The Mail Bag
Question for the AGM
Comments (12)
I have just read that the club signed up for a secured 25-year fixed-rate loan at 7.79% when the Bank of England base rate was 4% and this for a sum of £26M plus.!!
Please tell me it's not true? Sorry if this is old news but it's news to me.
Steve Lyth, Posted 14/11/2007 at 19:01:26
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Steve Lyth
1 Posted 14/11/2007 at 20:26:43
1 Posted 14/11/2007 at 20:26:43
Yes Michael, I am afraid I am, thats poor business by anyones standards, 2% over base I can understand but fixing at a rate of 7.79% for 25 years is bloody incompetent. We are truly ran by morons
Mark Perry
2 Posted 14/11/2007 at 21:32:50
2 Posted 14/11/2007 at 21:32:50
7.79% isn't that bad compared to what some firms are charged on the international money markets - trust me. The fact we got that rate and not being charged 10% plus shows that they have faith in our ability to pay.
Steve Lyth
3 Posted 14/11/2007 at 22:24:50
3 Posted 14/11/2007 at 22:24:50
Mark, would you sign up for a 25yr fixed rate mortgage if you could arrange a tracker or capped rate mortgage for far less ?
They were available on a commercial basis at the time, 1% of £26 mil is £260,000 a year, no mate I am afraid i dont think I can trust you.
I certainly dont trust the lot in charge of us at this time either.
They were available on a commercial basis at the time, 1% of £26 mil is £260,000 a year, no mate I am afraid i dont think I can trust you.
I certainly dont trust the lot in charge of us at this time either.
Barry Bragg
4 Posted 15/11/2007 at 00:41:22
4 Posted 15/11/2007 at 00:41:22
Steve Its not a mortgage its a commercial loan set against future season ticket sales and as such carries a premium rate over and above the base rate or what you or I would expect to pay for a mortgage.
If you think they could just go to the Abbey National and ask for a ’Buy To Let’ or something similar I think it is you who are deluded. I think its probably fair to assume they shopped around and got the best deal available at the time.
Anyway wasn’t this 5 or 6 years ago. Why are you bringing this up now?
If you think they could just go to the Abbey National and ask for a ’Buy To Let’ or something similar I think it is you who are deluded. I think its probably fair to assume they shopped around and got the best deal available at the time.
Anyway wasn’t this 5 or 6 years ago. Why are you bringing this up now?
Michael Kenrick
5 Posted 15/11/2007 at 03:28:33
5 Posted 15/11/2007 at 03:28:33
Barry, I think you have missed something. In fact two things. Yes, Bear Streans was 5 or 6 years ago now.
What these lads are talking about are NEW LOANS that substantially increased the current debt burden of teh club. These loans were taken out THIS YEAR.
Mark Perry
6 Posted 15/11/2007 at 08:28:07
6 Posted 15/11/2007 at 08:28:07
Steve, Barry is right this is not a mortgage its a business loan which works very differently. The fact we got charged such a high a rate 5 years ago compared to the recent loan shows that the club is in a LOT better financial position and more investable in. As is any premier leauge club that is not relegation fodder, due to the increased profit projections from world wide TV revenue.
I know economics mate, I get very well paid to make sure I know it!
I know economics mate, I get very well paid to make sure I know it!
Steve Lyth
7 Posted 15/11/2007 at 09:36:31
7 Posted 15/11/2007 at 09:36:31
Look lads I work in the area of commercial finance, arranging commercail loans is part of my every day job.I think you are missing the point I am trying to make, of course there has to be a premium given the risks involved, however,3.79% over base fiixed for a 25 period on a secured basis is ludicrous.
Not one client of my would be dumb enough to sign paperwork for a deal like that. 2% over base is the norm for any securitised commercial loan, the bank who arranged this has had Everton over that is the reality of the situation.
For those asking why i have brought this up now, its because its the first time I have seen it in the accounts.
The club are about to engage in further financial proceedings with the new ground proposal and I for one do not feel they have achieved optimum deals in the past,
Mark, dont tell me 7.79% fixed for 25 years was competitive in 2002 because it was not. I get paid very well too, it does not mean I am blinkered to reality.
Not one client of my would be dumb enough to sign paperwork for a deal like that. 2% over base is the norm for any securitised commercial loan, the bank who arranged this has had Everton over that is the reality of the situation.
For those asking why i have brought this up now, its because its the first time I have seen it in the accounts.
The club are about to engage in further financial proceedings with the new ground proposal and I for one do not feel they have achieved optimum deals in the past,
Mark, dont tell me 7.79% fixed for 25 years was competitive in 2002 because it was not. I get paid very well too, it does not mean I am blinkered to reality.
Mark Perry
8 Posted 15/11/2007 at 11:48:46
8 Posted 15/11/2007 at 11:48:46
Steve I’m not blinkerd, the bank bases its loan rate on many things risk and current base rate now and future projections being two factors, the problem with long term loans for the lender is that we do not know what the future hold, we therefore analise the risk and mittigate it with a set rate for each client. Sporting clubs in football, rugby, whatever are very difficult to predict as their earning capability is linked to sporting success not something that can easily be prdicted unless you are 1 of the big 4 with more or less guarenteed champions leauge revenue and expanding income from world wide marketing.
Everton fall into the bracket of a club who is seen as a relaible member of the premier leauge with increasing prospects of european competition which generates so much money. With the increasing popularity of the Premier Leauge in foreign markets and the money it attracts clubs are generating more money. Banks are now wiling to lend more money to them over a long period as they see them as stable. The lower the loan rate the better financial bet the club is. Derby for example would never of got a loan that size for that rate as the future income they can generate is less than ours as they bounce between the top two divisions.
The big fear for banks lending to football clubs is another Leeds. Or Shefield Wednesday who were in a similar position to us 10 years ago ( high finishs in the leauge, big support base, challenging for cups) then got relegated and have not yet recoverd, and have huge debts that realisticly cannot be paid off.
The club have financial experts employed and if they were acting like arses then the big shareholders would be up in arms and it would be a big story in both the financial and sports press. Its not because Everton got a realistic deal. The same with the stadium, we cant build one oureselves and need help to do it.
Everton fall into the bracket of a club who is seen as a relaible member of the premier leauge with increasing prospects of european competition which generates so much money. With the increasing popularity of the Premier Leauge in foreign markets and the money it attracts clubs are generating more money. Banks are now wiling to lend more money to them over a long period as they see them as stable. The lower the loan rate the better financial bet the club is. Derby for example would never of got a loan that size for that rate as the future income they can generate is less than ours as they bounce between the top two divisions.
The big fear for banks lending to football clubs is another Leeds. Or Shefield Wednesday who were in a similar position to us 10 years ago ( high finishs in the leauge, big support base, challenging for cups) then got relegated and have not yet recoverd, and have huge debts that realisticly cannot be paid off.
The club have financial experts employed and if they were acting like arses then the big shareholders would be up in arms and it would be a big story in both the financial and sports press. Its not because Everton got a realistic deal. The same with the stadium, we cant build one oureselves and need help to do it.
Steve Lyth
9 Posted 15/11/2007 at 12:43:01
9 Posted 15/11/2007 at 12:43:01
Mark, do you work for a bank ?
You certainly sound like a bank employee.
Just so you know, I have been a successful independant financial adsvisor for over 20yrs now, with a thriving practice.
I have taken great pride in getting competitive commercial loans for my clients when asked to do so.
My point is simple, could Everton have arranged that deal on more favourable terms at the time ? If you think a 25yr fixed rate at 7.79% was good business in 2002 so be it , I simply cannot agree with you.
You certainly sound like a bank employee.
Just so you know, I have been a successful independant financial adsvisor for over 20yrs now, with a thriving practice.
I have taken great pride in getting competitive commercial loans for my clients when asked to do so.
My point is simple, could Everton have arranged that deal on more favourable terms at the time ? If you think a 25yr fixed rate at 7.79% was good business in 2002 so be it , I simply cannot agree with you.
Steve Lyth
10 Posted 15/11/2007 at 13:17:26
10 Posted 15/11/2007 at 13:17:26
footnote Mark, there are only two big share holders that I can see,
Kenwright and Earl.
Kenwright and Earl.
Mark Perry
11 Posted 15/11/2007 at 13:43:33
11 Posted 15/11/2007 at 13:43:33
Steve, I have an Honours Degree in International Econimics from one of the best universities in the country and I head up an international finance department at one of the world's largest banks.
As I have said before, the trouble with sports companies is that the market parameters for them are very different from any other market, hence the interest rates charged.
As for the Shareholders they all have an interest in making the club as profitable as possible to increase the value of their shares and the value of the club. Thanks to Leeds debacle, the accounts of clubs are much more transparent now and banks or anyone else would be running to the hills from a client that was a bad risk.
As I have said before, the trouble with sports companies is that the market parameters for them are very different from any other market, hence the interest rates charged.
As for the Shareholders they all have an interest in making the club as profitable as possible to increase the value of their shares and the value of the club. Thanks to Leeds debacle, the accounts of clubs are much more transparent now and banks or anyone else would be running to the hills from a client that was a bad risk.
Steve Lyth
12 Posted 15/11/2007 at 14:40:06
12 Posted 15/11/2007 at 14:40:06
Hey Mark, I just knew you worked for a bank, can we leave it there please .I think we have both made our points eloquently enough, I am glad to here your doing well mate your almost as qualified as my co director in our business, my wife, she seems to have a similar disposition to you when it comes to qualifications.
More power to both your elbows, the rest of us can simply toil for a living.
More power to both your elbows, the rest of us can simply toil for a living.
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But I'm surprised that you're surprised. To compete you need money... and money costs money. Surely you are not questioning the financial wisdom and business acumen of our Club custodians? What shocking disloyalty!