ago.
Somebody is getting very rich from our season ticket money,which should go in trying to build at eam.
That the answers we deserve.
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davidsc1971 added 16:56 - Sep 20
So in less than 3 years our debt has ballooned by £19m? That was before we spent serious wedge in the transfer market over summer 2011, paying large contracts to ageing players in the hope we get promoted?

This just shows how massively we will all need to thank Marcus Evans if this comes off and pray that this doesn't turn out to be some Ridsdale-style boom or bust gamble with our beloved team.

They need us behind them now. We so need to do our bit too.

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PhilTWTD added 17:10 - Sep 20
nearly50yearsblue

Season ticket income has been several million short of covering the club's annual costs, hence ME's yearly additional input and the increase in debt. No one is getting rich from season ticket cash.
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tractorboybig added 17:27 - Sep 20
Guys
the original deal is that when town (IF EVER) have been in the premier league for four years, then the club will pay Evans the WHOLE debt back. It would appear without interest.
However the sale was so quick in its execution I hope sheep shagg** looked at the small print.
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PhilTWTD added 17:49 - Sep 20
Tractorbigboy

That's not correct. There is a five-year clause relating to preference shares:

http://www.itfc.co.uk/page/NewsDetail/0,,10272~1181533,00.html
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tractorboybig added 17:51 - Sep 20
philTWTD
thanks when you get to my age the years sort of blend
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bluesimon added 18:11 - Sep 20
I'm amazed to read that £55m of debt is of no concern. I'd be very concerned if it was my money! I long for the day when we can be completely debt free, break-even and be competitive. At the moment those seem to be a long way away.

Looks like lots of work needs to be done for when the 60% rule comes in.
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bluesimon added 18:47 - Sep 20
I'm amazed to read that £50m of debt is of no concern. That's seems to be a very flippant comment to make. Is it beyond the realms of possibility to be debt free and competitive ever again?
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marcus139 added 18:50 - Sep 20
Some sense being spoken, a lot of nonsense too! This really is not something to worry about as clegg rightly says. It just means if we get promoted, do not expect us to spend much, will be payback time to mr evans. We will be like blackpool...however, i do think evans should write off the money he spent on keane and his reign as that was a publicity stunt for his company and name and was a big mistake for a club like ipswich. Other than this, it would really be a financial mystery if marcus evans walked away now!
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alfromcol added 19:41 - Sep 20
marcus139 It just means if we get promoted, do not expect us to spend much, will be payback time to mr evans. We will be like blackpool...however,

Marcus, not the real Marcus obviously.

If you read the link in Phil's post you will know that we have to be in the Premiership continuously for 5 years before ME gets any money returned. So his target must be to stay in the Premiership, rather than simply get there and get relegated. And to stay there he will need to continue to invest to stay there.
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beerhelps added 19:54 - Sep 20
I, for one, was not at the game last night.

Work and family committments for once did not stop me, nor did the tele, £30+ did.

Coventry are hardly a big draw, as Steve Foley said on the radio more than once 'you can only beat whos in front of you...', so it was full price for religation fodder.

The verdict is in the attendance figure.
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