At least these arguments are thought through and worthy of consideration:
I would argue that the stadium lease is in reality freehold. Unless the organisation defaults then it will it will own the structure for its lifetime. This gives a significant advantage over a lease of less than 50 years which always massively impacts value.
I would say it was very expensive compared to other stadia of its capacity yes if the figures are correct. People will argue it has a hotel etc. but the stadiums such as Stoke, Leicester etc, cost significantly less and certainly the returns from the hotel etc would have to be massive to justify the return
Yes I am to an extent talking about the original lease - I have always said that, The original lease was in my view always massively overvalued as as such was an object which was expensive and without value. The Higgs share was in effect worthless and the valuation placed on it through a formula valuation hugely disproportionate to actual worth.
The council had to move the goalposts massively to achieve a valuation for sale that even then was a fraction of the amount it was previously quoting and a value that would have had people on here up in arms if it was the clubs owners that acquired it. If the lease and the terms had not been altered I do not believe that Wasps would have acquired the stadium at all. Even when they did the value was less than most people on here believed it was worth on the original lease.
My assertion is that the original lease on the stadium made the stadium worthless hence the term. That is always the argument I have maintained and still do. Thje council had to significantly revise its terms to sell.
Happy to discuss valid points or opinions G not interested in some of the other stuff you and others get involved in
Much of what you say is your opinion, as is mine, and I think we will have agree from the off to disagree on certain things. I do not have a problem with that.
A long leasehold can be viewed as equivalent to freehold for valuation purposes. Legally it is not the same thing at all. People mix up the legal reality with valuation equivalence and make the leap that it is the same thing. Does it give you long term rights yes, do you have the rights of a freeholder no. Yes there is the control of the site that a lease gives you but you can not for example make changes to the freehold without the freeholders permission, and some things are excluded even then. You couldn't sell or transfer the lease without the freeholders permission
Yes in theory a long lease, in this case 250 years, you could expect to have a greater value than a 50 year one. In this case without the head lease of 50 years and owning ACL it is not possible to get the long leasehold. That in itself gives the head lease value to an entity seeking a long term agreement, and gives CCC/AEHC something to sell. You cant get the head lease without ownership of ACL, which must therefore give ACL value - how much is a different question, but events showed it wasn't worthless.
Yes there are advantages to a long lease but also disadvantages, the stadium is not going to last 250 years for example. Useful life is probably around 50 years without significant improvements/rebuilding to be carried out by the leaseholder
I think we should not mix up the value of the management company with the value of the head lease or the construction costs. the shares purchased by Wasps include a value of the head lease but they are not the value of the lease itself
The stadium bowl at the Ricoh accounts for under 50% of the space, so I do not think you can dismiss the additional construction work to build the other facilities and infra structure when comparing to other grounds. I doubt, but have not checked, the other grounds needed 17m spent on decontamination, that £110m also included the cost of the land sold to Tescos for example. The hotel, exhibition space, car parking are income earners 365/24/7 not just construction costs. Two thirds of the site income is not sport related. Many other stadiums simply do not have the same facilities, or were built well before. Non sports income Events, conferences, hotel over £12m
KIng power stadium cost 37m in 2002 - doesn't have the same amount of car parking, hotel facilities, exhibition halls etc and therefore potential income sources Commercial income inc shop £7.5m
Bet 365 stadium cost 19.5m to date (£15m in 1997) - it doesn't have the same facilities at all and therefore potential income sources Hospitality & event income £3.7m
Pride Park cost £28m in 1997 - again it doesn't have the same facilities and therefore potential income sources Hospitality & event income £3.5m
All cheaper yes but are we comparing like with like.
The original lease an object that was expensive and without value?. Was it expensive?, without seeing the valuations in 2008 I couldn't say but I would tend towards your opinion. The greatest mistake CCC did was to not offer a long lease in the first place . Did the lease have no value, not sure how anything other than opinion contradicts the actual events that have taken place and the information in the financials. On the one hand we have qualified specialists saying that the lease did have value against which there is unqualified opinion it didn't, sorry but I tend to accept the professional opinion but not unquestioningly.
Both SISU & Wasps bid for at least some of the shares. SISU on two occasions if we are to believe they were serious. The sums bid for the charity shares were not too dissimilar. Those values were similar to the balance sheet values of ACL Group. The share price is a reflection of all the assets less all the liabilities of a company agreed by the two parties. ACL included a valuation of the original lease (18m in 2014) - a valuation it would seem to be in the right ballpark value for both SISU & Wasps. The value of the head lease was accepted by various parties as reasonable and a figure circa £18m by 2014
Was the charity share worthless? It was sold for 2.77m plus add on's. Even SISU were prepared to make an offer of £2m plus in 2012. It being "worthless" is an opinion what happened says otherwise. The "value" placed on the charity shares by the formula was a contractual agreement between CCFC ltd and AEHC for the repurchase of the shares it actually had no relationship to the value of ACL nor was ever intended to, and in any case that formula was never activated at any time. You could argue the shares had a ransom value, often the case with less influential partners, but it would still be a value not worthless. The lease extension was not available to Wasps without the purchase of the Charity shares.
The value to CCC or indeed to AEHC at date of sale is totally different to what the value was in the hands of new owners the two are not connected. At date of sale CCC & AEHC could only sell what was, a cash flow short stadium and events site with no long term sports team there. Apparently a worthless white elephant with no real value under the ownership of CCC & AEHC - indeed if the head lease had no value then the balance sheet would have been £13m in the red, the loan security at risk etc. If it was such a valueless set up why would anyone be interested in paying millions or going to court because they were not allowed to bid?
Would Wasps have bought without a lease extension. Almost certainly not but then again neither would anyone else. I believe SISU even made an approach for a 100 year lease didn't they? I agree I thought the value would have been more than £1m - we will perhaps see why it was £1m if the JR2 gets off the ground.
The original lease was included at values that the directors, various valuers, auditors, legal experts, bidders, buyers etc were happy with. It clearly went on to achieve something like its value when included in what was being bought by Wasps( the shares)
We will also see how much of a white elephant ACL & the stadium were or had potential to be when Wasps publish year end results. I accept CCC were for years not keen to get out but the whole project was never meant to remain with CCC & AEHC long term. There was clearly also interest in the background from various parties over the years. Was the site including the stadium expensive to build possibly, was ACL or the head lease ever without value no I do not think so. Has the Ricoh, Coventry got a decent reputation locally, regionally, nationally? does it contribute to the local economy? does it provide large numbers of employment? has it encouraged other development? Does it now raise Coventry's profile in a positive way?etc - Councils do not need to see things in £ cost they can take other things in to account that would knock back the white elephant argument also
or i could use the investopedia definition White Elephant
