Re: Chairman's Programme Notes v Scunthorpe
Posted: Mon Jan 23, 2017 12:55 pm
POST 3:
[From Myles Francis agreeing with an assessment by Mark Sennett re the delays in getting Heads of Terms agreed between OxVox and Firoz Kassam]
It's an explanation which makes sense. In corporate financing terms, announcements of agreements, heads of terms etc, affects a business' share price. It's only when those deals are implemented that it affects the business' cash flow.
If an announcement on heads of terms was made today, it would make absolutely no difference to the club in terms of budget setting for next season - clearly a deal isn't going to be completed in that timescale, considering the complexities of what is likely to be involved here.
What it would make a difference to is the club's "share price". Having an agreement in place which is likely to be more favourable to the club makes it a more attractive business to invest in, and that's what investors do everyday - take a punt on businesses with potential.
And that's what I believe Darryl is doing here, trying to push for an announcement of an agreement to make the club a more saleable proposition. In his programme notes last week he said that he has invested around £8m in the club over the last two and a half seasons. It was widely believed that he had around £10m to play with, so it doesn't take a genius to work out that he is coming towards the end of that. So, it would make sense for him to be looking at some sort of exit strategy and try to maximise the return he can get.
[My response]
I don't agree with this.
Investing in anything is about assessing risk and return, whether that be hedge funds, stocks and shares, premium bonds and indeed football club playing staff.
Having an HoT in place significantly reduces the risk to DE of investing in the playing staff of OUFC and pushing for promotion either this season or next, which are in effect governed by this transfer window and the summer respectively.
There is no point DE going for promotion to the Championship by investing in the playing staff, if the business model at that level is unsustainable. As I am sure OxVox and indeed everyone with any sense would agree, that OUFC playing in the Championship in a 3 sided limited capacity stadium with no non-matchday revenues would be near suicidal for the club, and we could easily see the club playing in the Conference again within a relatively short space of time.
So for promotion, which I am sure every one of us would like to see, there has to be movement on the stadium ownership.
It is in Mr Kassam's interest to hold on to the stadium as long as he can. The license if fast running out. Yes there are 9 years left but given the timescales required to achieve alternative accommodation, 9 years is nothing, and whilst Kassam cannot use the site for non sporting activities, he can impose big rent rises and higher maintenance costs and to avoid that would mean going through a lengthy and expensive tribunal, which might not even decide in the club's favour.
And all that whilst we the supporters had expected DE to dip even deeper into his pockets and fund a promotion squad? I don't think so.
If that were not enough, and I think this has been long forgotten by many, the rental terms of even the existing license are much more costly for playing in the Championship, than for playing in League 1 or 2.
Movement on the stadium ownership is very important for OUFC to progress, and anyone using this as an opportunity to bash DE with unfounded myths of selling the club, is fundamentally wrong in my view.
It is a simple situation that Championship football is not an option without access to non-matchday revenues. To be fair, even League 1 is not sustainable without big player sales unless we get the 24/7 use of the stadium.
Now I agree with those who say buying the stadium is a complex issue, an issue made even more complex by the set up of a community trust to own the stadium (and I would agree that is the best long term option), BUT DE is not a bottomless pit of cash. He has previously made it clear that he has a budget for subsidising the club.
An announcement of the existence of an HoT would make it very publicly clear that OxVox is serious about community ownership, that OxVox has access to third party funding, that Kassam is serious about selling, and all that with absolutely no need to breach confidentiality or divulge identities. It is not a guarantee of stadium ownership that might allow DE to invest further, but it is a hell of a reduced risk.
And to those who say it takes a long time to create an HoT. Well you don't really understand what an HoT is, how and why it is created, and what it represents. It is not a lengthy or costly process, and it is not legally binding unless the parties specifically wish to make it so.
[From Myles Francis agreeing with an assessment by Mark Sennett re the delays in getting Heads of Terms agreed between OxVox and Firoz Kassam]
It's an explanation which makes sense. In corporate financing terms, announcements of agreements, heads of terms etc, affects a business' share price. It's only when those deals are implemented that it affects the business' cash flow.
If an announcement on heads of terms was made today, it would make absolutely no difference to the club in terms of budget setting for next season - clearly a deal isn't going to be completed in that timescale, considering the complexities of what is likely to be involved here.
What it would make a difference to is the club's "share price". Having an agreement in place which is likely to be more favourable to the club makes it a more attractive business to invest in, and that's what investors do everyday - take a punt on businesses with potential.
And that's what I believe Darryl is doing here, trying to push for an announcement of an agreement to make the club a more saleable proposition. In his programme notes last week he said that he has invested around £8m in the club over the last two and a half seasons. It was widely believed that he had around £10m to play with, so it doesn't take a genius to work out that he is coming towards the end of that. So, it would make sense for him to be looking at some sort of exit strategy and try to maximise the return he can get.
[My response]
I don't agree with this.
Investing in anything is about assessing risk and return, whether that be hedge funds, stocks and shares, premium bonds and indeed football club playing staff.
Having an HoT in place significantly reduces the risk to DE of investing in the playing staff of OUFC and pushing for promotion either this season or next, which are in effect governed by this transfer window and the summer respectively.
There is no point DE going for promotion to the Championship by investing in the playing staff, if the business model at that level is unsustainable. As I am sure OxVox and indeed everyone with any sense would agree, that OUFC playing in the Championship in a 3 sided limited capacity stadium with no non-matchday revenues would be near suicidal for the club, and we could easily see the club playing in the Conference again within a relatively short space of time.
So for promotion, which I am sure every one of us would like to see, there has to be movement on the stadium ownership.
It is in Mr Kassam's interest to hold on to the stadium as long as he can. The license if fast running out. Yes there are 9 years left but given the timescales required to achieve alternative accommodation, 9 years is nothing, and whilst Kassam cannot use the site for non sporting activities, he can impose big rent rises and higher maintenance costs and to avoid that would mean going through a lengthy and expensive tribunal, which might not even decide in the club's favour.
And all that whilst we the supporters had expected DE to dip even deeper into his pockets and fund a promotion squad? I don't think so.
If that were not enough, and I think this has been long forgotten by many, the rental terms of even the existing license are much more costly for playing in the Championship, than for playing in League 1 or 2.
Movement on the stadium ownership is very important for OUFC to progress, and anyone using this as an opportunity to bash DE with unfounded myths of selling the club, is fundamentally wrong in my view.
It is a simple situation that Championship football is not an option without access to non-matchday revenues. To be fair, even League 1 is not sustainable without big player sales unless we get the 24/7 use of the stadium.
Now I agree with those who say buying the stadium is a complex issue, an issue made even more complex by the set up of a community trust to own the stadium (and I would agree that is the best long term option), BUT DE is not a bottomless pit of cash. He has previously made it clear that he has a budget for subsidising the club.
An announcement of the existence of an HoT would make it very publicly clear that OxVox is serious about community ownership, that OxVox has access to third party funding, that Kassam is serious about selling, and all that with absolutely no need to breach confidentiality or divulge identities. It is not a guarantee of stadium ownership that might allow DE to invest further, but it is a hell of a reduced risk.
And to those who say it takes a long time to create an HoT. Well you don't really understand what an HoT is, how and why it is created, and what it represents. It is not a lengthy or costly process, and it is not legally binding unless the parties specifically wish to make it so.