Just imagine... (1 Viewer)

Exactly.

SISU is made up of rich people, why would they need outside investment if it was so good?

I liked how they said that they dont want to sell shares but want investment....so basically it means they want money for nothing!

singers_pore said:

...that you aere a mega rich investor and SISU came to you asking whether you would be interested in investing in the club. Taking off your Sky Blue spectacles, the question surely that would be asked is "If this investment is so great, how come you (SISU) are not investing yourself instead?".

It's an obvious question and one that I very much doubt SISU can answer convincingly. Thus, I very much doubt that SISU will be able to get the investment they have been talking about.

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You would need to understand the nature of a hedge fund like SISU.
A large investment is very seldom done by one individual but by a group of investors. This spread the risk (and the profit, but as these people are already rich, rsik management comes before profit).
A hedgefund like SISU organise groups of individuals and offers projects for them to invest in.
So for SISU to go to potential investors and offer an opportunity is actually thir core business.

What very few people on this board seem to know is that SISU themselves or the people behind SISU may not necessary have their own money in any of the projects - the money comes from 'private investors' outside the SISU company.

I think if I was very rich I would actually make an offer on business terms. The Ricoh Arena posted profits of £3.1m a couple of years ago. The council agreed that CCFC could buy half of the stadium for £10m, meaning each year I would take £1.5m to £1.6m profit from the stadium. Taking into account the 750k (rough estimate) rent money I would save each year that is £2.3m saved from the £4m a year loss, taking losses to £1.7m. Having a stake in the stadium means a say in events taking place, so I could ask for more events to be held, pushing up profits further. I'm sure an extra £1m profit would be available, of which I would take 500k. Losses down to £1.2m JUST through having that 50% stake.

Of course, if I was VERY rich (£50m+) I would buy the Ricoh outright for I think it would be £40m. CCFC's losses would be instantly wiped out. £3.1m + 750k rent saved is £3.8m, plus added events and I'm sure the £4m loss would be gone. If the clubs losses are now more than £4m a year then a better marketing approach would be needed. New shirt sponsor could be maybe 500k+ added in (not sure how many years City Link have left). Also how many more years do Ricoh have as stadium sposor? That would be another contract to be signed and more revenue.

So yes, if I was mega-rich I would see CCFC as a long term profitable business venture, as long as the stadium can be secured. This is partly where Sisu are falling over.

Users may be able to pick what I've said apart but it's only a very very basic guide. If I ever actually saw the accounts I could come up with a more detailed and probably somewhat suitable approach.

"What very few people on this board seem to know is that SISU themselves or the people behind SISU may not necessary have their own money in any of the projects - the money comes from 'private investors' outside the SISU company".

The shares in the holding company (which owns CCFC) are owned by 5 private equity funds - i assume these are managed by SISU whether SISU actually have any investment in these funds is unclear.

Users may be able to pick what I've said apart but it's only a very very basic guide. - please excuse me gouldberg if i comment on a few things

Council didnt make offer to sell for £10m - The Alan Higgs Trust have given CCFC the option to buy their shares at £10m by 2013. Got a feeling the Council are looking for somewhat more, I doubt they could sell it at anything other than a profit especially as everyone is saying how successful it is - they would get hammered by the rate payers in the city . Only way to withdraw funds on the basis of share ownership is to take a dividend but cannot do that because the reserves available in ACL are negative £2.4m (to take dividend would be illegal). Also what CCFC saves in rent ACL loses so the group effect is nil. The events are limited to customers wanting them and the football timetable it isnt just a case of asking. The £3m profit at ACl was an exception not the rule and includes the rent receivable from CCFC. But perhaps better marketing and usage could increase the profits

Buying CCFC outright wouldnt wipe out the losses it just calls one debt something else. I think the profitable side of the equation is the stadium not CCFC which is why everyone wants the stadium. CCFC wont be profitable until it is in the premiership or can sell players on at a huge mark up as Newcastle did with Andy Carroll. But yes there are things that can be done to improve income

If I won the euromillions I'd buy a half stake in the Ground and the Club. I'd want suitable investors to buy the other half so we could own it outright. If none of the other dragons would like to invest then...............I'm OUT.

oldskyblue58,

I have read most of your posts and you seem to know about economics.
Most of what I have read in your posts are about the current situation - where we are today.
I would like your view on how we got here. Who (if any) are to blame and would you prefer SISU out with RR/Hoff back at the helm?

Rich said:

If I won the euromillions I'd buy a half stake in the Ground and the Club. I'd want suitable investors to buy the other half so we could own it outright. If none of the other dragons would like to invest then...............I'm OUT.

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Be great to see Ken and the boys fronting up in front of the dragons on the next series adn then see them squirm when Theo and teh boys ask for the numbers and it's "erm .. erm .. I think Ken should have those" Ken fumbles around and says "sorry, I don't have them to hand but in two years time we will be in the PL returning hundereds of millions of pounds"

oldskyblue58 said:

"What very few people on this board seem to know is that SISU themselves or the people behind SISU may not necessary have their own money in any of the projects - the money comes from 'private investors' outside the SISU company".

The shares in the holding company (which owns CCFC) are owned by 5 private equity funds - i assume these are managed by SISU whether SISU actually have any investment in these funds is unclear.

Users may be able to pick what I've said apart but it's only a very very basic guide. - please excuse me gouldberg if i comment on a few things

Council didnt make offer to sell for £10m - The Alan Higgs Trust have given CCFC the option to buy their shares at £10m by 2013. Got a feeling the Council are looking for somewhat more, I doubt they could sell it at anything other than a profit especially as everyone is saying how successful it is - they would get hammered by the rate payers in the city . Only way to withdraw funds on the basis of share ownership is to take a dividend but cannot do that because the reserves available in ACL are negative £2.4m (to take dividend would be illegal). Also what CCFC saves in rent ACL loses so the group effect is nil. The events are limited to customers wanting them and the football timetable it isnt just a case of asking. The £3m profit at ACl was an exception not the rule and includes the rent receivable from CCFC. But perhaps better marketing and usage could increase the profits

Buying CCFC outright wouldnt wipe out the losses it just calls one debt something else. I think the profitable side of the equation is the stadium not CCFC which is why everyone wants the stadium. CCFC wont be profitable until it is in the premiership or can sell players on at a huge mark up as Newcastle did with Andy Carroll. But yes there are things that can be done to improve income

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Apologies for a few incorrect figures. I'm just working with a very (and I mean VERY) basic knowledge of Business Studies haha. Definitely agree with the last paragraph, when I spoke about the losses being wiped I meant the £4m a year loss would be wiped out thanks to stadium ownership and new sponsorship deals. It is all about the stadium with CCFC. It's one of the best concert arenas in the UK and the room is most certainly there for good yearly profits. Again I agree with increasing the number of events there being difficult due to football commitments, but I'm sure there is more room for added events during the summer period when the football season is on it's yearly break.

There is no doubting that the club is being run inadequately and I'm sure the right investor would be able to turn it around with the right expertise. I think the way to get the most out of CCFC is minimize club losses and reap rewards from the stadium. All we need is the right person to be able to do that.

gouldberg said:

I think if I was very rich I would actually make an offer on business terms. The Ricoh Arena posted profits of £3.1m a couple of years ago. The council agreed that CCFC could buy half of the stadium for £10m

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That figure changes on a daily basis, its calculated using a complex formula which takes into account changes in property value, among several other factors. The 50% share price for the Arena may have increased considerably by the time SISU are ready to approach the Council with a firm offer.

The CableGuy said:

That figure changes on a daily basis, its calculated using a complex formula which takes into account changes in property value, among several other factors. The 50% share price for the Arena may have increased considerably by the time SISU are ready to approach the Council with a firm offer.

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Which is the problem. Sisu should have done the maths and snapped their hands off the second £10m was said. As a result we're now stuck in limbo with zero assets and losses which include rent on a stadium we could and should have bought into by now.

Godiva said:

oldskyblue58,

I have read most of your posts and you seem to know about economics.
Most of what I have read in your posts are about the current situation - where we are today.
I would like your view on how we got here. Who (if any) are to blame and would you prefer SISU out with RR/Hoff back at the helm?

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Have some knowledge yes due to my business but really I am only offering an opinion based on the meagre information available. Somehow my idea of transparency and SISU'S differs . What follows is just my opinion....

Dont think you can blame any one particular party in this mess, its been a "team" effort. RR and SISU arrived with good intentions and saved the club from administration. Some would argue that we should have taken administration then perhaps the medicine then might have been better I dont know. What does puzzle me is why SISU - apparent sharp operators financially - chose to buy all the debt (discounted in some ways) when they could have bought the club in administration at 25p in the pound of debt in administration. Obviously they were on restricted funds and somehow this may have been better use of funds and freed up more funds for transfers - not sure we will ever know.

Yes they have put funds into the club to keep it going, basically covering the wages to keep the players CCFC had, but they never had a fund to invest properly in the squad. Look at the transfers since they came in I reckon that its about break even or maybe a small profit on transfer dealings. SISU clearly didnt buy into what RR was trying to do.... whether thats lack of understanding, wrong person etc I dont know.... but very quickly RR learnt that the funds would not be there, the players he wanted to bring in would not be financed, and those he wanted to build a team around were being sold. There needed to be a gamble that worked because that would improve player values, and increase crowd numbers and propel the club forward, SISU took the money men from the City attitude and crunched numbers that said they couldnt afford to do it. For them it was the right decision, well i have to assume that, but for CCFC it created a world of restriction and lack of confidence.

However no one is innocent and there are always two sides. SISU clearly relied on RR to advise on football matters and to set up the original deal. Not sure he was clear enough. However dont level the blame for underinvestment at him because SISU would have done their own due diligence on the scheme and still bought in. In terms of buying CCFC I think they made a bad investment decision for them. However look a bit deeper have they used this as a means to an end but it cost them a little more than expected. What they really wanted wasnt CCFC at all but the Stadium and behind that the Prozone Group, both capable of making money. They havent invested in the stadium because CCFC has cost £20m + more than they thought. Yes they got caught by recession.... but the stock market is now above the crash levels and a recession isnt a bad time for everyone investors can make huge sums if they know what they are doing. RR employed on his recommendation managers that really should have produced more and didnt and the difference between the AB season and now is stark. THat affected the crowds and whole morale of the club. I just dont think that SISU went into this properly equipped, I think RR didnt properly understand who he was getting involved with and made some questionnable decisions, CCFC needed more and better, result has been a slow bleed to the current mess.

However it wasnt RR or SISU that got us to the original mess, that was done over many years and by various different managements all of whom share some blame. The club has meandered and slipped away over the last 20 years with too many fingers in the pie and no proper control. There has been no plan to produce a successful club, merely one crisis after another. No business is ever successful unless it has a clear vision. I think what SISU and to a lesser extent RR have done is to compound it, not worked in a common direction. SISU held 84% of the shares and controlled all the finances in that sense they ran the club and RR was just a front man having to toe the party line, SISU cant hide from their responsibility. Yes they "saved" the club but they controlled what has happened since and frankly made a mess of it. I have never known so many city fans so distanced from the club they love and that is SISU's doing. They are trying to change that but many do not trust them - funny thing trust takes ages to build and is gone in seconds.

Do I trust in SISU to get it right, to be honest no. The new board seem to lurch from one mistake or misquote to another. There is a lot of words from the board but precious little action, it is hard to give them time when the trust isnt there. There is I feel a hidden agenda with this board particularly when you listen to how they dodge questions. So do I want SISU running the club no but have to put up with it until they choose to go or the club ceases.

Do I want RR and MH to take over the club..... I quite like RR and his approach, MH has financial pedigree to match any of the current Board. But I dont know what their plans are ...... I would however being very willing to listen to them

What I really want is a successful team..... I cant affect who brings that...... but I want a team that at least challenges at the top of the table!

I think you're under playing the role of BR and GR on this - they held out from SISU as long as they could ~ why ? They didn't get more money, so what did they get ? What was in the confidentiality clause undertaken between GR and BR ? What that the reason that admin had to avoided ?
I don't know, and I'm just a conspiracy theorist, but chairmen who borrowed money from the club and flew all round the world buying players, who chose their manager and team by media comment, certainly took us too close to the brink in my opinion, and from then on the cliff was crumbling. imp:

oldskyblue58,

I kinda like your balanced view, but I do have a few comments.

When the takeover was in place I am certain SISU and RR were on level page. They knew status on the starting line, they planned the finances ahead and they agreed to the strategy. At that point I think there were complete unity and harmony on the board.
Over the first year the income started to fail and maybe the cost control was a bit slow. I imagine they closed the books on their first account knowing they had not reached their goal economically. This may well have caused the first real frictions as SISU (being stupid money) might have felt let down by RR who was in charge on the daily business (acting CEO).

It didn't get better during the second year. Failing gates due to the recession and poor football put even more pressure on the finances. Key players had to be sold - against RR's advice. At the end of season two the panic clearly sat in. Coleman was sacked as he was in charge of the poor football, but they couldn't sack anyone for the recession.
I think they made a new businessplan a year ago and again RR must have agreed. The plan must have included selling Westwood in the summer to raise money for new players on lower wages.
AB came in and started using the money from the Westwood sale but when the season started the keeper was still here. The signing of MK9 taking forever is a clear indication that the finances were heavily unbalanced and we were missing the money from the Westwood sale. SISU must have looked at RR and asked several times 'how are you going to manage the finances?'.
When the january window closed without any income from selling Westwood or Gunnar and with the team sliding down the table the game was lost for RR. Hoffmann realized that and he bailed out early, but RR's share position made it difficult for him to step down.
The final showdown came as administration was unavoidable without new cash injection. And I believe it had to go to the wire because of the spilt between RR and SISU.

So I ask - are SISU really untrustworthy? Have they not done what they originally promissed? And maybe a bit more?
On the other hand - I wouldn't want RR back unless he came in with his own money only and took the entire risk himself.

Take your points Godiva but at the heart of this you have to ask who had the real power. RR is a reasonably rich man who sold the business he built to SISU to make the deal work. Any profit on a subsequent sale of ProZone is 86% SISU's . He invested himself in the project which something I am guessing SISU didnt as it was the private equity funds they managed that did.

Bottom line what ever way it looks SISU or their representative on the board had the power of yes or no regarding any expenditure, That is without doubt the biggest power to be gained in any business. It is control

As for the recession it is an easy arguement accept except that in evaluating any project a prudent investor discounts income streams by say 30% to see if the project still works. I would argue certainly the first 2 years were within parameters. Equally you do not havbe to be in 100% unity to make a project work in fact disagreement is healthy. The target and general path is important and clearly for what ever reason SISU and RR were never quite on the same page

AS SISU had control RR's agreement was not necessary but yes i guess he acquiessed when it came to a revised business plan. But with his money and ahares tied up in the group did he have much choice. He owned 16% of the shares and was owed £1.5m by the group but none of that gave him much control. All his actions could be vetoed by SISU simply by not providing any funds - something that clearly happened. Gary Hoffman clearly stated that the finances were micro managed by SISU's representative on the board - thats where responsibility for the finances rests.

AS for GR and BR I think you make valid points disorganised1. Not sure we will ever know what went on but I assume they held out for some reward and would guess they are the parties due £6m should CCFC be promoted by 2013 as disclosed in the accounts.

I think that RR has already risked proportionately more than SISU and they have wheeled and dealed to sell the company on that he brought to the original table. Should he take all the risk- no why should he SISU have not, they manage the private equity funds that own the club i query if they invested in any of them

Have SISU delivered, did RR deliver - clearly neither did. However those in control bear the most responsibility, it has been very convenient for SISU to hide behind RR when in reality they pulled all the strings. Finance is the control here and SISU controlled all finance in the group and CCFC.

oldskyblue58,

When reading your reply I can't help feel that you think RR was quite naive going into the adventure placing his own fortune at the control of SISU.
I guess that RR was the one who took initiative, bringing the proposal to buy CCFC to SISU and they agreed on the terms that RR himself put in his own money. With RR holding a large portion of the shares SISU felt at ease that RR would do his best to avoid failure.
I believe this to be a quite normal construction as investors have no or very little knowledge in running a specific business (other than their own).

RR and SISU surely planned the finances together and if they are anything like professionals they have planned a reserve amount should the income fail to some extent. What they probably did not plan for was the recession and the heavy impact this would bring. You can't really blame any of them for that.

SISU being a hedge fund must have made very clear from the beginning that the amount invested would be a one-time placement. That there were to be no extra installments as it would be difficult to obtain unless the project proved a success.
When we blame SISU for not being communicative and clear in their intentions, this could have been avoided if they had publicly stated that fact from the very beginning.
As fottball fans we are used to have sugardaddys as owners. People with an interest and a heart for the club. This kind of owner gets exited by the prospect of acquiring potential stars and they thrive being hailed by the fans like a Cesar. Hedge funds are nothing like that. All they know is money.

My own company is financed in quite the same way as CCFC, so I do have experience with external investors. Learning how they think and operate has been rollercoaster ride and I can relate easily to what happens at the club.

Based on that experience I maintain that given the fact that SISU is a hedge fund and not a russian oligarch playing with pocket money, they have done little wrong.
I also think that investors like SISU is exactly what todays football business need as the FA seems very unlikely to do the necessary regulation that will ensure financial stability and sustainability.

No not naiive but i do think that for whatever reason the objectives and how to get there were not as clearly understood as they should have been and not fully shared. I think both sides came at it from slightly different angles and what each thought they had was actually a bit different in reality.

Did they plan the finances together? yes of course they did in so far as they related to CCFC and its budget or daily running. The financing of that budget and any additional funding was clearly controlled as it probably should be by SISU. They are the financiers and they had day to day control over what got paid - because they had to provide the funds to pay it. GH confirmed that all expenditure was passed through SISU's man on the Board for approval. They controlled the finances at a micro level

RR owned 16% of the shares, that gives SISU confidence that he would try to do all he can yes. Equally it gives SISU a tool to use against him.

The recession has obviously had an effect, however there are plenty of financial institutions that have profitted in that period and we just dont know the effect on SISU and their investment plans. It is easier to see the effect on CCFc in terms of crowd size, customer spend etc and that certainly didnt help. It was however compounded by RR's decision to employ AB as manager because for many fans it wasnt just the cost that turned them off it was the football we saw.

I hear what you say about hedge fund one time investment but clearly CCFC has received more than one influx of funds so it isnt quite accurate. Have to agree that our present owners have no passion for football their passion is money and they are usually very successful at it. They see and assess everything in terms of cold numbers and that works in most businesses, fortunately in those businesses you dont get 16000 people disputing your product or know how, few businesses have such social impact as a football club and the business model is not the standard one. In terms of their objectives and usual operating practices then SISU have acted as they would normally. In that sense they have done nothing wrong. However they attempted a sea change in operating practices at CCFC that contributed to the mess we are in because i do not think it was properly funded to begin with. If SISU made one serious error it was probaly to invest in the first place.... i doubt they feel it has been a positive experience so far and the present board is a last throw of the dice.

With my own business back ground I am not going to argue against having proper cost control, living within means etc It makes sense to me and is essential. I think the original investment by SISU was either wrong or insufficient, SISU seem to have had one way to recover the situation- cost cutting- which in the end at least contributed to driving away the one thing they needed.... the fans (customers/money)

As i said originally this has been a "team" effort to get in this sorry mess. I dont think anyone can say SISU have not done anything wrong or that it was all their fault. Others clearly contributed and each of us has opinion as to the mix of the "blame". I do think it has been convenient for SISU to hide behind RR and right now they are somewhat more exposed. RR is no saint in this but nor is he the only sinner. He made mistakes, but no more so than others. The history of this club has been that of mismanagement and it continues.

You might find this surprising but I think an original Board of RR KD GH LB PC and a SISU appointee may well have been what CCFC needed in the first place but we will never know. Certainly it would have been strong in character and carry some business weight

What is the only important thing now is where do we go from here. The blame game serves no useful purpose. We cannot unpick past mistakes whoever made them. CCFC its board, the squad and supporters can however affect its future

Thanks for your reply.
I do hope some of the readers on this board understand half of what we have discussed and now have a more balanced view of situation.

As for the future I certainly hope the board will stay focused and that they managed to set up a new investment fond to make it possible to acquire the arena. It should help stabilizing the income stream and lay a good foundation.

We will lose quite a few good players in the summer - those already out of contract and possibly Turner and/or Juke.
As always we, the fans, will panic when it happens, and we will panic even more when we see the replacements coming from the lower leagues.
Nothing new there - yet it always comes as a surprise!

There was certainly more than one initial investment planned all along. The idea was to invest and build in each window. RR says that plan changed, obviously against his wishes. THAT is the bit that annoys most about SISU, as we've just gone around the block with no prospect of actually getting anywhere apart from in debt to the very guys who claim to be our saviours. Throughout that time being told how lucky we are-and never being told anything about why the initial plan changed, or what the new plan was.
A bit like now, really-any supposed attempt to be transparant has obviously gone what with the utter balderdash and piffle that was spouted at that big press conference, and by Brody on CWR!

Nonleagueherewecome said:

There was certainly more than one initial investment planned all along. The idea was to invest and build in each window. RR says that plan changed, obviously against his wishes. THAT is the bit that annoys most about SISU, as we've just gone around the block with no prospect of actually getting anywhere apart from in debt to the very guys who claim to be our saviours. Throughout that time being told how lucky we are-and never being told anything about why the initial plan changed, or what the new plan was.
A bit like now, really-any supposed attempt to be transparant has obviously gone what with the utter balderdash and piffle that was spouted at that big press conference, and by Brody on CWR!

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The installment plans may have changed as the operational loss went through the roof. SISU might have stood firm to the amount they initialy committed to and that amount couldn't be spent both on covering losses and on new players.
I think it is 'spin' when RR says SISU changed the plans - it seems much more likely that circumstances forced the change.

Excellent thread this, well worth reading through if anyone has decided to skim through it.

I think Eddie Jordan should buy the place, he has the cash, he has the passion, he invests in sport and may bring some very nice ladies to the club. Why does no-one ever consider him?

Didn't I read somewhere that he isn't actually a Cov fan though? I know a few years back we tried to claim him, Brian McFadden and Pete Waterman but I think the only real celeb fans we have are Keys and that murderer from Corrie

I heard he was a fan - and so won't get involved financially because that would make it business.

Disorganised1 said:

I heard he was a fan - and so won't get involved financially because that would make it business.

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The Hoff is a fan and has to chance to save his beloved team going down the swanny. Is EJ not a fan of Formula 1?

Just what I heard - he's not in The Golden Cross much nowadays.

EJ's wiki page says that he is a Celtic shareholder and a fan of Coventry and Chelsea. Never sure how much truth on those pages, but I would have expected it to have been corrected if untrue. However, doesn't sound like a die-hard who would be willing to risk his personal wealth.

I believe EJ was a friend of Richardsons and attended a few matches as a guest - hardly makes him likely to be ploughing his millions into this club on the strength of that.

So he's not a fan. He's just been to a couple of games and we claimed him. That explains it :claping hands:

Perhap's he can be part of the consortium with the Hoff?

Disorganised1 said:

I heard he was a fan - and so won't get involved financially because that would make it business.

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There's a rule in investing: Kill your darlings.
The meaning is quite straight forward - never invest in anything that you have feelings for.