Or 2% - in conclusion they are betting on a falling GBP when GBP is historically low to justify this loan.
It means they are betting on the GBP strengthening, since a stronger Pound Sterling means the exchange loss would be greater than the fixed rate they have now.
If GBP is strengthening the tax money in the future would be worth more and they have to convert less USD to GBP in the future.
Now with a weak GBP they would get the money conversion cheap. Instead of this they take away the strengthened Tax money and pay for GBP in the GBP now (due loan) so at the moment they trade GBP for GBP. But when it is strengthening every GBP they pay over time (due fixed rates) will be more expensive. (though the tax money will be paid in the future but the margin went down)
With this tactic they missed the window to invest USD to GBP because you'll never get that much GBP for USD than now (for the case that GBP gets stronger).
To make this loan financially profitable they need the GBP to go down further if it raises the money conversation would be more expensive in the future. You would be right if the loan was in USD then you want GBP to raise in the future but this is not the case.
Tax isn't my forte, so I'm not following your logic on the tax piece. If we are dealing with a loan in GBP, the buying power will be the same as the tax credit received in GBP. F42 is getting injected with USD. If the GBP strengthens, then it costs more USD to send money over to F42. Since you have a fixed rate loan on money you will receive in the near future in GBP, you bypass that additional cost. If the Pound weakens, then it's cheaper to transfer cash to F42, which could potentially be less of a loss than the cost of the interest on the loan.
If the exhange rate weakens, then the loan was a bad investment. If the exchange rate strengthens, they win out.
I don't think "buying power" means what you think it means.
Are you really claiming that a certain amount of GBP today has the same buying power as the same figure 3 months down the road in an economy where the GBP is stronger?
Let's take a look at this recent trend, courtesy of Derek Smart (I'm sorry, try not to get a reaction):
"Our UK companies are entitled to a Government Game tax credit rebate which we earn every month on the Squadron 42 development. These rebates are payable by the UK Government in the fall of the next following year when we file our tax returns. Foundry 42 and its parent company Cloud Imperium Games UK Ltd. have elected to partner with Coutts, a highly regarded, very selective, and specialized UK banking institution, to obtain a regular advance against this rebate, which will allow us to avoid converting unnecessarily other currencies into GBP. We obviously incur a significant part of our expenditures in GBP while our collections are mostly in USD and EUR."
So... they collect in USD and EUR, while their overhead is in GBP. Given that it looks like GBP is trending up over the past month or two, if this continues then it means one would get more GBP per USD today than 90 days from now. According to Ortwin, F42 wants to avoid converting other currencies into GBP. Remember, they are a UK company so their rebate is in GBP.
If the loan was in USD, and they will be repaying this 90 days from now from earnings in GBP, then yes it would make absolute sense to take it given GBP is trending up. However, it looks like this is the opposite of what is occurring, given Coutts is a UK bank. You say "F42 is getting injected with USD." Source, please?
Otherwise, the most reasonable answer for taking a loan like this would be to address cash flow problems, not "smart money management".
The USD injection claim is straight from their financial statements. They had $3MM of profit (Note 5), but the bulk of their activity ($5.7MM) was from RSI, which is American (Note 11).
If you have a 90 day month time frame, yes it looks like the Pound is weakening. If you take it over the past year, though, it's crazy volatile and even strengthened significantly in April, so a 90 day graph is incredibly misleading (Which is naturally why Smart latched onto it).
Notice the sharp downturn in the graph and the jagged performance over the past few months since then. Of course they don't want to be converting anything in GBP right now. This isn't about profit on exchange rates, it's about managing risk.
You could be right.
This is getting incredibly confusing, but I think Dr. Smart may have had the chart flipped:
As you say, the GBP is weakening vs USD in the most recent trend, not strengthening. In this scenario, taking a loan in GBP makes sense to me (I'd prefer to pay this back via earnings in USD 90 days from now).
...again, though, who knows what the timeframe is, and maybe it's more about risk management than prospecting, as you say.
Now you have it. Don't feel bad, this is high-level finance. I'm an accountant doing this every day, and even I have to sit with my bosses and figure out what the hell the finance people are up to sometimes. You'd be amazed at how complex some of these debt deals can get even without having to deal with foreign exchange.
Or 2% - in conclusion they are betting on a falling GBP when GBP is historically low to justify this loan.
It means they are betting on the GBP strengthening, since a stronger Pound Sterling means the exchange loss would be greater than the fixed rate they have now.
If GBP is strengthening the tax money in the future would be worth more and they have to convert less USD to GBP in the future.
Now with a weak GBP they would get the money conversion cheap. Instead of this they take away the strengthened Tax money and pay for GBP in the GBP now (due loan) so at the moment they trade GBP for GBP. But when it is strengthening every GBP they pay over time (due fixed rates) will be more expensive. (though the tax money will be paid in the future but the margin went down)
With this tactic they missed the window to invest USD to GBP because you'll never get that much GBP for USD than now (for the case that GBP gets stronger).
To make this loan financially profitable they need the GBP to go down further if it raises the money conversation would be more expensive in the future. You would be right if the loan was in USD then you want GBP to raise in the future but this is not the case.
Tax isn't my forte, so I'm not following your logic on the tax piece. If we are dealing with a loan in GBP, the buying power will be the same as the tax credit received in GBP. F42 is getting injected with USD. If the GBP strengthens, then it costs more USD to send money over to F42. Since you have a fixed rate loan on money you will receive in the near future in GBP, you bypass that additional cost. If the Pound weakens, then it's cheaper to transfer cash to F42, which could potentially be less of a loss than the cost of the interest on the loan.
If the exhange rate weakens, then the loan was a bad investment. If the exchange rate strengthens, they win out.
I don't think "buying power" means what you think it means.
Are you really claiming that a certain amount of GBP today has the same buying power as the same figure 3 months down the road in an economy where the GBP is stronger?
Let's take a look at this recent trend, courtesy of Derek Smart (I'm sorry, try not to get a reaction):
"Our UK companies are entitled to a Government Game tax credit rebate which we earn every month on the Squadron 42 development. These rebates are payable by the UK Government in the fall of the next following year when we file our tax returns. Foundry 42 and its parent company Cloud Imperium Games UK Ltd. have elected to partner with Coutts, a highly regarded, very selective, and specialized UK banking institution, to obtain a regular advance against this rebate, which will allow us to avoid converting unnecessarily other currencies into GBP. We obviously incur a significant part of our expenditures in GBP while our collections are mostly in USD and EUR."
So... they collect in USD and EUR, while their overhead is in GBP. Given that it looks like GBP is trending up over the past month or two, if this continues then it means one would get more GBP per USD today than 90 days from now. According to Ortwin, F42 wants to avoid converting other currencies into GBP. Remember, they are a UK company so their rebate is in GBP.
If the loan was in USD, and they will be repaying this 90 days from now from earnings in GBP, then yes it would make absolute sense to take it given GBP is trending up. However, it looks like this is the opposite of what is occurring, given Coutts is a UK bank. You say "F42 is getting injected with USD." Source, please?
Otherwise, the most reasonable answer for taking a loan like this would be to address cash flow problems, not "smart money management".
The USD injection claim is straight from their financial statements. They had $3MM of profit (Note 5), but the bulk of their activity ($5.7MM) was from RSI, which is American (Note 11).
If you have a 90 day month time frame, yes it looks like the Pound is weakening. If you take it over the past year, though, it's crazy volatile and even strengthened significantly in April, so a 90 day graph is incredibly misleading (Which is naturally why Smart latched onto it).
Notice the sharp downturn in the graph and the jagged performance over the past few months since then. Of course they don't want to be converting anything in GBP right now. This isn't about profit on exchange rates, it's about managing risk.
You could be right.
This is getting incredibly confusing, but I think Dr. Smart may have had the chart flipped:
As you say, the GBP is weakening vs USD in the most recent trend, not strengthening. In this scenario, taking a loan in GBP makes sense to me (I'd prefer to pay this back via earnings in USD 90 days from now).
...again, though, who knows what the timeframe is, and maybe it's more about risk management than prospecting, as you say.
This loan makes more sense when its weakening
When you have cake, it is not the cake that creates the most magnificent of experiences, but it is the emotions attached to it. The cake is a lie.
Can we all just agree it's business as usual with CIG where they don't tell backers important things until after the shitstorm has started and then it's usually cryptic messages and damage control?
Can we all just agree it's business as usual with CIG where they don't tell backers important things until after the shitstorm has started and then it's usually cryptic messages and damage control?
lol
The usual suspects would have blown this out of proportion, independent of them updating or not the Backers before or after doing this.
Can we all just agree it's business as usual with CIG where they don't tell backers important things until after the shitstorm has started and then it's usually cryptic messages and damage control?
lol
The usual suspects would have blown this out of proportion, independent of them updating or not the Backers before or after doing this.
That's why you don't pay attention to the usual suspects (aka Derek Smart) or is CIG so afraid of him writing a blog about them that they think silence is the way to go?
That's why you don't pay attention to the usual suspects (aka Derek Smart) or is CIG so afraid of him writing a blog about them that they think silence is the way to go?
Oh it's not even him, those who get quoted, that is some journalists, only takes one and everyone reports the same thing, here it even lied within a misread of the available information (due copy/pasting neogaf).
What CIG says is irrelevant, because this sort of speculative sensationalism will still be spread around anyway, and we all know this is how it works hence why companies are closed by default.
That's why you don't pay attention to the usual suspects (aka Derek Smart) or is CIG so afraid of him writing a blog about them that they think silence is the way to go?
Oh it's not even him, those who get quoted, that is some journalists, only takes one and everyone reports the same thing (and we seen this happening here).
What CIG says is irrelevant, because this sort of speculative sensationalism will still be spread around anyway, and we all know this is how it works hence why companies are closed by default.
CIG isn't closed though that's the point. They made a promise to be the most open development ever and they need to stick to it not only when it benefits them.
Like I said a while ago the easiest way to stop most of the speculation was to issue a statement when the deal with the bank was finalized. See how fast the sites reporting issued apologies? They could have avoided the speculative shitstorm and damage to their image by doing what they promised
CIG isn't closed though that's the point. They made a promise to be the most open development ever and they need to stick to it not only when it benefits them.
Yeah, open-development, not an open-company.
This is just legal matters, the same way they filed their financials for FQ42 and CIG UK. The only change with one previous statement would make they do the same toned articles with CIG's statement linked on them.
CIG isn't closed though that's the point. They made a promise to be the most open development ever and they need to stick to it not only when it benefits them.
Yeah, open-development, not an open-company.
This is just legal matters, the same way they filed their financials for FQ42 and CIG UK.
You'd be plainly wrong into thinking the speculative shitstorm wouldn't have happened, only change would be they would do the same toned articles with CIG's statement linked on them.
Is this money to be used for game dev? If you answered yes then a statement would go a long way but we know that's not CIG's way and they prefer to keep everything in the dark until its too late.
And you'd be plainly wrong to assume it would have. I'm not talking about a statement from the idiot lawyer but something that doesn't sound like damage control from someone who puts it in layman terms for everyone so that there is very little wiggle room for speculation.
And you'd be plainly wrong to assume it would have.
I plainly assume so, that's how it works, a statement gets more media attention to the situation than more localized situations that spread until they are put out, even so, once the statement is made it's when most mainstream media will report on it (not on the statement but the situation + mention to their statement), spreading it even more.
The reality of click-bait and sensationalism all over makes it so. It's like media outlets reporting on accidents, whoever reports the highest number of victims "wins" (audience).
And you'd be plainly wrong to assume it would have.
I plainly assume so, that's how it works, a statement gets more media attention to the situation than more localized situations that spread until they are put out, even so, once the statement is made it's when most mainstream media will report on it (not on the statement but the situation + mention to their statement), spreading it even more.
The reality of click-bait and sensationalism all over makes it so. It's like media outlets reporting on accidents, whoever reports the highest number of victims "wins" (audience).
And your assuming things to be facts again when you are just speculating at this point.
The whole point of this is to be the ones to tell your fans that you are doing X to help Y which will benefit Z in the long run and not letting them hear it from media sources who don't have all the details and are speculating on what might be happening
spankybus said: "Seriously, it's always the same with SC threads. Haters vs shills."
Sometimes, yes, but often there are important differences which may be hard to notice for the untrained eye (and people without academic training for analyzing sentence logic). One of the most important factors is that haters damage the project by scaring away potential backers/customers with presenting (negative) "facts", which they present as truth, even if it's only based on their own opinions and speculations.
This is also bad argumentation technique, of course, but lots of people take the bite anyway - sack and lace. This is so common that it's the normal out there. And it's sad, because they fight dirty. If they'd stick to the facts then we wouldn't have this "war" between haters and fans.
Just today I caught one with this technique. And there are hundreds, even thousands of similar messages I've simply ignored and not replied to, because it's useless. You can't argue with someone who fight dirty. Most people will listen to him, and not someone who present real facts in a calm and logic way.
spankybus said: "Seriously, it's always the same with SC threads. Haters vs shills."
Sometimes, yes, but often there are important differences which may be hard to notice for the untrained eye (and people without academic training for analyzing sentence logic). One of the most important factors is that haters damage the project by scaring away potential backers/customers with presenting (negative) "facts", which they present as truth, even if it's only based on their own opinions and speculations.
Doesn't that mean, that fans damage the potential backers/customers by "presenting (negative) "facts", which they present as truth, even if it's only based on their own opinions and speculations"
spankybus said: "Seriously, it's always the same with SC threads. Haters vs shills."
Sometimes, yes, but often there are important differences which may be hard to notice for the untrained eye (and people without academic training for analyzing sentence logic). One of the most important factors is that haters damage the project by scaring away potential backers/customers with presenting (negative) "facts", which they present as truth, even if it's only based on their own opinions and speculations.
Doesn't that mean, that fans damage the potential backers/customers by "presenting (negative) "facts", which they present as truth, even if it's only based on their own opinions and speculations"
The fans are more likely to fire off info directly from CIG's mouth, where as detractors spout off cherry picked info from other sources, largely out of context or filling in a whole lot of gaps with speculation. And one or two of those sources have a verifiable axe to grind with CR.
The real part where fans start to turn away the potential backers is when the urge to defend something that they have money tied up in out weights the "is this a good idea" process.
spankybus said: "Seriously, it's always the same with SC threads. Haters vs shills."
Sometimes, yes, but often there are important differences which may be hard to notice for the untrained eye (and people without academic training for analyzing sentence logic). One of the most important factors is that haters damage the project by scaring away potential backers/customers with presenting (negative) "facts", which they present as truth, even if it's only based on their own opinions and speculations.
This is also bad argumentation technique, of course, but lots of people take the bite anyway - sack and lace. This is so common that it's the normal out there. And it's sad, because they fight dirty. If they'd stick to the facts then we wouldn't have this "war" between haters and fans.
Just today I caught one with this technique. And there are hundreds, even thousands of similar messages I've simply ignored and not replied to, because it's useless. You can't argue with someone who fight dirty. Most people will listen to him, and not someone who present real facts in a calm and logic way.
Starts with good argument and then you veer into this is why haters are bad territory and complete miss the other side of the argument. Oh well it was a good attempt.
spankybus said: "Seriously, it's always the same with SC threads. Haters vs shills."
Sometimes, yes, but often there are important differences which may be hard to notice for the untrained eye (and people without academic training for analyzing sentence logic). One of the most important factors is that haters damage the project by scaring away potential backers/customers with presenting (negative) "facts", which they present as truth, even if it's only based on their own opinions and speculations.
Doesn't that mean, that fans damage the potential backers/customers by "presenting (negative) "facts", which they present as truth, even if it's only based on their own opinions and speculations"
The fans are more likely to fire off info directly from CIG's mouth, where as detractors spout off cherry picked info from other sources, largely out of context or filling in a whole lot of gaps with speculation. And one or two of those sources have a verifiable axe to grind with CR.
The real part where fans start to turn away the potential backers is when the urge to defend something that they have money tied up in out weights the "is this a good idea" process.
Problem is sometimes the fans repeating the info that is coming from CIG's mouth can contradict info they have given in the past. When it's pointed out they will come up with any number of excuses as to why it's true.
Aside from that though I would say the post is spot on
spankybus said: "Seriously, it's always the same with SC threads. Haters vs shills."
Sometimes, yes, but often there are important differences which may be hard to notice for the untrained eye (and people without academic training for analyzing sentence logic). One of the most important factors is that haters damage the project by scaring away potential backers/customers with presenting (negative) "facts", which they present as truth, even if it's only based on their own opinions and speculations.
Doesn't that mean, that fans damage the potential backers/customers by "presenting (negative) "facts", which they present as truth, even if it's only based on their own opinions and speculations"
Fans have generally little interest in presenting negative facts (although sometimes it's done anyway when needed) or "facts" (which are not real facts), because haters fill that role more than enough. So fans don't scare away potential backers - except those who characterize fans as "White Knights", "zealots", etc. and the community as "toxic", "church of Christ Roberts", and so on. But those are really not potential backers. They're already planted firmly outside the fence. It's the more open minded people, genuinly seeking fact information about the game, which are scared away by haters.
Personally, I don't want haters to play the game at all. We don't need those type of backers. They'll only stir up trouble in the game, since they have no interest in the game itself.
Edit: To be on topic at last - I see no problem with the loan Foundry 42 has taken up. On the contrary, it seems like a logical and smart thing to do.
spankybus said: "Seriously, it's always the same with SC threads. Haters vs shills."
Sometimes, yes, but often there are important differences which may be hard to notice for the untrained eye (and people without academic training for analyzing sentence logic). One of the most important factors is that haters damage the project by scaring away potential backers/customers with presenting (negative) "facts", which they present as truth, even if it's only based on their own opinions and speculations.
Doesn't that mean, that fans damage the potential backers/customers by "presenting (negative) "facts", which they present as truth, even if it's only based on their own opinions and speculations"
Fans have generally little interest in presenting negative facts (although sometimes it's done anyway when needed) or "facts" (which are not real facts), because haters fill that role more than enough. So fans don't scare away potential backers - except those who characterize fans as "White Knights", "zealots", etc. and the community as "toxic", "church of Christ Roberts", and so on. But those are really not potential backers. They're already planted firmly outside the fence. It's the more open minded people, genuinly seeking fact information about the game, which are scared away by haters.
Personally, I don't want haters to play the game at all. We don't need those type of backers. They'll only stir up trouble in the game, since they have no interest in the game itself.
Edit: To be on topic at last - I see no problem with the loan Foundry 42 has taken up. On the contrary, it seems like a logical and smart thing to do.
You're going to get people who are in the game to stir the pot just for the hell of it so might as well start prepping yourself now lol.
From an outsider looking in who admittedly has no experience in these types of loans it seems rather odd to put up the entire studios assets, everything it has made and will make in the future as well as the tax credit from the government for what is essentially an advance on the tax credits.
And yes I realize all of that is moot as long as they don't default on the loan itself but in my head (and others I would assume by this thread alone) it throws up red flags when that much collateral is thrown into the pot.
You're going to get people who are in the game to stir the pot just for the hell of it so might as well start prepping yourself now lol.
From an outsider looking in who admittedly has no experience in these types of loans it seems rather odd to put up the entire studios assets, everything it has made and will make in the future as well as the tax credit from the government for what is essentially an advance on the tax credits.
And yes I realize all of that is moot as long as they don't default on the loan itself but in my head (and others I would assume by this thread alone) it throws up red flags when that much collateral is thrown into the pot.
The collateral is the part that is a huge red flag for me. I mess around with stocks and play with the forex exchanges occasionally. You win some, you lose some. I wouldn't speculate on the Pound dropping further right now. I wouldn't really speculate on it blowing the roof off in the next handful of months either. There is still a lot unresolved on the table with the whole Brexit thing and the initial shock is pretty much over.
Even if I were to speculate, I wouldn't put up my government credit, my main studio, and all the work of my main studio as collateral on a loan. Especially if my only source of income was public crowdsourcing and said credit. I think the core market is fairly well saturated and there are only so many times you can go back to the well. I thought they were already beyond that "only so many times" number though, so I guess we'll see.
Comments
When you have cake, it is not the cake that creates the most magnificent of experiences, but it is the emotions attached to it.
The cake is a lie.
The usual suspects would have blown this out of proportion, independent of them updating or not the Backers before or after doing this.
What CIG says is irrelevant, because this sort of speculative sensationalism will still be spread around anyway, and we all know this is how it works hence why companies are closed by default.
Like I said a while ago the easiest way to stop most of the speculation was to issue a statement when the deal with the bank was finalized. See how fast the sites reporting issued apologies? They could have avoided the speculative shitstorm and damage to their image by doing what they promised
This is just legal matters, the same way they filed their financials for FQ42 and CIG UK. The only change with one previous statement would make they do the same toned articles with CIG's statement linked on them.
And you'd be plainly wrong to assume it would have. I'm not talking about a statement from the idiot lawyer but something that doesn't sound like damage control from someone who puts it in layman terms for everyone so that there is very little wiggle room for speculation.
The reality of click-bait and sensationalism all over makes it so. It's like media outlets reporting on accidents, whoever reports the highest number of victims "wins" (audience).
The whole point of this is to be the ones to tell your fans that you are doing X to help Y which will benefit Z in the long run and not letting them hear it from media sources who don't have all the details and are speculating on what might be happening
Seriously, it's always the same with SC threads. Haters vs shills.
Surely CIG has done something else to wattarnt a new thread to fight over by now?
Frank 'Spankybus' Mignone
www.spankybus.com
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and seeing how 3.0 is pushed back to august (for now) there's gonna be a lot of horse paste around here
Sometimes, yes, but often there are important differences which may be hard to notice for the untrained eye (and people without academic training for analyzing sentence logic). One of the most important factors is that haters damage the project by scaring away potential backers/customers with presenting (negative) "facts", which they present as truth, even if it's only based on their own opinions and speculations.
This is also bad argumentation technique, of course, but lots of people take the bite anyway - sack and lace. This is so common that it's the normal out there. And it's sad, because they fight dirty. If they'd stick to the facts then we wouldn't have this "war" between haters and fans.
Just today I caught one with this technique. And there are hundreds, even thousands of similar messages I've simply ignored and not replied to, because it's useless. You can't argue with someone who fight dirty. Most people will listen to him, and not someone who present real facts in a calm and logic way.
Viking
Aside from that though I would say the post is spot on
Personally, I don't want haters to play the game at all. We don't need those type of backers. They'll only stir up trouble in the game, since they have no interest in the game itself.
Edit: To be on topic at last - I see no problem with the loan Foundry 42 has taken up. On the contrary, it seems like a logical and smart thing to do.
Viking
From an outsider looking in who admittedly has no experience in these types of loans it seems rather odd to put up the entire studios assets, everything it has made and will make in the future as well as the tax credit from the government for what is essentially an advance on the tax credits.
And yes I realize all of that is moot as long as they don't default on the loan itself but in my head (and others I would assume by this thread alone) it throws up red flags when that much collateral is thrown into the pot.
Even if I were to speculate, I wouldn't put up my government credit, my main studio, and all the work of my main studio as collateral on a loan. Especially if my only source of income was public crowdsourcing and said credit. I think the core market is fairly well saturated and there are only so many times you can go back to the well. I thought they were already beyond that "only so many times" number though, so I guess we'll see.