"GodalmingYellow" wrote:"slappy" wrote:Stadco doesn't make big annual losses either. It turned a profit last year and even if you strip out the release of grant income (and add back depreciation) it is a cash generator.
As to the stadium, it can be argued that it only needs around £5MM externally, and then it is self funding as the rent plus income matches the mortgage on say £8MM. (Without going into detailed interest rates and the split of what mortgage would replicate the rent)
So apart from hoping someone wins the lottery, some of the alternatives are :-
WPL finds £5MM to 'invest' in OUFC (and the rest is bank mortgage).
Someone else finds £5MM - there are plenty of multimillionaires around and doesn't need to be a lottery winner.
A business partner with £5MM can find good use for the stadium whilst OUFC aren't using it.
Would you mind emailing me those accounts please Mark?
Thanks Mark.
The picture is certainly rosier than I painted, but nowhere near the picture you have painted.
Strip out grant income, which will not be an ongoing revenue stream, and the company made a loss before tax.
The business is certainly not a cash generator, cash balances went down last year, and that is despite much lower borrowings, and favourable interest rates.
Factor in the £13m borrowing requirement to buy the place, and it would once again make a huge loss and lose a stack of cash, and would be an albatross around the club's neck.
The rental income does not match the borrowing requirements, as you have suggested, and that is precisely the problem.
The present rental income results in the company making a small loss (taking out grant income) even with outstanding borrowing at only £2.6m, and that was with favourable interest rates and with massive group borrowings charging no interest.
For a £13m asking price, £13m borrowings are required for a debt free purchase. £13m borrowings (not that the club would ever be able to obtain that level of loan for StadCo due to lack of value and restrictions of LTV rates) would attract an interest rate of perhaps 6.5% at best. That would result in loan interest of £845k per year, resulting in StadCo once again becoming hugely loss making to the tune of £600k per year.
On top of that a maximum 10 year normally applies to such commercial mortgages, and so to repay that loan would result in a drain on cash of £1.8m per year.
The club would simply not be able to find that level of cash even with the best estimates of potential improvement to StadCo's business.
Sorry, but an asking price of £13m is just no good for the club, and the company isn't worth anything like that anyway.
Even at the supposed value of £6m, it wouldn't be easy.