Following QPR’s spending spree since their promotion to the Premier League, they’ve sacked and paid off two coaches (Neil Warnock and Mark Hughes). The current coach Harry Redknapp arrived at the club in November 2012 and admitted some players were overpaid.
That notwithstanding during the January transfer window, the west London club twice broke their transfer record with deals for Loïc Rémy, £8m, and Chris Samba, £15m, in an attempt to preserve their top-flight status. Fears have grown that the club will face serious financial difficulty when they are relegated to the Championship at the end of this month.
When the club is relegated, they will be forced to offload many of their top players in order to reduce the burden of their payroll.
There is a simple lesson to learn from this, if you’re in a hole, stop digging.
Don’t borrow your way out of a debt problem
If you’re in debt, don’t make the situation worse by borrowing your way out of debt.
The Bible does not prohibit debt. However, everywhere debt is mentioned in the Bible, it is discussed in a negative light. One reason for this is because it makes you a servant to the lender, and when you dedicate your time to servicing your debt, you might miss out on total dedication or service to God. Remember the saying in Matthew 6:24, “No one can serve two masters. Either you will hate the one and love the other, or you will be devoted to the one and despise the other. You cannot serve both God and money”?
Proverbs 22:7 says: “The rich rule over the poor, and the borrower is servant to the lender.” When you borrow, you become a servant to a bank, a business, a family member, a friend – whoever you borrowed from. When you borrowed, you entered into a contractual agreement. There is always a condition, and if you fail to meet the condition, it is a breach of contract. Remember, a contract occurs when there is both offer and an acceptance.
A breach of a contract technically makes you a servant to the lender.
Throughout the 2012/13 season, QPR has always been adrift of safety in the Premier League by several points. However, their strategy for getting out of their problem was to spend and borrow more.
Premier League clubs’ spending in January 2013 topped £120 million. QPR emerged as the biggest spenders, splashing out a total of £22 million.
The scale of the challenge facing QPR was published in their financial reports for last season, which show their wage bill doubled even before the latest spending spree. The accounts, for the year ending 31 May 2012, show that the club’s wage bill almost doubled from £27.6m to £58.5m in their first year back in the Premier League under Neil Warnock and Mark Hughes.
It is reported that there was a loss of £22.6m and debts jumped 57% to nearly £90m according to the accounts, which do not include the club’s latest spending on new players.
QPR chairman Tony Fernandes admitted that spending needed to be “closely monitored and controlled”.
QPR is partly owned by Mr Fernandes, and the Malaysian business tycoons Kamarudin Bin Meranun and Ruben Emir Gnanalingam, who have a combined 66% stake. The remainder belongs to the Mittal family.
Do not accumulate long-term debt.
The longest debt in the Bible was about seven years. During the year of remission, the seventh year, the Jews were instructed to release their fellows from any indebtedness.
Well… Barclays, RBS, Lloyds, HSBC and other financial institutions are no Jews, and they do not intend to release any debtor after seven years, so you must borrow wisely if you have to.
Deuteronomy 15:1-2 says: “At the end of every seven years you must cancel debts. This is how it is to be done: Every creditor shall cancel the loan he has made to his fellow Israelite. He shall not require payment from his fellow Israelite or brother, because the LORD’s time for cancelling debts has been proclaimed.”
Thus, the only debts that could exceed seven years were those made to non-Jews or from non-Jews. However, I’d encourage you to use this as the maximum length of time you should borrow from anyone. Even if you have to take a 15-year loan, have a plan to pay it off in 7 years or less.
From frying pan to fire
Jumping from the frying pan into the fire is an idiom with the general meaning of escaping a bad situation for a worse situation. In a folktale, a fish was caught and put into a pan. He struggled to escape and just ended up in the fire. Can we say QPR was over spending to avoid relegation, and as a result they might find themselves in a burning financial problem.
If you borrow more than you can afford to pay, you’ve jumped from frying pan to fire.
Psalm 37:21 says: “The wicked borrow and do not repay, but the righteous give generously.”
If you don’t want to be counted among the “wicked,” you must repay any debt you owe. It really doesn’t matter if the circumstances are beyond your control. If you get into debt, you’re stuck with it. Ecclesiastes 5:5 says: “It is better not to vow than to make a vow and not fulfill it.” This is why the Bible discourages borrowing.
How to borrow
If you do borrow, you should do so only if you have a guaranteed way to pay it back.
For instance, if you borrow to buy a car, arrange the loan so that if you can’t pay for some reason, the lender can take back the car and you will be free from your debt.
How not to borrow
Some lenders today might seek for a surety in order to lend money to you.
If you get someone else to be your surety, you must be sure you can pay back the borrowed sum in the future.
If you counter-sign a loan for another person, make sure you are willing and able to pay the whole amount for the person. Otherwise, do not do it.
Proverbs 17:18 says: “A man lacking in judgment strikes hands in pledge and puts up security for his neighbour.”
It was reported recently that, for the first time since Fernandes became majority owner of QPR in 2011, they had borrowed a significant sum of money from a bank, in the form of a £15m loan from Barclays in Hong Kong, charged against all the club’s assets. With the club already roughly £90m in debt, the news raised fears among QPR fans that their probable upcoming relegation will prove financially disastrous.
Do the next thing right
Never borrow more to get out of a debt problem. However, If it’s possible to borrow more cheaply elsewhere to replace existing borrowing, then this can provide a huge boost, as lower interest rates mean more of your cash goes towards repaying the actual debt rather than just servicing the interest. Those with big debts may save thousands a year in interest by being more savvy with their borrowing.
If you’re in a mess, do the next thing right. Don’t jump from frying pan to fire. If you’re in a hole, stop digging.