Takeover

[Fulham Fallout]

Him and his dad are worth under £100m. How can they afford to buy us?

So when I said that Shilen Patel wasn't worth as much as we were told the new owners was going to be worth, a lot of replies were it doesn't matter about how rich they are nowadays because of FFP rules etc... Then someone worth substantially less comes into the frame and apparently it will matter now. (not sure who was saying having mega rich owners doesn't matter BTW, not saying it was you).

I remember saying it would be these Warmfront guys the other month, but I was joking and making stuff up, it'd be a very WBA thing to go and do though. I suppose they'll get their loan discounted off the price??

Really can't see it being these by the way, but nothing about our club would surprise me.

The sort of wealth needed to buy and sustain (under current FFP rules) a Championship club is probably around £200-£300m.  That’s based on buying a club for an average of £50m and being able to pump in the permitted £13m a year (£39m over 3 years).  Any wealth above that is totally irrelevant as it can’t be injected into the club (other than for ground improvements, academy etc).  So whether someone is worth £300m or £3 billion, the extra £2.7 billion can be ignored. 

I suspect that what might have happened re Hearn is that Lai hasn’t repaid the Warmfront loan by the deadline, which would have entitled Warmfront/Hearn to convert their loan into equity.  That would simply mean that instead of Lai/Yunyai owning 88% of Group via Holdings, they might now own only around 80%, meaning that Hearn/Warmfront would now be a minority shareholder in Group, as opposed to being a creditor of Holdings.  That wouldn’t affect anything other than the legal agreements re the imminent sale. 

Not saying that’s what’s happened - but it could well be the case as the Warmfront loan was due to be repaid around this time.

Not entirely correct re the wealth of a new owner, as wealthy owners can inject cash into WBA Group Ltd either as an interest free loan or equity.  This would naturally benefit cash flow and would allow WBA Group Ltd to meet all its future outgoings and to pay off the MSD loans as soon as possible to reduce interest charges which would benefit FFP.

But otherwise I agree that the wealth is irrelevant.

No - I’ve already allowed for that in the “£39m over 3 years” permitted losses.  That sum is made up of £5m per annum of permitted losses, and owners are allowed to inject an additional £8m of equity (but not loans).  Only the losses of £5m a year can be funded by owners’ loans.

Agree, sort of.  I haven’t seen in the regs the owners aren’t allowed to inject an amount greater than that allowed in the losses calculation. I.e.  the amounts used in the calculations are as you state, but additional funds pumped into a club and not used in the FFP calculation.