Appeal granted (1 Viewer)

could use the Cambridge one if you prefer or i could use the investopedia definition White Elephant

DEFINITION of 'White Elephant'
A white elephant is an investment whose cost of upkeep is not in line with how useful or valuable the item is. From an investment perspective, it refers to an unprofitable investment, property or business that is so expensive to operate and maintain that it is extremely difficult to actually make a profit.

Would seem to apply to a lot of football clubs including SISU investors investment in CCFC

ACL Group btw had accumulated net profits at 31/05/2014 of £2.5m which is just prior to the share sale. According to the Wasps 2015 accounts including ACL for the full year not just from the date of acquisition it would have reduced Wasps Holdings group losses from 6.3m to 3.5m which would suggest profitability of the ACL sub group.

Grendel said:

So something that cost £110 million and sold for £6 million?

Click to expand...

The term 'clown' that you are so fond of throwing out there. Very apt at the moment.
You are wrong again whilst trying to justify why you were not wrong before. Even though everybody apart from you it seems knows you are as usual wrong.
Couldnt make it up.

letsallsingtogether said:

No one else wanted it I remember that one...
Well boom Sisu also believed that ( maybe G was their advisor) and now look what we have got.

Click to expand...

'Apparently' he never suggested that!!! He just wants to be remembered as calling it a white elephant. Then desperately try and find a definition of white elephant that fits him not getting proven wrong.
Embarrassing. He has issues and can't handle admitting he gets it wrong a lot.

oldskyblue58 said:

Except that isn't the case is it. The shares in ACL sold for £6m not the freehold land and property that cost £110m - two very different things. The leases give ACL rights to be there but the legal ownership of the freehold land & property is still with CCC. The council sold the two leasehold interests for a total of £22m

the origins of the expression "white elephant" can be found here White elephant - Wikipedia

A white elephant is a possession which its owner cannot dispose of and whose cost, particularly that of maintenance, is out of proportion to its usefulness. The term derives from the story that the kings of Siam, now Thailand, were accustomed to make a present of one of these animals to courtiers who had rendered themselves obnoxious, in order to ruin the recipient by the cost of its maintenance. In modern usage, it is an object, building project, scheme, business venture, facility, etc., considered expensive but without use or value. (Oxford English dictionary)


- Clearly CCC were able to dispose of some of its rights and to retain ownership. Have CCC ever wanted to dispose of the freehold?
- The stadium doesn't & didn't cost the owner CCC any maintenance. The cost of maintenance of the stadium is not what drags Wasps figures down or indeed ACL before its sale
- was it expensive to build compared to other stadia?
- is it unused? Usage of the whole site seems to be well above the levels when if first opened even before Wasps came in, and has increased further since
- does it have a value? ( all sorts of things to consider in that one) Depends if you look at what CCC value their rights over the site or what Wasps do. CCC include their ownership at £nil because of the long leases and had spent mainly grant plus ACL lease premium and Tesco land sale monies on the construction. Whilst leases are in place little value but little cost to the owner CCC. Wasps value their long lease interest at £60m largely based on the site activity. Also CCC would argue that the site has value in addition to monetary, eg social and community values etc.
- clearly at least two obvious parties were interested in acquiring some sort of interest in the stadium, we are told there were more than that over the years

Sorry G not sure I agree with your assessment of white elephant, it doesn't seem to fit the definition I have

Click to expand...

At least these arguments are thought through and worthy of consideration:

I would argue that the stadium lease is in reality freehold. Unless the organisation defaults then it will it will own the structure for its lifetime. This gives a significant advantage over a lease of less than 50 years which always massively impacts value.

I would say it was very expensive compared to other stadia of its capacity yes if the figures are correct. People will argue it has a hotel etc. but the stadiums such as Stoke, Leicester etc, cost significantly less and certainly the returns from the hotel etc would have to be massive to justify the return

Yes I am to an extent talking about the original lease - I have always said that, The original lease was in my view always massively overvalued as as such was an object which was expensive and without value. The Higgs share was in effect worthless and the valuation placed on it through a formula valuation hugely disproportionate to actual worth.

The council had to move the goalposts massively to achieve a valuation for sale that even then was a fraction of the amount it was previously quoting and a value that would have had people on here up in arms if it was the clubs owners that acquired it. If the lease and the terms had not been altered I do not believe that Wasps would have acquired the stadium at all. Even when they did the value was less than most people on here believed it was worth on the original lease.

My assertion is that the original lease on the stadium made the stadium worthless hence the term. That is always the argument I have maintained and still do. Thje council had to significantly revise its terms to sell.

Grendel said:

At least these arguments are thought through and worthy of consideration:

I would argue that the stadium lease is in reality freehold. Unless the organisation defaults then it will it will own the structure for its lifetime. This gives a significant advantage over a lease of less than 50 years which always massively impacts value.

I would say it was very expensive compared to other stadia of its capacity yes if the figures are correct. People will argue it has a hotel etc. but the stadiums such as Stoke, Leicester etc, cost significantly less and certainly the returns from the hotel etc would have to be massive to justify the return

Yes I am to an extent talking about the original lease - I have always said that, The original lease was in my view always massively overvalued as as such was an object which was expensive and without value. The Higgs share was in effect worthless and the valuation placed on it through a formula valuation hugely disproportionate to actual worth.

The council had to move the goalposts massively to achieve a valuation for sale that even then was a fraction of the amount it was previously quoting and a value that would have had people on here up in arms if it was the clubs owners that acquired it. If the lease and the terms had not been altered I do not believe that Wasps would have acquired the stadium at all. Even when they did the value was less than most people on here believed it was worth on the original lease.

My assertion is that the original lease on the stadium made the stadium worthless hence the term. That is always the argument I have maintained and still do. Thje council had to significantly revise its terms to sell.

Click to expand...

"Changing horses mid stream." You do know the meaning of this don't you?

We know how much the original lease cost. We know how much ACL, including the original lease, was sold for. We know how much the lease extension was sold for. And we know the valuation of the lease under Wasps ownership.

Raises the question why the huge disparity in the numbers and more importantly from a taxpayers point of view, if extending the lease massively increased the value why not do it prior to selling and maximise the return?

Hobo said:

"Changing horses mid stream." You do know the meaning of this don't you?

Click to expand...

Beep beep beep
"This vehicle is reversing"

Grendel said:

At least these arguments are thought through and worthy of consideration:

I would argue that the stadium lease is in reality freehold. Unless the organisation defaults then it will it will own the structure for its lifetime. This gives a significant advantage over a lease of less than 50 years which always massively impacts value.

I would say it was very expensive compared to other stadia of its capacity yes if the figures are correct. People will argue it has a hotel etc. but the stadiums such as Stoke, Leicester etc, cost significantly less and certainly the returns from the hotel etc would have to be massive to justify the return

Yes I am to an extent talking about the original lease - I have always said that, The original lease was in my view always massively overvalued as as such was an object which was expensive and without value. The Higgs share was in effect worthless and the valuation placed on it through a formula valuation hugely disproportionate to actual worth.

The council had to move the goalposts massively to achieve a valuation for sale that even then was a fraction of the amount it was previously quoting and a value that would have had people on here up in arms if it was the clubs owners that acquired it. If the lease and the terms had not been altered I do not believe that Wasps would have acquired the stadium at all. Even when they did the value was less than most people on here believed it was worth on the original lease.

My assertion is that the original lease on the stadium made the stadium worthless hence the term. That is always the argument I have maintained and still do. Thje council had to significantly revise its terms to sell.

Click to expand...

Happy to discuss valid points or opinions G not interested in some of the other stuff you and others get involved in

Much of what you say is your opinion, as is mine, and I think we will have agree from the off to disagree on certain things. I do not have a problem with that.

A long leasehold can be viewed as equivalent to freehold for valuation purposes. Legally it is not the same thing at all. People mix up the legal reality with valuation equivalence and make the leap that it is the same thing. Does it give you long term rights yes, do you have the rights of a freeholder no. Yes there is the control of the site that a lease gives you but you can not for example make changes to the freehold without the freeholders permission, and some things are excluded even then. You couldn't sell or transfer the lease without the freeholders permission

Yes in theory a long lease, in this case 250 years, you could expect to have a greater value than a 50 year one. In this case without the head lease of 50 years and owning ACL it is not possible to get the long leasehold. That in itself gives the head lease value to an entity seeking a long term agreement, and gives CCC/AEHC something to sell. You cant get the head lease without ownership of ACL, which must therefore give ACL value - how much is a different question, but events showed it wasn't worthless.

Yes there are advantages to a long lease but also disadvantages, the stadium is not going to last 250 years for example. Useful life is probably around 50 years without significant improvements/rebuilding to be carried out by the leaseholder

I think we should not mix up the value of the management company with the value of the head lease or the construction costs. the shares purchased by Wasps include a value of the head lease but they are not the value of the lease itself

The stadium bowl at the Ricoh accounts for under 50% of the space, so I do not think you can dismiss the additional construction work to build the other facilities and infra structure when comparing to other grounds. I doubt, but have not checked, the other grounds needed 17m spent on decontamination, that £110m also included the cost of the land sold to Tescos for example. The hotel, exhibition space, car parking are income earners 365/24/7 not just construction costs. Two thirds of the site income is not sport related. Many other stadiums simply do not have the same facilities, or were built well before. Non sports income Events, conferences, hotel over £12m

KIng power stadium cost 37m in 2002 - doesn't have the same amount of car parking, hotel facilities, exhibition halls etc and therefore potential income sources Commercial income inc shop £7.5m
Bet 365 stadium cost 19.5m to date (£15m in 1997) - it doesn't have the same facilities at all and therefore potential income sources Hospitality & event income £3.7m
Pride Park cost £28m in 1997 - again it doesn't have the same facilities and therefore potential income sources Hospitality & event income £3.5m

All cheaper yes but are we comparing like with like.

The original lease an object that was expensive and without value?. Was it expensive?, without seeing the valuations in 2008 I couldn't say but I would tend towards your opinion. The greatest mistake CCC did was to not offer a long lease in the first place . Did the lease have no value, not sure how anything other than opinion contradicts the actual events that have taken place and the information in the financials. On the one hand we have qualified specialists saying that the lease did have value against which there is unqualified opinion it didn't, sorry but I tend to accept the professional opinion but not unquestioningly.

Both SISU & Wasps bid for at least some of the shares. SISU on two occasions if we are to believe they were serious. The sums bid for the charity shares were not too dissimilar. Those values were similar to the balance sheet values of ACL Group. The share price is a reflection of all the assets less all the liabilities of a company agreed by the two parties. ACL included a valuation of the original lease (18m in 2014) - a valuation it would seem to be in the right ballpark value for both SISU & Wasps. The value of the head lease was accepted by various parties as reasonable and a figure circa £18m by 2014

Was the charity share worthless? It was sold for 2.77m plus add on's. Even SISU were prepared to make an offer of £2m plus in 2012. It being "worthless" is an opinion what happened says otherwise. The "value" placed on the charity shares by the formula was a contractual agreement between CCFC ltd and AEHC for the repurchase of the shares it actually had no relationship to the value of ACL nor was ever intended to, and in any case that formula was never activated at any time. You could argue the shares had a ransom value, often the case with less influential partners, but it would still be a value not worthless. The lease extension was not available to Wasps without the purchase of the Charity shares.

The value to CCC or indeed to AEHC at date of sale is totally different to what the value was in the hands of new owners the two are not connected. At date of sale CCC & AEHC could only sell what was, a cash flow short stadium and events site with no long term sports team there. Apparently a worthless white elephant with no real value under the ownership of CCC & AEHC - indeed if the head lease had no value then the balance sheet would have been £13m in the red, the loan security at risk etc. If it was such a valueless set up why would anyone be interested in paying millions or going to court because they were not allowed to bid?

Would Wasps have bought without a lease extension. Almost certainly not but then again neither would anyone else. I believe SISU even made an approach for a 100 year lease didn't they? I agree I thought the value would have been more than £1m - we will perhaps see why it was £1m if the JR2 gets off the ground.

The original lease was included at values that the directors, various valuers, auditors, legal experts, bidders, buyers etc were happy with. It clearly went on to achieve something like its value when included in what was being bought by Wasps( the shares)

We will also see how much of a white elephant ACL & the stadium were or had potential to be when Wasps publish year end results. I accept CCC were for years not keen to get out but the whole project was never meant to remain with CCC & AEHC long term. There was clearly also interest in the background from various parties over the years. Was the site including the stadium expensive to build possibly, was ACL or the head lease ever without value no I do not think so. Has the Ricoh, Coventry got a decent reputation locally, regionally, nationally? does it contribute to the local economy? does it provide large numbers of employment? has it encouraged other development? Does it now raise Coventry's profile in a positive way?etc - Councils do not need to see things in £ cost they can take other things in to account that would knock back the white elephant argument also

Grendel said:

At least these arguments are thought through and worthy of consideration:

I would argue that the stadium lease is in reality freehold. Unless the organisation defaults then it will it will own the structure for its lifetime. This gives a significant advantage over a lease of less than 50 years which always massively impacts value.

I would say it was very expensive compared to other stadia of its capacity yes if the figures are correct. People will argue it has a hotel etc. but the stadiums such as Stoke, Leicester etc, cost significantly less and certainly the returns from the hotel etc would have to be massive to justify the return

Yes I am to an extent talking about the original lease - I have always said that, The original lease was in my view always massively overvalued as as such was an object which was expensive and without value. The Higgs share was in effect worthless and the valuation placed on it through a formula valuation hugely disproportionate to actual worth.

The council had to move the goalposts massively to achieve a valuation for sale that even then was a fraction of the amount it was previously quoting and a value that would have had people on here up in arms if it was the clubs owners that acquired it. If the lease and the terms had not been altered I do not believe that Wasps would have acquired the stadium at all. Even when they did the value was less than most people on here believed it was worth on the original lease.

My assertion is that the original lease on the stadium made the stadium worthless hence the term. That is always the argument I have maintained and still do. Thje council had to significantly revise its terms to sell.

Click to expand...

Are you claiming that the council made a good deal by unloading a debt ridden white elephant? If so, please tell the judge at the JR.

oldskyblue58 said:

Happy to discuss valid points or opinions G not interested in some of the other stuff you and others get involved in - it does you a dis-service.

Much of what you say is your opinion, as is some of mine, and I think we will have agree from the off to disagree on certain things. I do not have a problem with that.

A long leasehold can be viewed as equivalent to freehold for valuation purposes. Legally it is not the same thing at all. People mix up the legal reality with valuation equivalence and make the leap that it is the same thing. Does it give you long term rights yes, do you have the rights of a freeholder no. Yes in theory a long lease, in this case 250 years, you could expect to have a greater value than a 50 year one. In this case without the head lease of 50 years and owning ACL it is not possible to get the long leasehold. That in itself gives the head lease value to an entity seeking a long term agreement, and gives CCC/AEHC something to sell. You cant get the head lease without ownership of ACL, which must therefore give ACL value - how much is a different question, but events showed it wasn't worthless.

Yes there are advantages to a long lease but also disadvantages, the stadium is not going to last 250 years for example. Useful life is probably around 50 years without significant improvements/rebuilding to be carried out by the leaseholder

I think we should not mix up the value of the management company with the value of the head lease or the construction costs. the shares purchased by Wasps include a value of the head lease but they are not the value of the lease

The stadium bowl at the Ricoh accounts for under 50% of the space, so I do not think you can dismiss the additional construction work to build the other facilities and infra structure when comparing to other grounds. I doubt, but have not checked, the other grounds needed 17m spent on decontamination, that £110 also included the cost of the land sold to Tescos for example. The hotel, exhibition space, car parking are income earners 365/24/7 not just construction costs. Two thirds of the site income is not sport related. Many other stadiums simply do not have the same facilities, or were built well before

KIng power stadium cost 37m in 2002 - doesn't have the same amount of car parking, hotel facilities, exhibition halls etc and therefore potential income sources
Bet 365 stadium cost 19.5m to date (£15m in 1997) - it doesn't have the same facilities at all and therefore potential income sources
Pride Park cost £28m in 1997 - again it doesn't have the same facilities and therefore potential income sources

All cheaper yes but are we comparing like with like.

The original lease an object that was expensive and without value?. Was it expensive?, without seeing the valuations in 2008 I couldn't say but I would tend towards your opinion. The greatest mistake CCC did was to not offer a long lease in the first place - I have argued this for years. Did the lease have no value, not sure how other than opinion that stacks up against the events that have taken place and the information in the financials. We have qualified specialists saying that the lease did have value against which there is unqualified opinion and no access to the base data saying it didn't.

Both SISU & Wasps bid for at least some of the shares. SISU on two occasions if we are to believe they were serious. The sums bid for the charity shares were not too dissimilar. Those values were similar to the balance sheet values of ACL Group. The share price is a reflection of all the assets less all the liabilities of a company agreed by the two parties. ACL included a valuation of the original lease (18m in 2014) - a valuation it would seem to be in the right ballpark value for both SISU & Wasps. The value of the head lease was accepted by various parties as reasonable and a figure circa £18m by 2014

Was the charity share worthless? It was sold for 2.77m plus add on's. Even SISU were prepared to make an offer of £2m plus in 2012. It being "worthless" is just your opinion what happened says otherwise. The "value" placed on the charity shares by the formula was a contractual agreement between CCFC ltd and AEHC for the repurchase of the shares it actually had no relationship to the actual value of ACL or was ever intended to, and in any case that formula was never activated at any time.

The value to CCC or indeed to AEHC at date of sale is totally different to what the value was in the hands of new owners. At date of sale CCC & AEHC could only sell what was. A cash flow short stadium and events site with no long term sports team there. Apparently a worthless white elephant with no real value under the ownership of CCC & AEHC - indeed if the head lease had no value then the balance sheet would have been £13m in the red, the loan security at risk etc. If it was such a valueless set up why would anyone be interested in paying millions or going to court because they were not allowed to bid?

Would Wasps have bought without a lease extension. Almost certainly not but then again neither would anyone else. I believe SISU even made an approach for a 100 year lease didn't they? I agree I thought the value would have been more than £1m - we will perhaps see why it was if the JR2 gets off the ground.

The original lease was included at values that the directors, various valuers, auditors, legal experts, bidders, buyers etc were happy with. It clearly went on to achieve something like its value when included in what was being bought by Wasps( the shares)

We will also see how much of a white elephant ACL & the stadium were or had potential to be when Wasps publish year end results. I accept CCC were for years not keen to get out but the whole project was never meant to remain with CCC & AEHC long term. There was clearly also interest in the background from various parties over the years. Was the site including the stadium expensive to build possibly, was ACL or the head lease ever without value no I do not think so. Has the Ricoh, Coventry got a decent reputation locally, regionally, nationally? does it contribute to the local economy? does it provide large numbers of employment? has it encouraged other development? Does it now raise Coventry's profile in a positive way?etc - Councils do not need to see things in £ cost they can take other things in to account that would knock back the white elephant argument also

Click to expand...

I and others have been making the same points for a while now. Probably not as well as you've just put it though.

The point about the useful/design life of the stadium is one point that I've been making that everyone seems to miss. 50years sounds about right to me so you could argue that the biggest return for CCC and the Coventry tax payer is that there is 7 or 8 times that the burden and cost doesn't fall on them for redevelopment of the stadium over the 250year lease period. How many millions is that going to save the taxpayer? £770million if you believe one estimate in today's money but being serious for a moment. Doesn't that represent value for money on its own to the taxpayer? I would think you'd have difficulty arguing it doesn't. Then again...

martcov said:

Are you claiming that the council made a good deal by unloading a debt ridden white elephant? If so, please tell the judge at the JR.

Click to expand...

Try telling our owners so that they can end this nightmare now would be better.

Wow, what a great example of point scoring, petty squabbling posting for likes this thread is. Its almost as if I have read the very same arguments before...again and again and again.
Hope people will be over the match threads with such enthusiasm.

Moff said:

Wow, what a great example of point scoring, petty squabbling posting for likes this thread is. Its almost as if I have read the very same arguments before...again and again and again.
Hope people will be over the match threads with such enthusiasm.

Click to expand...

Would a simple solution be not to move it to the forum created for this very type of thread ?

ccfcway said:

Would a simple solution be not to move it to the forum created for this very type of thread ?

Click to expand...

Totally agree. I think its time it was moved!

ccfcway said:

Would a simple solution be not to move it to the forum created for this very type of thread ?

Click to expand...

would seem sensible to me

ccfcway said:

Would a simple solution be not to move it to the forum created for this very type of thread ?

Click to expand...

Can't we move Grendel and give him his own thread?

Hobo said:

Can't we move Grendel and give him his own thread?

Click to expand...

Problem is that's the only thread anyone would be looking at

A Leg-end in his own mind!

Grendel said:

Problem is that's the only thread anyone would be looking at

Click to expand...

You're right every time I feel down I look for your posts have a good laugh then back to reality

Grendel said:

So something that cost £110 million and sold for £6 million?

Click to expand...

When it was built there was a demand & a pressing schedule. When it was sold it had no tenant & was not generating much income. So it lost value

Sent from my SM-G900F using Tapatalk

SkyblueBazza said:

When it was built there was a demand & a pressing schedule. When it was sold it had no tenant & was not generating much income. So it lost value

Sent from my SM-G900F using Tapatalk

Click to expand...

Indeed it did

Grendel said:

Problem is that's the only thread anyone would be looking at

Click to expand...

Is "anyone" another of your accounts?

Hobo said:

Is "anyone" another of your accounts?

Click to expand...

No it's clearly one of yours.

Grendel said:

No it's clearly one of yours.

Click to expand...

I only have one I am not that sad.

Grendel said:

Problem is that's the only thread anyone would be looking at

Click to expand...

Broken Hearted Sky Blue said:

You're right every time I feel down I look for your posts have a good laugh then back to reality

Click to expand...

Banterthon

skybluetony176 said:

I and others have been making the same points for a while now. Probably not as well as you've just put it though.

The point about the useful/design life of the stadium is one point that I've been making that everyone seems to miss. 50years sounds about right to me so you could argue that the biggest return for CCC and the Coventry tax payer is that there is 7 or 8 times that the burden and cost doesn't fall on them for redevelopment of the stadium over the 250year lease period. How many millions is that going to save the taxpayer? £770million if you believe one estimate in today's money but being serious for a moment. Doesn't that represent value for money on its own to the taxpayer? I would think you'd have difficulty arguing it doesn't. Then again...

Click to expand...

Of course is SISU had got the lease I believe they'd have flipped it at a profit within 2 years and got out.

Notice too that they were trying to buy it and get it extended at a lower price than even Wasps eventually paid, their hard ball negotiating stance backfired in spectacular fashion.

.

Sent from my SM-G930F using Tapatalk

Hobo said:

Is "anyone" another of your accounts?

Click to expand...

bloody hell, lets not start on the "accounts", this thread will run and run about debt, equity and escrows