Finance update (25 Viewers)

[Ccfcisparks]

Not necessarily true. Could be true, but I’d imagine based on the forecasts DK/the club are looking at, DK thinks the stadium is worth owning rather than renting. DK will have factored risk into this, ie if forecasts are off by x%, how does this impact the overall analysis (net present value of the arena/club). If this wasn’t DK’s view, he ultimately wouldn’t have done a deal to buy the ground.

Also massively depends on the rental agreement and what the club were managing to earn as revenue vs what was stadium revenue retained by Frasers. Also it is worth remembering and thinking about what could happen if we couldn’t agree a suitable rental deal. Removing risks in the business model is a good idea if cost effective.

Also lots of other tangible and intangible benefits of owning the stadium. In terms of branding and commercials (eg advertising, sponsorship), I’d think owning the ground has only improved the perception of our brand (also due to us winning football matches). Feel good factor equals more ticket sales, more merch sales, which equals easier conversations with sponsors, advertisers, kit manufacturers. Other benefits include how the club has seemingly been able to better use the arena on match days (fan village), moving of away fans/more home fan seating, better control of bookings of the arena and conference centre etc. Of course, winning football matches creates this positive loop too though.

So whilst the arena has historically always been loss making, this does not mean it always will be. The arena has never had an average attendance of 30k for a full season, so there’s a good start at turning things around.

Ultimately we’re not close enough to the numbers and the internal management information and assumptions to know the answer. So not saying you are necessarily wrong, but there are lots of things to think about for which we only have a snippet of information.

From what I have seen based on the club’s finances and footballing performances, which have both improved since DK has taken over, I’m happy to give DK the benefit of the doubt in that he’s trying to do the right thing for the club and that the deal to buy the arena was the best option for the club.

I dont even think Doug will be thinking about long term cashflows from the stadium. He will be considering it as a more complete package for a sale now that we own the stadium

 

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[CrawleySkyBlue]

Just to add, now that we Own the arena we get all the Revenue, food and drink the hotel the casino and the car parking and any concerts in the stadium or in the indoor arena, should be a big improvement in the account next year.

Not necessarily. Whilst the consolidated accounts of Covcityco Ltd will change due to owning this new operation (new revenue streams and expenditure), improvement will only come if these operations are profitable and/or if these operations increase the profitability of existing operations.

 

[shmmeee]

Has the arena ever made a profit?

 

[CrawleySkyBlue]

I dont even think Doug will be thinking about long term cashflows from the stadium. He will be considering it as a more complete package for a sale now that we own the stadium

Which will involve long term cash flows.

Agree the club is now a more complete package. But as what Cally Fedora was kind of getting at, the club is only more profitable for DK if the arena has strengthened the financial operations of the club. The only way to know this is long term cash flows.

 

[CrawleySkyBlue]

Has the arena ever made a profit?

I don’t think so. At least in recent years it has not.

 

[Ccfcisparks]

Which will involve long term cash flows.

Agree the club is now a more complete package. But as what Cally Fedora was kind of getting at, the club is only worth more profitable for DK if the arena has strengthened the financial operations of the club. The only way to know this is long term cash flows.

Well on a basic level, we have another asset on the balance sheet. Like you said, Doug will have done his sensitivity analysis and forecasting and it seems it was worth the purchase.

I do wonder what the annual mortgage payments on it would be.

I also assume that rather than housing the Stadium in a separate entity, it will all be incorporated under one.

 

[CrawleySkyBlue]

Well on a basic level, we have another asset on the balance sheet. Like you said, Doug will have done his sensitivity analysis and forecasting and it seems it was worth the purchase.

I do wonder what the annual mortgage payments on it would be.

I also assume that rather than housing the Stadium in a separate entity, it will all be incorporated under one.

You also have the liability offsetting the asset on the balance sheet.

Worth noting that the club acquired four companies rather than simply the stadium.

My opinion is he’ll keep the existing set up as is. Covcityco Ltd (ultimate parent) wholly owns: Coventry city football club limited (ie the football club, the playing part), Coventry arena propco limited (proprietor of stadium lease), Coventry arena opco limited (proprietor of other leases around the ground), Coventry arena retail limited (the company running the operations of the arena) and Coventry arena ipco limited (dormant).

The investments will eliminate in the consolidated Covcityco Ltd financial statements, but all of the assets and liabilities and P&Ls of the investments will be shown in the consolidated results. This is where the main stadium asset will come in, but it will be offset by the liability we have not yet paid to buy the 4 stadium companies. So overall, the net asset change is important, along with any interest rates on the deal to buy the stadium companies, along with the P&L activity of the stadium companies.

DK will potentially leave the set up as is I think. In the stadium update thread from a few months back I gave my opinion on this. Essentially the current structure reduces risk, increases financial flexibility and probably helps for tax purposes. The only reason I can think of for potentially integrating the companies into one would be to reduce certain running costs (eg audit fees) (can’t see this being a massive consideration tbh) or for PSR reasons or any EFL reasons/regulatory purposes. I don’t know much about PSR so unsure if it would have any impact or if the consolidated Covcityco Ltd results are used for PSR purposes (in which case no easy difference or reason I can see for integrating). There’s a reason Frasers had it set up this way.

Edit - we know from companies house that the stadium lease remains in propco as this is where the fixed charge has been filed. The fixed charge has not moved/transferred to a different Coventry city owned company, hence the stadium lease continues to be owned by propco Ltd.

 

[Ccfcisparks]

You also have the liability offsetting the asset on the balance sheet.

Worth noting that the club acquired four companies rather than simply the stadium.

My opinion is he’ll keep the existing set up as is. Covcityco Ltd (ultimate parent) wholly owns: Coventry city football club limited (ie the football club, the playing part), Coventry arena propco limited (proprietor of stadium lease), Coventry arena opco limited (proprietor of other leases around the ground), Coventry arena retail limited (the company running the operations of the arena) and Coventry arena ipco limited (dormant).

The investments will eliminate in the consolidated Covcityco Ltd financial statements, but all of the assets and liabilities and P&Ls of the investments will be shown in the consolidated results. This is where the main stadium asset will come in, but it will be offset by the liability we have not yet paid to buy the 4 stadium companies. So overall, the net asset change is important, along with any interest rates on the deal to buy the stadium companies, along with the P&L activity of the stadium companies.

DK will potentially leave the set up as is I think. In the stadium update thread from a few months back I gave my opinion on this. Essentially the current structure reduces risk, increases financial flexibility and probably helps for tax purposes. The only reason I can think of for potentially integrating the companies into one would be to reduce certain running costs (eg audit fees) (can’t see this being a massive consideration tbh) or for PSR reasons or any EFL reasons/regulatory purposes. I don’t know much about PSR so unsure if it would have any impact or if the consolidated Covcityco Ltd results are used for PSR purposes (in which case no easy difference or reason I can see for integrating). There’s a reason Frasers had it set up this way.

Yes true he will probably use the tax losses in the stadium entity across the rest of the group.

 

[clint van damme]

Renting was the sweet spot. Decent revenues with little cost.

Apart from the 3 exiles, the postponed games due to a wrecked pitch, not knowing where you were going to be playing from one season to the next and the out of town rugby club regalia everywhere it was great.

 

[Londonccfcfan]

Imagine owning the stadium and the other Leisure entities during covid years would have been a financial disaster.

 

[Ccfcisparks]

Imagine owning the stadium and the other Leisure entities during covid years would have been a financial disaster.

As it was for most teams.

I don’t think a once in a lifetime event is an argument against us owning the stadium

 

[Londonccfcfan]

As it was for most teams.

I don’t think a once in a lifetime event is an argument against us owning the stadium

Everything is timing. Glad we didnt buy just before covid.

Many teams plan/ build stadiums and then relegated.

Like i said all about timing.

For you young man i hope it is a once in lifetime event.

 

[shmmeee]

Apart from the 3 exiles, the postponed games due to a wrecked pitch, not knowing where you were going to be playing from one season to the next and the out of town rugby club regalia everywhere it was great.

How much of that was before we had mental aggressive owners egged on by a bunch of political morons and how much after?

 

[Londonccfcfan]

On the note of timing. DK i thought has timed it perfectly on our upward trajectory.

 

[Ccfcisparks]

Everything is timing. Glad we didnt buy just before covid.

Many teams plan/ build stadiums and then relegated.

Like i said all about timing.

For you young man i hope it is a once in lifetime event.

Were you alive for the spanish flu?!

 

[clint van damme]

How much of that was before we had mental aggressive owners egged on by a bunch of political morons and how much after?

It still wouldn't of happened if we'd owned the ground and that's why I can't see it as anything but a positive that we do.

 

[PaulPUSB]

Here is the inconvenient truth here. Despite the feel good factor of owning the stadium it is a mistake. It’s a loss making money pit. Renting was the sweet spot. Decent revenues with little cost. The CBS could easily turn out to be a massive mill stone around our neck.

Hi ChatGPT

Sent from my SM-A176B using Tapatalk

 

[shmmeee]

It still wouldn't of happened if we'd owned the ground and that's why I can't see it as anything but a positive that we do.

One day I will get SBT to accept they backed the wrong horse. Clearly today is not that day.

 

[shmmeee]

Hi ChatGPT

Sent from my SM-A176B using Tapatalk

ChatGPT writes nothing like that

 

[bigfatronssba]

Here is the inconvenient truth here. Despite the feel good factor of owning the stadium it is a mistake. It’s a loss making money pit. Renting was the sweet spot. Decent revenues with little cost. The CBS could easily turn out to be a massive mill stone around our neck.

I don’t understand this obsession with having a building make a profit.

The stadium is a tool to make money. Just like a factory is a tool for a manufacturer to make money.

 

[shmmeee]

I don’t understand this obsession with having a building make a profit.

The stadium is a tool to make money. Just like a factory is a tool for a manufacturer to make money.

What?

 

[PaulPUSB]

ChatGPT writes nothing like that

Have you played with its personality and characteristics?

Sent from my SM-A176B using Tapatalk

 

[shmmeee]

Have you played with its personality and characteristics?

Sent from my SM-A176B using Tapatalk

To be clear your claim is someone has intentionally put a system prompt in that repeats words and writes in overly short sentences just to fool people on SBT?

 

[Cally Fedora]

Don’t even know how to use chat gpt. Back to the stadium. Focus is always on the revenue generation. That’s great. Of course it’s nice to have a sense of permanence but you only have to look at it to see it will cost an absolute fortune to run and maintain. The question from a purely financial point of view is are we more profitable (or less deficit making) owning or renting?

 

[Grendel]

More than double what Wasps paid for it though, which really drives home Sisus stupidity.

I think the fault lies with your cronies at the council.

 

[PaulPUSB]

To be clear your claim is someone has intentionally put a system prompt in that repeats words and writes in overly short sentences just to fool people on SBT?

Yes... to be clear you havnt changed chatGPT's personality settings?

Sent from my SM-A176B using Tapatalk

 

[clint van damme]

One day I will get SBT to accept they backed the wrong horse. Clearly today is not that day.

It's nothing to do with horses backed.
I was responding to a post that said the ground could become a burden, I don't agree, I'm delighted we own it.