oldskyblue58
CCFC Finance Director
just thinking out loud really
ask yourself what is most important to CCFC (the club not CCFCL or CCFCH) right now
.....is it buying an interest in the stadium or is it owning the rights to the income from the stadium?
I would have said that the need for income outweighs the need for a stake in stadium.
Bear in mind that the income sources other than rent from lease tenants and the naming rights now sit in the IEC joint venture company. That company is owned 77% by ACL 23% by Compass.
The case for and against a long lease on the stadium. Ideally then this gives CCFC control of the whole thing and income sources, thats the plus. It is going to take time and there are obstacles. Firstly ACL is a separate legally entity and can not simply be bypassed to give CCFC ownership. Why? well for starters the stakeholders are entitled to some worth from it, you can argue how much. ACL has secured finance on their 42yo lease that requires repaying otherwise CCC is left with a bad debt and a loan to repay themselves. The leases and contracts for Casino, Hotel, IEC Ricoh are all with ACL - these would be broken if ACL simply shut down to keep CCFC happy, that could mean compensation and lower rent from new leases going forward. Could those contracts be disposed of, well yes but not for nothing because they contribute to repaying the loan, and have value to ACL for the length of each lease etc. Biggest obstacle is that neither stakeholder is going to trust the existing or any new owners simply to help CCFC..... that is the consequence of what has gone on. Trust takes time and needs to be built.
What might happen to get round all the above is ....... the lease for ACL is extended to 125 years - (including but not necessarily a small premium and/or small annual rent). Then CCFC obtains a 99 year lease from ACL. That again can be at a small/no premium, but at a low rent. That gives CCFC security of tenure, the value of which isn't really important and frankly in the hands of CCFC at the moment is not worth much to anyone looking at the club given recent events. Why 99 years for club and 125 for ACL, well it means that CCFC lease renewable before ACL lease runs out - hopefully by then it wont matter because the club has bought the whole thing outright. It doesnt have to cost much but the way things are set up it wouldn't give rights to income because that is all now in IEC not ACL directly
Buy 50% of ACL from Charity. Well yes that gives an interest in the stadium but it doesn't give a right to income and nothing can be drawn down because the other stakeholder can block it. It doesn't give control so can ACL total turnover be included in CCFC FFP calculation ?- I suspect not. The Charity isn't simply going to give up its shares to the first person who steps in to own CCFC, they need to know after all that has gone on that the club is in good hands, that can only be done over time. The Charity also cannot give their interest away for nothing. It all takes time, time we do not have. So is buying the Charity share really a priority to anyone coming in? People say the Charity want out - well yes they never intended to be long term stakeholders- but they don't want out at any price and they need to know things are in safe hands.
CCFC need the income and they need to control that income. So why not simply buy the 77% of IEC to begin with. That effectively makes CCFC the site operator. That means that the whole of the IEC income can be included in the FFP calculation. Profits from IEC can be drawn down to CCFC to assist cashflow and that can not be blocked by the other stakeholder (77:23 share split). CCFC looks better in terms of income and profitability in the accounts. It gives a new owner worth/return for their investment, it gives them control of incomes that most other clubs in the FL do not have, it softens the cashflow and the cost of investment, It has potential for growth, it can be driven in the direction CCFC sees fit, it doesnt require a commitment to develop the site, it allows time to prove ability to run the club, it provides a basis for trust to grow. Prove that works then the CCC will take outright ownership more seriously (not saying it guarantees it). Couple that with a 99 year lease on the stadium element as suggested above and you end up with something worth having for CCFC and the City
That leaves the possibility of buying in to ACL but that means buying in to the development of the site. The right owners of CCFC might not be interested in or have the ability to do that. If they have the security of 99 year stadium lease and the right to all operating site income do they need to ? That leaves ACL in a more strategic position rather than operational, with modest incomes from rents and/or naming rights to repay the loan with very few other overheads. ACL can then tout the other areas it has to developers leaving the club to get on with the stadium. More people in the area should mean more income for the stadium, the club benefits at no investment cost. The club can buy in at a later date. If the club owners buy in to the IEC income streams then that price can repay loans of ACL at least in part. That means possibly a return for stakeholders sooner, giving the club time to rebuild, leaving a club interest in ACL possible etc
In summary - I would look at
- extending ACL lease to 125yrs
- offering CCFC a 99 year lease at low/no premium and low rent
- selling 77% of IEC to the club Now .... <well once current mess sorted>, (either by lump sum, staged payment, or earn out)
- leave option to buy 50% from charity in place for another 5 years
Just thoughts ....... everyone says it is the lack of income and high rent that is killing the club ....... well deal with those issues first, they are the critical ones, then deal with ownership later.
we have options...... a lot more options than simply saying we have to own the stadium
ask yourself what is most important to CCFC (the club not CCFCL or CCFCH) right now
.....is it buying an interest in the stadium or is it owning the rights to the income from the stadium?
I would have said that the need for income outweighs the need for a stake in stadium.
Bear in mind that the income sources other than rent from lease tenants and the naming rights now sit in the IEC joint venture company. That company is owned 77% by ACL 23% by Compass.
The case for and against a long lease on the stadium. Ideally then this gives CCFC control of the whole thing and income sources, thats the plus. It is going to take time and there are obstacles. Firstly ACL is a separate legally entity and can not simply be bypassed to give CCFC ownership. Why? well for starters the stakeholders are entitled to some worth from it, you can argue how much. ACL has secured finance on their 42yo lease that requires repaying otherwise CCC is left with a bad debt and a loan to repay themselves. The leases and contracts for Casino, Hotel, IEC Ricoh are all with ACL - these would be broken if ACL simply shut down to keep CCFC happy, that could mean compensation and lower rent from new leases going forward. Could those contracts be disposed of, well yes but not for nothing because they contribute to repaying the loan, and have value to ACL for the length of each lease etc. Biggest obstacle is that neither stakeholder is going to trust the existing or any new owners simply to help CCFC..... that is the consequence of what has gone on. Trust takes time and needs to be built.
What might happen to get round all the above is ....... the lease for ACL is extended to 125 years - (including but not necessarily a small premium and/or small annual rent). Then CCFC obtains a 99 year lease from ACL. That again can be at a small/no premium, but at a low rent. That gives CCFC security of tenure, the value of which isn't really important and frankly in the hands of CCFC at the moment is not worth much to anyone looking at the club given recent events. Why 99 years for club and 125 for ACL, well it means that CCFC lease renewable before ACL lease runs out - hopefully by then it wont matter because the club has bought the whole thing outright. It doesnt have to cost much but the way things are set up it wouldn't give rights to income because that is all now in IEC not ACL directly
Buy 50% of ACL from Charity. Well yes that gives an interest in the stadium but it doesn't give a right to income and nothing can be drawn down because the other stakeholder can block it. It doesn't give control so can ACL total turnover be included in CCFC FFP calculation ?- I suspect not. The Charity isn't simply going to give up its shares to the first person who steps in to own CCFC, they need to know after all that has gone on that the club is in good hands, that can only be done over time. The Charity also cannot give their interest away for nothing. It all takes time, time we do not have. So is buying the Charity share really a priority to anyone coming in? People say the Charity want out - well yes they never intended to be long term stakeholders- but they don't want out at any price and they need to know things are in safe hands.
CCFC need the income and they need to control that income. So why not simply buy the 77% of IEC to begin with. That effectively makes CCFC the site operator. That means that the whole of the IEC income can be included in the FFP calculation. Profits from IEC can be drawn down to CCFC to assist cashflow and that can not be blocked by the other stakeholder (77:23 share split). CCFC looks better in terms of income and profitability in the accounts. It gives a new owner worth/return for their investment, it gives them control of incomes that most other clubs in the FL do not have, it softens the cashflow and the cost of investment, It has potential for growth, it can be driven in the direction CCFC sees fit, it doesnt require a commitment to develop the site, it allows time to prove ability to run the club, it provides a basis for trust to grow. Prove that works then the CCC will take outright ownership more seriously (not saying it guarantees it). Couple that with a 99 year lease on the stadium element as suggested above and you end up with something worth having for CCFC and the City
That leaves the possibility of buying in to ACL but that means buying in to the development of the site. The right owners of CCFC might not be interested in or have the ability to do that. If they have the security of 99 year stadium lease and the right to all operating site income do they need to ? That leaves ACL in a more strategic position rather than operational, with modest incomes from rents and/or naming rights to repay the loan with very few other overheads. ACL can then tout the other areas it has to developers leaving the club to get on with the stadium. More people in the area should mean more income for the stadium, the club benefits at no investment cost. The club can buy in at a later date. If the club owners buy in to the IEC income streams then that price can repay loans of ACL at least in part. That means possibly a return for stakeholders sooner, giving the club time to rebuild, leaving a club interest in ACL possible etc
In summary - I would look at
- extending ACL lease to 125yrs
- offering CCFC a 99 year lease at low/no premium and low rent
- selling 77% of IEC to the club Now .... <well once current mess sorted>, (either by lump sum, staged payment, or earn out)
- leave option to buy 50% from charity in place for another 5 years
Just thoughts ....... everyone says it is the lack of income and high rent that is killing the club ....... well deal with those issues first, they are the critical ones, then deal with ownership later.
we have options...... a lot more options than simply saying we have to own the stadium
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