Salford financial issues(again…)

[dboy]

9 minutes ago, Charlie said:

Most clubs are losing money though which is fine as long as someone is happy to cover the cost. But I don’t think a revenue based cap would work. Personally I think the cap needs raising 

There is already enough room under the cap for most occurrences.

There is an argument that a club who can show a higher, sustainable revenue could get dispensations.

However, it should follow that a club who don't generate such revenues should have a lower cap, yes?

[RP London]

31 minutes ago, Dave T said:

I'm not sure I buy the fairness argument to be honest mate.

Why is it not seen as fair that Salford have a supportive council that helps with funding but Warrington have a private individual that underwrites our shortfall?

I'm not sure I see any fairness piece in the slightest here. It's not like they have been handed a bonus £500k - it's an advance.

Really, the only claims of unfairness here can be around the CVA and RFL advances - nothing else is relevant to anyone else.

The CVA punishment was a bit of a fudge, but as Tommy points out, there are real world consequences of that too.

RFL advances - they've had two now apparently, and we have to assume the first one was settled. Hopefully this latest one will be settled rather than the worst case scenario of them going bust.

I don't really buy these vague claims of unfairness. 

Toulouse have huge LA funding (and are hampered with huge costs too).

Fev have had serious financial issues, as have Halifax and now London. 

Bradford have had all sorts going on - plenty of allegations of dodgy stuff there too.

All of these clubs are doing what they have to, I do think that argument is a bit of a slippery road.

Sure, firm up the rules, and I do agree with Tommy on % of revenue on the cap as we used to have.

I understand your point. I just feel that there is absolutely a "fairness" (i've been putting it in inverted commas for a reason throughout, its not a great word for it but I cant think of a better one..) issue that their finances were woeful at grading, they have plugged holes with RFL advances etc and nothing has been properly fixed, otherwise they wouldn't need them again. I don't mind the council bit as I said in a previous poster council/investor is the same really. What I do mind is that they have 100% played a system which has kept them in super league due to the incumbency bias. They have been caught out, maybe by timing, again.. There has to be a firming of the rules and they have to put finances more importantly in the grading. 

Edited January 29 by RP London

[Dave T]

1 minute ago, LeytherRob said:

Only if you can afford it which you'll know all too well coming from banking. No one is saying it isn't good to invest in future or that we don't want them to improve financials, but making fairly modest investments on borrowed money whilst also completely self-sabotaging their bottom line by loading up on financial commitments they can't afford on players/pre season trips is not the way to run a sports club when there is no safety net. 

If someone takes out a bank loan to invest in a friends business where he's going to get a good profit share moving forward that's great, if they do it whilst they're also struggling to put food on the table then they are a certified lunatic and should be called out as such. 

 

 

Of course your post is sensible and hard to disagree with the principle, but the missing piece here is that we don't know what the financial plans were.

It's been touched on that the stadium deal has fallen behind on timelines, I'd be interested to know what financial impact that has had, plus the council funding not materialising - if the timelines were too aggressive, or the returns pie-in-the-sky then that is poor management, but different people/leaders/organisations have different levels of risk appetite to this kind of thing. My natural instinct would be to keep costs really tight until there is a high level of certainty, I expect we are broadly aligned on that.

[binosh]

15 hours ago, Dave T said:

I'm still not sure why that makes you and others so angry. 

Their council has helped - well good, so have many others. My team has certainly had support from their council. Fans have bailed them out - again, that's on them, that's often what fans do. The RFL have advanced funds, not really a new activity in RL. And you say waiting for someone else, well that's an investor, if it comes off, excellent! Most clubs are not balancing the books, they are losing millions and getting other people to pay their bills. 

Salford are hardly unique here. And if we look at the clubs just below them, London, Bradford, Fev, York, Halifax, Toulouse - all pretty much the same, or worse.

 

I’m not angry, it’s just repetitive and tedious, it’s like having a family member with a bad gambling addiction who wants to keep borrowing money off you, sooner or later you need to show them some tough love and say no more.

[RP London]

29 minutes ago, Dave T said:

The stadium (inc billboard) are revenue driving initiatives. It's perfectly reasonable to be funded on finance, providing the initiative delivers.

The Academy is more of a long term play in that it is likely to improve squad costs and hopefully performance.

They should both have positive impacts on the P&L though (to different levels and at different times) which was my point really. We want them to improve their financials - these are two things that they are doing to work towards that.

If you can service that finance... it would appear they cannot therefore it isnt really reasonable surely. 

[LeytherRob]

7 minutes ago, Dave T said:

Yeah, that's fair, and it's clearly not a good way to run your club - I suppose my challenge though is that isn't something that is unfair or something for other clubs to be annoyed about.

I don't think they were until SRD dragged them into it and left them with little choice but to give them nearly half of their central funding early because if it all goes wrong the clubs are on the hook for that.

[Dave T]

1 minute ago, LeytherRob said:

I don't think they were until SRD dragged them into it and left them with little choice but to give them nearly half of their central funding early because if it all goes wrong the clubs are on the hook for that.

Not really. They really could have rejected that, I don't buy that they couldn't.

[Dave T]

3 minutes ago, RP London said:

If you can service that finance... it would appear they cannot therefore it isnt really reasonable surely. 

Obviously we don't know the terms of the finance, but that was my point on 'if the initiative delivers'. If you deliver something that increases your income to cover the costs and more then it's fine.

I'm not sure that finance agreement is the straw that broke the camels back here.

[RP London]

1 minute ago, Dave T said:

Not really. They really could have rejected that, I don't buy that they couldn't.

problem is, what would the consequences be of that? 11 team super league, knock on in funding etc etc.. it was a bit of a held to ransom IMHO

[LeytherRob]

2 minutes ago, Dave T said:

Not really. They really could have rejected that, I don't buy that they couldn't.

I agree they could have, but it would have created an arguably bigger headache at that point. My point is at that stage the clubs are fully entitled to start getting annoyed because SRD's actions are having a direct impact on the other clubs.

[RP London]

Just now, Dave T said:

Obviously we don't know the terms of the finance, but that was my point on 'if the initiative delivers'. If you deliver something that increases your income to cover the costs and more then it's fine.

I'm not sure that finance agreement is the straw that broke the camels back here.

I dont think there was 1 straw, its an accumulation of everything all of which was poorly thought out.. 

The finance is an example, 1 can be serviced but 2-3-4-5 thats when you start to have a problem, everything is on finance and nothing is bringing in extra revenue.. with the "maybe" from the council etc.. I understand risk appetite (own a business and used to be a risk manager) but the Salford situation does scream utter madness and built on sand.

[sweaty craiq]

13 minutes ago, dboy said:

There is already enough room under the cap for most occurrences.

There is an argument that a club who can show a higher, sustainable revenue could get dispensations.

However, it should follow that a club who don't generate such revenues should have a lower cap, yes?

Retained revenues yes, Profit based cap is sensible as it’s peas easy to show top line growth that has nothing falling through

[LeytherRob]

9 minutes ago, Dave T said:

Of course your post is sensible and hard to disagree with the principle, but the missing piece here is that we don't know what the financial plans were.

It's been touched on that the stadium deal has fallen behind on timelines, I'd be interested to know what financial impact that has had, plus the council funding not materialising - if the timelines were too aggressive, or the returns pie-in-the-sky then that is poor management, but different people/leaders/organisations have different levels of risk appetite to this kind of thing. My natural instinct would be to keep costs really tight until there is a high level of certainty, I expect we are broadly aligned on that.

Microsoft Word - Salford RD Holdings CBS Business Planv2.docx

All i can go off is the business plan SRD put out to the world in the share scheme along with the estimated income they put out, and well we obviously know they haven't hit the financial targets they set themselves or we wouldn't be here now having this discussion. 

 

 

[The Masked Poster]

7 minutes ago, RP London said:

problem is, what would the consequences be of that? 11 team super league, knock on in funding etc etc.. it was a bit of a held to ransom IMHO

Which is where I agree with you. I can understand that it might be the best 'worse case scenario' but I personally still think it shouldn't have been allowed to get this far. 

[The Masked Poster]

50 minutes ago, Dave T said:

I'm not sure I buy the fairness argument to be honest mate.

Why is it not seen as fair that Salford have a supportive council that helps with funding but Warrington have a private individual that underwrites our shortfall?

I'm not sure I see any fairness piece in the slightest here. It's not like they have been handed a bonus £500k - it's an advance.

Really, the only claims of unfairness here can be around the CVA and RFL advances - nothing else is relevant to anyone else.

The CVA punishment was a bit of a fudge, but as Tommy points out, there are real world consequences of that too.

RFL advances - they've had two now apparently, and we have to assume the first one was settled. Hopefully this latest one will be settled rather than the worst case scenario of them going bust.

I don't really buy these vague claims of unfairness. 

Toulouse have huge LA funding (and are hampered with huge costs too).

Fev have had serious financial issues, as have Halifax and now London. 

Bradford have had all sorts going on - plenty of allegations of dodgy stuff there too.

All of these clubs are doing what they have to, I do think that argument is a bit of a slippery road.

Sure, firm up the rules, and I do agree with Tommy on % of revenue on the cap as we used to have.

But all those clubs have suffered from their financial problems to a greater or lesser degree. Salford have not as yet, been disadvantaged. In fact they've actually benefited from playing fast and loose and signing players that they couldn't afford but other clubs might have been actually able to afford. 
This is absolutely unfair however you slice it up. 

[phiggins]

2 hours ago, Charlie said:

If 1.2 is all Salford can afford and I’m a fan, there no way we’d be competitive best would be to pull out of sl and start again. 
 

hopefully investors come in and things can be run abit more professional 

Of course, over a whole season, such a low cap would start to bite as injuries, fatigue, maximum minutes per player kicks in.

My view was that they could reduce the spend to buy more time to get the takeover done, and remain competitive for a decent enough spell. Then, build and recruit once the takeover is complete. If the takeover did not happen for whatever reason, then it would make for a long season, but could be survived. As it is, it seems like it is all or nothing with this bid that is in.

Completely share your hope on new investors.

[Tommygilf]

1 hour ago, Charlie said:

You are aware no club makes money so a revenue based cap is stupid 

Revenue isn't profit last time I checked?

[binosh]

This is the first time I’ve seen players commenting about the situation, I’m sensing a couple of digs at Mr King and Co here. It must be stressful for players with bills to pay.

 

[Charlie]

1 minute ago, Tommygilf said:

Revenue isn't profit last time I checked?

No but nearly ever club loses money so what do you base it off ??? Normally owners cover the loss and invested more but how do you gage how much there willing to invest 

[Tommygilf]

1 minute ago, Charlie said:

No but nearly ever club loses money so what do you base it off ??? Normally owners cover the loss and invested more but how do you gage how much there willing to invest 

Base it off of revenue? - it's a really easy number that includes all the income into the club. Turnover (ie revenue) is a well established basis for measuring the operational capacity of a business. Profit doesn't need to come into it.

If a club owner, or indeed a local council, has shown willingness to invest £X in a club, then the relative cap goes up for that club as they have generated that revenue into their coffers. They aren't forced to spend to their cap, they just can if they want. 

[Charlie]

34 minutes ago, Tommygilf said:

Base it off of revenue? - it's a really easy number that includes all the income into the club. Turnover (ie revenue) is a well established basis for measuring the operational capacity of a business. Profit doesn't need to come into it.

If a club owner, or indeed a local council, has shown willingness to invest £X in a club, then the relative cap goes up for that club as they have generated that revenue into their coffers. They aren't forced to spend to their cap, they just can if they want. 

I get what your saying but just can’t say that ever working or the clubs wanting something like this 

[Dave T]

1 hour ago, LeytherRob said:

Microsoft Word - Salford RD Holdings CBS Business Planv2.docx

All i can go off is the business plan SRD put out to the world in the share scheme along with the estimated income they put out, and well we obviously know they haven't hit the financial targets they set themselves or we wouldn't be here now having this discussion. 

 

 

Thanks for sharing, hadn't seen the doc behind the summary table.

[Dave T]

1 hour ago, The Masked Poster said:

But all those clubs have suffered from their financial problems to a greater or lesser degree. Salford have not as yet, been disadvantaged. In fact they've actually benefited from playing fast and loose and signing players that they couldn't afford but other clubs might have been actually able to afford. 
This is absolutely unfair however you slice it up. 

 If anyone is getting outbid by the lowest spenders in the league, I suggest they aren't trying very hard tbh.

[LeytherRob]

1 minute ago, Dave T said:

Thanks for sharing, hadn't seen the doc behind the summary table.

No worries, and for full transparency the summary table isn't in the business plan doc, but in this one which was also shared on the crowdfunder site(Salford Red Devils RLFC Community Share Offer - a Community crowdfunding project in Manchester by Salford Red Devils)

This has the income table along with some other info 1684939078_salford_red_devils_-_community_share_document_-_digital_(1).pdf

 

The other doc shared in the crowdfunder is the governing rules for running(and ultimately selling/dissolving) a CBS which are very relevant to this takeover process (Paul Kings signature is on this doc).  Found here 1682350908_rules.pdf

[Tommygilf]

1 hour ago, Charlie said:

I get what your saying but just can’t say that ever working or the clubs wanting something like this 

I don't know, lots of clubs use every loophole going to push their actual cap up way past the official top level. Plenty would want the ability to invest more if they could.