Selling the club ? But what is it's value (2 Viewers)

[EleanorRigby]

When you buy anything it has to have value or assetts. If administators came in that is all they look at, so what are ours, as i see it now Ryton has been mortgaged just the staff, kit, balls, what else ? So the maximum price would surely be the players value, which shrinks as they edge towards the end of their contract. So what would the collective value of our playing staff be ? Would £5/6million be about right or hopeful. So the sale price surely would reflect that.

 

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[Disorganised1]

Options have a value as well - like the option on the stadium.

 

[thorn in my side]

When you buy anything it has to have value or assetts. If administators came in that is all they look at, so what are ours, as i see it now Ryton has been mortgaged just the staff, kit, balls, what else ? So the maximum price would surely be the players value, which shrinks as they edge towards the end of their contract. So what would the collective value of our playing staff be ? Would £5/6million be about right or hopeful. So the sale price surely would reflect that.

We are not in administration and so open-market considerations apply. You have to factor in the loans as well. Sadly it simply is not a simple as you suggest. The assets may be £5/£6M but the underlying debt is whatever.

Rumour has it Carsen Yeung wants £40M plus for Birmingham City - £20M for the assets and £20M for the loans he has put into the club. That is business whatever the morality.

 

[EleanorRigby]

But and i don't know that much about the big business world should a potential buyer reimburse failed investments. In other words when does and investment become a loan seems to be the best of both worlds to me.

 

[Jim]

The liabilities of the club need to be considered in addition to the assets when considering a valuation. This gives the Fair Value of the club.

The balance sheet of the club accounts for 2010 showed Assets of just under £4m but liabilities of £50m. Even if you removed the liability to SISU of £30m then that still leaves a net liability of over £10m.

This gives a negative fair value. Therefore a bid of £1 to acquire the share capital is perfectly realistic.

Again we come back to the problem of the liabilites to SISU. This is where the real negotiations will be taking place and both sides will be playing hardball. SISU will want as much of their investment back and Hoffman will be trying to reduce this to a minimum. These negotiations could take a long time and will be behind closed doors.

We may not see a lot going on but I am sure there is plenty of activity going on.

 

[Paxman II]

There is the franchise, the goodwill, licences etc and of course the stadium option. Players, capital equipment and various leases on properties I would expect and the freehold of Ryton. There's probably more still but the value stands probably no more than half of what SISU claim to have invested.

 

[DazzleTommyDazzle]

But and i don't know that much about the big business world should a potential buyer reimburse failed investments. In other words when does and investment become a loan seems to be the best of both worlds to me.

In most private equity style deals, "investment" is pimarily done by way of loans rather than share capital. This is partly because loans are so much more flexible for the investor, but also largely because of the preferential tax treatment that the interest payments on the loans attract.

As you imply, a potential buyer of a business will look at the value of the business - not how much the current owner has historically invested in it. You can have businesses that have grown into very valuable propositions through self-financed growth (i.e. high value business with low investment by the owner) and you can have businesses where many millions have been invested, but the business has not grown, or has even gone backwards (i.e. low value business with high investment by the owner). Some business plans work and some don't.

 

[shmmeee]

The key fact isn't the value of the club, I'd imagine you could have it for £1 now if you wanted.

The problem is you'd be inheriting £30m of debt. Currently that debt is interest free and has no repayments as it's owed to the owners. However, if the club changes hands do you seriously expect SISU to keep those terms? Why should they?

The negotiation isn't about the value of the club, it's about the terms of repayment of those loans. SISU could very easily cripple the club if they wanted, but the club going into liquidation would do them no good. So they need to agree loan terms that give them a return on investment without crippling repayments. And that's a tough negotiation.

Hoffman's initial bid wanted to pay nothing until we got promoted, and if that didn't happen in 3 years then write off the debt. To be fair to SISU that's an awful deal and they'd have been crazy to go for it.

As I've stated before, as a pure guess, I'd imagine they want an initial amount up front then a payment plan in place over the next 5-10 years. What those amounts are is the sticking point.

 

[EleanorRigby]

Thanks for all that info lads. But as a guess how much of their so called £30million investment would be an acceptable figure to be repaid ? And while we are at it what's the significance of transferring the business to the Cayman Islands ?

 

[skyblu3sk]

The key fact isn't the value of the club, I'd imagine you could have it for £1 now if you wanted.

The problem is you'd be inheriting £30m of debt. Currently that debt is interest free and has no repayments as it's owed to the owners. However, if the club changes hands do you seriously expect SISU to keep those terms? Why should they?

The negotiation isn't about the value of the club, it's about the terms of repayment of those loans. SISU could very easily cripple the club if they wanted, but the club going into liquidation would do them no good. So they need to agree loan terms that give them a return on investment without crippling repayments. And that's a tough negotiation.

Hoffman's initial bid wanted to pay nothing until we got promoted, and if that didn't happen in 3 years then write off the debt. To be fair to SISU that's an awful deal and they'd have been crazy to go for it.

As I've stated before, as a pure guess, I'd imagine they want an initial amount up front then a payment plan in place over the next 5-10 years. What those amounts are is the sticking point.

Isn't this the deal Sisu got when they took over?

 

[Astute]

Thanks for all that info lads. But as a guess how much of their so called £30million investment would be an acceptable figure to be repaid ? And while we are at it what's the significance of transferring the business to the Cayman Islands ?

30m and tax reasons

 

[ccfcway]

i would suggest its worth about what Hoff offered them

£1

and I would expect change

After all, thats £1 more than they paid for it, representing a huge % profit for their investors

 

[Paxman II]

Regarding Hoffman and co there are other more attractive clubs he and his cronies could go after. What he wants i suspect is a deal on the Ricoh ownership. Not the ACL share option but a real deal on ownership or the very least lease rights. That's the only thing that is making CCFC an attractive proposition at all. Security of tenure is paramount to any investment.
Add to that the so called 'debt' inherent and how SISU Capital will agree to restructure that may also be a sticking point.
Be very careful what you wish for. SISU are keeping the club afloat and there are no angels coming forward.
I think the council may be playing a huge part in what happens simply by their reckless stance over the arena. Yes they are making money from it now but long term without the Cities football there they will lose much of it's attractiveness.
people need to get motivated and find a workable solution but all these rumours and tweets going around make me wonder if Hoffman or anyone has even began a serious approach and shown intention?
IF Hoffman had a down payment of 10m then I'm sure SISU would open up and negotiate some terms. As it stands and as I said previously many months ago with the £1 non existent bid that Hoffman seems to be on a mission of personal ego as much as anything else, if indeed he is even interested in reality and all of this is silly rumour and non existent attention grabbing media nonsense by silly people such as Keys and co.
Anyone coming forward with a modicum of intent and some serious cash down would not fail to be noticed by SISU...truth is it ain't happening.
Pigs might fly comes to mind.