FAI finances

[Charlie Darwin]

Didn't Dion Fanning give him a grilling post-Sopot?
Maybe, I'm not sure, but I don't think they really have an editorial line towards the FAI the way the Indo do. I think Denis has a bit more sway at the Sindo since Dion's dad died whereas the Indo is still in open revolt against him.

[bennocelt]

His friends in the press? The Indo hates him and is never slow to throw a dig the FAI's way!

Ah come on Stutt did you not read that Barry Egan interview!!!:confused:

[Stuttgart88]

No, I didn't, but I stand by my remark. The Indo is constantly having a dig at FAI and even the national team. I don't distinguish between The Sindo and The Indo, so maybe it's much more one than the other.

[bennocelt]

No, I didn't, but I stand by my remark. The Indo is constantly having a dig at FAI and even the national team. I don't distinguish between The Sindo and The Indo, so maybe it's much more one than the other.

Well I dont read that rag, but as mentioned probably is a difference between the football writers and the rest

[Dodge]

His friends in the press? The Indo hates him and is never slow to throw a dig the FAI's way!

That was before the Independent became official newspaper group of the FAI though

Although it could be just a co-incidence

[Charlie Darwin]

No, I didn't, but I stand by my remark. The Indo is constantly having a dig at FAI and even the national team. I don't distinguish between The Sindo and The Indo, so maybe it's much more one than the other.
They're completely different newspapers.

[geysir]

I'd say the papers are brotherly, but not identical twins.
That was a stroke and a half for Delaney to get the Indo as a FAI...."stakeholder" (buzz word alert).

[paul_oshea]

As much as people talk about him and try and negate the situation, the facts speak for themselves, the revenue steams speak for themselves. Getting 100k for GU didnt help much and seems like an ego boost but overall if he were in business the shareholders and IIs would resolutely be backing him just like his current board members are.

[paul_oshea]

All week the Indo keeps knocking, everyone and everything, and on Sunday, the Sindo perches them back on the pedastal.

[Stuttgart88]

I'm reading Jonathan Wilson's book "Behind the Curtain: Travels in Eastern European Football" at the moment. It's a good read.

Some of the ex-Soviet bloc leagues and national associations, even in wealthy countries like Slovenia, make the FAI and LOI look like a model of sound economics and good governance!

[NeverFeltBetter]

I loved that book. Was it Romania that had the semi-formal group of clubs that agreed to trade wins to keep themselves in the top tier?

[paul_oshea]

Slovenia isnt wealthy and has had a bailout for about 4bil euro. Drop in the ocean compared to ours but still. I gather you mean relative to the other countries though in the book.

[Stuttgart88]

Yes - relative. I'd say Slovenia is one of the wealthier ex-Communist small to mid-sized countries, if not the wealthiest. But, like Ireland, they allowed things to get out of hand and suffered a deeper recession than most as a consequence.

[Stuttgart88]

I loved that book. Was it Romania that had the semi-formal group of clubs that agreed to trade wins to keep themselves in the top tier?I haven't got that far yet!

[bennocelt]

As much as people talk about him and try and negate the situation, the facts speak for themselves, the revenue steams speak for themselves. Getting 100k for GU didnt help much and seems like an ego boost but overall if he were in business the shareholders and IIs would resolutely be backing him just like his current board members are.

In a corporate sense maybe but what about the stakeholders, the footballing public, certain clubs in Dublin he might have a hard time even showing his face!

[paul_oshea]

Thats a fair point benno, but the FAI were a bit of a laughing stock from a PR point of view and a financial point of view, no due dilligence or process in place for anything it had gotten involved in. He has certainly made them financially viable and put them on a level footing whilst at the same time romancing the media at every opportunity and potraying a well-oiled machine. Thats half the battle, I think sometimes people forget what he is doing here, as much as putting himself on the front, he is advertising a well run professional outfit.

The next step would be to try and get the stakeholders on board and sharing the same vision whilst at the sametime engaging with all sides.

[Stuttgart88]

Who is the "footballing public" and "the stakeholders"?

I'd say many of the key stakeholders are very happy - that's the problem! The FAI leaves them alone in return for them leaving the FAI unchallenged at AGMs etc.

The "footballing public" are hard to please. The FAI will always be muppets in many's eyes. The two words are inextricably linked!

I know Benno thinks I'm a "FAI head" - I'm not - but I do think certain aspects of that Indo piece are fair. No matter how well regulated a league is, some clubs will always find solvency a tall order. The LOI seems to be in better shape (although James Chambers looks a stone overweight!) than 5 years ago, certainly financially. The level of competition is good and the LOI has had a really exciting first 10-11 games and any one of 5 teams could go on to win it. I was at St Pats recently and there was a good crowd, good atmo and some good players.

I think the FAI should be harder on the regressive factions at schoolboy and other levels. I think they could make it much easier and less costly for talented young coaches to achieve their UEFA badges. I think there is a lot they could do better and I'd like to see the voting structure and Board structure adapted.

[Dodge]

The LOI seems to be in better shape (although James Chambers looks a stone overweight!) than 5 years ago, certainly financially.

I don't think that's anywhere close to being true.

[Stuttgart88]

James Chambers or the LOI?

[Dodge]

James Chambers or the LOI?

Both. Chambers is big, but not fat.

[Stuttgart88]

OK, so he's big-boned, like Andy Reid :)

I'm not saying LOI finances are healthy (is any football league ever properly healthy in P&L terms?) but I am under the impression they're better than 5 years ago and the trend towards 40-week contracts has stabilised the situation at clubs.

If there's a financial review available I'd be interested.

Of course there's always stuff like this (result of a google search on the topic) but if there's anything more extensive I'd be interested.


http://www.fai.ie/domestic-a-grassroots/airtricity-league/news/103076-clubs-in-profit-as-airtricity-lleague-2013-season-is-launched.html

[bennocelt]

Who is the "footballing public" and "the stakeholders"?


The "footballing public" are hard to please. The FAI will always be muppets in many's eyes. The two words are inextricably linked!

I know Benno thinks I'm a "FAI head" - I'm not - but I do think certain aspects of that Indo piece are fair. No matter how well regulated a league is, some clubs will always find solvency a tall order. The LOI seems to be in better shape (although James Chambers looks a stone overweight!) than 5 years ago, certainly financially. The level of competition is good and the LOI has had a really exciting first 10-11 games and any one of 5 teams could go on to win it. I was at St Pats recently and there was a good crowd, good atmo and some good players.



Fact you have to ask that question?:)

Every year the LOI loses a club, and this year Waterford are looking a bit dodgy. For the head of the FAI to be taking much more than what the champions of the LOI get is a disgrace, and he has done very little for the league. I am not asking for miracles just not treat the LOI as some sort of virus, and promote the league far more. That and the big FF head on him, urgh.

As for steadying the ship, last time I looked the FAI were in debt, paying for a stadium they wont even own in the far off future. FAI are still the joke of the pack.

[geysir]

Fact you have to ask that question?:)

Every year the LOI loses a club, and this year Waterford are looking a bit dodgy. For the head of the FAI to be taking much more than what the champions of the LOI get is a disgrace, and he has done very little for the league. I am not asking for miracles just not treat the LOI as some sort of virus, and promote the league far more. That and the big FF head on him, urgh.

As for steadying the ship, last time I looked the FAI were in debt, paying for a stadium they wont even own in the far off future. FAI are still the joke of the pack.
Another groundhog day discussion :)
In the far off future, stadiums crumble and have to be rebuilt.
Wembley Stadium has a 50 year design lifespan. The FAI are 50/50 owners of Lansdowne Rd, for 60 years .

[paul_oshea]

From a leashold perspective no one ever owns the land or building, the own the use of it for that period of time, however usually they have a chance to extend it for a tiny fraction of that initial cost...I doubt the FAI have this.

[bennocelt]

Another groundhog day discussion :)
In the far off future, stadiums crumble and have to be rebuilt.
Wembley Stadium has a 50 year design lifespan. The FAI are 50/50 owners of Lansdowne Rd, for 60 years .

Yeah I know I know, not good for my health:o
Still though those repayments are monies not spent on local football, and technically doesnt the bank own it?

[Stuttgart88]

Technically the key holders own the stadium (in this case the IRFU / FAI joint venture) and the bank has a security charge on it, which it can enforce if the debtor doesn't repay. No?

I don't know the actual economics in this instance (few do), but the argument that the mortgage repayment is money not spent elsewhere would more than likely be countered by: better stadium = better crowds = more gate income = more profit = better funded association = better funded grassroots etc.

It's like saying don't ever buy a house because it'll allow more money for groceries. If you don't buy you have to rent. Rental costs may rise faster than income. The question is whether the FAI could have secured a long term rental agreement, and my guess is they couldn't because the IRFU needed a partner to raise cash upfront.

Ok, so it didn't work out like they hoped but the debt renegotiation has seemingly given some headroom.

Yet another Groundhog Day argument but I don't find fault for the FAI being caught offside by the economic crash. The IRFU sold their tickets a year earlier but are facing a tough time with the first wave of renewals.

I'm not dogmatically defending the FAI here, but the idea that you at least part-own your own stadium isn't the daftest thing in the world. Did the FAI get good value from the arrangement? I have my doubts.

[bennocelt]

Technically the key holders own the stadium (in this case the IRFU / FAI joint venture) and the bank has a security charge on it, which it can enforce if the debtor doesn't repay. No?

I don't know the actual economics in this instance (few do), but the argument that the mortgage repayment is money not spent elsewhere would more than likely be countered by: better stadium = better crowds = more gate income = more profit = better funded association = better funded grassroots etc.


Ok, so it didn't work out like they hoped but the debt renegotiation has seemingly given some headroom.



But the problem is that the money never trickles down, not in Ireland anyway.
Re the crash, the tkt prices were far too high, for football fans, rugby have a different fanbase.

[TheOneWhoKnocks]

Didn't know where else to put this....

Good article by Emmet Malone on Ireland's farcical tour to South America in 1982.

http://www.irishtimes.com/sport/soccer/international/a-comedy-of-errors-ireland-s-ill-fated-south-american-tour-1.1813889?page=3

The threat of that coming to pass, though, was very real. Hand made the first of two trips to England to sound out English club managers about the availability of their players. At Manchester United Ron Atkinson, when asked about Ashley Grimes (http://www.irishtimes.com/search/search-7.1213540?tag_person=Ashley%20Grimes&article=true), Kevin Moran and Frank Stapleton, said the FAI could “f**k off”. “I told him I needed his official response,” recalls Hand, “and he said: “F**k off, that’s my official response.”

[Stuttgart88]

http://www.rte.ie/sport/soccer/international/2014/0708/629256-fai-accounts-reveal-debts-of-50m/

RTE posters in the comments section are usually idiots of the highest order but it's hard to argue with anything they say underneath this article.

[wonder88]

The news at 1 on radio was supposed to cover this story, but don't think it did (I missed first 10min of it so I may be wrong). 50m debts and 5m annual interest bill, and a story recently in the Indo sports section was that Wexford Youths had debts of 140k. Wait for the spin and news management on these account in coming days.

[Stuttgart88]

Doesnt Bray have similar debts?

Irish Times article says senior squad still owed €900k.

[osarusan]

I'm sure this will all be cleared up to everybody's satisfaction at the AGM, as it is every year.

[Charlie Darwin]

Doesnt Bray have similar debts?

Irish Times article says senior squad still owed €900k.
The senior squad bonuses was covered a few weeks ago by the Sunday Times. Apparently the players aren't pushing it.

[gastric]

I'm sure this will all be cleared up to everybody's satisfaction at the AGM, as it is every year.

And why the obsession with supposedly paying off the debt by 2020?

[BonnieShels]

This oft quoted €5m "spent on interest and other service charges on that debt"; I that assume includes principal? Otherwise that's loan-shark territory.

[wonder88]

50m loan at 10% per annum would give the 5 million figure. Private equity firms often charge rates and fees of around 10%. The "debt free by 2020" is the target set by the FAI themselves, so that after that date Lansdowne Road would be a major source of revenue for Irish soccer.

[paul_oshea]

That's not quite right, its compound interest, you are missing a few sums there. Its not an interest free loan set at 50mil.

[Stuttgart88]

True, but I seriously doubt that in this instance the rate is 10%. That'd be seriously distressed territory. There's physical collateral providing security although a share in the Aviva would have a very limited range of potential buyers! The likely stream of revenue from UEFA would make a loan to FAI a reasonably respectable creditor. My guess is the effective rate is closer to 5-6% and the UEFA payments are part of the security package.

I know Desmond is no mug and I doubt there's any philanthropic element to his participation on the FAI loan but I'd love to see so e kind of gesture like him buying out the FAI and then leasing the stadium back. Net net maybe the refinancing he arranged has had a similar impact on the FAI.

[Stuttgart88]

That's not quite right, its compound interest, you are missing a few sums there. Its not an interest free loan set at 50mil.
Really? 50mm at 5% pa = 5mm!

It'd be highly unlikely such a loan would be what they call "interest only" though. I suspect that's what you were trying to say.!

More realistically there's a repayment schedule just like a regular mortgage loan where the regular instalments include an element of both interest and principal. In the early years of a fixed rate amortising loan the bulk of the payments are interest rather than principal, so realistically the FAI has made little enough headway into paying down the loan, other than what was written off in the refinancing of the Danske loan.

The key is whether the loan amortises to zero, I.e., all the principal is repaid by the end of its term or whether it's repaid to something like 30-40pc of its original value, with a view to a new loan being taken out at maturity to refinance the outstanding amount of the old loan.

There is only ever compound interest in a loan if the borrower misses out on his repayments.

[Charlie Darwin]

There is only ever compound interest in a loan if the borrower misses out on his repayments.
Huh? Compound interest is standard in almost every loan.

[Stuttgart88]

Compound Interest by definition is interest on interest, no?

In interest only loans the interest payment is calculated flat. In an amortising loan the way the interest and principal schedules are determined is somewhat complicated, although easy enough to do on Excel. So, in a fixed rate mortgage loan you would typically have a fixed periodic payment. In the early years this is mainly interest with a bit of principal, but in the later years it's the other way around.

But I don't think this is the same as compounding interest though, or is it? The interest is still calculated on a simple basis not a compound basis.

Check this out

http://www.amortization.com/understanding.htm

And then, more tellingly, this, which is part of the same article

http://www.amortization.com/monthly_compounding.htm


Anyway, Paul's point (I'd say) is that it's unlikely the loan is a simple non-amortising loan, what's known as a bullet loan

http://en.m.wikipedia.org/wiki/Bullet_loan

If that was his point, I'd agree!

[Charlie Darwin]

No, compound interest is interest on the principal.

I get a loan of €1000 at 10% interest.

After one year, the principal is €1100. I pay off my agreed interest payment of €200, so the principal is now €900.

After two years, the principal at 10% interest is now €990. I haven't missed a payment but I am paying compound interest of 10% every year.

edit: I'm not using the word principal strictly correctly there but you get the point.

[Stuttgart88]

Yes, I get the point but the rub is exactly what you said, you're not strictly speaking using the term principal correctly. In your example you are simultaneously capitalising interest and paying the interest off. So you're compounding the interest but for zero days! The actual interest you're paying is still effectively calculated on a simple basis.

You say above you agree to pay interest of 200 after year one. But that would imply interest of 20%! What you're saying is that you agree a repayment of 200, made up of interest of 100 and principal of 100. The effect is that over time you probably pay as much in interest as you do in actual principal (which is where it feels like there's a compounding going on) but the way I conceptualise it is still in terms of simple interest. You would only ever pay compound interest if at some point your repayment is less than the rate of interest accrued over that period. Or put another way, in working out a annuity payment at all times the interest component is still a simple rate of interest applied to the principal outstanding in the previous period.

By definition, compound interest is interest on interest! I can see no other way of describing it.

http://www.investopedia.com/terms/c/compoundinterest.asp

[Charlie Darwin]

You have it completely arseways. You're confusing interest with the repayment - if all you do is repay the interest you'll never close the loan book. The first line of the link you posted states it clearly: compound interest is interest on the principal plus the accrued interest.

What you've basically done is take compound interest and renamed it "simple interest" for no apparent reason.

[Stuttgart88]

No, I haven't got it arseways and I am not confusing interest with the repayment!

I explained how a fixed repayment amount includes both principal and interest and how the early years is mainly interest and the later years is mainly principal. Look up any definition anywhere of compound interest and you'll find it is "interest on interest"! Accrued interest is simple interest unless you fail to pay some interest. If interest is unpaid, you pay interest on the unpaid interest I.e., it compounds but by accruing additional interest to the original interest. Another way of saying this is that the interest is capitalised, ie., it is added to the principal so the unpaid interest also starts accruing interest.

In your example above you borrow 1000 at 10pc p.a. At the end of year 1 your interest bill is 100. You pay this off plus whatever principal you have agreed to repay. In your example you have agreed to pay 200 annually. So you pay 200 in total, which is 100 of interest and 100 of principal.

At the start of year two you have an outstanding principal of 900 and at the end of year two the interest that has accrued is 90. But you have agreed to repay 200 per year, so at the end of year 2 you repay 90 in interest and 110 in principal.

At the start of year 3 you have an outstanding loan of 790. By the end of year 3 you have clocked up interest of 79. You have agreed an annual instalment of 200 so you pay this 79 plus 121 of principal.

At the start of year 4 you now have principal of 669. And so on! I don't have a calculator but using pen and paper it looks to me like you would have repaid your loan in full in 7 and a bit years.

Over this time you will have paid 457 in interest.

The average life of the loan is 4.57 years (sum of the annual amounts outstanding after the annual repayment, divided by original principal) = 4.57.

By wonderful symmetry the interest paid in total is 1000 * 10% * 4.57.

So, simple interest is paid despite the loan being an amortising loan that repays principal.

Another angle: By the end of the loan period I'll have paid a shed load of interest and all my principal. The shed load of interest is only ever calculated on a simple basis though. But the fact that it's a lot of interest makes it feel as if there must be compounding. But there isn't if you strip everything down to first principles.

How do you determine what the annual total payment is, I.e., the 200 plucked from the air in our example.

I don't have excel in front of me but I think you use the PMT formula where you can input the starting amount of the loan, the life of the loan expressed in the same units as the frequency of repayments (in our example = number of years which we didn't specify! but it could be monthly or quarterly or annually), the final amount of the loan (for a mortgage this would be zero), the annual rate of interest and the frequency of payment (in our example this is annually). You solve for PMT by inputting the other factors.

The answer is determined by an underlying formula which you can find online.

See here for example

http://www.ruralfinance.org/fileadmin/templates/rflc/documents/1133308852080_Lesson_4_interest_rates.pdf

There is an inherent compounding in arriving at the regular instalment above the line , but there is a simultaneous decompounding below the line!

In the sequential example above at no point is the interest paid less than the interest accrued, so no interest is charged on interest, so no compound interest is charged.

A mortgage loan or the type of loan the FAI has is very different to a credit card debt which will accrue interest on a compounded basis. Interest will clock up at a huge rate if you don't meet your payments.

[Stuttgart88]

You have it completely arseways. You're confusing interest with the repayment - if all you do is repay the interest you'll never close the loan book. The first line of the link you posted states it clearly: compound interest is interest on the principal plus the accrued interest.

What you've basically done is take compound interest and renamed it "simple interest" for no apparent reason.are you referring to my post number 293? Read it again:)

I think you're confusing accruing with compounding.

If I put money, say one unit of money, on deposit at rate of interest n%, at the end of year one my money is 1+n. I have accrued n in interest. The bank credits my account with n and adds it to the 1. If I choose to leave 1+n on deposit for another year at n% I will accrue further interest and by the end of year two I will have (1+n)^2 in my account. I.e., the original n will be compounded. Regardless of whether I leave my earned interest n on deposit whatever amount I have in my account at the start of year two will continue to accrue interest at a rate of n% per annum. But it is only accurate to say I am compounding interest if I leave my n on deposit during year 2. The same works if it's a liability, not an asset.

[paul_oshea]

He said his actions were "against the GAA" and not Garth Brooks. Soccer head, typical anti-GAA. All those soccer barstoolers. :D

Stutts remind me never to loan you money :P

[Stuttgart88]

Jeez, I have wasted an hour of my life explaining how a mortgage loan works and yet Paul thanks CD for his totally and utterly incorrect post above and neither has the decency to go uh, yeah, I think you're right.

I'm going off to start my own forum with TOWK who has been right about you lot all along.

[BonnieShels]

No, I haven't got it arseways and I am not confusing interest with the repayment!

I explained how a fixed repayment amount includes both principal and interest and how the early years is mainly interest and the later years is mainly principal. Look up any definition anywhere of compound interest and you'll find it is "interest on interest"! Accrued interest is simple interest unless you fail to pay some interest. If interest is unpaid, you pay interest on the unpaid interest I.e., it compounds but by accruing additional interest to the original interest. Another way of saying this is that the interest is capitalised, ie., it is added to the principal so the unpaid interest also starts accruing interest.

In your example above you borrow 1000 at 10pc p.a. At the end of year 1 your interest bill is 100. You pay this off plus whatever principal you have agreed to repay. In your example you have agreed to pay 200 annually. So you pay 200 in total, which is 100 of interest and 100 of principal.

At the start of year two you have an outstanding principal of 900 and at the end of year two the interest that has accrued is 90. But you have agreed to repay 200 per year, so at the end of year 2 you repay 90 in interest and 110 in principal.

At the start of year 3 you have an outstanding loan of 790. By the end of year 3 you have clocked up interest of 79. You have agreed an annual instalment of 200 so you pay this 79 plus 121 of principal.

At the start of year 4 you now have principal of 669. And so on! I don't have a calculator but using pen and paper it looks to me like you would have repaid your loan in full in 7 and a bit years.

Over this time you will have paid 457 in interest.

The average life of the loan is 4.57 years (sum of the annual amounts outstanding after the annual repayment, divided by original principal) = 4.57.

By wonderful symmetry the interest paid in total is 1000 * 10% * 4.57.

So, simple interest is paid despite the loan being an amortising loan that repays principal.

Another angle: By the end of the loan period I'll have paid a shed load of interest and all my principal. The shed load of interest is only ever calculated on a simple basis though. But the fact that it's a lot of interest makes it feel as if there must be compounding. But there isn't if you strip everything down to first principles.

How do you determine what the annual total payment is, I.e., the 200 plucked from the air in our example.

I don't have excel in front of me but I think you use the PMT formula where you can input the starting amount of the loan, the life of the loan expressed in the same units as the frequency of repayments (in our example = number of years which we didn't specify! but it could be monthly or quarterly or annually), the final amount of the loan (for a mortgage this would be zero), the annual rate of interest and the frequency of payment (in our example this is annually). You solve for PMT by inputting the other factors.

The answer is determined by an underlying formula which you can find online.

See here for example

http://www.ruralfinance.org/fileadmin/templates/rflc/documents/1133308852080_Lesson_4_interest_rates.pdf

There is an inherent compounding in arriving at the regular instalment above the line , but there is a simultaneous decompounding below the line!

In the sequential example above at no point is the interest paid less than the interest accrued, so no interest is charged on interest, so no compound interest is charged.

A mortgage loan or the type of loan the FAI has is very different to a credit card debt which will accrue interest on a compounded basis. Interest will clock up at a huge rate if you don't meet your payments.


In the 5 and a half years I've been wandering through these halls this is up there with the greatest posts of all time.

Given I know what Stutts does in real life, I would have no doubts with his "Danny-esque" response.

Otherwise he's been swiping money for nothing all this time.

[BonnieShels]

Jeez, I have wasted an hour of my life explaining how a mortgage loan works and yet Paul thanks CD for his totally and utterly incorrect post above and neither has the decency to go uh, yeah, I think you're right.

I'm going off to start my own forum with TOWK who has been right about you lot all along.

http://www.quickmeme.com/img/19/19dd5c552f103532e344ea63b196fd5bb10be636247c7894bd 4f90e5fef5ade1.jpg