Philosoraptor
Well-Known Member
Down another 7% this morning.
Wasps current finances & hope (13 Viewers)
- Thread starter oldskyblue58
- Start date
Nick
Administrator
There's a pretty complete analysis by Les Reid here:
EXCLUSIVE: Wasps ‘breach agreement’ with bondholders over Ricoh Arena value amid £43m debt
It's going to take some pulling apart this.
Again my gut feel is that it falls somewhere between the Telegraph's "everything is fine" minor rewrite of Wasps' own press release, and the "end is nigh" scenario (that I'm not-so-secretly hoping for!). It doesn't look great in that I think it would be unexpected news for bondholders, at the very least, and must cast some doubts on Wasps' own accounting procedures.
I look forward to OSB's thoughts in due course!
Wasn't that news brushed away at the time? Or is it a different breach?
Philosoraptor
Well-Known Member
Make that down 12% and another 5% last night. Going to make some popcorn.
Grendel
Well-Known Member
Yeah the markets not reacting well at all to the news
duffer
Well-Known Member
It's the same issue I think, Nick.
It just highlights the difference in reporting standards.
The CET basically take Wasps press release at face value, The Observer article takes the time to critically analyse the facts and figures.
Of them all, the one that's clearest to me is OSB's explanation. No surprise there! However I think where we politely differ might be in the valuation of The Ricoh, which without Wasps as a tenant can't be anything like the amounts claimed to support the bond issue, imho.
For that reason alone, I think the bond holders would have to sit tight rather than press for a default and immediate repayment. If Wasps fail they never get all of their cash back as I see it - it was always a risky investment in my book, I wouldn't want my money tied up in it!
Captain Dart
Well-Known Member
chiefdave
Well-Known Member
Totally theoretical but lets say Joy owned 51% of the bonds and voted no to the amendments. What would happen then? Wasps are in breach and the Ricoh was the security so would that just get handed over?
fernandopartridge
Well-Known Member
Richardson himself might be a bondholder, who knows really. IF he was and I am not saying he is....could it be considered insider trading?
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jimmyhillsfanclub
Well-Known Member
Excellent.
chiefdave
Well-Known Member
No idea what is classed as insider trading. Probably just coincidence but it seems a bit odd for a large amount to hit the market right before this announcement after months of virtually no trading.
fernandopartridge
Well-Known Member
If somebody was a bondholder who was privy to information that others aren't and sold their bonds on the basis of that knowledge, it's insider trading. To confirm I am not suggesting that Richardson is in this position.
duffer
Well-Known Member
If you traded your bond holdings based on information that wasn't yet publicly available, then that's insider dealing or trading, as I understand it.
A criminal offence for sure, but I wouldn't want to accuse anyone of it yet. In truth I'm not sure why Richardson would buy his own bonds in any case, I got the impression he wanted to get his cash out of Wasps...
A criminal offence for sure, but I wouldn't want to accuse anyone of it yet. In truth I'm not sure why Richardson would buy his own bonds in any case, I got the impression he wanted to get his cash out of Wasps...
Captain Dart
Well-Known Member
Why would he pay money to lend to himself?
Captain Dart
Well-Known Member
Then she just lost £1.5M. More her style to buy them at the bottom of the market.
fernandopartridge
Well-Known Member
Demonstrating demand for the bonds piques the interest of others, but yeah, take your point that it would seem risky but is a way of pumping money in without appearing to pump money in
Liquid Gold
Well-Known Member
Ha
oldskyblue58
CCFC Finance Director
What they have disclosed in summary for the solicitation request is unaudited figures as follows (figures in brackets are 2015)
Sales 33.4m ( 30.9m)
Cost of sales 22m (20.6m)
Gross Profit 11.4m (10.4m)
other income 0.16m (0)
other overheads & costs 10.7m (14.1m)
operating profit before exceptional items & allocation to non controlling interests profit 0.799m ( loss 3.8m)
Allocation to non controlling interests (eg Compass share in IEC) cost of 1583 (1504)
operating loss minus 0.784m ( loss 6.2m)
Finance costs 2.3m (3.1m)
Loss before tax 3.1m ( loss 9.3m)
taxation provision add back 1.6m ( add back 7m)
loss for year 1.5m (loss 2.3m)
There was a surplus on revaluation of 8.7m after providing for potential tax
Fixed assets 79.9m (67.9m) - they spent 0.83m on new plant & equip
current assets 8.6m (7.2m)
current liabilities 21.4m (20.5m)
long term liabilities 46.9m (43.4m)
Net assets 20.2m (11.2m)
It was the fact that they didn't achieve the right multiple on the EBITDA calculation that caused this not, as the CT reported the 1.1m put in by Richardson. He did that to try rectify the situation but the auditors are not having it. Also the CT have got some their figures muddled
I would not hang on the bond price. At this stage it is separate to the trading and financial well being of Wasps and has bounced back a little
Sales 33.4m ( 30.9m)
Cost of sales 22m (20.6m)
Gross Profit 11.4m (10.4m)
other income 0.16m (0)
other overheads & costs 10.7m (14.1m)
operating profit before exceptional items & allocation to non controlling interests profit 0.799m ( loss 3.8m)
Allocation to non controlling interests (eg Compass share in IEC) cost of 1583 (1504)
operating loss minus 0.784m ( loss 6.2m)
Finance costs 2.3m (3.1m)
Loss before tax 3.1m ( loss 9.3m)
taxation provision add back 1.6m ( add back 7m)
loss for year 1.5m (loss 2.3m)
There was a surplus on revaluation of 8.7m after providing for potential tax
Fixed assets 79.9m (67.9m) - they spent 0.83m on new plant & equip
current assets 8.6m (7.2m)
current liabilities 21.4m (20.5m)
long term liabilities 46.9m (43.4m)
Net assets 20.2m (11.2m)
It was the fact that they didn't achieve the right multiple on the EBITDA calculation that caused this not, as the CT reported the 1.1m put in by Richardson. He did that to try rectify the situation but the auditors are not having it. Also the CT have got some their figures muddled
I would not hang on the bond price. At this stage it is separate to the trading and financial well being of Wasps and has bounced back a little
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chiefdave
Well-Known Member
I know cashflow is the key but can they sustain annual 7 figure losses. Sure it pales in to comparison with football but we all know that for some reason football clubs get treated differently.
Out of interest how much were they losing annually before the Ricoh when they claimed they were about to go out of business?
oldskyblue58
CCFC Finance Director
at the moment they are reliant on Richardson to fund the gap I would think. Certainly looks like they will have to if they are to satisfy the new bond clauses
They were losing 3m to 4m per year
They were losing 3m to 4m per year
speedie87
Well-Known Member
Just done a bit more reading on this looks very unusual.
Effectively Richardson but some money into the business post 30th June 2017 , therefore accounting treatment should be a capital introduced in current years accounts, but wasps had treated it has income (I.e sales) in the Roth June 2018.
Effectively Richardson but some money into the business post 30th June 2017 , therefore accounting treatment should be a capital introduced in current years accounts, but wasps had treated it has income (I.e sales) in the Roth June 2018.
Grendel
Well-Known Member
fernandopartridge
Well-Known Member
3 posters do in fact. Interesting perception about importance of CCFC as well.
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oldskyblue58
CCFC Finance Director
Interesting points raised.
The consent solicitation is (a) more than technical because Wasps are in default of the current bond terms and (b) certainly is not about moving stuff around for tax purposes
The asset cover doesn't require increasing valuations or improved financial performance the ratio is that the value of the charged assets (the long lease £60m) must 1.4 x the senior debt (the bond debt £35m) the current multiple is 1.71 so room for the asset value to actually decrease and still be ok. To meet that covenant then all that is needed is to maintain the lease valuation at anything above £49m
EBITDA is reasonably easy to pick out. Earnings Before Interest Tax Depreciation and Amortisation. The intention is that it is the figure before allocation to minority share holders (Compass and I assume the Wasps amateur club) but I am not sure the bond documents made that clear (the amendment does) From the summary above roughly that means EBITDA was £799k plus the depreciation add back of £1.602m (Taken from the consent doc cash flow statement) = 2.401m but it needed to be Interest £2.328m x 1.5 = 3.492. It was short by £1.091m which is why Richardson put in 1.1m of funding as the equity cure.
The statutory accounts are not available because Wasps are in breach of the bond terms. If the auditors issued a report now they would have to qualify it on a potential for not being a going concern. However following discussions with the auditors a remedy they are happy with has been agreed and this is what is put forward in the consent solicitation. Assuming the consent is granted I would expect a clean audit report in terms of going concern
The adding back of the minority shareholders bit seems reasonable to me and I am surprised that it wasn't clear from the get go. Compass can only be paid a distribution out of taxed income which is stated after the deduction of interest and depreciation so it should not affect the EBITDA calculation at all. I think that this is a technical amendment to make blindingly obvious what is and is not in the EBITDA calculation
The bit about CCFC I think in current circumstances overstates the reliance on CCFC. If you look at what CCFC brings in could they create that profit in a different way? It isn't about the CCFC turnover it is about the bottomline. So if there were not 23 CCFC games there could they put on other events in the halls and lounges to generate the same or better profit ? Could they have more hotel rooms available to sell? Things like that. If CCFC were successful started going up the pyramid then that's a different question the opportunities for CCFC & Wasps are greater, and possibly any deals very different.
I agree any reasonably competent bookkeeper should know the difference between income and a loan and where they sit in a set of accounts
Cashflow is the key to the success or failure of the business. Things are tight and that reflected in costs being cut etc. At the end of 30/06/2017 they had spent 1.8m more than they generated but this included investment in plant & equipment of 1.64m.
The problems they have are the EBITDA and the cash flow. They are redefining the EBITDA and putting in extra comfort for bondholders in cash deposit. The cashflow relies on Richardson, the additional income from the RFU, maintaining incomes, and cutting costs
Are they vulnerable yes but the business is benefitting from inward investment and heading in right direction (just not as fast as perhaps they planned). Will it succeed - I don't know
The general consensus from the professionals on that site seems to be keep calm and nothing to get too concerned about. The bond price is beginning to climb again if slowly
The consent solicitation is (a) more than technical because Wasps are in default of the current bond terms and (b) certainly is not about moving stuff around for tax purposes
The asset cover doesn't require increasing valuations or improved financial performance the ratio is that the value of the charged assets (the long lease £60m) must 1.4 x the senior debt (the bond debt £35m) the current multiple is 1.71 so room for the asset value to actually decrease and still be ok. To meet that covenant then all that is needed is to maintain the lease valuation at anything above £49m
EBITDA is reasonably easy to pick out. Earnings Before Interest Tax Depreciation and Amortisation. The intention is that it is the figure before allocation to minority share holders (Compass and I assume the Wasps amateur club) but I am not sure the bond documents made that clear (the amendment does) From the summary above roughly that means EBITDA was £799k plus the depreciation add back of £1.602m (Taken from the consent doc cash flow statement) = 2.401m but it needed to be Interest £2.328m x 1.5 = 3.492. It was short by £1.091m which is why Richardson put in 1.1m of funding as the equity cure.
The statutory accounts are not available because Wasps are in breach of the bond terms. If the auditors issued a report now they would have to qualify it on a potential for not being a going concern. However following discussions with the auditors a remedy they are happy with has been agreed and this is what is put forward in the consent solicitation. Assuming the consent is granted I would expect a clean audit report in terms of going concern
The adding back of the minority shareholders bit seems reasonable to me and I am surprised that it wasn't clear from the get go. Compass can only be paid a distribution out of taxed income which is stated after the deduction of interest and depreciation so it should not affect the EBITDA calculation at all. I think that this is a technical amendment to make blindingly obvious what is and is not in the EBITDA calculation
The bit about CCFC I think in current circumstances overstates the reliance on CCFC. If you look at what CCFC brings in could they create that profit in a different way? It isn't about the CCFC turnover it is about the bottomline. So if there were not 23 CCFC games there could they put on other events in the halls and lounges to generate the same or better profit ? Could they have more hotel rooms available to sell? Things like that. If CCFC were successful started going up the pyramid then that's a different question the opportunities for CCFC & Wasps are greater, and possibly any deals very different.
I agree any reasonably competent bookkeeper should know the difference between income and a loan and where they sit in a set of accounts
Cashflow is the key to the success or failure of the business. Things are tight and that reflected in costs being cut etc. At the end of 30/06/2017 they had spent 1.8m more than they generated but this included investment in plant & equipment of 1.64m.
The problems they have are the EBITDA and the cash flow. They are redefining the EBITDA and putting in extra comfort for bondholders in cash deposit. The cashflow relies on Richardson, the additional income from the RFU, maintaining incomes, and cutting costs
Are they vulnerable yes but the business is benefitting from inward investment and heading in right direction (just not as fast as perhaps they planned). Will it succeed - I don't know
The general consensus from the professionals on that site seems to be keep calm and nothing to get too concerned about. The bond price is beginning to climb again if slowly
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Earlsdon_Skyblue1
Well-Known Member
My point on another thread carries through here. They took advantage when we were vulnerable, we should return the favour.
If CCFC and CRFC want to survive in this city, Wasps need to be starved and an alliance needs to be formed.
Butts Park for a bit, if there is any chance us not paying wasps rent will rock the ship enough for them to foxtrot oscar...
Captain Dart
Well-Known Member
Do you think it will jump back to around par if the consent solicitation is approved?
oldskyblue58
CCFC Finance Director
Probably
And if it does I would think will be a number of investors who will make a tidy profit on the dip then recovery.
Some investors might have backed away and sold up others might have the loss created sold to crystallize and bought back in.
oldskyblue58
CCFC Finance Director
I think and it is only my own opinion that the benefit of Ccfc to wasps is overstated. What I think stops wasps saying enough is enough and go is (a) the PR damage it would cause and (b) being seen to be conciliatory whilst court case going on.
Financially what damage would Ccfc not being there cause? 100k in rent. I wouldn't think they make much on f&b might make a bit on match day costs but if Ccfc not there the cost to wasps isn't either. So in the scheme of things whilst the turnover/rent hit might be 600k even 750k the hit to the bottom line I doubt would be 200k including the rent. Easily covered by other events or the owner. Other than that how do Ccfc and crfc affect the wasps finances to make them vulnerable. Not to mention that over 50% of wasps turnover has nothing to do with sport at all. Ccfc account for somewhere between 2% and 3% of wasps turnover. What currently makes wasps vulnerable is not the turnover but the ability to make enough profit and net cash flow. What we know suggests Ccfc has little effect on that
Could wasps make the turnover up by utilizing the lounges for say Asian weddings at 50k+ a time ? For example.
Also i query whether there is no positive relationship between crfc and wasps. Would crfc throw that away if it exists to take temporary gain with Ccfc. Like it or not, but rugby is on the rise in Coventry and surrounding area and people are not only walking away from Ccfc but from football in general too. That benefits all rugby clubs in the area. What you are suggesting will require financial investment at BPA that you say would be only interim arrangement why would crfc do that when they are doing just fine with out Ccfc? Also crfc being in the championship actually makes closer relationships with wasps more attractive to wasps in things like loan players etc. Which would be attractive to crfc too. The premiership is still a long way off for crfc so no butting horns with wasps in that sense for a long time and to get there will need a lot of finance .
Not sure that the pressure would be on wasps financially brought by such an alliance. It might be on Ccfc though. Success of the ricoh/wasps and crfc actually seems to squeeze Ccfc unless they too become consistent and successful. At what point do crfc say we don't need Ccfc?
Wasps are vulnerable but have the capacity and backing to change things. They are reliant on many sources of income not just gate income or a second sports tenant. Crfc are becoming successful and as yet not got to the higher incomes and costs of being in the second division but they have plans to diversify their income sources to make their rise sustainable without Ccfc.
Then you have Ccfc with no pot to piss in, little success and unsupportive owners. Totally reliant on football related income. Is an alliance of Ccfc and crfc to work against wasps feasible? It might be attractive to Ccfc fans but would it be to crfc? I think wasps are vulnerable but not to things in the control of Ccfc or crfc
Ccfc remain between a rock and very hard place, the most vulnerable of the three teams. It is almost a case of Ccfc needs crfc and /or wasps but rugby doesn't need Ccfc to prosper. That I think is the real worry
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Brighton Sky Blue
Well-Known Member
I came to the conclusion a long time ago that the club is permanently screwed. Barring the unlikely scenario of Wasps failing there is no prospect of owning a ground going well into the future, irrespective of who the owners are. New owners with some goodwill behind them would be able to strike a better deal with Wasps but still only on favourable terms to them. New owners with more money than sense might be able to build a new stadium, but at what cost to the club all over again? The fumigators left the building in September 2014, the Wasps nest is here to stay. People in this city don't care about where clubs come from, they just care about the day out. Free flags and tickets in a ground where you aren't treated as a budding hooligan for showing up tend to do the trick.
I agree with a fair bit of what you're saying re CRFC, there is no need for them to rock the apple cart by joining up with perennial failures who have lost meaningful interest in success. I disagree though, that football is on the wane in terms of popularity-PL attendances continue to rise and the brand, if not the quality, seems only to get stronger. What makes less sense to me is SISU holding on to the club. It can't be that Joy is loving every minute of bad PR that comes from futile court cases and destroying a cherished football club.
SkyBlueZack
Well-Known Member
If there was a campaign against wasps I believe they would suffer. If it was made clear they weren't welcome and people refused to attend the Ricoh for anything other than CCFC games, they would be in trouble.
50k for an Asian wedding? Hopeful ain't it? Would there be a queue of people wanting to be married at a football stadium? That weren't CCFC fans?
It's all well and good saying about other events but they are not guaranteed. The nec hoovers up most concerts, shows and exhibitions.
People seem worried about pressuring wasps, frightened even. Strange.
50k for an Asian wedding? Hopeful ain't it? Would there be a queue of people wanting to be married at a football stadium? That weren't CCFC fans?
It's all well and good saying about other events but they are not guaranteed. The nec hoovers up most concerts, shows and exhibitions.
People seem worried about pressuring wasps, frightened even. Strange.
oldskyblue58
CCFC Finance Director
Just to be clear I didn't say football generally is on the wane ..... didn't the EFL recently release a report a report saying quite the reverse...... The comment was on the specific current circumstances of Ccfc. Where despite moderate success, we are still in the mix crowds have declined if anything. Rugby in the city of Coventry has seen a resurgence of interest. If that continues then it will affect Ccfc in many areas including attendances, finances, recruitment etc that to me is a long term concern
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oldskyblue58
CCFC Finance Director
Could you now generate a campaign of boycott? Not convinced that most people in Coventry are that concerned. Most do not care enough about Ccfc to make a difference. They are not interested. It also assumes that a large number of wasps fans are Ccfc fans that could be convinced to make a stand.
Then as explained previously how much difference would a protest by some fans make to wasps finances. Because to hurt them it means affecting the finances. People are generally going because they enjoy it. It isn't about the principles of it all for them. They are having a good day out with family and friends and the history of how wasps got here will register less and less as the years pass.
It is a pity that crfc were not able to tap in to the interest and enjoyment earlier. I would love to see them back to their past glories. That said it would provide serious competition for Ccfc as they currently stand.
The Indian wedding comment was an example of an alternative. Not a solution. But Google the average cost of such weddings the figures are surprising. 50k is the average. What I was suggesting was that wasps wouldn't just sit there whining there is a hole in the finances, they would look to fill it ..... and such events might provide better profits. No they are not guaranteed but it seems neither is income from a football tenant. But we had there is no alternative to Ccfc before didn't we, that went well....
The longer wasps are here and the more coverage they get the harder it will be to dislodge them or even to organise anything meaningful to make a difference. In the meantime Ccfc continue to be squeezed from all sides. Time helps wasps it works against Ccfc.
Is it scared to criticise wasps or is it there never has been any leadership or organisation for people to get behind that protests wasps presence here. People like to be led. Comments demanding action or berating others on a forum that most of Coventry does not read isn't going to challenge anything meaningful
So someone detail what the actions should be how they work and why thousands in Coventry will follow it (I don't mean why they should I mean why they will). As with most protest there is plenty of talk but few who will lead or take action. Deal with the realities. Convince me it will work and I will back it. Can't help thinking it should have been done 3 years ago and the appetite for such action is now not that great in the wider population in the area.
Then as explained previously how much difference would a protest by some fans make to wasps finances. Because to hurt them it means affecting the finances. People are generally going because they enjoy it. It isn't about the principles of it all for them. They are having a good day out with family and friends and the history of how wasps got here will register less and less as the years pass.
It is a pity that crfc were not able to tap in to the interest and enjoyment earlier. I would love to see them back to their past glories. That said it would provide serious competition for Ccfc as they currently stand.
The Indian wedding comment was an example of an alternative. Not a solution. But Google the average cost of such weddings the figures are surprising. 50k is the average. What I was suggesting was that wasps wouldn't just sit there whining there is a hole in the finances, they would look to fill it ..... and such events might provide better profits. No they are not guaranteed but it seems neither is income from a football tenant. But we had there is no alternative to Ccfc before didn't we, that went well....
The longer wasps are here and the more coverage they get the harder it will be to dislodge them or even to organise anything meaningful to make a difference. In the meantime Ccfc continue to be squeezed from all sides. Time helps wasps it works against Ccfc.
Is it scared to criticise wasps or is it there never has been any leadership or organisation for people to get behind that protests wasps presence here. People like to be led. Comments demanding action or berating others on a forum that most of Coventry does not read isn't going to challenge anything meaningful
So someone detail what the actions should be how they work and why thousands in Coventry will follow it (I don't mean why they should I mean why they will). As with most protest there is plenty of talk but few who will lead or take action. Deal with the realities. Convince me it will work and I will back it. Can't help thinking it should have been done 3 years ago and the appetite for such action is now not that great in the wider population in the area.
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SkyBlueZack
Well-Known Member
I have ideas, couldn't do it all on my own. I have always been of the thinking, protests should be aimed at all parties. People don't like that, they just want to go after sisu. That is the difficulty, wasps have been accepted as they're not sisu. CCFC fans would need persuading that wasps are bad says it all.