[baggie82]

There’s no “debt exceeding £20m”.  The cash from that loan still sits on the balance sheet and there’s no other debt owed by the club, which haa a positive balance sheet.  We are probably the only club in the Championship with no net debt!

The wage bill is already being cut drastically.

There’s never a solid “business case” for buying a Championship club, but there are always buyers out there at a sensible price.  There were genuine American buyers at £100m a few months ago.

We have a bad habit of claiming that nobody will pay anything for any of our players, and that nobody would want to buy the club, both of which are utter nonsense.  At the right price of course.

The loan was taken out to help plug the large deficit we are running. It will be gone before we get to next summer. The accounts made it crystal clear that in spite of that loan we still need to sell players to remain a going concern and the auditors did not share the boards confidence that would be plain sailing.

[overseas baggie]

The loan was taken out to help plug the large deficit we are running. It will be gone before we get to next summer. The accounts made it crystal clear that in spite of that loan we still need to sell players to remain a going concern and the auditors did not share the boards confidence that would be plain sailing.

It will only be gone by next summer if we don’t sell enough players - quite rightly the auditors covered the aspect that sales can’t be guaranteed (ie Dike then got injured).  Not a question of the “board’s confidence”, more a recognition that sales can’t happen if buyers can’t be found.  One club can’t force other clubs to pay a certain level of transfer fee. That’s standard auditing prudency.

[Albion79]

So am i right in thinking if we sell any players for a fee, (example Dara for £5m) then those funds raised will go straight towards running costs, ie - minimal amounts or none  to spend on players?

I had assumed that was the case anyway and any players we sign will be from the
Wages saved from those who leave the club? I have no issue with that, there are plenty of bargains out there and we have to start using the loan market like those around us and stop giving big paydays to players in their late 20's.

[overseas baggie]

So am i right in thinking if we sell any players for a fee, (example Dara for £5m) then those funds raised will go straight towards running costs, ie - minimal amounts or none  to spend on players?

I had assumed that was the case anyway and any players we sign will be from the
Wages saved from those who leave the club? I have no issue with that, there are plenty of bargains out there and we have to start using the loan market like those around us and stop giving big paydays to players in their late 20's.

I think you are right.  In the absence of a new owner I’d be amazed if we spent anything on transfer fees

[sconesy]

So am i right in thinking if we sell any players for a fee, (example Dara for £5m) then those funds raised will go straight towards running costs, ie - minimal amounts or none  to spend on players?

I had assumed that was the case anyway and any players we sign will be from the
Wages saved from those who leave the club? I have no issue with that, there are plenty of bargains out there and we have to start using the loan market like those around us and stop giving big paydays to players in their late 20's.

Completely agree. Lai has done 75% of his money so will ‘duck and dive’ in hope of promotion over the next couple of seasons. I agree any player sale monies will not be directly reinvested and will only ease the pain of operating costs. I’d imagine (sadly) that the next 2 years will be tax write-off to minimise loss and risk so it’s definitely an awful situation to be in.

[overseas baggie]

Completely agree. Lai has done 75% of his money so will ‘duck and dive’ in hope of promotion over the next couple of seasons. I agree any player sale monies will not be directly reinvested and will only ease the pain of operating costs. I’d imagine (sadly) that the next 2 years will be tax write-off to minimise loss and risk so it’s definitely an awful situation to be in.

Where does a “tax write-off” come into play?  Only profits get taxed and there aren’t and won’t be any of those!

[sconesy]

Where does a “tax write-off” come into play?  Only profits get taxed and there aren’t and won’t be any of those!

Doesn’t he have multiple companies to kick the can down the road? There are multiple ways asset decreases can be factored in.

[Dexy]

Who in their right mind would be "ready to buy" the club? Cash-flow negative; in need of large investment, just another mid-table championship club, no obvious business case for anyone looking to buy; difficult to see how even £30m-£40m is good value for the buyer, and I can't see Lai giving it away so I suspect we are stuck with the current ownership until the whole thing goes up in smoke.

A club that has lost its way but still has tradition , a decent stadium and good training facilities . Formally worth about 100m now could be bought for half that ...maybe even less. Thats a very good base to work with and I believe thats what will happen this Summer or next , Lai's failed and he isn't getting even 50% of that back . Somebody will be waiting in the wings .

[overseas baggie]

Doesn’t he have multiple companies to kick the can down the road? There are multiple ways asset decreases can be factored in.

“He” isn’t the owner.  Yunyai with more than 1,000 investors are.  Tax losses wouldn’t be a factor.

[overseas baggie]

A club that has lost its way but still has tradition , a decent stadium and good training facilities . Formally worth about 100m now could be bought for half that ...maybe even less. Thats a very good base to work with and I believe thats what will happen this Summer or next , Lai's failed and he isn't getting even 50% of that back . Somebody will be waiting in the wings .

Correct - if the price can be justified there will be buyers.  The tradition is important - apparently we rank 12th all-time based on performances in the top division (old Division 1 and Premier League)

[gazberg]

Correct - if the price can be justified there will be buyers.  The tradition is important - apparently we rank 12th all-time based on performances in the top division (old Division 1 and Premier League)

One better, 11th.

Buyers galore IF the price is right as you say.

[baggie82]

It will only be gone by next summer if we don’t sell enough players - quite rightly the auditors covered the aspect that sales can’t be guaranteed (ie Dike then got injured).  Not a question of the “board’s confidence”, more a recognition that sales can’t happen if buyers can’t be found.  One club can’t force other clubs to pay a certain level of transfer fee. That’s standard auditing prudency.

The maths in the accounts strongly signal otherwise. Our income in 2023/24 is set to be no more than £15m. You can't really run a championship club in the top end of the table on that. Wages last season were down to £42m. I suspect we will look to push the wage bill down again to around £25-30m. We also have to cover the cost of the £20m loan which includes extortionist rate of interest and annual capital repayments; and of course legacy player trading obligations. We need to sell players and raise presumably around £10m just to stand-still for a year and the £20m loan is going to be wiped out come what may. Unless you think PSG are going to come in and bid £30m for O'Shea & Palmer. The maths are very ugly and no getting away from that.

[overseas baggie]

The maths in the accounts strongly signal otherwise. Our income in 2023/24 is set to be no more than £15m. You can't really run a championship club in the top end of the table on that. Wages last season were down to £42m. I suspect we will look to push the wage bill down again to around £25-30m. We also have to cover the cost of the £20m loan which includes extortionist rate of interest and annual capital repayments; and of course legacy player trading obligations. We need to sell players and raise presumably around £10m just to stand-still for a year and the £20m loan is going to be wiped out come what may. Unless you think PSG are going to come in and bid £30m for O'Shea & Palmer. The maths are very ugly and no getting away from that.

You’re assuming that the loan requires both annual interest and capital repayments. I don’t believe that’s the case.   It won’t require anything like £30m of player sales. 

[Gilsey 56]

I do feel a little bit of sympathy for Lai if I'm honest, He paid top dollar for a club and has employed a long list of people costing millions and recruiting players costing millions with absolutely no idea how to stop a juggernaut on a collision coarse to oblivion.
I have absolutely nothing but contempt for Jeremy Peace who sold us to a man knowing this and recommending people of the top of his head, I don't blame him for taking top dollar if I'm honest, but please don't tell me he's a baggie through and through.
I can only hope Lai has milked a substantial amount now to sell the club for  realistic offer and get out please.

[baggie82]

You’re assuming that the loan requires both annual interest and capital repayments. I don’t believe that’s the case.   It won’t require anything like £30m of player sales.

The interest rate alone exceeds 10%.

[overseas baggie]

The interest rate alone exceeds 10%.

I’m well aware of that.  The question is whether the interest and the capital repayments are payable annually.  I think it’s a bullet capital repayment at the end of the 4 years but I’m not sure whether the interest is paid annually or rolled up until the end.

[baggie82]

I’m well aware of that.  The question is whether the interest and the capital repayments are payable annually.  I think it’s a bullet capital repayment at the end of the 4 years but I’m not sure whether the interest is paid annually or rolled up until the end.

Interest rate is 9.75% plus sterling overnight index average, so 14% currently. Presuming MSD have worked on same basis as their loans to Burnley, Southampton that would be payable annually. So £2.8m a year on interest.  Typically with MSD loans the capital itself can be paid back at any time within the four years, obviously paying it back earlier would reduce the interest liability, which is calculated daily on the amount drawn down.

[Standaman]

It is not our indebtedness that will kill us. As Overseas has pointed out there is lot of other Championship clubs carrying more debt. However that debt in many cases is owed to the clubs ownership and is not carrying much by the way of interest.

It is cash flow that will kill us. There will come a point where the wages full due and there will  not be the funds available to pay them. How quickly this happens depends on a number of factors most of which are unknown.

a) Our current trading position I think it is dire Overseas sees it as less bad but we wont' know for certain until next March.
b) How successful the club is in reducing the wage bill and raising funds through player sales during the summer.
c) How much of the MDH loan has been drawn down. At the point it is 100% drawn down it is costing about £2.8m in interest annually which does nothing for our cashflow.

A footnote on the MDH loan if we are still a championship club when it falls due particularly if the interest is rolled up it will be close to 100% of the club's income. If the financial crisis has not already happened by then it surely will arrive at that point.   

The sale of Birmingham City is a slight ray of light because it would suggest there are buyers out there, but how realistic Lai is I don't know. I suspect he won't get serious about selling until the financial crunch is almost upon us, at that point buyers might be better waiting to deal with the administrators.

[baggiejohn]

It is not our indebtedness that will kill us. As Overseas has pointed out there is lot of other Championship clubs carrying more debt. However that debt in many cases is owed to the clubs ownership and is not carrying much by the way of interest.

It is cash flow that will kill us. There will come a point where the wages full due and there will  not be the funds available to pay them. How quickly this happens depends on a number of factors most of which are unknown.

a) Our current trading position I think it is dire Overseas sees it as less bad but we wont' know for certain until next March.
b) How successful the club is in reducing the wage bill and raising funds through player sales during the summer.
c) How much of the MDH loan has been drawn down. At the point it is 100% drawn down it is costing about £2.8m in interest annually which does nothing for our cashflow.

A footnote on the MDH loan if we are still a championship club when it falls due particularly if the interest is rolled up it will be close to 100% of the club's income. If the financial crisis has not already happened by then it surely will arrive at that point.   

The sale of Birmingham City is a slight ray of light because it would suggest there are buyers out there, but how realistic Lai is I don't know. I suspect he won't get serious about selling until the financial crunch is almost upon us, at that point buyers might be better waiting to deal with the administrators.

As I understand it, the new investors at BCFC are proposing to buy 100% of the stadium & 40% of the football club.
I belive a similar model could be attractive to Lai, with new investors taking on operational contol & Yunyi being towed along.

[overseas baggie]

As I understand it, the new investors at BCFC are proposing to buy 100% of the stadium & 40% of the football club.
I belive a similar model could be attractive to Lai, with new investors taking on operational contol & Yunyi being towed along.

Do we really want the Hawthorns owned separately and not by the football club?  I’m not sure that would be very appealing at all.

Bringing in an outside equity partner might be one way for Yunyai to hedge their bets, but based on how Lai has behaved I’m not sure that being a sizeable minority shareholder with Yunyai as partners would appeal to any savvy investor.

[skyclad99]

As I understand it, the new investors at BCFC are proposing to buy 100% of the stadium & 40% of the football club.
I belive a similar model could be attractive to Lai, with new investors taking on operational contol & Yunyi being towed along.

We absolutely need to own our own ground full stop. If we are looking at selling our own house to raise a few quid then we are on a very slippery slope. There are plenty of examples around of clubs and grounds that have ‘parted company’ to the clubs detriment.

I would see any talk of the ground sale as the beginning of the end to be honest.

[skyclad99]

As I understand it, the new investors at BCFC are proposing to buy 100% of the stadium & 40% of the football club.
I belive a similar model could be attractive to Lai, with new investors taking on operational contol & Yunyi being towed along.

Actually the plan is to knock down St Andrews and turn it into social housing. The new owners have identified an old go cart race track close by to build a new ground. If I were a bluenose I would not be relishing that

“The buyers will re-claim ownership of St Andrew’s - and part of their plans will be to re-develop the site as social housing. Discussions are underway to build a new stadium on a 40-acre piece of derelict land that was formerly used as a go-karting track at Birmingham Wheels.”

[SmethDan]

Do we really want the Hawthorns owned separately and not by the football club?  I’m not sure that would be very appealing at all.

Bringing in an outside equity partner might be one way for Yunyai to hedge their bets, but based on how Lai has behaved I’m not sure that being a sizeable minority shareholder with Yunyai as partners would appeal to any savvy investor.

It could work if the savvy investor also had eyes on the other 12% lying elsewhere and the owners of the other 12% lying elsewhere were willing to sell. Knowing our luck we'd end up attracting someone as saft as Lai with Lai and co clawing some cash back through a share sell off before we almost inevitably fail to meet our commitments to MSD and the pain of administration.

[overseas baggie]

It could work if the savvy investor also had eyes on the other 12% lying elsewhere and the owners of the other 12% lying elsewhere were willing to sell. Knowing our luck we'd end up attracting someone as saft as Lai with Lai and co clawing some cash back through a share sell off before we almost inevitably fail to meet our commitments to MSD and the pain of administration.

I would like to think that money coming in from a savvy investor would be used to repay MSD.  A “savvy” investor would not want to retain debt costing 14% per annum

[SmethDan]

I would like to think that money coming in from a savvy investor would be used to repay MSD.  A “savvy” investor would not want to retain debt costing 14% per annum

True. Tucked up in bed with extreme nausea, dizzy, coughing phlegm and generally feeling very rough so my thought processing isn't at it's sharpest. Negative Covid test aside the day isn't going too well.

Probably a false negative knowing my luck and I've most likely started a new strain which will wipe out several board members I came into contact with at Swansea. Silver linings    .