Generic clubs in financial crisis Thread

[Rev Algenon Stickleback H]

Other than the cup replica, they aren't really anything tangible though. They have no monetary value.


I don't think the SFL should be able to strip Rangers (old or new) of those titles though. While you can argue tax dodging is a form of cheating, it's not akin to match fixing or something like that, nor was not paying tax against SFL rules, I'd imagine.

But that's exactly the point - had they worked within the legal framework they wouldn't have had the same amount of money to spend, therefore wouldn't have been able to afford the players they had and in all probability not won anywhere near as many trophies (last 10 years, anyway).
Cheating is taking an unfair advantage - that's exactly what they've done...... and Portsmouth, and Leeds, and Leicester, etc.

It is cheating, but unless it's a kind of cheating that's banned by the league rules (such as not declaring salaries to duck under a wage cap) it's hard to see the justification for stripping a club of titles it won.

Unless you can point to a league rule they broke then how can you punish them for it?

It would be like a ref awarding a free kick against a player shepherding a ball out for a goal kick on the grounds that it's morally wrong and is "cheating" even though there's no rule against it.

[watfordroyal]

Paying players by double contracts, not declared, was against the league rules and points should be deducted for every game these players were involved - so stripping them of the titles and awarding to the runners-up. Be interesting if sellic are found to have also gone down this route as Green states.

[Stranded]

Isn't the Rangers case against the rules though. If their EBT is found to have been so, then under SPL rules the players paid into one won't have been registered correctly so any points gained using them would be null and void hence the possible removal of titles.

[Rev Algenon Stickleback H]

The SPL rules seem to indicate that the players' contracts must be submitted when the player is registered.

If the EBT payments aren't declared, and are effectively "under the counter" payments, then they really are screwed.

If they were declared, but just turn out to be dodgy from a tax point of view, then they broke no SPL rules.

[weybridgewanderer]

Rangers paid a lump sum into the Trust every year, the amount depended on the teams performance. The players could then apply to the Trust that managed the fund for a "loan". there was no guarantee of how well Rangers would perform so no guarantee of how much would go into the Trust Fund.

Celtic operated an EBT for Juninho. It has been decided this is not considered to be a problem because Juninho was paid from the Trust when he left the club, a golden handshake.

If players are promised testimonials, or exotic holidays, or luxury cars, media rights etc and these do not form part of their recorded contract and were "under the counter" should these all be investigated too?

Rangers payments into their EBT trust every year were declared on their financial statements, audited, published in their accounts and recorded with the SFA. Over 10 years nobody raised any issues with this.

[Rev Algenon Stickleback H]

If players are promised testimonials, or exotic holidays, or luxury cars, media rights etc and these do not form part of their recorded contract and were "under the counter" should these all be investigated too?

Essentially, if players receive undisclosed payments from a club, that does breach regulations, and clubs would then be fielding ineligible players every time one plays.

Testimonials are most certainly not undisclosed payments, as they aren't payments by the club. Likewise, getting cars etc of sponsors aren't payments by the club.


Unless you have a salary cap I'm not sure why such disclosure is so vital though. It made sense in the old days of transfer tribunals, as the salary a player was on, and the salary he's been offered did factor into the tribunal transfer fee, but I don't see a huge relevance now, but then again there's no incentive for clubs to hide payments either - unless they are some kind of tax dodge.

[weybridgewanderer]

EBTs are trust funds that the club pays into and the trust then makes a payment to the player.

So is that any more a payment from the club than the club promising that a 3rd party will provide you with a car?

For example my company pays money into a pension held by legal and general, legal and general will, hopefully, then pay me.

[Rev Algenon Stickleback H]

EBTs are trust funds that the club pays into and the trust then makes a payment to the player.

So is that any more a payment from the club than the club promising that a 3rd party will provide you with a car?

Yes, because the trust is paid into by the club. The club makes no payment for the car.

A cut & pasted answer is...

For an Employee Benefit Trust (EBT), to be operated legally for tax purposes, money is deposited in the trust by the employer. Thereafter, the employer must have no control or involvement in the disbursement of funds. Employees can then apply to the trust for loans. The loans must be discretionary i.e. contractual obligations or wages (of any kind) cannot be paid tax-free through an EBT. Any payment through an EBT for wages or other contractual obligations would be liable to tax. Paying wages or other obligations through an EBT without deducting PAYE & National Insurance is a breach of UK tax law and is illegal. HMRC has investigated Rangers’ use of the MGMRT EBT and found it to be a sham designed to avoid due PAYE & NIC. The Rangers FC plc (In Administration) appealed this determination and this appeal was heard by the now infamous First Tier Tribunal (Tax). Rangers FC (the oldco) was able to pay higher wages to sign and retain better quality players during the decade in which the scheme operated. In fact, had Rangers paid staff the same take home wage, the club would have had to find an extra £49m to pay tax on these wages legally.


Now, it certainly is possible that a club could accept sponsorship at a reduced rate, in return for favourable sponsorship of certain players, allowing a trade-off in salary payments, but it would be quite awkward to arrange. The big sponsors don't tend to have things that players would necessarily want in large sums.

[weybridgewanderer]

"contractual obligations or wages (of any kind) cannot be paid tax-free through an EBT"

Rangers operated and EBT and the above clearly states that EBTs cannot be a contractual obligation

You said

The SPL rules seem to indicate that the players' contracts must be submitted when the player is registered.

EBTs cannot be contractual as you see above so cannot be declared to the SPL

[weybridgewanderer]

An auditor’s report found that Sporting Lisbon was “technically bankrupt” after losing money for 12 of the past 13 years and accumulating debt of €375 million ($495 million), borrowed in part to acquire more than a dozen new players for some €30 million. Club President Luiz Godinho Lopes says he’s looking for an investor to ensure the team makes it through this season and next. He has traveled twice to Angola to see if he could find a backer.

And tonight they launched an attack on Benfica whom have their own problems to seek;

"Benfica, always claim they are biggest club in the world. Congratulations for achieving record of biggest ever debt in Portuguese sport. Benfica's liabilities are the biggest ever in the history of Portuguese football," the club said, adding that Benfica were "technically broke".

According to their listed company filing, Benfica posted a loss of 12 million euros ($16 million) in the period from July 2011 to June 2012 and their liabilities totalled 426 million euros, an 11 percent rise from the previous year. Benfica's assets were 412 million euros.

Sporting were among 23 European clubs to have UEFA prize money withheld because of overdue payments to other teams, their own employees or social and tax authorities, European soccer's governing body said this month.

For first time in history benfica's debt is higher than the assets, based on yesterdays finances report presented by benfica,

Activo/assets: 411.9M
Passivo/debts: 426.1M
=
Negative net worth of 14,2M

Benfica is also right now on technical bankruptcy

[watfordroyal]

An auditor’s report found that Sporting Lisbon was “technically bankrupt” after losing money for 12 of the past 13 years and accumulating debt of €375 million ($495 million), borrowed in part to acquire more than a dozen new players for some €30 million. Club President Luiz Godinho Lopes says he’s looking for an investor to ensure the team makes it through this season and next. He has traveled twice to Angola to see if he could find a backer.

And tonight they launched an attack on Benfica whom have their own problems to seek;

"Benfica, always claim they are biggest club in the world. Congratulations for achieving record of biggest ever debt in Portuguese sport. Benfica's liabilities are the biggest ever in the history of Portuguese football," the club said, adding that Benfica were "technically broke".

According to their listed company filing, Benfica posted a loss of 12 million euros ($16 million) in the period from July 2011 to June 2012 and their liabilities totalled 426 million euros, an 11 percent rise from the previous year. Benfica's assets were 412 million euros.

Sporting were among 23 European clubs to have UEFA prize money withheld because of overdue payments to other teams, their own employees or social and tax authorities, European soccer's governing body said this month.

For first time in history benfica's debt is higher than the assets, based on yesterdays finances report presented by benfica,

Activo/assets: 411.9M
Passivo/debts: 426.1M
=
Negative net worth of 14,2M

Benfica is also right now on technical bankruptcy

What assets do Benfica have to be worth 412m Euros?!

[Wax Jacket]

What assets do Benfica have to be worth 412m Euros?!

probably at least €400m worth of clever accounting

[Alexander Litvinenko]

Not strictly a club in financial crisis, but a name dear to this thread :

http://rnn.cabinetoffice.gov.uk/Press-Releases/Former-football-club-chairman-Peter-Ridsdale-banned-as-a-director-for-over-seven-years-68112.aspx

Peter Ridsdale, the former chairman of Leeds United, Barnsley and Cardiff City football clubs, has been disqualified from acting as a company director for seven-and-a-half years, following an investigation by Company Investigations team in Manchester, part of The Insolvency Service.

Mr Ridsdale, 60, of Carnforth, Lancashire, has given an undertaking to the Secretary of State for Business, Innovation and Skills (BIS) barring him from acting
as a company director, and from managing or in any way controlling a company, from 19 October 2012 to 18 April 2020, due to his conduct as a director of W H Sports Group Limited (WHSG).

Sophie Victoria Ridsdale, 45, Mr Ridsdale’s wife and co-director of WHSG, has also been disqualified after providing a similar undertaking which will run for three-and-a-half years from 19 October 2012 to 18 April 2016.

Investigators found that WHSG traded from 2003 to 2007 and was used by Mr Ridsdale to provide sports and leisure consultancy services to football clubs. .

The company went into liquidation on 22 April 2009 with assets of £22,592 and liabilities of at least £478,698, including £442,353 owed to HM Revenue & Customs (HMRC).

[Wimb]

About time ^^

[Silver Fox]

I'm sure he could still just squeak past the fit and proper persons test

[Rev Algenon Stickleback H]

I'm sure he could still just squeak past the fit and proper persons test

Isn't he currently chairman of Preston, which is interesting when you consider the line "Mr Ridsdale, 60, of Carnforth, Lancashire, has given an undertaking to the Secretary of State for Business, Innovation and Skills (BIS) barring him from acting as a company director, and from managing or in any way controlling a company, from 19 October 2012 to 18 April 2020, due to his conduct as a director of W H Sports Group Limited (WHSG)."

[T.R.O.L.I.]

Mr Ridsdale, 60, of Carnforth, Lancashire,

Sophie Victoria Ridsdale, 45, Mr Ridsdale’s wife

Dirty b*stard!

[weybridgewanderer]

http://www.dailymail.co.uk/news/article ... dance.html

I think we need to hold off talking about stripping the BBC of BAFTA's, Sony Radio Awards and reviewing their position at the top of the viewing / listening charts.

Maybe its just me but these awards were all won fair and squarely on the screen or thru the speakers of a radio.

It is simply unbelievable we should be talking about punishments when we have not yet had time to handpick a firm of lawyers who have spent the vast bulk of their careers working for Rupert Murdoch and put together a formal independent investigative body comprising former ITV executive board members preferrably those previously sacked by the BBC as they would have detailed knowledge of exactly how the system works.

One area that does need investigation is the important question of dual contracts that could run back decades what with the BBC handing out lucrative TV and Radio deals to the likes of Terry Wogan. Even Wogan's No. 2 chart placing with the "Floral Dance" cannot be safe and one would hope that The Guinness Book of Hit Singles cannot stay silent on this.

Does anyone know of a BBC Tax Case blog?

[bobbybottler]

It's baffling as to why the BBC needs to cheat like this, and then blame everybody else for getting caught doing so, in spite of all of the massive advantages it has over almost all of its rivals.

[Uke]

http://www.dailymail.co.uk/news/article-2213120/MPs-shock-BBC-tax-deals-Commons-watchdog-says-25-000-contracts-raise-suspicion-complicity-tax-avoidance.html

I think we need to hold off talking about stripping the BBC of BAFTA's, Sony Radio Awards and reviewing their position at the top of the viewing / listening charts.

Maybe its just me but these awards were all won fair and squarely on the screen or thru the speakers of a radio.

It is simply unbelievable we should be talking about punishments when we have not yet had time to handpick a firm of lawyers who have spent the vast bulk of their careers working for Rupert Murdoch and put together a formal independent investigative body comprising former ITV executive board members preferrably those previously sacked by the BBC as they would have detailed knowledge of exactly how the system works.

One area that does need investigation is the important question of dual contracts that could run back decades what with the BBC handing out lucrative TV and Radio deals to the likes of Terry Wogan. Even Wogan's No. 2 chart placing with the "Floral Dance" cannot be safe and one would hope that The Guinness Book of Hit Singles cannot stay silent on this.

Does anyone know of a BBC Tax Case blog?

Which league do the BBC currently play in?

#threadfail