Is CCFC worth more than £1 ? (1 Viewer)

I think it has been mentioned several times on this board that the price for the shares is not an issue. It may be £1 - it may be more or less.
It's the £25+ million loans that is the stumbling block.

Can someone justify a £1 price tag? Why not 99p?

We have all these valuable players on the books - like Westwood. Clubs were fighting over themselves to get him. We've got loads more where that came from.

I'd love to see ken in the dragons den trying to get 500,000 investment for players for a 10% share of the business, then explaining how he's valued the company at 5mill.

The thing is that SISU stand to lose upwards to £30m. Now I'm sure they don't expect to get it all back, but there is a as yet unknown fee at which they will I'm sure be prepared to cut their losses. Presumably that fee is close to any money they believe that they can raise on the value of the squad, or mortgaging any assets that they possibly can before a possible administration. I would think that figure is somewhere between £5m - £8m as they can keep the club afloat without putting any cash in up to that value, albeit only to ultimately be worth nothing. I would suspect an offer of around the bottom end of that close to £5m would secure their exit strategy and perhaps with the incentive that a future payment (if this is legal?) based on unrealistic chance of success.

In real terms CCFC is worth

-£30m in the red

CCFC has no value.

The best deal for SISU is for someone to take the debt of their hands.

Isn't the debt all to SISU anyway? I can never understand what Ken is on about as it is a bank one minute and SISU next where they get the money.

I am pretty sure the stumbling block is just how much GH's lot will actually pay back if the debt is owed to SISU.

Old Sky Blue will be about soon I bet to explain...

rob9872 said:

The thing is that SISU stand to lose upwards to £30m. Now I'm sure they don't expect to get it all back, but there is a as yet unknown fee at which they will I'm sure be prepared to cut their losses. Presumably that fee is close to any money they believe that they can raise on the value of the squad, or mortgaging any assets that they possibly can before a possible administration. I would think that figure is somewhere between £5m - £8m as they can keep the club afloat without putting any cash in up to that value, albeit only to ultimately be worth nothing. I would suspect an offer of around the bottom end of that close to £5m would secure their exit strategy and perhaps with the incentive that a future payment (if this is legal?) based on unrealistic chance of success.

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I think we have been over this a few times already.
SISU themselves have not invested anything - they are managers of funds who have loaned the club £25+ million.
Those loans are just sitting there - no interest is charged and with no periodic installment. As long as the club is a going concern these loans continue to hold their full value.
The club is losing money - not SISU.
So it makes no sense at all for SISU to accept any offer for a discount on the loans at this point.

The board had said finances have been secured for the rest of the season, so I fail to see what could force SISU into accepting anything less than the loans paid back in full and probably with interest. Putting the loans in the hands of new owners would be risky and so SISU would only do so charging a hefty interest ... adding to the current financial deficit.

If the club is bleeding around £2 mil/yr then selling Clingan or Juke would give the club another year without the need for extra cash injection.
So I must say I disagree with your figures between £5-8 millions.

Nick said:

Isn't the debt all to SISU anyway? I can never understand what Ken is on about as it is a bank one minute and SISU next where they get the money.

I am pretty sure the stumbling block is just how much GH's lot will actually pay back if the debt is owed to SISU.

Old Sky Blue will be about soon I bet to explain...

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Nick - you are spot on. CCFC are £30m in the red.

So the value of CCFC is £0

Last few assets we have like the training ground have been remortgaged - so that is now a debt as well

So Hoffman can't offer £30m to sisu as the formal offer because technically SISU would pocket the money and stick two fingers up at the city of coventry.

Hoffman is offering to take the debt off their hands and transfer it to Project Hoffman.

So Project Hoffman is in debt.

The detail of the offer is will Hoffman offer say £15m to SISU to piss off and then say he will use the other £15m to pay half the debt off or some of that money will go towards buying the Ricoh share? There are lots of ways it could go.

This is a very basic look at it. But Ken really needs to move on about £1 not being enough. NO SHIT KEN.

Today - formal letterhead paper - with £1 formal offer plus Project Hoffman taking on a % of the debt or the full debt.

Interesting to read that Hoffman said the deal maybe accepted and if not there maybe a short negotiation period.

Hoffman is quietly confident and I am too :claping hands::guitar2:

rob9872 said:

The thing is that SISU stand to lose upwards to £30m. Now I'm sure they don't expect to get it all back, but there is a as yet unknown fee at which they will I'm sure be prepared to cut their losses. Presumably that fee is close to any money they believe that they can raise on the value of the squad, or mortgaging any assets that they possibly can before a possible administration. I would think that figure is somewhere between £5m - £8m as they can keep the club afloat without putting any cash in up to that value, albeit only to ultimately be worth nothing. I would suspect an offer of around the bottom end of that close to £5m would secure their exit strategy and perhaps with the incentive that a future payment (if this is legal?) based on unrealistic chance of success.

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100% agree. The club and loan is probably ultimately only worth £1, however, SISU will believe that there are assets worth a few million (Juke, Turner etc). I presume their loans are secured therefore their argument could be if they put the club into administration they would have first call on any money after preferential creditors (wages/holiday), the football super prefs, ongoing running costs ie cover losses until a sale and the administrators fees so deserve something.

Saying that it wouldnt take long for any player value/realisations to be outweighed by the above costs and then theyd get bugger all. Its a catch 22 situation for SISU, each passing week they have to put in more to keep the club afloat thereby increasing their overall debt (or they sell a player and reduce their asset pool), however, they dont want to walk away for nothing and are waiting in hope that some billionaire comes in to give them their money back (aint going to happen)

An offer of £3m-£4m upfront and a share in any promotion monies in settlement of the loans is probably a fair sum as neither will want the club to get relegated, however, GH will question why he should even pay this as the club is ultimately bust and is just burning cash, he'll be taking on a stack of contingent liabilities ie player contracts etc with little certainty over income (other than it will most likely be significantly less than expenditure)

Its going to be a case of who will blink first.

Godiva said:

I think we have been over this a few times already.
SISU themselves have not invested anything - they are managers of funds who have loaned the club £25+ million.
Those loans are just sitting there - no interest is charged and with no periodic installment. As long as the club is a going concern these loans continue to hold their full value.
The club is losing money - not SISU.
So it makes no sense at all for SISU to accept any offer for a discount on the loans at this point.

The board had said finances have been secured for the rest of the season, so I fail to see what could force SISU into accepting anything less than the loans paid back in full and probably with interest. Putting the loans in the hands of new owners would be risky and so SISU would only do so charging a hefty interest ... adding to the current financial deficit.

If the club is bleeding around £2 mil/yr then selling Clingan or Juke would give the club another year without the need for extra cash injection.
So I must say I disagree with your figures between £5-8 millions.

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Thats if the status quo is maintained, however, if we go down assets will reduce in value, weekly/monthly costs increase as crowds dwindle and tv money disappears. They cant continue to let this happen. They gambled by investing so much and now there is no way they will get their £30m back

They want to get out but they will try their best to recoup the money they have put in.

CCFCSteve said:

Thats if the status quo is maintained, however, if we go down assets will reduce in value, weekly/monthly costs increase as crowds dwindle and tv money disappears. They cant continue to let this happen. They gambled by investing so much and now there is no way they will get their £30m back

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We won't know for some time if we get relegated, so at this time I don't think a discounted bid for the loans will be accepted.
And as I said, leaving the loans in the hands of new owners will only happen at a price. That could be in form of an immidiate down payment of a considerable amount and putting an interest tag on the rest.
Any money used to pay out old loans will be deducted from money that could be used to buy into the ricoh revenue stream - plain stupid.
Any interest being charged on the remainder of the loans will add to the clubs operational loss making it even harder for new owners to achieve break-even.

They can get their money back by either accepting a take over bid that repays the loans in full. They can even make a profit on their investment by charging interest on the loans calculated from the date they were issued. Then they can demand an amount for the shares, golden handshakes for the boarding members ... whatever.

It's been disected many times for the lay among us here now.

The structures set up by Ranson/SISU are a little more complex than just a club for sale at £1 or whatever is offered.

I'll let OSB run over it again as I just can't find the spark to try and lay it all out again and tbh I even don't quite get the full complexities at times myself!

However we will soon see just how good Hoffman's bid is won't we?
Before anyone gets to say SISU 'OUT' because they turn down Hoffman's bid (as I expect they will) please get the facts of the situation and of the offer before you do!

This is all Bu ll Sh it about the debt only being Sisu.
The mortgage on Ryton ?
The loan against future ticket sales ?
These will be loans and mortgages from banks not Sisu and will be on top of a made up figure that Sisu will believe they are owed which will be the true figure + whatever they feel like putting on as interest or even admin costs.

I wonder what Hibberts view on it all is?...

This is an absloute joke! how the hell did CCFC get into this mess? I mean why did the board not one take action say when the debt reached £5 million? and let it get no higher?

Was there no finace person/director saying "Excuse me but we are currently spending more than we are earning, the budget needs cutting to X next financial year to break even".

No matter who comes in unless this debt is tackled we will be in the same position in another 10 years. No wonder this club is on its knees, its been run by donkeys for years.

Did ALARM bells not ring?

they can make more money if they shut down ccfc and sell the players than what hoffmans offering he needs to at least bid 5mil as thats how much the squads worth

I think what AFCCoventry said is largely correct

"Nick - you are spot on. CCFC are £30m in the red.

So the value of CCFC is £0

Last few assets we have like the training ground have been remortgaged - so that is now a debt as well

So Hoffman can't offer £30m to sisu as the formal offer because technically SISU would pocket the money and stick two fingers up at the city of coventry.

Hoffman is offering to take the debt off their hands and transfer it to Project Hoffman.

So Project Hoffman is in debt. "

As some of us have said the shares issue of £1 is a distraction. It is what is paid to SISU funds to repay or takeover their loans that is in discussion. Unless there is a substantial repayment of those loans, taken over in full or remain on the balance sheet at some or full value then there will be no deal.

I could find arguements as to why SBS&L Group has a worth more than £1 (but thats a side show largely irrelevant), similarly I could find arguements as to why the Loans from SISU funds have a value or even full value but it would all be speculation. Bottom line is the value of each is dependent on a willing buyer making an acceptable offer to a willing seller.

The feel I get is that perhaps details will not be so public this time - but that this offer is still well short of acceptable to SISU

A lot here have faith in GH because he has been high up in banking, but they forget that SISU and a number of the directors specialise in corporate recoveries - this is a corporate recovery. Dont expect them to roll over simply because we want them to or because GH says so

the value of CCFC or the group to SISU is in how much they can recover for the funds they manage - that is much more than £1

Mr T - Sukka! said:

This is an absloute joke! how the hell did CCFC get into this mess? I mean why did the board not one take action say when the debt reached £5 million? and let it get no higher?

Was there no finace person/director saying "Excuse me but we are currently spending more than we are earning, the budget needs cutting to X next financial year to break even".

No matter who comes in unless this debt is tackled we will be in the same position in another 10 years. No wonder this club is on its knees, its been run by donkeys for years.

Did ALARM bells not ring?

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unfortunately the level of debt was at £5m many years before SISU even got interested at CCFC. We have lived beyond our means for decades and got used to it. It is partly because SISU and the board have said enough we cant do this any more and are actually tackling that situation that fans are up in arms. It is painful medicine that would have been far less painful if tackled many years ago.

Godiva said:

As long as the club is a going concern these loans continue to hold their full value.
The club is losing money - not SISU. So it makes no sense at all for SISU to accept any offer for a discount on the loans at this point.

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How wrong can you be?!ointlaugh:

The market value of the loans is substantially less than their book value simply because the club's financial position (and its on field performance) are so poor. To put it another way: Greece is currently a going concern, so do you really think that the book value of Greek debt is equal to its market value? You have no idea what you are talking about.

As any fule knows, the market value of any business is a non-linear function of its book value, its operating earnings and its option value. As OSB mentioned in another post, the market value depends on many unknown assumptions, e.g., the option value is heavily dependent on the club's relegation / promotion probabilities. But - based on a very rough back of the envelope type calculation, I would say that the market value of CCFC is no more than 5 million pounds.

Given that SISU are the owners of the club, then SISU are losing money on their investment. Your comment that "The club is losing money - not SISU" is frankly stupid.

oldskyblue58 said:

I think what AFCCoventry said is largely correct

"Nick - you are spot on. CCFC are £30m in the red.

So the value of CCFC is £0

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Correction - the market value of the equity is zero. The market value of the debt is unknown but I would guess it is around 5 million pounds.

There is no way the market value of the debt is as high as the book value. Thus, SISU are going to have to take a bath on a major part of their investment. Frankly it is so obvious it hardly needs explanation. SISU have not improved the club's financial standing or its playing performance and value. Therefore, most of the money that SISU have put into the club to cover operating losses cannot be recovered.

As was said above by another poster, SISU took a gamble and lost. Therefore, they have to accept this situation for what it is. SISU ultimately lost the gamble because they simply do not understand the football business and they failed to listen to someone who does, i.e., Ray Ranson.

bottom line is the club is only worth what someone is willing to pay to get their hands on it. The shares might be worth £1 but the value of the club to a potential investor is what they are willing to pay or take on to get their hands on it, that might not be the same as market value in an open market. So the value might not be so obvious

We dont know what is being offered or sought so anything here is guesswork.

As for RR yes he understood the mechanics of squad building, bringing in players cheap to sell on whilst getting good use from them. Clearly he was unable to marry that to the financial requirements of running a profitable business because he & SISU got their original budget wrong and he persisted as many before him in the club paying out more than it could afford. All this stuff about football being a special case in business terms is rubbish - strip any club back to basics (and like any other business) the fact remains that you spend more than you can afford and you risk going out of business. About time this and every other club woke up to the realities. You need both football and financial abilities clearly RR nor SISU only had half the requirement each and failed to create the right partnership

oldskyblue58 said:

As for RR yes he understood the mechanics of squad building, bringing in players cheap to sell on whilst getting good use from them. Clearly he was unable to marry that to the financial requirements of running a profitable business because he & SISU got their original budget wrong and he persisted as many before him in the club paying out more than it could afford.

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When RR was appointed he stated to the press that the club would not make a profit until it reached the premiership. So clearly those losses were budgeted in the original plan that he had with SISU. The big mistake that SISU made was that it did not invest enough upfront but instead fed the money in dribs and drabs. RR felt let down by SISU as they did not understand that it was more cost effective to make a big promotion push in the first two seasons rather than limp along for several years.

Personal opinion is the deal was wrong and underfunded from the start and RR was as much to blame as anyone he was afterall the one with the understanding of football. Have always said this. To effectively bet the survival of the club on two factors a) that SISU would fund more and more and b) promotion to Premiership is at best a very risky business strategy. He knew from the off that he would bring in players and sell them on he didnt like the timing was all.

However both SISU and RR continued the operations like nearly all before them by paying out more wages than income without actually addressing the issue properly. They had an opportunity right at the start to say to the fans this club is in a mess we need to sort the costs out properly, get wages to a sustainable level, to set the club up for the long term. Both failed to do this. More than SISU to blame in all this, RR contributed good and bad like many others too. All failed

The worst thing Ray Ranson ever did was 'choose' Chris Coleman and Aidy Boothroyd as our managers.

The £1 isn't the important part, it's what SISU want to do about the debt.

I'd assume in theory there's nothing to stop them selling to Hoffman for £1, then demanding full payment of their loan, thus forcing us into admin immediately. So the deal will or won't be done on the middle ground. Purely pulling figures from my rear end, I'd say something like £10m up front, with another £10-15m on promotion (time limited) would be reasonable. If I was Hoffman and I had £30 to invest, I'd think that'd be worth it, put £10-15m into the playing side and bet on promotion in 3 years. Crowds would go up, so would merchandise, which would help as well.

A big up front investment always seems to have the most impact on increasing revenue and I think that's where SISU went wrong. If you're going to end up spending £30m over 5 years on a club, may as well put half of that in immediately and if nothing else bump up crowds for a couple of seasons.

"If I was Hoffman and I had £30 to invest"

Fk it - I 'll buy it myself