Baggies in financial trouble?

[Lanterne Rouge]

West Bromwich Albion: Fans' group to protest at QPR home match with delayed entry - BBC Sport

I`m sure @Mr Popodopolous or @Davefevs can elaborate on whether this is as bad as it sounds to a layman like me.

[Roe]

Of course they are. Same as any of the "big" clubs once they run out of parachute money

[The Gasbuster]

Hopefully, just like this season, they won’t be “challenging” towards the top of the table.

[Loosey Boy]

Expensive interest rates being paid on their borrowing(s) - sign of desperation?

They certainly aren’t going up this season and so perhaps we’ll see them struggle even more next season

[Numero Uno]

27 minutes ago, Lanterne Rouge said:

West Bromwich Albion: Fans' group to protest at QPR home match with delayed entry - BBC Sport

I`m sure @Mr Popodopolous or @Davefevs can elaborate on whether this is as bad as it sounds to a layman like me.

Seemingly an annual occurrence now. All hindsight I know but thankfully Richard Gould and Nigel Pearson felt they were able to cut the costs before it was too late and do the best with a limited squad (not the first XI when barely available). Brave move that could easily have went tits up tbh, especially when the entire Twitter fanbase don’t even seem to realise FFFP is a thing, but we’ll be far better for it in the long run.

[ExiledAjax]

47 minutes ago, Lanterne Rouge said:

West Bromwich Albion: Fans' group to protest at QPR home match with delayed entry - BBC Sport

I`m sure @Mr Popodopolous or @Davefevs can elaborate on whether this is as bad as it sounds to a layman like me.

The particular issue that WBA have is that Lai has been using the club as his own personal bank.

WBA have lent his other companies money. With interest. To pay for that they have taken loans from MSD (of lending to Derby fame). 

If Lai walks away then save for some big player sales yes they're potentially in trouble.

Edited April 8, 2023 by ExiledAjax

[milo1111]

I do love it when the parachute payments run out for these type of clubs. Welcome to reality

[Davefevs]

This thread worth a look.

 

[Loosey Boy]

29 minutes ago, Davefevs said:

This thread worth a look.

 

Crazy @Davefevs!!

They’ve gambled again and failed this time around…..could be a while before we see them in the Prem again

Edited April 8, 2023 by Loosey Boy

[The Gasbuster]

1 hour ago, milo1111 said:

I do love it when the parachute payments run out for these type of clubs. Welcome to reality

Hopefully tWatford next !

[Gol]

3 hours ago, Roe said:

Of course they are. Same as any of the "big" clubs once they run out of parachute money

They had to take an emergancy loan to see through this year (and thats with parachute money) next season without parachute money could get very messy 

[Rocking Red Cyril]

3 hours ago, Davefevs said:

This thread worth a look.

 

Okies if you take out a loan at 5% surely you pay back at 5% not 79.6%

[reddoh]

3 minutes ago, Rocking Red Cyril said:

Okies if you take out a loan at 5% surely you pay back at 5% not 79.6%

it said 5 % per month ,just to help you out 12 months in a year.

[Red from afar]

If you've defaulted and the default rate is 5% per month, then that equates to 79.6% per year.

[luke_bristol]

Any team that’s received parachute payments before they go into administration should receive a 30 point deduction 

[Bristol Rob]

8 hours ago, Rocking Red Cyril said:

Okies if you take out a loan at 5% surely you pay back at 5% not 79.6%

This is how people end up with overwhelming credit card debt.

 

[ashton_fan]

The owner is using the club as a cash machine. The same thing has been happening at Man Utd with the Glazers but they've been a bit more subtle about it. All perfectly legal, we don't know how lucky we are with the Lansdowns.

[ExiledAjax]

9 hours ago, Rocking Red Cyril said:

Okies if you take out a loan at 5% surely you pay back at 5% not 79.6%

It's compound interest so every month you add 5% of the total.

If you borrow £100 in January and pay 5% compounded interest on a monthly basis then by next January you will owe £179.58. So the effective annual rate is roughly 79.6%.

Edited April 9, 2023 by ExiledAjax

[Mr Popodopolous]

2 hours ago, ashton_fan said:

The owner is using the club as a cash machine. The same thing has been happening at Man Utd with the Glazers but they've been a bit more subtle about it. All perfectly legal, we don't know how lucky we are with the Lansdowns.

Burnley and their leveraged buyout will also be intriguing to see when they finally release their 2022 accounts...many of the Parent and connected Companies seem to have missed Companies House deadlines.

They had a huge cash reserve coming in, £80m coming into Covid 19 and were impeccably run for about a decade and maybe more but...

[Mr Popodopolous]

Yeah can only echo what others said tbh. Two major issues.

Lack of Parachute Payments will see their regular income drop to £20-25m provably- that's normal and quite a bit adjustment to say the least! Still part of the game.

What isn't normal is a double if not treble whammy of:

1) Shareholder/owner, in fact he could be the face of a consortium I've seen different things- borrowing from the club is odd in itself and then missing multiple deadlines to repay. A shade under £5m cash hole right there. 2016 reports suggested a consortium- maybe he's scrambling to get their money back who knows.

2) Former owner Peace seemingly borrowing. No repayment- West Brom were supposed to go after this but seemed to go quiet- again cash flow not revenue. £3.7m more was it.

3) The whole 79.6% interest, and it comes to about that spot on- if you go 1.05 x 1.05 and keep on with that. Compounded interest.

That MSD loan yeah it's about 13-14 pct interest. Kieran Maguire had it at £7.6k interest..per day!? Secured as well as you might expect although they didn't seem to enforce so rigorously with Derby when they ran into difficulties.

There are elements of overspending maybe but compared to a lot of clubs...most clubs have owners who just bung in shares, cash or loans- check the cash flow of many clubs, how many would be insolvent without owner support of some description. Or at least into administration.

Edited April 9, 2023 by Mr Popodopolous

[Rocking Red Cyril]

3 hours ago, ExiledAjax said:

It's compound interest so every month you add 5% of the total.

If you borrow £100 in January and pay 5% compounded interest on a monthly basis then by next January you will owe £179.58. So the effective annual rate is roughly 79.6%.

Another banking rip off. 

[ExiledAjax]

5 minutes ago, Rocking Red Cyril said:

Another banking rip off. 

Exactly. This is the interest rate that one of WBA's owner's companies is charging WBA.

Imagine if one of Lansdown's other companies borrowed £2m from City and charged the club that interest rate. You'd rightly be livid.

[PHILINFRANCE]

49 minutes ago, ExiledAjax said:

Exactly. This is the interest rate that one of WBA's owner's companies is charging WBA.

Imagine if one of Lansdown's other companies borrowed £2m from City and charged the club that interest rate. You'd rightly be livid.

Hmm.

If one of ´Landown’s other companies’ was to borrow £2M from City at a compounded interest rate of 79.6%, I should imagine City would be quite happy .

[ExiledAjax]

1 minute ago, PHILINFRANCE said:

Hmm.

If one of ´Landown’s other companies’ was to borrow £2M from City at a compounded interest rate of 79.6%, I should imagine City would be quite happy .

Ah. Yes. Thanks, the other way round is what I meant. Even I find it confusing sometimes.

[Mr Popodopolous]

They're two separate issues.

The loan never repaid is one- that's the loan to the owner/his consortium. That only had £50k interest on a £4.95m loan btw.

The loan to the club whether by him or a related party at the compounded interest.

Double ripoff albeit in two separate transactions if anything.

[PHILINFRANCE]

9 minutes ago, ExiledAjax said:

Ah. Yes. Thanks, the other way round is what I meant. Even I find it confusing sometimes.

Of Course, and I understood perfectly what you meant - my response was just sarcasm.

The WBA financial situation is quite farcical, though, and I am intrigued as to how it will end.

I have seen several posts on here suggesting that the shenanigans relating to the various loans are quite legal, and I find that astonishing.

The post from @Mr Popodopolous immediately above sums up my disgust with the whole matter, and raises a question I was going to ask myself.

[Sir Geoff]

QPR at home tomorrow but after that they have a tough run in. Really hope the owner's gamble of promotion fails. Can see Admin and 12 point penalty next season, at the very least.

[downendcity]

1 hour ago, ExiledAjax said:

Exactly. This is the interest rate that one of WBA's owner's companies is charging WBA.

Imagine if one of Lansdown's other companies borrowed £2m from City and charged the club that interest rate. You'd rightly be livid.

 

43 minutes ago, PHILINFRANCE said:

Hmm.

If one of ´Landown’s other companies’ was to borrow £2M from City at a compounded interest rate of 79.6%, I should imagine City would be quite happy .

 

41 minutes ago, ExiledAjax said:

Ah. Yes. Thanks, the other way round is what I meant. Even I find it confusing sometimes.

@ExiledAjax you obviously believe in the old maxim, " never a lender or lender be"! 

[ExiledAjax]

8 minutes ago, downendcity said:

 

@ExiledAjax you obviously believe in the old maxim, " never a lender or lender be"! 

The church upbringing runs deep mate.

[ExiledAjax]

36 minutes ago, PHILINFRANCE said:

I have seen several posts on here suggesting that the shenanigans relating to the various loans are quite legal, and I find that astonishing.

It is likely legal. In many industries commonly owned companies lend money to each other. 

I know a bloke who owns a distillery and a plumbing business. The plumbing business turns a profit, and lends money to the distillery as it is loss-making. That's generally fine, and it's even normal to charge market interest rates.

But, as ever, we come back to the fact that football clubs are not ordinary businesses. Fans are a unique type of stakeholder etc etc. Putting a football club into this kind of financial situation is risky, as if it fails it's tens of thousands of people who suffer.

So, in my opinion, what might be acceptable and ordinary on one industry is not so acceptable in football.