Salford financial issues(again…)

[Charlie]

2 minutes ago, LeytherRob said:

Latest from John Davidson is that negotiations are still ongoing as of earlier today. It would be very tight to get the whole thing done by the end of the week now, especially when there would need to be some form of vote of SRD shareholders/members to dissolve the community benefit society (CBS). 

This is taken from the CBS rules as published by SRD in the initial crowdfunder (1682350908_rules.pdf)

DISSOLUTION 97. The Club may be dissolved by the consent of three-quarters of the members who sign an instrument of dissolution in the form provided by the Registrar or by winding-up in the manner provided by the Act. 98. Subject to Rule 9, if on the winding-up or dissolution of the Club there remains, after the satisfaction of all its debts and liabilities any property whatsoever the same is to be transferred to: 98.1 a sporting charity or sporting charities operating in the Area and/or; 98.2 one or more societies established for the benefit of the community operating in the Area; and/or 98.3 one or more societies established for the benefit of the community in each case as determined by the members at a meeting called to decide the issue. Nothing belonging to the Club shall be transferred to any other society unless that society has in its rules a rule substantially in the terms of this Rule.

I'm assuming there would need to be some form of dissolution process to deregister the CBS with the financial conduct authority before the new owners can be truly 'official' but maybe they're banking on some form of guarantee from them to appease the RFL into removing the sustainability cap.

The only recent example I can find of a CBS moving to private ownership is Wrexham going to Ryan Reynolds and Rob McElhenney, some relevant quotes here from the below links:

Wrexham Supporters Trust (WST) members voted overwhelmingly to back the takeover with 98.6% of those who responded backing the bid. Out of more than 2,000 trust members eligible to vote, 1,809 approved, 26 were against and nine abstained.

Ryan Reynolds and Rob McElhenney: Hollywood stars to take over Wrexham - BBC Sport

In November Wrexham Supporters Trust voted overwhelmingly in favour of the deal, which has since gained approval from football authorities and the Financial Conduct Authority.

Ryan Reynolds & Rob McElhenney: Hollywood duo complete Wrexham takeover - BBC Sport

The latter link also gives quite a handy timeline of events which demonstrates how long these things take - the NDA's were signed summer 2020, the takeover vote was 8th Nov 2020 and final completion wasn't until 9th Feb 2021.

 

Salfords shearholders have bored who make that call so that part wouldn’t take long unless they voted no 

[LeytherRob]

16 minutes ago, Charlie said:

Salfords shearholders have bored who make that call so that part wouldn’t take long unless they voted no 

The board runs things day to day, just like the CBS board did at Wrexham - it's a mandatory part of setting up a CBS. The membership votes on dissolution and sale of the CBS, not the board. Otherwise, the whole thing is nothing but a bucket collection for the world's most expensive pin badges.

Edit - also, there was ZERO pushback at Wrexham from members against the sale and it still took over 6 months from the NDA's and 3 months from the vote to ratify.

 

Edited January 21 by LeytherRob

[dboy]

Does the transfer to a new ownership group require a dissolution of the existing company??

[LeytherRob]

6 minutes ago, dboy said:

Does the transfer to a new ownership group require a dissolution of the existing company??

I’m assuming it would require some form of dissolution of the entity as a CBS so that it can go back to being a Ltd company. Shares in a CBS are non transferable and are strictly on a ‘one share, one vote’ regardless of the amount invested (they got around this in the crowdfunded by issuing £1 of ordinary shares to everyone and the rest in community shares). 
 

Wrexhams takeover from being a CBS had to be approved by the FCA which won’t be a quick process.

Maybe the new owners could get approval for the takeover in principle and release funds early to the club like what happened for Wrexham.

Edited January 21 by LeytherRob

[Dullish Mood]

2 hours ago, dboy said:

Does the transfer to a new ownership group require a dissolution of the existing company??

Come on Salford…..  

[Charlie]

8 hours ago, LeytherRob said:

The board runs things day to day, just like the CBS board did at Wrexham - it's a mandatory part of setting up a CBS. The membership votes on dissolution and sale of the CBS, not the board. Otherwise, the whole thing is nothing but a bucket collection for the world's most expensive pin badges.

Edit - also, there was ZERO pushback at Wrexham from members against the sale and it still took over 6 months from the NDA's and 3 months from the vote to ratify.

 

It was an expensive pin collection. Honestly the only “power” we have is to elect a cbs bored who make a choice on our behalf 

[PREPOSTEROUS]

There are ways round a delay in a take over, if there is confidence it's going to happen, a funding package can be provided as a sponsor of sorts while the details are being worked up. Matt Ellis provided a cash boost prior to him taking over to give Trinity a chance of survival by signing Fifita, Griffin and Gale. Didn't work in the end but it's a way forward for Salford. 

[phiggins]

52 minutes ago, PREPOSTEROUS said:

There are ways round a delay in a take over, if there is confidence it's going to happen, a funding package can be provided as a sponsor of sorts while the details are being worked up. Matt Ellis provided a cash boost prior to him taking over to give Trinity a chance of survival by signing Fifita, Griffin and Gale. Didn't work in the end but it's a way forward for Salford. 

They’d have to put up 800k up front if they’re to avoid any player sales. That’s a hefty amount to put up without the deal being officially done 

[Exiled Wiganer]

So, if I wanted to buy a club and avoid all its debts, I could make sure they pass the IMG test first, by saying whatever needs to be said to achieve that, allow the target to run out of cash, but grab an advance on future payments sufficiently late that it is too late to be kicked out, then simply allow the target to fold entirely before buying it debt free from insolvency practitioners. 
 

Would the new company then be allowed to do the IMG dance again this year, or does insolvency mean that they would drop down in 26? 

[PREPOSTEROUS]

8 minutes ago, phiggins said:

They’d have to put up 800k up front if they’re to avoid any player sales. That’s a hefty amount to put up without the deal being officially done 

Is that not just the running deficit for the year? Or do they need to drop to a £1.2m cap and find £800k.

[Wellsy4HullFC]

8 minutes ago, Exiled Wiganer said:

or does insolvency mean that they would drop down in 26? 

You'd kind of hope so for the reasons you've outlined.

[Tommygilf]

23 minutes ago, Exiled Wiganer said:

So, if I wanted to buy a club and avoid all its debts, I could make sure they pass the IMG test first, by saying whatever needs to be said to achieve that, allow the target to run out of cash, but grab an advance on future payments sufficiently late that it is too late to be kicked out, then simply allow the target to fold entirely before buying it debt free from insolvency practitioners. 
 

Would the new company then be allowed to do the IMG dance again this year, or does insolvency mean that they would drop down in 26? 

Insolvency events, including even just administration iirc, force an automatic downgrading by 1. So from A to B or B to C.

C grade sides cannot be in Super League and as such for currently Grade B Salford an Insolvency event would mean relegation.

[Charlie]

11 hours ago, LeytherRob said:

The board runs things day to day, just like the CBS board did at Wrexham - it's a mandatory part of setting up a CBS. The membership votes on dissolution and sale of the CBS, not the board. Otherwise, the whole thing is nothing but a bucket collection for the world's most expensive pin badges.

Edit - also, there was ZERO pushback at Wrexham from members against the sale and it still took over 6 months from the NDA's and 3 months from the vote to ratify.

 

It’s not the same as Wrexham I am a shareholder and we don’t get asked about these things, we had to elect a group of shareholders who make the call on are behalf 

[LeytherRob]

3 hours ago, Charlie said:

It was an expensive pin collection. Honestly the only “power” we have is to elect a cbs bored who make a choice on our behalf 

If you actually read the rules, it isn’t and you’re wrong. Because otherwise your club would be in a lot of trouble with the financial conduct authority. This is a highly regulated process SRD signed on to. 

[LeytherRob]

33 minutes ago, Charlie said:

It’s not the same as Wrexham I am a shareholder and we don’t get asked about these things, we had to elect a group of shareholders who make the call on are behalf 

 

11 hours ago, LeytherRob said:

The board runs things day to day, just like the CBS board did at Wrexham - it's a mandatory part of setting up a CBS. The membership votes on dissolution and sale of the CBS, not the board. Otherwise, the whole thing is nothing but a bucket collection for the world's most expensive pin badges.

Edit - also, there was ZERO pushback at Wrexham from members against the sale and it still took over 6 months from the NDA's and 3 months from the vote to ratify.

 

 

I’m not retyping so I’ve just highlighted the sections you seem to have misunderstood in bold. It is the same because there are a designated set of rules to follow to become a CBS, which I’ve handily attached to one of my previous posts which has Paul Kinds signature on there.

unless you want to start claiming SRD have committed fraud?

[Archie Gordon]

A reminder that going into admin, etc., no longer causes a club to drop an IMG grade. It means you lose half your finance points.

[LeytherRob]

6 minutes ago, Archie Gordon said:

A reminder that going into admin, etc., no longer causes a club to drop an IMG grade. It means you lose half your finance points.

Is that in the changes for this year?

[Archie Gordon]

30 minutes ago, LeytherRob said:

Is that in the changes for this year?

For the next gradings, yes. See https://www.totalrl.com/all-of-the-img-changes-revealed-from-todays-rfl-council-meeting-as-punishment-for-late-proposal-announced/

[nadera78]

I think I'm right in saying that, if an investor was to put up the £800K (or whatever the actual amount) needed to cover the shortfall this year then that would also go towards improving their IMG rating. Investment = points, right?

[Celtic Roosters]

I can remember when positions in Rugby League were decided by what players did on the pitch? Aaaah yes, the good old days. They seem like a distant memory now. Glad I'm not so involved now.

[LeeF]

21 minutes ago, Celtic Roosters said:

I can remember when positions in Rugby League were decided by what players did on the pitch? Aaaah yes, the good old days. They seem like a distant memory now. Glad I'm not so involved now.

And that would have prevented the current issues how?

[dboy]

26 minutes ago, Celtic Roosters said:

I can remember when positions in Rugby League were decided by what players did on the pitch? Aaaah yes, the good old days. They seem like a distant memory now. Glad I'm not so involved now.

You see the problem where the achievements on the pitch are false because the club can't actually afford those players, yes?

If SRD paid everything they were supposed to / had the income to run their business, they wouldn't be able to field this successful squad.

I baffled as to how that squad equals a £800k operating hole though - and that's before you add in the £300k that the council underwrites on their missed rent.

The squad + stadium costs can't be so high that they are down by that figure each year. There is something we aren't seeing about this business.

Edited January 22 by dboy

[M j M]

6 minutes ago, dboy said:

The squad + stadium costs can't be so high that they are down by that figure each year. There is something we aren't seeing about this business.

Yet know there are a lot more running costs to a Rugby League team than stadium and players, right?

[RigbyLuger]

32 minutes ago, Celtic Roosters said:

I can remember when positions in Rugby League were decided by what players did on the pitch? Aaaah yes, the good old days. They seem like a distant memory now. Glad I'm not so involved now.

Like when Wigan cheated to avoid relegation.

[dboy]

5 minutes ago, M j M said:

Yet know there are a lot more running costs to a Rugby League team than stadium and players, right?

Yes, but ones which dwarf the cost of a squad and venue?

We have worked out that they don't have a huge income, but can you suggest which costs are creating such a massive shortfall?

Edited January 22 by dboy