Implications of P Share Value...or otherwise

[Rifleman Harris]

I'm not an accountant, but I've seen the P share valued at about £9m.  It is clearly worthless and so surely should come off the balance sheet of all the clubs, shouldn't it?  That will leave a £9m hole in everyone else's accounts won't it?  And any club looking to get finance will consequently have more difficulty and so less likely to dig themselves out of a hole?  Maybe someone with more knowledge of these things could explain what the impact of the P shares becoming effectively worthless would be for others?

[hookender]

I'm not an accountant, but I've seen the P share valued at about £9m.  It is clearly worthless and so surely should come off the balance sheet of all the clubs, shouldn't it?  That will leave a £9m hole in everyone else's accounts won't it?  And any club looking to get finance will consequently have more difficulty and so less likely to dig themselves out of a hole?  Maybe someone with more knowledge of these things could explain what the impact of the P shares becoming effectively worthless would be for others?

Agree. I’m sure in the past a club ( Leeds tykes?) took a short term loan against the strength of P shares. Maybe that was why they were forced to sell them to chiefs rather than Bristol, when loan was up.

If anything,if  HMRC took them , they would know they could get payment ( dividend) in a few months time . And for Worcester too

[InBetweenWasp]

Commented this morning on the Missed Opportunity thread, but it does seem that as an asset they're largely worthless (save for where it's unanimous like CVC coming in and buying up a chunk; as an income stream there's value you in them.  It doesn't seem like PRL even buy them back off of us - They just get relinquished and re-distributed amongst the rest.

It's not like if I had £4.5m going spare I could buy 50% of Wasps' P-Share and pocket 50% of the income it generates.

(at least, as I understand it - I could be wrong and happy to be corrected).

[Bloke in North Dorset]

They’re just an income stream, but as it a future income that was taken as guaranteed for the life of the BT contract, for example, they have value when looking to buy the company hence talked about as an asset. But they aren’t like a machine that you’ve already lurched and it has some residual uses that can be sold.

The key here is what rights the PRL has to rescind future revenues and why that didn’t apply to any club not in the Prem league. 

[Lwasp]

They're not worthless. If(when) Wasps are stripped of their P Share PRL have to pay the contractual value of them to Wasps, £9m. Most clubs have them valued in their accounts for more than this, the increased value most recently established AIUI by the CVC purchase.

The fact that ownership of the share cannot be freely traded and that the rules state they have to be given up to PRL in the event of insolvency does not make them worthless, it just makes them worth less.

[Rifleman Harris]

They're not worthless. If(when) Wasps are stripped of their P Share PRL have to pay the contractual value of them to Wasps, £9m. Most clubs have them valued in their accounts for more than this, the increased value most recently established AIUI by the CVC purchase.

The fact that ownership of the share cannot be freely traded and that the rules state they have to be given up to PRL in the event of insolvency does not make them worthless, it just makes them worth less.

I don't think that's the proposal.  I think the idea being proposed is that they are simply forfeit and returned to the PRL.  I haven't seen anywhere that the proposal is to pay for it...but maybe I missed that.