My analysis of King Austins’ news

[QPROslo]

I have been thinking of the alarming post from King Austin the last couple of days.
It contained a lot of information, spread over several posts. This is my summary and interpretation of it (sorry Chaz, if I am not accurately summarising/interpreting it):

• We have got a last deadline from EFL to pay one or more outstanding instalments of the FFP fine.
• If we do not meet the four-week deadline set by EFL, we will be given a points deduction of 10 points, applicable next month.
• We are unable to pay right now, as there are not sufficient funds. The extended deadline has been given to allow us to somehow find the money, but apparently, we cannot, at least not now.
• If we get a points deduction, we have accepted that this will mean relegation.
• We plan a fire sale of players (supposedly in this window, to find money to pay the FFP instalment within four weeks)
• We plan to sack more members of staff.
• The owners have fallen out with each other. That is the reason why Fernandes sold (or gave away) his shares to the other owners, and possibly the reason Amit stood down as chairman.
• We are in a worse state than Reading, that broke the FFP rules and got a points deduction for that (hence, there might be two separate point deductions – one for failing to pay instalments connected to the previous fine and one for breaking the FFP threshold now. If so, the latter will come next season when this year’s accounts are posted).
• Marti is dissatisfied and may leave.
• The story of the threat of points deduction will soon be covered by the media.

Then a couple of pieces that contradicts each other:

• We will with 100 percent certainty get the points deduction, but we might find the money to avoid it.
• We might make some high-profile signings to try to avoid relegation, indicating that funds are available.

First, and this is important, I find King Austin to be a real IKT, with a previous track record of reliable information that certainly comes from the inner circles of QPR. His most important information was the news that QPR had signed up with an American corporate advisory to help find new owners. This was later confirmed by a serious news source, and a California advisory firm was mentioned in the press article.

His information of Ings cannot be verified. However, it is not unlikely that the QPR hierarchy is looking at players that are presently outside our financial limits, to be prepared for a scenario where we sell influential players such as Chair, Field, Dykes and/or Paal during this transfer window and have money to spend.

So, contrary to some others, I believe in King Austin. There is no reason to believe he has made this up. Those that imply otherwise are unreasonable to him, given his previous track record. I personally think he is owed an apology.

Here is my way of interpreting the news (I am responsible for my own speculations – I have no insight other than what I read from Chaz’ posts):

The owners are very frustrated by the overall development. They have put in £300-400m over the years, with nothing to show for other than fantastic training facilities. Now we are facing a real possibility of relegation. The process to find new investors might not go accordingly to plan and has met one or another stumbling block.

In this situation, either Ruben, Amit (Mittal) or Kamarudin need to come up with more money to finance the ongoing losses, including money to pay the instalment. All of them are wealthy. Hence, there is no lack of resources on the owner level. But for one or another reason, they cannot agree on how new capital injections shall be split between them. Ruben might be tired of carrying the largest burden and ask the others to contribute more. Amit/Mittal might be willing, but only if they can buy a substantial stake off Ruben and get control. Ruben is not willing, as the price that is offered is too low.
If there is such an ongoing owner conflict, it might even have affected the sales process negatively. If they cannot agree between them, they might not agree on possible new capital being offered by any interested third party, as some existing owners might not be happy with how it affects their individual situation (valuation, ownership percentage, influence, and corporate governance to name a few things).
In this situation, where they cannot agree, no one is willing to give in and inject the cash that is required to pay the instalment.

Information about this ownership fight has moved from the boardroom to the administration, where this has caused great concern and speculation about how it will influence the immediate future of the club. This has led to concern about any point deductions if owners cannot come to terms with how to finance the club. Right now, it might block new player signing, which makes Marti very frustrated. He might have been vocal about it internally. People might fear for downsizing of staff, fuelled by the recent situation of Ramsey.

Well, this is nothing else than my own interpretation of the situation, and the news posted by King Austin. I might be completely wrong, or I might not.
I would like to add that I want King Austin to seriously consider returning to this message board. To me, he is a very important member of our small community. Maybe the best IKT we have, even though he does not like to consider himself as such.

Finally, any speculation about remaining fine becoming void if we get relegated is not correct. We will remain liable to pay the fine whether we are in the Premier League, Championship, League 1 or even outside of the League system. However, if we are outside of EFLs jurisdiction (i.e., in the Premier League), they cannot dock us points.

And to round it off: The owners promised to pay the fine. They do this through the ongoing financial support of the club. The fine is not counting towards the FFP threshold of £39m for any rolling three-year period, so up until the possible incident that is now causing unrest, the club has not been limited financially by the fine.

[Stanfan]

My view is owners feel fed up with all the negative ungrateful stuff about them. They’ve always tried to do what’s asked (eg Austin) and all they get is abuse.

[SheepRanger]

Surely any abuse they get right now is completely justified. They tried to buy success with cheque book managers and over paid knackered premiership players. How you can put £300-£400m into a club and be where we are beggars belief.

The owners should have taken the premiership money and left our promotion side as it was. All this Hughes, McClaren, Redknapp, Barton, SWP etc was complete nonsense.

I think they are fed up with chasing good money after bad. Us fans have near packed out the ground from the off. What happens on the pitch and how that is managed is their job.

If someone comes in with £55m for the club (£20m for training ground and £35m which equates to 10% of their investment) I think theyd take it. But who would spend that on a L1 club and have to cover monthly losses will still need very deep pockets. I doubt they'll find anyone, so they'll need to stabilise the club in L1 and reduce outgoings to a manageable overspend before anyone will consider buying us. With crowds of 13k in L1 we should be able to get a midtable team together quite quickly.

They've done their money, but dont blame the fans. Im not angry with them, just amazed how they could get so little from their money.

[topperharley]

Good write up Oslo.

Seems to make sense with the timelines, we've not sold anyone of value, or bought anoyone of note for some time, signs that there is smoke. There has been some considerable mis management somewhere, it will sting if this deduction comes to light as clearly this would have just a can being kicked down the road for years and years.

We'll know very soon what the go is, either way, for a club fighting to to stay in the divison, we're very quiet on the transfer front in a window that literally means survival or not.

[shaggy24]

Pretty good summary Oslo.

Having a fire sale with our squad won't take long be realistic we've got about 3 or 4 worth anything

Re the ffp yep we got done fair enough but whilst City go about stuff the way they have and Everton forest got done isn't a level playing field imo, we've been diabolical as a business model for far too long all we got is a training facility that's decent.

Lest see what the weekend pans out and monday but i think we can all agree that the clubs in a desperate situation and needs help both on and off the pitch for any chance of progression and to be successful.

[SheepRanger]

Im not sure what defaulting would achieve if relegation by sanction would not wipe the remaining FFP amounts due.

If theyre putting in £2m a month to keep us going (may be less this season) why wont they pay the annual FFP fine rumoured to be £1.7m? If there's a general arguement around ongoing funding why change managers as GA had loads of L1 experience? Selling players to bring in income should be normal so why call it a firesale?

I would expect the owners to prepare for L1 in advance if we're up to the limit of FFP and MC has acknowledged we need to be creative in the window.

This ten point deduction thing seems very odd and doesnt quite add up.

[QPROslo]

It is obviously counterproductive by the owners to not come up with the money to pay the instalment, particularly given their wealth. They are at risk of causing self-inflicted damage that will hurt both the value of their assets and their reputation.

But even though it intuitively seems very unlikely they are in such situation, it isn't the first time that a shareholder deadlock will cause serious damage to a football club or a company. No one would like to be the first owner to give in, by backing down on principles they have, and we might suddenly find ourselves in a much bigger mess than we already experience.

If my interpretation is correct, and that funds are presently blocked because of an owner struggle, I think common sense will prevail, and money be forthcoming to pay the fine. Hence, I think we won't receive any FFP fine for failing to respect the final deadline that is set by EFL.

The deeper problem as I see it is the present FFP situation (the fight to stay inside the threshold this season). In March 2023, on the back of the newly published 2021/22 accounts, I shared my assessment of the financial constraints of the upcoming 23/24 season. Based on some assumption I made, I estimated that the club had to sell players for anything from £7m to £10m during the two upcoming transfer windows to avoid any breach.

During the summer transfer window, we only sold for ca £3m. Hence, there is a significant gap that hasn't been filled, if my calculations and assumptions are correct. Part of it was covered by three new sponsoring deals (naming rights) signed by owners a couple of months ago. We do not know the value of these, but if they are supposed to be on market terms, it would have been far from enough to plug the hole. Hence, we are depending on selling some players during this window (or pray to God, hoping Man City buys Eze).

Any points deduction coming from FFP breach this season will only be effective sometime during the tail end of the 24/25 season (once the 23/24 accounts will be published), if practise doesn't change. Hence, if we get relegated, we might have to assume significant points deduction will be handed out next season. This will greatly reduce the chance of going back up right away, and might even put us at risk of being relegated a second time in a row. This is the real danger we face, not the 10 points deduction for failing to pay an instalment of £1.7m within four weeks right now, as this can be mitigated. The risk of relegation + points deductions next season have to have significant impact on the process of raising new capital and find new owners/co-owners. It is not surprising that this has caused deep frustrations among owners, which again has contributed to an owner fight of whom shall keep plugging the hole by throwing more good money after bad, if there is little hope of new owners signing up to this unfortunate mess called QPR.

I would like to stress once again that this is how I read the situation based on Kingaustin's recent post. It is my own interpretation of the state of affairs and information published by the club and Kingaustin - and might not be correct.

[FurtiveFox]

I suspect there is an element of Chinese whispers coming out of the club so I am not convinced on this although I can see why KA may have been leaked this. Happens with all organisations. Something comes up which after 'x' number of tellings becomes something else and then gets leaked.

I do not doubt we are in difficulties financially. We were pre-warned before this season and I took it that we would have to sell players in the summer, have bugger all to reinvest in squad, and hope for the best. As it panned out the players we needed to sell (in my view being Chair, Field and Dykes) didn't go and we sold Dieng and Dickie for a few pennies. To be fair to club they got Dykes to sign a longer term contract but financially the summer was a disaster.

The hope manager wise would likely have been GA is type to gee players up for a back to the walls type season and try and scrape through with sheer determination. That didn't work and from what we have seen so far I like the look of Marti and long term could be good appointment but our chances of staying up without a few additions and keeping what we have are minimal.

My hope is the selling of naming rights to everything has raised enough cash for the change in manager and to see us through this season. If there is anything for players in January great but I am not expecting it.

[SheepRanger]

Well if we're likely to breach FFP and get a 10 deduction next season, whatever league we're in, then the owners really are a bunch of clowns!!

We have brought in Azmir, Cook, Colback, Fox and lumped Dykes an extra £10k a week. That alone would cost the thick end of £75k a week, circa £4m a year. Add the cost of paying up GA and hiring MC you can add another £1m. Thats before we get onto the Richards saga. If all this was done on the gamble of selling Chair for £6m then the owners really are the most incompetent business people known to footbsll.

GA clearly stated thst whatever happens we would atay the right side of FFP. I believe he meant this and its been planned for. Again, MC has made the budget clear in his messaging. If the things were this bad we should have signed a load of L1 free transfers in the sumner and stuck with GA.

This doomsday scenario still doesn't add up to me. Thats not to say we wont sell any player that we get offers for, loads of analysts will get the boot and we sign more old knackered players by month end.

[Abseits]

Thing is, I don't see how our situation is markedly different from about 15 other teams in this division. Obviously we know the gory details of past decade but I'd say our finances over past five years or so must be fairly typical and normal and akin to all the other non-parachute money clubs.
Given the fine was accepted and agreed and the payment schedule was known I find it hard to understand how they could miss a payment. If they have (or are about to) that really is a disgraceful piece of financial management and accounting and I'd be worried about our stewardship until this group of owners had packed up and gone.

[72bus]

If we are losing 2 million a.month then why wouldn't they pay the 1.7 fine ..more will be revealed.

[theblackmafia.]

QPR Finances released on 06:42 - Feb 28 by Hunterhoop

And therein shows the reality of how much Warburton was backed by in his final year. No major sale and signings on big salaries. The year before the year we accounted for some/most of the Eze sale. Last season we lost that sake money and 3m more extra to 2021. A 24m loss a season is not sustainable in FFP. Can anyone remember what we lost in the season ending 2020? 2021 and 2022 together is 28.8m, so hope it was less than 10m. If it wasn’t we’ve breached slightly. If it was, we somehow need to only lose 10m this season. Given we’ve not sold anyone, no idea how we achieve that. We won’t. Hopefully SimonD can explain how some of these losses are excluded from FFP calcs. Otherwise we look like we’re about to breach FFP either now (slightly) or in one year’s time. And we’re going to be miles over come the end of next season (as the 4m loss season drops out of the rolling period). So come Feb/March 2025 when we announce 2024 season we will get a points deduction. Unless we have a fire sale this summer and play children in 2023/24 season which will get us relegated anyway. I’m not sure there is a way out of avoiding a points deduction. A 24m loss in one season is just unmanageable in FFP. Shouldn’t have given the manager what he wanted unless it got us up. Gambled and lost.

[theblackmafia.]

That was last year on Loft for Words. Is there not an element of someone reading this and rehashing as new news?

[topperharley]

Assuming KA's info is right, that Oslo's and others assessment is correct, was the spending under Beale the nail in the coffin or was it inevitable anyway?

Seems to me it was.

Not wanting to start enough snake smashig thread just thinking outloud.

[SheepRanger]

Spending in the last Warbuton season was the downfall which was covered in the accounts to May 22, so the three year cycle ends to May24.

Ever since they took over the owner have tried to but success rather than achieve it organically. I guess if we were in the premiership now that would be called excellent investing.

But I still dont understand the investment we made in the summer whilst leaving such a gap in attacking areas.