Forfaiting - Our Payment From Real Madrid

[IMissTheWaddler]

Just read this and thought it was very interesting.

http://www.dailymail.co.uk/sport/fo...le-fee-paid-using-forfaiting-bank-option.html

Tottenham could receive all the money owed to them by Real Madrid for Gareth Bale at one fell swoop because of a complex five bank operation and a financial transaction known as forfaiting.

According to sources close to the Spanish club Tottenham have already received the first payment from Real Madrid of 16m euros in cash. But the remaining 75m euros (£63m) can now either be paid in three instalments over three years or be received at once, at a slightly lower return.

Spurs have three promissory notes from Madrid - IOUs that specify date and sum of repayment. These can be cashed in September 2014, 2015 and 2016, each for 25m euros.

But Daniel Levy has the option of using a transaction known as forfaiting to get the money up-front. Tottenham's bank, Deutsche Bank, would effectively buy the debt - the promissory notes - from the club for a slightly reduced fee.
Spurs would recieve 73m euros up-front instead of three payments of 25m euros.

Deutsche Bank would then hold the promissory notes - guaranteed by four banks where Madrid have accounts - Santander, BBVA, Popular and Sabadell - and receive the three remaining repayments from the Spanish club.
The figures have been released by sources close to Madrid who maintain that the final price for Bale did not pass 91m euros.

 

[theShiznit]

So someone's lying about the final fee...

€91m euros is not a WR.

 

[Azazello]

We sell the bank risk to Deutsche but would receive the cash at a discount (LIBOR plus a risk premium, compounded over the period concerned). Very routine. €91mm could well be the discounted value of the money that the club would receive.

 

[soup]

Surely this is just the same as using a factoring company to get your invoice paid straight away but paying a percentage for the pleasure, is it not?

 

[theShiznit]

But the last statment says that the final value was only €91m irrespective of any early payment forfiet.

The figures have been released by sources close to Madrid who maintain that the final price for Bale did not pass 91m euros.

The Spanish press have been running that price and all the English press have been running €99/100m.
The Spanish media trying to cover Real's attempts at keeping Ronny sweet...

 

[Azazello]

Surely this is just the same as using a factoring company to get your invoice paid straight away but paying a percentage for the pleasure, is it not?

Pretty much the same - just discounting (forfaiting) prom notes instead of invoices.

 

[wishkah]

Stoof - whack your finance guide out again!

we've discussed a slightly less complex version of this called factoring or invoice discounting. Cool beans!

 

[Mullers]

Daily mail...

 

[dricha1]

So someone's lying about the final fee...

€91m euros is not a WR.

Surely the truth will out when either clubs financial reports are released?

 

[TottenhamMattSpur]

I'd take the instalments. The roe is going back up slowly. As the UK recovers and Europe goes belly up we'll get more cash!

 

[worcestersauce]

if we take it now can make more than the €2m gap? With investments at 1% that's more than €2m over three years so it terms to me we could.
Take it now I'd have thought.

 

[OmarsComing]

Take the maneys

 

[SandroClegane]

Should probably take the money before the Spanish banks collapse and we get nothing...

 

[Mullers]

I said Daily Mail!

 

[beals]

A form of invoice discounting i suppose.
On the other point I trust Daniel rather than any journalist or certainly the RM disinformation department.
€100m paid whatever way Daniel & his Sensi Joe are content with.

 

[onthetwo]

great deal for DB. Unless we need the cash for something like the stadium i dont know why wed take a haircut or as much as 10% on the deal. At this point its a VERY low risk situation given what the ECB has done for the big European banks. Easy money.

 

[Spurz]

Promissory notes from Spanish banks are like government bonds from Greece. They are worth shit. Probably rated junk by S&P

 

[Beni]

Didn't realise I worked at the bank Spurs use, may have to do some digging around to see if I can get me some ITK