The low down on ARVO (1 Viewer)

[bigfatronssba]

It was an example for Ron who said he wouldn't back a stadium that put us in debt, purely to show that it doesn't mean any plan should be disregarded. There are no figures available hence the need for proper business plans and forecasts.

The point I was making was that having a debt, whoever it is to, is not necessarily a bad thing if that money is invested in something that generates money, preferably over the amount needed to service the debt.

And on this I would trust a Greek finance minister over any Sisu employee.

Every time they attempt to generate money via CCFC it goes wrong and we end up worse than we started. Throwing millions at a stadium envisaged by them will be the killer blow for CCFC imo.

 

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[Godiva]

Sisu aren't the club apparently, and will be gone once a new stadium is built we are told.

While they are here they own the club - if they can't pay the mortgage to themselves it's their problem.
When they sell I expect the new owners buy out that mortgage.
Didn't I say that clearly? (I think I even added that I was amazed Wasps didn't buy out the council mortgage).

 

[Noggin]

I think you compare apples with bananas. The stadium is a property, and current mortgage rates are well under 4%. It has nothing to do with stocks or business loans or IPO's - it's a property investment.

I don't compare apples with bannanas, in fact its you doing that by comparing building a stadium to an already built residential house worth more than the mortgage ammount, it doesn't matter what you are investing in, all that matters is risk and return. my family lends to a property developer at 20% interest and thats secured on his house (admittedly as second charge after the bank, which is fine unless his house ends up worth alot less than its valued at) why doesn't he get a mortgage instead at well under 4% interest? because he can't and sisu couldn't either. Once the stadium is built you can borrow against it at a much much lower rate (though considering how cheaply the ricoh was sold for and that this stadium is likely to be significantly worse good luck borrowing 20mill against it.)

 

[Godiva]

And on this I would trust a Greek finance minister over any Sisu employee.

Every time they attempt to generate money via CCFC it goes wrong and we end up worse than we started. Throwing millions at a stadium envisaged by them will be the killer blow for CCFC imo.

No, the killer blow will be if they leave us without a home we own.

 

[Godiva]

I don't compare apples with bannanas, in fact its you doing that by comparing building a stadium to an already built residential house worth more than the mortgage ammount, it doesn't matter what you are investing in, all that matters is risk and return. my family lends to a property developer at 20% interest and thats secured on his house (admittedly as second charge after the bank, which is fine unless his house ends up worth alot less than its valued at) why doesn't he get a mortgage instead at well under 4% interest? because he can't and sisu couldn't either. Once the stadium is built you can borrow against it at a much much lower rate (though considering how cheaply the ricoh was sold for and that this stadium is likely to be significantly worse good luck borrowing 20mill against it.)

Yes, but in the prospect the long lease is already sold to the club. So effectively it's no risk investment.

 

[martcov]

I think you compare apples with bananas. The stadium is a property, and current mortgage rates are well under 4%. It has nothing to do with stocks or business loans or IPO's - it's a property investment.

Pit is not a house where people can always live. It is a commercial property dependant on the demand or lack of for stadiums. High risk.

 

[bigfatronssba]

While they are here they own the club - if they can't pay the mortgage to themselves it's their problem.
When they sell I expect the new owners buy out that mortgage.
Didn't I say that clearly? (I think I even added that I was amazed Wasps didn't buy out the council mortgage).

It wouldn't make sense for Wasps to buy out the council mortgage, the rate it is currently at is less than anything a bank would offer.

The same could happen with any new CCFC owner. Sisu lend the new stadium company money at say 7%, in the years between this happening and new buyers turning up, interest rates go up, suddenly that 7% is better than anything a bank would offer, so we would then be stuck paying Sisu.

 

[skybluetony176]

While they are here they own the club - if they can't pay the mortgage to themselves it's their problem.
When they sell I expect the new owners buy out that mortgage.
Didn't I say that clearly? (I think I even added that I was amazed Wasps didn't buy out the council mortgage).

Only it won't be. They'll do what they do and restructure that debt so it will still be the clubs problem. Only probably over a longer period at an eventual higher total payback. And if that doesn't work repeat. Some people on here think that building a new stadium is the only way to get rid of SISU, my fear is it will actually lump us with them for longer. And then you have to add to the mix the other issues with the ground, not least where will it be.

 

[bigfatronssba]

No, the killer blow will be if they leave us without a home we own.

Why?

The best thing for CCFC to do is buy into income streams at the Ricoh and sign up to a long term rental contract. Its only the income streams that matter.

Ownership of a ground is of no use to the running CCFC.

 

[Godiva]

It wouldn't make sense for Wasps to buy out the council mortgage, the rate it is currently at is less than anything a bank would offer.

Isn't that unlawful state aid?

 

[torchomatic]

We'll now always be in debt to someone. Hardly breaking news.

What you've basically said there then is CCFC will be in debt to Sisu for the next 30 years?

Sorry if I don't give my backing to that one.

 

[bigfatronssba]

Isn't that unlawful state aid?

No, as you well know it wasn't.

 

[bigfatronssba]

We'll now always be in debt to someone. Hardly breaking news.

So aren't we better taking the safe option?

Taking a gamble got us into this mess, I'm surprised anyone thinks taking a gamble is the way out of it.

 

[torchomatic]

There is no "safe option".

So aren't we better taking the safe option?

Taking a gamble got us into this mess, I'm surprised anyone thinks taking a gamble is the way out of it.

 

[Godiva]

Why?

The best thing for CCFC to do is buy into income streams at the Ricoh and sign up to a long term rental contract. Its only the income streams that matter.

Ownership of a ground is of no use to the running CCFC.

Buy into the revenue streams? How could they do that? Would Wasps not need those revenues themselves - especially when you look at the losses they (and ACL) make. How much would they have to pay? Would it even remotely be a good business for the club?

I don't think it's realistic.

 

[Noggin]

Yes, but in the prospect the long lease is already sold to the club. So effectively it's no risk investment.

sold to the club that isn't really a going concern and has no ability to pay for it. You can't possibly think that putting 18m (I think its double that easy personally) is a no risk investment, I wouldn't do it at 50% interest and I mean that, you would be much much much better giving your 20m to neil woodford. Maybe you'll end up owning 5% of the next google or Apple, again even ignoring the massive massive risk there is no upside, you are going to end up with something worse the ricoh, that has the ricoh as a competitor but paying much much more than wasps paid for the ricoh, it makes no sense, even if everything works out there is seemingly no profit there.

you can understand why investors originally gave their money to sisu for the club, it was a gamble with a big payoff if it worked out, there is no big pay off with the stadium build.

 

[Godiva]

No, as you well know it wasn't.

It wasn't when the council owned 50% of ACL and protected their own interest. But now?

 

[Rusty Trombone]

Try this:

If they build a stadium for say £18m (including ground purchase), add a couple of millions for themselves and sell a long lease for £20m to the stadium management club, then they have made a nice little £2m profit right there.
They also lend the stadium management company the £20m (used to pay themselves) at say 6% or 7% over 20 or maybe even 30 years. That's a nice profit too.

So the management company would need to find £1.5m a year just to pay the £20m loan over 30 years at 6%. I don't think that would end well for them.

 

[bigfatronssba]

It wasn't when the council owned 50% of ACL and protected their own interest. But now?

A judgement cannot be made retrospectively.

 

[stupot07]

We went into administration last time that happened didn't we?

No, that was when sisu couldn't/wouldn't pay ACL.


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[bigfatronssba]

Buy into the revenue streams? How could they do that? Would Wasps not need those revenues themselves - especially when you look at the losses they (and ACL) make. How much would they have to pay? Would it even remotely be a good business for the club?

I don't think it's realistic.

So if a major regional stadium and conference centre can't cover those losses, why would a smaller, less adequate stadium be able to generate enough revenue?

Do you think a new stadium being able to generate enough revenue to pay for itself and cover CCFC losses is realistic?

 

[stupot07]

So if a major regional stadium a conference centre can't cover those losses, why would a smaller, less adequate stadium be able to generate enough revenue?

Do you think a new stadium being able to generate enough revenue to pay for itself and cover CCFC losses is realistic?

Do you think our long term future (say 15-20 years time) is playing in a wasps owned stadium containing yellow and black seats and WASPS RFC written in the seats?


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[Godiva]

sold to the club that isn't really a going concern and has no ability to pay for it. You can't possibly think that putting 18m (I think its double that easy personally) is a no risk investment, I wouldn't do it at 50% interest and I mean that, you would be much much much better giving your 20m to neil woodford. Maybe you'll end up owning 5% of the next google or Apple, again even ignoring the massive massive risk there is no upside, you are going to end up with something worse the ricoh, that has the ricoh as a competitor but paying much much more than wasps paid for the ricoh, it makes no sense, even if everything works out there is seemingly no profit there.

you can understand why investors originally gave their money to sisu for the club, it was a gamble with a big payoff if it worked out, there is no big pay off with the stadium build.

I know you wouldn't do it - but Cayman investors with little knowledge of the actual details surrounding the club?
Rich people, investors, usually divide their investments into several segments. They have some for high risk - so maybe already placed a part at Neil Woodford - some for long term low interests like national bonds - some in gold - some in FTSE - and some in property. I don't think it will be too hard to find the investors for a new stadium providing the plans and budgets looks appealing.

But the real argument here is not really if they can pull it off or not. The real argument is whether we want them to build us a new stadium. Right now I want us to have our own home with a surface we can play football on and where every penny spent is making the club stronger.

 

[chiefdave]

So if a major regional stadium and conference centre can't cover those losses, why would a smaller, less adequate stadium be able to generate enough revenue?

Why does it have to be a conference facilities in any new stadium? Pretty much anything could be incorporated, if they find something for which there is a demand it would be a success and there's no reason (other than who would be running it!) it couldn't be more successful than ACL.

 

[Godiva]

So the management company would need to find £1.5m a year just to pay the £20m loan over 30 years at 6%. I don't think that would end well for them.

It won't add up if the club is the only business there.

 

[Noggin]

Do you think our long term future (say 15-20 years time) is playing in a wasps owned stadium containing yellow and black seats and WASPS RFC written in the seats?


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The topic always gets steered this way and it's just not relevant to whether or not a new stadium is a viable proposition. Even if the current situation isn't viable that doesn't increase the viability of an obviously significantly worse option it just means we are screwed.

 

[bigfatronssba]

Do you think our long term future (say 15-20 years time) is playing in a wasps owned stadium containing yellow and black seats and WASPS RFC written in the seats?


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Well the colour of the seats isn't really critical to the future of the club. Just over 2 years ago Mark Robins was moaning about Sky Blue seats and half the posters on here were calling for a seat colour change.

What I am absolutely certain of though, is doing the wrong thing is far worse than doing nothing. And being dependent on a small stadium construction to cover CCFC losses, as well as its own construction costs is just going to end in disaster.

 

[bigfatronssba]

Why does it have to be a conference facilities in any new stadium? Pretty much anything could be incorporated, if they find something for which there is a demand it would be a success and there's no reason (other than who would be running it!) it couldn't be more successful than ACL.

Whilst that would work, is that not what every business strives to do? Find something with high demand and low supply.

As you say, with the people that would be running it, that would be down to luck rather than judgement.

 

[Rusty Trombone]

It won't add up if the club is the only business there.

So, the land and buildings will be big enough to incorporate other businesses, and all for a total price of around £18m. Looks like it doesn't add up.

 

[martcov]

Why does it have to be a conference facilities in any new stadium? Pretty much anything could be incorporated, if they find something for which there is a demand it would be a success and there's no reason (other than who would be running it!) it couldn't be more successful than ACL.

Yes, but what? Shopping centres are everywhere. Hot dogs and MacDonalds? Mac already suffering a decline. Up til now we have only had a sketch of a stadium with nothing around it. I don't think it is that simple. Which why 0,0% progress has been made. They have yet to set a professional structure for player recruitment in place ( according to TM ). That is embarrassing and explains the hit or miss random player selection. I have therefore, no faith in them to get a stadium together.

 

[Noggin]

I know you wouldn't do it - but Cayman investors with little knowledge of the actual details surrounding the club?
Rich people, investors, usually divide their investments into several segments. They have some for high risk - so maybe already placed a part at Neil Woodford - some for long term low interests like national bonds - some in gold - some in FTSE - and some in property. I don't think it will be too hard to find the investors for a new stadium providing the plans and budgets looks appealing.

But the real argument here is not really if they can pull it off or not. The real argument is whether we want them to build us a new stadium. Right now I want us to have our own home with a surface we can play football on and where every penny spent is making the club stronger.

high risk has to have high reward though, even if they are able to put together a plan that shows a profit on paper (which I don't believe is possible) the return is still going to be small compared to the risk and so no cayman investors wouldn't be involved. This plan has high risk, low reward so has no place in any portfolio, if you want risk you invest in venture capital, or biotech funds or something.

I'd love to own our own stadium but its not going to happen as things stand.

 

[chiefdave]

I don't think it will be too hard to find the investors for a new stadium providing the plans and budgets looks appealing.

Lets face it Ranson managed to persuade SISU we were worth investing in! There would most likely be no mention of SISU or much of a mention of CCFC in any prospectus to raise funds, it would be all about an event facility and whatever else was incorporated into the site. Make it look attractive enough and people will invest.

Of course that assumes they need investment, there is a scenario where they wouldn't need funding, obviously made up figures but lets say a new stadium cost £20m and there's 20 units incorporated into the site for which they have pre-sold leases at £1m a go, 'free' stadium. Obviously there's a lot more to it than that and it would deb very hard to do to say the least but just because a stadium costs x amount doesn't mean there would be a loan for the same amount.

 

[Rusty Trombone]

Bristol City are redeveloping 3 stands for £45m.

 

[Godiva]

So, the land and buildings will be big enough to incorporate other businesses, and all for a total price of around £18m. Looks like it doesn't add up.

Look, I used the figures as an example - it was not the final figures from Fishers calculations. Why try ridiculing the numbers when the concept is the essential part?

The stadium cannot be the only business there, so the land spot must be large enough to house additional buildings. That also means there are more than the club to share the lease costs. It also means there will be more business for the stadium management company and more FFP/SMCP bonus for the club.

 

[chiefdave]

Yes, but what?

well that's the million dollar question and if I knew the answers to those sort of questions I'd be doing it myself and have enough money spare to buy the club and build the ground. By no stretch of the imagination would it be easy, and given SISU's track record they are the last people you would want managing the project, but it's not impossible.

To me that's the key point, show us how the two options stand up against each other and if both projections stand up to scrutiny and a new stadium is shown to be the best option then lets pursue that.