sky blue john
Well-Known Member
and the wife keeps telling me I cant multitask ....... pah!
All men can multitask we just let women assume they are the only ones who can!
CCFC worth - by lecturer in football finance Liverpool (1 Viewer)
- Thread starter Captain Dart
- Start date
All men can multitask we just let women assume they are the only ones who can!
oucho
Well-Known Member
I haven't followed much of this, and didn't understand the tables....can someone who knows more please explain to me in simple terms why, if the club is valued at £1.1m, debts and all, Hoff's offer of £1.2m + possible add-ons is a non-starter?
This is a genuine question, not a point-scoring exercise. It's just not clear to me, I may have missed something.
This is a genuine question, not a point-scoring exercise. It's just not clear to me, I may have missed something.
Nick
Administrator
Hoff doesn't want the debts.
oldskyblue58
CCFC Finance Director
The Professor has used complicated and accepted formulas to arrive at a value for OEG today based largely on future operating profits. The sheets summarise his workings. On that basis he got to his estimate of £1.1m as the today's value of owning OEG
It is not what Hoffman is seeking to buy. He is not buying ownership of OEG. He is bidding to acquire the assets including the market value of playing squad and Ryton less certain of the liabilities referred to as football creditors. The assets could be several millions (eg Stevenson say 1.5m alone) and football creditors could be quite small (PAYE & VAT included - these sort of creditors are defined by FA/FL and are not all the creditors) His bid included 1.2m up front plus addons on certain events happening. He does not want to take on the loans and preference shares. The problem for SISU is that it does not provide certainty or a significant reduction in the amount outstanding to ARVO and so will and has been rejected out of hand
not sure I can make it simpler than that
oucho
Well-Known Member
thanks both - do we have a feeling for what the club is worth if taken over as Hoffman would like i.e. assets less certain liabilities? I guess that is the golden question.
oldskyblue58
CCFC Finance Director
I would think that SISU would look to clear the ARVO capital of £8m as a minimum. I would think Hoffman has to offer the value of the assets less football creditors up front to get them interested- a pure guess is upwards of £3m down payment - and then sweeten it with annual payments & guarantees plus some performance payments. Trouble with that is the financial burden it places on the club and investors, the club doesn't have the finance to support its ambitions on the face of it and giving away 50% of vital income streams only makes it worse. Thinking ahead the average football fan is not going to be sympathetic when their money has to be spent on paying SISU rather than buying players especially if promotion doesn't happen - short memories and unreasonable expectations have always been a problem at CCFC (probably at any club)
Nick
Administrator
How viable do you think telling them to keep Ryton as part of it would be to do what they want with it? It would take the up front value down too.
Specs WT-R75
Well-Known Member
It stands to reason if OEG is potentially worth 1.1m with warts & all, that if you are just buying the all and leaving behind the warts it is going to cost quite a bit more than 1.1m.
oldskyblue58
CCFC Finance Director
but build in other finance costs to replace it Nick
oucho
Well-Known Member
Well yeah.............but how much more?
I don't believe £3m up front would be acceptable - but I am often wrong. Putting myself in their position I would want at least £8m up front to cover the ARVO investments and either additional £ to cover some of the accrued interests and some £ for initial investors as well. So I guess it will take £8m + half the accrued interests plus 10% of the original investments.
But then there's all the other stuff. Like the hatret between Hoffman/Elliott and SISU going back to when the original board failed to meet any of their strategic goals and SISU decided to not increase their investments (they did, but only when the board had been replaced with another equally inept representation). How much penalty payment would SISU want as compensation for all the bad blood, the sisu-out-campaigns, the 'don't-sell-the-Ricoh-to sisu' campaign, the NOPM campaigns etc., the 'WASPS-are-our-best-friends' campaigns, the 'don't-buy-ST' campaign etc.?
And what about JR2 - do they want some compo for dropping it?
As I said I could be wrong, maybe SISU are interested in selling up for a much lower up-front payment and a staggered deal based on performance than I expect. If so, I would really like to know if any future payments comes from the club or if the new investors commits to make the payments directly to SISU as they become due. That at least would make sure the club keep all future revenue it generates.
oldskyblue58
CCFC Finance Director
First off the £3+ guessitimate is actually a net figure because it represents assets less football creditors. Paying or taking responsibility for the creditors is a benefit in the deal too
I would think no one is going to offer them £8m straight out, as for the rolled up interest I wouldn't pay it on the basis it was risk capital and they knew that from the start. I certainly would not offer anything like 10% of the original capital, the £28m is lost and they know it. I might consider performance payments to build up to the settlement for ARVO
Certainly no one is going to offer them anything for hurt feelings and they will deal with Hoffman/Elliot if they really need to sell and the offer is tempting enough unless there is better interest from elsewhere.
I don't see why the investors would pay SISU directly not through the club. What are they actually acquiring by doing so? Doesn't make sense to me. The club would own the assets & Football creditors acquired at a minimum you would want the investment you make to be shares in the club - many prefer it to be interest bearing loans
The deal has to be tempting for SISU but it also must first be viable for the club
I wasn't trying to dis-prove any of your original analysis, just show how far apart they might be. As you put it very accurately in your last sentence above it must be a deal appealing to all, and just because Hoffman says his offer is too good to be turned down, or a professor says the value of the club equals the offer - it doesn't necessary mean a deal is either tempting to sisu or viable for the club.
Captain Dart
Well-Known Member
Possibly, though maybe as low as £6M with a future £4M to be taken from transfers and profits within a few years subject to personal guarantees.
Having said that I don't think anyone will offer anywhere near that, so I think SISU will suck the money out of the club over the next few years at around £0.5M a year.
oldskyblue58
CCFC Finance Director
I would guess something between 8 to 10 million and they would go if it was in one upfront payment. But I wouldn't think there would be anyone keen to do that because it wouldn't represent any asset value. You would be paying them a hefty premium for then to go dressed up as goodwill. Unless they are prepared to take another risk by accepting conditional rights to payments then I cant see it happening
On the other side of course there is the cost to the new investors and or club of financing for years to come the purchase of assets that only exist on paper (goodwill) and generate no extra cash. Also there is an immediate need for working capital. People say ah but there will be season ticket income - but to some degree the benefit of that needs to be spread over the whole financial year. extra will be needed
Paxman II
Well-Known Member
It's what i had in mind around 8 to 10m up front without future 'if's and buts'' payments but not sure about what debt SISU can get rid of without it costing them and there may have to be some clause giving them percentage towards those so called write off's as it were. Certainly 1.2m is nowhere near enough and the add on's are comical and I would have thought not practicable tbh
Is there evidence they have 'sucked' out half a mil a year before? I don't think accrued interests counts as the money doesn't leave the club and as suggested in this thread (and elsewhere) sisu probably won't see either the loans or the interests paid back. If they aren't interested in selling, they won't change behavior.
And the part where the club will pay £Xmil out of future income is quite frankly ludicrous - we have seen how difficult it is for the club to become cash-flow neutral even included revenue from player sales. How easy will it be in a division lower and paying £1M a year? Who would cover that money? The investors? - well in that case they may as well pay out of own pocket and not burden the club. The fans? - Paying money to SISU? Good luck explaining that! Loan the money in a bank? - Recipe for future collapse!
skybluetony176
Well-Known Member
That's true. I can ignore my wife and watch TV at the same time.
sky blue john
Well-Known Member
That is high level black belt multitasking.
Captain Dart
Well-Known Member
Unless it is well hidden in other amount they haven't, only salaries that were excessive considering performance.
As for transfers, they are identifiable income of which there has been £5M in the last 2 years (it is in the accounts), however the transfer policy would be that of the new owners and may not be done in the way SISU would like.
So really in short SISU won't sell unless they save face by retrieving a reasonable part of their 'investment' to minimise their losses ?! ..............But their business model for the club, will not achieve that either, cutting costs and reducing/selling asset values and revenue is doing nothing but fighting the fire in the short term. Their only strategy is 'battering no one in court' whilst the club spirals deeper and deeper down the football pyramid and it's net worth dwindles out altogether. I hope everyone is keeping fit and healthy because it could be a long wait for these people to finally ship out !
I haven't seen or heard anything to suggest that SISU want to sell - in fact they keep saying the club is not for sale - over and over and over again. It's Hoffman who want to buy, so as sad as it may be, the terms and conditions that will make SISU change their mind is very different to 'reasonable'. Like when the club hold out for insane money for a player.
What you believe is 'their strategy' is your opinion, and if you are right that strategy is not working.
But equally flawed is 'our' strategy. We try to 'batter' them in the ticket office, in the stands, in the local paper, on internet forums ... it isn't working!
It's like divorcing parents fighting for custody of their child - but in reality only the child is battered and have its future ruined.
Brighton Sky Blue
Well-Known Member
What would help but none of us seem to know is the club's position in SISU's portfolio.
When you say 'our' strategy isn't working, we don't know that. What we do know is that it hasn't worked yet. Admittedly it may never work, but whose to say it may work over time. It maybe be a poor analogy, but Argentina didn't surrender when we bombed Port Stanley airfield, or when we sunk the Belgrano,or when we recaptured Goose Green etc etc, sometimes things are won by a long period of attrition. The trouble is no one really knows what it will take to get rid of them.
oldskyblue58
CCFC Finance Director
How about changing the direction we look at this. Look at what SISU/ARVO might be asking for. This is not going to be a sophisticated model, it is basically guesswork and for that reason don't get hung up on the values I put in. It is more about guessing the reasoning from the SISU side. Remember Hoffman is not looking to purchase Otium t/a CCFC he wants the assets less football creditors not the company.
aside.... football creditors are liabilities to players, managers, other clubs and the football authorities. The EFL can use their discretion to add other items in as happened in forcing the rent payment to ACL. It means a big chunk of creditors stays with Otium in Hoffman's proposals as I understand them
so value from the SISU side of things could be
1)the playing squad. Now we know in January the club turned down interest in Stephenson & Willis, Harries went training with Liverpool so we know there is value there. We know there are other players contracted to us, not many but some, at the end of this season that have a value. We have the FA compensation rules that calculate values for other players. Would it be unreasonable to suggest a total market value of £4m? If GH is buying the assets it will have to be at market value wont it ?
2) Ryton. From the SISU point of view it is the opportunity value of this asset that is important. The opportunity is to sell the site for housing. Could that value be say £6m. Obviously cant be done without new pitches elsewhere so deduct say £1m contribution to that (the balance of new site being paid by grants etc). That gives you £5m?
3) There are fixtures fittings equipment etc that are necessary for the operation to function value say £100k
4) there is the trademark and the right to trade in the EFL. In 2013 these were included in the buy out from administration. It also included a rates refund of £400k so lets take a guess at current value £1m. (In reality isn't this what the professor values at £1.1m when valuing Otium as a company?)
5) From ARVO point of view they are being asked to give up a potential income stream - the interest on the loan. That has a value to them. Well using the same rates as the professor the interest asked to for go over the 5 years 2016/2017 to 2020/21 comes to approx. £3.8m as a discounted cash flow. That ignores what is already owed £4m+
6) they are being asked to retain creditors after losing the trade and therefore pay it - suspect they would wind up the company but even that has costs to it
7) there are income streams (some deferred) and ST monies perhaps cash balances to be transferred over even ignoring player add on's from previous sales
Say the football creditors are £1m
There are other twists and turns you could add in, you can argue about the values, but could SISU be looking at it in a similar way?. They have parked the club in terms of funding it and the club will sell players to raise cashflow and slash costs to survive. That means less pressure to do cheap deals
But from the above their current estimate of value selling the assets less football creditors could be something like £13m+, hence the derisory comments and the outright rejections. If they do not want to sell and it seems they do not then a bid of £1.2m upfront with vague add on's wont tempt them at all, however good the deal might look to some fans.
Just thinking out loud really and trying to look at it from a different angle. Not saying it is right but to get a deal done you have to try to understand where SISU are coming from (difficult at the best of times - (even impossible?).
The problem with their value like this, is that there is no matching asset value to it in terms of a new owner - the playing squad yes, use of Ryton as a training ground not housing yes, the right to play in the EFL yes but then there looks like a big gap in matching values to assets if you look at both sides. So funding becomes very problematic. To successfully match the other side in a bid the worry is unless the money to purchase from SISU is free from debt itself then any deal places big financial burdens on the club and/or investors
just guess work of course
aside.... football creditors are liabilities to players, managers, other clubs and the football authorities. The EFL can use their discretion to add other items in as happened in forcing the rent payment to ACL. It means a big chunk of creditors stays with Otium in Hoffman's proposals as I understand them
so value from the SISU side of things could be
1)the playing squad. Now we know in January the club turned down interest in Stephenson & Willis, Harries went training with Liverpool so we know there is value there. We know there are other players contracted to us, not many but some, at the end of this season that have a value. We have the FA compensation rules that calculate values for other players. Would it be unreasonable to suggest a total market value of £4m? If GH is buying the assets it will have to be at market value wont it ?
2) Ryton. From the SISU point of view it is the opportunity value of this asset that is important. The opportunity is to sell the site for housing. Could that value be say £6m. Obviously cant be done without new pitches elsewhere so deduct say £1m contribution to that (the balance of new site being paid by grants etc). That gives you £5m?
3) There are fixtures fittings equipment etc that are necessary for the operation to function value say £100k
4) there is the trademark and the right to trade in the EFL. In 2013 these were included in the buy out from administration. It also included a rates refund of £400k so lets take a guess at current value £1m. (In reality isn't this what the professor values at £1.1m when valuing Otium as a company?)
5) From ARVO point of view they are being asked to give up a potential income stream - the interest on the loan. That has a value to them. Well using the same rates as the professor the interest asked to for go over the 5 years 2016/2017 to 2020/21 comes to approx. £3.8m as a discounted cash flow. That ignores what is already owed £4m+
6) they are being asked to retain creditors after losing the trade and therefore pay it - suspect they would wind up the company but even that has costs to it
7) there are income streams (some deferred) and ST monies perhaps cash balances to be transferred over even ignoring player add on's from previous sales
Say the football creditors are £1m
There are other twists and turns you could add in, you can argue about the values, but could SISU be looking at it in a similar way?. They have parked the club in terms of funding it and the club will sell players to raise cashflow and slash costs to survive. That means less pressure to do cheap deals
But from the above their current estimate of value selling the assets less football creditors could be something like £13m+, hence the derisory comments and the outright rejections. If they do not want to sell and it seems they do not then a bid of £1.2m upfront with vague add on's wont tempt them at all, however good the deal might look to some fans.
Just thinking out loud really and trying to look at it from a different angle. Not saying it is right but to get a deal done you have to try to understand where SISU are coming from (difficult at the best of times - (even impossible?).
The problem with their value like this, is that there is no matching asset value to it in terms of a new owner - the playing squad yes, use of Ryton as a training ground not housing yes, the right to play in the EFL yes but then there looks like a big gap in matching values to assets if you look at both sides. So funding becomes very problematic. To successfully match the other side in a bid the worry is unless the money to purchase from SISU is free from debt itself then any deal places big financial burdens on the club and/or investors
just guess work of course
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Nick
Administrator
That's the thing, you have to look from their point of view to see what they could get from all the different bits if they were to tally it up that Hoffman wants to buy.
Why would they sell for £1.2m when we were talking of Stevenson being worth more alone?
I still think as part of a bid Hoffman should tell them to keep Ryton, yes it would be a loss but there is already a rebuild job to be done and I think it will bring the purchase value down and give SISU something to keep.
They will just be happy for the club to sit to the side and tick over, sell players and cut budgets to suit the income. From our site it is shit and from a football side it's shit but from their side why would they take such a big hit to sell to Hoffman for the bids he has put in?
Surely Hoffman knows the last offer was never going to be accepted for what he wanted to pay and what he wanted in return?
Why would they sell for £1.2m when we were talking of Stevenson being worth more alone?
I still think as part of a bid Hoffman should tell them to keep Ryton, yes it would be a loss but there is already a rebuild job to be done and I think it will bring the purchase value down and give SISU something to keep.
They will just be happy for the club to sit to the side and tick over, sell players and cut budgets to suit the income. From our site it is shit and from a football side it's shit but from their side why would they take such a big hit to sell to Hoffman for the bids he has put in?
Surely Hoffman knows the last offer was never going to be accepted for what he wanted to pay and what he wanted in return?
Captain Dart
Well-Known Member
Then you can look at running the club as a profitable going concern, can that be done?
I think so, with the conveyor belt of talent from the academy being used to keep the club in profit.
However this situation leaves the club bouncing between Div 3 and 4, do fans want that, my guess would be no, whereas bouncing between Div 2 & 3 might be OK.
It is possible this is SISU's plan all along, the Crewe model.
I think OSB's analysis has ignored running costs in favour of asset value, can the assets be sold piecemeal, well Ryton can and players from the academy can the remainder of the assets can only be sold as a job lot with a sale of the entire club.
I think so, with the conveyor belt of talent from the academy being used to keep the club in profit.
However this situation leaves the club bouncing between Div 3 and 4, do fans want that, my guess would be no, whereas bouncing between Div 2 & 3 might be OK.
It is possible this is SISU's plan all along, the Crewe model.
I think OSB's analysis has ignored running costs in favour of asset value, can the assets be sold piecemeal, well Ryton can and players from the academy can the remainder of the assets can only be sold as a job lot with a sale of the entire club.
oldskyblue58
CCFC Finance Director
It is an asset value deal that is being proposed. Can the business be profitable yes, (look at Walsall,) but it relies on there being no debt or interest burden for the new owners/club.
No one is suggesting individual sales of assets. The bid is assets less football creditors. The SISU position is I think that is not enough value to compensate what they are being asked to give up.
How the new owners run it is up them. So it can be argued that future income streams, profits or losses are irrelevant to buying the assets less football creditors (except in valuing the right to the golden share - which I have included)
but what SISU are looking for is not in my opinion just a sale of assets with a value to a new owner they are going to want more than that. Such a deal would have ongoing implications for viability
Being blunt What the fans want or expect really does not come in to it. New owners could still result in CCFC spending several seasons in L2 - that's certainly not what a lot of fans expect. The league ability will be based on the financial implications of the deal done, then the ability of the squad that can be assembled and manager, together with the stewardship of the club. They will seek to make best of what they have but to get there they have to do a deal. So far everyone seems to look from one side at this, to get it over the line you have to try at least to understand the other side
Just illustrating the seeming gulf between the two sides and the big difficulties in getting any deal from this
No one is suggesting individual sales of assets. The bid is assets less football creditors. The SISU position is I think that is not enough value to compensate what they are being asked to give up.
How the new owners run it is up them. So it can be argued that future income streams, profits or losses are irrelevant to buying the assets less football creditors (except in valuing the right to the golden share - which I have included)
but what SISU are looking for is not in my opinion just a sale of assets with a value to a new owner they are going to want more than that. Such a deal would have ongoing implications for viability
Being blunt What the fans want or expect really does not come in to it. New owners could still result in CCFC spending several seasons in L2 - that's certainly not what a lot of fans expect. The league ability will be based on the financial implications of the deal done, then the ability of the squad that can be assembled and manager, together with the stewardship of the club. They will seek to make best of what they have but to get there they have to do a deal. So far everyone seems to look from one side at this, to get it over the line you have to try at least to understand the other side
Just illustrating the seeming gulf between the two sides and the big difficulties in getting any deal from this
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Nick
Administrator
Exactly, as fans it would be great if SISU said "here you go garry, have the club" and we all lived happily ever after.
From their perspective, why would they?
It's being put out it only cost £1 but it's not a true reflection on what he is trying to buy and the amounts offered.
NorthernWisdom
Well-Known Member
Yeah, which is probably where we're in catch-22. You'd have to question the ability of anybody to keep hold of their cash and run the club well, if they offered what was tempting for SISU!
oldskyblue58
CCFC Finance Director
This is not a distressed potential sale of a company in administration, it is still classed as a going concern. So there should be no implied discount to values for a distressed sale.
The bid is for the assets as they are less football creditors.
So questions...........
If the squad is worth £4m, Ryton (current use) 500k, the trademark and right to play in EFL say £1m and say the liabilities defined as football creditors £1m that is a net amount of £4.5m. Why would anyone, not just SISU, sell those assets for £1.2m plus add on's that may never happen ? The add on's are the sweetener in the deal not the foundation of it, they are the counter to the loss of income for ARVO and the loss of development of Ryton aren't they? There has to be market value paid for the assets less creditors taken on surely ?
The bid is for the assets as they are less football creditors.
So questions...........
If the squad is worth £4m, Ryton (current use) 500k, the trademark and right to play in EFL say £1m and say the liabilities defined as football creditors £1m that is a net amount of £4.5m. Why would anyone, not just SISU, sell those assets for £1.2m plus add on's that may never happen ? The add on's are the sweetener in the deal not the foundation of it, they are the counter to the loss of income for ARVO and the loss of development of Ryton aren't they? There has to be market value paid for the assets less creditors taken on surely ?
SkyBlue_Bear83
Well-Known Member
He says realistically SISU would have to to write off the debt
oldskyblue58
CCFC Finance Director
So why in the calculations he has done does he show interest that is calculated on the ARVO loans if its been written off?
