Why Did Bournemouth Borrow £16m from an Australian Bank?

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Why did Bournemouth borrow £16m from an Australian bank?
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Two days after Bury were expelled from the Football League, Bournemouth registered that they had agreed to borrow around £16 million from an Australian bank called Macquarie, who have, in the past, been criticised over their ruthless pursuit of profits. The mere reference to loans, and the spectre of debt, is one that, unsurprisingly, alarms supporters.
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#bournemouth #tyronemings #premierleague

[@ChaingunCassidy]

I was listening to this and I was like "I've never heard of McWary" Then I realised he meant Macquarie.

[@ninstagram]

I watched while doing other things, and I just thought "they pronounce Maguire's name wrong"

[@minwoochong4064]

Meant to pronoune Mac as the Mac in Maccas And ~quarry as quaarryy Not macwary lmao

[@Noisemansoundinsect]

Otherwise known as Mac Bank if it’s too hard :)

[@RickyPro888]

John Ingui more just like Maquarry, barely pronounce the C.

[@Hamsterzilla1349]

"Although it is more popular in Spain and Italy, and less so in France and Germany." Now that inspires trust.

[@MattOlsen294]

Macquarie was not pronounced correctly, can’t blame you though - need the accent.

[@MrKastle09]

It's pretty much like mac-quarry

[@MrMeoow91]

😂😂😂 as an Australian.

[@FrenchGoddy]

Basically say Macworry real fast

[@morrigangg]

@Frank Jomungle frank chill out ya nob

[@sergeantawesome8959]

This comment was originally featured on the Athletic, the best place to read about football online.

[@a.warner8246]

The above comment was brought to you by a city fan. The best place to find plastic material online.

[@MichaelM-wd5yi]

Jay R Hartley ABSOLUTELY WORLD CLASS

[@seanomcfc2809]

Jay R Hartley jealous 🏆 💯

[@U_C_G]

Tifo football in 5 years (probably): 'Why short-term bank lending was a terrible idea for football clubs'

[@isaacshusters1620]

Nah, factoring has been around since the beginning of times and football teams are ultinately companies

[@ivanfernandezramirez2629]

Actually is really interesting to use it. It basically works like this: you sell a player for 20M€, you need the money right now, so the bank lends you 15M€ and they charge the club that owes you the 20M€ that amount. So you only get 15M€ out of the 20 from the transfer but you might use it to invest in something more important right now. Also, all those transfers are secured so no one is gonna lose money, you'll receive less money for your transfer but if you have the opportunity to invest in something really interesting right now, it's worth the shot.

[@mathres17]

Probably the interest the bank takes will be lower than the transfer market will inflate by 2021.It´s literally a win win if the interest rate isnt as exorbitant as market growth

[@jmckendry84]

I'm no financial expert, but this seems like a pretty low-risk arrangement for all involved. Clubs are effectively paying a small fee (the 6-7% interest rate) to access money today that they would have otherwise have had to wait a year or more for. They already know that they will get that money as the payment is agreed in advance, so there is little risk involved. I would say that the main risk is that one of the clubs involved in the transfer goes bust at some point before the loan has been paid back. Presumably the lender would want to check the financial health of the clubs involved before lending the money...if you're relying on a club paying you back millions in a few years, you want to be sure they're not likely to be liquidated any time soon!

[@Roscododger]

5:11 Why, Tifo, Why! Their eyes... staring right through me...

[@patrickscottwalsh]

tifo gettin into minion territory now.

[@albusdumbledore5875]

It's not prounouced mac-querie but mac-quarry

[@unstoppableExodia]

The things I learn watching these tifo videos. More than just tactics videos they paint a very detailed picture of a lot of the behind the scenes stuff from football.

[@scinematography6196]

Mike Ashley just did this at Newcastle except the money is being used to buy shops .... then Mike gets his money back via TV deal money.

[@KGBgringo]

The "L" from "Leicester" is missing @4:05 but there when the sentence is finished @4:11

[@salihalash4111]

Yea creepy shit

[@Zul-tz1pp]

Arsenal is getting laughed at because this summer they are rumored to have only £45m budget in transfer, but in reality we know they sign almost worth of £150m, so alot of people including journalist first time reporting that Arsenal paid this fee in 'installments' as an excuse of why Arsenal can pay such money. A thing that actually exist since the dawn of football transfer and every club who make a big money deal actually doing.

[@Ese96Agoaye]

Rule number one of taking in transfer news, never EVER watch Sky Sports!

[@hanklesacks]

The embarrassing journos are just trying to save face with that ‘installments’ bs.

[@Ese96Agoaye]

@@hanklesacks Thi is why we follow Tifo Football

[@afc8981]

I don't think it was that commom until maybe 10 years ago. Before then transfer fees were much less inflated due to smaller tv deals and clubs could pay more transfer fees upfront as a result.

[@jmckendry84]

I would have thought that anyone who has played Football Manager over the last 10 years would have seen that fees are often paid in instalments!

[@AlexGrtner]

People were making fun of Arsenal for signing players on instalment deals this summer but as this video perfectly demonstrates... That's how seemingly all transfer deals are done these days. I mean I'd find it hard to imagine there's a club out there who can feasibly just dish out £100m in full at any given time.

[@JohnKobaRuddy]

So players are effectively bought on tick? Good luck with that when economies collapse and greedy bastards demand the money upfront immediately

[@LawAndBedlum]

I learned about this when writing a paper in Varsity. It was a fascinating glimpse into football

[@AbdulJawula]

Real Madrid regularly buys players upfront. PSG, Manchester City and Real Madrid are probably the only clubs who can do this.

[@AlexGrtner]

@@AbdulJawula Which players did Madrid buy up front?

[@mufcok2148]

Abdul J it literally says in the video United paid 80 mil upfront for Maguire...

[@aaronadeniran6025]

Should have been a Tifo finances

[@markravindranayagam1736]

Could you please make a video on the new rb Salzburg team under Jesse marsch or a player profile on erling haaland braut. Keep the good work up as always👍

[@Banzybanz]

What happens though if the buying club defaults on their installment? Will the lender collect it from the borrower (selling club) or from the buying club? It's like a home loan or a car loan; with the roles reversed. The buyer borrows money and gives it to the seller upfront, and has to then pay installments to the lender. Why don't selling clubs do the same? Insist on upfront payments so that the buyers have to take loans instead.

[@dadedraak]

These videos are on another level! Love em!

[@LawAndBedlum]

I think the animations on this channel are underrated. Top notch content 👌🏿

[@ChasingLions_]

So much happens behind the scenes to keep a football team going 👀

[@jmckendry84]

This sort of thing goes on all the time at most businesses. Once you accept that clubs are run as businesses too, it's not really that surprising

[@lucasmoreno5330]

'Factoring' is common practice in business where clients take 60-90 days to pay invoices.

[@hutch022]

Loving the content on this channel, quality

[@Slackboy72]

First: it's pronounced Mack-Quarry. Second: It's one of the biggest corporate banks in the world. They are specialists in organising private equity consortiums for acquisition and funding of large infrastructure (airports, tollroads, water works, etc.). Third: They've been operating in London since the 70s.

[@craigseddon4884]

I run my own commercial finance company and the best way to explain factoring is like this; future installments on transfer fees are essentially IOU's, instead of waiting for that money clubs can instead essentially sell that IOU to a bank. The banks want to make a profit too so if you have an IOU worth £20 million, they might pay £18 million for it. There are numerous reasons to want the cash now but quick example; if they had 50 million in debt @ 10% over 10 years they would pay £29,300,000 in interest. If they instead used the 18 million to pay that debt down to 32 million over the same period of time they would save £10,550,000 on interest payments. So that is one example how losing £2 million today can benefit a club over the long term. Most likely they would set aside maybe £10 million for loan payments (which would still save them six million over the long term), £4 million for the new training ground and invest the remaining £4 million on a new player, likely paying £3 million up front and paying the rest in installments and giving the player/agents £1 million in signing bonuses, like most clubs tend to do with transfers today.

[@sunnymehta367]

5:38, I'm confused about the VAT point. When selling a player, doesn't the club just transfer that cost to buyer? Like normal things in shops?

[@kierran5021]

One of the best articles you've released, thoroughly enjoyed it

[@wwehdizzle]

We love these videos!

[@SamButler22]

HOLY SHIT! You mentioned Bury, I must be hallucinating!

[@cabdriver123456]

Can you make a video about the Valenciennes-Marseille scandal in 1993? The Marseille team had a fixture against Valenciennes a couple days before their Champions league final vs Milan, so they told two Valenciennes players to convince their teammates to go easy on them so that they can rest up for Milan. One of the Valenciennes players didn't want to be part of the fixing and leaked the story.

[@Stokie09123]

Fifa (the game) has a lot to answer for regarding how people think transfers work, I genuinely think some people believe Chairman rock up to another club with a suitcase full of cash and then leave with the player.

[@shanewright2772]

Why should a bank not pursue a profit, ruthlessly or otherwise? They Banks. That's what Banks do and what I, as a shareholder, think they should do under whatever circumstances.

[@Zahrul3]

Making brazen loans like this is a risky proposition for the bank, which, if they do it too often, can eventually result in bankruptcy, or being in a position where their assets are worthess because the creditors cant pay

[@shanewright2772]

I was speaking in the general sense, but I appreciate your considered and clearly informed response. Thank you.

[@Quirin1860]

It would be awesome if there werent only stories from this web page. Please do a video on the rise and fall of Luzenac AP.

[@SamButler22]

This is so bizarre! If the buying club wants to pay in instalments, they should be the ones to take out a loan

[@Stevesmith-xj7xe]

@David Clinging he does, thats why he knows its the selling club that end up taking out a loan on the basis the buying club is paying over terms, what is it that you dont understand?

[@06cdancer]

As a Bournemouth fan this scares the sh*t out of me. Just glad to see it's common practice amongst most clubs.

[@ThreeLeftOverCrest]

I've been asking that myself all my life, thanks Tifo!

[@littlecatholicman]

I rate your videos alot and am subscribed. But i have to admit I often listen to the videos to help me fall asleep

[@joshuageraldbutler8037]

I found out the other day that my dad taught Tyrone Mings GCSE science in Year 10. Such a small world.

[@GPSJustin]

this pronounciation of macquarie is closer to my childhood throwback of hairy maclary from donaldson's dairy

[@amitchakraborty8420]

Make a video about the rise of serge gnabry. You can also make a whole playlist of videos with different players like gnabry and their rise. Would love this type of content from you guys.

[@Guacomolit0]

Can you cover Sheffield United under Chris Wilder and how he uses his centre backs?

[@Postposterous]

Consistently great! Big fan. And what I'm saying is true because it's on the internet. 8-)

[@soludsnak]

Are y'all planning on revisiting the "Club X Finances explained" series? I really enjoyed those videos breaking down the health of teams like Palace, United, etc. I realize it might not be super profitable content for your videos but I haven't found content like that elsewhere.

[@mikethestoner]

I used to always go them on fifa and bring them to the prem was always a challenge need to do it again it takes a while so can eat up hours if you can't find something to do

[@iiiaiiin]

Why would the charge be lower on a longer loan? Why would anyone pay off early in that case?

[@sunnymehta367]

Great stuff. Love videos like this.

[@Macho_Fantastico]

This actually makes a lot of sense, although anything involving this amount of money will always be a risk.

[@Sparkz147]

Now if you could just do a tactical breakdown of the way Bournemouth play under Eddie Howe, and his unwavering want to only every use two central midfielders, that would be perfect.

[@Sparkz147]

Danny Taylor I’d say he needs a double pivot because he wants to play with 2 strikers and very attacking full backs.

[@hanif-pl5hd]

Can you make a video analysis about swansea 11/12 possession based tactic

[@felixplatt3023]

As a Bolton fan I have always had respect for Bournemouth . because of the way then stayed up that season even though they started it on -17 points, I hope we can stay even with our points deduction

[@felixplatt3023]

@@iwilltouchyourtoes Always look on the bright side of life

[@joshuacoombs1955]

so, do the bank somewhat own the player involved in the transfer until the sums are paid off ??

[@zephergaming4437]

To give Ryan Fraser as a signing on bonus so he stays?

[@Tazza81]

Love the video, but the name of the bank is pronounced Mac-quarry, not Mac-wary

[@benedictpetch]

In Bournemouth the paper is the daily echo ;) not the Bournemouth herald

[@felixplatt3023]

Tifo can you please do a video on Famalicão. They were promoted to the Portuguese top flight for the first time last season but are already top. It would make a really interesting video.

[@GoodMorning-wc7yr]

Great video!

[@Jamwamee]

So everybody owes everybody loads of money? So if one club couldn't pay, it would have huge knock on effects? At least we have a good, effective FA Fit and Proper person test that NEVER fails and clubs NEVER go bust...

[@junioriseffe]

Jamwamee 😂

[@orb5841]

Wouldn't this negatively effect other statements though like potentially income? I think its a very interesting practice and I definitely want to know more. The Athletic are making sports journalism smarter than I could've imagined.

[@gashmukii6818]

not particularly, in accounting there is an equation used to balance the balance sheet, Assets = Liabilities + Owners equity, theyre mearly taking on a liability equal or less than their owners equity (income from transfers) - and then balancing that against the Asset their building (the stadium) - factoring doesnt really change the balance sheet but it can help with liquidation as they transfer a fixed income into liquid cash reletively quickly

[@davidcook3086]

A large capital expenditure (like a training ground) has a small effect on net income. Net income is revenue - expenses. Assuming large amounts of debt in exchange for cash has no effect on Income. Interest expense or depreciation has a small effect on Net Income, but it’s a fraction of the full cost of a training ground.

[@orb5841]

@@gashmukii6818 I guess it makes sense as your notes payable would be the same as your accounts receivable. I messed up a tad and forgot that you don't put loans on an income statement. In laymen terms there essentially taking that transfer money they'd receive in 1-3 years and instead of waiting for that money, they take out a loan which will help there cash flow statement for this year and allow them to conduct business or get around FFP. Then they'll take the transfer money in the future and pay it back. With the only cost being 6-8% interest. Only question I really got is there any potential tax benefit/negative on top of this?

[@gashmukii6818]

@@orb5841 maybe, it depends on legislation and all that but they could potentially get tax credit on the loan if they cost it as an expense on the building of a new stadium

[@felady7803]

Where is sensible transfers??

[@keidarr]

If the story originally appeared in The Athletic, then you know it's a classic

[@ThePhoneBook123ABC]

That Eicester city is a top club

[@guyr7351]

oops, doing this at the start of the season they drop out of the premiership. next few years now critical for bournmouth, and having sacked Howe's repalcement they could be on a very rocky road if the next appointment is not right.

[@andrewdow4839]

The transfer fees are becoming increasingly performance and fitness based. If they are expectinf 20million pounds for player, 10 million which involves how many games he is healthy for and how many goals he scores. And he plays like shit for 3 season, they may only recieve half of it while being stuck with a 20 millon pound loan. Its stupid. Fuck no

[@montygemma]

It seems quite sound business to me. I really hope the club though are sensible with their finances because debt worries me as a supporter much more than relegation, we don't want to do a Portsmouth.

[@mmafiemc]

This cannot be sustained, surely not? I imagine swap deals getting more and more popular, so.... - Welcome to the NBA

[@mohammedshueb8237]

Both Watford and Bournemouth borrowed money from that bank and both were relegated

[@ICULooking]

Bankers will stop at nothing to manufacture profits out of nothing. Ultimately it's a side effect of bloated transfer fees.

[@lagofala]

Do you see how complicated the whole process is? Making things happen don't come for free.

[@Derekstefan]

But like why Australia? Why not America or other countries?

[@macca10ism]

It's a lot easier to do business like this in Aus than in America. The way our corporate business system works makes it a lot easier for others to make investments in businesses if it meabs profit in Australia. Decent system but makes it extremely competitive which isn't a bad thing. It's not hard to be successful on some level but there's always gonna be a bigger fish because of it.

[@rchopra535]

Need this feature in the new football manager game

[@shiblybegum7178]

Please can u make a video of quique Sanchez flores tactics at Watford

[@antoniofernando8731]

How works the 4 1 2 1 2 with no wingers formation?

[@CJ_Yo_]

4:08 Eicester city...then the L appears

[@drelma]

Love the chanel especially ”tactics explained”, player profiles and the podcast but enough is enough. Is this tifofootball or the athletics chanel? Is it possible to get more content about tactics etc. and expand to different leagues?

[@PGDJ88]

Eicester city

[@abbba2007]

Notification squad! P.S. This comment is borrowing likes against future Tifo videos.

[@ntahlagaming]

Why? Cashflow

[@anthonywilson-ul8zv]

More football fans should watch this video to understand how clubs are run

[@jono_jpg]

I shudder at the possibility of embarrassing myself, but from one of your biggest Aussie fans, it's pronounced MA-QUARRY like the British governor. We have quite a lot of things named after him.

[@dafspeed]

Payday loan, it will end it disaster for someone.

[@bnbsports6288]

ma-kwor-ee not mac-kware-ee

[@uhhhmemes7331]

I want to ask, how come every other video is just a recycle of an athletic article?. At least for me your best work comes from when you do the original content, not an in depth analysis on an article.

[@gareth6956]

The athletic is paying them big bucks so why not make them into videos after the article is written.

[@Zahrul3]

He writes for them

[@Sparkz147]

Firstly, The Athletic are sponsoring Tifo, it will be part of the agreement for them to turn articles into videos. Secondly, there are a hell of a lot of interesting articles on the Athletic and people who haven’t paid to subscribe will miss out on those (personally I thought this was a very interesting look at an often private part of football finance). Thirdly, it is a great deal less work for Tifo to animate and voice this episode because all the research and script writing has already been done.

[@IrvinLopezz]

Should I buy stock?

[@PradeepPurple]

Basically a pay-day loan but for Corporate entities!

[@Banzybanz]

Unlike the pay day loan however, this is relatively safe and the interest is lower.

[@ws0153]

It's 'McWorrie' Tifo brah

[@AnonNomad]

STONKS

[@magicalluke3861]

Funny how his name is Price

[@FrenchGoddy]

The bank is pronounced Mac-Worry but you say it fast like Macworry ✌🏾✌🏾✌🏾

[@oliverrushton1422]

Now he at villa

[@dalespelman4188]

maquarie... ‘mack-kwa-rie’

[@mtaylor3684]

Dude said Mah Qair ee lmao. That's not how you say it mate.

[@thepolticalone961]

Guess everyone wins

[@m7thena]

Make a video on the Neymar transfer

[@cheehongduck101]

Is Kieran related to Harry maguire?

[@AIRBORNPREDATOR]

The way he says Macquarie would make Uni students more suicidal

[@hakim6158]

Why are you talking about factoring like it's sorcery or something insane and new? It's standard procedure

[@reecet5533]

HES THERE HES THERE

[@ravenala9521]

FM21 new feature confirmed

[@tomrobinson736]

Mac-Worry

[@chrispypie9649]

"mekwary"

[@straightXDspear]

Wtf are those eyes?

[@nadadur]

mc-kwor-rie

[@finlaycraig1810]

Never forget they paid 15m for ibe and solanke hahaha

[@DresdenShuffle]

Mac-quarry. Mac-quarry.