Takeover

[Malcolm Tucker]

There are two issues here.  Cash flow and losses. 

Cash flow is clearly an issue for us but has been eased by the two loans from MSD.  None of us know the exact current position, but it seems obvious to me that we needed this latest loan because we simply didn’t sell enough players in the summer window (not helped by Dike and Diangana both being long-term injuries).

Then there’s the FFP regulations which limit what losses we can make over a 3-year period. We are bound to be under some pressure there, although none of us know where we stand re the current year although it clearly is going to be a very big loss this year due to the huge drop in revenue.  Under the regulations owners can I believe put in some funds as capital, not debt, to capitalise some losses but of course we don’t have an owner capable of doing that. 

Reducing our losses for FFP purposes can obviously be done by selling players to get them off the wage bill (although they need to be replaced of course), but for FFP purposes it really matters “which” players get sold because we would need to be able to record a profit against their amortised value.  O’Shea was a no-as he cost us nothing. 

There are so many unknowns re the current trading year that it’s impossible to predict with any certainty, but it’s clear there’s an issue and it’s clear that with our current wage bill relative to our reduced income we simply have do reduce the wage bill considerably and sell some players. It might be that if we can sell certain players for a fee which generates an accounting profit (as well as good cash flow) then we might not need to sell too many, but if we are only able to reduce the wage bill by offloading players for nominal fees then the total number of players who we will need to offload would be far greater.

Diangana, Kipre, Palmer and BTA seem our most saleable players, and for some time I’ve expected Diangana to go in January now that he’s fit again. But what happens if he gets injured at AFCOM and can’t be sold?

At the start of this season I just wanted us to survive this season so that we still have a club.  However we now find ourselves in the play-off zone and of course nobody wants us to weaken in January.  But I don’t see any other way of addressing our FFP issue without several players leaving, and if that means us falling away from the play-off zone then so be it, and that’s with or without a new owner.  If a sale of the club means that the Wisdom Smart plan gets repaid by Holdings then that would help by £5m re both cash flow and FFP, because the loan is already fully provided for in the accounts (ie the provision made last year’s figures £5m worse, and reversing that provision would make us £5m better off in this year’s accounts).

Find it very hard to believe that any sensible businessman would spend £60m acquiring a business and make selling its prized assets one of your first acts - thereby massively reducing the prospects of the hugely increased PL revenue.