Interesting that this thread aimed at CCFC became a discussion of Wasps again. Not really done much detailed checking on their finances, so had a look at the accounts.
Firstly at what point did I say there was no risk. I said I didn't think Wasps had a problem as it stands . Their accounts identify the major risks and how they are mitigated. As I said above all businesses have risks it is part of what drives them forward. I do not agree that these serious financial people would have no plan going forward, or that they wouldn't see the difficulty in raising £35m in cash to repay the bonds and wouldn't be being active to solve the issue.
If they don't they may have a problem, but there is a lot of if this or if that, what happens if they show profits from here on in, what happens if they do not default, what happens if a replacement bond is over subscribed. All ifs buts and maybes. Current price shows a premium of 4.5% the price has only dipped below par for 9 days last November when a large trade hit around the time the interest was due. Yes there are risks but presently the market sees the Wasps bond as a good risk
Most of the bond issue of £35m was used to replace existing borrowing. Then 3.4m was retained on deposit to pay 18mths of interest and 3.5m spent on improving the hotel on site and some working capital. The loans that were replaced all carried interest charges. Annual combined charge around £1.5m. The bond carries an annual interest charge of 6.5% or 2.28m. Interest charges were being met previously so the actual increased interest burden is £725K. . Borrowings for group had it existed 30/06/2014 were £25m by 30/06/15 £40m by 31/12/15 38.6m. By 31/1215 Richardson was owed £7.9m. Why he wanted money out who knows but repayment spreads the risk to Wasps
Profits. Think you have to look behind the figures not just accept the headline. Yes the accounts to 30/06/2015 showed a loss of 6.3m (including interest of 1.2m) But. The accounts did not show a full year trading for ACL because the Group only brings in the results from date of purchase. However the Wasps group accounts give a note stating had a full year been included then the loss would have been £3.6m. Also included in the results were £1.9m in exceptional charges. Factor in those things and the loss is not so damaging and actually at 1.7m including interest charges
Then look at the interim results and you can see, a loss again 2.9m for 6 months (after interest charge of £1.13m) . But the rugby season started late, (two less games at home than there should have been) overheads incurred but income restricted. Income per match Tickets £245k F&B £90k . There are major events to fit in before end of financial year MTV (three year contract) Springsteen & Rhianna, not to mention more rugby matches than the first 6 mths league and cup. Gross margins have increased by 5% to just under 30% and it looks like turnover could be over £30m. Borrowings have decreased to 38.6m. Will they still make a loss? probably but it looks like it is heading in the right direction. If they made profits from here on in what would the bondholders reaction be?
But its not the profit that is going to kill Wasps its the cash flow. Over the 18mths to 31/12/15 the group is cash flow positive by 1.25m.
Yes there is a risk to the bonds but it is a managed risk based on driving the business. The bonds of course are secured on the lease valued at 48m which is not going to drop in value much due to time (6 years out of 250 is not a lot). If Wasps have a bad season then rugby income will be hit but the other incomes cushion that and because of the short contracts playing costs can be reduced as necessary. Crowds of 7000 are still going to generate £150k per game. They are not going to be moving back to London area imo, most if not all of the other clubs that have moved and then moved back did not own the site they moved to and certainly did not have the significant other incomes the Ricoh provides.
So bringing it back to what I am more interested in
CCFC
Average crowds of 12500 for CCFC generate the club Ticket income circa 112k plus 4k in F&B per game. Rent per game £4350
Another thought for you IEC experience currently has no charges registered against it. So those income streams are not charged. Did CA talk to ACL or was it IEC / Compass?
As for Seppalla waiting 6 years for Wasps to go bust. Well that's a strategy that might work for her but can CCFC afford to wait it out? Why bother with BPA and waste all that time and money if that's the plan? In the mean time Wasps could soften the blow to their finances by putting the rent up to a short term tenant that doesn't want to stay and who doesn't have anywhere else to go. If we get promoted Why would Wasps want to sell ownership even if they could surely they just milk the situation?
CCFC is still in a very big deep hole
