Ricoh Valuation.

[Captain Dart]

But they didn't value the freehold at £4m did they? Wasn't that their value of the 'business' i.e. ACL?

Is it clear what the terms of these valuations floated in the press were? I don't think so.

 

[grego_gee]

Beat me to it - had just started playing with some yield and revenue assumptions in Excel. I also assumed 7% yield, although that may be a little high. I assumed total income of 2mm giving a valuation of 28.5mm.

To answer magic82ball, it is the income potential that should be used. The fact that SISU withheld their rent is not relevant. I reckon that properly managed, one should be able to get 2mm pa revenues from the Ricoh (Casino, special events, catering etc.)

The prospect of getting any other regular tenant is very slim. 2m pa is certainly not achievable.
I doubt if they can better the £150k pa recently quoted for CCFC.
I would be interested to know what if anything the casino pay in annual rent since they contributed £6m to the original build.
Concerts etc might yield a profit but maybe not
the Olympics returned several million but that was before costs, we may have broken even? either way that was very much a one off!

 

[Noggin]

20-30 year gilts trading at 3.5%, so I reckon 7% is a bit high. 6% yield assumption gives a valuation of 33mm - again on projected revenue of 2mm.


2.5mm revenue and 6% yield gives you 42mm valuation.

Gilts are safe though for the most part, lending money to sisu to build a stadium that makes no financial sence when there is already a better stadium in the city that is according to them struggling is the complete oposite of safe. looking at it completely dispassionately (ie ignoring the fact I wouldn't piss on them if they were on fire) I wouldn't lend to sisu for 6%, not £50k and certainly not 20mill, In fact I'm pretty sure I wouldn't do so for 10%. We just lent money to a developer for a project much safer than this and we got ALOT more than 6%.

Edit - Sorry I should read from the start of a thread and not from the most recent posts, I completely misunderstood what you were saying. Ignore me, carry on.

 

[grego_gee]

20-30 year gilts trading at 3.5%, so I reckon 7% is a bit high. 6% yield assumption gives a valuation of 33mm - again on projected revenue of 2mm.


2.5mm revenue and 6% yield gives you 42mm valuation.

glad you appreciate the logic, but your idea of revenue is way wide of the mark
if we base it on ACL's last offer of £100k pa for the two years after an initial "free" year
£100k/.07 = £1.5m capital value

There has been a lot of speculation about how much SISU wouldn't pay
but I think they would be prepared to pay in excess of the £1.5m I just calculated.
bearing in mind the running cost of the asset is likely to be in excess of £1.5m pa
I think it is just a matter of time before the council come round to seeing it as in their best interests to deal as soon as possible!

 

[stupot07]

I think people are getting mixed up between the Lease and the Freehold.
The Ricoh stadium with freehold would be in the region of £40M and as a whole £60M-£70M with the rest of the complex. IMHO

In addition I don't think they want to sell.

But the freehold gets no income and won't get any income for another 42 years as the 50 year leasehold was purchased upfront for £21m. Other than selling off pockets of land you would gain little for buying the freehold, so I really can't see how it can be worth that much or who would want to buy it without the leasehold and probably the football club.


Sent from my iPhone using Tapatalk - so please excuse any spelling or grammar errors

 

[lewys33]

To sum up .......... its fucking complicated!

 

[duffer]

glad you appreciate the logic, but your idea of revenue is way wide of the mark
if we base it on ACL's last offer of £100k pa for the two years after an initial "free" year
£100k/.07 = £1.5m capital value

There has been a lot of speculation about how much SISU wouldn't pay
but I think they would be prepared to pay in excess of the £1.5m I just calculated.
bearing in mind the running cost of the asset is likely to be in excess of £1.5m pa
I think it is just a matter of time before the council come round to seeing it as in their best interests to deal as soon as possible!

Blimey, remind me not to get you in as a valuation agent.

I hate to shoot you down here, but you're just using ACL's figures based on the revenue you think they may receive from the club. ACL themselves claim a lot more than that as revenue, and show more both in their past books and presumably their future projections.

Even then, if you're just going to use ACL revenue as a valuation for the freehold, then you only get the freehold for the bit that ACL sit in. All of that other land, ready for development, and the casino etc., that's not included in your valuation by definition. How much are you going to value that at?

And that's before you even get to the question of whether the council want to sell at the 'bottom of the cycle', to use Tim's words. SISU wouldn't, so why should CCC? It could be that if ACL is profitable, there's no commercial need to sell at all, in which case a buyer might need to go far beyond a simple commercial valuation in order to secure a purchase. In addition the council have a statutory legal duty to get the best possible return for any assets they sell, so even if they wanted to do a deal, they'd be obliged to consider all avenues before selling to SISU.

As I've said before, if you want to know the true market value of something, the best thing to do is put it on the market.

(As an aside, even if you buy the freehold, you still get ACL as a sitting tenant with a 40+ year lease. You can't just break that lease, no matter what TF says. And the Council, even if they wanted to, do not have the power to 'liquidate' ACL. The only quick way back to the Ricoh, imho, is via a rental deal. Anything else is going to take a long time to sort out.)

 

[The Prefect]

Didn't Tim Fisher recently say they would buy the freehold, and it would be up to CCC to "liquidate" ACL? I seriously doubt that it would happen.

Good point. The crux of SISU and Fisher's position is that they want the Ricoh's freehold for very little and they want ACL liquidated in the process. Why would CCC sell the Ricoh to SISU for nothing and allow them to take on all the benefits? ACL have a long lease and other partners - throwing out a statement indicating ACL needs to liquidated is unwise in the extreme. It just goes to show SISU's apparent want to buy but not wanting to pay.

With ACL in place the freehold is worth very little - perhaps £5m or less. For ACL to be removed it would cost the value of their business to the club - less their outstanding debt. On the basis ACL made a profit of £1m when the club were there then a value of £40m might be feasible as that would be their profit for their remaining lease. Take away their £14m debt and you get a figure of £26m.

So there's the starting point - £26m. Suggesting liquidating ACL (which won't happen) and that the freehold is worthless is SISU playing games. If they want to buy they should make an offer. The fact that there's no offer in the public domain yet tells you all you need to know.

 

[mrtrench]

glad you appreciate the logic, but your idea of revenue is way wide of the mark
if we base it on ACL's last offer of £100k pa for the two years after an initial "free" year
£100k/.07 = £1.5m capital value

Golly, thank you. I tried to follow what you said really closely and I thought really hard.

You are quite clearly quoting a floor price here - if you were writing an option to buy at that level then I'd want to be long.
Forget the club and forget the rent that the club would be prepared to pay in league 1. If someone put their mind to it they could manage a fine estate like this to make a lot of money.

But what you have here effectively is the crux of the issue. 6% - 7% yield is probably accepted as reasonable, but the conflict will be all about the potential revenue. SISU might well argue £200k to low ball the whole thing (although it is clearly disingenuous... if they really believed that why are they so keen to buy?). ACL no doubt sees it more like £2.5mm.

 

[Captain Dart]

What is a mm in this context, I always though it was a millimetre?

 

[mrtrench]

What is a mm in this context, I always though it was a millimetre?

millions. m is a thousand, so mm is 1000x1000 = 1,000,000

 

[Noggin]

millions. m is a thousand, so mm is 1000x1000 = 1,000,000

m is thousandth (milli) - 0.001
k is thousand - 1000
M is million (mega) - 1,000,000

mm is millimeter, it's certainly not million despite the fact that a millenium is 1000 years.

 

[sky blue john]

Why would the counsel get rid of acl and sell the Ricoh to Sisu for 5million ??
Hypotheticaly the Ricoh freehold without Acl and land would be worth upwards of 50million and Sisu know this !!!
Anyway all this Ricoh talk is Sisu time wasting they are only interested in a compensation result via the JR !!!!
Why would they build a new stadium its not going to get them the so called invested money back?

 

[dongonzalos]

If I we're the council

I would say that the club have to move back to the Ricoh immediately.

Then a date at the end of the season to be agreed.

Two completely independent valuations obtained.

Then a price in middle shaken on.

 

[Broken Hearted Sky Blue]

If I we're the council

I would say that the club have to move back to the Ricoh immediately.

Then a date at the end of the season to be agreed.

Two completely independent valuations obtained.

Then a price in middle shaken on.

Oh yes handshakes:thinking about:

 

[dongonzalos]

Oh yes handshakes:thinking about:

Ha ha

 

[dongonzalos]

I see your point, aside the last line.....

My point is SISU have engineered the club moving out = lower valuation of Ricoh.
Buy Ricoh + move the club back in = instant profit.

Demand the club come straight back, we the fans get our club back.

SISU are not rewarded for using the club as a hostage.

A correct price is paid for the stadia and no one can moan about tax payers getting ripped off. Or there is another JR as the council sell the Ricoh cheap to help out a private company etc etc etc

 

[Broken Hearted Sky Blue]

I see your point, aside the last line.....

My point is SISU have engineered the club moving out = lower valuation of Ricoh.
Buy Ricoh + move the club back in = instant profit.

Demand the club come straight back, we the fans get our club back.

SISU are not rewarded for using the club as a hostage.

A correct price is paid for the stadia and no one can moan about tax payers getting ripped off. Or there is another JR as the council sell the Ricoh cheap to help out a private company etc etc etc

Agree

 

[grego_gee]

Blimey, remind me not to get you in as a valuation agent.

I hate to shoot you down here, but you're just using ACL's figures based on the revenue you think they may receive from the club. ACL themselves claim a lot more than that as revenue, and show more both in their past books and presumably their future projections.

Even then, if you're just going to use ACL revenue as a valuation for the freehold, then you only get the freehold for the bit that ACL sit in. All of that other land, ready for development, and the casino etc., that's not included in your valuation by definition. How much are you going to value that at?

And that's before you even get to the question of whether the council want to sell at the 'bottom of the cycle', to use Tim's words. SISU wouldn't, so why should CCC? It could be that if ACL is profitable, there's no commercial need to sell at all, in which case a buyer might need to go far beyond a simple commercial valuation in order to secure a purchase. In addition the council have a statutory legal duty to get the best possible return for any assets they sell, so even if they wanted to do a deal, they'd be obliged to consider all avenues before selling to SISU.

As I've said before, if you want to know the true market value of something, the best thing to do is put it on the market.

(As an aside, even if you buy the freehold, you still get ACL as a sitting tenant with a 40+ year lease. You can't just break that lease, no matter what TF says. And the Council, even if they wanted to, do not have the power to 'liquidate' ACL. The only quick way back to the Ricoh, imho, is via a rental deal. Anything else is going to take a long time to sort out.)

You could be right on ACL being part of the reason why CCC don't just do the deal. They do have a lease in place for the next 40 years. Having said that the council created ACL who used to be 50/50 council and CCFC, Higgs bought out the CCFC interest when CCFC had "cash flow" problems.
I would have expected the council to retain a controlling interest and if so they could disolve ACL if they so wished, and certainly SISU will not do any deal with ACL still in place.
The problem might be funding the withdrawal of the Higgs Trust.
I believe they paid c £6m when they got involved that probably has a lesser book value now after 8 or 9 years but they would want it back.
If the value is based on the rental value of £100k or £150k there wouldn't be sufficient cash to refund them.
It becomes very difficult to establish a value other than for CCFC playing there, clearly Vile or KP wouldn't want to! Rugby teams don;t generate the same revenue!

Maybe SISU would be prepared to pay a value based on the rent originally agreed for the Premier League - £1.3M /0.07 =£18.5M its potentially worth that in the long term to them and arguably preferably to them building another stadium as they plan.

It needs some sorting out but the council don't seem to even get started!

 

[stupot07]

I see your point, aside the last line.....

My point is SISU have engineered the club moving out = lower valuation of Ricoh.
Buy Ricoh + move the club back in = instant profit.

Demand the club come straight back, we the fans get our club back.

SISU are not rewarded for using the club as a hostage.

A correct price is paid for the stadia and no one can moan about tax payers getting ripped off. Or there is another JR as the council sell the Ricoh cheap to help out a private company etc etc etc

How can ccfc moving out of the Ricoh decrease it's value, when ACL are financially better off without the club there?


Sent from my iPhone using Tapatalk - so please excuse any spelling or grammar errors

 

[wingy]

You could be right on ACL being part of the reason why CCC don't just do the deal. They do have a lease in place for the next 40 years. Having said that the council created ACL who used to be 50/50 council and CCFC, Higgs bought out the CCFC interest when CCFC had "cash flow" problems.
I would have expected the council to retain a controlling interest and if so they could disolve ACL if they so wished, and certainly SISU will not do any deal with ACL still in place.
The problem might be funding the withdrawal of the Higgs Trust.
I believe they paid c £6m when they got involved that probably has a lesser book value now after 8 or 9 years but they would want it back.
If the value is based on the rental value of £100k or £150k there wouldn't be sufficient cash to refund them.
It becomes very difficult to establish a value other than for CCFC playing there, clearly Vile or KP wouldn't want to! Rugby teams don;t generate the same revenue!

Maybe SISU would be prepared to pay a value based on the rent originally agreed for the Premier League - £1.3M /0.07 =£18.5M its potentially worth that in the long term to them and arguably preferably to them building another stadium as they plan.

It needs some sorting out but the council don't seem to even get started!

Leicester paid £19 M. for Kingpower last year,after paying around 10-11 years fees/rent ,but that was purely for a Stadium ,whether that involved a Management company I doubt .It would'nt have Involved the extra enterprise and Land @ the RICOH.

 

[skybluefred]

Ann Lucas stated that we the Council DO NOT SELL FREEHOLD's. That makes this thread a waste of time.

 

[Hobo]

I haven't a clue.
One for Kirsty Allsop and Phil Spencer

 

[dongonzalos]

How can ccfc moving out of the Ricoh decrease it's value, when ACL are financially better off without the club there?


Sent from my iPhone using Tapatalk - so please excuse any spelling or grammar errors

Better off without the club there

Or

can survive without it there

Which did they say?

 

[letsallsingtogether]

Well said Anne..

Ann Lucas stated that we the Council DO NOT SELL FREEHOLD's. That makes this thread a waste of time.

 

[mrtrench]

mm is millimeter, it's certainly not million .

http://www.abbreviations.com/term/571305

There are more things in heaven and earth...

 

[mrtrench]

https://www.google.co.uk/search?q=m.....1c.1.24.heirloom-serp..30.5.440.x5acKjEbics

204mm hits.

 

[saltaire bantam]

I think Leeds Arena is the most recent "stadium" built in the UK, it cost £80+ million inc land (much smaller than required for a football ground & no parking). Capacity? 13500.

The Ricoh is a good modern stadium, there are several shows/bands that tour the world where they need large capacity, you do not need many Coldplay/U2/Springsteen type events to turn a profit annually and the stadium is there.

 

[dongonzalos]

http://kcstadium.co.uk/kc-stadium/stadium-facts

Cost 44 million to build

Sounds very similar to what SISU are talking about building so should probably be their starting bid.

However obviously the Ricoh is already a better stadium.

It is already built as well. As you can guess most projects run over budget. So there is an advantage already.

 

[olderskyblue]

On talksport last week, there was a discussion about an NFL team looking to set up in the UK, and although London was mentioned as the prime location, maybe a stadium elsewhere may be an option? I wonder how much the Ricoh would be worth then?

Oh, the team mentioned was the Jacksonville jaguars......

 

[wingy]

On talksport last week, there was a discussion about an NFL team looking to set up in the UK, and although London was mentioned as the prime location, maybe a stadium elsewhere may be an option? I wonder how much the Ricoh would be worth then?

Oh, the team mentioned was the Jacksonville jaguars...... 

Is /Was that the Team that PH4's old man was part owner of?? Read an article recently on this ,Wembley too Big ,Myriad other sites In around the Capitol though.

 

[olderskyblue]

Is /Was that the Team that PH4's old man was part owner of?? Read an article recently on this ,Wembley too Big ,Myriad other sites In around the Capitol though.

That's the one

 

[Como]

Jacksonville and Fulham, same owner.

 

[duffer]

You could be right on ACL being part of the reason why CCC don't just do the deal. They do have a lease in place for the next 40 years. Having said that the council created ACL who used to be 50/50 council and CCFC, Higgs bought out the CCFC interest when CCFC had "cash flow" problems.
I would have expected the council to retain a controlling interest and if so they could disolve ACL if they so wished, and certainly SISU will not do any deal with ACL still in place.
The problem might be funding the withdrawal of the Higgs Trust.
I believe they paid c £6m when they got involved that probably has a lesser book value now after 8 or 9 years but they would want it back.
If the value is based on the rental value of £100k or £150k there wouldn't be sufficient cash to refund them.
It becomes very difficult to establish a value other than for CCFC playing there, clearly Vile or KP wouldn't want to! Rugby teams don;t generate the same revenue!

Maybe SISU would be prepared to pay a value based on the rent originally agreed for the Premier League - £1.3M /0.07 =£18.5M its potentially worth that in the long term to them and arguably preferably to them building another stadium as they plan.

It needs some sorting out but the council don't seem to even get started!

I stand to be corrected, but I don't believe the council have a controlling interest in ACL.

 

[duffer]

m is thousandth (milli) - 0.001
k is thousand - 1000
M is million (mega) - 1,000,000

mm is millimeter, it's certainly not million despite the fact that a millenium is 1000 years.

In fairness in finance I've seen mm used quite a lot in this sense. It's certainly not an SI unit though.

Anyway, I'm off to stretch my legs for a few furlongs. I might stop by the pub for a quart of ale, followed by an eighth of a gill of something warming. I'll leave the yard to the big boys.