Wrexham finances explored with expert Kieran Maguire

[Gilpo]

Hi all

Bit of a bonus FiD pod which you may want on the way to Halifax.
We speak to Price of Football podcast expert Kieran Maguire on Wrexham finances which were released to company house last week
- Losses and why we shouldn't worry
- The owner's loan and 'surprising' interest rate
- Impact the documentary will have in the future
- We also preview the Notts County match with NC Talk

https://open.spotify.com/episode/7iqSaqcijwy7UWuvik46we

[exileddragon]

Is there any forum where fans can ask about that interest rate and/or whether there are any additional investors? Seem to recall talk about fans having some sort of representation back when the takeover happened but I haven't seen anything on it since then.

The overall loss number was more or less openly disclosed in the documentary from what I recall ('if we don't go up you'll lose X a season), and Stockport lost a lot more in the same period, so I'm not that bothered by that, but the interest rate on the loan seems a bit unusual.

[MJ6987]

Originally Posted by exileddragon

Is there any forum where fans can ask about that interest rate and/or whether there are any additional investors? Seem to recall talk about fans having some sort of representation back when the takeover happened but I haven't seen anything on it since then.

The overall loss number was more or less openly disclosed in the documentary from what I recall ('if we don't go up you'll lose X a season), and Stockport lost a lot more in the same period, so I'm not that bothered by that, but the interest rate on the loan seems a bit unusual.

Are they maybe moving money to lower tax places?

[FrenchCanada]

Originally Posted by Gilpo

- Losses and why we shouldn't worry
- The owner's loan and 'surprising' interest rate
- Impact the documentary will have in the future
- We also preview the Notts County match with NC Talk

I haven't listened but here's my thoughts:

RE: Losses - An analogy we can think about is a rental property. Perhaps rental income didn't cover minor repairs, mortgage interest, property taxes, other costs for the year. But the value of the property went up 50k so the owner 'isn't worried'. Cash flow negative, but net worth positive.

RE: Loan/Interest rate - What the loan is allowing the club to do (buy the ground freehold, build the new stand, etc) is worth the prime+3% a year which is probably a going rate at this time. A premier league club I support has an average debt rate (we're talking close to $200 million of debt) of 5.75% and keep in mind a lot of that was taking out when interest rates were lower/they have some fixed terms.

RE: Documentary - The 2023 books will really highlight the impact the documentary has directly on club turnover. My understanding is most of the docu money goes to a holding co of R&R but that's just more $$$ they'll have to invest in the club.

Great days ahead!

[Wrexham Can]

Originally Posted by exileddragon

Is there any forum where fans can ask about that interest rate and/or whether there are any additional investors? Seem to recall talk about fans having some sort of representation back when the takeover happened but I haven't seen anything on it since then.

The overall loss number was more or less openly disclosed in the documentary from what I recall ('if we don't go up you'll lose X a season), and Stockport lost a lot more in the same period, so I'm not that bothered by that, but the interest rate on the loan seems a bit unusual.

I haven't listened yet but that interest rate is normal I think. It's competitive and I also think there's an issue if a loan is taken out at less than market rates - I can't remember what it is but it may be related to how the taxman views it.

[138+NotOut]

I'd rather sit in it bath and slit my wrists than listen to Tim

[taffguyukhc]

Originally Posted by 138+NotOut

I'd rather sit in it bath and slit my wrists than listen to Tim

I'm flattered but I'm really not worth running a bath over. Don't do anything silly though. I can assure you I'm a better listener than podcaster 👍

[Alan in Ukraine]

They are interesting accounts but it is till June 2022 so do not include anything relating to this season. In particular we are not told how much income from "Welcome to Wrexham" will go to the club, though the report implies that there will be some.

There are a couple of negatives:

1. They have taken advantage of the small companies' regime not to publish a Profit and Loss Account which is a pity. The Trust was always fully transparent here and disclosed a lot of detail. Against that, the Director's Report does give some of the main numbers, which allows a limited amount of comparison, but really there is not much information

2. If turnover was £5.8 million, football costs were £3.9 million and the loss was £2.9 million, then non-football costs were £4.8 million, which I suppose covers the Fleurs, Humphreys and Consultants, but also all those jobs which used to be done by volunteers.

The Fixed Asset split looks odd: £2 million for the ground and £2 million for improvements? I don't see that much in the way of improvements as at June 2022 so assume this is a historical split, and actually is is £4 million for the Ground

The interest rate will be their way of obtaining income as the Withholding Tax on interest paid from UK companies to US companies is 0% under the Double Tax Treaty, while for dividends it is only 0% subject to certain conditions which may not have been fulfilled in that year.

The club is technically bankrupt (it has negative assets) and so is entirely reliant on the support of R and R. Hopefully this position is temporary, and don't forget, if we do get into League 2, then there is this much quoted £800,000 income.

Still, the growth of the club is impressive

[Redted]

Originally Posted by FrenchCanada

I haven't listened but here's my thoughts:

RE: Losses - An analogy we can think about is a rental property. Perhaps rental income didn't cover minor repairs, mortgage interest, property taxes, other costs for the year. But the value of the property went up 50k so the owner 'isn't worried'. Cash flow negative, but net worth positive.

RE: Loan/Interest rate - What the loan is allowing the club to do (buy the ground freehold, build the new stand, etc) is worth the prime+3% a year which is probably a going rate at this time. A premier league club I support has an average debt rate (we're talking close to $200 million of debt) of 5.75% and keep in mind a lot of that was taking out when interest rates were lower/they have some fixed terms.

RE: Documentary - The 2023 books will really highlight the impact the documentary has directly on club turnover. My understanding is most of the docu money goes to a holding co of R&R but that's just more $$$ they'll have to invest in the club.

Great days ahead!

'A premier League club I support' split loyalties eh?