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Newco admin unlikely in short term but traumas ahead

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I had lot of questions over the weekend about Newco going into administration in the coming days or weeks, following Dave King’s resignation on Friday when he simultaneously announced funding plans have “been put on hold”.

To recap:  In their most recently available accounts to 30 June 2018, Newco recorded an £11m annual loss.  Since then they have gone one stage further in European competition, but also spent significantly in the transfer market.  My expectation is that losses would be higher this season, even before the current crisis.

In a statement on Friday, interim chairman Douglas Park and vice-chair and John Bennett indicated they would continue to support the club financially.  It is unlikely they would have made this commitment if they were planning to put the club into administration in the short term.

While the coronavirus will devastate the P&L of every club in Europe, government provisions will help Newco, who, like every other business in the land, will be able to defer payments to HMRC.  They will also be able to furlough the vast majority of non-playing staff.

Even with players and coaches remain on the payroll, cash required to get through the next three months could be as little as £6m (assuming they defer paying every other bill they can).  Led by Barcelona (or Herats, if you prefer), some clubs across Europe have taken unilateral action and suspended or curtailed player wages for the duration of the crisis.  Before next month’s payroll is due, there may be a coordinated effort by clubs to push a rule like this through.  If not, Newco could come to an agreement with high-earning staff to take a pay cut, or postpone wages.

A few million may be enough to see the club limp to the summer, when they hope to see season ticket renewal money.  With these possibilities still in play, and bearing in mind the funding commitment by Park and Bennet, I don’t see a convincing argument to suggest they will press the administration button immediately.

While it is clear they can (if they choose) survive until the summer, they still need to address the fact that they are trading beyond their means and incurring unsustainable losses.  An open transfer window gives them an out.

The market for footballers will open hugely down on where it closed in January.  Fanciful valuations that appeared in newspapers for Newco players will not be met, but to survive, all they need to do is get high earners off the wage bill, even if it means accepting low or zero compensation.

The first thing an administrator normally does on taking over a distressed company is to keep creditors at bay while he tries to salvage the business.  Newco’s creditors are not applying pressure – and the quantum is nothing like what it was when Oldco went down.  The next thing an administrator would do is try to cut costs while turning non-key assets into cash where possible.  This can be done by management without the need to go through administration.

The one caveat to this – as long as the directors are prepared to cough up a few million, and they said on Friday they were, I don’t see the benefit of administration before the transfer window opens.

All the underlying issues remain.  This club has lived beyond its means for all its eight-year history.  It will need to downsize quickly and significantly to have any future.  The Sugar Daddy daydream cannot help them, as funding continuous losses is inconsistent with Uefa FFP – and the most recent Knight on a White Charger has just tailed it back to Hong Kong.

Newco can have a future as a smaller football club, one that pays its bills and develops players in the same way Motherwell, Hibs and others do.  Living within their means is their only viable future, but that would necessitate giving up on fantasies of catching Celtic, and I suspect they would prefer liquidation than take that bitter pill.

The auction for Roy Keane’s signed Ireland shirt closes tomorrow, keep an eye on it.  Proceeds to towards Glasgow South East Foodband at this difficult time.

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  1. The fact is that most football clubs on this island are run on the edge of a financial cliff. It’s not just Newco.

  2. Today I am wearing my persistence beats resistance T shirt .

     

     

    One lives in hope .

  3. Back to Basics - Glass Half Full on

    Gene @ 1:45pm. True.

     

     

    But Sevco are, by some margin, closer to that cliff than anyone else in the SPFL.

  4. Fairhillbhoy

     

     

    Was supposed to go to Prague weekend of huns game with your cousin

     

    Andy along with other mates and kids.

     

     

    We were flying out Friday 13th but heard on Thursday that Prague was shutting borders on the Friday evening decided not to go.

     

     

    Pups in group tried to convince us change to Majorca or Spain.

     

     

    Glad we just said NO.

     

     

    Keep safe.

  5. !!Bada Bing!! on

    FB- I thought it was brilliant TV,the Vegas judge knew what she was doing, was ironic Marcia Cross was there at the same time, thanks for getting back. HH

  6. oh and where is OJ program you and Bada talk of

     

     

    Looked on beeb cant see.

     

     

    Going to try Ozark

     

     

    I would suggest money heist for anyone looking in Netflix Spanish but watched a dubbed version.

  7. Leftie, great to hear from you, hope you and the wee fella are well P. I bet he’s no so wee now. Lol. HH

  8. Glasgowbhoy, down to one ram now unfortunately. A five year old spoiled brat of a pet.lol. Hope yer well. HH

  9. Wouldn’t want FSG involved with Sevco at all.

     

     

    They know how to run a successful football club. It might have never been a serious proposition.

  10. fairhill bhoy on

    JC2-wow you had a lucky escape then.😉

     

    It’s a strange time just now and staying as safe as possible is really all we can do.Its interesting the traffic we have on cqn at the moment .People literally have nothing better to do😂

     

    Stay safe

  11. fairhill bhoy on

    BADA-I thought the way the judge stopped for a drink of juice just before sentencing was very subtle

  12. WEEFRATHETIM

     

    He was 10 two weeks ago. :)))

     

    he stays 200 yards from me but cant get my usual hugs due to the corona,I miss them badly.other daughter brought the 2yr old to the front gate to see me on my birthday,but he got really upset that he couldnt come in.

     

    strange times but they will passCSC

  13. The best game i was ever at was at the Estadio National Park in Lisbon whe we gubbed Inter by 2 goals to one.

     

    No game before or since has ever compared with that fantastic game,and never will.First time ever I bought a round of drinks for. strangers in a strange bar,Around about 45 drinks,but it was worth it.

  14. LEFTCLICKTIC on 30TH MARCH 2020 1:30 PM

     

    All good P hope you all are as well.

     

    Thanks for the text.

     

    Keep the Faith!

     

    Hail Hail!

  15. Jc2 – I am in the 3rd series of Ozark and think it’s a good watch but I know everyone’s likes are different.

     

    I think I have completed Netflix and Amazon Prime😂😂😂

     

     

    Going to go back on fire stick IPTV for old or American box sets, that’s after the painting and the gardening oh and going walks with MrsDavid66, ffs we never done this before bring back work.😂

     

     

    D. :)

  16. PAUL67 on 30TH MARCH 2020 1:31 PM

     

    Thanks, hope you are right and we can now concentrate on securing 10 in a row.

     

    Keep the Faith!

     

    Hail Hail!

  17. !!Bada Bing!! on

    JC2- BBC Iplayer, under Storyville, brilliant biopic on OJ Simpson, actually a lot of stuff on the Iplayer….

  18. I’d imagine wee Alfredo will look even more sour than usual when he gets the phone call to ask him about taking a 70% hit.

  19. In some ways the admin question is rather mute. Sevco need to reduce running costs, drastically. Whether that’s done via admin or in normal operation amounts to the same thing. A scaled back club.

  20. fairhill bhoy on

    AN DUN-I’m happy watching them die slowly.If that takes a while longer all the better

  21. Thanks for feedback on OJ

     

     

    Tried previously kept saying not available will look again.

     

     

    I like bbc iplayer have (sorry kids have) netflix and Amazon prime but i get overwhelmed with choice in there sometimes.

  22. FAVOURITE UNCLE on

    OLDTIM67 on 30TH MARCH 2020 2:29 PM

     

    The best game i was ever at was at the Estadio National Park in Lisbon whe we gubbed Inter by 2 goals to one.

     

     

     

     

    No game before or since has ever compared with that fantastic game,and never will.First time ever I bought a round of drinks for. strangers in a strange bar,Around about 45 drinks,but it was worth it.

     

     

    And you have not stopped buying rounds of drink since then.

  23. Neustadt-Braw on

    smiley one mans carrots are anither ,s donkeys shoite thing

     

     

    twas ever so

     

     

    Braw

  24. Their interims last season were published in February, as ours were this season.

     

     

    It’s also important to note that the interims take in the most favourable trading period for any club.

     

     

    Their interims will take in their season tickets and Europa league group match and qualifying income.

     

     

    If the interims are bad then the second half of the season will be a car crash on a railway line with a train incoming.

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