Losses and Management fees (5 Viewers)

skybluesam66 · Mar 14, 2013

on cwr this morning - PWKH mentioned sisu taking out very large management fees from ccfc

if this is true - how big are these . How much of our losses are in fact the management fee - and therefore how much have they really lost in net cash terms (i suspect no more than 15million) -

Is this why they are hanging around - as in reality 15 m could be got back if they could get there hands on a viable business

Would really be keen to see a detailed cash flow for their tenure

chiefdave · Mar 14, 2013

OSB would be the best person to answer this but didn't this get mentioned when the last set of accounts were submitted, a while back I know, and there was no evidence to support it just the money that had gone to RR? Not sure, it all moves so fast I can't remember what happened this morning let alone months ago!

Mary_Mungo_Midge · Mar 14, 2013

Large management fees don't featue on this article, published in 2012. Now, like a good old fashioned game of spot-the-ball; let's see what issue Fisher doesnt mention, shall we?

http://www.coventrytelegraph.net/co...-where-has-all-the-money-gone-92746-30209621/

Danceswithhorses · Mar 14, 2013

Mary_Mungo_Midge said:
Large management fees don't featue on this article, published in 2012. Now, like a good old fashioned game of spot-the-ball; let's see what issue Fisher doesnt mention, shall we?

http://www.coventrytelegraph.net/co...-where-has-all-the-money-gone-92746-30209621/

Hmmmm....not a single moan about the rent - how odd

Godiva · Mar 14, 2013

Sisu are the owners (or representing the investors), so they are entitled to spend whatever money on whatever purpose. The more they take out, the more they have to put back in.

I take it PWKH has seen the ccfc accounts since he is so detailed informed, but I can't understand why he would make public statements about it.
Unless he is actually blaming management fees for being the reason the club can't afford to pay rent.

The spin from both sides are really unbearable.

TF saying ACL were heading for trouble (before CCC bailed them out) - now ACL saying the club is being bled dry by excessive management fee's.

PWKH · Mar 14, 2013

Ainsworth:

"Coventry City football club has been in deep financial difficulty for many years. Five years ago, when it had lost its ground, Highfield Road, and most of its assets, the club was sold to the hedge fund Sisu 20 minutes before the administrators were due to take over. Sisu specialises in acquiring distressed assets, and under Sisu the club’s ownership is multilayered, opaque and partly offshore in the Cayman Islands. It is claimed that Sisu has lost £43 million over the period, but nobody can be sure as substantial management fees of millions of pounds are passed between the layers of ownership and debentures seem to protect unknown investors."

Moff · Mar 14, 2013

I think people readily accept that SISU's stated investment does not equate to what their losses are.

fernandopartridge · Mar 14, 2013

PWKH said:
Ainsworth:

"Coventry City football club has been in deep financial difficulty for many years. Five years ago, when it had lost its ground, Highfield Road, and most of its assets, the club was sold to the hedge fund Sisu 20 minutes before the administrators were due to take over. Sisu specialises in acquiring distressed assets, and under Sisu the club’s ownership is multilayered, opaque and partly offshore in the Cayman Islands. It is claimed that Sisu has lost £43 million over the period, but nobody can be sure as substantial management fees of millions of pounds are passed between the layers of ownership and debentures seem to protect unknown investors."

Shame he doesn't mention his wanker of a fellow MP and the part he plays in the story.

Colonel Mustard · Mar 14, 2013

fernandopartridge said:
Shame he doesn't mention his wanker of a fellow MP and the part he plays in the story.

Quite! It is not like Senors Robinson and Richardson epitomised transparency ... I seem to remember a confidentiality agreement!

shy_tall_knight · Mar 14, 2013

why do they keep spouting £43m if this is their actual net investment (which I doubt it is) then they are more inept than we thought at running a football club as they have nothing to show other than a relegation and the rest being bottom 6 finishes.

Godiva · Mar 14, 2013

PWKH said:
Ainsworth:

"Coventry City football club has been in deep financial difficulty for many years. Five years ago, when it had lost its ground, Highfield Road, and most of its assets, the club was sold to the hedge fund Sisu 20 minutes before the administrators were due to take over. Sisu specialises in acquiring distressed assets, and under Sisu the club’s ownership is multilayered, opaque and partly offshore in the Cayman Islands. It is claimed that Sisu has lost £43 million over the period, but nobody can be sure as substantial management fees of millions of pounds are passed between the layers of ownership and debentures seem to protect unknown investors."

oldskyblue58 said:
Directors Remuneration In the accounts from 2008 to 2010 there is only one Director that has been paid – RR. He was paid via Arley Group £169750 (2008) £294500 (2009) £303125 (2010). There is nothing in the accounts so far published that indicates any other directors have been paid. Just to be clear disclosure is required by the Companies Act and if not done would be disclosed by the independent auditors in their report. Total cost of RR’s services & interest to 31/05/10 £1.23m

(http://www.skybluestalk.co.uk/threads/11316-FAQ-2-Money-Talks)

Has something changed?

chiefdave · Mar 14, 2013

Thanks Godiva, my memory obviously isn't as bad as I thought!

Pete in Portugal · Mar 14, 2013

Godiva - I think you may be confusing Management Fees, (in this case fees paid from one SISU Company to another), and Directors Fees (fees paid to Board Members). They are very obviously quite different.

So while the only Directors Fee that was mentioned by OSB was paid to RR, it does not mean that Management Fees were not paid from one SISU owned Company to another. Presumably if Management Fees have been charged, as stated by PWKH, (and I mean 'IF'), then OSB will be able to tell us.

Jack Griffin · Mar 14, 2013

Absolutely true Pete,what are the chances Tim Fisher & Mark Labovich work for nothing. :facepalm:
They are probably paid via SISU indirectly somehow.
SISU management fees won't be itemised in published accounts.

Godiva · Mar 14, 2013

Pete in Portugal said:
Godiva - I think you may be confusing Management Fees, (in this case fees paid from one SISU Company to another), and Directors Fees (fees paid to Board Members). They are very obviously quite different.

So while the only Directors Fee that was mentioned by OSB was paid to RR, it does not mean that Management Fees were not paid from one SISU owned Company to another. Presumably if Management Fees have been charged, as stated by PWKH, (and I mean 'IF'), then OSB will be able to tell us.

I get your point, but all available accounts since take over have been scrutinized by OSB and I don't remember him quoting any other fee's than those metioned in the FAQ-2.

Usually hedge fund managers are paid a success fee by the the funds they manage directly - they are not paid by the companies owned by the funds.

But the statement is part of the smoke and mirror tactics and with the inclusion of 'multilayered' and 'Cayman Islands' we are tricked to think 'Gordon Gekko'.
It is quite funny though - this whole scenario:
on one hand we have an evil hedge fund losing money trying to save a distressed company
and on the other hand a partnership of a city council and a charity foundation making profit.

They are like divorced parents trying to destroy each other, and cought in the middle are the children (the fans).

Godiva · Mar 14, 2013

Jack Griffin said:
Absolutely true Pete,what are the chances Tim Fisher & Mark Labovich work for nothing. :facepalm:
They are probably paid via SISU indirectly somehow.
SISU management fees won't be itemised in published accounts.

TF and ML are ccfc employees. Not sisu hedge fund managers or sisu employees.
They are probably paid wages for their work. Just like you are (I presume).

Pete in Portugal · Mar 14, 2013

Godiva said:
They are like divorced parents trying to destroy each other, and cought in the middle are the children (the fans).

I agree 100% with that at least. :claping hands:

chiefdave · Mar 14, 2013

If it doesn't show in the published accounts how would PWKH know about it? I can't see TF bowling up to a meeting and telling everyone they've just taken millions out of the club!

My other questions would be if we're losing millions a year surely any management fee is just a debt on a balance sheet somewhere or is there someway SISU have managed to take cash out of the company?

Godiva · Mar 14, 2013

chiefdave said:
If it doesn't show in the published accounts how would PWKH know about it? I can't see TF bowling up to a meeting and telling everyone they've just taken millions out of the club!

My other questions would be if we're losing millions a year surely any management fee is just a debt on a balance sheet somewhere or is there someway SISU have managed to take cash out of the company?

I think PWKH was quoting Ainsworth, which doesn't make it true ... but of course is showing ACL is just as bad as sisu in the spin department.

As I said before - managemet fees (to sisu) would under normal practice be paid by the funds they manage, not by the companies owned by the funds.

Jack Griffin · Mar 15, 2013

Godiva said:
TF and ML are ccfc employees. Not sisu hedge fund managers or sisu employees.
They are probably paid wages for their work. Just like you are (I presume).

They are directors of CCFC (in fact of several of the companies in the CCFC group) and any directors renumeration must by law be declared in the company accounts, none has been declared yet so far as I know.

Hedge funds tend to be highly secretive, so there is no doubt very few people really have any idea how the money is being moved around..

singers_pore · Mar 15, 2013

Any management fees paid to SISU controlled companies would have to be disclosed in the notes to the financial statements as they would be "related party transactions". I don't recall seeing any such RPT disclosures in recent years so presumably that means that no mgt fees have been paid.

On the other hand, auditors are notoriously lax about checking up on related party transactions. So it would not surprise me at all if SISU had made such payments but they were not disclosed in the public accounts as they should have been (under FRS27).

skybluesam66 · Mar 15, 2013

If there are no such transactions -PWKH should be careful on what he has said on radio, as he clearly stated that there were management fees paid out

Jack Griffin · Mar 15, 2013

http://judgmental.org.uk/judgments/EWHC-QB/2009/[2009]_EWHC_3214_(QB).html
From a court judgement, Aymard v Sisu Capital Ltd [2009] EWHC 3214 (QB) (15 December 2009)

The Defendant is a limited liability company that carries on two types of business:

(1) hedge fund, and
(2) private equity business.

It is the private equity business with which this claim is concerned.

The Defendant secures investment capital. It uses that capital to invest in distressed businesses in return for an equity stake. Its plan is to turn around the failing business and then to realise the equity stake at a profit. The investment funds have a lifespan of 8 years, which can be extended to 10 years.

The Defendant's private equity business makes money by:

(1) Receipt of a management fee of 0.2% paid by the company in which the investment is made, and
(2) Receipt of a fee from the General Manager. The General Manager charges a management fee of 2% per annum of the funds invested and passes that (or part of it) to the Defendant as Investment Manager.

In addition, the individuals who secure the investment and manage the funds can themselves share in the profit. This is done by the formation of a vehicle to receive a share in the profits from the investments. In this case that was SISU Carry Partners LP ("the Carry Partnership").

luwalla · Mar 15, 2013

Does that mean, if they put in say 6 million a year into CCFC, they take a management fee of 120k ? ..

Stafford_SkBlue · Mar 15, 2013

It's the private investor, investment into the fund, it's not from SISU but from a private investor such as you or me if we were very wealthy individuals.
But yes CCFC company would directly or indirectly have to pay it. Also only 98% invested in the company. all fairly standard when dealing with investment funds.

Ashdown1 · Mar 15, 2013

What was it £12 million in administration fees in the last fiddled set of accounts, these scumbags haven't put in anything like they say they have ! I love to really see the true breakdown, I'm sure other interested parties in the stand off are not blind to their creative accounting either !

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