Finance guesswork april 2012 (1 Viewer)

[oldskyblue58]

The more I think on it the more perplexed I am about what we are told about the finances at CCFC. It just doesnt stack up to me. Yes I know it is partly to do with the timing of payments etc, partly others guess work or hearsay etc - but how did it get to the stage where we cannot pay our bills, cannot set a budget, cannot sign off accounts etc. It all suggests to me that far from going in a positive direction the state of CCFC has got worse - even perilous.

taking the figures in the 2010 accounts as a starting point to guess the current figures they should roughly be .....

Turnover. Well gates are down by about 2100 a game compared to 2010 that will equate to say £1m in lost income. That would place turnover at around £8m assuming other income remains constant

Direct costs should be slightly down but say £0.9m (similar to 2010)

Admin Expenses would expect some of them to be fixed but some savings to be made so say that is £3m

Wages. Well from all reports significant savings have been made here. The squad is much smaller and less costly. We dont have the back room and support staff we used to, not paying off old managers etc. The senior management has been reduced, we no longer have a head scout or fitness trainer, RR is not being paid (dont know about TF). The CT says it is around £5m but I think it would be more at least £6m

Amortisation of player contracts. Most this has been done by the end of 2011 accounts so there should not be much in the 2012 accounts. Say it is £0.5m

Interest. Well apparently we are not charged any by SISU and the other loans account for not a lot but say £0.5m

that should equate to a loss of £2.9m before player sales

Player sales monies - Juke £1.2m, Dann additional £0.3m Gunner £0.4m Turner £0.8m = 2.8m

overall loss £100k. Even if that was £1m that would not be bad

All guess work of course but shouldnt be catastrophic should it? shouldnt mean major funds from SISU should it ? And yet the SISU debt has grown to a point they wont put money in, we dont pay our bills, we cant agree budgets, cant file accounts, desperate to renegotiate the rent. There is an air of panic and concern

What is going on ? .......... a sadly familiar question when dealing with CCFC & SISU.

in terms of money coming in 2011/2012
Players sales = + 2.8m
wages savings = + 4m compared to 2010 figure
overheads saved = + 1m?
Prozone sale = +6m ?
increase in SISU loan account = + £10m ?(apparently loan now over £36m so at least £10m has come in since 31/05/10 to fund losses - under two years)

where has it all gone for us to be in the financial mire again ?

I could be getting it all wrong of course. Would be interested to see what anyone else thinks about my guesstimates.

Got a feeling that things are worse than we think though - possibly much worse

But right now it doesnt make much sense to me

 

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[BurbageSkyBlues]

Agree entirely OSB.

One thing we do not know, is the cost of all the senior management/director/board consultants etc, that have come and gone in the last couple of years. No doubt, there has been some loss here, but not catastrophic.

Something is very wrong.

 

[Otis]

We have also though apparently borrowed against next season's season ticket sales. How is that possible if these figures are anywhere near accurate ... or even if they are not.

 

[stupot07]

Although we're not paying any interest on the Sisu loans, could it be that we have started to repay them? Or make any sort of payments to those shareholding accounts?

 

[oldskyblue58]

possibly stupot but why would their debt go up if that was the case ? cant repay the shareholders or give them a dividend it would be illegal because there are no accumulated net profits to do it. like i said doesnt make much sense to me unless we had incurred new types of cost or income was significantly lower

 

[Brighton Sky Blue]

Ricoh rent of say £2 million since April 2010 been included in your estimates OSB?

 

[oldskyblue58]

rent is 1.2m BSB and paid by CCCFC Holdings who it looks like then recharge its expenses to CCFC. So assuming that is right the effect of the rent is in there.

 

[BurbageSkyBlues]

Perhaps this is why the accounts are not filed? It might expose something unsavoury, or could be related to the negotiations that are (allegedly) pending...?

 

[BurbageSkyBlues]

Or, perhaps there might be an operating profit, which would be the source for criticism when we are relegated?

 

[Grendel]

Will the issue not be cash flow? As the club enters the summer months there is no gate revenue. Liabilities and outgoings are unchanged. I assume the club can no longer access funds from other sisu holdings so the situation is becoming bleak.

 

[blueflint]

OSB i think your spot on cant possibly be a profit. but money may have been dished out unwisely causing problems with accounts .we may be in deeper do do than we all think

 

[thegameaintstraight]

Will the issue not be cash flow? As the club enters the summer months there is no gate revenue. Liabilities and outgoings are unchanged. I assume the club can no longer access funds from other sisu holdings so the situation is becoming bleak.

If cash flow is the issue, and you are very likely correct, what might happen? As has been said on here before, neither administration nor liquidation is any good for SISU and whoever owns the near &40M loans. Surely a takeover with some loan writeoff is what our owners should be desperately seeking, but they dont seem to be. I know that would still leave us in debt but it could not be worse than now......could it?

 

[swanageskyblue]

Is there another way that SISU could be taking money out of the club? Like as management charges? Rather like private pensions, the value of which gets diluted so much by charges the intermediaries make for their services?

 

[skybluesam66]

you didnt factor in additional premier ship tv money that passes down of an additional £1.5m - so even if you were running at 1m losses, and there are another 0.5m costs you did not envisage, then that still brings us to break even

My theory of not publishing accounts, is a substantial disclosure may be required about the status of a certain potential takeover

 

[oldskyblue58]

or a disclosure that there is no more money and they cannot pay their way - ie not a going concern

 

[oldskyblue58]

Is there another way that SISU could be taking money out of the club? Like as management charges? Rather like private pensions, the value of which gets diluted so much by charges the intermediaries make for their services?

possibly, there must be some additional costs somewhere, or income is significantly lower or they havent saved as much on the wages as we think.

Its all guess work because there is no transparency

 

[Brighton Sky Blue]

What would we be entitled to see under the Freedom of Information Act? I've a sneaky suspicion we could request the majority of the information OSB's referring to.

 

[stupot07]

What would we be entitled to see under the Freedom of Information Act? I've a sneaky suspicion we could request the majority of the information OSB's referring to.

I think (and I may be wrong) the Freedom of Information Act only applies to the public sector.

 

[Brighton Sky Blue]

Just done a quick bit of reading on it-it applies to information held by public authorities, so you're right. It'd just limit us to the Council's side of things, which isn't a great deal.

 

[Godiva]

OSB,

Perhaps you're putting 2 and 2 together and gets 17

Let's say you're calculations are roughly correct, which they usually are. Then the explanation to why the club defaults on paying the rent could be just what they tell us - that the club want to renegotiate the rent and have tried for some time to get it down to a reasonable level.
Everybody say's sisu are hard nosed businessmen, well maybe they're playing hardball as sweet talk and coffee meetings apparently brings them nowhere.

And then there's the failure to secure funds for next year. I think you have said it may be down to not knowing which league we'll be in and I think it sounds plausible.

 

[oldskyblue58]

OSB,

Perhaps you're putting 2 and 2 together and gets 17

Let's say you're calculations are roughly correct, which they usually are. Then the explanation to why the club defaults on paying the rent could be just what they tell us - that the club want to renegotiate the rent and have tried for some time to get it down to a reasonable level.
Everybody say's sisu are hard nosed businessmen, well maybe they're playing hardball as sweet talk and coffee meetings apparently brings them nowhere.

And then there's the failure to secure funds for next year. I think you have said it may be down to not knowing which league we'll be in and I think it sounds plausible.

Thanks for the vote of confidence Godiva - but I dont know my figures are correct, they are just a guess.

The rent - well for the facilities they get it isnt actually unfairly priced imo, it is only an issue because of the lack of success at the club and because of years of inappropriate financial management. The board over the time we have been there have failed to make the club sustainable or successful. Yes they will use it as a bargaining tool of course but if they halve it that will save £600k and they are saying losses are much bigger than that. Still going to be in the financial mire arent we.

If you ask me SISU dont like a taste of their own hard nosed attitude.

Paul Fletcher went on about the club should own the stadium, it should have the income streams etc in an interview on CWR on friday night. Two things I would say to that - firstly yes ok they should so lets see the colour of your money to buy it at market value together with a sustainable business plan. Second I am damn glad that SISU do not own the stadium right now.

Yes I said it might be down to not knowing but I also said it should be possible to have two plans - one for the Championship the other for League 1 so it should not stop the process. I think there is a very real possibility that the money has run out and the rent issue is a last throw of the dice.

If they had thought this through properly SISU could have got some of the income streams a long time ago - they went a different way and now want to blame anyone else. As usual with our Board and SISU it is everyone elses fault when in reality the club got themselves in this mess

 

[Godiva]

The rent - well for the facilities they get it isnt actually unfairly priced imo, it is only an issue because of the lack of success at the club and because of years of inappropriate financial management. The board over the time we have been there have failed to make the club sustainable or successful. Yes they will use it as a bargaining tool of course but if they halve it that will save £600k and they are saying losses are much bigger than that. Still going to be in the financial mire arent we.

The price may not be unfair, but it may be OTT market-wise. If our 'competitors' are paying less, it positions the club with less competitive power. That cannot be in the best interest of the stadium owners.
I think (like everybody else) that the club and the stadium should have the same owner - and if that is not the case, then at least work in synergy. Success and failure for the club effects the stadium, and to some extend vice-versa.

But what is the right price? Impossible to calculate, isn't it?
Then how about a pound or two per ticket? That would make it obvious for both parties that they have to work closely together to get more ppl through the gates. Maybe that way the stadium owners would become more interested in setting up extra income streams or public events outside the turnstiles on matchday to attract attention?

If they had thought this through properly SISU could have got some of the income streams a long time ago - they went a different way and now want to blame anyone else. As usual with our Board and SISU it is everyone elses fault when in reality the club got themselves in this mess

Now this is where auditors and accountants excell! Looking at the results of past events and pointing out the now obvious
In my next life I will be an auditor!

 

[rob9872]

But what is the right price? Impossible to calculate, isn't it?

I'm sure that we would all love a bottle of hindsight, but imo the contract when it is up for renewal it would be better negotiated on a % of income (note; not profit because if we overspend that's our look out) the more we generate the more twe pay, but it protects us if we go down so that we don't have such a large commitment based on failure that will handicap us. It could of course mean that we pay more than £1.2m but that wouldn't be a problem if we had the benefit of significantly more income.

 

[Godiva]

I'm sure that we would all love a bottle of hindsight, but imo the contract when it is up for renewal it would be better negotiated on a % of income (note; not profit because if we overspend that's our look out) the more we generate the more twe pay, but it protects us if we go down so that we don't have such a large commitment based on failure that will handicap us. It could of course mean that we pay more than £1.2m but that wouldn't be a problem if we had the benefit of significantly more income.

Yes, that's what I meant when I suggested a fixed price per ticket.

But what is the right price? Impossible to calculate, isn't it?
Then how about a pound or two per ticket? That would make it obvious for both parties that they have to work closely together to get more ppl through the gates. Maybe that way the stadium owners would become more interested in setting up extra income streams or public events outside the turnstiles on matchday to attract attention?

 

[skybluesam66]

the council will have to be careful though - if they evict us for non payment of rent - a lot of associated revenue will go

Ricoh may want to renegotiate - and as a minimum the next naming rights will be much harder to sell
Car parking revenue
Food and drink sales
Associated additional revenue for Casino/hotel etc

the offset of that is that should somebody make a bid for the club, I think that somebody mentioned the rent was around 7% of stadium turnover

if we half owned the ricoh, aswell as saving 1.2m - there would be additional revenue of around £8m per year - and also the share of the naming rights ( yes there will be costs aswell) but it is a much more attractive business model, and it is unclear why Sisu didnt properly invest to tap into this

 

[oldskyblue58]

I have been saying for a long time that you dont have to own the stadium to have right to income Godiva - has nothing to do with looking back at figures - it has everything to do with looking forward and attempting to solve the clubs future income problems. I do not understand why approaches along those lines have not been made by the club - from what I know it hasnt happened

Please clarify who are competitors for rented stadia are ...... saw Peterboro mentioned in the press...... clearly some people have never been there.... the two stadiums are vastly different in quality and facilities. Have indicated several times the value that CCFC's own commercial team put on the pitch alone - surely that indicates in some way the value of the rent

What the club are saying to ACL essentially is that because CCFC has failed to deal with many of its own problems then ACL has to take a cut in income. Yes it is a bit of brinksmanship on both sides but thats the situation in a nutshell isnt it ?

I have a problem with folk just assuming that there is no working relationship at the Ricoh. There has to be some synergy. But look at what has gone on, the things said at CCFC etc - who repeatedly broke the trust ? Trust is built over time by matching actions to words - it is lost very quickly when words fail to match actions

the stadium and club are closely linked obviously - perhaps that is why in part that ACL need to see a viable business plan from CCFC before helping more or divesting some income or control. If the club continues to fail on and off the pitch it reflects badly on an international class set up at the Ricoh. It isnt all about the money

Think Rob's suggestion has great merit - it has to be an alternative imo. Comes back to trust though - ACL has got to trust that CCFC & SISU will do the right things to bring success, not continue to spiral into financial melt down. My question would be would you trust the current set up and owners ?

Dont forget CCFC will have had to give a lot more info to ACL than they do to us - just maybe ACL do not see how CCFC can get out of this. In which case it doesnt matter what ACL do. Personally I think if you let CCFC use the stadium for free we will still be in the same position - no money to finance the business - unless SISU attract serious investment, or purchase some income streams or new owners with investment available are found then saving on the rent is not the greatest problem at CCFC

 

[rob9872]

OSB; please forgive me as I'm sure this topic must have been explored previously, but ... is there any way in which ACL could become part or full owners in CCFC?

I realise that the Council is a non-prfit making organisation, but as ACL are only council run and not actually the council, is there anything to prevent this? What would your opinion be of the fact that the people of Coventry whether fans or not, then effectively own the club, help or hinder progress and what other implications would occur and what financial responsibilities/restrictions would the council be liable for.

 

[Godiva]

I have been saying for a long time that you dont have to own the stadium to have right to income Godiva - has nothing to do with looking back at figures - it has everything to do with looking forward and attempting to solve the clubs future income problems. I do not understand why approaches along those lines have not been made by the club - from what I know it hasnt happened

Please clarify who are competitors for rented stadia are ...... saw Peterboro mentioned in the press...... clearly some people have never been there.... the two stadiums are vastly different in quality and facilities. Have indicated several times the value that CCFC's own commercial team put on the pitch alone - surely that indicates in some way the value of the rent

What the club are saying to ACL essentially is that because CCFC has failed to deal with many of its own problems then ACL has to take a cut in income. Yes it is a bit of brinksmanship on both sides but thats the situation in a nutshell isnt it ?

I have a problem with folk just assuming that there is no working relationship at the Ricoh. There has to be some synergy. But look at what has gone on, the things said at CCFC etc - who repeatedly broke the trust ? Trust is built over time by matching actions to words - it is lost very quickly when words fail to match actions

the stadium and club are closely linked obviously - perhaps that is why in part that ACL need to see a viable business plan from CCFC before helping more or divesting some income or control. If the club continues to fail on and off the pitch it reflects badly on an international class set up at the Ricoh. It isnt all about the money

Think Rob's suggestion has great merit - it has to be an alternative imo. Comes back to trust though - ACL has got to trust that CCFC & SISU will do the right things to bring success, not continue to spiral into financial melt down. My question would be would you trust the current set up and owners ?

Dont forget CCFC will have had to give a lot more info to ACL than they do to us - just maybe ACL do not see how CCFC can get out of this. In which case it doesnt matter what ACL do. Personally I think if you let CCFC use the stadium for free we will still be in the same position - no money to finance the business - unless SISU attract serious investment, or purchase some income streams or new owners with investment available are found then saving on the rent is not the greatest problem at CCFC

The competitors are every other club in our division, wheter they own their stadium or not. It's down to the income minus cost of putting a bum on a seat.

No doubt trust is broken, but exactly where it started to break and who started it, I think we'll never know. Probably wasn't even intentional, but a result of the failure to stay within budgets. Then the public mud throwing competition added to the situation and who started that? I don't know and have lost interest. I will be told 'the whole truth' someday by the winner.
The mis-trust is not mended over night, and this is why the quick solution is new ownership of the club. Even though a new regime would only proceed in doing what the present owners do, the benefit of restored trust between the club and the rest of the world will make it possible to move forward at speed.

But a change is not imminent, is it? So, in the mean time the current owners should do what they do ... get the club to live within its means. Bringing down the rent is one task - maybe it's not the clubs greatest problem as you say, but it's something that needs to be sorted.

 

[oldskyblue58]

I cant see that the regulations regarding the council or charity would allow them to do it even at arms length Rob. Plus the practicalities of running a football club would require a certain amount of money to be "gambled" on players and it would seem money to cover losses. Its hard to see that in these times of cutbacks at councils any sort of case could be put forward that wouldnt cause up roar. The charity will have detailed rules at the charity commission for instance that might allow putting money in to property by way of loans or shares (an investment) but would prohibit putting money into a business operated by themselves (in effect) for non charitable purposes

ACL's core business is running of events facilities, now while that might seem to match with the football club I am not sure they have the experitise to run a football club. I think it is one thing running an arena which they own and has a minimum value as landlord its quite another running a football business that might incur big losses and keep needing repeated cash injections. Ideally both council & charity want their money out of the setup not to be putting more in.... of course that depends on finding suitable wealthy owners of the club

I dont see it happening to be honest.

 

[rob9872]

Thanks OSB

 

[oldskyblue58]

Just out of interest how willing do you think SISU would be to increase rent if the club was ever successful Godiva ?

Most other clubs have mortgaged the stadiums if they own it - how much do you think they pay in interest on such loans ? Its either pay rent or pay interest in effect isnt it? How many mortgage providers will drop let alone halve their interest rate just because the club is having a tough time? Interest is a cost of bums on seats too

Of course if SISU want to agree a much lower rent could improve the saleability of the club - especially if they can fix it for a number of years - wonder who that benefits? In the meantime ACL takes longer to repay loans (costs more) and the council/charity have money tied up for longer they could use elswhere

Yes if CCFC were not there ACl would suffer - but the reality is that for CCFC not to be there would most likely mean they had gone bust ! In that situation I would guess a new club and lease would happen - no one, for all sorts of reasons wants CCFC to go bust, but some will lose more than others by it particularly SISU

Bottom line still comes back to no matter the reduction size in rent the club will still be making losses that SISU are unwilling to cover any further and apparently have no other sources to utilise. Where does that leave us ? Too much being made of this rent issue ...... if it was halved it would save £600K - they wasted 5 times that alone on Eastwood (fee and wages). The club have accumulated £30m + debt while achieving very little yes the rent contributed as did every other cost of the business. The rent has always been what it is but it is only now (last 12 months) a problem ?

Lack of ambition, investment, planning and foresight ........... little trust or seemingly ability to think creatively..... no real plan and no real understanding how to do it anyway. That sums up CCFC I reckon

Not saying that they shouldnt look at every cost and try drive down (including rent) but the implication is that it is because of the rent that we are in trouble (see Brody comments for example). Simply ridiculous

 

[rob9872]

Even if the council were to agree a reduced rent there is nothing to enforce them paying that or renegotiating again. The deal is probably not great for us, particularly with our current plight, but we committed to it and should have budgeted for it like any other expense for length of the agreed contract.

 

[Godiva]

Just out of interest how willing do you think SISU would be to increase rent if the club was ever successful Godiva ?

That's an extremely hypothetical question, isn't it? When will this ever happen.
But to be serious, my suggestion was a fixed price per ticket sold. So the more success the more attendants and the higher rent.

Most other clubs have mortgaged the stadiums if they own it - how much do you think they pay in interest on such loans ? Its either pay rent or pay interest in effect isnt it? How many mortgage providers will drop let alone halve their interest rate just because the club is having a tough time? Interest is a cost of bums on seats too.

True, but those clubs with mortages will have had the opportunity to re-finance their loans and cut the interest payments over the last couple of years - effectively reducing their 'rent'. We, on the other hand, are paying a price set in times when the interest rate was much higher, yet we do not benefit from the reduced interest like other clubs do and like the owners of Ricoh do (or should do).

Bottom line still comes back to no matter the reduction size in rent the club will still be making losses that SISU are unwilling to cover any further and apparently have no other sources to utilise. Where does that leave us ? Too much being made of this rent issue ...... if it was halved it would save £600K - they wasted 5 times that alone on Eastwood (fee and wages). The club have accumulated £30m + debt while achieving very little yes the rent contributed as did every other cost of the business. The rent has always been what it is but it is only now (last 12 months) a problem ?

Lack of ambition, investment, planning and foresight ........... little trust or seemingly ability to think creatively..... no real plan and no real understanding how to do it anyway.

Not saying that they shouldnt look at every cost and try drive down (including rent) but the implication is that it is because of the rent that we are in trouble (see Brody comments). Simply ridiculous

Brody said the rent was a noose around our neck. I don't think he said it was the only one. But every other large post in the budget is being dealt with - and the more the club brings down every other costs, the more the rent post stands out.

We can point towards every mistake made in the past, and the reality will still be with us. Any negotiation to reduce a payment starts with pointing fingers and making references to the past, but at some point reason kicks in and the parties will try to solve the problem on the table.
Some sort of solution will pop up, and I don't think it includes eviction or calling in rent for the outstanding period of the contract.

 

[SkyBlue_Bear83]

Trying to work out the finances and the way SISU run our club is like being spun till dizzy and trying to find your way through a maze blindfolded.

Smoke and mirrors, the whole lots of them are crooked. No direction they just blunder from one mistake to another.

 

[Sumo the Micky Quinn]

I think the key statement made yesterday by Tim Fisher. Our budget at the moment is the same as the teams in the promotion pack of league 1.

Contradictory to Len Brody saying Sheff Utd went down with a "Championship promtion budget proving money dosn't get you promoted" (or words to that effect). So how much is Sheff Utd. budget this year?
Knowing nothing about Sheff Utd. I can probably bet they didn't sell all their players to make thier budget in line with the rest and it's already well documented about Huddersfields' spending.

I'm sure there will be more bullsh1t/spin call it what you want to try and convince us they are doing the right thing.