Good Business

[Houso]

Actually, though I can't be arsed to look through the entire accounts, there's one word that I suppose means that we're struggling more so than the last tax year:

"Parachute"

In fact, the below paragraph is somewhat pertinent... though no doubt full of spin:

To demonstrate the seriousness of the Club’s
intention to challenge for promotion, it is worth
noting that it is believed that the Sheffield
United first team playing squad salary budget
for 2008/9 season was, at £15.7 million, in the
top three in the Championship. In the current
season, despite the loss of the parachute
payments, we have maintained a salary budget
of over £12 million, which will probably be more
than all but the three clubs relegated from the
Premier League at the end of the 2009 season.
This is being funded mainly with the proceeds
from the sale of Kyle Naughton and Kyle Walker.

 

[lenners]

That's all understandable Len, and when put in terms like that, it's worrying.

On the other hand, surely you can only go on the last accounts and then take into consideration changes in the current tax year.

So, season tickets will remain around the same I assume. Repayments will remain around the same. Chengdu may cost us an extra million. Player sales will increase. Player purchases will drop. Player wages will drop. Tevez income will continue.

Does that not mean our next accounts will look better? Or am I missing something?

I think we lost about £12m last year. I doubt we'll lose as much next year but when you're already £48m down any increase isn't a good idea.
Last year also included big player sales and the loss of the club's biggest wage earner. The current year is unlikely to look pretty.
The focus on how much McCabe is taking out of the club will start to get much keener as 2010 goes on.

 

[Houso]

I think we lost about £12m last year. I doubt we'll lose as much next year but when you're already £48m down any increase isn't a good idea.
Last year also included big player sales and the loss of the club's biggest wage earner. The current year is unlikely to look pretty.
The focus on how much McCabe is taking out of the club will start to get much keener as 2010 goes on.

Aside from the lack of parachute payments I mention above; as I keep banging on about player sales will increase in the next accounts.

 

[JohnDenver]

The focus on how much McCabe is taking out of the club will start to get much keener as 2010 goes on.

I don't doubt this will look bad on paper. But unless it's viewed in the context of what he has put in, then it's not entirely fair.

This year's accounts will need some genuine scrutiny to see where we're headed, and when we can expect to achieve equilibrium in lieu of a new sugar daddy.

 

[alcoblade]

Fair enough, although (and im no KMc lover btw) i just dont see the reasoning behind the anger towards a guy who has genuinely done his best for SUFC and who without his interventions we would be in a much less attractive state now, and would undoubtedly not be the club we are today (i wonder if our expectations would be so high if he had never been chairman?).

I can forgive the so-called bad decisions (and bad luck) with the mess we are now in as they were done with the best of intentions and in most cases would have (and could still) proven an absolute genuis and astute move to making us self-sufficient - had this been all done and KMc was calling in his loans right now and demanding all his money and walking away I would say different, but there is no signs of this being the case!

re. the bold bit about the hotel - a building such as the hotel is nearly always unprofitable and loss making for the first 12-18 months (initial decorating, renovations, ammendments, employee costs, with a lack of revenues and minimal operations make sure of that!) - after this sort of period is when a return starts to be realised - now can you see the logic and benefit in that? An asset that is not yet earning its 100% potential revenue is unlikely to show a profit immediately, but thats not to say it wont (in fact in most hotels' cases it is pretty much accepted!)

If the hotel in the next 12 month returns a profit (and remember much of its running costs is covered by the agreement with Copthorne etc), and then does so for the next 20 years, then has it not proven a good deal?



But, tbf, for much of his tenure WE HAVE been living on his handouts, prior to our most recent extravegances (sp?) on the ground, chegdu, hotel, investments etc he (and his co's) has underwritten millions of pounds in share issues in United (shares which anyone could have bought if they'd so chosen), all the while KMc knew he was more than likely going to be left to buy them hisself - he has ammassed substantion shareholding through this, spending well over £10m i'd imagine, he has bought the shareholdings of various other parties for similar expenses, and allowed united to join in some of his companies ventures when he could quite easily have left it for himself (some of the investment sales have gained profits in the past).

There comes a time when he can no longer continue this, and like you say he is now simply a creditor, however, despite earning substantial interest (but nothing compared to what might be available to him elsewhere for the sums owed by us), he has stated no intention of "calling in" these debts, so barring any takeover or a complete fall-out, this debt is not a problem.

You try asking for the same sort of security (especially now) from the likes of HSBC, LLoys, Barclays or even the Co-op and see what they offer. there is no suggestion that KMc is even thinking of calling these debts in, and for all we know he could negate some of these in the event of any takeover, or simply convert them too into further shareholdings or (unlikely but possible) he writes them off. As long as this remains the case we have nothing to fear from McCabes "debt".

UTB!

But the money borrowed from McCabe wasn't borrowed now - it was borrowed in the days of much lower costs of finance. Who's to say we couldn't then have issued bonds at around 8,9, 10% - the rate we're paying McCabe back now. Or we could have not bothered at all and remained primarily a football club, rather than a token gesture after thought attached to a property portfolio.

We can only speculate as to what McCabe has given us. I only see loans and a huge debt that could easily have been much bigger. If on top of this, we've managed to squander even more money that was a gift - then I'd counter that the mis management has been of breath taking proportions. Many clubs are in debt, but few are carrying our level of debt that have not at least had some time in the sun. We've had one year in the top flight! You say we have nothing to fear from the debt, but Mccabe is taking it back now, just not asll at once. It's that that is forcing player sales, IMHO.

I agree with your asessment of the hotel and I think in time it could prove an astute investment. I have much less faith in our second division corrupt chinese club that lost £2M last year alone, or the property empire acquired at the peak of a property bubble. I fear for us and pray we can offload some of this "crap".

UTB

 

[Grecian2000]

Beighton_Blade, are you Dr Jekyll to beightonblade's Mr Hyde?

I don't remember the book ever saying that Hyde's spelling and syntax went to shit but it does all makes sense now.

 

[alcoblade]

This year's accounts will need some genuine scrutiny to see where we're headed, and when we can expect to achieve equilibrium in lieu of a new sugar daddy.

How much more into debt should we go under the tenure of the next "sugar daddy"?

UTB

 

[Beighton_Blade]

Beighton_Blade, are you Dr Jekyll to beightonblade's Mr Hyde?

I don't remember the book ever saying that Hyde's spelling and syntax went to shit but it does all makes sense now.

For the lack of anything else which can quite explain my responce to that as well as this does...

...LOL! (boy i hate using that phrase!)

UTB!

 

[lenners]

I don't doubt this will look bad on paper. But unless it's viewed in the context of what he has put in, then it's not entirely fair.

This year's accounts will need some genuine scrutiny to see where we're headed, and when we can expect to achieve equilibrium in lieu of a new sugar daddy.

Really? How much has he 'put in'? What has he got in return? What is he now taking out?
I suspect we'll all be thinking much harder about these issues this year.
I seem to recall a claim he'd 'put' £50m in.
For starters, he now owns SUFC. He has a handy involvement in Hungary on the back of it. Many other doors will also have opened up through SUFC.
Huge amounts of cash are now being taken out and ultimately he has the potential option of being able to sell SUFC.
I'd hazard a guess that at the end of the day the claim of 'putting £50m in' will start to look very wide of the mark.

 

[Nick Jansky]

my take on it is that a chairman should make money separate from the football club and if he so chooses invest those profits into the club.

A lot of people on here are hoping that the club secures an investor. And there's nowt wrong with that, provided it doesn't turn out to be somebody similar to the clowns we have seen at Notts County & the like recently. But if investment is secured, do you believe that whoever comes in won't want a return on their investment?

I know people will use the "McCabe is supposed to be a Blade" line, and yes he is, but by funding us to the degree he has he has taken a gamble with his personal wealth and put an awful lot of his money where his mouth is, so I don't begrudge him getting a return on his investment.

 

[Houso]

Really? How much has he 'put in'? What has he got in return? What is he now taking out?
I suspect we'll all be thinking much harder about these issues this year.
I seem to recall a claim he'd 'put' £50m in.
For starters, he now owns SUFC. He has a handy involvement in Hungary on the back of it. Many other doors will also have opened up through SUFC.
Huge amounts of cash are now being taken out and ultimately he has the potential option of being able to sell SUFC.
I'd hazard a guess that at the end of the day the claim of 'putting £50m in' will start to look very wide of the mark.

For what it's worth, and despite being a big fan of McCabe, I agree with all this. He knew what he was doing and knew that ultimately he was quite protected with the loans provided by the various groups of which he heads.

That said, I definitely think he did it with his heart in the right place. He also made three very big misjudgments (namely Chengdu, Robson and Blackwell).

Despite all this, and despite our 'debt' (which I still place in apostrophes as it's a debt like no other in football), I believe we're in a much better position than when he joined and he's the best chairman we've had in my lifetime.

I also believe that investment is close. Much closer than it is for our porcine cousins across the city.

 

[alcoblade]

I also believe that investment is close. Much closer than it is for our porcine cousins across the city.

We've had the "best chairman in my lifetime"* and after his tenure have found ourselves £50M in debt. You may call it "debt", but however we define it, it still requires millions of pounds every year to fund from now on.

Given that, and that the next lot of investement wont be from the "best chairman in my lifetime", do we want more "investment"?

I don't.

UTB

*I don't subscribe to this. Far from it.

 

[alcoblade]

I know people will use the "McCabe is supposed to be a Blade" line, and yes he is, but by funding us to the degree he has he has taken a gamble with his personal wealth .

Has he really though? Really? What's the risk that he wont get his money back from his own company? Very small, I suggest.

A much larger risk is that his own company will have to sell off most of its' saleable assets* should the repayments not look like being made.

*Read the two Kyle's, for starters.

UTB

 

[Nick Jansky]

We've had the "best chairman in my lifetime"* and after his tenure have found ourselves £50M in debt. You may call it "debt", but however we define it, it still requires millions of pounds every year to fund from now on.

Given that, and that the next lot of investement wont be from the "best chairman in my lifetime", do we want more "investment"?

I don't.

UTB

*I don't subscribe to this. Far from it.

Out of interest, who has been the best chairman in your lifetime?

 

[alcoblade]

I would say thay've all been shite, sadly. McCabe threatened (and tried to be) otherwise but has ended up the same. I think he was the best intentioned. I also think he's possibly done the most damage, though only time will tell.

UTB

 

[Nick Jansky]

I would say thay've all been shite, sadly. McCabe threatened (and tried to be) otherwise but has ended up the same. I think he was the best intentioned. I also think he's possibly done the most damage, though only time will tell.

UTB

So if they have all been shite, but he is the best intentioned, doesn't that make him the best?

He hasn't done the most damage - I would say that is a toss up between Brealey & Hassall.

 

[Houso]

I agree that only time will tell. And as JD says above, the next accounts will be very telling. Until then, it's fairly moot.

 

[Sothall_Blade]

I agree with your asessment of the hotel and I think in time it could prove an astute investment. I have much less faith in our second division corrupt chinese club that lost £2M last year alone, or the property empire acquired at the peak of a property bubble. I fear for us and pray we can offload some of this "crap". UTB

I too was under the impression that we had a lot of money tied up in property that could be offloaded if necessary. But according to this article it isn't the case:-

"Sheffield United plc, which is 70% owned by Scarborough and chaired by McCabe, has four major assets: the 10 acre Bramall Lane stadium site, the 22 acre Shirecliffe Road academy, the 4.5 acre Crookes Junior Academy and the 4.3 acre Thames Health Club in Staines.
Sheffield United plc also has two joint ventures running with Scarborough: United Scarborough Estates and United Scarborough Developments. It is developing a 149-bed hotel and a serviced office complex, both at Bramall Lane. The offices are operated by Forsyth Business Centres, which is 100%-owned by Scarborough."

We've already sold the Health Club. We can't and definitely shouldn't sell Bramall Lane, The Academy or The Junior Acadamy. So that just leaves the Hotel and the Forsyth Business Centre.

Personally, I still think it would be better for United in the long run to flog the hotel, pay off a big chunk of debt and avoid making the hefty interest payments. Why doesn't McCabe just buy it with one of his other property companies if he's so sure it's going to be a money-spinner?

 

[super_pig]

>To me this looks like paralysis
indeed it is but we can thank robson for this.. one good thing is that a couple of the ridiculous contracts run out this summer i think

are you sure that we own bramall lane? i can never seem to get a straight answer on this..

 

[alcoblade]

So if they have all been shite, but he is the best intentioned, doesn't that make him the best?

He hasn't done the most damage - I would say that is a toss up between Brealey & Hassall.

Under Brealey we ended up 2 divisions higher, had 3 times as many seasons in the top flight, and finished with a fraction of the current debt levels. I was tempted to argue that he'd been the best

UTB

 

[alcoblade]

I too was under the impression that we had a lot of money tied up in property that could be offloaded if necessary. But according to this article it isn't the case:-

"Sheffield United plc, which is 70% owned by Scarborough and chaired by McCabe, has four major assets: the 10 acre Bramall Lane stadium site, the 22 acre Shirecliffe Road academy, the 4.5 acre Crookes Junior Academy and the 4.3 acre Thames Health Club in Staines.
Sheffield United plc also has two joint ventures running with Scarborough: United Scarborough Estates and United Scarborough Developments. It is developing a 149-bed hotel and a serviced office complex, both at Bramall Lane. The offices are operated by Forsyth Business Centres, which is 100%-owned by Scarborough."

We've already sold the Health Club. We can't and definitely shouldn't sell Bramall Lane, The Academy or The Junior Acadamy. So that just leaves the Hotel and the Forsyth Business Centre.

Personally, I still think it would be better for United in the long run to flog the hotel, pay off a big chunk of debt and avoid making the hefty interest payments. Why doesn't McCabe just buy it with one of his other property companies if he's so sure it's going to be a money-spinner?

I think we own a huge chunk of a company called "Blades Realty", with Scarborough owning the rest. A huge chunk, if not all of Blades realty is property.

UTB

 

[beightonblade]

yer have to laff.............

McCabe might know fook all about hoofball but property ...... he's one of the best.

 

[Nick Jansky]

Under Brealey we ended up 2 divisions higher, had 3 times as many seasons in the top flight, and finished with a fraction of the current debt levels. I was tempted to argue that he'd been the best

UTB

He also left us with a 3 sided ground, and sold Deane from under Bassett, which got us relegated. Bassett had to put his hand in his own pocket to fund transfers. And he was quite prepared to unload us to somebody like Hashimi.

 

[Studge]

That's the top and bottom of the staggering financial picture at United.
£80m, absolutely astonishing way to live a dream that resulted in one season in the sun.

Not quite right the £48M debt reflects the situation before the receipt of the Kyles monies and the Tevez monies the inflow of which would presumably reduce the debt by £30M to £18M not increase it by £30M to £78M albeit over the period covered by the terms of WHU's repayment. That assumes of course that our current years budgeted expenditure is covered by our income.

In simple terms as WHU makes a repayment to us their debt to us reduces we then pay Mr Mccabe / Scarborough the same amount our debt to him/them reduces which of course represents approx £26M of our £48M Debt.

 

[alcoblade]

He also left us with a 3 sided ground, and sold Deane from under Bassett, which got us relegated. Bassett had to put his hand in his own pocket to fund transfers. And he was quite prepared to unload us to somebody like Hashimi.

Agreed, hardly a ringing endorsement. But on the field (someone remind McCabe where that is) he achieved far more than McCabe did / has.

UTB

 

[alcoblade]

Not quite right the £48M debt reflects the situation before the receipt of the Kyles monies and the Tevez monies the inflow of which would presumably reduce the debt by £30M to £18M not increase it by £30M to £78M albeit over the period covered by the terms of WHU's repayment. That assumes of course that our current years budgeted expenditure is covered by our income.

In simple terms as WHU makes a repayment to us their debt to us reduces we then pay Mr Mccabe / Scarborough the same amount our debt to him/them reduces which of course represents approx £26M of our £48M Debt.

The Tevez money was included, in its' entirety, in the last set of accounts where the upshot was a £48M debt.

UTB

 

[Studge]

The Tevez money was included, in its' entirety, in the last set of accounts where the upshot was a £48M debt.

UTB

I am not sure I understand what you are saying.

The income was included in the P & L A/C and the opposite entry is a debtor on the balance sheet as we have not yet received it. It does not form part of the £48M debt well apart from the fact that Mr Mccabe/SIG lent us monies against this debtor.

The subsequent receipt of the debtor will reduce our debt to Mr Mccabe/SIG.

 

[alcoblade]

I am not sure I understand what you are saying.

The income was included in the P & L A/C and the opposite entry is a debtor on the balance sheet as we have not yet received it. It does not form part of the £48M debt well apart from the fact that Mr Mccabe/SIG lent us monies against this debtor.

The subsequent receipt of the debtor will reduce our debt to Mr Mccabe/SIG.

Perhaps I misunderstand it, but I dont think so. As I understand it, our net debt, the difference betweem money owed by us and money owed to us, is £48M.

UTB

 

[Studge]

Perhaps I misunderstand it, but I dont think so. As I understand it, our net debt, the difference betweem money owed by us and money owed to us, is £48M.

UTB

No you misunderstood it. The term net debt in the financial statements actually represents the monies owed in bank overdrafts and loans less cash in hand and at bank which is £47.304M. This ignores our debtors of £30M and indeed our other trade creditors, accrued expenses and deferred income of approx £17M so the figure that is your understanding of net debt would be nearer £34M than £48M.

 

[Highbury_Blade]

This is the first time i've heard anything like this on here studge, despite oodles of people that supposedly know something about accountancy dissecting the accounts.

Are they all wrong?