Diehard Si
New Member
The whole stop the Council Ricoh rent thing seems like a total mis-direction of energy to me. Coventry fans are hurting and are mad, and I appreciate the need to come together and do something. But just because someone has suggested this and shouting ‘ALL OF US HAVE TO STICK TOGETHER’ doesn’t necessarily mean its the right way to go.
Yes the club pays too much in rent, but consider this that the Arena has to make money. If they go bust then no stadium also. The issue for me though is more a case of getting ownership of the stadium INTO THE CLUB.
We all want SISU out, but must remember that it is highly likely that administration will follow, and if no buyer then found liquidation will occur. It is also likely liquidation might just happen anyway. Now from a potential investors (Knight in shining armour ) point of view it is a scary prospect. SISU say they lose £500k a month ( which I must say sounds vastly exaggerated, unless they are charging huge amounts of loan interest a month to themselves ). We will be losing most of our TV money, we will be losing lots of ticket sales.
So if SISU say we are losing £6m a year now, less say another £3m a year revenue next season (TV and tickets ) that is a potential loss of £9m a year next year. Of course, I think the SISU figures are rubbish, but you can certainly picture a £5m loss next year. The rent of course is an issue, but it’s not as if this is everything. £1.2m clearly isn’t the whole picture.
But what investor is going to spend Millions to buy a club losing millions a year?? Investors look for a return on their capital, Coventry in their current position have Zero chance of this. We can’t trim the squad down anymore either. The club losing money left right and centre and no assets either. A business needs not only a cashflow but also long term a strong asset base. A stadium perhaps.
Stadium Ownership
It is all for nothing if we can’t own the stadium. Whoever made the mistake of letting external parties own the stadium instead of ourselves has utterly ruined this club. The only way back is for the stadium to be owned by the club, sit on its balance sheet and generate money from all its facilities day by day. Not just from a pure financial point of view, but also these new ‘fair trade rules’ instead of an expense of £1.2million, you will have additional revenue for the club, allowing therefore more to be spent on players wages to comply with the FA’s new rules.
The club will increase it’s liabilities to acquire the stadium, but will have the asset to sit on its accounts to offset this. You could even push for the club to convert the loan to ‘equity’, therefore giving ACL a share of club ownership and giving the club a better gearing ratio.
Ok there will be depreciation to consider, but this is a non operating cost. It could realistically get losses to £2m and under, which could be offset by player trading. Get the scouts out, pick up some quality youth players coming through. The likes of Dann, Fox, Gunnar, Juke etc. Get them cheap, sell them on for £2m or something. Do that a few times and you are offsetting the losses.
This does need some investment obviously, but is a clear way to trade through it. This to me is much more important than a campaign to reduce rent. Instead push for the Council to put ownership of the stadium back into the club, once SISU are out of the picture preferably!
Idea scenario
Yes the club pays too much in rent, but consider this that the Arena has to make money. If they go bust then no stadium also. The issue for me though is more a case of getting ownership of the stadium INTO THE CLUB.
We all want SISU out, but must remember that it is highly likely that administration will follow, and if no buyer then found liquidation will occur. It is also likely liquidation might just happen anyway. Now from a potential investors (Knight in shining armour ) point of view it is a scary prospect. SISU say they lose £500k a month ( which I must say sounds vastly exaggerated, unless they are charging huge amounts of loan interest a month to themselves ). We will be losing most of our TV money, we will be losing lots of ticket sales.
So if SISU say we are losing £6m a year now, less say another £3m a year revenue next season (TV and tickets ) that is a potential loss of £9m a year next year. Of course, I think the SISU figures are rubbish, but you can certainly picture a £5m loss next year. The rent of course is an issue, but it’s not as if this is everything. £1.2m clearly isn’t the whole picture.
But what investor is going to spend Millions to buy a club losing millions a year?? Investors look for a return on their capital, Coventry in their current position have Zero chance of this. We can’t trim the squad down anymore either. The club losing money left right and centre and no assets either. A business needs not only a cashflow but also long term a strong asset base. A stadium perhaps.
Stadium Ownership
It is all for nothing if we can’t own the stadium. Whoever made the mistake of letting external parties own the stadium instead of ourselves has utterly ruined this club. The only way back is for the stadium to be owned by the club, sit on its balance sheet and generate money from all its facilities day by day. Not just from a pure financial point of view, but also these new ‘fair trade rules’ instead of an expense of £1.2million, you will have additional revenue for the club, allowing therefore more to be spent on players wages to comply with the FA’s new rules.
The club will increase it’s liabilities to acquire the stadium, but will have the asset to sit on its accounts to offset this. You could even push for the club to convert the loan to ‘equity’, therefore giving ACL a share of club ownership and giving the club a better gearing ratio.
Ok there will be depreciation to consider, but this is a non operating cost. It could realistically get losses to £2m and under, which could be offset by player trading. Get the scouts out, pick up some quality youth players coming through. The likes of Dann, Fox, Gunnar, Juke etc. Get them cheap, sell them on for £2m or something. Do that a few times and you are offsetting the losses.
This does need some investment obviously, but is a clear way to trade through it. This to me is much more important than a campaign to reduce rent. Instead push for the Council to put ownership of the stadium back into the club, once SISU are out of the picture preferably!
Idea scenario
- SISU push for liquidation, gets blocked and goes into admin.
- A pence in the pound agreement is made to settle some of the debt to SISU.
- GH/ACL/other steps in with bid to administrators to buy the club.
- GH/ACL/other open talks with Council that part of this venture involves 100% of the stadium being transferred to the club TO SAVE THE CLUB.
- Council/ACL gain a stake in the club in return, therefore not relinquishing their investment altogether.
