Shareholders Dividents

Unfortunately, there is something totally wrong with this in FM and it should be fixed for the next game.

Only clubs which are on the stock market pay dividents, which would be a percentage of the profit. You can't pay dividents to the shareholders if there aren't any shareholders. It's ridiculous. IRL you'd end up in prison for some time if you do that.

Besides, the divident is a percentage of the net profit, therefore, you cannot end the season with income of 36M, expenditure of 30M and pay 19M dividents, which happened to me. I am not quite sure, but I think this has been in previous versions of the game as well. Total ignorance..

btw, I really hope that other members of the community will raise voices of concern regarding this flaw of the game. One way to solve the problem would be to just occasionally show the message "President X of Team A has been sentenced to 15 years in prison for financial fraud." :DDD

Uh... HEAR HEAR!

I'm not so outraged, but I raised my voice anywho. I'm a man, hear me roar! (ain't it how that line goes?)

The word is "Dividends".

And I have to say, you're actually wrong. There are 2 types of Dividends payable, called "Preferred" and "Common". A common dividend, which you're talking about, is the net profits divided by the shareholders. A preferred dividend (which major figureheads of companies take on to guarantee an annual salary, (without paying NI and Tax - but thats a whole other story)) - is a fixed payout regardless of how much the club made or lost. The "common dividend" - hence the name, is obviously more common, and is more often than not the shares that are traded on the stock market.

Before I go any further with this - how many Football Clubs do you know that don't have a number of shareholders? Which club are you?

Now, you mentioned that you cant pay dividends to a club that has no shareholders, but every business has shareholders. Perhaps its just 1 shareholder, being the sole owner, or perhaps its 4 shareholders, investors or simply people who have been offered a percent of the company for goodwill or business strengths. Now, in those situations, the shareholders are called silent partners. Again, in the scenario you've pointed out, you only accept the fact that PLC's have shareholders, which isn't the case. The only difference between a PLC - is that its floated on the stock market. This could be for many reasons, but the main 2 are to boost geared borrowings, or quite simply sell your shares to the public.

The company my Dad owns had 5,000,000 shares, and he owns 4,500,000 and I own the other 500,000. They currently have no value except the fact at the end of the financial year, it allows us to split the profits of the company 80/20, although we invest a lot of the profits back into the company. If we were to float the company, (which isn't possible yet) - then each share would be worth X amount, and we would allocate the amount of shares we wish to sell to the Public.

Hope that all made sense.

Nep is entirely correct, all companies MUST have shareholders (at least one) and can pay dividends. Dividends are payable once the board decides on it and passes a resolution to do so. In many small companies the directors and shareholders are one in the same, or there may be no more than a handful of shareholders.

The only situation they would be legally unable to do so is if they have insufficient 'distributable profits'. The exact definition of that is rather complex, but essentially comes down to the company having no carried forward losses. FWIW, the finances section of FM is very simplified, and works on an entirely cash basis, if you took the finances in FM and prepared a proper set of accounts, your profit figure would be entirely different. Overall though, it does a pretty decent job of modelling the real world.

Agreed though that it is a pain when the board pays some massive dividend when you thought the transfer budget might shoot up of course...

But in real life, Arsenal, for example, don't pay dividends. The board unanimously decides annually that they don't want to. Yet in the game, they do. It's a good thing they do, otherwise the finances would be even MORE ridiculously good. But still. It is wrong.

Good on ya Nep, brilliant explanation, TBH I was a little confused about how dividends and that worked, although I knew basics, like companies have to pay them out to shareholders etc. Always nice to come accross a thread that teaches you something about real life as well as FM

BTW Nep, if you own 500,000 of the shares, why is your cut 20%?

20% of 5,000,000 is 1,000,000

At Reading, there are several shareholders plus Madejski. The other shareholders hold tiny amounts. Between them, they wouldn't get paid £16m. The money Madejski takes out of the club is his loan- which is in the game. Randy Lerner is the sole shareholder at Villa iirc, and I don't think he takes £16m for himself every year. In both those cases- and Arsenal- the £16m is unrealistic.

Total ignorance.

I quite agree. But on your part as you don't seem to have any idea what you're talking about.

A company does not have to be listed on the Stock Exchange to pay dividends.

As Nepenthez points out, dividends are not always tied to net profit.

The word is "Dividends".

And I have to say, you're actually wrong. There are 2 types of Dividends payable, called "Preferred" and "Common". A common dividend, which you're talking about, is the net profits divided by the shareholders. A preferred dividend (which major figureheads of companies take on to guarantee an annual salary, (without paying NI and Tax - but thats a whole other story)) - is a fixed payout regardless of how much the club made or lost. The "common dividend" - hence the name, is obviously more common, and is more often than not the shares that are traded on the stock market.

Before I go any further with this - how many Football Clubs do you know that don't have a number of shareholders? Which club are you?

Now, you mentioned that you cant pay dividends to a club that has no shareholders, but every business has shareholders. Perhaps its just 1 shareholder, being the sole owner, or perhaps its 4 shareholders, investors or simply people who have been offered a percent of the company for goodwill or business strengths. Now, in those situations, the shareholders are called silent partners. Again, in the scenario you've pointed out, you only accept the fact that PLC's have shareholders, which isn't the case. The only difference between a PLC - is that its floated on the stock market. This could be for many reasons, but the main 2 are to boost geared borrowings, or quite simply sell your shares to the public.

The company my Dad owns had 5,000,000 shares, and he owns 4,500,000 and I own the other 500,000. They currently have no value except the fact at the end of the financial year, it allows us to split the profits of the company 80/20, although we invest a lot of the profits back into the company. If we were to float the company, (which isn't possible yet) - then each share would be worth X amount, and we would allocate the amount of shares we wish to sell to the Public.

Hope that all made sense.

My explanation was lame, but you are not correct either..

First of all 500000 out of 5000000 is 10%.

There is a term "preffered dividend" but it has nothing to do with what you say. It is a dividend payed to those who own preferred shares and it still applies to PLCs only. This means that if a PLC made a very small profit and is unable to pay all dividends, they are payed first and only if there is money left, then common dividend is payed. In any case the dividend cannot be more than the profit. Usually in such companies part of the profit is payed as dividends and shared in proportion to their shares, while the other part is reinvested.

If the company is owned by one person only, as is the case with Levski and many other clubs, it is different. There are no shareholders, there is an owner. There are no dividends, simply profit. Yes, the owner can decide to take the season's profit and spend it on McDonald's, but that's completely different.

PS. Sorry for the spelling mistake. In my language it's with t.

If the company is owned by one person only, as is the case with Levski and many other clubs, it is different. There are no shareholders, there is an owner. There are no dividends, simply profit. Yes, the owner can decide to take the season's profit and spend it on McDonald's, but that's completely different.

No, really it's not. Any director of any company can be paid dividends from the company accounts (and you get taxed less in the UK compared to salaried earnings). You don't have to be a shareholder, you don't have to be the owner.

No, really it's not. Any director of any company can be paid dividends from the company accounts (and you get taxed less in the UK compared to salaried earnings). You don't have to be a shareholder, you don't have to be the owner.

You are right. In that case that would be pre-tax expenses. The sole purpose would be to avoid taxes. Instead of paying big salaries to your emplayees, you can pay dividends corresponding to their salary, the hours they worked, or their contribution.

Anyway, those expenses would be far smaller, and it has nothing to do with the game.

The word is "Dividends".

And I have to say, you're actually wrong. There are 2 types of Dividends payable, called "Preferred" and "Common". A common dividend, which you're talking about, is the net profits divided by the shareholders. A preferred dividend (which major figureheads of companies take on to guarantee an annual salary, (without paying NI and Tax - but thats a whole other story)) - is a fixed payout regardless of how much the club made or lost. The "common dividend" - hence the name, is obviously more common, and is more often than not the shares that are traded on the stock market.

Before I go any further with this - how many Football Clubs do you know that don't have a number of shareholders? Which club are you?

Now, you mentioned that you cant pay dividends to a club that has no shareholders, but every business has shareholders. Perhaps its just 1 shareholder, being the sole owner, or perhaps its 4 shareholders, investors or simply people who have been offered a percent of the company for goodwill or business strengths. Now, in those situations, the shareholders are called silent partners. Again, in the scenario you've pointed out, you only accept the fact that PLC's have shareholders, which isn't the case. The only difference between a PLC - is that its floated on the stock market. This could be for many reasons, but the main 2 are to boost geared borrowings, or quite simply sell your shares to the public.

The company my Dad owns had 5,000,000 shares, and he owns 4,500,000 and I own the other 500,000. They currently have no value except the fact at the end of the financial year, it allows us to split the profits of the company 80/20, although we invest a lot of the profits back into the company. If we were to float the company, (which isn't possible yet) - then each share would be worth X amount, and we would allocate the amount of shares we wish to sell to the Public.

Hope that all made sense.

Sorry, but not all companies have shareholders. In Germany most of the clubs are (sorry, bot I don't know the correct English term for that) sort of non-profit organisations, which means that the entire profit is used by the club (cash stays on clubs account). Some clubs Dortmund and Bayern (only 10%) have issued some shares, but the majority of clubs is "owned" (again not true term) by the fans that pay membership fee, which vote for clubs president...

ALL companies have shareholders. All businesses do not. There is a difference.

Many football clubs are not plcs but still have shareholders.

ALL companies have shareholders. All businesses do not. There is a difference.

Yeah, I must have chosen the wrong term - but the fact is that there are many clubs which don't pay any dividends or similar payments, because there aren't any formal owners. They have members which vote to select the board and don't get payed anything.

Isn't it fan ownership? I'm pretty sure Barca have that company structure too.

There is a term "preffered dividend" but it has nothing to do with what you say. It is a dividend payed to those who own preferred shares and it still applies to PLCs only.

Wrong again:

http://en.wikipedia.org/wiki/Preferred_stock

"Preferred shares are more common in private or pre-public companies"

Yeah, I must have chosen the wrong term - but the fact is that there are many clubs which don't pay any dividends or similar payments, because there aren't any formal owners. They have members which vote to select the board and don't get payed anything.

What you're really confusing is between a club and a company.

I just talked to a couple of Olympiacos's shareholders and they told me that they never received any dividends , of course in the game i do have to pay ridiculous amounts of money .

If the company is owned by one person only, as is the case with Levski and many other clubs, it is different. There are no shareholders, there is an owner. There are no dividends, simply profit. Yes, the owner can decide to take the season's profit and spend it on McDonald's, but that's completely different.

There is a big difference between a business that is a sole proprietorship and a business that happens to have all it's shares owned by one person.

The major difference being that sole proprietorship does not have limited liability - and nobody as far as I know is stupid enough to own a football club with unlimited liability. And you can't have limited liability without becoming a limited company.

Couple of points that I'd like to make.

1. All UK clubs are likely to be limited companies (as stated above, why would they be unlimited - no shareholder in their right mind would agree to that!). They may be owned by:

(i) many shareholders - e.g. Tottenham. However, the company does not have to be a PLC it may be a private company ('ltd') and still have many shareholders.

(ii) a single owner - e.g. Chelsea, Villa. However, this single owner will simply be a sole shareholder and will own all of the shares in the company (even if there is only 1 share).

2. The above (I think - and would be happy for someone who knows for definite to clarify) apply to clubs owned by a shareholders trust (e.g. Ebbsfleet). The way it (probably) works is that the 'trust' owns all the shares in the company. The trust is then normally a partnership or other legal entity, whereby the fans put in subscriptions each year to stay members and have a say in how the club is run (at least this is how Ebbsfleet works).

3. The total amount of all dividends allowed to be paid in each financial year is limited to 'distributable' profits. Which is normally 'net' profit per year. So in a simple example, in year 1 of trading £20m in, £10m out. Net profit = £10m = distributable profits (I am not an accountant and obviously it is more complicated than this, especially with carrying-back and forward of losses).

4. Preferred dividends are, as described above, those attached to preference shares which simply rank higher than common/ordinary shares in the dividend they get. Often, the terms of the shares will state that each year there will be an X% dividend, there is no discretion for the directors here. However, note that if the X% dividend would result in a higher dividend than distributable profits, that the dividend actually paid will be limited to the amount of distributable profits, with the remaining dividend being carried over to next year for payment (e.g. if 5% dividend but distributable profits only allow 3% to be paid in year 1, 3% is paid and 2% is carried forward, so that 2% + 5% (depending on the terms of the pref shares) is due in year 2 - again distributable profits allowing). Preference shares are often used by private equity houses to incentise management and to lock them into the company.

5. Common/ordinary dividends are paid to ordinary shareholders at the discretion of the directors of the company but again llimited to distributable profits (after deducting any amounts distributed to preference shareholders).

In summary, Chelsea and Villa etc owners could choose to pay themselves a dividend if there were distributable profits. However, unlikely in either scenario as - Chelsea makes a massive loss and Villa owner is putting money in, not taking it out. Only situtation where its likely to occur, is at Man Utd - but again unlikely as they won't make an actual profit due to the debts.

In FM, there should probably be somekind of recognition that clubs don't generally pay dividends and that they should only be paid where the club is acquired by someone looking to make money.

Couple of points that I'd like to make.

1. All UK clubs are likely to be limited companies (as stated above, why would they be unlimited - no shareholder in their right mind would agree to that!). They may be owned by:

(i) many shareholders - e.g. Tottenham. However, the company does not have to be a PLC it may be a private company ('ltd') and still have many shareholders.

(ii) a single owner - e.g. Chelsea, Villa. However, this single owner will simply be a sole shareholder and will own all of the shares in the company (even if there is only 1 share).

2. The above (I think - and would be happy for someone who knows for definite to clarify) apply to clubs owned by a shareholders trust (e.g. Ebbsfleet). The way it (probably) works is that the 'trust' owns all the shares in the company. The trust is then normally a partnership or other legal entity, whereby the fans put in subscriptions each year to stay members and have a say in how the club is run (at least this is how Ebbsfleet works).

3. The total amount of all dividends allowed to be paid in each financial year is limited to 'distributable' profits. Which is normally 'net' profit per year. So in a simple example, in year 1 of trading £20m in, £10m out. Net profit = £10m = distributable profits (I am not an accountant and obviously it is more complicated than this, especially with carrying-back and forward of losses).

4. Preferred dividends are, as described above, those attached to preference shares which simply rank higher than common/ordinary shares in the dividend they get. Often, the terms of the shares will state that each year there will be an X% dividend, there is no discretion for the directors here. However, note that if the X% dividend would result in a higher dividend than distributable profits, that the dividend actually paid will be limited to the amount of distributable profits, with the remaining dividend being carried over to next year for payment (e.g. if 5% dividend but distributable profits only allow 3% to be paid in year 1, 3% is paid and 2% is carried forward, so that 2% + 5% (depending on the terms of the pref shares) is due in year 2 - again distributable profits allowing). Preference shares are often used by private equity houses to incentise management and to lock them into the company.

5. Common/ordinary dividends are paid to ordinary shareholders at the discretion of the directors of the company but again llimited to distributable profits (after deducting any amounts distributed to preference shareholders).

In summary, Chelsea and Villa etc owners could choose to pay themselves a dividend if there were distributable profits. However, unlikely in either scenario as - Chelsea makes a massive loss and Villa owner is putting money in, not taking it out. Only situtation where its likely to occur, is at Man Utd - but again unlikely as they won't make an actual profit due to the debts.

In FM, there should probably be somekind of recognition that clubs don't generally pay dividends and that they should only be paid where the club is acquired by someone looking to make money.

Should have also made it a bit clearer - this only applie to England and Wales. All other countries have different legal systems with different forms of entities so most clubs in those jurisdictions may be in the form of a non-dividend paying entity (although, in my experience, any that are in the form equivalent to a company will probably have to adhere to some kind of legal requirement akin to distributable profits).

What some of you have to realize is that there are football clubs outside of England. Just because clubs in England pay dividends doesn't mean its the same in the other 200 countries.

For example here in Slovenia the number of privately owned clubs is zero. All of the clubs operate as a non-profit organization. What that means (simplified a bit) is that all the money they earn must be spent within the club.

Paying any "dividends" would get you thrown i jail. I have pointed out this flaw many times before but i have a feeling they are still not going to fix this bug. IMO its just a lazy workaround for a flawed financial model ie. a way to decrease the amount of money in the game.

What some of you have to realize is that there are football clubs outside of England. Just because clubs in England pay dividends doesn't mean its the same in the other 200 countries.

For example here in Slovenia the number of privately owned clubs is zero. All of the clubs operate as a non-profit organization. What that means (simplified a bit) is that all the money they earn must be spent within the club.

Paying any "dividends" would get you thrown i jail. I have pointed out this flaw many times before but i have a feeling they are still not going to fix this bug. IMO its just a lazy workaround for a flawed financial model ie. a way to decrease the amount of money in the game.

I don't think it is feasible for SI to research every type of legal entity in every country to model dividends etc 100% accurately. However, I'm in favour of them defaulting to no dividends with only a few clubs paying dividends.

What some of you have to realize is that there are football clubs outside of England. Just because clubs in England pay dividends doesn't mean its the same in the other 200 countries.

For example here in Slovenia the number of privately owned clubs is zero. All of the clubs operate as a non-profit organization. What that means (simplified a bit) is that all the money they earn must be spent within the club.

Paying any "dividends" would get you thrown i jail. I have pointed out this flaw many times before but i have a feeling they are still not going to fix this bug. IMO its just a lazy workaround for a flawed financial model ie. a way to decrease the amount of money in the game.

The main reason dividends are paid out in the game is to prevent the clubs amassing a ridiculous amount of money. In cases such the clubs you mention in Slovenia, would an acceptable way of taking money out of the club be to say the clubs are 'making a donation to charity' instead of a 'paying a dividend'?

Just a thought.

The main reason dividends are paid out in the game is to prevent the clubs amassing a ridiculous amount of money. In cases such the clubs you mention in Slovenia, would an acceptable way of taking money out of the club be to say the clubs are 'making a donation to charity' instead of a 'paying a dividend'?

Just a thought.

It's called bad financial model. It works fine for big clubs like Man Utd and Juventus, where you have huge profit and it is reasonable to pay dividents to the shareholders. When I played with Juve dividends never really bothered me because it has shareholders and the dividends were a realistic percentage of the profit. The problem is with clubs from Eastern Europe and other weaker divisions. Almost none of these clubs pay dividends in real life, but in FM each season I see the entire profit payed out as dividends. The game just does not allow these teams to progress..

Progress to where?

Progress to where?

Financially I mean. I checked with FMM that after 5 season with Levski the reputation of the club has increased from about 4500 to above 6000 and my average attendance has increased from 8000 people to 18000 people. I participate in the CL almost every season, yet, my first season's sponsorship deal was for 2M and this season its for 1.6M (Kits sponsorship is 80k)... I really can't find the logic.

Financially I mean. I checked with FMM that after 5 season with Levski the reputation of the club has increased from about 4500 to above 6000 and my average attendance has increased from 8000 people to 18000 people. I participate in the CL almost every season, yet, my first season's sponsorship deal was for 2M and this season its for 1.6M (Kits sponsorship is 80k)... I really can't find the logic.

the first season's figures are entered by researchers. Later figures are worked out by the game based on reputation, not taking the old figures into account.

Just consider there to have been a global recession, so advertisers pay less. Other lower rep teams will have even less still, so no real harm.

WOOOOOOOOOW

I just conducted an experiment. I finished my season with Levski with income of $36M, expenditure of $17M for a profit of almost $19M. $19M were paid to the shareholders. I loaded my last save (arround the beginning of June) and I signed 6 players for free but with huge signing fees ($1.5M each for a total of $10.5M). I finished the season with incom of $36M, expenditure of $28M, for a profit of $8M and guess what...

$21M were paid to the shareholders! How about that?

I haven't seen Levski Sofia progressing anywhere in real life either so if the game doesn't allow such teams to progress then maybe it isn't being all that unrealistic. The financial model of the game is always a little approximate in terms of where money goes for what reasons. Some financial things seem to just be there to keep finances at a vaguely realistic level so an umbrella term like Dividends to Shareholders may be used to cover a few things that aren't specifically that. I wouldn't want FM programmers to spend forever looking into detailed financial models to add into the game - people do whole University degrees and more and don't always fully understand such things!

I wouldn't want FM programmers to spend forever looking into detailed financial models to add into the game - people do whole University degrees and more and don't always fully understand such things!

That's because you are stupid.

That's because you are stupid.

Care to explain why you have exactly the same IP address as Di Vladi?

Just wondering, in the game are dividends always paid at the end of the season or is it only if you have made a profit?

Care to explain why you have exactly the same IP address as Di Vladi?

Because I am the same person of course.

Kudos for honesty, at least.

Makes my job easier...

haha i feel a lot of tension in this thread...shall i crack a joke?

The main reason dividends are paid out in the game is to prevent the clubs amassing a ridiculous amount of money. In cases such the clubs you mention in Slovenia, would an acceptable way of taking money out of the club be to say the clubs are 'making a donation to charity' instead of a 'paying a dividend'?

Just a thought.

IMO they should just fix the financial model instead of wasting time implementing additional problems. Besides clubs in Slovenia arent rich even in FM No need to make them even poorer.

Shame the guy who started the thread got banned. As for my 80/20 for 500,000 shares of 5,000,000 - I don't need to go into details, but for as long as I actually work for the company, I earn 10% profits per year + my 10% shares. If I were to leave the company, I'd only have 10% shares.

Shame the guy who started the thread got banned.

It's a shame he felt the need to create an alias just to abuse somebody.

It's a shame he felt the need to create an alias just to abuse somebody.

Thats what I meant. Also, What the hell...!!!! I've never seen those red / yellow cards before. I'm assuming the red means banned for good, and the yellow has a time limit? Isn't that a bit silly if so in this case, since its the same guy

yellow is a warning- red is a ban i think although im probably wrong so you should discount what i just said.

If nothing else, I'm learning all the time. going to re-read the thread, simply because i feel I'm starting to learn more about big business. Until now, all my knowledge of business came from the underpants Gnomes on South Park.

Phase One: Steal Underpants

Phase Two: ???

Phase Three: Profit!

Back on-topic, and referring to jakobx's message, it seems feasible to me that clubs that operate as a non-profit organisation (ie, no private owner, and no didvidend payout) should be treated as such. Surely less work, not more, on SI's part would be required to ensure that money that went into these clubs simply stayed there, rather than calculating dividends that shouldn't happen anyway.

Thats what I meant. Also, What the hell...!!!! I've never seen those red / yellow cards before. I'm assuming the red means banned for good, and the yellow has a time limit? Isn't that a bit silly if so in this case, since its the same guy

The yellow was for his original abusive post, before I knew for certain that it was an alias account, which got the red.

Stupid response really. Of all the possible responses, that one was the daftest if he wanted to avoid a ban.

Back on-topic, and referring to jakobx's message, it seems feasible to me that clubs that operate as a non-profit organisation (ie, no private owner, and no didvidend payout) should be treated as such. Surely less work, not more, on SI's part would be required to ensure that money that went into these clubs simply stayed there, rather than calculating dividends that shouldn't happen anyway.

It would be fairly tough to research and implement though wouldn't it?

It would be fairly tough to research and implement though wouldn't it?

not really...Its much easier for the researcher to find out who owns the club then it is to fill out a gazillion attributes for 30-40 players and staff.