Full Q and A's (1 Viewer)

Questions and Answers: CCFC and ACL

1: Who are your negotiation team ?
ACL: Paul Harris, Chris West. Although a wider number of Board members which included Martin Reeves and P.W.Knatchbull-Hugessen, were in attendance on 29 January 2013
CCFC: Tim Fisher, Mark Labovitch (came very late into the process) and John Clarke (has since resigned)

2: Does that team have the authority to agree a deal?
ACL: Yes – within clear parameters. This is normal practice. The 4 shareholder Board members were present on 29 January 2013. At the start of the meeting we specifically clarified that CCFC Directors were also authorised to agree a deal.
CCFC: Yes – if economics agreed got club to cash flow zero next season

3: Are all the negotiating team clear as to the detailed requirements of the owners so that they can agree a deal the stakeholders will sign off?
ACL: Yes, there is complete alignment between the Board and both Shareholders on this matter. The owners appoint the Directors to work for the benefit of the company as a whole. Company Law ensures that a director’s duty is to the company and all shareholders equally.
CCFC: Yes – requirement to ensure cash flow zero so as to ensure no additional funds needed from SISU.

4: Who on both sides signed the original licence?
ACL: John McGuigan and Paul Fletcher
CCFC: (I don’t know this – well before my time: pls verify from someone else) Geoffrey Robinson and Mal Brannigan

5: The current licence has 42 years to run are there any break clauses included?
ACL: The current licence expires in September 2054. ACL agreed to consider the variation of three to four clauses at the meeting of 29 January 2013, at the request of CCFC. Tim Fisher and Mark Labovitch committed to forward the particular clauses which they proposed to amend, these were never received. ACL would not consider inserting break clauses into the current licence, as this is the home of Coventry City Football Club
CCFC: Require break clauses after 3 or 5 years (not set in stone – by way of example) to be acted upon if relationship not working.

6: Before April 2012 did CCFC ever approach ACL to change the licence or rental value?
ACL: In 2004 and 2005 a proposal was made by Sir Derek Higgs that there should be different base rents for each League with escalators that would relate attendance to payment. He was a shareholder and director of CCFC and a director of ACL. This proposition was rejected by the then Board of CCFC, as although the base rents for the lower Leagues would have resulted in a reduction on the agreed rent, the rent in the Premiership would have been higher. Since SISU bought the club there have been one or two light touch discussions with SISU but nothing that amounted to a serious proposition.
CCFC: Not sure of historic negotiations

7: Is the rent at £400k in League 1 acceptable ?
ACL: Yes
CCFC: Yes [if other accompanying terms are kept to]

8: Have rents for Championship and Premiership been offered and agreed?
ACL: Yes, all part of the HOT verbally agreed with CCFC on 29th January 2013 in the presence of the Boards of each party, CCFC subsequently reneged on the agreement. Requirement for extra spectator payments subsequently withdrawn verbally.
CCFC: Yes but additional payments of £3 per spectator over 15k in Championship and £4 per spectator over 16k in Premiership were not acceptable as impacted financial viability (cashflow b/e) and ticket sales our only material source of revenue.

9: Has a settlement on the outstanding debt been reached? What was offered?
ACL: Yes these were verbally agreed with CCFC on 29th January 2013 in the presence of the Boards of each party, CCFC subsequently reneged on the agreement. ACL offered to reduce the arrears to £485,000
CCFC: No we are not fully convinced as to the lawfulness of the original licence and the very high mark-ups applied to a range of non-rent occupancy costs. We proposed an offsetting of the outstanding rent against what we feel is owed to CCFC.

10: Is there still to be an escrow account at 500k?
ACL: There is a legal requirement for an escrow account, which in essence is a rent deposit deed, agreed in 2004 by the then owners of CCFC and ACL, with funds not provided by CCFC. The deed is meant to cover any failure of the tenant, e.g. CCFC to pay their rent. It is worth reiterating the guarantee or escrow funds, were never deposited by the then owners of CCFC or SISU when they acquired CCFC. However ACL proposed as part of its 29 January 2013 agreement to reduce this amount to £200k, therefore writing off £313,000, this was conditional on agreeing the HOTs of the aforementioned date
CCFC: Yes – level to be reduced to £200k.

11: Have there been detailed discussions regarding match day income and what revenues CCFC want access to?
ACL: Yes
CCFC: Yes

12: £100,000 has been publicised as the value of food and beverage income – is this 50% of the profits i.e. ACL’s half from the EIC joint venture?
ACL: In principle – we have all accepted that more work is needed on the detail of this, and it needs to be agreed with ACL’s contracted partner Compass, so it is not simply in ACL’s gift. Of course match-day income is also influenced by attendances, these we have seen drop from an average of 13,126 in 11/12 to a current year to date average of 9,259
Match-day F&B Turnover in 11/12 season was £1,010,992, with Nett Profit of £119,903.
ACL would be willing to give CCFC full details of the F & B accounts and were prepared to go open book and even allow CCFC to use the revenue figures in the clubs FFP calculations?
CCFC: CCFC would have to negotiate with ACL partner Compass but if after 3 months Compass would not agree access to this level of revenue indicated by ACL, we would ask that the rent be reduced by £100k

13: Did any of the ACL negotiating team believe heads of terms had been agreed on 9/01/2013?
ACL: Yes absolutely and would be prepared to swear on oath to that. This meeting was almost 4 hours long with adjournments into separate rooms, both parties concluded with a verbal agreement and a commitment to formalise within 48 hours, the meeting concluded with handshakes ratifying the agreement. At a meeting on 19 January 2013, the ACL representatives commenced by asking whether those representing CCFC, Fisher, Labovitch and Clarke had the authority to agree a deal, given that up to that throughout December and up to 7 January 2013, negotiations were directly with Joy Seppala, each CCFC Director stated they were empowered and would not need to refer any decision back to Ms Seppala. This was reiterated prior to commencement of the meeting dated 29 January 2013, and once again confirmed by the 3 CCFC representatives.
CCFC: No there were still major points such as the content of a new rent agreement needing to be clarified. Any handshakes – and not everybody shook hands - were purely as a “goodbye” gesture and not as a sign of “deal agreement”.

14: Did the club sell the rights to match day catering income to ACL or were these part of the sales of the ACL shares to the Higgs Charity? How much for and when?
ACL: Yes on the sale of its shares to The Higgs Charity. CCFC sold Football Investors Ltd, the non-trading company that owns 50% of the shares in ACL, to the Higgs Charity in 2003 for £6.5m.
CCFC: The club relinquished this income to ACL but I am not aware of what it received in return

15: Are ACL, Compass or IEC expecting to be the supplier of those services to CCFC? e.g. Staffing
ACL: Compass will need to be the supplier as they are contracted. We all accepted that the detail of how this could work is still to be agreed. This will need the full agreement of Compass who are receptive to having a relationship with CCFC, subject to contract.
CCFC: As things stand the contract is with Compass but CCFC would prefer to have full control of the F & B – we need to understand exactly what arrangement is in place with Compass

16: Did the club sell the right to car park income?
ACL: No they retained 900 spaces for use on match-days, these remain part of the new overall proposed deal. This is approximately 50% of all available car parking at the stadium.
CCFC: I don’t know- I haven’t heard this

17: Did the club stop receiving car park income as a consequence of not paying the rent for the stadium?
ACL: Yes, the club subsequently purchased 300 seasonal spaces at the start of the season, which they also sell on.
CCFC: Yes

18: Is it the intention that CCFC pays for any incremental car parking spaces it may require beyond the 900 spaces CCFC has allocated under the current licence?
ACL: Yes, if the club require additional spaces beyond their contracted 900 spaces and ACL have the availability (e.g. no conflicting events), they would need to purchase them.
CCFC: No car parking offered to CCFC under proposal

19: Does the club currently receive any of the following either in part or full, directly or indirectly, and include it in their turnover?
Car parking
ACL : Under the licence agreement the club gets 900 car park spaces – nearly 50% of the total. Temporary arrangements outlined above are in place, whilst the rent is being withheld. ACL’s proposed deal would reinstate the 900.
CCFC: No car parking received
Concourse food and drinks
ACL: No
CCFC: No
Catering in Jaguar, Legends, Yorkshire, Eon etc
ACL: Hospitality food is purchased by the club and is sold on by them as part of a package
CCFC: No all has to be purchased at high rate that allows no margin for profit
Pitch side advertising
ACL: Yes. All pitch side advertising is sold by the Club. ACL purchase from the Club advertising for ACL sponsors
CCFC: Pitch side advertising belongs to the club, all other advertising is ACL’s.
Match tickets
ACL: Yes. ACL separately purchase tickets for all their guests and sponsors.
CCFC: Yes
Match day packages
ACL: Yes, however ACL have 6 hospitality boxes, which were excluded from the original lease/licence. ACL have 4 x Jaguar Club seats as part of the three way Jaguar Club agreement
CCFC: Yes


20: Has the club ever tried to repurchase the additional income sources from ACL?
ACL: No – its policy to date is to demand these for nothing.
CCFC: Last year Daniel Gidney, the then CEO of ACL offered CCFC the full match day revenue streams for a one off payment of £24 million, this was dismissed out of hand [? – I don’t think this valuation could be substantiated]

21: Is ACL prepared to sell those additional income sources to CCFC?
ACL: The offer agreed by Sisu/CCFC on 29 January was our best and final offer.
CCFC: CCFC wanted to regain access to to match-day revenues (i.e. all revenues which only occur because a football match is taking place) as part of a negotiated solution

22: In addition to the additional turnover are you expecting CCFC to take over the associated additional costs that each source incurs?
ACL: Yes but we are only in discussion on food and beverage. This would form part of the agreement with Compass. Costs and overheads will be integral to any financial model.
CCFC: Yes of course we would pay costs

23: Are some of these sources sold to the club by ACL from match to match then sold on by the Club? E.G car parking in corporate packages.
ACL: Yes. We do not know how they account for it.
CCFC: I don’t know. [the point about no room to make a profit is related to F&B revenues – the F&B revenues and margins appear to be much lower than at other clubs, e.g. Charlton made £1.8m in League 1)

24: Did CCFC inform ACL that it intends to move to a new built ground in South Warwickshire
ACL: Yes, Chris West and Paul Harris were advised post 29 January 2013 meeting during a follow up discussion with Tim Fisher, Mark Labovitch and John Clarke, that the Club wanted a three year run off period. This was totally rejected by the ACL representatives. There were no details provided of the location other than “South Warwickshire”, and that it would potentially take three years.
CCFC: Yes but this is very much a Plan B. With modern building techniques a stadium could be built quicker and cheaper than ever. Majority of funding would be done by developer who would benefit from retail, hotel as well as bank lending and CCFC would simply cover any funding gap. This is a feasible option but not CCFC’s preferred course of action – that is reaching agreement and staying at the Ricoh.

25: Is the new loan through CCC now fully in place
ACL: Yes

26: How much is owed to SISU, its investors, owners and/or associated companies?
CCFC: Over £45 million but this has been fully written off.

27: Have any of the loans been converted to shares in any of the SBS&L companies?
CCFC: No, not into shares. It is well known that when the SISU fund which had invested in CCFC required more money, this was provided by another SISU fund, in part on a secured basis

28: Do ACL want CCFC at the Ricoh? Do CCFC want to stay at the Ricoh?
ACL: Yes of course. The Ricoh is the home of CCFC, not a proposed ground outside the City of Coventry boundary
CCFC: Yes of course but it has to be on terms that allow the club to maximise its potential.

29: Can ACL and the Ricoh survive without CCFC?
ACL: This is not what we want – but yes we can. We have detailed business plans supporting this. ACL is a solvent and successful business. Our accounts, which have been lodged with Companies House demonstrates this.
CCFC: I personally doubt it – our analysis of the ACL business show the company’s business model to be very challenging without the club and possibly require further cash injections from the Council. Without the revenue currently received from CCFC the council will be called on for more money to prop up a failing business in the future.

30: Are ACL willing to be bound by an agreement brokered by independent mediators or arbitrator?
ACL: No. We have put our best and final offer on the table after months of negotiation with both SISU and CCFC. It was a reasonable and generous offer, as recognised by all 3 CCFC directors in attendance on 29 January 2013, as they verbally accepted it and shook hands in confirmation. We are not prepared to make further concessions, nor do we believe that any mediator could reasonably expect that we would. The ball is in CCFC’s court. Negotiations are now at an end, and the Board of CCFC have been duly notified.
CCFC: Yes. Any Arbitrator(s) would need to look at matters such as the lawfulness of the original licence, the financial viability of ACL, monies paid to ACL for utilities/other services and the fact there appears to be no contract for these and the monies paid by CCFC to ACL during the period of the dispute.

So the picture becomes clear-Fisher only ever had authority to agree to a deal if it meant the club could achieve a break even position next season. That being because SISU had no intention of funding losses any longer.

26: How much is owed to SISU, its investors, owners and/or associated companies?
CCFC: Over £45 million but this has been fully written off.

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Panic over!

CCFC: No there were still major points such as the content of a new rent agreement needing to be clarified. Any handshakes – and not everybody shook hands - were purely as a “goodbye” gesture and not as a sign of “deal agreement”.

How pathetic can you get.

Let's look at the positives, it could have been a fist bump.

Brighton Sky Blue said:

So the picture becomes clear-Fisher only ever had authority to agree to a deal if it meant the club could achieve a break even position next season. That being because SISU had no intention of funding losses any longer.

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But didn't fisher state in the summer that wish had agreed to fund us for another 3 years

Q26... written of or owed....

Brighton Sky Blue said:

So the picture becomes clear-Fisher only ever had authority to agree to a deal if it meant the club could achieve a break even position next season. That being because SISU had no intention of funding losses any longer.

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That's okay isn't it ?

Brighton Sky Blue said:

CCFC: No there were still major points such as the content of a new rent agreement needing to be clarified. Any handshakes – and not everybody shook hands - were purely as a “goodbye” gesture and not as a sign of “deal agreement”.

How pathetic can you get.

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That one caught my eye. Playground stuff.

covkid69 said:

But didn't fisher state in the summer that wish had agreed to fund us for another 3 years

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Either the goalposts were moved since or he lied at the time.

Q26 - so where has this extra 15mill come from since the meeting and yesterday?

italiahorse said:

That's okay isn't it ?

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Not making a comment on it either way but it goes some way to explaining why a deal was never accepted.

28: Do ACL want CCFC at the Ricoh? Do CCFC want to stay at the Ricoh?
ACL: Yes of course. The Ricoh is the home of CCFC, not a proposed ground outside the City of Coventry boundary
CCFC: Yes of course but it has to be on terms that allow the club to maximise its potential.

All you need to know. All the rest is horse shit. That we have reached this point is shameful.

Colin1883 said:

Q26... written of or owed....

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fully written off

I'd love to know how the debt jumped from £45 million to £60 million in what 2 months? The strategy all along as some suspected was to bust ACL but since the council put a stop to that, the only strategy post that was one of exit and refusal to fund the club !!

Sub said:

fully written off

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Off... It's cold outside dude...
The boss won't be happy if he catches me....
Again

The lawfulness of the original license?

You've been paying it without a problem for the prior 4 years......

Is the rent of 400k acceptable for league one?

Yes and Yes

What the frigg are we arguing about then, pathetic

ACL valued match day revenue at between 100 & 150k ... ACL wanted 24 million from the club to buy back match day revenue!!

so thats around 20 years for the club just to recoup.. they'd make more than 100k a year just by sticking their 24 million in the bank!!!

Jim said:

The lawfulness of the original license?

You've been paying it without a problem for the prior 4 years......

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Surely their own due diligence affirms it's lawfulness?

ajsccfc said:

Let's look at the positives, it could have been a fist bump.

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Resists urge to make "colourful" quip about fisting....

I think we'll gloss over that though, shall we.....

luwalla said:

ACL valued match day revenue at between 100 & 150k ... ACL wanted 24 million from the club to buy back match day revenue!!

so thats around 20 years for the club just to recoup.. they'd make more than 100k a year just by sticking their 24 million in the bank!!!

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luwalla said:

ACL valued match day revenue at between 100 & 150k ... ACL wanted 24 million from the club to buy back match day revenue!!

so thats around 20 years for the club just to recoup.. they'd make more than 100k a year just by sticking their 24 million in the bank!!!

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This hasn't been substantiated by ACL and more to the point was not mentioned in the most recent round of negotiations, only under the previous CEO.

torchomatic said:

I think we'll gloss over that though, shall we.....

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just shows the stupidity of the prices being asked for by ACL..

then again, as someone famous once said, there is simply no reasoning with stupidity! and i think its fair to say we have stupidity shining out of both sides in this saga!

luwalla said:

ACL valued match day revenue at between 100 & 150k ... ACL wanted 24 million from the club to buy back match day revenue!!

so thats around 20 years for the club just to recoup.. they'd make more than 100k a year just by sticking their 24 million in the bank!!!

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Hence the quip "We may as well build our own gorund for that much!!"

What this does show is that in the main both parties gave true answers to the questions as on well over 90% they agree.

Two things that are very very telling, one is that CCFC needed to reach a break even point for any deal to be acceptable. That adds definite weight to the argument that SISU could choose to liquidate us if a new stadium deal could not be agreed.

The other that ACL should value the f&b at 24m which can only have been done to either scare off CCFC from looking to purchase it or because ACL had got so use to CCFC paying hyper inflated prices.

Question 26 the big interest for me!! 45m to 60m how?? Other interesting answers nothing giving rise to delaying their publication

..and as for £4 for every spectator over 16K in the PL, you've got to be fucking kidding me?

Not content then with the massive boost it would give to the local area from having a PL football club (just listen to what Swansea council have said recently about the massive boost in investment since the Swans achieved PL status), they would also seek to eek more money out of the football club by levying a surcharge on match tickets.

Overall, ACL answered their questions honestly and with clarity, far more so than SISU, but there are a couple of things that come out of the answers provided that reflect badly on ACL imo. Cue shouts of SISU-apologist.

Sky Blue Pete said:

Question 26 the big interest for me!! 45m to 60m how?? Other interesting answers nothing giving rise to delaying their publication

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He said "over £45m" - he didn't say how much over

luwalla said:

just shows the stupidity of the prices being asked for by ACL..

then again, as someone famous once said, there is simply no reasoning with stupidity! and i think its fair to say we have stupidity shining out of both sides in this saga!

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Or is the value driven from the contact agreed with Compass in 2009 rather than ACL's calculations? The contract is long and expensive. Is that value the sum Compass want to walk away from some aspects of that to which they hold contracted rights?

theferret said:

..and as for £4 for every spectator over 16K in the PL, you've got to be fucking kidding me?

Not content then with the massive boost it would give to the local area from having a PL football club (just listen to what Swansea council have said recently about the massive boost in investment since the Swans achieved PL status), they would also seek to eek more money out of the football club by levying a surcharge on match tickets.

Overall, ACL answered their questions honestly and with clarity, far more so than SISU, but there are a couple of things that come out of the answers provided that reflect badly on ACL imo. Cue shouts of SISU-apologist.

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No I agree. You have to read it all carefully. ACL are squeezing the life blood from the football club even after the football club came knocking at the door to find a way forward. ACL just see themselves as a stadium company and the football club another renter believing they don't need the football club. I just don't think they are as bright as SISU in all this.
Outright refusal to allow a mediator is not good by ACL.

I owe Natwest over 50p on my credit card.