Valuing P Shares

[Skippy]

Given the shenanigans currently playing out with the P Shares, there’s a sense that the shares don’t really belong to the individual clubs that supposedly hold them.

Rather, the impression is that as soon as a club is any financial trouble, the other clubs can decide to take that club’s P share away. (Unless of course that financial trouble relates to the salary cap).

Given the state of affairs around the P Shares, it would suggest that the value placed on these shares (which is no doubt shown in each club’s accounts) is nothing like what it is claimed to be. That’s assuming it has any value at all. After all, who in the right mind would offer to lend a club money that’s secured against that asset. If the club gets in trouble, you’ve seemingly got no way of getting your hands on it as the other clubs might vote to strip it away.

If that really is the case, have the other clubs thought through the impact they might be having on the valuation of their own P Shares?

[hookender]

Am I right in remembering that when chiefs got their shares they had to pay a ‘market value’ for them and I’m pretty sure a club had had a charge over their P shares put in place at some point.

Now I know share prices may go down as well as up, but if they are saying they are worth zilch , I trust that that is reflected in all club accounts and not treated as an asset at the end of the year.

[Bloke in North Dorset]

AIUI

The P shares are just the share of collective money from things like TV deals. So the argument appears to that as the clubs won’t be in the league helping to generate that money they shouldn’t get a share. Seems reasonable.

They wont be in the league because the rules say that if you go in to administration you will be relegated. The reason for this is that clubs that go in to administration must have been badly financially managed  and if they do get to restructure that debt they will have gained an unfair financial advantage.  Again , in isolation it seems harsh but fair enough, it was well known.

Of course this is all pre Covid rationale and may or may not be sound thinking.

The problem comes because we are in a new post Covid world and clubs are still grappling with the impact of Covid shut downs There is supposed to be a Covid exception clause, but that appears to be largely unwritten and seems to rely on the goodwill of the other clubs.

They now want to enforce the relegation clause with the obstinacy of a German bureaucrat.

How would I feel it it was happening to another club? It’s hard to draw down the veil and think absent what we know already know, but I’d  like that Rugby has held itself on a higher moral ground than football and that’s I’d have supported another club in a similar situation.

Would I still do so if I was told the money we’d receive from their P share might be our financial lifeline? I think that I would because it’s obvious that’s a short term fix for a long term and growing problem and we need all the clubs to come together to find a long term solution and forcing clubs out for short term gain is divisive.

[Westy68]

How can the league expect to get a 10 team league if you can’t get 10 teams to afford them

[Skippy]

Did the EAs lose their P share when they were relegated for cheating? If not, the relegation on administration argument would not seem to hold.

[Andywasp50]

Excellent point Skippy.

[Shugs]

Did the EAs lose their P share when they were relegated for cheating? If not, the relegation on administration argument would not seem to hold.

No, strangely enough they did not. The whole thing absolutely stinks and is mired in self interest. PRL are shown, to be frank, to be clueless, useless, and unfit to run the game.

[Rossm]

Didn't Bris get stuck in the Championship for several seasons trying to get back into the Prem?

[Lwasp]

Did the EAs lose their P share when they were relegated for cheating? If not, the relegation on administration argument would not seem to hold.

Sadly the EAs got relegated because they finished bottom of the table on points, not for financial breaches. They finished bottom of the table on points because of points deductions. The 1st points deduction was punishment for breaching the cap, the 2nd was for refusing to open their books to audit. So they were subject to "normal" relegation rules, if you come straight back up next season you keep the P share, if you stay down for (and here i'm not certain if its 2 or 3 consecutive seasons) a period you have to give them up.

It sucks, but it was following the rules.

[DGP Wasp]

Did the EAs lose their P share when they were relegated for cheating? If not, the relegation on administration argument would not seem to hold.

Sadly the EAs got relegated because they finished bottom of the table on points, not for financial breaches. They finished bottom of the table on points because of points deductions. The 1st points deduction was punishment for breaching the cap, the 2nd was for refusing to open their books to audit. So they were subject to "normal" relegation rules, if you come straight back up next season you keep the P share, if you stay down for (and here i'm not certain if its 2 or 3 consecutive seasons) a period you have to give them up.

It sucks, but it was following the rules.

So this was following the rules, then where is the rule that states that if you're relegated for being skint (as opposed to cheating for example), that you must surrender your P share immediately?