by muirinho »
08 Jul 2020 19:17
Nameless Elm Park Kid Nameless
Although would it mean they had injected capital into the club (as opposed to writing off historical debt), which could impact FFP .
I’m less of a finance expert than you so no idea if the question even makes sense !
While the debts never really worried me given they were just debt owed by the owners to themselves there must be a reason why they have done this. Is it purely of benefit to them, or is there an actual benefit to the club ?
The short answer is no; the entire point of FPP is that it looks at the profit/loss a club is making when any investment from the owner is excluded. For example: If RFC are making £40m a year from football/commercial activities, then over 3 seasons it can't spend more than £120m + the cushion that FFP allows (i think £30m, can't remember). It doesn't matter if the owners invest £1bn into the club over that period and RFC has an amazing bank balance, according to FFP we are still in breach.
I thought that along with things like spending on Academies and Women’s teams there was an allowance which could be offset against losses for investment by owners if it was in return for equity as opposed to a repayable loan
True, but that allowance is included in the figures that are generally quoted. E.g., in previous years you could lose an average of £5m a year. Or £13m a year if the extra 8m was covered by owners. That would generally be quoted as £39m over the 3 years, i.,e., the assumption being made that owners were putting in the money to cover the losses.