MFC Loan to Schwab

[Kento80 83]

Just came across this, $140,000 loan for Schwab on The Age website. I don't have a problem with it, just interested to hear others thoughts on it, and presumed it may be of interest.

[Nasher 33,616]

No problem here. It's a secured loan and it's actually a revenue stream for the club.

[Rhino Richards 1,467]

While they have made disclosure to the AFL etc and the Board approval, I dont understand why the Club needs to provide any financing arrangements to CEO above and beyond agreed salary.

If the deal is arms length why couldn't Schwab have arranged this with a bank of third party administrator? I dont see the use or the validation of doing this particularly in a cash strapped club.

I dont think it is appropriate for company/club to be making loans to directors, CEO's or senior management.

[Kento80 83]

I see your point there RR. Thankfully it was all above board though as the club would be in for a fair amount of criticism if there appeared to be any murkiness there.

[BAMF 4,353]

If the deal is arms length why couldn't Schwab have arranged this with a bank of third party administrator? I dont see the use or the validation of doing this particularly in a cash strapped club.

I dont think it is appropriate for company/club to be making loans to directors, CEO's or senior management.

It does seem strange. A guy like Cam Schwab should not have any problems getting a loan like that from the bank or credit union.

No harm done I guess.

[Good Times Grimes 2,396]

Maybe Cam prefers to help out the MFC as it is a profit generator for them.

[Kento80 83]

It does seem strange. A guy like Cam Schwab should not have any problems getting a loan like that from the bank or credit union.

That's pretty much the reason I started the thread. Couldn't quite work out the reason it was required. I have borrowed money off a boss before, as I wasn't able to secure a loan, but I can't see Schwab having that same issue.

[Dee Fan 3,247]

While they have made disclosure to the AFL etc and the Board approval, I dont understand why the Club needs to provide any financing arrangements to CEO above and beyond agreed salary.

If the deal is arms length why couldn't Schwab have arranged this with a bank of third party administrator? I dont see the use or the validation of doing this particularly in a cash strapped club.

I dont think it is appropriate for company/club to be making loans to directors, CEO's or senior management.

It appears to be some sort of bridging finance and if Cam had gone to a bank he would have been punished so the club loaned him the money at a commercial rate and with conditions that the loan be paid back in two or three years. It is a benefit to the club as it shows faith in it’s chief executive and they are getting an acceptable rate of return, on par with term deposit loans so what’s the issue?

I don't think Wilson likes Cam and that may be the only motivating factor.

Nothing to see here move on.

[Rhino Richards 1,467]

While there appears no apparent harm I think it is inappropriate corporate governance standards for a company/club to have. IMO it should not have been done particularly for a club that has focussed on reducing debt. We are not a finance house. There may be reasons why it was done but I am stumped why it could not have been done outside the Club with Schwab keeping his personal affairs seperate from the Club.

[Rhino Richards 1,467]

It appears to be some sort of bridging finance and if Cam had gone to a bank he would have been punished so the club loaned him the money at a commercial rate and with conditions that the loan be paid back in two or three years. It is a benefit to the club as it shows faith in it’s chief executive and they are getting an acceptable rate of return, on par with term deposit loans so what’s the issue?

I don't think Wilson likes Cam and that may be the only motivating factor.

Nothing to see here move on.

Why would Cam have been "punished" by a bank for bridging finance? How is MFC interest rate more commercial than a bank ( )? If our rate is less than a bank then MFC are taking on the same risk at a cheaper price (return) than the market.

I cant see how it benefits the Club at all. A CEO is remunerated by salary and not by cosy loans. We are not in the business of money lending and should not be doing that.

Potential conflict of interest. Sooner it is bad back by Schwab the better. I dont agree with jobs for the boys and I scertainly dont abide with loans for the boys. The Club should not be doing that again.

[TonyMelb 7]

While there appears no apparent harm I think it is inappropriate corporate governance standards for a company/club to have. IMO it should not have been done particularly for a club that has focussed on reducing debt. We are not a finance house. There may be reasons why it was done but I am stumped why it could not have been done outside the Club with Schwab keeping his personal affairs seperate from the Club.

RR Your comments are spot on. Whilst the loan has been disclosed and is all above board it is not good corporate governance practice (which I have some involvement in)for public companies to be giving personal loans to senior management. The potential for conflict if performance issues arise is great and it is not good from a perception point of view for a footy club with the financial issues MFC has had during the past 10 years. For $140k would have thought Cam would have bbeen better borrowing off a third party.

Given all AFL clubs (and lower levels for that matter) rely on membership fees and othercontributions from general supporters the convention should be that club executives do not mixe their personal financial interests with those of their clubs

[Cranky Franky 2,061]

Wake up to yourselves fellers. There is lots wrong here. These are the sort of shenanigans that build up & fester & eventually become a problem & people get compromised.

FFS we are only just out of debt & we are asking supporters to put their hands in their pockets to build a strong Club.

I didn't make donations to the MFC so that they could lend money to someone on probably $300,000 a year.

We are a footy club NOT a bank.

Very poor judgement by CS to ask in the first place because as CEO it puts the Club in a difficult position.

When he was at Freo CS asked for 3 months off during the season to go & do a course in the US. Again he haed Freo over a barrell. Freo didn't like it but had to agree.

Hope we are training up someone to take over as CEO.

[agent_orange 0]

Why would Cam have been "punished" by a bank for bridging finance? How is MFC interest rate more commercial than a bank ( )? If our rate is less than a bank then MFC are taking on the same risk at a cheaper price (return) than the market.

I cant see how it benefits the Club at all. A CEO is remunerated by salary and not by cosy loans. We are not in the business of money lending and should not be doing that.

Potential conflict of interest. Sooner it is bad back by Schwab the better. I dont agree with jobs for the boys and I scertainly dont abide with loans for the boys. The Club should not be doing that again.

A great non-event as far as I can see. There was no risk involved really, a bit of extra money to the club. Move on, nothing to see here.

[Nasher 33,616]

I don't think Wilson likes Cam and that may be the only motivating factor.

Wilson hasn't insinuated anything in this article - just published facts that I believe we are entitled to know.

[Nasher 33,616]

A great non-event as far as I can see. There was no risk involved really, a bit of extra money to the club. Move on, nothing to see here.

It's not the risk that is the issue (though your call of "no risk" is incorrect - there's always a risk) - it's a question of business ethics and the potential conflict of interest it raises.

[Kento80 83]

I spose the question the Club should ask in deciding if this is right (technically) or not is "Would we grant a realistic loan to a lower employee?" I suspect that if an Admin Assistant or someone a bit further down the chain requested a loan, even though they may be able to afford the repayments and their job may be fully secure, that the Club would say no. And if they did say yes then they are opening themselves up for any employee to make such a request.

[agent_orange 0]

It's not the risk that is the issue (though your call of "no risk" is incorrect - there's always a risk) - it's a question of business ethics and the potential conflict of interest it raises.

It was a secured loan done legally as any bank would do meaning the only risk was for Cam.

All the issues would have been discussed.

[Dee Fan 3,247]

Why would Cam have been "punished" by a bank for bridging finance? How is MFC interest rate more commercial than a bank ( )? If our rate is less than a bank then MFC are taking on the same risk at a cheaper price (return) than the market.

I cant see how it benefits the Club at all. A CEO is remunerated by salary and not by cosy loans. We are not in the business of money lending and should not be doing that.

Potential conflict of interest. Sooner it is bad back by Schwab the better. I dont agree with jobs for the boys and I scertainly dont abide with loans for the boys. The Club should not be doing that again.

There is a difference between a Bank Housing loan rate over say 15 years and a short term Bank rate over say 2 years, the difference in interest rate is usually substantial. The club lent the money to Cam on a rate of 6.2% which is marginally higher than they would get from the Bank on Term Deposit. The Club has not lost out on the deal as they continue to get a commercial rate of interest for their money. Cam has paid a rate about half a percent lower that a home interest rate and probably much less that Bank Bridging finance.

It was fully disclosed to the AFL and it was shown in the book of accounts and it is a miniscule but important reward to a CEO that has done a wonderful job so far in resurrecting our club's finances.

Loans that are provided to executives of Businesses and Organizations are ok if they are fully disclosed and no harm is done to the lender, this seems to be the case here and I cannot for the life of me see why it is even an issue. The loan is fully secured and will be paid back on time as it is ahead of schedule at the moment.

Some people just like to make an issue out of nothing so let’s not get sucked in to the Caroline Wilson School of muck raking.

[Dee Fan 3,247]

Wilson hasn't insinuated anything in this article - just published facts that I believe we are entitled to know.

How long ago was the loan provided and how long ago did our accoubnts come out?

The facts have been available for quite some time so why bring it up now?

She is muck raking without seemin to.

It's certainly got Cranky in a lather I'm please I'm not on his side of the fence it makes me feel cleaner.

[Radar Detector 1,347]

Whilst I don't have any real issue with the loan, I disagree that the club is getting a commercial rate of interest. It is not a true arms-length deal, as typical commercial loans of this type would attract a margin of at least 2% over a base rate of about 5.2% for two years.

That said, the club describe it as an investment in one of their key people which is important in retaining quality employees like Cameron. The loan is therefore not worth all the fuss Caroline Wilson is trying to stir up.

[buddha82 12]

Completely agree with RobbieF. Non-issue as far as I'm concerned.

[Guest DeesPower]

Just came across this, $140,000 loan for Schwab on The Age website. I don't have a problem with it, just interested to hear others thoughts on it, and presumed it may be of interest.

If this is part of his salary package then I have no problem at all. Cam Schwab is an outstanding CEO and in a competitive market we need to pay what it takes to get and retain the best. In a competition regulated to even it up, it is more and more the non playing things which clubs will concentrate on to get an advantage. As we become more successful, you can bet that other clubs will be looming at our staff to see if they can be poached.

Frankly I think these details should be between the club and its employees - I don't see why supporters need to know these details.

Edited March 29, 2011 by DeesPower

[rpfc 28,433]

Doesn't look great.

But having said that - helping staff with loans is what companies are able to do (and used to do quite a bit).

Cam wanted some quick cash at a decent rate.

We want to keep Cam.

We wanted it secured.

Meh.

If the worst happens we can just garnish his salary...

[Kento80 83]

Frankly I think these details should be between the club and its employees - I don't see why supporters need to know these details.

Well clearly we help, quite considerably, the clubs financial position. And I don't mean by purchases such as guernseys etc, but ongoing memberships, debt demolition campaign and so on. The foundation heroes (of which there were more than 300) each contributed $5k and some much, much more. But in a way even though I just have my membership, it is just as valuable because it is more than I can afford. But these constant contributions mean that we do need to know these details, deserve to know these details, because we deserve to know that the Club (board, administrators) are using the money responsibly. In this case, I think they are ok, but it is a grey area relating to good corporate governance. I think that CS has done an amazing job and deserves the trust of the Board and members, but there is no question in my mind as to our right to know, or question for that matter.

[Rhino Richards 1,467]

There is a difference between a Bank Housing loan rate over say 15 years and a short term Bank rate over say 2 years, the difference in interest rate is usually substantial. The club lent the money to Cam on a rate of 6.2% which is marginally higher than they would get from the Bank on Term Deposit. The Club has not lost out on the deal as they continue to get a commercial rate of interest for their money. Cam has paid a rate about half a percent lower that a home interest rate and probably much less that Bank Bridging finance.

It was fully disclosed to the AFL and it was shown in the book of accounts and it is a miniscule but important reward to a CEO that has done a wonderful job so far in resurrecting our club's finances.

Loans that are provided to executives of Businesses and Organizations are ok if they are fully disclosed and no harm is done to the lender, this seems to be the case here and I cannot for the life of me see why it is even an issue. The loan is fully secured and will be paid back on time as it is ahead of schedule at the moment.

The home loan rate over 15 years is irrelevant for this purpose on the basis of term and security. In addition, the relevant comparison is what rate the banks would have issued the loan at back last year and what the club did it all.

Any difference on the interest rate is a fringe benefit to the employee and the tax payable by the club. There is no advantage. Related party loans are an inappropriate way to reward executives. I cant think of any public company with a high profile these days that would do this. And it is not the purpose of the Club to finance executives with loans otherwise we should get John Symonds and Mark Bouris on the Board. If the Club is getting a lower rate of interest than would be charged by the bank then it is not "commercial" and not commensurate with the market risk.

If this is part of his salary package then I have no problem at all. Cam Schwab is an outstanding CEO and in a competitive market we need to pay what it takes to get and retain the best. In a competition regulated to even it up, it is more and more the non playing things which clubs will concentrate on to get an advantage. As we become more successful, you can bet that other clubs will be looming at our staff to see if they can be poached.

Frankly I think these details should be between the club and its employees - I don't see why supporters need to know these details.

You dont build related party loans into salary packages. Its poor business ethics and is tax neutral for the employee and employer. There should be better and more transparent ways to do this arrangement. The club should not be in the arena to provide employee finance.

Supporters may not have right to know but hell members sure do.

Doesn't look great.

But having said that - helping staff with loans is what companies are able to do (and used to do quite a bit).

Cam wanted some quick cash at a decent rate.

We want to keep Cam.

We wanted it secured.

Meh.

If the worst happens we can just garnish his salary...

Agree it doesn't look great at all. Companies dont give out staff loans anymore particularly football clubs

We should have increased his salary if we wanted to give him a benefit.