Wasps losses and ricoh return catalyst (1 Viewer)

oldskyblue58 · Mar 26, 2021

yes it is in that sort or region because some of the loans from ARVO got converted to preference shares (which btw accrue income at something like 9%) and there was some cash in the first couple of years raised and introduced

I know you and I both know it is not SISU's money, was just making it clear.

Basically as it stands the only recoverable amounts are the amounts owed to ARVO & SISU Master Fund circa 16m in May 2019

samccov1987 · Mar 26, 2021

oldskyblue58 said:
yes it is in that sort or region because some of the loans from ARVO got converted to preference shares (which btw accrue income at something like 9%) and there was some cash in the first couple of years raised and introduced

I know you and I both know it is not SISU's money, was just making it clear.

Basically as it stands the only recoverable amounts are the amounts owed to ARVO & SISU Master Fund circa 14m in May 2019

So in effect we’re looking at Sisu needing to clear the 14m owed to ARVO before they’d sell up otherwise they’d need to crystallise their losses?

oldskyblue58 · Mar 26, 2021

Without the owners of wasps or CCFC finding ways to keep things going (ie "supporting" the clubs they own financially) both clubs are up the creek with no paddle.

Yes CCFC have the transfer dealing, But wasps have access to rental income and more non sports related income. Both get sizeable funds from the central bodies.

The biggest problem for both is the size of the wages bill and costly debt.

Both have large debt (unsupportable?) in comparison to their assets. wasps debt is bigger than CCFC (Otiums) but wasps assets are equally bigger (excluding the multi 10's of million of players valuation in CCFC)

Both are vulnerable, especially to the whim of each respective owner. Either owner wants their money back and that club is in real trouble

neither can crow much about how financially rosey things look

oldskyblue58 · Mar 26, 2021

samccov1987 said:
So in effect we’re looking at Sisu needing to clear the 14m owed to ARVO before they’d sell up otherwise they’d need to crystallise their losses?

that's how i would see it yes. ARVO rates of interest are over 10% i believe so not going to happen quick. Last time they had ability to with drow funds they mainly took out the interest due

samccov1987 · Mar 26, 2021

oldskyblue58 said:
that's how i would see it yes. ARVO rates of interest are over 10% i believe so not going to happen quick. Last time they had ability to with drow funds they mainly took out the interest due

Thanks OSB I have some accounting understanding but the CCFC structure often bamboozles me.

Gregbant · Mar 26, 2021

oldskyblue58 said:
Firstly is it SISU who have invested or is it their clients funds ? I have seen nothing to suggest SISU are anything other than fund managers - who those investors are remains a mystery but they have given SISU the right to manage or control

Did some calculations a while back of what SISU had invested since they acquired CCFC came out at around £35m total in hard cash. The rest of this mythical £50m to £100m or whatever figure is thrown out that SISU & others have claimed, is actually derived from clever and repeated use of losses not hard cash.

However the club is Otium Entertainments Group Ltd not the SBS&L Group. The only way that the investors whoever they are in SBS&L get their money back is if Otium is sold as a company or the assets in the company at such a premium that ARVO/SISU master fund are cleared (capital & interest) before moving by way of dividend to SBS&L. The problem is SBS&L do not hold any charge or guarantee from Otium. Last accounts for Otium showed loans owing 8.8m with 7.7m interest all owed to ARVO and SISU Master fund.

I did some analysis on the wasps thread of the wasps latest financials. Do I expect them to go bust any time soon ? no.

Last analysis Keiran Maguire did on CCFC he took down. I believe because it was wrong in a number of areas, not least in the claims he made regarding the level of debt owed by the club and he got pulled up on it

Couple of thoughts.
- Wasps did not pay 5m for the lease that was for the shares in ACL - a totally different thing. The lease at the time was valued at just over £18m and that is what wasps effectively paid for the lease
- yes i would think the lease value had dipped, it is due to be revalued about now. However it will now be revalued to include CCFC as a key tenant paying a commercial not discounted rent. That should bolster the valuation
- everyone focuses on the income wasps will get by the CCFC return but just as important to them is the value of the lease - which has i suspect stopped its decline now ccfc are back. That will help the refinancing just as the additional income will
- nothing to do with day to day operations but the bond price seems to be recovering - nearly double what it was in October
- as for moving back down south - i just do not see it, how are they going to be able to afford that ? land & property prices are much higher and after clearing debts where is the surplus to pay those premiums not just on a ground but on the removal expenses of staff & players

Thanks

Gynnsthetonic · Mar 26, 2021

Oldskyblue58 I've been shot down before by Nick about this, you said in an earlier post about SISU and there mysterious investors, could they be Coventry related or from previous regimes which is why they are holding on to the club and not selling, just a theory I have thats all!

Grendel · Mar 26, 2021

Gynnsthetonic said:
Oldskyblue58 I've been shot down before by Nick about this, you said in an earlier post about SISU and there mysterious investors, could they be Coventry related or from previous regimes which is why they are holding on to the club and not selling, just a theory I have thats all!

not a chance any of that historic debt is wrapped in SB and l

Grendel · Mar 26, 2021

oldskyblue58 said:
yes it is in that sort or region because some of the loans from ARVO got converted to preference shares (which btw accrue income at something like 9%) and there was some cash in the first couple of years raised and introduced

I know you and I both know it is not SISU's money, was just making it clear.

Basically as it stands the only recoverable amounts are the amounts owed to ARVO & SISU Master Fund circa 14m in May 2019

The other thing I don’t get is the notion Sisu are likely to sell. Scraping survival in this league with zero interest in investing in the squad while recovering the loans and interest in the club over the next few years is surely utopia for them?

Earlsdon_Skyblue1 · Mar 26, 2021

shmmeee said:
You know if you let me know I’ve touched a nerve I’m just going to keep poking it

You should see my notifications every time I post something on the Off Topic Chat.

Staying well away from there today!

Magwitch1 · Mar 26, 2021

So how much will it take in hard cash to get this lot to sell and piss off ?

oldskyblue58 · Mar 26, 2021

Grendel said:
The other thing I don’t get is the notion Sisu are likely to sell. Scraping survival in this league with zero interest in investing in the squad while recovering the loans and interest in the club over the next few years is surely utopia for them?

I agree. If you look at the 2019 accounts I think we saw the start of that process. That year they extracted 1.5m of the accrued interest total from the club. That meant income for investors and for sisu by taking their cut of fund income. The covid crisis delayed that plan but I see no reason to change the plan from their point of view.

They won't leave until they extract the capital and interest. Which in turn sets a limit to ccfc ambition because the manager won't get all the funds from player sales. It is the player sales that makes the difference. I dont expect them to invest more other than to keep us afloat.

They won't be leaving any time in the next 5 years at least in my opinion

oldskyblue58 · Mar 26, 2021

Gynnsthetonic said:
Oldskyblue58 I've been shot down before by Nick about this, you said in an earlier post about SISU and there mysterious investors, could they be Coventry related or from previous regimes which is why they are holding on to the club and not selling, just a theory I have thats all!

I don't think so but that doesn't mean they couldn't be. However......

I think most if not all investment has come usa, middle east and far east.
The original investors who I think you allude to have lost their money as it is locked in to sbs&loss and by the shuffling of funds and losses. So I doubt if the investors were local they are still involved - personal opinion is that local investors were never involved.

But we will never know who the investors were then or now

Colin Steins Smile · Mar 26, 2021

It's

oldskyblue58 said:
I agree. If you look at the 2019 accounts I think we saw the start of that process. That year they extracted 1.5m from the club. That meant income for investors and for sisu by taking their cut of fund income. The covid crisis delayed that plan but I see no reason to change the plan from their point of view.

They won't leave until they extract the capital and interest. Which in turn sets a limit to ccfc ambition because the manager won't get all the funds from player sales. It is the player sales that make difference. I dont expect them to invest more other than to keep us afloat.

They won't be leaving any time in the next 5 years at least in my opinion

Thanks OSB - If I have interpreted this thread correctly.....the business plan for the funds investors makes sense. If the investment was circa £14m from the SISU master fund and Avro....realising £1.5M in interest is a great return as I can’t think of too many other investments that give a 10.7% return.
They could keep this going for years ....why would you sell up with returns of that level?

Gregbant · Mar 26, 2021

How much is Ryton worth?

oldskyblue58 · Mar 27, 2021

Gregbant said:
How much is Ryton worth?

In the last financial statements well under £400k. However if sold for residential development it should be worth a fair bit more. Fisher suggested previously a figure under 2m for such a disposal I think

matesx · Mar 27, 2021

Im no expert on this stuff but are we saying a £30m transfer splurge in the Summer is unlikely?

oldskyblue58 · Mar 27, 2021

Colin Steins Smile said:
It's

Thanks OSB - If I have interpreted this thread correctly.....the business plan for the funds investors makes sense. If the investment was circa £14m from the SISU master fund and Avro....realising £1.5M in interest is a great return as I can’t think of too many other investments that give a 10.7% return.
They could keep this going for years ....why would you sell up with returns of that level?

Broadly yes. However the loan from ARVO/SMF up until 31/05/2019 was 8.8 capital loan plus accruing interest £7.7m. (Have had the chance to check figs in accounts not do from memory)

The charge to interest in the p&l account was 2.1m (including 350k of tax provision due to hmrc when interest actually paid out) so net interest due to sisu entities was 1.7m. I think we can be sure it is compound interest so it is charged on all outstanding capital and interest

Paid out in the year was 1.5m of the total interest that had been accrued to date and 250k in capital.

The £1.5m is physical payment, the £1.7m is annual interest charge accrued on the outstanding capital and interest liability. All the payment did was to stop the debt and interest liability growing. It should mean another 2.1m interest charge in the 2020 financials

oldskyblue58 · Mar 27, 2021

matesx said:
Im no expert on this stuff but are we saying a £30m transfer splurge in the Summer is unlikely?

Kind of depends if we accept the 50m bid from Real Madrid for Hamer or not

letsallsingtogether · Mar 27, 2021

Liquid Gold said:
Does making up playground names make you feel like a big man or something?

What like making personal comments on someones dad or family you mean.
Bet that gives people big bollox.

Gregbant · Mar 27, 2021

oldskyblue58 said:
In the last financial statements well under £400k. However if sold for residential development it should be worth a fair bit more. Fisher suggested previously a figure under 2m for such a disposal I think

Thank you again

Sky_Blue_Dreamer · Mar 27, 2021

oldskyblue58 said:
I agree. If you look at the 2019 accounts I think we saw the start of that process. That year they extracted 1.5m of the accrued interest total from the club. That meant income for investors and for sisu by taking their cut of fund income. The covid crisis delayed that plan but I see no reason to change the plan from their point of view.

They won't leave until they extract the capital and interest. Which in turn sets a limit to ccfc ambition because the manager won't get all the funds from player sales. It is the player sales that makes the difference. I dont expect them to invest more other than to keep us afloat.

They won't be leaving any time in the next 5 years at least in my opinion

I agree with the plan BUT the problem with it is it's again short-sighted like when they took over, bought some decent players and sold them quickly for the profits ultimately leading to relegation, a much lower income and thus less chance to recover interest/capital.

If they plan to take out some of the accrued interest, we'll have a lower budget for transfers/wages, putting us at much greater risk of relegation and the lower income again, stopping them recovering it.

Plus we're still running at a cash loss that they're covering so what they're taking out in interest is pretty much going straight back in in cash loans.

It's not a policy I see working very well and if that's the gameplan for the next five years I think we'll be back in League 1. And they still won't have recovered their debt.

One thing i think needs to be made clear when they talk about investment/amounts owing is how much actual capital they've put in and how much is just interest on that.

oldskyblue58 · Mar 27, 2021

And yet in 2019 accounts there was 4.4m player sales income actually received allowing their income extraction.

Then in the promotion season I suspect the figure could be higher with the sales of Chaplin, Bayliss and McCallum.

All done on successful seasons in league 1

The driving force for sisu is not the creation of a better team per se but income extraction and capital growth. Pay the loans down the company becomes worth more because it has less liabilities.

The plan I think relies on significant player sales that creates a pot for extraction. There is no room for major increases in overhead. There has to be some growth of wages costs but I suspect limited to the increase in central distribution and matchday incomes. Player signings are limited by that income but also the annual amount to be extracted for their investors.

The return to the Ricoh has added not only stability but also capital value to the investment.

I think to understand the rational that I think is in play you have to look at it as an investment not at club or league position. I would think they would be very happy being established in championship but are right now comfortable with yo yoing between there and L1.

Relegation doesn't stop the player sales although there may be an element of discount by it. There is a drop in income but also significant drop in costs . The club will be run at break even which ever league we are in, in any normal season. I accept there may be some allowance this season for costs and restrictions caused by the pandemic, but I doubt it is any more than the minimum to keep afloat.

Which is how the club has operated for a number of seasons (with minimum support from the owners over last 4 years - I think less than a net £1m in hard cash)

The deflation of the transfer market caused by the pandemic is a problem for their plan and investment extraction

Of course this season you maybe have to ask where are the major player sales? Only perhaps because the pluses I can recall is potential for add ons from sales in previous seasons. That's a problem for income extraction this season. Next season who knows but there are better opportunities possible to do that

Magwitch1 · Mar 27, 2021

I think the deflation of the transfer market will be severe let’s assume Norwich, Watford and Bournemouth go up I see only the relegated clubs with money for players where are the other so called wealthy championship clubs, I reckon sisu’s annual plundering of transfer money to be hit.

Sky_Blue_Dreamer · Mar 27, 2021

oldskyblue58 said:
And yet in 2019 accounts there was 4.4m player sales income actually received allowing their income extraction.

Then in the promotion season I suspect the figure could be higher with the sales of Chaplin, Bayliss and McCallum.

All done on successful seasons in league 1

The driving force for sisu is not the creation of a better team per se but income extraction and capital growth. Pay the loans down the company becomes worth more because it has less liabilities.

The plan I think relies on significant player sales that creates a pot for extraction. There is no room for major increases in overhead. There has to be some growth of wages costs but I suspect limited to the increase in central distribution and matchday incomes. Player signings are limited by that income but also the annual amount to be extracted for their investors.

The return to the Ricoh has added not only stability but also capital value to the investment.

I think to understand the rational that I think is in play you have to look at it as an investment not at club or league position. I would think they would be very happy being established in championship but are right now comfortable with yo yoing between there and L1.

Relegation doesn't stop the player sales although there may be an element of discount by it. There is a drop in income but also significant drop in costs . The club will be run at break even which ever league we are in, in any normal season. I accept there may be some allowance this season for costs and restrictions caused by the pandemic, but I doubt it is any more than the minimum to keep afloat.

Which is how the club has operated for a number of seasons (with minimum support from the owners over last 4 years - I think less than a net £1m in hard cash)

The deflation of the transfer market caused by the pandemic is a problem for their plan and investment extraction

Of course this season you maybe have to ask where are the major player sales? Only perhaps because the pluses I can recall is potential for add ons from sales in previous seasons. That's a problem for income extraction this season. Next season who knows but there are better opportunities possible to do that

Indeed. But as you say that plan requires significant player sales to bring about. While no doubt there would be players we could get a decent fee for even if we went down as they now have Championship experience (O'hare, Hamer, Dabo) + return on the likes of Walker and Godden it still seems to me to be a very risky, short term plan (which I know is their kind of modus operandi).

Whatever they draw down in interest/capital is less for MR to improve the squad, which is already working at a disadvantage to its rivals. If they sell players to increase their 'return' then those players would need to be replaced and with the funds available we're relying heavily on those players having slipped through the net of others and performing for us at this level. They'll be unknown quantities by and large - high risk level. If we went down and they sold these players either because they wanted to move on due to decent offers elsewhere or just because they'd have more value now than if they start the season in L1 you're again losing the performers that are most likely to help you back up. Squad players this year were instrumental last year in promotion but even by our own admission we weren't expected to go up last year. It's by no means a certainty we'd come straight back up - teams would up their game against us and we'd have had that forward momentum of the last few years arrested. Last time we sold our performers at this level (Fox, Dann etc) that didn't turn out well and we were starting from a much more established place at this level than we are now.

As a plan I can only see it resulting in a vicious circle. if they take the money out to repay the money/interest owed, we inevitably fall back down and need investment to keep going due to less league/TV money and loss of higher transfer fees. A few poor signings and they lose the income from transfers anyway. Admittedly the other option is they have to maintain putting money in to keep us at this level and the income it provides. No-one is ever going to pay SISU what they want because the club just isn't worth it. If SISU were looking to buy it they wouldn't pay what they're asking and deep down they know it.

shmmeee · Mar 27, 2021

oldskyblue58 said:
Without the owners of wasps or CCFC finding ways to keep things going (ie "supporting" the clubs they own financially) both clubs are up the creek with no paddle.

Yes CCFC have the transfer dealing, But wasps have access to rental income and more non sports related income. Both get sizeable funds from the central bodies.

The biggest problem for both is the size of the wages bill and costly debt.

Both have large debt (unsupportable?) in comparison to their assets. wasps debt is bigger than CCFC (Otiums) but wasps assets are equally bigger (excluding the multi 10's of million of players valuation in CCFC)

Both are vulnerable, especially to the whim of each respective owner. Either owner wants their money back and that club is in real trouble

neither can crow much about how financially rosey things look

Do turkeys crow?

oldskyblue58 · Mar 28, 2021

Sky_Blue_Dreamer said:
Indeed. But as you say that plan requires significant player sales to bring about. While no doubt there would be players we could get a decent fee for even if we went down as they now have Championship experience (O'hare, Hamer, Dabo) + return on the likes of Walker and Godden it still seems to me to be a very risky, short term plan (which I know is their kind of modus operandi).

Whatever they draw down in interest/capital is less for MR to improve the squad, which is already working at a disadvantage to its rivals. If they sell players to increase their 'return' then those players would need to be replaced and with the funds available we're relying heavily on those players having slipped through the net of others and performing for us at this level. They'll be unknown quantities by and large - high risk level. If we went down and they sold these players either because they wanted to move on due to decent offers elsewhere or just because they'd have more value now than if they start the season in L1 you're again losing the performers that are most likely to help you back up. Squad players this year were instrumental last year in promotion but even by our own admission we weren't expected to go up last year. It's by no means a certainty we'd come straight back up - teams would up their game against us and we'd have had that forward momentum of the last few years arrested. Last time we sold our performers at this level (Fox, Dann etc) that didn't turn out well and we were starting from a much more established place at this level than we are now.

As a plan I can only see it resulting in a vicious circle. if they take the money out to repay the money/interest owed, we inevitably fall back down and need investment to keep going due to less league/TV money and loss of higher transfer fees. A few poor signings and they lose the income from transfers anyway. Admittedly the other option is they have to maintain putting money in to keep us at this level and the income it provides. No-one is ever going to pay SISU what they want because the club just isn't worth it. If SISU were looking to buy it they wouldn't pay what they're asking and deep down they know it.

But your premise looks at it from a football perspective, I am not at all sure that sisu look at it primarily from that perspective.

They have already proven that it was possible to extract significant funds in league 1 with moderate success, it will be interesting to see what was extracted in 2020 financials.

The financial model over the last 4 or 5 years has not been to rely on major funds from the owners and yet we have been successful. Our owners have done nothing more than top up the odd cash flow blip caused by timing during that period. The set up is to run the club on breakeven for day to day operations. Player sales are extras and the manager hasn't been able to use all of those funds at any time, and yet has been successful.

This season has had its problems for the plan because of the pandemic. But we have the lowest budget apparently so that suggests to me same operating set up but the owners not able to extract funds. That is I am guessing how the owners have been most "supportive". They are able to decide when and how much they extract it isnt a set figure. Have they put money back in ? We are not going to know for a year or so but I suspect it won't have been much

If we stay up then I doubt there will be major funds from the owners coming back in. Our overheads next season will be roughly similar as will wages, income will be up when crowds are back. That will allow the owners to once more rely on day to day operations being self funding. Even if relegated the budget gets cut to L1 levels and break even adjusted. Player sales remain the extra.

We are at the moment a bottom 6 Championship to top league 1 team. The finance operation will reflect that within the break even set up. At that level it isnt so difficult to source players that could turn a premium without breaking the bank. All clubs purchase duds as well, that's just business. Our financial model relies on player sales, that model builds in financial return for the owners has done I think for a number of seasons

Yes there is risk, but there is always risk. Our owners specialise in high risk.

Are the owners worried about how much the club is worth right now. No not in my opinion. I doubt for the next 5 years that they are. I suspect they are more worried about where the next major player sale comes from. Pay down the ARVO/SMF debt and interest and the sale of the club is a nice extra even at a few million.

To my mind they have already proven the plan works. This year has been a curve in the road. Next year day to day income increases whichever division we are in, admittedly on relegation league distribution lower but the budget will as always just get adjusted.

You have to try look at things away from league position and moving up the leagues. That's the view of a fan not hard nosed high risk investment managers.I think player sales provide the owners some funds as and when, and I seriously doubt they are or would be putting major amounts back in to the club.

Just my opinion though.

Grendel · Mar 28, 2021

oldskyblue58 said:
But your premise looks at it from a football perspective, I am not at all sure that sisu look at it primarily from that perspective.

They have already proven that it was possible to extract significant funds in league 1 with moderate success, it will be interesting to see what was extracted in 2020 financials.

The financial model over the last 4 or 5 years has not been to rely on major funds from the owners and yet we have been successful. Our owners have done nothing more than top up the odd cash flow blip caused by timing during that time. The set up is to run the club on breakeven for day to day operations. Player sales are extras and the manager hasn't been able to use all of those funds at any time, and yet has been successful.

This season has had its problems for the plan because of the pandemic. But we have the lowest budget apparently so that suggests to me same operating set up but the owners not able to extract funds. That is I am guessing how the owners have been most "supportive". They are able to decide when and how much they extract it isnt a set figure. Have they put money back in ? We are not going to know for a year or so but I suspect it won't have been much

If we stay up then I doubt there will be major funds from the owners coming back in. Our overheads next season will be roughly similar as will wages, income will be up when crowds are back. That will allow the owners to once more rely on day to day operations being self funding. Even if relegated the budget gets cut to L1 levels and break even adjusted. Player sales remain the extra.

We are at the moment a bottom 6 Championship to top league 1 team. The finance operation will reflect that within the break even set up. At that level it isnt so difficult to source players that could turn a premium without breaking the bank. All clubs purchase duds as well, that's just business. Our financial model relies on player sales, that model builds in financial return for the owners has done I think for a number of seasons

Yes there is risk, but there is always risk. Our owners specialise in high risk.

Are the owners worried about how much the club is worth right now. No not in my opinion. I doubt for the next 5 years that they are. I suspect they are more worried about where the next major player sale comes from. Pay down the ARVO/SMF debt and interest and the sale of the club is a nice extra even at a few million.

To my mind they have already proven the plan works. This year has been a curve in the road. Next year day to day income increases whichever division we are in, admittedly league distribution lower but the budget will as always get adjusted.

You have to try look at things away from league position and moving up the leagues. That's the view of a fan not hard nosed high risk investment managers.I think player sales provide the owners some funds as and when, and I seriously doubt they are or would be putting major amounts back in to the club.

Just my opinion though.

I’m sure this is the plan

It makes me laugh when some of our supporters seem to praise them for financial prudence when all they are really doing is starting to claw back the money that their investors have put in. As you say they haven’t actually put money in for years

Their only worry will be where the next mccallum Maddison Wilson is as without that it’s hard to see a mechanism that will work at all

oldskyblue58 · Mar 28, 2021

Final thought

We accrued 2m interest in 2019 and broke even to all intents and purposes. It included 4m player sales profits.

With no debt or interest to pay then the value of the club increases, and assuming what in football terms are modest player sales the club is profitable.

How much would someone pay for a debt free club that is profitable then ? even in L1

mark82 · Mar 28, 2021

Grendel said:
I’m sure this is the plan

It makes me laugh when some of our supporters seem to praise them for financial prudence when all they are really doing is starting to claw back the money that their investors have put in. As you say they haven’t actually put money in for years

Their only worry will be where the next mccallum Maddison Wilson is as without that it’s hard to see a mechanism that will work at all

I think there are players that can be sold on for significant sums, just maybe not this season. Continued development of the likes of O'Hare, Hamer & Dabo. Think with another season of progression those 3 will be worth a significant amount between them. We have some exciting prospects in the academy but our progress has made their progress more difficult. Still, would like to think Bapaga will break through at some point. Sure there could be others too.

NortonSkyBlue · Mar 28, 2021

mark82 said:
I think there are players that can be sold on for significant sums, just maybe not this season. Continued development of the likes of O'Hare, Hamer & Dabo. Think with another season of progression those 3 will be worth a significant amount between them. We have some exciting prospects in the academy but our progress has made their progress more difficult. Still, would like to think Bapaga will break through at some point. Sure there could be others too.

You would have thought that some pressure/arm twisting would be going on to ensure the academy players get some exposure in the first team
Not this season with our precarious situation but down the line.
Would you say that league one might be a better platform to bed in youngsters than bottom half championship with all the angst that entails?

Speedies_Chips · Mar 28, 2021

oldskyblue58 said:
And yet in 2019 accounts there was 4.4m player sales income actually received allowing their income extraction.

Then in the promotion season I suspect the figure could be higher with the sales of Chaplin, Bayliss and McCallum.

All done on successful seasons in league 1

The driving force for sisu is not the creation of a better team per se but income extraction and capital growth. Pay the loans down the company becomes worth more because it has less liabilities.

The plan I think relies on significant player sales that creates a pot for extraction. There is no room for major increases in overhead. There has to be some growth of wages costs but I suspect limited to the increase in central distribution and matchday incomes. Player signings are limited by that income but also the annual amount to be extracted for their investors.

The return to the Ricoh has added not only stability but also capital value to the investment.

I think to understand the rational that I think is in play you have to look at it as an investment not at club or league position. I would think they would be very happy being established in championship but are right now comfortable with yo yoing between there and L1.

Relegation doesn't stop the player sales although there may be an element of discount by it. There is a drop in income but also significant drop in costs . The club will be run at break even which ever league we are in, in any normal season. I accept there may be some allowance this season for costs and restrictions caused by the pandemic, but I doubt it is any more than the minimum to keep afloat.

Which is how the club has operated for a number of seasons (with minimum support from the owners over last 4 years - I think less than a net £1m in hard cash)

The deflation of the transfer market caused by the pandemic is a problem for their plan and investment extraction

Of course this season you maybe have to ask where are the major player sales? Only perhaps because the pluses I can recall is potential for add ons from sales in previous seasons. That's a problem for income extraction this season. Next season who knows but there are better opportunities possible to do that

I'm no expert but isn't capital value to do with the price of an asset ? If so, how does returning to the Ricoh add to value to SISU's capital value? They havent gained any assets out of this.

shmmeee · Mar 28, 2021

Speedies_Chips said:
I'm no expert but isn't capital value to do with the price of an asset ? If so, how does returning to the Ricoh add to value to SISU's capital value? They havent gained any assets out of this.

Theyve got a ten year tenancy. That’s an asset.

Sky_Blue_Dreamer · Mar 28, 2021

oldskyblue58 said:
But your premise looks at it from a football perspective, I am not at all sure that sisu look at it primarily from that perspective.

They have already proven that it was possible to extract significant funds in league 1 with moderate success, it will be interesting to see what was extracted in 2020 financials.

The financial model over the last 4 or 5 years has not been to rely on major funds from the owners and yet we have been successful. Our owners have done nothing more than top up the odd cash flow blip caused by timing during that period. The set up is to run the club on breakeven for day to day operations. Player sales are extras and the manager hasn't been able to use all of those funds at any time, and yet has been successful.

This season has had its problems for the plan because of the pandemic. But we have the lowest budget apparently so that suggests to me same operating set up but the owners not able to extract funds. That is I am guessing how the owners have been most "supportive". They are able to decide when and how much they extract it isnt a set figure. Have they put money back in ? We are not going to know for a year or so but I suspect it won't have been much

If we stay up then I doubt there will be major funds from the owners coming back in. Our overheads next season will be roughly similar as will wages, income will be up when crowds are back. That will allow the owners to once more rely on day to day operations being self funding. Even if relegated the budget gets cut to L1 levels and break even adjusted. Player sales remain the extra.

We are at the moment a bottom 6 Championship to top league 1 team. The finance operation will reflect that within the break even set up. At that level it isnt so difficult to source players that could turn a premium without breaking the bank. All clubs purchase duds as well, that's just business. Our financial model relies on player sales, that model builds in financial return for the owners has done I think for a number of seasons

Yes there is risk, but there is always risk. Our owners specialise in high risk.

Are the owners worried about how much the club is worth right now. No not in my opinion. I doubt for the next 5 years that they are. I suspect they are more worried about where the next major player sale comes from. Pay down the ARVO/SMF debt and interest and the sale of the club is a nice extra even at a few million.

To my mind they have already proven the plan works. This year has been a curve in the road. Next year day to day income increases whichever division we are in, admittedly on relegation league distribution lower but the budget will as always just get adjusted.

You have to try look at things away from league position and moving up the leagues. That's the view of a fan not hard nosed high risk investment managers.I think player sales provide the owners some funds as and when, and I seriously doubt they are or would be putting major amounts back in to the club.

Just my opinion though.

But football is the 'business' of the club. Hence the decisions based around the football side of it are the business decisions.

Of course you can argue their main aim is to reclaim their capital and interest to get their return on investment, but we've been down this road before. It didn't work. We ended up in L2 and that massively reduced our income on all levels - TV/prize money/gate receipts/transfer fees received. That affects the ability of the owners to take their money out.

The club have been more successful the last few years and developed some players they've been able to sell on for good fees. But that's not guaranteed to continue and the more they take in terms of interest the more it infringes the ability to keep on doing so. After we sold Dann etc we spent years relying on frees and kids and we made very little in terms of transfer fees on many of those players. They took the short term profits on the players and then ended up spending years having to cover losses. If we're not careful that could well be repeated again.

Magwitch1 · Mar 28, 2021

I don’t think it’s a coincidence that sisu have come back to the Ricoh now the transfer market is fooked and it is. Hamer and O’Hare could be worth a bit of cash one day but only if premier or top European clubs want them, sisu grab of transfer fee cash is over for a while. lets think what’s been plundered from the sales of Maddison, McNulty, Bayliss, Chaplin, McCallum, the bonus kick back from Callum Wilson’s Newcastle transfer, there’s a few million there I doubt if Robins has had much of that then add the few million lost due to playing in Birmingham last season and behind closed doors this season

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