Reading FC 2018/19 accounts

Nameless
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Re: Reading FC 2018/19 accounts

by Nameless » 07 Jul 2020 10:41

Nameless
Royals and Racers Details could be here.
New company document available: SH01 - 19/06/20 STATEMENT OF CAPITAL GBP 63342263.00 (received: 7 July 2020)
New company document available: RES10 - AUTHORISED ALLOTMENT OF SHARES AND DEBENTURES (received: 7 July 2020)


So is that saying £63 million has been put into the club in return for additional shares ?


And does that equate to our theoretical debt ?

And does it count as anything in terms of FFP ? Is it ‘income’ ?

Elm Park Kid
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Re: Reading FC 2018/19 accounts

by Elm Park Kid » 08 Jul 2020 10:20

I'm not an expert - but my understanding is that:

The issuing of shares to convert owner debt is purely an accountancy practice and has no impact on the 'real' finances of the club or FFP.

We've still lost exactly the same amount, it's just the way that lose is financed has been changed.

Nameless
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Re: Reading FC 2018/19 accounts

by Nameless » 08 Jul 2020 10:48

Elm Park Kid I'm not an expert - but my understanding is that:

The issuing of shares to convert owner debt is purely an accountancy practice and has no impact on the 'real' finances of the club or FFP.

We've still lost exactly the same amount, it's just the way that lose is financed has been changed.


Although would it mean they had injected capital into the club (as opposed to writing off historical debt), which could impact FFP .
I’m less of a finance expert than you so no idea if the question even makes sense !
While the debts never really worried me given they were just debt owed by the owners to themselves there must be a reason why they have done this. Is it purely of benefit to them, or is there an actual benefit to the club ?

Elm Park Kid
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Re: Reading FC 2018/19 accounts

by Elm Park Kid » 08 Jul 2020 17:03

Nameless
Elm Park Kid I'm not an expert - but my understanding is that:

The issuing of shares to convert owner debt is purely an accountancy practice and has no impact on the 'real' finances of the club or FFP.

We've still lost exactly the same amount, it's just the way that lose is financed has been changed.


Although would it mean they had injected capital into the club (as opposed to writing off historical debt), which could impact FFP .
I’m less of a finance expert than you so no idea if the question even makes sense !
While the debts never really worried me given they were just debt owed by the owners to themselves there must be a reason why they have done this. Is it purely of benefit to them, or is there an actual benefit to the club ?


The short answer is no; the entire point of FPP is that it looks at the profit/loss a club is making when any investment from the owner is excluded. For example: If RFC are making £40m a year from football/commercial activities, then over 3 seasons it can't spend more than £120m + the cushion that FFP allows (i think £30m, can't remember). It doesn't matter if the owners invest £1bn into the club over that period and RFC has an amazing bank balance, according to FFP we are still in breach.

Nameless
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Joined: 23 Aug 2013 12:25

Re: Reading FC 2018/19 accounts

by Nameless » 08 Jul 2020 17:33

Elm Park Kid
Nameless
Elm Park Kid I'm not an expert - but my understanding is that:

The issuing of shares to convert owner debt is purely an accountancy practice and has no impact on the 'real' finances of the club or FFP.

We've still lost exactly the same amount, it's just the way that lose is financed has been changed.


Although would it mean they had injected capital into the club (as opposed to writing off historical debt), which could impact FFP .
I’m less of a finance expert than you so no idea if the question even makes sense !
While the debts never really worried me given they were just debt owed by the owners to themselves there must be a reason why they have done this. Is it purely of benefit to them, or is there an actual benefit to the club ?


The short answer is no; the entire point of FPP is that it looks at the profit/loss a club is making when any investment from the owner is excluded. For example: If RFC are making £40m a year from football/commercial activities, then over 3 seasons it can't spend more than £120m + the cushion that FFP allows (i think £30m, can't remember). It doesn't matter if the owners invest £1bn into the club over that period and RFC has an amazing bank balance, according to FFP we are still in breach.


I thought that along with things like spending on Academies and Women’s teams there was an allowance which could be offset against losses for investment by owners if it was in return for equity as opposed to a repayable loan


muirinho
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Re: Reading FC 2018/19 accounts

by muirinho » 08 Jul 2020 19:17

Nameless
Elm Park Kid
Nameless
Although would it mean they had injected capital into the club (as opposed to writing off historical debt), which could impact FFP .
I’m less of a finance expert than you so no idea if the question even makes sense !
While the debts never really worried me given they were just debt owed by the owners to themselves there must be a reason why they have done this. Is it purely of benefit to them, or is there an actual benefit to the club ?


The short answer is no; the entire point of FPP is that it looks at the profit/loss a club is making when any investment from the owner is excluded. For example: If RFC are making £40m a year from football/commercial activities, then over 3 seasons it can't spend more than £120m + the cushion that FFP allows (i think £30m, can't remember). It doesn't matter if the owners invest £1bn into the club over that period and RFC has an amazing bank balance, according to FFP we are still in breach.


I thought that along with things like spending on Academies and Women’s teams there was an allowance which could be offset against losses for investment by owners if it was in return for equity as opposed to a repayable loan


True, but that allowance is included in the figures that are generally quoted. E.g., in previous years you could lose an average of £5m a year. Or £13m a year if the extra 8m was covered by owners. That would generally be quoted as £39m over the 3 years, i.,e., the assumption being made that owners were putting in the money to cover the losses.

Elm Park Kid
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Joined: 05 Feb 2013 10:45

Re: Reading FC 2018/19 accounts

by Elm Park Kid » 08 Jul 2020 22:57

muirinho
Nameless
Elm Park Kid
The short answer is no; the entire point of FPP is that it looks at the profit/loss a club is making when any investment from the owner is excluded. For example: If RFC are making £40m a year from football/commercial activities, then over 3 seasons it can't spend more than £120m + the cushion that FFP allows (i think £30m, can't remember). It doesn't matter if the owners invest £1bn into the club over that period and RFC has an amazing bank balance, according to FFP we are still in breach.


I thought that along with things like spending on Academies and Women’s teams there was an allowance which could be offset against losses for investment by owners if it was in return for equity as opposed to a repayable loan


True, but that allowance is included in the figures that are generally quoted. E.g., in previous years you could lose an average of £5m a year. Or £13m a year if the extra 8m was covered by owners. That would generally be quoted as £39m over the 3 years, i.,e., the assumption being made that owners were putting in the money to cover the losses.


Yeah, i was just talking very generally.

I didn't know that though about only being able to lose £5m a season if the owners don't cover the difference. It makes sense, but the reality is that many Championship owners are prepared to lose the full £13m a season and much more, it's just a case of how that 'loss' is represented in the books for tax/FFP and other purposes.

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