Posted by NWBluesFan on 10 Aug 20:44
re: re: re: Henderson Transfer Fee ...
Quote from previous post:
>surely it would of been better to give £125000 to Cooper and £200000 to the bank, but then again with the size of our debt that wouldnt even cover the interest payment.
Maybe I just take my background in finance for granted but I'll point something out just to be on the safe side. We don't "choose" whether to repay the bank - the overdraft/draw down we have is on call permanently. Interest applied to it will probably be pretty punitive too - it's an expensive source of borrowing for the club.
Now, given Mr Scally's efforts to make GFC a viable business, the debt is now serviceable - ie. we should be able to meet interest payments as and when they fall due under the terms of the borrowing. However, the principle is still outstanding and this is the bank's money. That's the key fact that I think many blue-blooded Gills fans overlook - it's NOT ours.
So when we say "we should spend X, Y and Z on different players" it's just not the real world. Bank of Scotland or whoever it is that provides our borrowing facilities see GFC as an investment, nothing more, nothing less.
They don't care about the strength of our squad - they care about the risk of their investment. I'm sure they're more than happy for us to have a huge principle outstanding as they can charge interest on it until the cows come home... but let's be clear - we don't choose what we want to do. If the bank says repay us now (unlikely, but possible) then we have to say "Yes, sir!". It's a financial stark reality. GFC as a business owes the bank a significant sum. It's more than likely that any public injection of cash into the club like a transfer fee would be met with a discussion with the bank manager.
Anyhoo, I think you all get the picture...
If you want to nominate a particular post (not one of your own!) for consideration for Post of the Week, email me at headley@gills365.co.uk