UEFA and the Football league have mandated that Financial Fair Play rules shall be adhered to by teams. Queens Park Rangers have declared a loss for last year at £9.8 million yet the true trading loss was much higher. They have had a £60 million debt written off by the board which somehow flowed to the bottom line. I am no accountant but I always understood that an action like this would improve the balance sheet but I can't figure out how that would impact the P&L statement other than a reduction in interest.
No longer living in the UK nor in contact with corporate accountants I thought I'd pose this on here. If I'm out of order, moderators feel free to delete. Thanks
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-- Edited by Shamus on Thursday 5th of March 2015 01:55:28 PM
I am not privy to the details but without evidence to the contrary I have no reason the suspect that there is wrong doing.
Debt restructuring is quite common with things like debt/equity swaps. The creditors must have been sat9iffied with the conversion otherwise they would not have approved the write off.
Generally that happens where a creditor is faced with either the hope of getting their money back in the future or not getting their money back at all if a business is forced to fold.
the £9.8 million would have been current year (a profit and loss item), the £60 million long term (a balance sheet item).
As I say, without going through the accounts which I don't really have time to do at the min then I don't know the details and am merely speculating on a debt restructuring arrangement.
Shaun.
p.s. absolutely no interest at all in football so no idea about the history of this clubs finances.
p.s.2 embedded link removed.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I wasn't implying there was wrong doing and my question isn't about the merits of restructuring debt. I am merely asking how the reduction of a liability flows to the bottom line, it's an accountancy question.
I would need to see the full financial statements and they don't seem to be available yet. Any other response would just be guessing at what the business has done to alter their debt/equity structure and as you appreciate guessing should never come into the equation.
As a general note to potential contributors to the thread nothing detrimental must be written about the business concerned here. This will only ever be allowed to be a discussion relating to accounting principles within a reconstruction scenario with this business concerned simply being used as an example of application of financial reporting standards. If it ever goes beyond generally available published documents into hearsayor becomes in any way unprofessional I would have to delete the thread.
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
