Club aims to raise £35m from bond (1 Viewer)

[Ashdown]

A bit random I know but Wasps could easily gross £750,000+ from this forthcoming match with Leicester Tigers. They are obviously basing their optimistic pay back terms on big paydays like this one ? If it's on TV you can add another big wedge !

 

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[NorthernWisdom]

A bit random I know but Wasps could easily gross £750,000+ from this forthcoming match with Leicester Tigers. They are obviously basing their optimistic pay back terms on big paydays like this one ? If it's on TV you can add another big wedge !

They';re dependent on the few big games however (less if they cock up European qualification) and also holding onto people who are going currently out of curiosity. The trajectory of attendances at Wycombe (and the football club's after moving ground, for that matter) suggests the latter may be a particular challenge.

 

[Noggin]

What is worrying is people who suddenly have access to there pension pots see headline rates of 6.5% which is more than double high street rates .. And put there money in not realising they could loose it all .. They are not covered like high street banks .. Does anyone know of any upcoming stadium concerts .. As they make a big thing about the venue being used


Sent from my iPhone using Tapatalk

You could say that about all the other thousands of opportunitys there are for investing your money too. Personally though if I wanted 6.5% interest I'd do peer to peer lending with my money spread across say 100 companies. You can then assume a few of them won't pay you back and that still be completely fine.

https://www.fundingcircle.com/statistics

The fact this bond offer looks so unappealing to most of us should show exactly how expensive it would be for sisu to borrow money for a new stadium which is probably an order of magnitude more risky.

 

[Grendel]

What is worrying is people who suddenly have access to there pension pots see headline rates of 6.5% which is more than double high street rates .. And put there money in not realising they could loose it all .. They are not covered like high street banks .. Does anyone know of any upcoming stadium concerts .. As they make a big thing about the venue being used


Sent from my iPhone using Tapatalk

The brochure refers to past concerts and the fact it hosts the Davies Cup - a privilege they pay for I believe.

 

[jimmyhillsfanclub]

Oooh....6.5% return eh....

If it looks too good to be true......

"A Fool & his money...." etc. etc.

 

[italiahorse]

Every time we find out any new details the whole thing seems to stink more and more. What we're basically seeing now is CCC have sold ACL to a company that doesn't have the money to pay back the loan, doesn't have the money to run their own business and doesn't have the money to run ACL!

This would be like Fisher coming out and asking the fans for money to pay back SISU and pay for a new ground and cover any losses for the next few seasons. I know councils can make some odd decisions but how on earth did they fall for this. They must have taken everything Wasps said on face value and not asked for evidence of anything.

I'd buy into CCFC if I thought they provided a product.

 

[chiefdave]

I'd buy into CCFC if I thought they provided a product.

You're not seriously suggesting that if Fisher came out and said fans should pay out a few grand each to pay back SISU everyone would be lining up saying its a great idea?

 

[Ashdown]

They';re dependent on the few big games however (less if they cock up European qualification) and also holding onto people who are going currently out of curiosity. The trajectory of attendances at Wycombe (and the football club's after moving ground, for that matter) suggests the latter may be a particular challenge.

Maybe but much of your debate has been centred round HOPING they fail dismally. Thing is they managed just under 17000 yesterday as well and if you can stomach a look at the Telegraph 'fan' photos they look like they're having a lot of fun. I don't think you are a rugby fan either and therefore can't appreciate the different atmospheres at games. I went to Cov Rugbys last home match and Cov City's and I can tell you for me at least now it's different gravy, Rugby is a growing spectator sport whilst football outside the top echelons is a poor experience by and large. I too worry about these imposters but they won't fail just because a handful of us City fans want them to.

 

[shy_tall_knight]

You're not seriously suggesting that if Fisher came out and said fans should pay out a few grand each to pay back SISU everyone would be lining up saying its a great idea?

No especially as the shares were given away to SISU for nothing but if we were in the PL with a track record of playing in the Champions League then a share issue would have some takers

 

[oldskyblue58]

not been through the prospectus in great detail but didn't read anything that would make me want to buy in to it. Is it a good investment? Depends on your view of risk I think. £2000 is not a lot of money to risk for many investors and 6.5% return is pretty reasonable. Is it a secure investment, seems to me no but it isn't supposed to be is it? Pretty much the same as playing the stock market don't do it if you cant afford to lose it.

It does provide a lot of other information. some is

- Richardson owns the whole thing, even if Moonstone is registered in Malta
- 6 mths to 31/12/14 Wasps Holding made an operating loss 1.9m, Net liabilities had increased by 2m to 9.9m, but were cash flow positive by 425k
- 6 mths to 30/11/14 ACL made operating loss 177k, net loss after interest 527k had net assets of 6.3m but were cash flow positive by 1.6m
- security for the bond issue seems to be a charge over all assets of ACL Group and P shares owned by Wasps
- bonds are not covered by Financial services Compensation Scheme - Wasps Holding go bust you could lose all your investment. When the bonds open to trade it doesn't mean they will be worth the £2000 you may invest, infact it could be worth very little or maybe more
- Richardson to be repaid up to £10m but that still leaves him owed 10m which he cant force repayment on. Loans from Close Leasing 3.3m also to be repaid
- CCC to be repaid £13.4m. Documents make clear that Wasps paid off £1m on the loan when they came in
- Docs also make clear Wasps paid £1m to extend the lease to 250yrs (in addition to £1m off the loan) But Wasps Rugby team have a licence to use the stadium for 50 years for first team games
- all sorts of analysis on the potential risks that could affect the investment - including business failure and Wasps relegation, analysed between Wasps and ACL
- Value of the 250year long lease £48.5m as of 23rd April 2015 - ie with Wasps there
- Compass provided £4m loan interest free to IEC Experience Ltd repayable 2019 if their deal with IEC not renewed
- first 17 CCFC games at Ricoh after return got average crowd 7333
- JLR talking about more sponsorship involvement and putting corporate events there
- Carlsberg contract re wet sales is up for review now
- training site and academy to be in West Midlands from mid 2016
- Wasps F&B's at Adams park averaged £3900 per game but hit average of £75k up to Harlequins fixture at Ricoh
- Wasps received £855k in 2013/14 from RFU central funds
- salary cap is at least £5m in total for 2014/15
- ACL lease Car Park C from CCC
- Wasps dispute SISU 2nd JR claims as factually inaccurate
- Otium have a four year tenancy at the Ricoh with a break clause in 2016 exercisable by ACL
- Ricoh naming rights not renewed and end August 2015. Jaguar Hall sponsorship ends 2015 Lloyds Pharmacy deal ends 2015 EON deal ends 2017. In fact most sponsorship expires 2015
- IEC shareholders agreement ACL & Compass expires 2027

Looks to me like a lot of things came to a head in 2014/15 for ACL/CCC/AEHC and for Wasps.

As for the bond take up I would think a large percentage has been prior placed hence why the stories have been floating around about raising finance.

All raises a few questions doesn't it. Still left with the feeling that it should have been CCFC's but we all think we know why that hasn't happened .............

 

[Grendel]

Maybe but much of your debate has been centred round HOPING they fail dismally. Thing is they managed just under 17000 yesterday as well and if you can stomach a look at the Telegraph 'fan' photos they look like they're having a lot of fun. I don't think you are a rugby fan either and therefore can't appreciate the different atmospheres at games. I went to Cov Rugbys last home match and Cov City's and I can tell you for me at least now it's different gravy, Rugby is a growing spectator sport whilst football outside the top echelons is a poor experience by and large. I too worry about these imposters but they won't fail just because a handful of us City fans want them to.

But even their own blurb says they have increased revenue by 50%. That's pretty poor compared to the percentage increase in attendances.

We know several thousand are free and a lot more subsidised. The actual revenue currently is non supporting and they themselves admit a budget projection of losses for 3 years.

After this next game the summer months are here and revenue falls again. Bills still need paying though and cash flow may prove difficult.

A lot of people on here were making claims the sponsor naming rights would be paying off the loan. Doesn't look that way now does it? I thought that was going to yield extra millions?

 

[shy_tall_knight]

The brochure refers to past concerts and the fact it hosts the Davies Cup - a privilege they pay for I believe.

From someone who works for the NEC, large stadium concerts not so popular as festivals are now more preferable, can't remember the last big stadium concert at the Ricoh and not aware of any planned ones either

 

[Noggin]

Oooh....6.5% return eh....

If it looks too good to be true......

"A Fool & his money...." etc. etc.

6.5% is pretty normal for a corperate bond, personally I think should be a couple of percent higher.

Severn Trent waters corporate bond pays 6.125% it was for 12 years not 7 though but to me that still would have been a more appealing deal.

You can't directly compare bond rates across companies because they will have happened a different times and be for different lengths.

So while you should keep that in mind - Direct Line 9.125% (27 more years), Marks and spencer 6.125% (5 more years) BT 8.625% (5 more years) John Lewis 8.375% (4 more years) rolls royce 7.375% (1 more year) Barclays 7.125% (34 more years)

5's and 6's% are the most common corporate bond rates at the moment.

 

[MusicDating]

Bit of history on Wasps attendances and season ticket prices from that drunkenwasps site (this is from a post in 2008) -

"In 1996 Wasps started playing their home games at Loftus Road. Initially the ticket prices were comparable to Sudbury and crowds were good. In the following seasons ticket prices increased and there was a steady decline in the average crowd. In 99-00 season Wasps averaged less than 5000 during the regular league season.


The following season saw a refreshing attitude to ticket prices and offers and by the time the club played its last match at LR attendances were back up to an average of 5860 (01-02 Season). During that last year a family season in the Ellerslie Road stand cost £230 (2 adults and 2 children).


The move to Wycombe saw that growth accelerate although ticket prices were reduced for the first season (a family season ticket in 02-03 was £150) and peaked in 04-05 when the average for the regular season was 9022. Since then ticket prices have tended to outstrip inflation and crowds numbers have fallen before recovering a little this year.


I realise that there are many factors that affect attendance but it seems to me that the cost of tickets and particularly season tickets has a major impact. Part of running a business is the ability to decide whether a 25% increase in prices justifies a 10% reduction in attendance and only the financial statement will clarify that. For 2006-07 crowds were down 8% and we made a loss of £2Million, which suggests that some poor business decisions were made."

 

[NorthernWisdom]

I don't think you are a rugby fan either and therefore can't appreciate the different atmospheres at games.

Not entirely true or fair. Just because I don't see you doesn't mean I've never been (managed the likes of Pontypool as well, now there's an experience!) and a certain schooling in the past from family with a particular dedication to following CRFC.

That, then, tells me the secure base to build a club is not there.

it also tells me (and on this I do have a fair track record to call it, based on what I do in the real world) that currently it's all built on sand, and *is* by no means a foregone conclusion.

 

[Grendel]

6.5% is pretty normal for a corperate bond, personally I think should be a couple of percent higher.

Severn Trent waters corporate bond pays 6.125% it was for 12 years not 7 though but to me that still would have been a more appealing deal.

You can't directly compare bond rates across companies because they will have happened a different times and be for different lengths.

So while you should keep that in mind - Direct Line 9.125% (27 more years), Marks and spencer 6.125% (5 more years) BT 8.625% (5 more years) John Lewis 8.375% (4 more years) rolls royce 7.375% (1 more year) Barclays 7.125% (34 more years)

5's and 6's% are the most common corporate bond rates at the moment.

And that's the difference isn't it? Most companies who operate bonds are big multi national organisations with a proven track record which makes them a good investment and is a method of funding which is quite normal for such institutions.

It's not as normal though for a company this small and with such high risk to be doing this is it?

 

[italiahorse]

Is anyone who supports Wasps here prepared to put their money where their mouth is, and buy one of these bonds?

Would need to understand it better and what the risks are.
A quick look suggests that the return is excellent but there must be a catch I'm missing.

 

[NorthernWisdom]

No especially as the shares were given away to SISU for nothing but if we were in the PL with a track record of playing in the Champions League then a share issue would have some takers

As an aside, a share issue was occasionally mooted when mcGinnity was in charge. it never got enough interest to pursuer properly, however.

 

[Ashdown]

Not entirely true or fair. Just because I don't see you doesn't mean I've never been (managed the likes of Pontypool as well, now there's an experience!) and a certain schooling in the past from family with a particular dedication to following CRFC.

That, then, tells me the secure base to build a club is not there.

it also tells me (and on this I do have a fair track record to call it, based on what I do in the real world) that currently it's all built on sand, and *is* by no means a foregone conclusion.

I'm taking it I would recognise you then ?

 

[NorthernWisdom]

I'm taking it I would recognise you then ?

Nope!

I hope not, anyway

 

[italiahorse]

Italia first in the queue

Do you know if you can put more than £2000 in ?

 

[Grendel]

Would need to understand it better and what the risks are.
A quick look suggests that the return is excellent but there must be a catch I'm missing.

After tax it works out at about £70 a year in interest assuming you have to pay the full tax rate.

The catch is - the company goes down then so does your money.

Also it's not excellent as a rate compared to other bonds ran by companies with a proven stable financial history.

 

[Noggin]

After tax it works out at about £70 a year in interest assuming you have to pay the full tax rate.

The catch is - the company goes down then so does your money.

Also it's not excellent as a rate compared to other bonds ran by companies with a proven stable financial history.

yeah because assuming he makes £150k a year for income tax purposes is the reasonable starting point, do you ever look at anything fairly?

 

[NorthernWisdom]

yeah because assuming he makes £150k a year for income tax purposes is the reasonable starting point, do you ever look at anything fairly?

tbf, the reason I don't pay the full tax rate is another major reason why I don't indulge in high risk high return investments.

As I don't have a spare £2,000 I can afford to just write off...

 

[jimmyhillsfanclub]

yeah because assuming he makes £150k a year for income tax purposes is the reasonable starting point, do you ever look at anything fairly?

I reckon you're being a little mischievous there Noggin.....

I'd bet a fair few quid he actually meant the 40% threshold.......

but I stand to be corrected....

 

[chiefdave]

yeah because assuming he makes £150k a year for income tax purposes is the reasonable starting point, do you ever look at anything fairly?

But isn't that exactly the sort of person who will have money to throw at something like this? People on average salaries aren't making investments like this.

 

[Grendel]

tbf, the reason I don't pay the full tax rate is another major reason why I don't indulge in high risk high return investments.

As I don't have a spare £2,000 I can afford to just write off...

Exactly - this is a high tax rate target audience.

 

[jimmyhillsfanclub]

Apologies Noggin.....now where is my orthopaedic shoe??

 

[Terry Gibson's perm]

I have the 2k, will I invest it in them no way I would rather stick it in the bank and get tiny interest than give it to them to be honest I would rather put it under my bed than give it to them.

 

[Noggin]

tbf, the reason I don't pay the full tax rate is another major reason why I don't indulge in high risk high return investments.

As I don't have a spare £2,000 I can afford to just write off...

Personally I think more "normal" people should invest in the stock market (of course most already are in a pension) but investing in something like this bond isn't the way to do it. Bonds are less risky than shares but having just one companies bond or one companies share is incredibly high risk. Passive funds are the way to go for most people imo.

If you invest in a £100million company for 5 years and at the end the company is worth £30mill. you've lost 70% of your money and may or may not have received dividends along the way, if you had brought bonds in the same company you'd receive all your money back + the interest you received along the way. If the company went bust you could lose all your money either way though the bond owner is in a much better position to receive some or all their money back.

I like investing in funds though, then you own a little piece of thousands of companys across the world, you'll receive your dividends and over a long enough period you should (though no guarantees) make money.

 

[NorthernWisdom]

Personally I think more "normal" people should invest in the stock market (of course most already are in a pension) but investing in something like this bond isn't the way to do it. Bonds are less risky than shares but having just one companies bond or one companies share is incredibly high risk. Passive funds are the way to go for most people imo.

As you say, there's a big difference between the Wasps deal, and investing £200 in shares of 10 separate companies...

Bear in mind I once owned half a million Millwall shares, and they indeed confirmed it was a high risk investment

 

[SkyBlue_Bear83]

It's a bond, a loan basically, if you buy £1000 worth of Wasps (or any other company or government bond) you will be lending the company £1000, in return you will receive interest at the rate they set out (in this case 6.5%) and you will get your £1000 back in 7 years time (in this case, bonds can be any specific length). If you want your money before then you would need to sell your bonds to someone else (which is easy to do at a stock broker), the value of these bonds will change based on how risky people think they are and the interest rate (of the country) and predicted interest rate (of the country) (because while the bank of interest rate is 0.5% a bond paying 6.5% sounds good, if the bank of england interest rate rose to say 7% then the bond would be worth less because it has risk and is generating income at a lower level than a safe bank account, it would still pay the holder £1000 at the end of the 7 years though).

There is nothing abnormal about this, this is how many companys raise capital, it's also how the government borrows money to run the country, government bonds though will pay a much much lower amount of interest because while there is a reasonable chance acl go bust, the chance of the country going bust is tiny.

for the most part bonds are often safer and less volatile than shares

I think this shows very strongly (especially if they actually manage to sell all the bonds) that the new council loan was an excellent deal for the council at 11% interest and is much better than commercial rates for the amount of risk. (just to be clear that is not the same as saying selling the ricoh was an excellent deal for the council, I believe wasps got it cheap)

I won't be investing though I'd want more interest than 6.5% to justify the risk.

A very informative post, although bonds are not abnormal as you said. In this case it is abnormal as wasps are the first sports club to ever do this. This isn't in any way or shape normal for a sports team

 

[Noggin]

But isn't that exactly the sort of person who will have money to throw at something like this? People on average salaries aren't making investments like this.

you can hold bonds in an isa or a sipp, I think most people should be saving and investing for their future, I completely agree that average people shouldn't be putting thousands of pounds in a single bond but then I also feel the exact same way about putting thousands of pounds in a single companies share yet many average people invest in that exact way.

But no Grendel was providing "information" to someone who was wondering about this and he deliberately chose the way to make it look a poor a deal as possible by using an assumption that he very strongly suspected wouldn't be the case for the person he was talking too.

 

[mattylad]

Sorry if this has been said but I am not trawling 14 pages... but this is just a stepping stone the final outcome if they make the club successful in European and Domestic competitions, make the Arena work finacially and pay off existing debts such as the Council loan then in 2022 when the bonds mature they will float the club on the stock exchange in the same way that top football clubs are and that will be how the Wasp owners will make their money.

 

[mattylad]

They';re dependent on the few big games however (less if they cock up European qualification) and also holding onto people who are going currently out of curiosity. The trajectory of attendances at Wycombe (and the football club's after moving ground, for that matter) suggests the latter may be a particular challenge.

They only need 2 points from 2 games to guarantee European rugby next year apparently, my brother says his season ticket also includes all three home European games (if they qualify)