italiahorse
Well-Known Member
He will go down in club history as putting the final nail in the coffin lid.
Billy liar strikes again
Sooner we get rid of this joke of a Chairman or whatever is pretend title is the better
I'm uncomfortable with that though, Torch.
Would much rather we had the Ricoh and Wasps buggered off back to London. We move and Wasps stay and you then have the scenario of a Coventry City team from Coventry playing outside the city and a London team, obviously not from the city, actually playing in our city.
The main local team gone from city, franchise team from bleedin miles away as the number one sporting team in the city.
Just doesn't sit right at all with me.
Exactly. We've got plenty of posters salivating at the thought of Wasps going bump of the back of the bonds but seem willing to sleep walk our club possibly into a similar situation abusing anyone who questions it as council lovers, wasps lovers or club hater's.
Similarly if you dare direct any criticism at the council for giving Wasps - the outsiders - a 250 year lease than will probably be the death knell of the club then you are a SISU lover.
Not true.
If you direct criticism at CCC but not at Sisu you are a Sisu lover.
Similarly if you dare direct any criticism at the council for giving Wasps - the outsiders - a 250 year lease than will probably be the death knell of the club then you are a SISU lover.
What are you if you make gifs saying SISU IS SAVING US?
You seem content to let wasps play games with us.
I don't know how you of all people can include a factor as to how many will follow outside the City.
Really have a word with yourself.
Well, I've said that and I'm pretty sure I'm not a SISU lover.
Some info about Propco Opco arrangements
http://www.dwf.co.uk/news-events/le...the-value-and-the-security-in-the-same-place/
In the early - mid naughties, Propco/ Opco deals were all the rage. By separating the real estate and operating assets of a business into separate corporate entities, borrowers secured greater leverage against the property assets, and could also tap into real estate funding that was not available for mainstream business funding.
The structure was particularly suited to businesses with substantial real estate assets that were integral to the operation of the underlying business. Examples include retail businesses, care homes and hotels. The result was heavily geared property portfolios and fixed high rents required to sustain the property deals.
Roll forward a few years and many of these Propco’s are in desperate need of restructuring. Many are based overseas in the Channel Islands, the Caribbean or Denmark, and all are divorced from the underlying value in the businesses that operate in them. Rent is no longer affordable (and because of the close relationship between Propco and Opco, seldom paid). At the same time real estate values are such that the enterprise value is now equally important as the real estate value.
In sectors such as care homes, not only will a ‘going concern’ valuation usually be materially more than a ‘vacant possession’ valuation, but the ‘vacant possession’ valuation will be subject to closure costs which will reduce realisations still further as well as bring about potentially adverse publicity.
This might not be a problem, or at least would all be part of the same problem, if the lender had any control over the ‘business’ rather than just the real estate. Unfortunately this is rarely the case. Real Estate financing rarely looked at the underlying business and did not require a full security structure over both real estate and operating businesses.
It may seem like pointing out the obvious, but restructuring professionals should look at the underlying value of the overall enterprise. From a lender’s perspective, if this points to a need to secure control of both real estate and the underlying business, then this should be put in place as a priority and as a condition of the necessary support requested.
This often means a debenture over the Opco, cross guarantee between Propco and Opco, an assignment of Opco’s rental income (note that a separate Deed is required in Scotland), and a charge over the shares in Opco so the lender can sell the shares without taking control of a heavily regulated, capital intensive and high risk business. It may also include assignments of rights under operating agreements so that the lender can secure ongoing services during any at-risk period.
So to summarise, if you identify an opco/ propco structure without full cross security, think carefully about putting it in place as a cornerstone of future support.
I think this is correct. It is all well and good when the opco is doing well and the investors are getting their return, but when things go wrong it's back to the investors to save the opco or end up with a white elephant. I don't like the idea of an 18000 stadium outside Coventry. Our main income is ticket sales and even with more F&B and car parking income we need people in the stadium. If we do well this season, I can see a couple of games at the end being over 18000 and if we can get to the Championship more games over 18000. If we stay in Cov we retain our Coventry identity - even if the stadium becomes more Wasps. The plan should be, let's get security of tenure from Wasps at our League 1 level ( cheap as possible ) for 5 or preferably 10 years and get the team out of this league ASAP. Ultimately we will probably have to get our own stadium, but the situation may be entirely different in 5 to 10 years and we may be in a better position to get our own financing. Now is not the time to move downwards in capacity and tie ourselves to investors in a propco.
I think this is correct. It is all well and good when the opco is doing well and the investors are getting their return, but when things go wrong it's back to the investors to save the opco or end up with a white elephant. I don't like the idea of an 18000 stadium outside Coventry. Our main income is ticket sales and even with more F&B and car parking income we need people in the stadium. If we do well this season, I can see a couple of games at the end being over 18000 and if we can get to the Championship more games over 18000. If we stay in Cov we retain our Coventry identity - even if the stadium becomes more Wasps. The plan should be, let's get security of tenure from Wasps at our League 1 level ( cheap as possible ) for 5 or preferably 10 years and get the team out of this league ASAP. Ultimately we will probably have to get our own stadium, but the situation may be entirely different in 5 to 10 years and we may be in a better position to get our own financing. Now is not the time to move downwards in capacity and tie ourselves to investors in a propco.
"See this face, does it look bothered?"
It seems to me that a propco opco arrangement offer's SISU more protection for their asset (The Stadium) than it does their investment (The Club) Is it really going to offer any more security for the club than staying at the Ricoh in a good ten year deal? If the location pisses of the majority of our fan base is it really going to produce more revenue for the club regardless of 365days a year income? Will the rent level be fixed and at what? There's so many more questions needed to be asked of Mr Fisher from his flippant remark that it will be a Propco Opco arrangement. Oh for a business plan!
The location is paramount. Everyone has a breaking point as to what is too far and I do get the feeling that the location we are musing over (if we are indeed looking), is going to be beyond the threshold for many.
Here's some more on Propco Opco
"Jamie Hyams considers whether the financial crisis has undermined the foundations of Opco/Propco structures or whether anything can be salvaged from the rubble.
Before the current lending crisis it was not uncommon for companies with good real estate portfolios to look at alternative ways of leveraging their assets to raise finance. Often the trend was to move away from traditional methods of charging property in order to increase the level of borrowing available or improve the terms on offer. One popular method was to transfer the property ownership to one group company (Propco) and retain the operating business in another (Opco). By financing each separately a group could, in theory, raise more and/or cheaper debt.
Structure
The basic Opco/Propco structure operates by way of a sale and leaseback process. Opco sells the real estate to Propco for cash and Propco then leases the real estate back to Opco on an institutional long lease. Opco and Propco are independent of each other and may even become separately owned. The objective is to release capital that is locked up in real estate assets so it can be redeployed in the operating business.
Click here to view diagram.
Opco/Propco structures are usually used where the group wants to retain ownership and control of its real estate. This differs from traditional sale and leaseback transactions, where the property is sold to an independent real estate investor and the former owner becomes the occupational tenant.
Increased Borrowing
Propco borrows against its new property assets and uses the rental income from Opco to service its debt. In return for the property, Opco obtains a capital sum that it can use in its business rather like a loan advance. Selling the properties to Propco does not materially reduce Opco’s borrowing capacity as lenders of business loans generally concentrate on the ability to service debt rather than comparing the amount of the loan to the value of balance sheet assets. This contrasts with Propco’s lenders who will usually look at Propco’s loan to value ratio. In theory, therefore, the Opco/Propco structure enables Opco and Propco to borrow independently of each other and raise more finance.
Property Issues
One of the key features of the Opco/Propco structure is that Propco is a clean, newly-formed company. Where leasehold properties are concerned, only long term premium leases (leases granted for a term of 50 years or more at a premium) are usually suitable, both for value and security reasons. A rack rent short term lease is generally unsuitable as it is regarded as a liability with no capital value. Where long term leases are available, they may still be unsuitable if landlord’s consent is needed to assign and if insolvency of Propco would enable the landlord to forfeit the lease.
Popularity of the Opco/Propco structure and the impact of the Global Financial Crisis
The reason for the popularity of the Opco/Propco structure before the current economic crisis began in 2007 was evident. The structure enabled companies to release equity caused by the property boom without selling the underlying assets and allowed Opco to fund further expansion. To maximise borrowing, the lease terms were heavily weighted in favour of Propco because both the property value and the borrowing capacity at Propco level depended on the terms of the underlying lease. Lenders competed to provide finance secured against such assets whilst investors fought to acquire long term, secure income streams which increased through upwards-only rent review or ratcheted/fixed rent mechanisms.
However, the prevailing confidence that the yield compression could continue without correction proved misplaced as the market peaked and started falling. The pressure on pricing finally imploded with a massive fall in capital prices exacerbated by the credit crunch which saw full-scale withdrawal of liquidity from the markets.
The Global Financial Crisis also took hold at Opco level. The rigid lease terms that Opco faced as tenant plus the sale of its prime assets left Opco exposed to an insolvency risk if it could not continue to trade.
Many UK businesses that utilised the model - pub groups (such as Barracuda, Orchid), care home groups (such as Southern Cross, General Healthcare Group) and car parks – found themselves squeezed at Opco level. The reduction in government spending was reflected by local authorities who reduced spending on procuring beds in private care homes, resulting in lower occupancy rates. For Southern Cross, the impact eventually forced it to wind down and hand the homes back to its landlords. Pubs also faced challenges from discount retailing by supermarkets and reduced trade caused by the smoking ban.1
Opco/Propcos – when it all goes wrong
The downturn in the economy resulted in Propcos owning devalued assets which breached the terms of their loan to value covenants whilst the ability to service their debt from the Opco income stream looked more fragile. Many Opco tenants meanwhile struggled to meet their rent payments as in the case of Southern Cross where the high rental levels became unsustainable and its ability to operate as a going concern became threatened. Given the sensitive nature of the business, there was considerable public outrage at the prospect of the closure of care homes and Southern Cross were criticised for taking financial risks.
Mitigating the Risks
It is understandable that, in the aftermath of Southern Cross and the credit crunch, Opco/Propco structures have become increasingly rare. However, they should not be written off entirely. Greater care needs to be taken and an increased emphasis placed on mitigating the risk to Opco without significantly reducing the value or debt capacity of Propco. There are a number of ways to do this:
• Leases that have stepped or index-linked rent increases may cause cash flow problems when the operating business struggles so they should not be agreed without proper consideration. Shareholders in Propco will want to maximise returns by imposing high rents, but this should not result in Opco becoming so vulnerable that the entire business could become insolvent as a consequence.
• Opco should retain the sales proceeds until there is evidence of sufficient growth in operating cash. This retention mechanism may be perceived as an inefficient use of the restructured capital, but ultimately it can be a prudent safety net in the event that the operating business experiences reduced revenues.
• Where there is a portfolio of properties, a piecemeal transfer of properties to Propco may be advisable so that only those assets that have been fully operational for a specified time are transferred and the group can ensure that the Opco owns tangible assets.
The future of Opco/Propco
The prospect of Opco/Propco structures becoming more popular in the near future is unlikely. The continuing lack of available credit leads to an additional issue: many of the companies that entered into Opco/Propco structures will shortly need to refinance their loans if they do not already need to do so.
Some of these loans are for significant sums and the current lending market is unlikely to absorb them in any structure. Borrowers will therefore need to look at alternative markets to attract funding. Alternatively, an outright sale of the assets may be the only available solution, albeit a less attractive one for the original investors.
The fundamental principles behind the Opco/Propco structure are not the reason for its decline in popularity. The decline is directly attributable to the current lending crisis and the negative criticism that such structures have received. As ever, the press will only report those instances where the Opco/Propco has gone wrong rather than its successes, of which there are undoubtedly some.
Mistakes have also been made at board level, but lessons can and should be learned. If and when the current lending crisis eases, Opco/Propco structures should be looked at again as a way of releasing capital. Provided they are operated sensibly, Opco/Propco structures can be a viable way for companies to realise value in their assets whilst retaining ownership of them."
Does it sound like something you'd trust SISU with? Given their history of decision making with the club?
I cannot see the incentive for the investors in proco. CCFC is volatile as opco - relegation sees an immediate drop in income and therefore capacity to repay. A stadium could easily become a white elephant as we have seen with the Ricoh when CCFC pulled out. The Ricoh may survive with dual usage and the monopoly on large venues in the Coventry area ( apart from the NEC ). A competitor nearby and the withdrawal of CCFC would put it under pressure. The competitor would be under more pressure starting from scratch and I do not think there is enough demand for two large venues in the Coventry area at the moment. Things could of course change in the future. Now doesn't seem to be the right time to be building a stadium. If CCFC were an established Championship side with regular attendances of over 20000 and good a good management record, maybe they would be worth "a punt" in the hope of them filling a new premiere league stadium, but not yet.
The point is that Sisu need to show us that any new stadium will be better than the Ricoh.
TF mentioning some way of financing a new stadium that allows Sisu to leverage money does not tell us what rent we will pay or what access to revenues we will have.
People also need to get past their hate of Wasps as a reason for building a new stadium.
The debt is a major issue too. Do you put it in the propco or the opco? Would it make a difference either way as which ever operation it goes in it will be a millstone around the neck? From what I've read on propco opco arrangements so far unless both operations have a clean bill of health it's almost certainly doomed to failure and there's plenty of case's to back that up. It seems our financial frailties make it a bad idea from the start.
You peddle the same line, in different forms time and again.
People want us to have our own stadium, as it means potentially more income for the club. We dont know what SISU intend if they ever build the stadium, they could charge rent like Wasps and leave little access to revenue like Wasps, but the again they make take a more prgmatic approach and realise that the Club's resale value is higher when successfull, the club earn more when successfull and when you match club and stadia it becomes a far more valuable and saleable commodity.
I hate SISU, but accept where we are at the moment, we are doomed, and your blinkered bowing down to Wasps will lead us to mediocrity for years to come. SISU did not enter into this with a long term plan, they led themsleves into it by ineptitude, so anything that may hasten their departure in the short to long term, is better in my eyes than the current uncertainty we have as sitting tenants of another organisation just like SISU.
But even Sisu say we will not own the stadium and will pay rent !!
So the question they need to answer is whether moving out of Coventry and renting a smaller stadium is better than staying at the Ricoh and renting off Wasps. Simple really ?
But even Sisu say we will not own the stadium and will pay rent !!
So the question they need to answer is whether moving out of Coventry and renting a smaller stadium is better than staying at the Ricoh and renting off Wasps. Simple really ?
At the moment Wasps can charge us anything they like. If they mess up and look like they can't repay the bonds what's to stop them putting the rent up to say £5m a year? What other options do we have? Would the league let us move to somewhere like Northampton again?
I hate SISU, but accept where we are at the moment, we are doomed, and your blinkered bowing down to Wasps will lead us to mediocrity for years to come.
I think until SISU/CCFC set out the business case properly then we will continue to have these arguments/discussions that go round and round with no real answer
Yes income is important but not important enough to stop it being sold off to third parties. Will that continue in any new stadium
Yes the total income at a new stadium might be higher but then you have to look at the other side of the transaction which sees costs considerably higher too
If CCFC are to get all the income streams of the new stadium then that will be reflected in the rent they pay (because the propco will need to repay at least some form of finance) but also CCFC will also be picking up all the stadium operation costs - or be franchising that operation out which limits CCFC turnover but more importantly cash flow
In the short term then CCFC have to do a deal at the Ricoh...... unless they are considering moving back to sixfields there is no other option...... any new ground is not going to be ready (if ever) within the 2 + 2 year deal we currently have. They have not presented anything to local councils and the planning process alone will take months if not years even without any objections
CCFC want to be at the heart of the community ..... but if it is in the sticks with no good transport links and no real partnership with CCC to help the transport links how does that happen ?
And whether they stay at the Ricoh or go to the new stadium there will be insufficient funds available to compete at the top of the Championship without owners putting more funds/loans in to the club ...... which they say they are not minded to
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