Many people argue that the board (or more specifically, Rod Petrie) should spend more money on transfer fees and wages.
We don't have an excess of cash so they'd need to borrow to do that.
Loans need to be repaid with interest. I don't know how cheap business loans are just now, but assuming a rather generous rate of 6% is charged, Hibs would need to sell another 150 season tickets every year to pay for the interest alone on every £1m borrowed. On top of that would be the hefty capital repayments.
So, I'd be interested to hear people's opinions as to how much debt we should get into?
And what should happen when we've reached that limit?
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Thread: How much debt should we have?
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24-07-2011 09:07 AM #1
How much debt should we have?
Last edited by Hibbyradge; 24-07-2011 at 09:13 AM.
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24-07-2011 09:11 AM #2
I think retire has done a great job with the finances, its the clowns he's appointed to spend it that's let him and us down.
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24-07-2011 09:24 AM #5
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To me its a bit like the recent financial crisis. When the going is good (we've only mortgage debt) we spend a little more than we should and everyone is happy.
Then bang - we're in the merde and suddenly we've got to offload a shedload of wages.
So far we've been carefully (skillfully?) guided through the crisis without getting ourselves into bother (well - since the last TV deal went south)
If we've only got mortgage payments to now cover, then the manager is obviously going to have more at his disposal. Debt is a short term fix with longer term pain - whichever way you look at it.
On that basis, apart from mortgage debt, then no debt is acceptable - it'll come back to bite us in the ass.
--posted from the the ideal world.
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24-07-2011 10:23 AM #6
The accountant's view
Break out the black coffee....
The point about business debt is that you're borrowing money to buy assets that will (directly or indirectly) generate or save enough funds to at least repay the loan plus interest. It follows that the lifetime of the asset should equal or exceed the period of the loan. Given that most purchased players will sign two or three year contracts the asset is almost certain to have expired before the loan has been repaid and we then have to find further funds to replace the asset as well as continuing to finance the original loan, all while the asset has moved on to bigger or better things. It would only really work if the player was sure to bring in massive crowds or could guarantee a cup win. Players like that are very rare, particularly at the level Hibs operate in.
It's safe and boring and doesn't help Hibs our of their current condition, but that's the financial reality.
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24-07-2011 11:38 AM #7This quote is hidden because you are ignoring this member. Show Quote
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24-07-2011 11:50 PM #8
I'm not an accountant but I support the boards policy of driving down debt & ideally not paying transfer fees or excessive wages. It seems a big part of what Rod looks for in a manager is the ability to spot a player - not many (none??) since TM have had success on this front but CC signings look promising.
The clamour by some for Rod / the board to splash cash on "quality" players is absolute nonsense. As mentioned above we're on a different financial planet to the OF & need to rely on picking up players with promise.
The board has proved it's prepared to support each manager to get the right players but credit to Rod - if he sees the manager can't spot a player it seems the financial support is withdrawn - & rightly so.
Building a solid business is a marathon - I'm happy CC & the board are not knee jerking into signing mercenaries.
I don't get involved in any of the "Rod must go" debates because it's pointless trying to explain to these people that at our level, high wages DOES NOT equal success.
We have club infrastructure & finances that are the envy of 99% of clubs in British football - the final part of the jigsaw still needs to fall into place but we're in a better position than ever to complete it - I'm happy to wait for the right players at the right price to come along.
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25-07-2011 08:47 AM #9This quote is hidden because you are ignoring this member. Show Quote
Flawed logic in the Boardroom and the repercussions are now very obvious.
Petrie
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25-07-2011 08:56 AM #10
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The best way to sell players is to raise our own. We have signed many players but the ones we have moved on for anything close to a "healthy mark up" are few and far between.
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25-07-2011 09:00 AM #11This quote is hidden because you are ignoring this member. Show Quote
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25-07-2011 09:08 AM #12
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25-07-2011 09:21 AM #13This quote is hidden because you are ignoring this member. Show Quote
The key is no matter what the plan is, the fact is that Scottish football hasn't produced a continuous supply of talented youngsters since the early seventies & I've seen nothing to suggest the golden generation was anything other than a one off.
By all means we need to keep on investing in youth, but it would be utter folly to think that this alone would be our salvation.Last edited by Ray_; 25-07-2011 at 09:24 AM.
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25-07-2011 09:22 AM #14This quote is hidden because you are ignoring this member. Show Quote
Stands are required for crowds
Also if we were to produce a few top notch players with the aid of the new training centre, which, imo, will take another 4 or 5 years till we see noticeable improvement, then it would be partly responsible for a cup win. As much as part of the golden generation were pretty responsible for our last cup win.
On the topic of how much debt we should have, we should have none. Does it not make more sense to have a surplus of cash, whilst using the yearly interest to top up playing budgets?
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25-07-2011 09:25 AM #15This quote is hidden because you are ignoring this member. Show Quote
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25-07-2011 09:34 AM #16This quote is hidden because you are ignoring this member. Show Quote
Paul Hanlon is still learning, he is not a patch on the likes of Sloop, at a similar age, the comparison with Berra, we'll see when he does it at Premiership level.
Wotherspoon, we got him from Celtic, but, on the strength of the last 18 months, if we had decent alternatives, I wouldn't have him anywhere near the first team, he seems to have gone backwards.Last edited by Ray_; 25-07-2011 at 09:36 AM.
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25-07-2011 09:40 AM #17This quote is hidden because you are ignoring this member. Show Quote
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25-07-2011 09:43 AM #18This quote is hidden because you are ignoring this member. Show Quote
You also have to question, how much money would JH have needed to bring in massive crowds or guarantee a cup win?
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25-07-2011 09:44 AM #19This quote is hidden because you are ignoring this member. Show Quote
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25-07-2011 09:45 AM #20This quote is hidden because you are ignoring this member. Show Quote
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25-07-2011 09:57 AM #22This quote is hidden because you are ignoring this member. Show Quote
Hibs are in a poor footballing situation now not because of Petrie's financial stewardship but because of the amount of managers he has appointed then, contrary to popular opinion, backed financially. JC, Mixu, Hughes and now CC have been allowed to build there own teams and all of them have failed to produced the type of results that are expected.
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25-07-2011 10:17 AM #23This quote is hidden because you are ignoring this member. Show Quote
IMO, the point behind completing the stadium is to attract new spectators - they will undoubtedly prefer to sit in a comfortable "shiny new" stand than the crumbling death trap that was the old East - so the stands should bring in extra income over their 25-50 year lifetime. I've seen that concept work to great effect here at Reading. In truth though they had to be built in any case and the timing of the East build saved a huge amount of money.
Of course, the other thing that will bring in new spectators (I'm deliberately avoiding using the word 'fans') is attractive or at least winning football and there is no doubt that the club is failing to deliver on that score - no argument from me on that one. As to whose fault it is, I'm staying out of that debate, because like most posters on here - I DON'T KNOW.
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25-07-2011 10:27 AM #24This quote is hidden because you are ignoring this member. Show Quote
At the beginning of last season that debt was £6.27m including a parent company loan of £0.25m. We're paying it off at £0.24m pa, so that part of the debt will be £6.03m in the forthcoming accounts. TQM will be able to tell you how much can be added to that in relation to the East Stand.
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25-07-2011 10:34 AM #25This quote is hidden because you are ignoring this member. Show Quote
And you accuse the board of flawed logic?
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25-07-2011 10:36 AM #26This quote is hidden because you are ignoring this member. Show Quote
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25-07-2011 10:37 AM #27
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The stands have been built we have to live with that, however, it is still the boards job to get the demand up to start these stands earning us money. What to most business' do when they need more people to buy their product if their product isnt as good as others on the market? they lower the prices in an attempt to get more selling, we arent doing that. Hibs are competing with fans choices of where to spend their money and right now the fans are choosing to spend that money elsewhere. Lower the prices and make it a more attractive proposition, however, the board have shot themselves in the foot again as we have started the season now, the prices are set because fans have purchased the season tickets and we now cannot lower walk up prices.
The board, IMO, havent thought this one through, or they have and the manager has made a host of errors. The board MUST know that in this time of financial hardships that getting a decent team on the pitch is the only way that fans will part with their cash. Fail to deliver on the pitch and income will be down. I am not saying its an easy thing to do as we need to do it without going bust, but its the same with any company. Sell a product with as little cost as possible. Make the margins as big as possible. Hibs have not done this and its not the fault of the fans, its the fault of the boards. They need to assess the demand, they need to assess how good the product needs to be, they need to try and employ the right people to carry the instructions out. If the people they employ are failing, the board have either employed the wrong person or the boards strategy which they are wanting the manager to use is flawed.
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25-07-2011 10:40 AM #28This quote is hidden because you are ignoring this member. Show Quote
"There's nothing flawed about the concept there, although the execution is certainly open to criticism given the current state of the club. The mirror image - say a five year loan for a player on a two year contract (or worse, to pay a single year's wages bill) is flawed to the point of being dangerous for the reasons I've already explained. I'd be appalled if the club went down that road in any significant way."
Is this nonsense too?
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25-07-2011 10:50 AM #29This quote is hidden because you are ignoring this member. Show Quote
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25-07-2011 11:05 AM #30This quote is hidden because you are ignoring this member. Show Quote
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