Valuations of ACL (20 Viewers)

[oldskyblue58]

We learnt at the JR that the valuations of ACL were 19.6m with CCFC there at a rental of 1.2m and 6.4m with no rent from CCFC. That's a gap of 13.2m

Often the value of a rental tenant is expressed as a multiple of the rent paid. It would seem in this case it is a multiple of 11.

What that leaves is a valuation of ACL business excluding CCFC of 6.4m. If that was on the same basis that would mean all other sources were 6.4 divided by 11 = £582K
Or a total turnover of 1.7m

Clearly not so ..... excluding the CCFC effect before CCFC pulled out ACL had a turnover of 5.5m ish

The major other tenants are De Vere and G Casino. There is no disclosure of how much they pay in rent I know of but the Isle of Capri rent compensation was being written off at £962k per annum does that equate to the rent G Casino should be paying? If so what is the length of their lease? (shorter lease brings lower multiple I would think) Similarly the De Vere takes up quite a bit of space so rent must be significant.

Then if you are valuing the business what about the other trade it does in conferences, events and exhibitions do they carry any weight at all when it comes to a business valuation?

Then you have to ask what was the purpose of the valuations security or market value for example. When were the valuations done and how are they affected by the reorganisation at ACL (assuming loan is legal) or the value if loan needs to be re done or replaced?

What about the strength of the respective tenants. An agreement or covenant with De Vere or G Casino is it worth more than a failing cash strapped football team? How is a risky tenant worth 13.2m in the ACL valuation and everything else half that?

I do not pretend to be a valuer or chartered surveyor but these are some of the questions that come to mind from the arguments in court this week. Some of it doesn't seem to add up. Explanations anyone?

 

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[skybluetony176]

We learnt at the JR that the valuations of ACL were 19.6m with CCFC there at a rental of 1.2m and 6.4m with no rent from CCFC. That's a gap of 13.2m

Often the value of a rental tenant is expressed as a multiple of the rent paid. It would seem in this case it is a multiple of 11.

What that leaves is a valuation of ACL business excluding CCFC of 6.4m. If that was on the same basis that would mean all other sources were 6.4 divided by 11 = £582K
Or a total turnover of 1.7m

Clearly not so ..... excluding the CCFC effect before CCFC pulled out ACL had a turnover of 5.5m ish

The major other tenants are De Vere and G Casino. There is no disclosure of how much they pay in rent I know of but the Isle of Capri rent compensation was being written off at £962k per annum does that equate to the rent G Casino should be paying? If so what is the length of their lease? (shorter lease brings lower multiple I would think) Similarly the De Vere takes up quite a bit of space so rent must be significant.

Then if you are valuing the business what about the other trade it does in conferences, events and exhibitions do they carry any weight at all when it comes to a business valuation?

Then you have to ask what was the purpose of the valuations security or market value for example. When were the valuations done and how are they affected by the reorganisation at ACL (assuming loan is legal) or the value if loan needs to be re done or replaced?

What about the strength of the respective tenants. An agreement or covenant with De Vere or G Casino is it worth more than a failing cash strapped football team? How is a risky tenant worth 13.2m in the ACL valuation and everything else half that?

I do not pretend to be a valuer or chartered surveyor but these are some of the questions that come to mind from the arguments in court this week. Some of it doesn't seem to add up. Explanations anyone?

I'm out.

Over to you Grendull.

 

[skybluesam66]

the thing to be careful of is that the combination of the revenue streams brings a diversified business model, therefore spreading risk, and increasing value

Take away the biggest income stream ,and the remainder is less diversified, higher risk and therefore lower value

So the decrease in value of the other streams driven by increased risk are probably part of the 13.2m gap

 

[torchomatic]

I was confused after "learnt".

We learnt at the JR that the valuations of ACL were 19.6m with CCFC there at a rental of 1.2m and 6.4m with no rent from CCFC. That's a gap of 13.2m

Often the value of a rental tenant is expressed as a multiple of the rent paid. It would seem in this case it is a multiple of 11.

What that leaves is a valuation of ACL business excluding CCFC of 6.4m. If that was on the same basis that would mean all other sources were 6.4 divided by 11 = £582K
Or a total turnover of 1.7m

Clearly not so ..... excluding the CCFC effect before CCFC pulled out ACL had a turnover of 5.5m ish

The major other tenants are De Vere and G Casino. There is no disclosure of how much they pay in rent I know of but the Isle of Capri rent compensation was being written off at £962k per annum does that equate to the rent G Casino should be paying? If so what is the length of their lease? (shorter lease brings lower multiple I would think) Similarly the De Vere takes up quite a bit of space so rent must be significant.

Then if you are valuing the business what about the other trade it does in conferences, events and exhibitions do they carry any weight at all when it comes to a business valuation?

Then you have to ask what was the purpose of the valuations security or market value for example. When were the valuations done and how are they affected by the reorganisation at ACL (assuming loan is legal) or the value if loan needs to be re done or replaced?

What about the strength of the respective tenants. An agreement or covenant with De Vere or G Casino is it worth more than a failing cash strapped football team? How is a risky tenant worth 13.2m in the ACL valuation and everything else half that?

I do not pretend to be a valuer or chartered surveyor but these are some of the questions that come to mind from the arguments in court this week. Some of it doesn't seem to add up. Explanations anyone?

 

[oldskyblue58]

the thing to be careful of is that the combination of the revenue streams brings a diversified business model, therefore spreading risk, and increasing value

Take away the biggest income stream ,and the remainder is less diversified, higher risk and therefore lower value

So the decrease in value of the other streams driven by increased risk are probably part of the 13.2m gap

You see the question I have on that is ....... surely CCFC were a high risk tenant, cash strapped, stopped paying rent, wanting rent decrease, deteriorating relationship etc etc ...... could it be argued that far from mitigating the risk CCFC posed both a potential for income but also an increased risk of failure. Too many eggs in one basket with CCFC so that could decrease value and increase risk?

 

[TheRoyalScam]

I seem to remember ACL stating that they had reduced their initial reliance on CCFC by diversifying their income streams. Didn't they say that CCFC accounted for 17% of their turnover the last year that the rent was paid? By my unqualified calculation that means overall turnover with CCFC paying £1.3m would have been £7.8m, and without the CCFC rent £6.5m.

All this bleating from TF about ACL being a 'failing business' reeks of BS and hypocrisy, compared to the utter basket case that Sisu have reduced my football club to.

And can anybody please explain just what good the JR did for SISU? Wasn't it just a feeble and unsuccessful attempt at PR spin and 'blustering'?

 

[Deleted member 5849]

You see the question I have on that is ....... surely CCFC were a high risk tenant, cash strapped, stopped paying rent, wanting rent decrease, deteriorating relationship etc etc ...... could it be argued that far from mitigating the risk CCFC posed both a potential for income but also an increased risk of failure. Too many eggs in one basket with CCFC so that could decrease value and increase risk?

If I were looking to bullet point are you suggesting the initial valuation with club there paying rent is too much, relative to the one post-club?

 

[oldskyblue58]

Am querying couple of things NW. The fall in value with and without CCFC seems too much when you factor in the risk of having a football club that is a financial disaster as a tenant. Is the Football club tenancy really worth 13.2m to ACL when (as was known) the possibility of non payment was high. The value of the other activities and rents seems lower than it might be expected although not tied to a 40 year potential income steam. But those other incomes form the overall majority of turnover (80%+)

It is back to "because football clubs are different argument" in a sense. In the community sense of worth they are valuable but in cold hard financial sense are they? Many football clubs are high risk to landlords and other suppliers surely that must be factored in when considering a rental covenant? a factor of 11 times rent is saying they are a decent risk are they really? In the end how secure is a long term tenancy for the landlord? not very it turned out

 

[Deleted member 5849]

Am querying couple of things NW. The fall in value with and without CCFC seems too much when you factor in the risk of having a football club that is a financial disaster as a tenant. Is the Football club tenancy really worth 13.2m to ACL when (as was known) the possibility of non payment was high. The value of the other activities and rents seems lower than it might be although not tied to a 40 year potential income steam.

It is back to "because football clubs are different argument" In the community sense of worth they are but in cold hard financial sense are they. Many football clubs are high risk to landlords and other suppliers surely that must be factored in when considering a rental covenant? a factor of 11 times rent is saying they are a decent risk are they really? In the end how secure is a long term tenancy for the landlord?

Well... the football club may be high risk, and certainly in hindsight, but is/was it when valuing?

Such bills do usually get paid, the lease in a 'normal' administration would be an asset somebody would 'normally' take on when buying the club (as indeed did SISU);

There were backups in the event of non payment for temporary cash flow issues from escrow and former directors' guarantees;

The club had been (as far as I'm aware, anyway!) reasonable in settling its football related debts if nothing else;

The Ricoh is (was!) in a monopoly position re: stadiums in Coventry able to house a football club, and football clubs are unusual in not being allowed to fail.

So... is it unreasonableto consider it 'secure' without the benefit of hindsight?

If I were being mischievous, it'd also suggest why there was no movement on the rental since 2006 when it was first mooted, as it was indeed seen as a secure income (and a necessary one for valuations?) so why move on a rent that's seen as secure?

But I am a mere layperson on balance sheets, so feel free to shoot down the idle speculation

 

[oldskyblue58]

I thought the valuation was done in mid 2012 - I would have thought the risk was certainly increasing at that time, relegation, rent dispute draw down of all Escrow, guarantors reluctance etc.

There were stories floating around about suppliers not being paid but to be fair there were no claims in the administration to evidence it so who knows but you would have to accept suppliers paid.

But football clubs do fail just no bigger clubs have been allowed to yet.

The risk to security of tenure was always there it isn't hindsight ....... but those making the decisions chose to ignore it. 2007 £50m+ CCFC all but goes bump 2008 deficits written off ..... 2012 34m in the hole as a group again .......... you could say the writing was on the wall

I think we would agree NW that the arrangement was too expensive for CCFC and too comfortable for ACL. But was only part of CCFC's problems because of their failure to address all costs and in particular wages. Look at the budget last year and what was achieved if you ignore the 10 points deduction. The one thing this dispute has done is to make ACL sharpen up their act and look to increase other incomes. If both had addressed those issues early on then there may have been a different solution to all this ..... but that's just speculation really

fair points well made NW, nothing to shoot down

 

[RPHunt]

The problem I have with playing the 'what is ACL worth' game is that this is the game SISU want to play.

I am interested in the football club and cannot see how, ultimately, the value of ACL has any bearings on the fortunes of the club. It may have some bearing on the fortunes of SISU, but I do not believe for one minute that the fortunes of SISU and the fortunes of the club are the same thing.

 

[oldskyblue58]

The problem I have with playing the 'what is ACL worth' game is that this is the game SISU want to play.

I am interested in the football club and cannot see how, ultimately, the value of ACL has any bearings on the fortunes of the club. It may have some bearing on the fortunes of SISU, but I do not believe for one minute that the fortunes of SISU and the fortunes of the club are the same thing.

I think you are most probably right in that

 

[Deleted member 5849]

2012 is, tbf, another matter

Then again, it is surely standard business practice to manipulate your valuation towards the high end if it's useful for you to do so, nothing unusual in that and it can justify a loan, but be within the remit of what you might 'expect' to happen as a business decision.

Landlords usually have the power, and if you were looking at precedent it wouldn't be unreasonable to expect the club to keep coming back. Sure, Rotherham moved out, but that was an attempt to negotiate a new agreement post administration. Usually if it gets to the edge it's the landlord locking the club out (David Lloyd at Hull springs to mind) and the club furiously scrambles around to find the money to pay the rent... as they need the income from being able to use the stadium! Grounds usually cripple owners rather than he other way around; ROn Noades seeing off Mark Goldberg and Simon Jordan being a fine example... yet the rent on Selhurst Park kept getting paid.

Probably not unusual, therefore, for the football club to be seen as a solid 'guaranteed' income... and even making a valuation in 2012... did anybody really believe the threats to leave until the club actually left? I'd suggest there's possibly only Stuart Linnell who did...

 

[torchomatic]

You're right there, NW. I don't think any of us actually thought the club would leave the Ricoh.

 

[Jack Griffin]

Probably not unusual, therefore, for the football club to be seen as a solid 'guaranteed' income... and even making a valuation in 2012... did anybody really believe the threats to leave until the club actually left? I'd suggest there's possibly only Stuart Linnell who did...

I have to say, I don't believe I did (though I'm not going to search back & check out what I posted at the time) & that is one reason why I think a new stadium may get built.

Though I certainly don't think it would take any less than 6 years hence before a new stadium could be ready and I also think it would be a pretty dumb move, very risky indeed!

I'm not sure I'd follow SISU into a new stadium after the way they've behaved.. and I don't think crowds will just return to pre-Sixfields levels as if nothing happened.

 

[oldskyblue58]

Doesn't the club leaving point to what I said though when dealing with football clubs proper financial sense goes out the window. There is only so many times going to the financial well or taking the financial hits. No one thinks a club will disappear, its emotion over head and a reliance on the fans to go above and beyond to pull them through.

Question just as an aside if SISU said tomorrow we have no more money to increase the budget or go bust we need the fans to chip in so we can survive would the fans do that. I suspect no unless it was linked with coming back to Coventry

I think what will slowly happen is that football in L1 and below will increasingly have to take on board proper financial control and the case of CCFC will be used as an example as to why. Just hope we are around as a club to say we survived it (I think we will be but it could be close)

With that I am off for the weekend have a good one NW and all

 

[Deleted member 5849]

Doesn't the club leaving point to what I said though when dealing with football clubs proper financial sense goes out the window. There is only so many times going to the financial well or taking the financial hits. No one thinks a club will disappear, its emotion over head and a reliance on the fans to go above and beyond to pull them through.

Yep, and as often said once one falls, there may be a house of cards... An auditor friend of mine would have wound us up long ago (he said, in words somewhat more vigorous!) so the fact we exist in whatever form is against all usual logic.

But also there is the precedent there before that allows a certain security. That in itself is logic to trust in that security when forward planning, as that is what happens and has happened before!

 

[shmmeee]

You're right there, NW. I don't think any of us actually thought the club would leave the Ricoh.

I think more importantly, at the time none of us thought the club could leave the Ricoh. No-one expected the Golden Share fiasco.

 

[stupot07]

Doesn't the club leaving point to what I said though when dealing with football clubs proper financial sense goes out the window. There is only so many times going to the financial well or taking the financial hits. No one thinks a club will disappear, its emotion over head and a reliance on the fans to go above and beyond to pull them through.

Question just as an aside if SISU said tomorrow we have no more money to increase the budget or go bust we need the fans to chip in so we can survive would the fans do that. I suspect no unless it was linked with coming back to Coventry

I think what will slowly happen is that football in L1 and below will increasingly have to take on board proper financial control and the case of CCFC will be used as an example as to why. Just hope we are around as a club to say we survived it (I think we will be but it could be close)

With that I am off for the weekend have a good one NW and all

Yeah very true, agree never thought they would actually leave the Ricoh, and yes, financial sense goes out the window when it comes to football clubs. They have loses far too much money for too long even since pre sisu days and in a way they're probably not loosing that much more In Northampton that they did the year before the Ricoh. That said its a stupid decision to move to Northampton both financially and politically.

We need better financial control in all areas but unfortunately that doesn't go down well with fans when it's the player transfer and wage bill.

You'd have liked to think that there are enough examples of clubs going bust (e.g Portsmouth,etc) to think that clubs should already be seriously considering tighter financial controls


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[lapsed_skyblue]

I believe that most people think of valuations they look upon it as a science and expect a consistent result. In reality making a valuation is more of art form having scope for subjectivity and agendas.
How much less would your house be worth if you had to sell it in 4 weeks? When your estate agent recommends a price drop of £10,000 how much does it cost him in terms of reduced commission?
If you are in negative equity does that matter to you if you don't want to move, or to your bank if you are able to pay the mortgage? However, if the bank loses confidence in your ability to pay the mortgage despite you never having missed a payment....
In considering the validity of a valuation you need to know the parameters given to the valuer and even that may not be enough: the general environment in which the valuation is being made is another factor. Valuations may therefore be useless if considered at a different point in time when different circumstances prevail.

I am therefore not surprised that the various valuations being bandied around are not consistent nor comparable. The various parties involved will undoubtedly select the valuation that bolsters their cause: if there isn't one I'm sure they can get someone to give them the valuation they need.

 

[dongonzalos]

Cant explain you quest OSB however what is clear and a 'debt specialist will not have missed. ACL or Ricoh Arena for that matter devalues massively when you kidnap the club.
Buy either at the low price or even less if you apply massive pressure with legal action and threats of a competitor stadium. Return the club an hey presto you make about 10 million.

 

[stupot07]

Cant explain you quest OSB however what is clear and a 'debt specialist will not have missed. ACL or Ricoh Arena for that matter devalues massively when you kidnap the club.
Buy either at the low price or even less if you apply massive pressure with legal action and threats of a competitor stadium. Return the club an hey presto you make about 10 million.

You mean ACL make about 10 million?


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[shmmeee]

You mean ACL make about 10 million?


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You miss the bit where he said "buy ... at a low price"?

 

[stupot07]

You miss the bit where he said "buy ... at a low price"?

Yeah, I missed that. Although you only make the £10m on paper and if they charge the club £1.3m rent per annum.


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[sky blue john]

Yeah, I missed that. Although you only make the £10m on paper and if they charge the club £1.3m rent per annum.


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Well if you wanted to be accurate the annual rent pays off the loan to previously the yorkshire bank but now CCC. This loan was taken out originally to cover the shortfall for the stadium build (which the old ccfc royally fucked up). Acl have not taken any money out of the company any profit goes on paying the loan and improvements to the stadium.

 

[lordsummerisle]

Well if you wanted to be accurate the annual rent pays off the loan to previously the yorkshire bank but now CCC. This loan was taken out originally to cover the shortfall for the stadium build (which the old ccfc royally fucked up). Acl have not taken any money out of the company any profit goes on paying the loan and improvements to the stadium.

should any improvements to the stadium made by ACL adding to the value of it have that money refunded on the lease by the freeholders?

Not sure how it works, but would seem to be fair.

 

[dongonzalos]

Yeah, I missed that. Although you only make the £10m on paper and if they charge the club £1.3m rent per annum.


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It's very simple something is worth a certain amount
SISU do something to devalue it.
They then buy it and then fix it an increase its value instantly

 

[Grendel]

It's very simple something is worth a certain amount
SISU do something to devalue it.
They then buy it and then fix it an increase its value instantly

But when they own the asset that makes the value higher why should they pay the higher value?

 

[Warwickhunt]

I seem to remember ACL stating that they had reduced their initial reliance on CCFC sby diversifying their income streams. Didn't they say that CCFC accounted for 17% of their turnover the last year that the rent was paid? By my unqualified calculation that means overall turnover with CCFC paying £1.3m would have been £7.8m, and without the CCFC rent £6.5m.

All this bleating from TF about ACL being a 'failing business' reeks of BS and hypocrisy, compared to the utter basket case that Sisu have reduced my football club to.

And can anybody please explain just what good the JR did for SISU? Wasn't it just a feeble and unsuccessful attempt at PR spin and 'blustering'?

so why the fuck did the YB want to pull their loan in then using your logic

 

[Jack Griffin]

so why the fuck did the YB want to pull their loan in then using your logic

They didn't.. in fact they were talking about restructuring it because they thought it could be serviced & would not be defaulted on.

Simon Gilbert @TheSimonGilbert · Jun 11

Council QC says fact Yorkshire Bank offered 15.5m loan to ACK kills Sisu state aid claim "stone dead"

 

[lordsummerisle]

They didn't.. in fact they were talking about restructuring it because they thought it could be serviced & would not be defaulted on.

Council QC says fact Yorkshire Bank offered 15.5m loan to ACL kills Sisu state aid claim "stone dead"

You would have thought that it was the opposite of killing the Sisu state aid claim "stone dead" really.

 

[stupot07]

It's very simple something is worth a certain amount
SISU do something to devalue it.
They then buy it and then fix it an increase its value instantly

But it was only worth that amount whilst ccfc paid £1.3m rent. It won't be worth that much with ccfc paying £150k rent.


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[Specs WT-R75]

I seem to remember ACL stating that they had reduced their initial reliance on CCFC by diversifying their income streams. Didn't they say that CCFC accounted for 17% of their turnover the last year that the rent was paid? By my unqualified calculation that means overall turnover with CCFC paying £1.3m would have been £7.8m, and without the CCFC rent £6.5m.

All this bleating from TF about ACL being a 'failing business' reeks of BS and hypocrisy, compared to the utter basket case that Sisu have reduced my football club to.

And can anybody please explain just what good the JR did for SISU? Wasn't it just a feeble and unsuccessful attempt at PR spin and 'blustering'?

If all this is true, and ACL makes more money outside of the football revenue why has there not been a rent deal at levels that suits the club?

Bottom line, right now nobody is winning. ACL isn't going to get an anchor tenant that will justify a massive renewal from Ricoh, the council are losing out from loss of business revenues from the surrounding areas, the fans are losing out, the club is losing out, sisu are losing out...

If ACL is profitable without the stadium, then sell that part of the lease back to the council to reduce the mortgage, and then CCC has a lease they can sell the club. Yes the club cannot easily access catering revenues but these things are not unworkable... revenue the club brings is shared etc whatever.

It's just too depressing... come on England!

 

[dongonzalos]

But it was only worth that amount whilst ccfc paid £1.3m rent. It won't be worth that much with ccfc paying £150k rent.


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It will be worth more with CCFC playing there whatever the rent. Than them in Northampton.

The Northampton move had a dual purpose IMO.

One to put the pressure on ACL so it has to be sold

Two when it is sold it is instantly lower in value than day one of new owners,

 

[TheRoyalScam]

so why the fuck did the YB want to pull their loan in then using your logic

Because SISU had stopped paying rent, the terms of the YB loan had technically been broken. They didn't want to 'pull their loan in' - they wanted it restructured @ £15.5m.