GunnerShy
Well-Known Member
Must have. What's the context?
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Arsenal take out Bank of England Loan
- Thread starter Trilly
- Start date
- Replies 165
- Views 13,620
Nah you said KSE would give us a 250m to spend. They are not. In fact all they are doing is ensure that we’re more in debt.
HairSprayGooners
My brother posted it ⏩
More in debt? We are one of the big clubs with the least amount of debt out of all the big sides in Europe.
Atlas
Lost a sausage bet on Xhaka 😭
If KSE did give us 250m it would be in the form of a loan. The only difference would be us owing money to them instead of a bank. Either way any money coming into the club will be borrowed money ain’t no equity from these guys. Debt is not a bad thing especially when you consider the fact that there is always an EK type waiting to bail the club out if things go wrong...with more debt.
Iceman10
Established Member
A KSE loan of 250m, at virtually zero interest rate, even though interest rates are low at present, would be taken (by me) as a form of commitment to Arsenal, different from anything else they have done to date, to be clear. Still to happen or not, and for the reasons you have outlined I probably would struggle to go along with it being described as "investment".
Atlas
Lost a sausage bet on Xhaka 😭
Did he not already do that with our stadium debt restructuring ie moving higher interest debt from bond holders over to himself at a lower rate? As long as there is no real risk of bankruptcy I have no problem with them borrowing to fund investment into the squad. In the end if things go bad the club is sold and the new owners gets to use new debt to pay off the old debt.
Iceman10
Established Member
I guess so, but likely the net impact was not enough to notice, probably as club statement losses have started to happen over the last couple of years. A 250m loan at near-zero interest would be important help for us to get around FFP (which is farcical, but whatever) to spend this summer as a bet to arrest our decline and get back up towards the big boys. As you say, a bet that likely does not have much downside.
Atlas
Lost a sausage bet on Xhaka 😭
I’m curious as to whether the FFP requirements are waived this time around because most clubs will be making a loss due to exceptional circumstances. Can’t imagine they would take exception to the losses being made now. What they gonna do anyway? Ban us from Europe? Arteta already achieved that.
I don’t have a problem with such a move in principle. The difference with what you said and what is happening is that we’re not getting a loan from KSE. Arsenal is taking a loan from Barclays or whoever to pay Bank of England.
That means there is no obligation on Kroenke to service the loan through KSE. The liability is all AFC.
Rasmi
Negative Nancy
Country: England
And if we fail to improve despite spending big due to poor manager and football director with next to no scouting system what next? Arsenals problem isn’t just spending, but spending badly for years which will lead to falling behind even further. They can’t just spend their way out of this
Iceman10
Established Member
Going into this summer a number of analysts discussed this and overall "low downside risk". If the Kroenke's inject money in and succeed they will win with fans and returns on investment in terms of an appreciated asset. If they inject money in and fail, they gave it a shot, and Arsenal is stil a big enough club with a big worldwide fan base that there would be willing buyers to take Arsenal off the Kroenke's hands. If the Kroenke's put more skin in the game they likely would pay more attention to day to day running of the club than they have so far though, with better more competent executive hires.
Atlas
Lost a sausage bet on Xhaka 😭
We already have a KSE loan which used to be stadium debt. Why would KSE take another loan to fund us when the obligation comes from the club? What real difference does it make anyway if the loan is on us or is at the holding company level but secured against the club? If there is a default the owner steps in and if the owner can’t pay the club gets sold.
It is called investment. As you alluded to earlier, if they KSE were to loan the club funds it can do so at a nominal interest rate and on such terms that are favorable to the club. If the club seeks any loan themselves this will be done at market rates. Further to that the club would most likely have to use collateral of some kind. It’s not rocket science. A loan from the owners on favourable terms is better than one at commercial rates.
Further to this, to borrow to pay debt only continues the cycle of debt. These are basic concepts or do you not know? The only way to reduce debt is to ensure that income > liabilities. That can be done through on field success which requires an investment in the playing staff.
Atlas
Lost a sausage bet on Xhaka 😭
In a perfect world he would be putting equity into the club but he didnt even use his own money to fund the shares he bought to own the club. What makes you think he’s going to spend his own money to buy players? As it stands what matters is the money to buy players is made available and the only way it happens is through debt. What’s the problem with debt? They won’t be taking it on at onerous terms anyway whatever hurts our bottom line hurts KSE bottom line as well.
Debt is always bad. It is by nature inherently bad for anyone. When utilized in a way that can maximize its effectiveness as a tool of a broader financial plan it can be leveraged to be useful.
The mere fact that we are going through a pandemic is explanatory of why debt is never a good thing. Circumstances can change that will significantly affect ones ability to service loans or generate income (present circumstances). Having too much debt will only lead to bankruptcy if the circumstances don’t change or devaluation of the club as it will have to sell assets or license them to generate income just to service debt or to stay afloat. The fact that I have to explain this says a lot about your understanding of how debt functions.
The mere fact that we are going through a pandemic is explanatory of why debt is never a good thing. Circumstances can change that will significantly affect ones ability to service loans or generate income (present circumstances). Having too much debt will only lead to bankruptcy if the circumstances don’t change or devaluation of the club as it will have to sell assets or license them to generate income just to service debt or to stay afloat. The fact that I have to explain this says a lot about your understanding of how debt functions.
Atlas
Lost a sausage bet on Xhaka 😭
I’m a chartered accountant although I might have missed the debt is bad class. I might need a refresher from a random guy on the internet who doesn’t realize most businesses operate using a healthy amount of debt. Governments are printing money and giving it away for next to nothing but man be telling you not to touch it. Unreal.
The ability to print money is not a cogent argument for the usefulness of debt!
Some businesses operate with a significant amount of debt because their income > debt or short term liabilities so all they are doing is kicking the can down the road until their income or assets increase in value or they manage to reduce their liabilities. It’s not rocket science.
It’s not the debt that is a good thing it’s the opportunity to utilize the amount borrowed to earn income or service exorbitant interest that is good and not the debt itself.
Money borrowed still has to be repaid and without income or assets to repay it any businesses will become insolvent.
Some businesses operate with a significant amount of debt because their income > debt or short term liabilities so all they are doing is kicking the can down the road until their income or assets increase in value or they manage to reduce their liabilities. It’s not rocket science.
It’s not the debt that is a good thing it’s the opportunity to utilize the amount borrowed to earn income or service exorbitant interest that is good and not the debt itself.
Money borrowed still has to be repaid and without income or assets to repay it any businesses will become insolvent.
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Atlas
Lost a sausage bet on Xhaka 😭
You do realize there is a 1.8 billion offer on the table to buy the club?? How dangerous can it possibly be to take a loan when you can sell at the drop of a hat?
Im not disputing that it is easy to take a loan. I am saying increased debt is not a good thing for the club especially in this economic climate. If you can’t see the value of what I am saying it is best to end the discussion because we would have fundamental differences in perspectives on the club being saddled with debt. We can agree to disagree.
Atlas
Lost a sausage bet on Xhaka 😭
Of course I understand what you’re saying it’s a very simplistic view that ignores the fact that debt is cheaper than it’s ever been, billionaires are significant richer than they were a year ago and there is a 1.8b offer on the table. Given the circumstances the risk to the club is next to nothing. There are billionaires literally waiting to take over if anything goes wrong.
We can’t afford to not spend we are sinking away from relevance and just dropped out of the rich list and we are losing revenues from not playing in the CL. What’s a couple hundred mil in debt when you leak 50m a year not being in the CL? Granted spending doesn’t guarantee top 4 but not spending guarantees we don’t get it.
We can’t afford to not spend we are sinking away from relevance and just dropped out of the rich list and we are losing revenues from not playing in the CL. What’s a couple hundred mil in debt when you leak 50m a year not being in the CL? Granted spending doesn’t guarantee top 4 but not spending guarantees we don’t get it.
