These are some random observations on the 'new' proposed Model Rules compared to the 'old' Rules.. They are just things that spring immediately to mind. A lot of the 'procedural stuff' is the same as the 'old' Model Rules, as far as I can see, so they generally don't appear in my observations. In making my observation, I've looked at the Trust survey form, in so far as it might apply. The headings below relate to the headings in the Model Rules.
I am making these comments as if I was a consultant just asked to make observations on the changes. I say that because I do not believe that, as a matter of law, the Trust is a community benefit society (CBS) at all since the transfer of ownership and therefore the Model Rules are irrelevant.
3 COMMUNITY BENEFIT PURPOSE and 4. OBJECTS
This where the 'meat of the action' is. I have heard that as well as a simple update the new rules now correspond to the situation that the Trust no longer owns the AFC.
The first thing to note is that there must be a Community Benefit purpose because the Trust is registered as a Community Benefit Society. A new first sentence is added, which essentially states that the Trust will be a conduit between the AFC and its supporters. And it is 'supporters' that are mentioned both in Rule 3 and 4 and in fact consistently throughout the New Rules . This rather implies that the Trust will in the future represent all supporters and not just the members of the Trust. Trust members might therefore wonder what is the point of Trust membership if the Trust will in the future represent 'all and sundry', irrespective of whether they pay a Trust 'subscription'.
To further reflect this, the Objects change from specifically referring to the 'mutual' (i.e. Trust member owning of the Club) to completely dropping that in the new Objects, which as I say now concentrates exclusively on 'supporter' representation. I find this odd because the whole ethos of the mutual movement is that it is primarily based on the mutual aspect of cooperative societies in the UK and revolves around their fundamental principle of democratic control by their members (only).
Rule 3 also repeats that the Trust runs a business. I am at a loss to see what that business might be. It was the legal control of the AFC but that's gone. It also strikes me as inconsistent and illogical the the Trust Board are proposing the new Rules on the basis that it reflects the situation that the Trust no longer owns the AFC, which seems to me an admission that the Trust no longer has a business.
5. POWERS
In the new version this clause is expanded to allow for the fact that the Trust now can only exert 'arms' length influence on the AFC. What remains is the sub clause that states that the Trust may have interests in other companies (e.g. the AFC Ltd.). However, it can only to do that if such a company fits the following: “provided that the objects of the companies or societies are consistent with the Society’s Objects”. Well, without looking at the now privately owned AFC's Objects or equivalent, I cannot see how the Trust's Objects, which are for community benefit purposes, are likely to be consistent with a private limited company whose main object is to make a profit.
Then a wholly new clause is added in the new Rules. This is clause 6. Most of this is housekeeping. However, to me, there is one very specific omission. There is no power that allows the Trust to transfer £100k p.a., or indeed any sum, to the AFC. To me this is an absolutely crucial omission. It makes such a transfer of such monies potentially unlawful because it does not provide a power to do so. That does not surprise me at one level because it would be inconsistent with a CBS to transfer money to a private limited company that it did not own. In legal terms, such a situation may well be 'ultra vires' (beyond the powers of) and continuously open to legal challenge.
9. ASSET LOCK
This was not in the old Model Rules. Maybe it is here because the FSA now recommends it regardless. The purpose of an asset lock is to ensure that any assets owned by a CBS essentially stays only for a community purpose even in a dissolution and does not fall into private hands or for private profit. Well the only assets that I think the AFC has is its remaining shares in the AFC. I must say that off the top of my head I can see no reason for the introduction of the asset lock.
MISCELLANEOUS
1. There is still no provision in the Model Rules that allows for the termination of a Trust member co-opted director.
2. The FSA have obviously insisted that the Trust must actually have the policies specified in the Rules and not simply just mentioning them in passing and they should comply with the FSA's policies.
Overall, in my consultant's role, I would advise the Board and the membership that the new Rules in relation to the law and the realities of the situation is trying to pretend a dog is a duck.
Re: SOME OBSERVATIONS ON THE PROPOSED NEW MODEL RULES COMPARED TO THE OLD MODEL RULES
2All of which completely ignores that these rules have been adopted by Accrington Stanley as you pointed out. So instead of trying to work out what you think they mean, why not simply ask how they work in practice for Accrington Stanley? as clearly they have financial conduct authority approval............Chris Davis wrote: April 12th, 2024, 11:09 am These are some random observations on the 'new' proposed Model Rules compared to the 'old' Rules.. They are just things that spring immediately to mind. A lot of the 'procedural stuff' is the same as the 'old' Model Rules, as far as I can see, so they generally don't appear in my observations. In making my observation, I've looked at the Trust survey form, in so far as it might apply. The headings below relate to the headings in the Model Rules.
I am making these comments as if I was a consultant just asked to make observations on the changes. I say that because I do not believe that, as a matter of law, the Trust is a community benefit society (CBS) at all since the transfer of ownership and therefore the Model Rules are irrelevant.
3 COMMUNITY BENEFIT PURPOSE and 4. OBJECTS
This where the 'meat of the action' is. I have heard that as well as a simple update the new rules now correspond to the situation that the Trust no longer owns the AFC.
The first thing to note is that there must be a Community Benefit purpose because the Trust is registered as a Community Benefit Society. A new first sentence is added, which essentially states that the Trust will be a conduit between the AFC and its supporters. And it is 'supporters' that are mentioned both in Rule 3 and 4 and in fact consistently throughout the New Rules . This rather implies that the Trust will in the future represent all supporters and not just the members of the Trust. Trust members might therefore wonder what is the point of Trust membership if the Trust will in the future represent 'all and sundry', irrespective of whether they pay a Trust 'subscription'.
To further reflect this, the Objects change from specifically referring to the 'mutual' (i.e. Trust member owning of the Club) to completely dropping that in the new Objects, which as I say now concentrates exclusively on 'supporter' representation. I find this odd because the whole ethos of the mutual movement is that it is primarily based on the mutual aspect of cooperative societies in the UK and revolves around their fundamental principle of democratic control by their members (only).
Rule 3 also repeats that the Trust runs a business. I am at a loss to see what that business might be. It was the legal control of the AFC but that's gone. It also strikes me as inconsistent and illogical the the Trust Board are proposing the new Rules on the basis that it reflects the situation that the Trust no longer owns the AFC, which seems to me an admission that the Trust no longer has a business.
5. POWERS
In the new version this clause is expanded to allow for the fact that the Trust now can only exert 'arms' length influence on the AFC. What remains is the sub clause that states that the Trust may have interests in other companies (e.g. the AFC Ltd.). However, it can only to do that if such a company fits the following: “provided that the objects of the companies or societies are consistent with the Society’s Objects”. Well, without looking at the now privately owned AFC's Objects or equivalent, I cannot see how the Trust's Objects, which are for community benefit purposes, are likely to be consistent with a private limited company whose main object is to make a profit.
Then a wholly new clause is added in the new Rules. This is clause 6. Most of this is housekeeping. However, to me, there is one very specific omission. There is no power that allows the Trust to transfer £100k p.a., or indeed any sum, to the AFC. To me this is an absolutely crucial omission. It makes such a transfer of such monies potentially unlawful because it does not provide a power to do so. That does not surprise me at one level because it would be inconsistent with a CBS to transfer money to a private limited company that it did not own. In legal terms, such a situation may well be 'ultra vires' (beyond the powers of) and continuously open to legal challenge.
9. ASSET LOCK
This was not in the old Model Rules. Maybe it is here because the FSA now recommends it regardless. The purpose of an asset lock is to ensure that any assets owned by a CBS essentially stays only for a community purpose even in a dissolution and does not fall into private hands or for private profit. Well the only assets that I think the AFC has is its remaining shares in the AFC. I must say that off the top of my head I can see no reason for the introduction of the asset lock.
MISCELLANEOUS
1. There is still no provision in the Model Rules that allows for the termination of a Trust member co-opted director.
2. The FSA have obviously insisted that the Trust must actually have the policies specified in the Rules and not simply just mentioning them in passing and they should comply with the FSA's policies.
Overall, in my consultant's role, I would advise the Board and the membership that the new Rules in relation to the law and the realities of the situation is trying to pretend a dog is a duck.
Re: SOME OBSERVATIONS ON THE PROPOSED NEW MODEL RULES COMPARED TO THE OLD MODEL RULES
3I have had cause to look at the new Model Rules again and there is something that I believe to be of potential significance in the new Model Rules compared to the old that I had missed before. This is that this Rule has been dropped from the old Rules in the 'Constitution of the Club Board' section and seems to have no replacement in the new version.
" 60. Only Members of the Club who are aged 16 years or more may serve on the Board of Directors."
The clear implication is that anyone, including under 16s, may stand for elections and be elected as a Board director, even if they are not Trust members. Obviously, in the past people who were not Trust members could be co-opted but I think this is a huge step beyond that, if I have understood it correctly.
" 60. Only Members of the Club who are aged 16 years or more may serve on the Board of Directors."
The clear implication is that anyone, including under 16s, may stand for elections and be elected as a Board director, even if they are not Trust members. Obviously, in the past people who were not Trust members could be co-opted but I think this is a huge step beyond that, if I have understood it correctly.
Re: SOME OBSERVATIONS ON THE PROPOSED NEW MODEL RULES COMPARED TO THE OLD MODEL RULES
4The new model rules like the old were not designed specifically for the County, they would have been designed to make things easier for trust's related to football clubs. That would include junior clubs etc.Chris Davis wrote: April 16th, 2024, 8:01 am I have had cause to look at the new Model Rules again and there is something that I believe to be of potential significance in the new Model Rules compared to the old that I had missed before. This is that this Rule has been dropped from the old Rules in the 'Constitution of the Club Board' section and seems to have no replacement in the new version.
" 60. Only Members of the Club who are aged 16 years or more may serve on the Board of Directors."
The clear implication is that anyone, including under 16s, may stand for elections and be elected as a Board director, even if they are not Trust members. Obviously, in the past people who were not Trust members could be co-opted but I think this is a huge step beyond that, if I have understood it correctly.
The financial conduct authority is basically looking for scams such as pyramid schemes and the like being used under a trust banner. I would say that is why as a Trust we could have a community share issue to raise capital, but we couldn't purchase shares in the County as the trust owned that business, and while businesses buy their own shares from their profits, its not the same to raise capital from the trust membership by buying shares, as fans might think it is an investment.
Wimbledon have a bond issue all regulated by the financial conduct authority as they are a trust run club, but underwriten by a rich fan.
Because the government is keen on football trust's running clubs, I don't think things such as not meeting the required 6 board members is at the forefront of the financial conduct authorities thinking. Therefore if you can make it easier to meet the requirements, why keep restrictive rules?
Re: SOME OBSERVATIONS ON THE PROPOSED NEW MODEL RULES COMPARED TO THE OLD MODEL RULES
5I am answering this particular response because it is relatively coherent and may because of that mislead some people.Bangitintrnet wrote: April 16th, 2024, 8:47 amThe new model rules like the old were not designed specifically for the County, they would have been designed to make things easier for trust's related to football clubs. That would include junior clubs etc.Chris Davis wrote: April 16th, 2024, 8:01 am I have had cause to look at the new Model Rules again and there is something that I believe to be of potential significance in the new Model Rules compared to the old that I had missed before. This is that this Rule has been dropped from the old Rules in the 'Constitution of the Club Board' section and seems to have no replacement in the new version.
" 60. Only Members of the Club who are aged 16 years or more may serve on the Board of Directors."
The clear implication is that anyone, including under 16s, may stand for elections and be elected as a Board director, even if they are not Trust members. Obviously, in the past people who were not Trust members could be co-opted but I think this is a huge step beyond that, if I have understood it correctly.
The financial conduct authority is basically looking for scams such as pyramid schemes and the like being used under a trust banner. I would say that is why as a Trust we could have a community share issue to raise capital, but we couldn't purchase shares in the County as the trust owned that business, and while businesses buy their own shares from their profits, its not the same to raise capital from the trust membership by buying shares, as fans might think it is an investment.
Wimbledon have a bond issue all regulated by the financial conduct authority as they are a trust run club, but underwriten by a rich fan.
Because the government is keen on football trust's running clubs, I don't think things such as not meeting the required 6 board members is at the forefront of the financial conduct authorities thinking. Therefore if you can make it easier to meet the requirements, why keep restrictive rules?
It shows a complete misunderstanding of the Financial Conduct Authoritiy's role in the registration of Community Benefit Societies (CBS ) under the 2014 Act. The statutory duty of the FCA under this Act is to register CBSs. As such, it must consider before and during the whole period of registration if a purported CBS, such as the Trusts, adheres and continues to adhere to the conditions for registration under the Act. In this context, it has nothing to do with dealing with examples of financial misconduct such a 'pyramid selling'. It's duties as registrar of CBS is entirely exclusive of its other jurisdictions.
For a CBS to be registered by the FCA, it must show that it has a set of Rules that incorporates all the requirements of the 2014 Act. CBS's often find it convenient to speed up and make cheaper adopting a Model Rules template provided by a 'sponsoring body', like the Football Supporters Association. So, it does not matter a jot if the Model Rules were not designed specifically for the County. Indeed saying ".. for the County.." is a misunderstanding of itself. The Rules were designed for 'the Trust', which is the registered CBS and not the County. What is of importance is that these Model Rules (old or new) are the Model Rules registered by the FCA as applying specifically to the Trust. Therefore they govern the i.e. our Trust's operations as a CBS.
The FCA are not at all interested in how many directors a CBS may have because this is a matter for an individual CBS. However, in relation to the nature and number of directors under the registered Rules the is a matter for the individual Trust. The point I was making in the post that you have commented on is that the Trust is proposing to make a significant change in who may be a director. It has nothing to do with the minimum number of directors, which again appears to be a complete misunderstanding by you. It is about who those directors may be. It is appearing to no longer under the proposed new Rules that an elected director need not be a Trust member. This not a restrictive Rule, it is a Rule which contributes to a fundamental change in the constitutional basis of the Trust.
Re: SOME OBSERVATIONS ON THE PROPOSED NEW MODEL RULES COMPARED TO THE OLD MODEL RULES
6The point I am making is that the rules are designed to take into account all trust's not simply ours.Chris Davis wrote: April 16th, 2024, 9:36 amI am answering this particular response because it is relatively coherent and may because of that mislead some people.Bangitintrnet wrote: April 16th, 2024, 8:47 amThe new model rules like the old were not designed specifically for the County, they would have been designed to make things easier for trust's related to football clubs. That would include junior clubs etc.Chris Davis wrote: April 16th, 2024, 8:01 am I have had cause to look at the new Model Rules again and there is something that I believe to be of potential significance in the new Model Rules compared to the old that I had missed before. This is that this Rule has been dropped from the old Rules in the 'Constitution of the Club Board' section and seems to have no replacement in the new version.
" 60. Only Members of the Club who are aged 16 years or more may serve on the Board of Directors."
The clear implication is that anyone, including under 16s, may stand for elections and be elected as a Board director, even if they are not Trust members. Obviously, in the past people who were not Trust members could be co-opted but I think this is a huge step beyond that, if I have understood it correctly.
The financial conduct authority is basically looking for scams such as pyramid schemes and the like being used under a trust banner. I would say that is why as a Trust we could have a community share issue to raise capital, but we couldn't purchase shares in the County as the trust owned that business, and while businesses buy their own shares from their profits, its not the same to raise capital from the trust membership by buying shares, as fans might think it is an investment.
Wimbledon have a bond issue all regulated by the financial conduct authority as they are a trust run club, but underwriten by a rich fan.
Because the government is keen on football trust's running clubs, I don't think things such as not meeting the required 6 board members is at the forefront of the financial conduct authorities thinking. Therefore if you can make it easier to meet the requirements, why keep restrictive rules?
It shows a complete misunderstanding of the Financial Conduct Authoritiy's role in the registration of Community Benefit Societies (CBS ) under the 2014 Act. The statutory duty of the FCA under this Act is to register CBSs. As such, it must consider before and during the whole period of registration if a purported CBS, such as the Trusts, adheres and continues to adhere to the conditions for registration under the Act. In this context, it has nothing to do with dealing with examples of financial misconduct such a 'pyramid selling'. It's duties as registrar of CBS is entirely exclusive of its other jurisdictions.
For a CBS to be registered by the FCA, it must show that it has a set of Rules that incorporates all the requirements of the 2014 Act. CBS's often find it convenient to speed up and make cheaper adopting a Model Rules template provided by a 'sponsoring body', like the Football Supporters Association. So, it does not matter a jot if the Model Rules were not designed specifically for the County. Indeed saying ".. for the County.." is a misunderstanding of itself. The Rules were designed for 'the Trust', which is the registered CBS and not the County. What is of importance is that these Model Rules (old or new) are the Model Rules registered by the FCA as applying specifically to the Trust. Therefore they govern the i.e. our Trust's operations as a CBS.
The FCA are not at all interested in how many directors a CBS may have because this is a matter for an individual CBS. However, in relation to the nature and number of directors under the registered Rules the is a matter for the individual Trust. The point I was making in the post that you have commented on is that the Trust is proposing to make a significant change in who may be a director. It has nothing to do with the minimum number of directors, which again appears to be a complete misunderstanding by you. It is about who those directors may be. It is appearing to no longer under the proposed new Rules that an elected director need not be a Trust member. This not a restrictive Rule, it is a Rule which contributes to a fundamental change in the constitutional basis of the Trust.
So for a rule change to happen it has happened for a reason. That reason is probably because smaller trust's were having difficulty getting people to fill the roles.
So I look at the bigger picture as to why the rule has changed, you look at the detail without considering why it has changed.
Re: SOME OBSERVATIONS ON THE PROPOSED NEW MODEL RULES COMPARED TO THE OLD MODEL RULES
7Further up Chris wrote:
MISCELLANEOUS
1. There is still no provision in the Model Rules that allows for the termination of a Trust member co-opted director.
2. The FSA have obviously insisted that the Trust must actually have the policies specified in the Rules and not simply just mentioning them in passing and they should comply with the FSA's policies.
Overall, in my consultant's role, I would advise the Board and the membership that the new Rules in relation to the law and the realities of the situation is trying to pretend a dog is a duck.
I am still awaiting a reply to this below, from the person who still thinks openness is for others.........
All of which completely ignores that these rules have been adopted by Accrington Stanley as you pointed out. So instead of trying to work out what you think they mean, why not simply ask how they work in practice for Accrington Stanley? as clearly they have financial conduct authority approval............
Edit: via the Football Supporters Association........
MISCELLANEOUS
1. There is still no provision in the Model Rules that allows for the termination of a Trust member co-opted director.
2. The FSA have obviously insisted that the Trust must actually have the policies specified in the Rules and not simply just mentioning them in passing and they should comply with the FSA's policies.
Overall, in my consultant's role, I would advise the Board and the membership that the new Rules in relation to the law and the realities of the situation is trying to pretend a dog is a duck.
I am still awaiting a reply to this below, from the person who still thinks openness is for others.........
All of which completely ignores that these rules have been adopted by Accrington Stanley as you pointed out. So instead of trying to work out what you think they mean, why not simply ask how they work in practice for Accrington Stanley? as clearly they have financial conduct authority approval............
Edit: via the Football Supporters Association........
Re: SOME OBSERVATIONS ON THE PROPOSED NEW MODEL RULES COMPARED TO THE OLD MODEL RULES
8It is a matter of public record that the trust bought shares in the club with the money from the Community Share issue.Bangitintrnet wrote: April 16th, 2024, 8:47 am
...
The financial conduct authority is basically looking for scams such as pyramid schemes and the like being used under a trust banner. I would say that is why as a Trust we could have a community share issue to raise capital, but we couldn't purchase shares in the County as the trust owned that business, and while businesses buy their own shares from their profits, its not the same to raise capital from the trust membership by buying shares, as fans might think it is an investment.
...
Re: SOME OBSERVATIONS ON THE PROPOSED NEW MODEL RULES COMPARED TO THE OLD MODEL RULES
9That might be the case, but what you're not considering is can they directly buy shares in the club?Amberexile wrote: April 16th, 2024, 11:07 amIt is a matter of public record that the trust bought shares in the club with the money from the Community Share issue.Bangitintrnet wrote: April 16th, 2024, 8:47 am
...
The financial conduct authority is basically looking for scams such as pyramid schemes and the like being used under a trust banner. I would say that is why as a Trust we could have a community share issue to raise capital, but we couldn't purchase shares in the County as the trust owned that business, and while businesses buy their own shares from their profits, its not the same to raise capital from the trust membership by buying shares, as fans might think it is an investment.
...
IMO the answer to that is likely to be no, as they can raise capital via community shares, that hasn't got a company linked to them, and therefore no requirement for tax or liability in paying back creditors.
Furthermore the trust are not asking fans to buy shares in a company that the trust has a controlling interest in.
To me that's why the club had little actual debt, as its owner was a trust that couldn't get a loan or raise capital. The club as a business could probably only get a business overdraft set against guaranteed income such as the EFL and Premiership £1 million.
Re: SOME OBSERVATIONS ON THE PROPOSED NEW MODEL RULES COMPARED TO THE OLD MODEL RULES
10Well it absolutely is the case and in my opinion there is nothing to stop them from doing so now other than Hj lacking the desire to sell them more shares. We did after all pass a resolution at the last AGM to allow more shares to be allocated but the club has yet to do so.Bangitintrnet wrote: April 16th, 2024, 12:00 pmThat might be the case, but what you're not considering is can they directly buy shares in the club?Amberexile wrote: April 16th, 2024, 11:07 amIt is a matter of public record that the trust bought shares in the club with the money from the Community Share issue.Bangitintrnet wrote: April 16th, 2024, 8:47 am
...
The financial conduct authority is basically looking for scams such as pyramid schemes and the like being used under a trust banner. I would say that is why as a Trust we could have a community share issue to raise capital, but we couldn't purchase shares in the County as the trust owned that business, and while businesses buy their own shares from their profits, its not the same to raise capital from the trust membership by buying shares, as fans might think it is an investment.
...
IMO the answer to that is likely to be no, as they can raise capital via community shares, that don't have a company linked to them, and therefore no requirement for tax or liability in paying back creditors.
To me that's why the club had little actual debt, as its owner was a trust that couldn't get a loan or raise capital. The club as a business could probably only get a business overdraft set against guaranteed income such as the EFL and Premiership £1 million.
I think you have a problem understanding the concept of debt. The club has always carried debt and always will, The club had debt before it was owned by the Trust, had debt while owned by the Trust and will have debt into the future now that it is no longer owned by the Trust.
The club did borrow money from the bank while Trust owned, both the 2020 and 2021 accounts show Bank borrowing of exactly £50,000. The club could have issued shares to raise capital. It was more a lack of the desire to do these things rather than being prevented from doing so. However, had they done so, I doubt things would have worked out much different.
Re: SOME OBSERVATIONS ON THE PROPOSED NEW MODEL RULES COMPARED TO THE OLD MODEL RULES
11The concept of debt in relation to loss is important. Companies short of funds will use every opportunity including the overdraft up to the maximum. So 900k of loss on the 30 June could be a small profit on the 30 July after our TV money comes in. Likewise season ticket loss is not a loss in real terms as it is what we sell! All of which is why you can have the same loss appearing year after year, as the cut off point of the accounts dictates wether a loss or small profit occurs.Amberexile wrote: April 16th, 2024, 12:32 pmWell it absolutely is the case and in my opinion there is nothing to stop them from doing so now other than Hj lacking the desire to sell them more shares. We did after all pass a resolution at the last AGM to allow more shares to be allocated but the club has yet to do so.Bangitintrnet wrote: April 16th, 2024, 12:00 pmThat might be the case, but what you're not considering is can they directly buy shares in the club?Amberexile wrote: April 16th, 2024, 11:07 amIt is a matter of public record that the trust bought shares in the club with the money from the Community Share issue.Bangitintrnet wrote: April 16th, 2024, 8:47 am
...
The financial conduct authority is basically looking for scams such as pyramid schemes and the like being used under a trust banner. I would say that is why as a Trust we could have a community share issue to raise capital, but we couldn't purchase shares in the County as the trust owned that business, and while businesses buy their own shares from their profits, its not the same to raise capital from the trust membership by buying shares, as fans might think it is an investment.
...
IMO the answer to that is likely to be no, as they can raise capital via community shares, that don't have a company linked to them, and therefore no requirement for tax or liability in paying back creditors.
To me that's why the club had little actual debt, as its owner was a trust that couldn't get a loan or raise capital. The club as a business could probably only get a business overdraft set against guaranteed income such as the EFL and Premiership £1 million.
I think you have a problem understanding the concept of debt. The club has always carried debt and always will, The club had debt before it was owned by the Trust, had debt while owned by the Trust and will have debt into the future now that it is no longer owned by the Trust.
The club did borrow money from the bank while Trust owned, both the 2020 and 2021 accounts show Bank borrowing of exactly £50,000. The club could have issued shares to raise capital. It was more a lack of the desire to do these things rather than being prevented from doing so. However, had they done so, I doubt things would have worked out much different.
Re: SOME OBSERVATIONS ON THE PROPOSED NEW MODEL RULES COMPARED TO THE OLD MODEL RULES
12You clearly don't understand double entry book keeping.Bangitintrnet wrote: April 16th, 2024, 12:50 pmThe concept of debt in relation to loss is important. Companies short of funds will use every opportunity including the overdraft up to the maximum. So 900k of loss on the 30 June could be a small profit on the 30 July after our TV money comes in. Likewise season ticket loss is not a loss in real terms as it is what we sell! All of which is why you can have the same loss appearing year after year, as the cut off point of the accounts dictates wether a loss or small profit occurs.Amberexile wrote: April 16th, 2024, 12:32 pmWell it absolutely is the case and in my opinion there is nothing to stop them from doing so now other than Hj lacking the desire to sell them more shares. We did after all pass a resolution at the last AGM to allow more shares to be allocated but the club has yet to do so.Bangitintrnet wrote: April 16th, 2024, 12:00 pmThat might be the case, but what you're not considering is can they directly buy shares in the club?Amberexile wrote: April 16th, 2024, 11:07 amIt is a matter of public record that the trust bought shares in the club with the money from the Community Share issue.Bangitintrnet wrote: April 16th, 2024, 8:47 am
...
The financial conduct authority is basically looking for scams such as pyramid schemes and the like being used under a trust banner. I would say that is why as a Trust we could have a community share issue to raise capital, but we couldn't purchase shares in the County as the trust owned that business, and while businesses buy their own shares from their profits, its not the same to raise capital from the trust membership by buying shares, as fans might think it is an investment.
...
IMO the answer to that is likely to be no, as they can raise capital via community shares, that don't have a company linked to them, and therefore no requirement for tax or liability in paying back creditors.
To me that's why the club had little actual debt, as its owner was a trust that couldn't get a loan or raise capital. The club as a business could probably only get a business overdraft set against guaranteed income such as the EFL and Premiership £1 million.
I think you have a problem understanding the concept of debt. The club has always carried debt and always will, The club had debt before it was owned by the Trust, had debt while owned by the Trust and will have debt into the future now that it is no longer owned by the Trust.
The club did borrow money from the bank while Trust owned, both the 2020 and 2021 accounts show Bank borrowing of exactly £50,000. The club could have issued shares to raise capital. It was more a lack of the desire to do these things rather than being prevented from doing so. However, had they done so, I doubt things would have worked out much different.
EDIT: If as you suggest, EFL money is due during July, the accounts for the period to 30th June will show the payment from the previous year in them. If you move the accounting year forward a month, the payment made in July this year will appear in them but the payment made in July last year will drop off the back end so the end result is the same. Each year's accounts will include one year's worth of EFL payments. A loss is a loss, a debt is a debt.
Re: SOME OBSERVATIONS ON THE PROPOSED NEW MODEL RULES COMPARED TO THE OLD MODEL RULES
13But we know that during covid, payments were brought forward as there was no income. It didn't therefore mean that there would be a next payment due, because it had already been paid.Amberexile wrote: April 16th, 2024, 2:31 pmYou clearly don't understand double entry book keeping.Bangitintrnet wrote: April 16th, 2024, 12:50 pmThe concept of debt in relation to loss is important. Companies short of funds will use every opportunity including the overdraft up to the maximum. So 900k of loss on the 30 June could be a small profit on the 30 July after our TV money comes in. Likewise season ticket loss is not a loss in real terms as it is what we sell! All of which is why you can have the same loss appearing year after year, as the cut off point of the accounts dictates wether a loss or small profit occurs.Amberexile wrote: April 16th, 2024, 12:32 pmWell it absolutely is the case and in my opinion there is nothing to stop them from doing so now other than Hj lacking the desire to sell them more shares. We did after all pass a resolution at the last AGM to allow more shares to be allocated but the club has yet to do so.Bangitintrnet wrote: April 16th, 2024, 12:00 pmThat might be the case, but what you're not considering is can they directly buy shares in the club?Amberexile wrote: April 16th, 2024, 11:07 amIt is a matter of public record that the trust bought shares in the club with the money from the Community Share issue.Bangitintrnet wrote: April 16th, 2024, 8:47 am
...
The financial conduct authority is basically looking for scams such as pyramid schemes and the like being used under a trust banner. I would say that is why as a Trust we could have a community share issue to raise capital, but we couldn't purchase shares in the County as the trust owned that business, and while businesses buy their own shares from their profits, its not the same to raise capital from the trust membership by buying shares, as fans might think it is an investment.
...
IMO the answer to that is likely to be no, as they can raise capital via community shares, that don't have a company linked to them, and therefore no requirement for tax or liability in paying back creditors.
To me that's why the club had little actual debt, as its owner was a trust that couldn't get a loan or raise capital. The club as a business could probably only get a business overdraft set against guaranteed income such as the EFL and Premiership £1 million.
I think you have a problem understanding the concept of debt. The club has always carried debt and always will, The club had debt before it was owned by the Trust, had debt while owned by the Trust and will have debt into the future now that it is no longer owned by the Trust.
The club did borrow money from the bank while Trust owned, both the 2020 and 2021 accounts show Bank borrowing of exactly £50,000. The club could have issued shares to raise capital. It was more a lack of the desire to do these things rather than being prevented from doing so. However, had they done so, I doubt things would have worked out much different.
EDIT: If as you suggest, EFL money is due during July, the accounts for the period to 30th June will show the payment from the previous year in them. If you move the accounting year forward a month, the payment made in July this year will appear in them but the payment made in July last year will drop off the back end so the end result is the same. Each year's accounts will include one year's worth of EFL payments. A loss is a loss, a debt is a debt.
So, so far you have mentioned debts of £100k in the accounts that you can find...... I've just found you a £1millon.
I have also asked you about accrued expenses? What might these be? Could it be related?
And for the sake of ballance can you also attempt to calculate how much of the loss would be due to season ticket sales etc.? These being included as a debt, due to them being a service paid up front, but not received until the final game of the following season.
I will be grateful therefore for some answers please.......
Re: SOME OBSERVATIONS ON THE PROPOSED NEW MODEL RULES COMPARED TO THE OLD MODEL RULES
14I have no idea what happened during the Covid period so no idea what payments you think were brought forward.Bangitintrnet wrote: April 16th, 2024, 3:19 pmBut we know that during covid, payments were brought forward as there was no income. It didn't therefore mean that there would be a next payment due, because it had already been paid.Amberexile wrote: April 16th, 2024, 2:31 pmYou clearly don't understand double entry book keeping.Bangitintrnet wrote: April 16th, 2024, 12:50 pmThe concept of debt in relation to loss is important. Companies short of funds will use every opportunity including the overdraft up to the maximum. So 900k of loss on the 30 June could be a small profit on the 30 July after our TV money comes in. Likewise season ticket loss is not a loss in real terms as it is what we sell! All of which is why you can have the same loss appearing year after year, as the cut off point of the accounts dictates wether a loss or small profit occurs.Amberexile wrote: April 16th, 2024, 12:32 pmWell it absolutely is the case and in my opinion there is nothing to stop them from doing so now other than Hj lacking the desire to sell them more shares. We did after all pass a resolution at the last AGM to allow more shares to be allocated but the club has yet to do so.Bangitintrnet wrote: April 16th, 2024, 12:00 pmThat might be the case, but what you're not considering is can they directly buy shares in the club?Amberexile wrote: April 16th, 2024, 11:07 amIt is a matter of public record that the trust bought shares in the club with the money from the Community Share issue.Bangitintrnet wrote: April 16th, 2024, 8:47 am
...
The financial conduct authority is basically looking for scams such as pyramid schemes and the like being used under a trust banner. I would say that is why as a Trust we could have a community share issue to raise capital, but we couldn't purchase shares in the County as the trust owned that business, and while businesses buy their own shares from their profits, its not the same to raise capital from the trust membership by buying shares, as fans might think it is an investment.
...
IMO the answer to that is likely to be no, as they can raise capital via community shares, that don't have a company linked to them, and therefore no requirement for tax or liability in paying back creditors.
To me that's why the club had little actual debt, as its owner was a trust that couldn't get a loan or raise capital. The club as a business could probably only get a business overdraft set against guaranteed income such as the EFL and Premiership £1 million.
I think you have a problem understanding the concept of debt. The club has always carried debt and always will, The club had debt before it was owned by the Trust, had debt while owned by the Trust and will have debt into the future now that it is no longer owned by the Trust.
The club did borrow money from the bank while Trust owned, both the 2020 and 2021 accounts show Bank borrowing of exactly £50,000. The club could have issued shares to raise capital. It was more a lack of the desire to do these things rather than being prevented from doing so. However, had they done so, I doubt things would have worked out much different.
EDIT: If as you suggest, EFL money is due during July, the accounts for the period to 30th June will show the payment from the previous year in them. If you move the accounting year forward a month, the payment made in July this year will appear in them but the payment made in July last year will drop off the back end so the end result is the same. Each year's accounts will include one year's worth of EFL payments. A loss is a loss, a debt is a debt.
So, so far you have mentioned debts of £100k in the accounts that you can find...... I've just found you a £1millon.
I have also asked you about accrued expenses? What might these be? Could it be related?
And for the sake of ballance can you also attempt to calculate how much of the loss would be due to season ticket sales etc.? These being included as a debt, due to them being a service paid up front, but not received until the final game of the following season.
I will be grateful therefore for some answers please.......
To the best of my knowledge I haven't mentioned £100k. I have mentioned the same £50k debt in 2 different years so maybe you are mistaking the same £50k in both years'accounts as being separate amounts.
As I remember it from a long time ago, the treatment of season ticket sales in accrual accounting terms should be as follows - When we sell a season ticket, it is not included in our revenue at the time of the sale. The way it is treated in the accounts is that the amount is debited to our bank or cash account and a credit entry is made to deferred revenue (or similarly named account) as both Cash/Bank and deferred revenue (as a current liability) are both Balance Sheet items, this will have zero impact on profit and loss but is a liability (i.e. debt) that will be included in the Creditors section of the Balance Sheet being balanced by the cash at bank.
Then as each match is played, the relevant amount (usually 1/23rd of the season ticket price) is debited to deferred revenue and credited to Revenue. It is at this point that the profit from each match represented by season ticket sales will flow through. This method is used to ensure that profit is recognised at the correct time.
Now for the guesswork, deferred revenue and accrued expenses are very similar beasts. In simple terms, deferred revenue is something you have been paid for but not yet delivered and accrued expenses are things you have received but not yet been billed/paid for thus both are current liabilities as in the near future you have to deliver the goods or services you have been paid for and you have to pay for the goods or services you have received. I suspect that in our Balance Sheet, the season ticket sales are being shown in accrued expenses but can't be certain
I hope that helps but as I said, it is many years (over 40) since I studied accountancy making me by no means an expert and somebody else on this messageboard will surely be able to explain this better than I have.
Re: SOME OBSERVATIONS ON THE PROPOSED NEW MODEL RULES COMPARED TO THE OLD MODEL RULES
15Thank you, a detailed and knowledgable explanation.Amberexile wrote: April 16th, 2024, 9:51 pmI have no idea what happened during the Covid period so no idea what payments you think were brought forward.Bangitintrnet wrote: April 16th, 2024, 3:19 pmBut we know that during covid, payments were brought forward as there was no income. It didn't therefore mean that there would be a next payment due, because it had already been paid.Amberexile wrote: April 16th, 2024, 2:31 pmYou clearly don't understand double entry book keeping.Bangitintrnet wrote: April 16th, 2024, 12:50 pmThe concept of debt in relation to loss is important. Companies short of funds will use every opportunity including the overdraft up to the maximum. So 900k of loss on the 30 June could be a small profit on the 30 July after our TV money comes in. Likewise season ticket loss is not a loss in real terms as it is what we sell! All of which is why you can have the same loss appearing year after year, as the cut off point of the accounts dictates wether a loss or small profit occurs.Amberexile wrote: April 16th, 2024, 12:32 pmWell it absolutely is the case and in my opinion there is nothing to stop them from doing so now other than Hj lacking the desire to sell them more shares. We did after all pass a resolution at the last AGM to allow more shares to be allocated but the club has yet to do so.Bangitintrnet wrote: April 16th, 2024, 12:00 pmThat might be the case, but what you're not considering is can they directly buy shares in the club?Amberexile wrote: April 16th, 2024, 11:07 amIt is a matter of public record that the trust bought shares in the club with the money from the Community Share issue.Bangitintrnet wrote: April 16th, 2024, 8:47 am
...
The financial conduct authority is basically looking for scams such as pyramid schemes and the like being used under a trust banner. I would say that is why as a Trust we could have a community share issue to raise capital, but we couldn't purchase shares in the County as the trust owned that business, and while businesses buy their own shares from their profits, its not the same to raise capital from the trust membership by buying shares, as fans might think it is an investment.
...
IMO the answer to that is likely to be no, as they can raise capital via community shares, that don't have a company linked to them, and therefore no requirement for tax or liability in paying back creditors.
To me that's why the club had little actual debt, as its owner was a trust that couldn't get a loan or raise capital. The club as a business could probably only get a business overdraft set against guaranteed income such as the EFL and Premiership £1 million.
I think you have a problem understanding the concept of debt. The club has always carried debt and always will, The club had debt before it was owned by the Trust, had debt while owned by the Trust and will have debt into the future now that it is no longer owned by the Trust.
The club did borrow money from the bank while Trust owned, both the 2020 and 2021 accounts show Bank borrowing of exactly £50,000. The club could have issued shares to raise capital. It was more a lack of the desire to do these things rather than being prevented from doing so. However, had they done so, I doubt things would have worked out much different.
EDIT: If as you suggest, EFL money is due during July, the accounts for the period to 30th June will show the payment from the previous year in them. If you move the accounting year forward a month, the payment made in July this year will appear in them but the payment made in July last year will drop off the back end so the end result is the same. Each year's accounts will include one year's worth of EFL payments. A loss is a loss, a debt is a debt.
So, so far you have mentioned debts of £100k in the accounts that you can find...... I've just found you a £1millon.
I have also asked you about accrued expenses? What might these be? Could it be related?
And for the sake of ballance can you also attempt to calculate how much of the loss would be due to season ticket sales etc.? These being included as a debt, due to them being a service paid up front, but not received until the final game of the following season.
I will be grateful therefore for some answers please.......
To the best of my knowledge I haven't mentioned £100k. I have mentioned the same £50k debt in 2 different years so maybe you are mistaking the same £50k in both years'accounts as being separate amounts.
As I remember it from a long time ago, the treatment of season ticket sales in accrual accounting terms should be as follows - When we sell a season ticket, it is not included in our revenue at the time of the sale. The way it is treated in the accounts is that the amount is debited to our bank or cash account and a credit entry is made to deferred revenue (or similarly named account) as both Cash/Bank and deferred revenue (as a current liability) are both Balance Sheet items, this will have zero impact on profit and loss but is a liability (i.e. debt) that will be included in the Creditors section of the Balance Sheet being balanced by the cash at bank.
Then as each match is played, the relevant amount (usually 1/23rd of the season ticket price) is debited to deferred revenue and credited to Revenue. It is at this point that the profit from each match represented by season ticket sales will flow through. This method is used to ensure that profit is recognised at the correct time.
Now for the guesswork, deferred revenue and accrued expenses are very similar beasts. In simple terms, deferred revenue is something you have been paid for but not yet delivered and accrued expenses are things you have received but not yet been billed/paid for thus both are current liabilities as in the near future you have to deliver the goods or services you have been paid for and you have to pay for the goods or services you have received. I suspect that in our Balance Sheet, the season ticket sales are being shown in accrued expenses but can't be certain
I hope that helps but as I said, it is many years (over 40) since I studied accountancy making me by no means an expert and somebody else on this messageboard will surely be able to explain this better than I have.
So at 30th of June it's likely that season ticket sales is making up half of the annual loss, as none of them would have been credited to revenue at that point?
The TV money being brought forward was all over the press at the time, as the discussion was about furlough payments to players, which of course never happened. Everyone forgets that if you bring something forward that it is not going to be paid again. I did, until reading the covid related notes in the Carlisle accounts ( i am interested in what happened at that time, and trying to relate those notes to our accounts)
I look at this in a different way to most, insomuch as I am interested in where debt shows in the accounts compared to what we know from being told.
So if I am told that the trust membership needed to act as guarantors for roughly £500k of future expenditure and future debt in case the takeover doesn't happen, I know that I am not looking for existing debt in the accounts. When HJ tells us that the County have cash flow problems that helps in my search as well. Then we find out that he is investing that magic £500k.
HJ tells us that electronic advertising is hired, (so will
not appear as debt). Pitch refurbishment sits with the RP accounts, (so is not our debt).
The away stand that we had to replace after Grimsby fans broke it, is probably in the RP rental as well. All these things could be debt, same as paying off a players contract early to get them out the door, but as a Trust run club, it's obvious to me that we have to find other ways of dealing with those issues. Clearly they will be paid for, but we are having to put a lot of things on future budgets. That makes it difficult when competing against teams that CAN simply rack up debt to sort out problems, or **** ups which all clubs have, but 18 have got it more wrong than the trust did.
I get that most want to find blame, but I don't think I would have done any better dealing with those issues myself. So I give my backing to them, not because I am friends or a family member etc etc. Even if I do find it funny that people see it as part of credibility that they put their name to their posts on an anonymous forum, when all it does is actually make discussion personal..........and therefore more reactive.
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