What’s the consensus on Gibson then?

[indeedido]

Are there no potential tax advantages for him to run the club in the way that he does?

Yes there are.
MFC, Rockliffe Hall and Bulkhaul are Operating Companies within the Gibson O'Neill Group of Companies.
Group configuration allows the losses of one Operating Company to be offset against the profits of another, to reduce overall tax paid.
MFC's losses reduce Group profit and reduce the tax burden as a result.

The MFC Published Accounts show that for every year the club made a loss, there is an offset of tax. In year to June 30th 2022, the club lost £19.5m pre tax, yet show a £4.1m tax benefit, leaving Loss After Tax at £15.3m.
This has happened every year since relegation in 2009. Every year that is except 2018 and 2019.
In these years the Club actually had a Tax charge in the P&L.
In 2019 the club actually made a small profit and incurred a small tax charge.
In 2018 they made a loss and still paid a small tax charge.
In 2017 the club made a profit and yet received a large tax benefit too.
MFC Operating Company has benefited by over £40m through this offsetting since 2009.
I've posted before that Tax is very complicated and far from my comfort zone. Very specialist people are paid very highly to optimise Tax.

Over all it is clear that MFC's losses are very real and painful, but are offset for tax purposes, to reduce the pain. It seems clear that Group also direct Tax benefit towards the club.

 

[changingman]

Corporate restructuring is not my strong suit, but would there be potential to restructure the club as a sub-division of Bulkhaul and sell the lot? Presumably board composition is similar?

A new owner could potentially transfer the debt and carve out Bulkhaul? The gains of selling Bulkhaul would go some way to off-setting the total purchase price?

 

[indeedido]

Corporate restructuring is not my strong suit, but would there be potential to restructure the club as a sub-division of Bulkhaul and sell the lot? Presumably board composition is similar?

A new owner could potentially transfer the debt and carve out Bulkhaul? The gains of selling Bulkhaul would go some way to off-setting the total purchase price?

It is absolutely not mine either.
Gibson O'Neill is a Group of primarily 3 Operating Companies (Bulkhaul is already a Group covering its international bases).
Bulkhaul is very valuable standalone business. It is extremely stable, highly profitable and a cash cow.
I'm not at all sure why Mike and Steve would not want to own this excellent business. Certainly the value they could raise from its sale would dwarf the loss MFC would have represented, but not sure that is where they are at.
I'm sure in Gibson's mind, he will ideally want the MFC Undertakings to his Group repaid by a new owner and something also paid for the 100% equity they have.
It may be that he is prepared to write off some of the debt to move the club on to a "worthy" owner. I think he would have to write most if not all of it off.
But I don't think he has to re-structure and sell Bulkhaul in order to do so.
Others will certainly know better.

 

[changingman]

It is absolutely not mine either.
Gibson O'Neill is a Group of primarily 3 Operating Companies (Bulkhaul is already a Group covering its international bases).
Bulkhaul is very valuable standalone business. It is extremely stable, highly profitable and a cash cow.
I'm not at all sure why Mike and Steve would not want to own this excellent business. Certainly the value they could raise from its sale would dwarf the loss MFC would have represented, but not sure that is where they are at.
I'm sure in Gibson's mind, he will ideally want the MFC Undertakings to his Group repaid by a new owner and something also paid for the 100% equity they have.
It may be that he is prepared to write off some of the debt to move the club on to a "worthy" owner. I think he would have to write most if not all of it off.
But I don't think he has to re-structure and sell Bulkhaul in order to do so.
Others will certainly know better.

Good point. I think either way, there's a way out of this if he so desires (and the current structure would suggest he doesn't) but it will certainly keep the lawyers and accountants in money for a while when he does!

 

[h_m_boro]

So how does converting "debt" to "equity" work?

Assume it will never be done due to the tax offsets, so Boro owing £142m is very bad for the club, good for the Gibson O'Neil/Bulkhaul books.

Cynically, apart from being a lifelong fan, Gibson has Boro there as a nice little (loss) earner hence no real need for the club to be run as dynamically as others - especially the off pitch/commercial side. Which, to be frank, is amateur hour and has been for some time.

No dig at Gibson btw......although he does seem to have lost the plot the last 4-5 years

 

[changingman]

So how does converting "debt" to "equity" work?

Assume it will never be done due to the tax offsets, so Boro owing £142m is very bad for the club, good for the Gibson O'Neil/Bulkhaul books.

Cynically, apart from being a lifelong fan, Gibson has Boro there as a nice little (loss) earner hence no real need for the club to be run as dynamically as others - especially the off pitch/commercial side. Which, to be frank, is amateur hour and has been for some time.

No dig at Gibson btw......although he does seem to have lost the plot the last 4-5 years

It's tricky though isn't it. Presumably the main way to "make money" from the club is via the purchase/sale of assets (players). Even ticket sales must be a small income comparably, and other revenue streams even further down.

Re: the £10m loss YOY, it appears our current plan is to recoup (at least some of) that through the smart purchase and sale of players - buy low, sell high(er).

It certainly puts the decision not to invest in loan signings into perspective (which is effectively all sunk cost UNLESS you get promoted, but it's a massive financial gamble).

 

[Soutra]

So how does converting "debt" to "equity" work?

Assume it will never be done due to the tax offsets, so Boro owing £142m is very bad for the club, good for the Gibson O'Neil/Bulkhaul books.

Cynically, apart from being a lifelong fan, Gibson has Boro there as a nice little (loss) earner hence no real need for the club to be run as dynamically as others - especially the off pitch/commercial side. Which, to be frank, is amateur hour and has been for some time.

No dig at Gibson btw......although he does seem to have lost the plot the last 4-5 years

Converting debt to equity is just buying more shares in the same company. If you were the owner of a business and had loaned it £10 million, you could convert your debt to equity and buy another 10 million £1 shares. Unfortunately, in MFC's case the value of the company doesn't go up, so all you would be doing is diluting the value of the shares you already own.

Tax offsets - that only saves a small percentage of the loss that MFC incurs (roughly 20%), while GO'N has to make good the loss. It's really inefficient, it costs far more than you get back in reduced tax. If the MFC loss gets too big it will reduce the value of the parent company.

I'm sure Steve Gibson would love the club to be dynamic but it's a fact of life that footballers are paid far too much, so MFC is going to lose money as long as it is in the Championship.

In what way is the commercial side poorly run? It seems pretty professional to me, for a club languishing at the bottom of the Championship.

 

[h_m_boro]

Converting debt to equity is just buying more shares in the same company. If you were the owner of a business and had loaned it £10 million, you could convert your debt to equity and buy another 10 million £1 shares. Unfortunately, in MFC's case the value of the company doesn't go up, so all you would be doing is diluting the value of the shares you already own.

Tax offsets - that only saves a small percentage of the loss that MFC incurs (roughly 20%), while GO'N has to make good the loss. It's really inefficient, it costs far more than you get back in reduced tax. If the MFC loss gets too big it will reduce the value of the parent company.

I'm sure Steve Gibson would love the club to be dynamic but it's a fact of life that footballers are paid far too much, so MFC is going to lose money as long as it is in the Championship.

In what way is the commercial side poorly run? It seems pretty professional to me, for a club languishing at the bottom of the Championship.

Cheers for that

Is the commercial side of the club maximising revenue? Could the stands be sponsored for example, could we look to increase matchday revenue - how do we get more fans in. More fans, more money. Why is the club shop so sh*t? I'm not a business person, not in marketing but a business has to maximise revenue however they can. From the outside it just seems we are always a bit half ars*d

 

[indeedido]

Converting debt to equity is just buying more shares in the same company. If you were the owner of a business and had loaned it £10 million, you could convert your debt to equity and buy another 10 million £1 shares. Unfortunately, in MFC's case the value of the company doesn't go up, so all you would be doing is diluting the value of the shares you already own.

Tax offsets - that only saves a small percentage of the loss that MFC incurs (roughly 20%), while GO'N has to make good the loss. It's really inefficient, it costs far more than you get back in reduced tax. If the MFC loss gets too big it will reduce the value of the parent company.

I'm sure Steve Gibson would love the club to be dynamic but it's a fact of life that footballers are paid far too much, so MFC is going to lose money as long as it is in the Championship.

In what way is the commercial side poorly run? It seems pretty professional to me, for a club languishing at the bottom of the Championship.

You do mislead folk.
1. Debt to Equity:
If you own 100% of the shares in a business (as Gibson does) then issue and buy £8m of new issue shares, then you have provided £8m of new funding and maintained 100% of the shares. There is no dilution of your ownership. The individual share value is matterless until sale. Other clubs owners are doing this. Gibson last did it in 2016. He could do it (within FFP by £8m per season). It is a conventional way of raising funds.
Once the shares are issues and paid for, the owner owns exactly what they did before but have injected £8m.
For sure Gibson would have nothing more for his £8m, but he could not get that back unless the Club engineered a share buy-back.
When Gibson O'Neill loan MFC the money to continue operating as a Going Concern (which they must as nobody else would) this is funding of course, but the difference is that GON can recall that money. The Group Undertakings are a loan, Equity injection is a gift in this case; both are funding, which is why Kieran Maguire is right to say Gibson has provided a lot of funding and without it the Club could not operate.
There is absolutely nothing to have stopped Gibson injecting equity in rather than loans.

2. Tax Offsets:
If Gibson is going to own and control all 3 businesses (Bulkhaul, MFC and Rockliffe Hall) in the Group then it makes sense for them to be part of a Group (Gibson O'Neill) for tax purposes.
Bulkhaul is a large, excellent, profitable, secure business.
MFC is a terrible, debt laden, loss making business that has massive negative nett value. It needs funding to stay afloat and can't get that externally and couldn't afford to service it even if it could get it.
Rockliffe Hall is a comparatively very small business that has high equity, very small loans from Group and is now washing it's face.

If Gibson wants control over all, then he has no option but to fund MFC from Bulkhaul. Them being in the same Group at least allows him to offset the MFC losses against Bulkhaul/rest of Group profits, for tax purposes.
Of course the losses made are real and do need funding, but the tax offset is not inefficient in any way and is money for free IF he is going to maintain absolute control over all 3.
If he didn't offset, he would simply pay more tax on Bulkhaul profit and still have to cover the MFC losses.

3. Commercial operations:
MFC are not a huge club of course, but the Merchandising sales (not profit) were just £1.8m in the season before last. It is hardly surprising when you can't buy the official kit for large chunks of the year, there is poor availability at peak times, the club shop is the primary outlet and the online offering is so poor.
Sponsorship and other Commercial Income is low. The stadium generates little away from match day.
On match day, the concourse bars and concessions in no way meet demand, not even close.
Controversially maybe, I think they get ticketing revenue pretty good. I think they could welcome more floating fans more often with more creative pricing, and I wouldn't understand even more tickets being given away free as in the GRFZ.
But really, anybody viewing the Commercial side of the club would be hard pressed not to think there should be both better service and higher revenue generated.

 

[Soutra]

You do mislead folk.
1. Debt to Equity:
There is no dilution of your ownership.


2. Tax Offsets:
If Gibson is going to own and control all 3 businesses (Bulkhaul, MFC and Rockliffe Hall) in the Group then it makes sense for them to be part of a Group (Gibson O'Neill) for tax purposes.
Bulkhaul is a large, excellent, profitable, secure business.
MFC is a terrible, debt laden, loss making business that has massive negative nett value. It needs funding to stay afloat and can't get that externally and couldn't afford to service it even if it could get it.
Rockliffe Hall is a comparatively very small business that has high equity, very small loans from Group and is now washing it's face.

If Gibson wants control over all, then he has no option but to fund MFC from Bulkhaul. Them being in the same Group at least allows him to offset the MFC losses against Bulkhaul/rest of Group profits, for tax purposes.
Of course the losses made are real and do need funding, but the tax offset is not inefficient in any way and is money for free IF he is going to maintain absolute control over all 3.
If he didn't offset, he would simply pay more tax on Bulkhaul profit and still have to cover the MFC losses.

3. Commercial operations:
MFC are not a huge club of course, but the Merchandising sales (not profit) were just £1.8m in the season before last. It is hardly surprising when you can't buy the official kit for large chunks of the year, there is poor availability at peak times, the club shop is the primary outlet and the online offering is so poor.
Sponsorship and other Commercial Income is low. The stadium generates little away from match day.
On match day, the concourse bars and concessions in no way meet demand, not even close.
Controversially maybe, I think they get ticketing revenue pretty good. I think they could welcome more floating fans more often with more creative pricing, and I wouldn't understand even more tickets being given away free as in the GRFZ.
But really, anybody viewing the Commercial side of the club would be hard pressed not to think there should be both better service and higher revenue generated.

I didn't say dilution of ownership. I said dilution of the value of the shares. If MFC issues another million shares, to make the total issued (say) 10 million, then the value of each share is diluted by about 10%. Obviously there's no change in the ownership.

Tax offsets - the misconception is that is you have a business in the group that runs at a loss, then you can reduce your tax bill because of the offset losses AND so the group is no worse off. Unfortunately, you have to make good the losses, so the group is worse off.

Commercial Operations - It's easy to criticise the club for not doing this, that or the other. But in reality, reducing ticket prices hasn't really worked in the past has it? And it may antagonize season ticket holders. I'd guess selling MFC stuff, whether it's shirts or hospitality, is quite hard.

 

[Bruce]

TL;dr - "invest" as a shorthand can mean loan or equity and both have pros and cons for the club and the "investor"

As a sole owner it makes no practical difference if you loan the club £10m with no interest repayable, no repayable date and an undertaking not to recall it within the next 12 months vs create 10m new shares and buy them at £1 each. The club gets £10m to spend with no expectation of having to repay it.

Right now the club is technically insolvent because it owes more than it can repay. It isn't cash-flow insolvent because whenever it runs out of cash to pay its bills, Gibson* loans it some more money. If he converts all the loans into equity we're no longer technically insolvent but that didn't matter anyway.

When it comes to sell the club, say for argument's sake there are 64 million shares and debts to Gibson to the value of £180m. Gibson paid a £1/share. For Gibson to get all his money back the new owner has to pay £1 to Gibson for each share and then pay off his debts. Gibson could of course agree to write-off some of his loans or they might agree to keep some on the books and repay them at a future date (say after promotion). So there is plenty of flexibility to do a deal.

If Gibson converted his loans to 180m shares valued at £1 each, the club has no extra money; it has already spent it. The plus side for the club is that Gibson can't demand his money back but he wasn't going to do that anyway. The club now has 240 shares with a paper value of £240m. When it comes to a sale, this actually means there is less flexibility. The owner either has to buy all the shares at £1 each or agree a reduced rate: say 50p per share instead. (Or only buy a controlling stake.)**

My guess is that Gibson is not converting loans to shares for this reason. It means that if he has to sell in the Championship he can negotiate a mix of loans repaid immediately, loans repaid in the future and loans written off. Gibson is a pretty hard-nosed operator and although he is undoubtedly resigned to writing-off some money, he's going to minimise that. If he can't get us promoted but someone else can, then he can potentially recover some loans in the future.

Since Southgate's appointment, Gibson's ownership has been a disaster. He has made bad decisions compounded on bad decisions. He has paid for his bad decisions by being forced into loaning a shed-load of cash into the company but that hasn't helped him make better decisions. As a commercial operation we're also a basket case. He clearly believes there is no demand for Boro merchandise outside of the local area and fairly small diaspora and runs the club on that basis.

The one thing you can say for him is that he has always put his money where his mouth is. While virtually all the debt is to just one man the club is a lot easier to sell because there is a lot of flexibility over what you repay. Gibson is both the club's greatest asset and liability. Asset because we won't go bankrupt while he's around to bankroll us. Liability because his ownership is a disaster and shows no sign of improving. He has of course tried to set us on a new path but he has tried a new path multiple times without success.

*Gibson and the club is shorthand for the various holding companies.
**Also a risk of Capital Gains. Say, Gibson retains 25% having sold the remainder at 50p each for loss of around £90m. We get promoted, value of the club rockets. New owner now buys the remaining shares at £2 share from Gibson. Gibson makes a profit on his shares of around £60m so has to pay capital gains tax. If this was a loan being repaid, he would have incurred no tax.

 

[atypical_boro]

We are set up differently, in effect it‘s Gibson’s club (not a community club) and he is judge and jury.
He will do with it as he sees fit and no one can stop him.

That really ought to get people to ask a few questions.

This is 100% right but the bit in bold kind of means that it is perhaps pointless discussing it or asking those questions. Or at least pointless expecting anything to come of those discussions. On the whole the last 15 years has been pretty rubbish but I still feel like we're a long way off Red Faction leading some kind of 'Gibson out' protest, he still has plenty of credit left in the bank with many (rightly or wrongly).

Its very different to the occasions that fans are sick of a particular manager when social media consensus perhaps contributes in some way to decisions the club hierarchy takes.

 

[atypical_boro]

I’m not buying the bull**** this is our level

Our 'level' is to be a yoyo club (if history is anything to go by). Over the last 15 years, we haven't been that, and our average finish has been 7th in the Championship in that time (outside the play offs).

That said, we have improved year on year since the initial covid stoppage. There's still time to improve this season.

 

[indeedido]

There is a lot of confusion around what Gibson O'Neill need to provide in terms of funding to keep the club afloat and what they can put into the Club from a FFP perspective.

Essential Funding:
The Club is only a Going Concern because of the £142m loans that Gibson O'Neill provide AND their commitment not to recall them within 12 months (though they are classified as Current liabilities i.e due within 12 months).
Gibson O'Neill could have injected equity rather than extended loans, but they provide the funding however you distinguish it.
If MFC make another loss the next year, then this too requires funding through either equity or loan. Gibson for decades has chosen to fund via loan, which he has converted to equity on 4 occasions to the tune of £90m (£64m Called Up Share Capital in 3 issues, and his first single £26m Capital Contribution).
He can/GON can continue to provide funding so long as they have a profit engine like Bulkhaul and overall nett assets in the Group.
If MFC lose £30m this season (they definitely won't) then this £30m would have to be covered for the club to continue, given its current nett state.
There is nothing to stop that happening.

Championship FFP.
The Club can only lose £15m across any 3 year period without breaking FFP rules and incurring penalties; unless the owner injects up to £24m in equity (or defined loans that commit to equity conversion).
However the FFP loss is not a simple figure to arrive at.
Profit Before Tax is the starting point, so this will include all the revenue sources and costs. (inc Profit from Transfer of Player Registrations).
MFC PBT was -£50.6m for the 3 years to June 2022. Already the reported loss is far higher than the £15m permitted loss (or £39m if owner funds to the FFP Championship max)
But that is before the significant FFP adjustments are made:
These are real costs but excluded from FFP calculation.
Depreciation of Fixed Assets is excluded. MFC £9.1m.
Community Spend is excluded. MFC £3m.
Academy capped for Cat A is excluded. MFC £15m.
Women's Football is also excluded. MFC £0 to date.
Fixed Asset Revaluation can also be added back in. MFC £2.7m.
Covid Allowance was also allowable capped by season. MFC £7.5m.
The calculation for each year through Covid was different, but the values I show are the 3 years to June 2022.
So, MFC's FFP calculation will be c-£13.3m.
Regardless of any funding into the club, the club is within the lower permitted loss of £15m.

People say that Gibson or any other owner could not inject any more that could be spent from an FFP perspective. This is absolutely not true.
Gibson could have injected £8m per season, or £24m across the 3 seasons as described above. This could have funded a variety of things.
The Wage bill could have been £8m higher per season and MFC would still have been FFP compliant.
Amortisation charge (annual cost of writing off a player's fee) could have been £8m higher per season and MFC would still have been FFP compliant.
Everybody who went to The Riverside could have got in free (Ticket sales are c£8m per season) and MFC would still have been FFP compliant.
I am not arguing for or against any of these or other options, but what I am saying is the equity injection could have funded £24m further losses and still been FFP compliant.
The point is that it is absolutely wrong to say Gibson couldn't put more in and be FFP compliant.

Now then, if he had injected the £24m across 3 years, then back in the non FFP world, the loss the club had actually made (c£50m) would still have to be covered to keep the club Going. Group Undertakings did increase from £91m in 2019 to £142m in 2022 i.e. by £51m, covering the actual losses made.

It is absolutely his right not to fund more, in either loan form or equity.
But it is mine to say that another owner could and possibly would, in order to access the higher/potentially self sustaining revenues in the PL.

The point I am making is that it is fundamentally wrong to say that Gibson or another owner could not provide more funding, our losses be higher, yet us still be FFP compliant in the Championship.
But it would take an owner with considerably greater funds and intent than the current one?

 

[alanmoodysdog]

I think it is the lack of improvement since relegation that is the issue . many lower clubs have had better success Luton, Burnley, Brentford and Bournemouth as examples and Preston and Ipswich this year

 

[indeedido]

TL;dr - "invest" as a shorthand can mean loan or equity and both have pros and cons for the club and the "investor"

As a sole owner it makes no practical difference if you loan the club £10m with no interest repayable, no repayable date and an undertaking not to recall it within the next 12 months vs create 10m new shares and buy them at £1 each. The club gets £10m to spend with no expectation of having to repay it.

Right now the club is technically insolvent because it owes more than it can repay. It isn't cash-flow insolvent because whenever it runs out of cash to pay its bills, Gibson* loans it some more money. If he converts all the loans into equity we're no longer technically insolvent but that didn't matter anyway.

When it comes to sell the club, say for argument's sake there are 64 million shares and debts to Gibson to the value of £180m. Gibson paid a £1/share. For Gibson to get all his money back the new owner has to pay £1 to Gibson for each share and then pay off his debts. Gibson could of course agree to write-off some of his loans or they might agree to keep some on the books and repay them at a future date (say after promotion). So there is plenty of flexibility to do a deal.

If Gibson converted his loans to 180m shares valued at £1 each, the club has no extra money; it has already spent it. The plus side for the club is that Gibson can't demand his money back but he wasn't going to do that anyway. The club now has 240 shares with a paper value of £240m. When it comes to a sale, this actually means there is less flexibility. The owner either has to buy all the shares at £1 each or agree a reduced rate: say 50p per share instead. (Or only buy a controlling stake.)**

My guess is that Gibson is not converting loans to shares for this reason. It means that if he has to sell in the Championship he can negotiate a mix of loans repaid immediately, loans repaid in the future and loans written off. Gibson is a pretty hard-nosed operator and although he is undoubtedly resigned to writing-off some money, he's going to minimise that. If he can't get us promoted but someone else can, then he can potentially recover some loans in the future.

Since Southgate's appointment, Gibson's ownership has been a disaster. He has made bad decisions compounded on bad decisions. He has paid for his bad decisions by being forced into loaning a shed-load of cash into the company but that hasn't helped him make better decisions. As a commercial operation we're also a basket case. He clearly believes there is no demand for Boro merchandise outside of the local area and fairly small diaspora and runs the club on that basis.

The one thing you can say for him is that he has always put his money where his mouth is. While virtually all the debt is to just one man the club is a lot easier to sell because there is a lot of flexibility over what you repay. Gibson is both the club's greatest asset and liability. Asset because we won't go bankrupt while he's around to bankroll us. Liability because his ownership is a disaster and shows no sign of improving. He has of course tried to set us on a new path but he has tried a new path multiple times without success.

*Gibson and the club is shorthand for the various holding companies.
**Also a risk of Capital Gains. Say, Gibson retains 25% having sold the remainder at 50p each for loss of around £90m. We get promoted, value of the club rockets. New owner now buys the remaining shares at £2 share from Gibson. Gibson makes a profit on his shares of around £60m so has to pay capital gains tax. If this was a loan being repaid, he would have incurred no tax.

Beautifully put.

 

[indeedido]

This is 100% right but the bit in bold kind of means that it is perhaps pointless discussing it or asking those questions. Or at least pointless expecting anything to come of those discussions. On the whole the last 15 years has been pretty rubbish

Not pointless atypical. Every journey has to take its first steps.

Our 'level' is to be a yoyo club (if history is anything to go by).

I recent times we have barely yo'd.

 

[atypical_boro]

Not pointless atypical. Every journey has to take its first steps.

I recent times we have barely yo'd.

Of course, but I did say this after that: "Over the last 15 years, we haven't been that, and our average finish has been 7th in the Championship in that time (outside the play offs)."

 

[Bruce]

I recent times we have barely yo'd.

We've gone from yo-yo to no-yo

 

[mercury_redstone7]

I didn't say dilution of ownership. I said dilution of the value of the shares. If MFC issues another million shares, to make the total issued (say) 10 million, then the value of each share is diluted by about 10%. Obviously there's no change in the ownership.

Tax offsets - the misconception is that is you have a business in the group that runs at a loss, then you can reduce your tax bill because of the offset losses AND so the group is no worse off. Unfortunately, you have to make good the losses, so the group is worse off.

Commercial Operations - It's easy to criticise the club for not doing this, that or the other. But in reality, reducing ticket prices hasn't really worked in the past has it? And it may antagonize season ticket holders. I'd guess selling MFC stuff, whether it's shirts or hospitality, is quite hard.

Well put and seems logical