THE REAL TRUTH PLEASE READ: FFC Khan's Tax Inversion Beneficiary

[Baszab]

I put this "tax loss" scenario forward a few months ago - if it is conspiracy please can anyone tell me what possible motives Khan has for investing in FFC ? Not silly ones like widening NFL franchise though

[Snibbo]

And why would he spend 11,000,000 on Ross. No sensible businessman incurs a loss just to save tax.

[WayneKerrins]

The op's theory is wrong in a number of respects but that said Khan has done little to indicate the playing fortunes of FFC concern him overly. In fact he's down right lied about a number of things.

[RPhillips]

The op's theory is wrong in a number of respects but that said Khan has done little to indicate the playing fortunes of FFC concern him overly. In fact he's down right lied about a number of things.

Specifically, what has Khan lied about?

[GloucesterWhite]

Tax inversion has to do with companies that will benefit from the 'patent box', where we have a low corporate tax rate (10% I think) for companies that make most of their money from products that are patented. Like drug companies and they have been the ones in the news. Nothing to do with football clubs or companies making car parts.

[Roberty]

I put this "tax loss" scenario forward a few months ago - if it is conspiracy please can anyone tell me what possible motives Khan has for investing in FFC ? Not silly ones like widening NFL franchise though

What motives did Andrew Carnegie have for his benevolence or Bill Gates for that matter?

At the end of the day Khan cannot take it with him and his financial wellbeing is not going to suffer from the investment in FFC.

If you've made as much they have you want more from life that just personal gain, so self-esteem and recognition come into play.

[The Rock]

You all are more qualified than I then. This is good. Especially Barry P. My point is that it is much more advantageous for Khan to have a capital event (gain or loss) in the UK as it is a US tax haven. True or false? It would make sense with gains for sure.

Call it pot stirring, and I don't know the answer 100%, but I am pretty sure I am spot on here and I'd love to be proven wrong.

[The Rock]

I practiced a smattering of tax law in a past life, and I try to keep up with what's current.  I've been following the 'inversion' phenomenon, because a drugstore chain stock I owned (until a few weeks ago) -- Walgreens's (which I think is still in the process of buying Boots) -- was trying to buy a drug retail company in Britain whereby it could avail itself of preferential tax treatment.  But, Rock, I think you are completely wrong about Khan re: your suggestion that he's trying to use FFC as a front of some kind to create an offshore tax haven.  The facts don't work.  The Jaguars and his auto parts business have their own wholly distinct corporate structures.  And those businesses have nothing to do with English football.  I'll do a little research on this, but I'm positive you can't create an inversion scenario out of such disparate businesses.  I've never heard of a single sports franchisee which was able to shoehorn its business into an offshore tax haven by buying a wholly unrelated sports club in another country.  Further, it is probably illegal to attempt to offshore the HQ of a U.S. sports team.  It's probably a breach of the franchise agreement for one thing.  Plus, English corporate tax rates are much higher than U.S. corp tax rates, making that theory silly in its impracticality.  Ireland maybe.  England, no.  This is all so much conspiracy talk. 

So are you saying that Khan can potentially establish a more advantageous greater capital loss in the UK vs. than a like entity in the US becuase UK taxes to him would be higher then?

Yes I know it sounds like I am pot stirring, but I am trying to figure out his motovation to running the club into the ground, that's all...

[andyk]

If Khan wanted to do this he could do what all the other yank companies are doing. Set up a proxy business in Ireland, corporate tax rate 12.5%, employ a few people in some small office or factory and funnell all profits through the shell company.

[Alf_Tupper]

A complete load of twaddle -stop stirring things.

[YankeeJim]

This is the Rock. I am a trader on Wall Street and many of you know me from the Lion, or Rockwell's , Bricklayers (great ale) when I am in town and so on... something needs to be known. I know how international taxation works and loops in tax codes etc...

In the US there is a lot of chatter going around about tax inversion. Investors are dealing with US gov't ruling on future tax inversion. What does that have to do with Fulham? Inversion is were you can be from the US and base a company "offshore" (in the UK) and have it's primary operations/owner in the US. The "offshore entity" enables you to take profits or accrue losses and the taxation on these events are far more beneficial to a US owner than having an "onshore" entity (in the US)...

Don't be fooled. Khan is using FFC as a greater tax write off than a like entity based in the US. The business model dovetails perfectly with the Jacksonville Jags and essentially divert Fulham losses to sustain his other sporting or general investment interests. Essentially, we are a taxation pawn and his investing history points to maximizing profits.  

Felix Magath is the perfect manager. He helps Khan realise those losses and from a financial fair play standpoint he's spent zero (notice the transfers out have or will match McCormack's and a few other's fees?). It is in Khan's best financial interests to spend nothing and run us into the ground and use the taxation loss/benefit against gains elsewhere.

Thankfully tax inversion rules may be changing in the states at some point, but not soon enough. This is the real truth. Please try and prove me wrong, I'm afraid you can't. Bitter bitter pill to swallow and I am sad.

I do not have any expertise on Wall Street and or taxes. However, I do not believe that a businessman buys any business to lose money. The tax situation makes a foreign investment such as FFC a better option but the best option is to make money. Yes, you pay more taxes but while the government takes its share, some is left. Now, if FFC loses money it helps Khan's situation with the Jags but a profitable FFC is still a better situation. Khan (IMHO) bought FFC for two main reasons. He wants to have a toe hold to exploit the pointy ball growth in England and he wants to be on the continuing growth of soccer in the US. Assigning evil intent to Khan as a corporate thief is something that should be left for socialists fools.

[YoungsBitter]

Forever Fulham has answered it. I am an investment banker and familiar with structuring SPV's off shore in low or zero tax jurisdictions. Khan's investment in Fulham is separate from his ownership of Flex-n-Gate Corp which is Illinois corporation paying IL tax (8%), Khan lives in Chicago,IL so pays personal income tax in IL. The revenue of Flex-n-Gate is just under $4 Billion annually. The last reported revenue for Fulham was £79.3 million. Fulham's ownership under Khan may be through an SPV in low tax jurisdiction but there is no way he could invert Flex-n-Gate into Fulham in the UK.
Back to bitching about Fotheringham, I think we are way better qualified to do that ;)

[epsomraver]

Why did he spend (up to) £11million on Mitroglou in January then?

Answer, he didn't , it is all in increments so he has splashed out very little at present

[YankeeJim]

Why did he spend (up to) £11million on Mitroglou in January then?

Answer, he didn't , it is all in increments so he has splashed out very little at present

If you buy a car with a $1000 down and finance $2000, did you spend a 1000 or 3000? Committing to the expense is spending. Khan has spent 22 million or so on two strikers. Now, neither purchase has born fruit, but he did commit to the expense.

[davew]

As a retired UK accountant but with no detailed knowledge of US tax rules, I can only comment that it makes no sense to try and set up a company or acquire a football club to operate at a loss simply to reduce taxation! The investment vastly out weighs the loss and benefit of the tax reduction, the net result being a substantial loss on investment especially with reducing gate attendances etc. On the other hand if SK is a shrewd businessman, which presumably he must be, it doesn't take a lot to work out that if he makes a decent investment in trying to get FFC back into the Premier League within 1 year it will bear fruits! At the moment everybody seems clueless as to what to do!!!