The dangers of debt

[g88ner]

I just hope I don't meet you two in a pub together.....

Sorry, Mega - but in my defence, my co-authors 'Jack Daniels' and 'John Smiths' have helped!

[USMartin]

g88ner you were within a single paragraph of showing I was completely wrong, and in single paragraph you proved my point 100%. Its clear that you do have reservations, and verywell-considered reservations, and terrifcially though-out reasons behind them. But still you are too eager to want to believe the best of them and that all those doubts you raise yourself very credibly are un-founded or minimally-founded, which is precisely what I was pointing out. As it is I still apologize for presuming the extent to whoch you take that thinking prematurely.

let's be clear - it is absolutely possible you are RIGHT. The problem is as your points suggest - its just highly unlikely. But whether you are right or I am right is secondary honestly. We need to know the truth whatever it is and whomever it may prove right. We will only learn that pressuring the Board to provide more complete information and more frequently rather than excepting what they wish to tell us when they wish to tell it.

You make some real excellent points though as I said and get to the heart of the re-development issue very well. I only disagree on one point about that cash infusion.

In my mind it would have gone to debt re-payment. If that had happened there would have been no need for real additional investment as plenty would have been available from revenue generated within the self sustaining business model, and the club would have no reason to use those funds for debt repayment or to sell playing assets to generate funds for addtional loan repayments during those years.. If the funds from the sale went to debt repayment there would have been no reason to decrease investment in the team at any time.

[USMartin]

I just hope I don't meet you two in a pub together.....

Why not you'd only have to buy one of every three rounds -sounds a good deal, no?

[VforVictory]

Thing is USMartin, if Highbury had been sold off for cash, would that have raised the share price too?

If it would have (and I believe it certainly would), then if the directors were intent on selling shares, they would have sold their shares regardless of whether Highbury was sold for cash, or Highbury was re developed.


Another thing is, there is no guarantee that the money from selling Highbury, even if it had all been pumped back into the team, would have meant our run of success would have continued from 2005.

As G88ner says, the funds behind Chelsea (and now Man City) changed the landscape for ever.

[USMartin]

Thing is USMartin, if Highbury had been sold off for cash, would that have raised the share price too?

If it would have (and I believe it certainly would), then if the directors were intent on selling shares, they would have sold their shares regardless of whether Highbury was sold for cash, or Highbury was re developed.

Let's see are we debating the decision to re-develop Highbury or to sell to new ownership? Because I'm not sure reading that above.

As to your question I think there shares would have remained stady or even increased but not at nearly the same rate they increased because of decision to re-develop? Why because in effect the club made at least 30 million pounds without investing any shareholders money in the project. Its the modern stock market at its best, where cleverly borrowing the bank's money to secure an almost certain profit for your company and paying for it with other income from that profitable project sends your companies shares rocketing up. It is tantamount to stock doping so dramatic is its effect when done right. And whatever one can question about this project,it was clearly done right in that sense.

Another thing is, there is no guarantee that the money from selling Highbury, even if it had all been pumped back into the team, would have meant our run of success would have continued from 2005.

This even more curious really given that I have never stated the money from the sale of Highbury would have been or should have been invested in the football team. I'd ask you to name one instance where I have but I'll save the effort and refer you back to my llast post

You make some real excellent points though as I said and get to the heart of the re-development issue very well. I only disagree on one point about that cash infusion.

In my mind it would have gone to debt re-payment. If that had happened there would have been no need for real additional investment as plenty would have been available from revenue generated within the self sustaining business model, and the club would have no reason to use those funds for debt repayment or to sell playing assets to generate funds for addtional loan repayments during those years.. If the funds from the sale went to debt repayment there would have been no reason to decrease investment in the team at any time.

So again where have I said the proceeds from the sale would - or should -have been invested in the team?

Indeed my contention has always been that the club would have been able to operate more sucessfully as a football club through this period within the existing self-sustaining business model and the business as a whole would havbe been better able to sutain itself throughout the repayment of the debt incurred to build the new stadium. The only extra income I envision being invested in this team if and when needed during this period would have come from the increased profits from the increased matchday turnover from the new stadium.

[VforVictory]

Thing is USMartin, if Highbury had been sold off for cash, would that have raised the share price too?

If it would have (and I believe it certainly would), then if the directors were intent on selling shares, they would have sold their shares regardless of whether Highbury was sold for cash, or Highbury was re developed.

Let's see are we debating the decision to re-develop Highbury or to sell to new ownership? Because I'm not sure reading that above.

As to your question I think there shares would have remained stady or even increased but not at nearly the same rate they increased because of decision to re-develop? Why because in effect the club made at least 30 million pounds without investing any shareholders money in the project. Its the modern stock market at its best, where cleverly borrowing the bank's money to secure an almost certain profit for your company and paying for it with other income from that profitable project sends your companies shares rocketing up. It is tantamount to stock doping so dramatic is its effect when done right. And whatever one can question about this project,it was clearly done right in that sense.

Another thing is, there is no guarantee that the money from selling Highbury, even if it had all been pumped back into the team, would have meant our run of success would have continued from 2005.

This even more curious really given that I have never stated the money from the sale of Highbury would have been or should have been invested in the football team. I'd ask you to name one instance where I have but I'll save the effort and refer you back to my llast post

You make some real excellent points though as I said and get to the heart of the re-development issue very well. I only disagree on one point about that cash infusion.

In my mind it would have gone to debt re-payment. If that had happened there would have been no need for real additional investment as plenty would have been available from revenue generated within the self sustaining business model, and the club would have no reason to use those funds for debt repayment or to sell playing assets to generate funds for addtional loan repayments during those years.. If the funds from the sale went to debt repayment there would have been no reason to decrease investment in the team at any time.

So again where have I said the proceeds from the sale would - or should -have been invested in the team?

You have repeatedly stated that the decision to redevelop Highbury as opposed to sell it was a major cause of the lack of team success since 2005 as opposed to 1998 - 2005.

So suppose Highbury was sold for a lump sum as you wish, instead of redeveloped?

If you would have wanted the money made from selling Highbury to go to reducing the stadium loan (prior to when it was replaced by a bond?), the cash from Highbury would only have made any difference to the club's transfer budget, if the loan payments were consequently less per year than they have been in the period 2005 - 2010, something neither you nor I could say would have definitely happened.

If the loan payments were the same, but simply that the loan would have been paid off over a shorter period overall, or that a less expensive bond (and consequent total repayment amount) was achieved, then it too would have made no difference to the team transfer budget in the years 2005 - 2010.

In which case the directors made the right decision to re develop Highbury for a profit!

Bottom line is USMartin, that you believe some of our directors redeveloped Highbury solely in order to make things nice for themselves by raising the share price, ahead of selling shares, in doing so acting only in their own interests and against the interests of the football club.

It might be true, might not, but you cannot prove that it mutually excludes the decision might have been made because they also thought it was best for the club.

Short of injecting the directors with a truth serum, you cannot prove it.

[USMartin]

Thing is USMartin, if Highbury had been sold off for cash, would that have raised the share price too?

If it would have (and I believe it certainly would), then if the directors were intent on selling shares, they would have sold their shares regardless of whether Highbury was sold for cash, or Highbury was re developed.

Let's see are we debating the decision to re-develop Highbury or to sell to new ownership? Because I'm not sure reading that above.

As to your question I think there shares would have remained stady or even increased but not at nearly the same rate they increased because of decision to re-develop? Why because in effect the club made at least 30 million pounds without investing any shareholders money in the project. Its the modern stock market at its best, where cleverly borrowing the bank's money to secure an almost certain profit for your company and paying for it with other income from that profitable project sends your companies shares rocketing up. It is tantamount to stock doping so dramatic is its effect when done right. And whatever one can question about this project,it was clearly done right in that sense.

Another thing is, there is no guarantee that the money from selling Highbury, even if it had all been pumped back into the team, would have meant our run of success would have continued from 2005.

This even more curious really given that I have never stated the money from the sale of Highbury would have been or should have been invested in the football team. I'd ask you to name one instance where I have but I'll save the effort and refer you back to my llast post

You make some real excellent points though as I said and get to the heart of the re-development issue very well. I only disagree on one point about that cash infusion.

In my mind it would have gone to debt re-payment. If that had happened there would have been no need for real additional investment as plenty would have been available from revenue generated within the self sustaining business model, and the club would have no reason to use those funds for debt repayment or to sell playing assets to generate funds for addtional loan repayments during those years.. If the funds from the sale went to debt repayment there would have been no reason to decrease investment in the team at any time.

So again where have I said the proceeds from the sale would - or should -have been invested in the team?

You have repeatedly stated that the decision to redevelop Highbury as opposed to sell it was a major cause of the lack of team success since 2005 as opposed to 1998 - 2005.

So suppose Highbury was sold for a lump sum as you wish, instead of redeveloped?

If you would have wanted the money made from selling Highbury to go to reducing the stadium loan (prior to when it was replaced by a bond?), the cash from Highbury would only have made any difference to the club's transfer budget, if the loan payments were consequently less per year than they have been in the period 2005 - 2010, something neither you nor I could say would have definitely happened.

If the loan payments were the same, but simply that the loan would have been paid off over a shorter period overall, or that a less expensive bond (and consequent total repayment amount) was achieved, then it too would have made no difference to the team transfer budget in the years 2005 - 2010.

In which case the directors made the right decision to re develop Highbury for a profit!

Bottom line is USMartin, that you believe some of our directors redeveloped Highbury solely in order to make things nice for themselves by raising the share price, ahead of selling shares, in doing so acting only in their own interests and against the interests of the football club.

It might be true, might not, but you cannot prove that it mutually excludes the decision might have been made because they also thought it was best for the club.

Short of injecting the directors with a truth serum, you cannot prove it.

When have I said I could prove it on my own? I have simply made a case based on facts we know and not on clinging to a lifetime of belief in the Board's virtue and honor. I have made a strong case based on the facts I have seen and many that you have seen.

I would suggest all that I have done and am doing is trying to encourage other supporters to look at these things and to seek to ask the Board to explain them instead of just trusting the Board without question.

We CAN impact what is happening by simply asking tough questions and demanding REAL and HONEST answers and JUDGING the Board based upon those answers. After all they still are the Board, and we still are the Club - if you believe your club is its supporters - so we can have some impact for the better on things. And if we can't at least we can look ourselves in the mirror then. Supporters who want to trust the Baord even when its so obvious they don't want to tell the truth that truth serum is required will never be able to look themselves in the eye again and will dread ever facing s***s supporters because they will be able to take the piss out of you no matter what.

We don't know what is happening for sure - and we ought to. Those who don't want to know the truth I suspect fear it even more than doubters do. At least the doubters won't have to re-think everything they feel about the club. But trust me, its very small comfort at this point if it comes to that.

Like I say we don't know for sure and that's all the more reason we ALL should want to know for sure, and we all deserve as much as that knowledge.

[Red107]

This presents a quite impossible scenario. It seems to me that the board could be asked about the intentions of the board over the Highbury redevelopment project, they would surely answer that they intended to maximise profits from property to pay off the stadium debt and invest in the team etc.

People who currently hold this view would continue to hold this view and those who doubt the integrity of the board members would claim that this is a lie and another sign that they don't want to tell the truth. Few are likely to change their viewpoint. It would almost be a pointless exercise.

Evidence over intentions would be very hard to come by apart from the much maligned official line, which I believe was the actual intention of the board.

[VforVictory]

USMartin,

If you do not believe you can prove it then it is up to you to either prove it or stop casting certain directors in the role of villain.


By the way, whilst on one post you clearly say you would have wanted any Highbury cash from a sale, to be offset against stadium debt rather than strengthening the team, on at least three other posts you blame the Highbury redevelopment for directly weakening the team, despite denying you said this, elsewehere on this thread.

You attacked me about this too!
You deny my claim, that you had said the Highbury re-development weakened the team.


To back up my argument,

here are two quotes from your posts where you explicity say the re-development weakened the team:



1.) "You don't achieve what we did from 1998-2005 often in sport and to sacrifice that or just give it up for ANY reason is hardly acceptable given that you may never reach such a level again."


2.) "The property market's crash had nothing to do with the damage done to the football team because it had nothing to do with the penny pinching. Much of the damage to the football team was well and truly done by the end of 2007 still 2-3 years before any expected profits form the project.

"That's beacuse the plan required borrowing an additional 110 on top of the 260 million already borrowed and forfieted at least in the short term the 65-70 million that would have been available immediately to pay down the 260 million pound loan already on the books. "

You also laid out a lengthy argument that Ashley Cole's sale was due to the club penny pinching on his wages because of stadium debt.

[USMartin]

As to your point about the loans - again the only extra money that would have gone into the club had sold Highbury is the money that was used to help pay the loan, and money that was withheld from spending because of concerns about being able to pay off the two loans - the re-development loan and the original stadium loan.

Keep in mind - had we sold Highbury we had 65-70 maybe as high as 80 million to repay the stadium loan in the intervening years. The plan they opted for not only eliminated the 65-70 or 80 million but it increased the debt in these intervening years by 110 million (and in a sense by 180 million since the money to pay that off no longer was available). It was a financial six-pointer that the football club clearly lost - though as it turned out the holding company and shareholders won.

As to whether the club would not have re-negotiated the loan if they hadn't decided to re-develop Highbury, this is Arsenal we're talking about, and even the Board's very best decisions for the club and football team have always been meant to balance the books profitably so I doubt that would have been the case.

Indeed I would suggest that if debt reduction was the Board's primary consideration in all this they would have re-negotiated the Stadium Loan regardless unless it was more profitable somehow not to, with or without re-developing Highbury.

My main point is had we sold Highbury we not only would have had 65-70 million or more to pay off the loan or re-enegotiated bond fora 2-4 years ahead of the addtional income boost from the Emirates stadium we would have owed 110 million pounds less during those years than we did. Basically we'd have owed much less and had extra income to pay that much less with without having to change how we invested in the football team over how we invested from 1998-2004.

[USMartin]

This presents a quite impossible scenario. It seems to me that the board could be asked about the intentions of the board over the Highbury redevelopment project, they would surely answer that they intended to maximise profits from property to pay off the stadium debt and invest in the team etc.

People who currently hold this view would continue to hold this view and those who doubt the integrity of the board members would claim that this is a lie and another sign that they don't want to tell the truth. Few are likely to change their viewpoint. It would almost be a pointless exercise.

Evidence over intentions would be very hard to come by apart from the much maligned official line, which I believe was the actual intention of the board.

The thing is there are words and there are actions, and that's my point. Ask them why specifically their words are incosistent with the actions they have - or one could say have not - taken .

The scenario you present is like if you were a detective and you asked a suspect where they were the night before, and the answer they gave was if not obviously untrue was quite probably untrue. Only instead of asking them to prove they actually were there you just accept their alibi because well, you like them and want to believe them, and let them walk and it turns out they WERE the killer.