owning half the stadium (2 Viewers)

[oldskyblue58]

OK I think I must be missing something in the KD chat, CT reports, the GH proposal etc.

All have talked about owning half the stadium as making a difference but how ?

The stadium is owned by ACL Group which is split 50:50 between Higgs Trust and Council. CCFC has option to purchase the Higgs Trust shares not 50% of the stadium there is a difference.

ACL is a seperate legal entity that we pay rent to use the stadium (£1m I think). ACL group last accounts showed £500K profit from turnover £6.6m. The group had by 31/05/10 accumulated losses at £2.5m

So given that no one would have overall control of the company( 50:50 is actually stalemate and from past reports of ccfc & council relationship it doesnt seem a healthy state of affairs ) how do CCFC claim the turnover as theirs when it comes to the new finance rules and more importantly after investing £10m how do they get a return on investment in terms of regular cash.

You see ACL would remain a seperate company that CCFC had shares in but not control over. A dividend would currently be illegal as there are no accumulated to profits to pay out only losses so no income or positive cash flow there. Not to mention a dividend requires a 51% majority to be approved. They cant charge interest because the purchase of the shares is not a loan.. CCFC will not be able to secure finance on the stadium because they own the shares in ACL not the building and quite possibly cant mortgage against the shares either. They will still be renting the stadium from ACL because ACL is a seperate legal entity with other shareholders.

The turnover wont belong to them it is locked in a seperate company so they cannot use it in the football league finance calculation and that wont allow a greater player budget . So no benefit there. CCFC wont be able to march in and say do things differently because we are CCFC - the council have done a reasonable job and can block anything CCFC want to do.(50:50 remember). CCFC cannot demand their own people run it or that they should get a payment from it for the same reasons

OK owning the stadium is a good idea ........... and apart from it being a start, owning half of ACL does not get us anything in the short or medium term other than a debt for £10m that is used to buy an investment that doesnt actually earn us anything for the next few years.

Please enlighten me as to how the ownership of 50% of ACL is so key in terms of current short term or even medium term income. Unless there is a definite plan to own 100% and there is no guarantee the council will sell any time soon then the benefits are not as great as perceived or spun out in interviews and press

or is it that they all know that this is the sound bite the fans want to hear - am i being too cynical ?

 

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[covcity4life]

it just is

 

[ashbyjan]

Just to clear it up ACL do not own the stadium (please note Mr Doolaly) - the stadium belongs to North Coventry Holdings Ltd a 100% council owned company. ACL has a 50 year lease on the building and operates all functions within the structure. ACL Ltd is owned 50% by the council and 50% by the Higgs Trust, CCFC Holdings Ltd have an option to buy the Higgs Trust share at a price fixed by a confidential formula but the last I heard it would cost around £10 million. One instant benefit of owning ACL (or at least 50%) would we could cut our rent, currently £1 million a season or at least renegotiate it.

 

[oldskyblue58]

Thanks for that info jan

there isnt anything stopping us renegotiating the rent now which i believe was discounted down to £1m early in our tenure. Owning a share in ACL doesnt make that easier or guaranteed because the council could block it. The directors have to act for the benefit of all their ACL shareholders not necessarily because it would help CCFC stay in business. Would expect they could argue that the rent is already well below market value anyway.

 

[Godiva]

OSB58,

I think the vision is to own the stadium 100%.
The Stadium holds two assets - the property and the lease.
Fisrt step must be to secure the lease which is where the revenue is.

How? Well, that will probably take a lot of new money and some long and hard negotiations.
Based on popularity and connections to the people in high offices it looks more likely to happen if Hoffman and Elliott is backing the potential buyers.
(If only Hoff and SISU would join forces instead of fighting each other).

 

[oldskyblue58]

I agree with the plan to own all of it Godiva, I think thats the right thing to do.

What I was trying to point out was that owning only half of the shares that control the lease is not going to provide the instant funds for CCFC that are implied by many of the discussions and news bites. It works for 100% not nearly so well with only 50%. I know buying 50% is a step along the way just didnt want folk thinking that by doing so there was instantly going to be loads of new cash for CCFC there wont be

 

[TheRoyalScam]

OSB58,

Based on popularity and connections to the people in high offices it looks more likely to happen if Hoffman and Elliott is backing the potential buyers.
(If only Hoff and SISU would join forces instead of fighting each other).

They won't join forces because Hoffman is a man of principle - he resigned because of the Conor Thomas decision. How can he possibly work with SISU again? The council won't deal with SISU either, and the sooner they're gone the better.

 

[im-confused]

I own 3/4 of the Ricoh.

 

[ashbyjan]

To buy 50% of ACL would cost around £10m - a reasonable amount, to buy the stadium would cost, conservatively, £100m - as the council has to sell at a fair market rate and that is an amount that I cannot see anyone forking out. First step is to buy ACL or at least half and at least then we have a modicum of control over our home and the revenue streams it can generate but the owning of the actual stadium is fanciful and like most things I hear from Doolally not to be taken at face value - whichever face he is using that day. I am currently looking forward to being allowed to watch "his" players - condescending tw*t.

 

[shmmeee]

OSB, I think you make a basic assumption that I don't agree with: that the council has any interest in running a stadium beyond revenue.

The council don't actually do anything at the moment, neither do the Higgs Trust, all the legwork is done by ACL. They are silent partners for all intents and purposes AFAIK.

I also think there are two issues here: taking up the option from the Higgs Trust before it runs out in 2014, and persuading the council to sell their half. I think the council are more open to a sale than some make out, but want to sell to the right people, hence why Hoffman is supposed to have had meetings with the council about the stadium, and SISU claimed to (although I never found out what happened there).

There is no need to meet if they only want the Higgs 50% as the club has a right to buy that at a fixed price and no-one can do anything about it. It's the council's half that both parties want.

Basically it's a big game of chicken: the club (and whoever owns them at the time) have the potential to own a fantastic asset, that is no doubt being underutilised at the moment and could unlock significant revenue. 50% is not worth much, but 100% could be purchased before 2014 for a damn good price, after that the stadium loses it's attraction as it would just cost market rate.

The council need to sell before 2014 as their half is essentially worth less once the option for the other half runs out (think of a player on a bosman). However, they don't want to sell to someone who does not have the club and the city's best interests at heart.

It's going to be a case of who blinks first, and given my experience with local politics, I wouldn't bet on the council.

 

[oldskyblue58]

Think you will find shmmee it isnt all about the revenue for the council. The Ricoh is a positive icon for the City even if the football team isnt and that has value for the Council and the egos involved. They might want to sell although they have never said they do, but they are duty bound to get the best deal possible for the ratepayers

The council and Higgs trust would appear to be in the same position to SISU with CCFC and I would guess can choose whether or not they get involved or the level of that involvement. We do not know how much or how little the council are involved, I should imagine with the Olympics coming they will want to be seen to be. I would be seriously surprised if they presently did nothing there being public money/assets & charity connections involved they have a duty of care to oversee the company - but not micro manage necessarily

But the premise of my post is not how CCFC buy the stadium , more that buying half of it does not achieve income for the club. They have to buy the whole of it to make it work. Recent pronouncements from KD and GH have both referred to owning half the stadium by exercising the option at £10m and owning half doesnt give us income which are so desperate for. Therefore there is every need to meet the council if both or either party is interested in making it work. For all the reasons stated above 50% doesnt work in terms of CCFC revenue it can only be a stepping stone to full ownership. Any interested party has to move quickly to maximise income streams - that is going to cost a lot more than £10m which in itself seems to be hard enough to find for those interested in the acquisitions.

Many fans will assume that a half share in ACL will give the club a right to 50% of the income / profits that can be drawn out to help finance the club and in particular player purchases. It simply is not the case

We dont actually know the nature or extent of any meetings so I would be careful reading too much into that. Those talks are likely to be very informal at this stage because GH doesnt own the club yet if ever and until SISU prove the club is viable the council will not go far with them either

As to value then the councils value remains the same. They dont even have simple control of ACL no one does and it is control that gives the value in company shares. If the option is exercised then they have new business partners but still own 50%. They know CCFC /SISU or who ever are desperate for the income streams to make the arrangement work so that could actually strengthen not weaken the councils hand. There is no point buying half unless it is a precursor to buying all of it simply because 50% does not unlock any income streams as it presently stands and the council know that...... they are not the ones desperate for this deal.

If they do not have a plan to buy all of it and the means to do it then buying 50% and sticking with that is not going to be a great business decision. It might be done in two stages but the deal is all or nothing

 

[shmmeee]

Sorry I rambled a bit so wasn't very clear.

The council DO have an incentive to sell before the option runs out. What the council want (or should want) is to get rid of the Ricoh to someone who can run it properly and to pocket a nice fat wedge to spend on <strike>election winning initiatives</strike> what's best for the city of Coventry.

Their half is worth more while the AH half is cheaper. It's just like playing monopoly, my Old Kent Road is worth more to you when you have Whitechapel. Let's say for the sake of argument the Ricoh has a market value of £100m, making the value of the council's share £50m. Except it's more valuable than that because the other half can be had for £10m, essentially making the council's half now worth £90m (does that make sense?)

Once the option runs out the council's share goes back to being only worth £50m as it'd cost you another £50m to get the AH share.

WRT the meetings, I was simply pointing to them as evidence that it is the whole stadium that both parties are after. There would be no point to meeting with the council otherwise.

I think we're both coming from the same place though.

EDIT: Why can't you do strikethrough on this forum? :/

 

[skybluearmy88]

I am slightyly confused, can anyone help? I did the stadium tour yesterday at the fans forum and our tour guide said the current value of the stadium is atleast 300 million, and said he doesn't know anything about the 10 million for shares of the stadium. But given the value given why would anyone take 10 million for there share?

 

[TommyAtkins]

In 2012, ACL will be expecting a bumper year from the Olympics.......

 

[Sky_Blue_Ste]

So this subject has risen because of our chairman's statements in the CT this week?

Well, considering he was going to be talking to the council when he took over, it was his number one priority at that time, I doubt it actually will happen anytime soon!

Just words in the paper!