Tinkerman

[Jimski]

Out of interest, does anyone know how much money FK actually made from selling the Manor, etc.? Was it more than the club's debts at the time?

[GodalmingYellow]

To quote Mooro from another thread: "Bevans allegedly turned down the new deal he was offered, with the club then choosing to trigger the one year option on the Dev deal he signed last summer."

Maybe he (or his agent) was trying to hold out for a better deal, but this immediately made me wonder what this might imply about the kind of wages being offered - and what, therefore, this might mean for squad-building. Oh - and both Morecambe and Accy can probably get away with paying lower wages and still attracting (relatively) decent players, because those parts of the country still have sane housing markets.

That is a very salient point about housing markets Dr B.

[GodalmingYellow]

Spot on, GY: my calculations (based only on the figures discussed on here) would suggest that the rent is worth about 1000 on the gate.

The rent in itself may only be worth 1000 on the gate (not that that's insignificant at our level), but when you take into account the service charge too, as well as the inability to generate decent commercial revenue from owning the ground then the numbers become much bigger. Am I right in thinking that we split pitchside advertising 50/50 with Firoka? And I'm sure we get less than 50% of the bar take and catering contracts etc. And presumably nothing at all from non-matchday conferencing. It all adds up.

The worst thing about it is that it's a rip-off anyway. The stadium's three-quarters built and undecorated. It already feels old and poorly maintained. All this drives fans away rather than attracting them. Yet we're paying top dollar for it and are tied into doing so for another couple of decades (I believe). It's a negative spiral that we need to snap out of, but that won't happen unless FK gets realistic about its value.

My calcs did take into account the service charge.

The ability to generate commercial revenue is not relevant as the stadium company runs at a loss, so if this ability were passed to the club it would either result in an increased charge to the club from losses of the stadium company (if owned) or increased charge to the club from Firoka for being granted the rights. The commercial rights argument that is oft raised is a very false argument. For all revenue raised there is always a cost. So the numbers don't suddenly become much larger as you assume Kernow.

I can't see Kassam changing his valuation of the stadium now that he has a second tenant.

The lease was for 25 years from 2001, so there is another 12 years to run, but I agree it already feels old and dated, perhaps because it has never been completed, perhaps because it is undecorated, dirty, and poorly maintained, perhaps because newer grounds look a lot classier. The pitchside views are good, but the unsealed concrete is always dusty ad dirty and the concourses and toilets are shameful really. There is no sense of pride in the stadium from the club or the owners and that reflects on the fans, perhaps contributing to why it never feels like home (although you can't create 76 years of history overnight). A slightly weird feeling statistic is that the club have been at the KasStad for 1 year out of every 6 that we were at The Manor, and for me having completed 34 years supporting the club, 1 in every 2.5 years has been at Grenoble Road. It certainly doesn't feel special to me though, it feels like we are playing at someone else's ground. Oh hang on a minute...

[Kernow Yellow]

Was a new lease not drawn up when WPL took over in 2006?

Also, regarding StadCo running at a loss - is this really true? I thought someone posted that they were sitting on £1m cash since LW became tenants? Anyway, I'm sure it's possible to make something appear to run at a loss if you really want it to! Even if Stadco don't appear to generate revenue from owning the Kassam doesn't mean it isn't possible to generate revenue from owning a football ground, especially if the football club brand is locally well-respected (which I don't think OUFC is particularly at the moment - the De Vere venues branding on the South Stand tells you all you need to know about Stadco's attempts to market it in relation to OUFC).

I agree that FK is unlikely to slash the price of the ground anytime soon, especially when he has Us over a barrel with the lease agreement. But when you see that Fratton Park changed hands for an estimated £3m last year, and Home Park for £1.6m in 2011 (and £2.7m in 2006) the sums bandied about for our shithole seem absolutely ludicrous. In Plymouth's case, the council now charge them £135k a year rent. Not bad, eh?

[GodalmingYellow]

Was a new lease not drawn up when WPL took over in 2006?

Also, regarding StadCo running at a loss - is this really true? I thought someone posted that they were sitting on £1m cash since LW became tenants? Anyway, I'm sure it's possible to make something appear to run at a loss if you really want it to! Even if Stadco don't appear to generate revenue from owning the Kassam doesn't mean it isn't possible to generate revenue from owning a football ground, especially if the football club brand is locally well-respected (which I don't think OUFC is particularly at the moment - the De Vere venues branding on the South Stand tells you all you need to know about Stadco's attempts to market it in relation to OUFC).

I agree that FK is unlikely to slash the price of the ground anytime soon, especially when he has Us over a barrel with the lease agreement. But when you see that Fratton Park changed hands for an estimated £3m last year, and Home Park for £1.6m in 2011 (and £2.7m in 2006) the sums bandied about for our shithole seem absolutely ludicrous. In Plymouth's case, the council now charge them £135k a year rent. Not bad, eh?

No a new lease was not drawn up in 2006. There was no need to as the lease is to the club, not the owners of the club.

Its a common misconception that having cash means a business is profitable. The amount of cash a business has is nothing to do with its profitability. A business with cash can be both profitable and loss making. A profit making business may have lots of cash or be strapped for cash, as can a loss making business. There is virtually no link at all. Whether Stadco had cash at any point is completely irrelevant.

It is not possible to legally make something appear loss making when it is profitable and vice versa. That is the whole point of independent accountants and auditors and following accounting standards and UK GAAP, not to mention dealing with Hector.

Your last sentence in your first paragraph is self defeating. Stadco do own the football ground, and they do generate revenue from it. Just not enough to make it profitable. Stadco is not just an intermediary running the operations inside the stadium. It is the organisation which owns both the stadium and operations combined. If OUFC owned Stadco, having bought it for £13m, the club would be bankrupt within months. Stadco makes no money even with low mortgages and funding from Firoka. It will make money in the future whilst Welsh are tenants, but nowhere near enough to cover a £13m mortgage.

Businessmen and women are hard nosed generally, and the addition of the OUFC branding, might help a little, but only a little.

As for sums relating to other grounds, firstly it depends where they are and property prices in those regions, secondly it depends whether they are sold with or without existing debts (a £13m stadium sold without debts might be worth £13m, a £13m stadium sold with a £10m mortgage might be worth £3m).

[Kernow Yellow]

Your last sentence in your first paragraph is self defeating. Stadco do own the football ground, and they do generate revenue from it. Just not enough to make it profitable. Stadco is not just an intermediary running the operations inside the stadium. It is the organisation which owns both the stadium and operations combined. If OUFC owned Stadco, having bought it for £13m, the club would be bankrupt within months. Stadco makes no money even with low mortgages and funding from Firoka. It will make money in the future whilst Welsh are tenants, but nowhere near enough to cover a £13m mortgage.

I think you're missing my point somewhat, probably because I got sidetracked querying Stadco's profitability. I'm saying it is perfectly possible for a football club (eg Morecambe or Accrington or Burton in the examples from earlier in the post) to create extra revenue (and profit) by owning its ground and using it for commercial purposes. I'm certainly not advocating OUFC paying £13m (or £7m or whatever) for the Kassam Stadium, as my point about ground purchase prices in my previous post was supposed to illustrate! Those figures would be a massive rip-off, as indeed is our rent for the quality of stadium and pitch we're receiving.

These are all reasons we don't have the financial clout some people assume we should in comparison to clubs which get half our gates.

[slappy]

Out of interest, does anyone know how much money FK actually made from selling the Manor, etc.? Was it more than the club's debts at the time?

From memory, the club sold the Manor to Stadco for £6MM without planning permission. The secured bank debt on the Manor was £6MM, so this was all used to pay the bank, who were presumably owed more than this. I think the CVA then paid everyone else 10%?

Kassam then got the planning permission for the Manor, and Stadco sold it for £12MM.
E&OE

[neilw]

Value of stadium = Rent from OUFC + Rent from London Welsh + Other income, less operating expenses, divided by market rate of return.

London Welsh have significantly increased the value, hence screwing up any chance of obtaining the ground, whilst wrecking the pitch. IL knows he needs an exit strategy, but can't find the right door.

[neilw]

Basically, Kassam took £6m out of the club to the benefit of his other business interests, which will have enjoyed a corresponding gain.

[Ancient Colin]

Value of stadium = Rent from OUFC + Rent from London Welsh + Other income, less operating expenses, divided by market rate of return.

Well, you need to allow for expected growth in income, so divide net operating income by the yield/cap rate = (required return - expected growth). But that's a perpetuity ... which ignores the lease expiries.

[Snake]

There is the Land Deal with the council that specifies that football must be played there which was drawn up in 2001, but imho it’s not worth the paper it’s written on. Then there is the licence agreed with WPL (or whoever owns the club should they sell it) and Firoka in 2006. They are different documents and both can be obtained in full from Oxford City Council and the Land Registry respectively.

[GodalmingYellow]

Your last sentence in your first paragraph is self defeating. Stadco do own the football ground, and they do generate revenue from it. Just not enough to make it profitable. Stadco is not just an intermediary running the operations inside the stadium. It is the organisation which owns both the stadium and operations combined. If OUFC owned Stadco, having bought it for £13m, the club would be bankrupt within months. Stadco makes no money even with low mortgages and funding from Firoka. It will make money in the future whilst Welsh are tenants, but nowhere near enough to cover a £13m mortgage.

I think you're missing my point somewhat, probably because I got sidetracked querying Stadco's profitability. I'm saying it is perfectly possible for a football club (eg Morecambe or Accrington or Burton in the examples from earlier in the post) to create extra revenue (and profit) by owning its ground and using it for commercial purposes. I'm certainly not advocating OUFC paying £13m (or £7m or whatever) for the Kassam Stadium, as my point about ground purchase prices in my previous post was supposed to illustrate! Those figures would be a massive rip-off, as indeed is our rent for the quality of stadium and pitch we're receiving.

These are all reasons we don't have the financial clout some people assume we should in comparison to clubs which get half our gates.

You're right, I didn't get that first time around. Apologies.

[GodalmingYellow]

There is the Land Deal with the council that specifies that football must be played there which was drawn up in 2001, but imho it’s not worth the paper it’s written on.

I tend to agree. If there is no tenant o play football at a market rent, Kassam could very easily get the covenant lifted.

[GodalmingYellow]

Value of stadium = Rent from OUFC + Rent from London Welsh + Other income, less operating expenses, divided by market rate of return.

London Welsh have significantly increased the value, hence screwing up any chance of obtaining the ground, whilst wrecking the pitch. IL knows he needs an exit strategy, but can't find the right door.

Quite. There appears to be a surfeit of creeks and a deficit of paddles and the place stinks of the sewer.

[Snake]

There is the Land Deal with the council that specifies that football must be played there which was drawn up in 2001, but imho it’s not worth the paper it’s written on.

I tend to agree. If there is no tenant o play football at a market rent, Kassam could very easily get the covenant lifted.

The reason it’s not worth the paper it’s written on is that both sides have repeatedly broken the terms of it for 13 years. i.e. it counts for nowt right now.