1971cobbler
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« on: July 03, 2021, 14:06:59 pm » |
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Ok, so my understanding of the three main methods of how businesses are financed;
1. Share issue. Capital is raised to provide equity, and the shareholders are then paid dividends on any future profits posted. The value of these shares can go up or down, or be diluted by further share issues.
2. The business can obtain a loan from a lending institution and pay it back, plus interest, over a period. A business overdraft also comes into this category. Manchester United are probably the best example of this, and how much interest they have had to pay to furnish that debt is staggeringly high.
3. The owners self fund the initial set up or purchase (in this case £1) plus cover any trading losses. They are solely responsible for the capital provided. This is NTFC, and as the latest accounts show, it looks like the losses are c£6m+ since the takeover? Not ideal, but certainly not unusual in lower league professional football.
To all those looking to question motives, and dig for wrongdoing, as Melbourne has already pointed out, where is the pot of money going to come from within the club that KT & DB are going to get repaid by?
For those who think that the equity put in so far shouldn't be listed in the accounts as a directors loan, please let me know what you think it should be instead?
Any financial wrongdoing, especially on the scale that some are suggesting on here, would surely get picked up by auditors.
As already mentioned, it is the 5USports takeover and then withdrawal that the attention needs the spotlights on.
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