The question

[Mally]

It's ironic that those doing the most worrying and questioning, with regards to the current owners, are those who did this the least about the previous regime. It so makes me smile

Complete rubbish. Nobody did more questioning and investigation into Kassam (and everybody else who wanted to stick their finger in the pie)than the people who I presume you are attacking.

The people who are asking questions now are the same people who were asking questions then. Whoever the owner is of your football club you have to hold them to account and make sure that they not only have the best interests of the club at heart but they are also capable of doing what needs to be done. This is exactly what FOUL did with Kassam and its only natural that ex FOUlers are doing the same with the new regime. By the way they also did it with the regime before Kassam and a number of wannabee/potential regimes that crawled out of the various pieces of woodwork in between.

Personally I believe that WPL (or the bit we can see) does have the best interests of the club at heart but where I have a big question is whether they have the means to ensure its success. Ownership of the stadium in the medium to long term is vital for the success of the club for all the reasons that boris and others have outlined and because of the uncertainty of future tenure and affordability.

I think (as I have always thought) that based on the balance sheet and P&ampL of the stad co Kassam will want somewhere in the region of £10 million for it. I am not sure (and have seen no evidence) that WPL have the ability to raise this money or have assets against which they can secure this amount of money (The stadium itself isn't enough).

Just to clear up one other point the club was debt free when WPL took over because the £2million went to clear Kassam's loans. In other words it was a £2million negative equity investment. Like buying a £200,000 house for £2.2million.

[Mally]

so if he thinks that the &quot&amp co.&quot bit of merry &amp co. have enough money to pay a higher price, and the desire/need to do so, why wouldn't he stick the price up and wait for them to either meet it, or at least offer more than they originally were?

This may well be true but I have it on fairly good authority that Kassam DOESN'T think that WPL have enough money to pay for it. His concern is that they can't afford it and until he can see the colour of their money he won't waste his time in negotiations.

Admittedly this was a while back and they may have convinced him since but I doubt it.

The other part of this equation is that as the clock continues to tick the value of the stadium (and therefore its cost to purchase) is likely to go up. Every additional use of the stadium (celebrity football trials, Elton John concert, etc) adds to its profitibility and future earning potential for Kassam and therefore raises the threshold for its sale. Ironically OUFC success on the pitch has the same effect. Its even written into the curent contract that as OUFC goes up the leagues the rent goes up.

[GodalmingYellow]

Sorry Neil, but that is simply not going to happen.

People like Kassam, Lenaghan, and Merry have wealth for a reason. The reason is that they know how much to pay for something. They have lawyers, accountants, valuers and a shed load of other advisors to tell them how much the stadium is worth, and that will take account of all the normal commercial factors. There may be negotiating room of 10% or so around that, but the idea that Kassam sees a rich potential buyer and is able to smakc another £5m on the price tag and still expect to sell is fanciful in the extreme. Merry and Co will just tell him to get stuffed as they have previously when he asked too much.

sorry godalming yellow, but i'm not sure i understand why this would be.

it seems to me that merry &amp co. can tell him to get stuffed if they don't like the price, but they still need the stadium. meanwhile, kassam will still get the rent from the club, and whatever income he gets from conferences etc., so has no great imperative to sell.

so if he thinks that the &quot&amp co.&quot bit of merry &amp co. have enough money to pay a higher price, and the desire/need to do so, why wouldn't he stick the price up and wait for them to either meet it, or at least offer more than they originally were?

Need is an interesting word. There are degrees of necessity. If Kassam puts the price up to much, then the degree of necessity drops because the financial outcome becomes unviable. As I said above, the stadium has a value, based on commercial factors like alternative use, actual and potential income streams, goodwill (haha), rebuild costs, development potential, capital gains potential and so on. Then the parties factor what they might be prepared to pay/sell for. Then they have wriggle room to persuade each other that certain elements of the business are worth more or less depending on which party you are. If the price goes outside either parties wriggle room they will say no. That's how wealthy businessmen do big deals and get even more wealthy.

To get a deal, you need both a willing buyer and a willing seller. Kassam will sell when it is in his interests to do so i.e. when he gets what he thinks it is worth, subject to the factros mentioned above. Merry will buy when it is in his interests to do so ie when it is available for what he thinks it is worth, subject to the factors mentioned above. Outside of those parameters, there will be no deal, and that's where we are at the moment.

This idea of Kassam being someone who can do what he wants and force everyone else to tow his path, more than Leneghan or Merry or any other successful businessman is errant nonsense. Kassam is just another successful businessman and is no different to any other.

To balance up the equation on who has the stronger hand, don't forget that the rent Kassam gets from OUFC is not a commercial rent, which means for StadCo to make the level of profit he gets from his other assets, he has to work harder by selling more of StadCo's products. It is easier and financially more sensible for Kassam to sell and use the money elsewhere where profitability is easier to come by. Kassam also has to fund Ally Pally and could no doubt do with more resources at the present time.

Overall, Kassam does have a slightly stronger hand imho, because of the rising capital value of property generally and improving trading of StadCo, and because OUFC is starting to show signs of success which will demand more and more use of the stadium, but there ain't a lot in it.

The delay is just negotiating time and disagreement of the stadium value. Kassam believes it is worth about £20m, Merry doesn't. I suspect once the June 06 StadCo accounts are available, and show the degree of success of the company, things will begin to move a little faster as potential profitability will then be easier to identify.

[Resurrection Ox]

Sorry Neil, but that is simply not going to happen.

People like Kassam, Lenaghan, and Merry have wealth for a reason. The reason is that they know how much to pay for something. They have lawyers, accountants, valuers and a shed load of other advisors to tell them how much the stadium is worth, and that will take account of all the normal commercial factors. There may be negotiating room of 10% or so around that, but the idea that Kassam sees a rich potential buyer and is able to smakc another £5m on the price tag and still expect to sell is fanciful in the extreme. Merry and Co will just tell him to get stuffed as they have previously when he asked too much.

sorry godalming yellow, but i'm not sure i understand why this would be.

it seems to me that merry &amp co. can tell him to get stuffed if they don't like the price, but they still need the stadium. meanwhile, kassam will still get the rent from the club, and whatever income he gets from conferences etc., so has no great imperative to sell.

so if he thinks that the &quot&amp co.&quot bit of merry &amp co. have enough money to pay a higher price, and the desire/need to do so, why wouldn't he stick the price up and wait for them to either meet it, or at least offer more than they originally were?

Need is an interesting word. There are degrees of necessity. If Kassam puts the price up to much, then the degree of necessity drops because the financial outcome becomes unviable. As I said above, the stadium has a value, based on commercial factors like alternative use, actual and potential income streams, goodwill (haha), rebuild costs, development potential, capital gains potential and so on. Then the parties factor what they might be prepared to pay/sell for. Then they have wriggle room to persuade each other that certain elements of the business are worth more or less depending on which party you are. If the price goes outside either parties wriggle room they will say no. That's how wealthy businessmen do big deals and get even more wealthy.

To get a deal, you need both a willing buyer and a willing seller. Kassam will sell when it is in his interests to do so i.e. when he gets what he thinks it is worth, subject to the factros mentioned above. Merry will buy when it is in his interests to do so ie when it is available for what he thinks it is worth, subject to the factors mentioned above. Outside of those parameters, there will be no deal, and that's where we are at the moment.

This idea of Kassam being someone who can do what he wants and force everyone else to tow his path, more than Leneghan or Merry or any other successful businessman is errant nonsense. Kassam is just another successful businessman and is no different to any other.

To balance up the equation on who has the stronger hand, don't forget that the rent Kassam gets from OUFC is not a commercial rent, which means for StadCo to make the level of profit he gets from his other assets, he has to work harder by selling more of StadCo's products. It is easier and financially more sensible for Kassam to sell and use the money elsewhere where profitability is easier to come by. Kassam also has to fund Ally Pally and could no doubt do with more resources at the present time.

Overall, Kassam does have a slightly stronger hand imho, because of the rising capital value of property generally and improving trading of StadCo, and because OUFC is starting to show signs of success which will demand more and more use of the stadium, but there ain't a lot in it.

The delay is just negotiating time and disagreement of the stadium value. Kassam believes it is worth about £20m, Merry doesn't. I suspect once the June 06 StadCo accounts are available, and show the degree of success of the company, things will begin to move a little faster as potential profitability will then be easier to identify.

[Mally]

All of the above may well be true but totally academic if Merry and Co can't afford a realistic asking price which I believe to be the case (but of course don't know).

I'd be interested to know why the figure of £20 million keeps coming up because this has no basis in reality or fact that I'm aware of but seems to be something that has become part of the folklore of the Kassam Stadium.

If Kassam is asking £20 million for the stadium and related company then he has completely taken leave of his senses and although he's done some very strange things over the past few years, when it comes to a property deal I think he's in full command of all his senses.

[GodalmingYellow]

All of the above may well be true but totally academic if Merry and Co can't afford a realistic asking price which I believe to be the case (but of course don't know).

I'd be interested to know why the figure of £20 million keeps coming up because this has no basis in reality or fact that I'm aware of but seems to be something that has become part of the folklore of the Kassam Stadium.

If Kassam is asking £20 million for the stadium and related company then he has completely taken leave of his senses and although he's done some very strange things over the past few years, when it comes to a property deal I think he's in full command of all his senses.

I don't know if Merry can afford the stadium. I've no doubt Lenaghan can.

Not sure how you are arriving at your values for StadCo, but I suspect you are undervaluing, or making a deduction for existing debts. I think you mentioned a figure of £10m, (I'm no valuer) but I'm told the land alone (which includes the car parks) on an alternative use basis would be worth more than that. The stadium cost more than £10m to build in the first place, so Kassam would be very unlikely to settle for an amount that low. Then you have to factor in the StadCo trading business, the re-build costs of the stadium, and so on.

I was told a few months ago that StadCo is expected to make £1m profits this year, though I will believe it when I see it, and Kassam is placing a high value on the trading side of things.

Kassam has already rejected an offer of not that far short of £20m I am told, though I haven't seen a piece of paper to that effect, so I can't comment on the reliability of that.

[Matt D]

[quote=&quotGodalmingYellow]
Need is an interesting word. There are degrees of necessity. If Kassam puts the price up to much, then the degree of necessity drops because the financial outcome becomes unviable. [/quote]

true. thanks.

[DLT]

Football stadiums must be the only property that seem to depreciate.

Would it be possible to build a similar stadium anywhere in the south east for less than £20 million?

Purchase land, fight planning battles, construct, fit out.

I don't think anyone could build a 12k capacity stadium with excellent parking and corporate entertainment facilities, with potential to extend to 16k for less than £20 million.

Buying that type of property for 10-12 million could be a steal if you had the need for such a property.

Well who is the property developer shafting who now.

If you had to buy a football club with potential to break even for two million in order to make that deal happen then it would still be a good deal.

I reckon this Lenaghan might be buying the club just to make a few million out of property deals, how shocking is that

[GodalmingYellow]

Football stadiums must be the only property that seem to depreciate.

Would it be possible to build a similar stadium anywhere in the south east for less than £20 million?

Purchase land, fight planning battles, construct, fit out.

I don't think anyone could build a 12k capacity stadium with excellent parking and corporate entertainment facilities, with potential to extend to 16k for less than £20 million.

Buying that type of property for 10-12 million could be a steal if you had the need for such a property.

Well who is the property developer shafting who now.

If you had to buy a football club with potential to break even for two million in order to make that deal happen then it would still be a good deal.

I reckon this Lenaghan might be buying the club just to make a few million out of property deals, how shocking is that

Unless he's a closet United fan, its difficult to see what else he would get out of it.

[Snake]

I don’t how much of the actual Stadium construction costs were derived from other sources (for example, the iconic sign http://en.wikipedia.org/wiki/Image:Kass ... m_sign.jpg above the ticket office was in fact the subject of a £7884 grant from the Football Foundation way back in 2001) but we can look at what price the land might fetch now should the Stadium be pulled down and we have to go somewhere else (God knows where) and houses get built on it instead.

When planning permission was granted at Minchery Farm over ten years ago not many people were talking about national housing shortages , and even less people envisaged a development of thousands of new homes on the other side of Grenoble Road (apart from a former owner of the club by the name of Tim Midgely).

Lastly, some people are having a bit of a go from their keyboards at some of the ex-FOULers on this board, but as a polite reminder we disbanded in 2001 after the club’s existence was secured and we had a half-decent stadium up and running (i.e. job done).

[Myles Francis]

I was told a few months ago that StadCo is expected to make £1m profits this year, though I will believe it when I see it, and Kassam is placing a high value on the trading side of things.

Likewise. Considering StadCo made a loss of (from memory) around £250k the previous year, that's a fair turn around.

[SmileyMan]

From a business point of view, leasing the stadium makes perfect sense. Making a large capital expenditure on an asset that you actually utilise very little (maxmimum 5 hours per week?) when you have a low turnover is just silly.

Of course, we all know that however much some people would like it not to be true, football is more than just a business, and owning your own stadium is both a source of pride and a committment to the community. Nobody wants to see their club go the way of Wimbledon.

The right time to make an approach to buy the stadium would be when the work to add the outstanding seating would need doing because our attendances had grown high enough. That would be a sensible business decision because you would not want to be negotiating with a landlord over such a project.

Think of the club as a kid who's just left school. You wouldn't give him the advice &quotbuy that five-bedroom luxury house, then try and get a career good enough to pay for it&quot, would you? You'd say &quotgo get a job, rent yourself a bedsit, and save up for when you want to settle down and have kids.&quot

Spend the money on getting ourselves up through the Leagues, with a strong youth system churning out profitable youngsters. Get that right, and by the time you decide to buy the stadium, you won't even notice the price.

As for the lack of transparency in the ownership of the club, I'd be 99% confident that that's all for tax purposes and nothing else. Don't worry about it.

[GodalmingYellow]

From a business point of view, leasing the stadium makes perfect sense. Making a large capital expenditure on an asset that you actually utilise very little (maxmimum 5 hours per week?) when you have a low turnover is just silly.

Of course, we all know that however much some people would like it not to be true, football is more than just a business, and owning your own stadium is both a source of pride and a committment to the community. Nobody wants to see their club go the way of Wimbledon.

The right time to make an approach to buy the stadium would be when the work to add the outstanding seating would need doing because our attendances had grown high enough. That would be a sensible business decision because you would not want to be negotiating with a landlord over such a project.

Think of the club as a kid who's just left school. You wouldn't give him the advice &quotbuy that five-bedroom luxury house, then try and get a career good enough to pay for it&quot, would you? You'd say &quotgo get a job, rent yourself a bedsit, and save up for when you want to settle down and have kids.&quot

Spend the money on getting ourselves up through the Leagues, with a strong youth system churning out profitable youngsters. Get that right, and by the time you decide to buy the stadium, you won't even notice the price.

As for the lack of transparency in the ownership of the club, I'd be 99% confident that that's all for tax purposes and nothing else. Don't worry about it.

All very interesting &quotSmileyMan&quot but bearing absolutely no relevance to OUFCs position.

The very clear business advantage for the club is to own the stadium as discussed on here and elsewhere too many times to mention.

[Mally]

The stadium can only be used 5 hours a week at the moment because its rented for that purpose only, however if it was owned by the club it could be used 16 hours a day every day. At the moment Firoka continues to run the conference centre and all other stadium uses and gets the revenue from these activities. The original idea of the new stadium was that these activities could support the football club.

Also remember that if the club owns the stadium even if it just breaks even on non football activity its turnover is added to the clubs for wages cap calculations and therefore gives much more flexibility for a club serious about getting back to back promotions.

This season it doesn't matter because our season ticket sales and total turnover can more than support the club at this level but if we don't go up and ticket sales dry up next season with the rent the same the club could end up in a downward financial spiral (income down but overheads stay the same). In the short term (this season) there's no immediate requirement to own the stadium but in the medium to long term it could become very important.

[SmileyMan]

Well, spending £20m on a capex that brings in £250kpa is only an ROI of 1.25%. You'd be better off putting the money in the building society.

There are obviously strategies that could increase the stadium revenue, but they are not all football related, ie not the club's core business, so it would be better owned as a subsidiary company of the football club that was required to make a profit off it's own back. To do that you'd need to make not only an investment in money, but also in time selecting the best management team to make it a success.

I'd prefer them to concentrate on getting the club back in the league where it belongs. The stadium can wait.