RE: the ITFC debt

As I understand it from various reports, the owner had bought the club debt for a lot less than how much the debt was.

However, he then charged the club interest not on how much he had paid for the debt but on the original higher amount.

For example, using some hypothetical figures... if you had ?10m and bought a ?100m club debt from a bank for that ?10m... then you charged interest on ?100m at say 2% per year. In 5 years the club would have paid off your investment, the club would still owe you ?100m and you would still own the club.

You could insert an option clause so that the club pays you back ?100m should it be promoted to the PL. You could then own a PL club with no debt and have made a ?100m personal profit.

It is possible to do if you don't even have the original ?10m to buy the ?100m debt. You could look to borrow the ?10m because you would be getting paid interest on ?100m but only paying out interest on ?10m.

Posted By: Larry Hagman, Jan 8, 21:00:07