When profits are haemmorrhaging to pay interest, the returns only arrive when the club is sold on for profit.
Not true.
A football minority case study works something like this. Mr Big owns football fc.The club is worth around £100m but is debt financed and he is having difficulty meeting the running costs.
But it is generating £50m cash a year which is very useful.He anticipates revenues going up, and in the medium term the value of the club going up. He is just short of readies.The banks wont lend any more.
So Mr Clever says, " I will lend you £10m for a year, with 10% of the shares as surity.In a years time I want £11m back. Deal closed.If the club is sold within that period I get my money back, or my percentage holding, whichever is the greater." So if the club is sold for £200m, he gets £20m back. A further clause states that there is an option, at the lenders discretion but in agreement with the club, that at the end of the year the interest payment can be converted into shares........and so on.
You can have your cake and eat it. A guaranteed high interest bank in the short term, and the option of an equity stake if you like the way things are looking at the end of the term.In time that can be converted into a place on the Board.
I have always been opposed to the G&H regime. But to dismiss their empire, valued two years ago at around £1.8bn, and LFC, which last year generated around £167m as one of the Richest clubs in Europe as, "in the top ten worst investments across the globe, even including investing in a bike for a paper round", helps no-one and gives comfort to the gullible.