Details of Wasps' Ricoh Arena deal with council revealed

Bertola

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Jun 5, 2011
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I thought the key to any deal was the development of the surrounding land? Isnt that what we were told?
 

oldskyblue58

CCFC Finance Director
Apr 16, 2010
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skybluetony176

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Aug 2, 2013
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so looking at that (ball park figures)

the original deal at 5% over 41 years earnt CCC 19.5m over the term (repayment at 827k pa)

To achieve that over 20 yrs and taking in to account the initial £1m down payment equates to an interest APR 11.35% (repayment 1.7m pa). To achieve 19.5m interest over a shorter term

loan calculator here http://www.thisismoney.co.uk/money/cardsloans/article-1633405/Loan-repayment-calculator.html
For the benefit of clarity OSB how does that 11.35% compare to the interest on the original bank loan that CCC took over?
 

tisza

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Aug 2, 2011
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1. it is interesting against the original acl rent fee of 1.9m per year.
2. surprising that Wasps can't refinance this loan at a better rate with a commercial lender. ir may be that is their intention.
 

Noggin

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Dec 11, 2012
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so looking at that (ball park figures)

the original deal at 5% over 41 years earnt CCC 19.5m over the term (repayment at 827k pa)

To achieve that over 20 yrs and taking in to account the initial £1m down payment equates to an interest APR 11.35% (repayment 1.7m pa). To achieve 19.5m interest over a shorter term

loan calculator here http://www.thisismoney.co.uk/money/cardsloans/article-1633405/Loan-repayment-calculator.html
If thats true thats really bad news for sisu and their second JR, that makes the councils decision to sell a much better decision financially.
 

skybluetony176

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Aug 2, 2013
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Didn't think you were interested Tony?
Just joining the club. This clearly ain't going away.

Besides are you not interested to know if they could get a more competitive commercial loan and then use this to pay off the council loan? That's the angle I'm coming from.
 

Terry Gibson's perm

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In the surrounding land is there space to squeeze in a 10k seater stadium?

I wonder who the other sports company were?
 

Noggin

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1. it is interesting against the original acl rent fee of 1.9m per year.
2. surprising that Wasps can't refinance this loan at a better rate with a commercial lender. ir may be that is their intention.
If they can that removes the risk (though also the profit depending on what the early repayment penalties are) completely from the council and if they can't that shows even further why ccfc building a stadium is a complete non starter.
 

Senior Vick from Alicante

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Jul 1, 2011
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For me the two over riding conclusions are A, The council look like they have acted in the best interest of getting the loan repaid in half the time while still earning the same amount for the public purse and B, I wish our owners had the same forethought as the owners of Wasps to do the deal in the first place. Plain fact from the councils point of view is that they probably thought they had no chance of doing a deal with Sisu because of their actions and conduct. I would like to see where Les Reid will find the new smoking gun now or will hell freeze over first? PUSB
 

fernandopartridge

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Dec 9, 2011
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so looking at that (ball park figures)

the original deal at 5% over 41 years earnt CCC 19.5m over the term (repayment at 827k pa)

To achieve that over 20 yrs and taking in to account the initial £1m down payment equates to an interest APR 11.35% (repayment 1.7m pa). To achieve 19.5m interest over a shorter term

loan calculator here http://www.thisismoney.co.uk/money/cardsloans/article-1633405/Loan-repayment-calculator.html
Can't really disagree with Fisher in saying he wouldn't want to buy into that. It might not help a state aid case but would surely give rise to SISU sitting tight for a while yet.
 

fernandopartridge

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Dec 9, 2011
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For me the two over riding conclusions are A, The council look like they have acted in the best interest of getting the loan repaid in half the time while still earning the same amount for the public purse and B, I wish our owners had the same forethought as the owners of Wasps to do the deal in the first place. Plain fact from the councils point of view is that they probably thought they had no chance of doing a deal with Sisu because of their actions and conduct. I would like to see where Les Reid will find the new smoking gun now or will hell freeze over first? PUSB
Do a deal to effectively increase the rent outgoing to £1.7m all because of the council making a complete hash of its loans to ACL from day one?
 

oldskyblue58

CCFC Finance Director
Apr 16, 2010
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For the benefit of clarity OSB how does that 11.35% compare to the interest on the original bank loan that CCC took over?
The Yorkshire Bank loan was at a rate of 1.265% above Libor but they also hedged the interest rate so it is not a straightforward calculation. Overall it looks like the rate was something like 6.6% (done by taking interest as a percentage of the average loan outstanding) but that's very rough and ready so I wouldn't swear to it
 

fernandopartridge

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Dec 9, 2011
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1. it is interesting against the original acl rent fee of 1.9m per year.
2. surprising that Wasps can't refinance this loan at a better rate with a commercial lender. ir may be that is their intention.
ACL paid £21m up front financed by a mortgage from Yorkshire Bank rather than playing £1.9m for 50 years.
 

Senior Vick from Alicante

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Jul 1, 2011
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Do a deal to effectively increase the rent outgoing to £1.7m all because of the council making a complete hash of its loans to ACL from day one?
How do you work that out, Sisu were originally offered a deal over a longer period plus you would get the benefits of the associated income streams or am I missing something?
 

Terry Gibson's perm

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Would be interesting to see the state of The Ricoh in 250 years time it already looks like a dump and was finished in a rush.
 

tisza

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Aug 2, 2011
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ACL paid £21m up front financed by a mortgage from Yorkshire Bank rather than playing £1.9m for 50 years.
the point was that the original 1.9m was to allow the council to pay the loan.acl then took out the loan to pay the lump sum which was reportedly costing them 1.7m per year with a commercial lender. now the acl is still at 1.7m a year over slightly longer time frame with the council acting as the lender. somewhere diwn the line isn't acl worse off now than it was 2 years ago particularly as it has also had to pay a lump sum of 1 million?
 

italiahorse

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Nov 23, 2011
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ACL paid £21m up front financed by a mortgage from Yorkshire Bank rather than playing £1.9m for 50 years.
In addition, “super rent” was payable, based on ACL’s net profit before tax, of 10% on profits over £3.75m rising to 50% of profits over £7.75m.

The detail in the deal I would like to know is does this still apply or was this subject to one of the modifications ?
 

duffer

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Oct 28, 2010
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Straight question: What happens to the loan if Wasps subsequently goes bust?

The council said that they wouldn't risk taxpayers' money by making loans to loss making operations, but as it turns out they did in both the original deal to ACL, and seemingly now again in this refinancing.

Maybe the reason Wasps have taken this loan on from the council is that they cannot obtain third-party finance to the tune of £14.4m given what a poor risk their business represents. It's a bit early to claim this is a good deal for the council, I'd say, especially if they're going to be on the hook if Wasps go bust.
 

skybluetony176

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Aug 2, 2013
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Can't really disagree with Fisher in saying he wouldn't want to buy into that. It might not help a state aid case but would surely give rise to SISU sitting tight for a while yet.
When you say "sitting tight for a while" do you mean sitting tight for 250years?
 

skybluetony176

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Aug 2, 2013
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The Yorkshire Bank loan was at a rate of 1.265% above Libor but they also hedged the interest rate so it is not a straightforward calculation. Overall it looks like the rate was something like 6.6% (done by taking interest as a percentage of the average loan outstanding) but that's very rough and ready so I wouldn't swear to it
Thanks OSB.

So why wouldn't Wasps go out and get a commercial loan over a longer period of time, end up still paying the same amount but over a longer period reducing their annual overheads? Surely a 250year lease is good security to obtain a loan? I can't really see why they wouldn't take that route.

That's an open question by the way. Not specifically aimed at OSB.
 

Noggin

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Dec 11, 2012
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Straight question: What happens to the loan if Wasps subsequently goes bust?

The council said that they wouldn't risk taxpayers' money by making loans to loss making operations, but as it turns out they did in both the original deal to ACL, and seemingly now again in this refinancing.

Maybe the reason Wasps have taken this loan on from the council is that they cannot obtain third-party finance to the tune of £14.4m given what a poor risk their business represents. It's a bit early to claim this is a good deal for the council, I'd say, especially if they're going to be on the hook if Wasps go bust.
ccc will be the main creditor and likely end up with the lease back to sell again.

We might not fully know if it's a good deal for the council but we do know it's a massive massive improvement over what the loan was previously and if it isn't considered a good deal it shows again how ccfc building their own stadium is simply not going to happen. Because the risk of lending to that is probably an order of magnitude higher and so will come with a significantly higher interest rate. I know I've said this before but a family member loans to a developer at 20% and it's secured (kinda anyway) and that project is way less risky than lending to sisu.
 

fernandopartridge

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Dec 9, 2011
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In addition, “super rent” was payable, based on ACL’s net profit before tax, of 10% on profits over £3.75m rising to 50% of profits over £7.75m.

The detail in the deal I would like to know is does this still apply or was this subject to one of the modifications ?
That's a good question
 

wingy

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Jul 9, 2011
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Not sure If my maths are accurate
The best rent offer to the Club while maintaining the Status Quo was £400k
Possibly in Itself stressing ACL at that level

We are now paying circa £100k
Unless Wasps invigorate ACL to become far more successful in its secondary operations
we may find ourselves facing a rent hike or homeless as I can't see them subsidising us at their own expense
 

Noggin

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Dec 11, 2012
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Thanks OSB.

So why wouldn't Wasps go out and get a commercial loan over a longer period of time, end up still paying the same amount but over a longer period reducing their annual overheads? Surely a 250year lease is good security to obtain a loan? I can't really see why they wouldn't take that route.

That's an open question by the way. Not specifically aimed at OSB.
Thats not how it works, the longer you borrow over the more you pay back. If 10% interest is the commercial rate for this risk then it's likely going to be 10% at 20 years or 40. The council had obviously done a good deal for ACL to protect them due to them owning half of it but wanted to renegotiate the loan to something more commercially viable when they no longer had a stake. Sisu say this means the original loan is stateaid because it's better than a commercial rate but the judge clearly didn't agree because he thinks its reasonable that another company would have done the same in the councils position.

unless of course OSB disagrees with me then you should assume I'm wrong :p
 

Terry Gibson's perm

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It looks shabby there is a lot of rust and is still unfinished in places like as you come up the steps from the a444 mud with weeds growing through and there has been a leak on the front that has been there since it opened (used to drive me mad but now I don't care). Inside it was finished on the cheap so is freezing cold and now all these awful looking signs are appearing trying to some how justify the egg chasers being there. Having said all of this I would be happy if it was ours (not Sisu's).
 

fernandopartridge

Well-Known Member
Dec 9, 2011
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Not sure If my maths are accurate
The best rent offer to the Club while maintaining the Status Quo was £400k
Possibly in Itself stressing ACL at that level

We are now paying circa £100k
Unless Wasps invigorate ACL to become far more successful in its secondary operations
we may find ourselves facing a rent hike or homeless as I can't see them subsidising us at their own expense
Indeed. We don't know how Wasps raised the other £5m to purchase the lease or how they turn around £3m losses. Neither do we know how they repay loans from Richardson.

Do we foresee another rent strike in the event that the rent is increased?
 

tisza

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Aug 2, 2011
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In addition, “super rent” was payable, based on ACL’s net profit before tax, of 10% on profits over £3.75m rising to 50% of profits over £7.75m.

The detail in the deal I would like to know is does this still apply or was this subject to one of the modifications ?
no paying the lease premium removed all rental obligations. that was in some council minutes i found years ago.
 

wingy

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Jul 9, 2011
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Indeed. We don't know how Wasps raised the other £5m to purchase the lease or how they turn around £3m losses. Neither do we know how they repay loans from Richardson.

Do we foresee another rent strike in the event that the rent is increased?
Back to Sixfields
Everybody happy:mad: