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Re:
Posted: Wed May 04, 2011 5:51 pm
by SmileyMan
"Baboo" wrote:WPL think that is too much.
I'm not sure it's as simple as "too much" - it's more about "given the club's current situation, what would be the best way to spend £14,000,000"
My heart says "please let's have our own stadium" but my head would say "let's build a Championship-level team, which our crowd levels and catchment area could easily support, and then see where we stand with the stadium situation"
Because the worst case scenario from FK's point of view is the club becoming successful enough to legitimately explore alternative options at some point he is faced with the choice of selling at the buyer's price or being left with an empty three-sided sports arena.
I expect the only way we'll own Michery Farm is if a lottery-winning supporter bequeathes the £14m with the express intent of buying it.
Re:
Posted: Wed May 04, 2011 7:14 pm
by Snake
"SmileyMan" wrote:"Baboo" wrote:WPL think that is too much.
I'm not sure it's as simple as "too much" - it's more about "given the club's current situation, what would be the best way to spend £14,000,000"
My heart says "please let's have our own stadium" but my head would say "let's build a Championship-level team, which our crowd levels and catchment area could easily support, and then see where we stand with the stadium situation"
Because the worst case scenario from FK's point of view is the club becoming successful enough to legitimately explore alternative options at some point he is faced with the choice of selling at the buyer's price or being left with an empty three-sided sports arena.
I expect the only way we'll own Michery Farm is if a lottery-winning supporter bequeathes the £14m with the express intent of buying it.
Let’s clear a few things up.
1. "
The price is agreed for the stadium at £13 million. That is not negotiable but the valuation of the stadium is some way short of that so funding that deficit needs to make commercial sense. We are not prepared to put the future of Oxford United at risk. Any deal has to make sense for both the short term and long term future of this club" The source of that quote is Nick Merry at the 2008 Oxford United AGM so make of it what you will given his track record -
http://www.oufc.co.uk/page/News/0,,1034 ... 31,00.html
2. “The club becoming successful enough to legitimately explore alternative options
Re:
Posted: Wed May 04, 2011 9:23 pm
by GodalmingYellow
"Snake" wrote:"SmileyMan" wrote:"Baboo" wrote:WPL think that is too much.
I'm not sure it's as simple as "too much" - it's more about "given the club's current situation, what would be the best way to spend £14,000,000"
My heart says "please let's have our own stadium" but my head would say "let's build a Championship-level team, which our crowd levels and catchment area could easily support, and then see where we stand with the stadium situation"
Because the worst case scenario from FK's point of view is the club becoming successful enough to legitimately explore alternative options at some point he is faced with the choice of selling at the buyer's price or being left with an empty three-sided sports arena.
I expect the only way we'll own Michery Farm is if a lottery-winning supporter bequeathes the £14m with the express intent of buying it.
Let’s clear a few things up.
1. "
The price is agreed for the stadium at £13 million. That is not negotiable but the valuation of the stadium is some way short of that so funding that deficit needs to make commercial sense. We are not prepared to put the future of Oxford United at risk. Any deal has to make sense for both the short term and long term future of this club" The source of that quote is Nick Merry at the 2008 Oxford United AGM so make of it what you will given his track record -
http://www.oufc.co.uk/page/News/0,,1034 ... 31,00.html
2. “The club becoming successful enough to legitimately explore alternative options
Re:
Posted: Thu May 05, 2011 12:34 pm
by Snake
"GodalmingYellow" wrote:"Snake" wrote:"SmileyMan" wrote:
I'm not sure it's as simple as "too much" - it's more about "given the club's current situation, what would be the best way to spend £14,000,000"
My heart says "please let's have our own stadium" but my head would say "let's build a Championship-level team, which our crowd levels and catchment area could easily support, and then see where we stand with the stadium situation"
Because the worst case scenario from FK's point of view is the club becoming successful enough to legitimately explore alternative options at some point he is faced with the choice of selling at the buyer's price or being left with an empty three-sided sports arena.
I expect the only way we'll own Michery Farm is if a lottery-winning supporter bequeathes the £14m with the express intent of buying it.
Let’s clear a few things up.
1. "
The price is agreed for the stadium at £13 million. That is not negotiable but the valuation of the stadium is some way short of that so funding that deficit needs to make commercial sense. We are not prepared to put the future of Oxford United at risk. Any deal has to make sense for both the short term and long term future of this club" The source of that quote is Nick Merry at the 2008 Oxford United AGM so make of it what you will given his track record -
http://www.oufc.co.uk/page/News/0,,1034 ... 31,00.html
2. “The club becoming successful enough to legitimately explore alternative options
Posted: Thu May 05, 2011 2:15 pm
by slappy
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.
Re:
Posted: Sun May 08, 2011 6:12 pm
by GodalmingYellow
"Snake" wrote:"GodalmingYellow" wrote:"Snake" wrote:
Let’s clear a few things up.
1. "
The price is agreed for the stadium at £13 million. That is not negotiable but the valuation of the stadium is some way short of that so funding that deficit needs to make commercial sense. We are not prepared to put the future of Oxford United at risk. Any deal has to make sense for both the short term and long term future of this club" The source of that quote is Nick Merry at the 2008 Oxford United AGM so make of it what you will given his track record -
http://www.oufc.co.uk/page/News/0,,1034 ... 31,00.html
2. “The club becoming successful enough to legitimately explore alternative options
Posted: Sun May 08, 2011 9:23 pm
by Snake
Agree. IL no longer has his hand up the arse of his Nick Merry puppet any more. But do you believe him when he talks* about the stadium purchase?
* = not that he ever does recently
Re:
Posted: Mon May 09, 2011 8:21 am
by GodalmingYellow
"Snake" wrote:Agree. IL no longer has his hand up the arse of his Nick Merry puppet any more. But do you believe him when he talks* about the stadium purchase?
* = not that he ever does recently
No I don't. I very much doubt he has access to the funds that would be required.
Re:
Posted: Mon May 09, 2011 8:22 am
by GodalmingYellow
"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?
Re:
Posted: Mon May 09, 2011 10:34 am
by GodalmingYellow
"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.
Posted: Mon May 09, 2011 6:05 pm
by slappy
OK cash may not be much different, but debt levels are reduced.
If you take the time to read my post, I am not saying that Stadco is 'worth' £13MM, more an argument over what level it is affordable based on historic (recessionary) revenues. With the club and ground reunited, I would expect external revenues to increase, and match-day / advertising as well.
Which sort of brings me onto Snake's perennial question. The club really needed say £8MM or £9MM of investment to take over the Kassam debt and at least put a reasonable deposit on the ground, with the rest by mortgage.
Posted: Mon May 09, 2011 8:35 pm
by Boogie
Posted: Mon May 09, 2011 10:09 pm
by recordmeister
At the end of the day, the club makes enough money to service it's debts and come out with a profit, doesn't it?
So long as we don't keep digging in to more debt, we're in a very good position.
Debt isn't a bad thing, so long as you can service it and you don't keep digging.
Re:
Posted: Mon May 09, 2011 10:29 pm
by Snake
"recordmeister" wrote:At the end of the day, the club makes enough money to service it's debts and come out with a profit, doesn't it?
So long as we don't keep digging in to more debt, we're in a very good position.
Debt isn't a bad thing, so long as you can service it and you don't keep digging.
Total lack of aspiration - how come we didn’t do an Accrington Stanley, a Bury or a Torquay this season?
Re:
Posted: Mon May 09, 2011 11:39 pm
by GodalmingYellow
"slappy" wrote:OK cash may not be much different, but debt levels are reduced.
If you take the time to read my post, I am not saying that Stadco is 'worth' £13MM, more an argument over what level it is affordable based on historic (recessionary) revenues. With the club and ground reunited, I would expect external revenues to increase, and match-day / advertising as well.
Which sort of brings me onto Snake's perennial question. The club really needed say £8MM or £9MM of investment to take over the Kassam debt and at least put a reasonable deposit on the ground, with the rest by mortgage.
I agree withe the club and ground re-united, that would increase total revenues, but to claw back the sort of deficits that would be created and then go further and turn that into sizable usable profits after tax, would be a mammothian task. It just isn't possible to create the £1.8m a year of cash that would be needed. That would require doubling of the Stadco Revenue without being able to increase the rent.
I haven't done the sums, but I would estimate that a purchase price of not much more than £5m would be needed for StadCo to break even if bought by the club. Which kind of also makes the £6m supposed valuation realistic.
If I were Kassam, I would want to hang onto the stadium at this point, and sell for not a penny less than the asking price of £13m.
If I were a wealthy owner of the club, I wouldn't want to pay more than £6m.
Hence we are where we are.