Takeover update (7 Viewers)

I can't see them joining forces for three reasons.
1) The Hoff knows how they operate.
2) Sisu won't give up controlling stake.
3) I should imagine that the Hoffs investors don't want third party involvement.

This one is aimed at the Sisu lovers employees ie Fanta, Godiva.

If I walk into the casino and blow a £100 on the roulete table, ok I hold my hands up because I made a bad investment on the numbers chosen. I don't expect the casino to reimburse my £100 on the way out !!!!!!!!

So my question is why do you think Sisu are owed and deserve anything ?

SISU bought all the black numbers. They have since further invested in the green zero. The wheel is constantly churning out red results and looks likely to for the forseeable future, but they own the blacks and there always a chance albeit a small one that it can turn. Therefore whilst they may not get a full market value return for them, they are not in a position where tey have to sell since they own them and can sservice the run of reds until such time that alll of the assets are gone. During that sell off process, they are holding on that it can turn. It's unlikely bt there is still some value left in what they have more than a nominal £1. We may not like it, but they don't and probably shouldn't care.

Nice analogy Rob:claping hands:

sky blue john said:

This one is aimed at the Sisu lovers employees ie Fanta, Godiva.

If I walk into the casino and blow a £100 on the roulete table, ok I hold my hands up because I made a bad investment on the numbers chosen. I don't expect the casino to reimburse my £100 on the way out !!!!!!!!

So my question is why do you think Sisu are owed and deserve anything ?

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I actually resent being labeled as 'SISU lover' - I am not. But I do take a business perspective and just submit my views like anybody else does.

It is really not helpful comparing a business with roulette gambling and nowhere have I said SISU should in any case have their money back. But I would have absolutely no qualms about them having their money back - even with a healthy interest - IF they turn the club around, start making a profit and sell it on to new investors.

I guess you take the lack of new high-profile signings as a token that SISU is not prepared to inject any more money into the club.
Well, I am not so sure that is correct.
Say the club bought 2 or 3 new players who have all made a name for themself. The wage budget would go up by 600k-800k per year and that would not guarantee promotion (look at Leicester last season). Then next season we would have to offload them again because of the new fair economics rules - and as probably all other championship clubs will have to do the same, the market will be flooded with 'expensive' players noone will buy.

The board does not look at the coming season as a make or break season - they would never 'gamble' everything on red or black. They look beyond this season and the next and plan accordingly.
New investors would have to do exactly the same, so don't expect miracles to happen if SISU is bought out.

No Godiva, not seen Wall Street too many times: I lost my job of 11 years thanks to a dodgy hedge fund firm. I'm speaking from my own experience and really don't need a finance lesson from you thank-you very much. My firm was run into the ground (I'd call it assett stripping), reduced to a rump, and lasted as long as they were making money from us. Then they liquidated us, having set up a "front" company so that they weren't liable for any of the debts. They made 100% profit, having bought the business for £1.

These people have zero scruples and have nothing but $ signs in their eyes. They don't care about people, or supporters in our context, only money. They are entirely ammoral and I consider them crooks on a par with some of the mob who trashed Pompey (indeed wasn't Dulieu involve in that? We warned about him on here by a Pompey fan some time ago).

There is no place for venture capitalists in football (which is why a myriad of clubs, including another facing administration, refused to accept bids from them). They hope to get something for free, force people into a corner, and make money out off it. Generally they reduce costs to a bare minimum and concentrate on nothing but the bottom line. "Investment" is entirely one-way with them: they make money, but don't often lose it.

You can dress it up however you like in terms of the terms the "loans" are couched in. but forgive me, I'm sure we were told

"This club is ENTIRELY DEBT FREE. We don't even have an overdraft facility".

I really was under the immpression thet SISU were here to "invest" like most other clubs owners. They were "absorbing" the debts. But no, they couldn't even do that-they wanted the money back all along!

The people in charge of the business were their people!!! They constantly outvoted Ranson and mismanaged the club.

Why do you love SISU so much, please answer me that!

As I said in my previous post - I do not love SISU.
But I guess it all comes down to where we come from. I have hands on experience running a business owned by investors, so my view expressed here are all based on 'qualified guesswork'.

I have supported this club for 40 odd years and seen how football loving people have run it to the ground because they operated with their hearts and not with their mind. It really does no-one any good using more money than is coming in.

Yes, SISU said we were debt-free, and in principle we are. As most debts are owned to SISU and not banks we can consider the club debt-free. And we don't pay interets or monthly installments on the loans - that debt is just as good as share equity.

I am sorry you lost your job - but if the hedge fund had not come in, would the business have survived anyway?

Godiva how can you say we are debt free.
We have a mortgage against Ryton training facillity.
We have a loans against future ticket sales.
And were we not recently stopped from doing transfers because we owed third parties money.

Well I was responding to this: "This club is ENTIRELY DEBT FREE. We don't even have an overdraft facility".

That statement was made just after the takeover when old externel debt was converted to SISU owned internal debt.

What has since happened on the debt side of things I don't really know ... ask OldSkyeBlue58, but if we have new debts it's surely down to poor management running over the budget surely.

As for the loans against the season ticket sales - this has been discussed many times and is seen as a normal practice to raise money in the income free period during pre-season.

The advance against guaranteed season ticket income is not exclusive to Coventry City as Godiva mentions. It does make for some nice 'Oh no! Click here!' Telegraph website hits though. Not that I'm cynical about the Mirror Group's journalistic philosophies or anything.

Some interesting points, Godiva - thanks. The problem for too many fans is that they only see things in "blacks" and "whites". Hence, in their eyes, one can only be "SISU lovers" or "SISU haters", whereas in reality life is much more complex.

I think it is entirely possible to be grateful to SISU for saving our club and keeping it afloat, whilst being critical of their decisions.

In many ways, SISU may be considered to be doing the right thing. Cutting costs to make the club a sustainable business - and that means budgeting the club around current income - primarily, season ticket sales of 9,500.

It may upset some fans, who regard "investment" solely as repeatedly spending money on players and wages but SISU were never going to be that sort of owner

For me SISU cutting costs is something that any owner of the club would have to do!!!
When the financial fair play kicks in next year then we will have no choice to reduce costs as our income streams are limited. It seems that SISU are doing it a year early. Whether it is asset stripping to recover as much money as possible before selling or whether they are in it for the long
term still remains to be seen.
The bottom line is until revenue increases we are screwed!!!
On a brighter note, hopefully Leicester do not get promotion and go tits up as they will not be able to plough money into the club next season..

In fact Ranson said the club was to be rebuild around young players - and we seem to have reverted to that plan.
Many fans moans that local young talent doesn't get enough playtime - well, that has certainly changed, and now the fans are upset we don't buy expensive proven players.

But I guess football and business are so complicated articles that nothing is ever right.
I for one am looking forward to the new season and hope many of our young players will step up to the challenge like Turner and Cameron did last season. And who knows - O'D may be our new 'king'.

sweeeeeeet

ajsccfc said:

The advance against guaranteed season ticket income is not exclusive to Coventry City as Godiva mentions. It does make for some nice 'Oh no! Click here!' Telegraph website hits though. Not that I'm cynical about the Mirror Group's journalistic philosophies or anything.

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So why did the Football League (including our board) vote to outlaw it henceforth, with the penalty being a transfer embargo? The reason being that it implies that a club is not viable financially going forwards.

Also, the "we are entirely debt free" statement was reiterated by Ranson constantly, including this year. I'm not dragging up a 3 year old quote there. And the SISU/Ranson vision was not to build a team entirely out of our own youth side. It was to build a side of young, quality players from the lower leagues or those who couldn't get in the side at bloated Premiership clubs (scouted by the visionary AT), complimented by our own home-produced players. As they would be young and imroving players, they would grow together into a side capable of staying in the top flight after promotion. People like Westwood, Dann, Fox, Cranie, Clingan, Henderson, Carroll. Not just the likes of Clarke and Jeffers, however promising they might be.

Yes, we do want to see our young players in the team. Not flogged as soon as they show even an inkling of promise like SISU tried to with Thomas!

Again, more patronising language: it isn't black and white to me, and I don't want us spending stupid money on big names. But I do want my team to be on a level playing field. I do want the board to stick to the promises they made to the fans about the budget being the same as last year and how we would be replacing our best and highest paid player with someone of at least the same pedigree. That looks like nothing more than SISU lies to flog season tickets. So please spin me a web of lies to explain how I'm deluded about all that too, please do.

Bang bang bang. That'll be my head against the wall again!

This club is "debt free". Apparently, the only money "owed" is to SISU - the owners. They bought the club and the debt is only repayable to them, when they sell up. If you buy something, you would expect to be able to recoup some money when you sell it to reflect your initial investment. It may well be that there is additional debt that we haven't been told about - I wouldn't be surprised at all given the mess Robinson and Richardson left behind. So yes, we are "debt free", according to this definition. The real problem is the deficit of £500,000 a month.

And perhaps SISU didn't break any promises regarding "budgets"? Circumstances change according to the environment we live and work in. At the time, Clouting may have been reassured by SISU that the budget was the same for this season, only for SISU to decide later the plan wasn't financially sound and therefore, have reduced the budget. That isn't necessarily a lie; it is a sound business decision not to further undermine the club's viability. We all know the statement was made during the period season tickets were being sold - so if it was a "lie", why all the surprise? Most clubs tell "lies" during the summer, to maximise income from ticket sales.

Equally, we all know what Ranson had in mind with regards to team building. However, SISU appear to have decided that this plan was no longer viable. From a business sense, they were right to do so. Given our past experiences, every single Cov fan should be applauding SISU for trying to get this club financially stable and if season ticket sales stay at around 9,500, that is what we should be budgeting for, not 23,000. And that means we can't (and shouldn't) afford to be buying players that would make the finances even worse. And it does mean we need to generate money from sales and decrease the wage bill accordingly.

Of course it is disappointing that we don't have an owner prepared to throw money at the club and cover the losses and of course, SISU are taking a big risk because relegation would carry an additional burden of further lost revenue and decreasing attendances. Nevertheless, there doesn't seem to be an alternative unless Hoffman's consortium make a move.

Bunkum. !!!

les_miserables said:

Bunkum. !!!

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I agree with you. Anyone rubbishing SISU is talking bunkum

Nonleagueherewecome said:

So why did the Football League (including our board) vote to outlaw it henceforth, with the penalty being a transfer embargo? The reason being that it implies that a club is not viable financially going forwards.

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Where did I say any different? I said it's standard practice; the rule change affects the majority of clubs.

What it isn't is exclusive to us or surprising in any way, shape or form. Pretty much every club that isn't wiping their arse with £20 notes from PL parachute payments have to seriously change their business model with the financial fair play regulations.

I haven't a problem with the current budget I think its the right way to go considering the position we are in. I have exepted no signings and we will just have to wait and see how we fair and I will support the players we have out on the pitch.
But what I do have a problem with is lie after lie no need for it.

Doesn't matter how you explain it.
The club is only worth what someone is willing to pay for it.
My opinion is SISU is going to squeeze out as much money to pay back as much money as it can and then sell it / crash it.
And all that crap about GH's offer not being on official paper is tosh. You can put a pre-lim offer on bog roll if you want. There is a lot of work to do before a final deal is worked out from both sides and that's even before Heads of Terms are signed.
Smoke and mirrors I tell ya.

lot of discussion about words

So some facts.

Ransons quote and its repetition is actually incorrect if read as debt free..... he always did choose his words carefully, and relied on portraying the debt to SISU as owing themselves so debt free. There were after the takeover no other loans and RR often added we dont owe the bank a penny which was quite true. However the investment from SISU are the LOANS from the 4 funds managed by SISU and are a DEBT of the company/club - always have been. Were the club to be in the fantasy position of having assets that covered all liabilities then be wound up those loans would be repaid in full, it is therefore a legal debt. CCFC, CCFC Holdings, SB S& L Group, SISU and the 4 hedge funds are in law all seperate legal entities and saying they owe themselves only clouds the issue, saying we are debt free is spurious and playing with words. The loans are legal debts of the the company which is why they are shown as liabilities on the Balance Sheet

Other clubs that rely on benefactors pumping money in are actually, nearly all the time, receiving LOANS from those benefactors. That is unless the benefactor writes off the loan, calls it a donation or sponsorship, or converts it to share capital as in the Abramovic/Chelsea situation. They may or may not be formal loans and they may or may not receive interest but until written off or changed in status they remain as debts of that club.

So are the SISU monies investment or loan - does it matter? either way it is legally and technically repayable and only SISU can decide to discount repayment or not. As would be the case with Whelan at Wigan, Abramovic at Chelsea etc etc etc. What actually really matters is that they have kept the club afloat by the actions taken so far - maybe not in the manner many of us would like from player squad point of view however. We can all question some of their decisions and disagree with them. Personally I think it was the wrong investment for them, essentially they had a certain pot to invest and it wasnt enough despite relying on discounting a big chunk of debt - which is what worries me about the Hoffman bid because it relies on the same basis as SISU started from and look where we are. Please do not take that as being anti GH it isnt meant that way nor that I support SISU- I never have but not everything they have done has been wrong

"Covering Losses" I think people are confusing with covering a shortfall in cash flow. SISU cover the shortfall in cashflow. The losses include such things as depreciation of assets and amortisation of players contracts (approx £2m) that actually involve no cash flow movement so SISU do not need to cover it.

There are additional loans that the Club has taken out and by 31/05/10 these stood at £3m. So it would not be true to say we were currently debt free even if you play word semantics with the SISU "investment/loan"

The losses - may have been £500K by end of last season but unlikely to be that now due to players that left, old managers paid off no longer costing us, staff reductions, no new players, etc - my guess is closer to £300K pm. Still not good but better

SISU/Board are right to try get the club living within its means. CCFC cannot continue to pay out more in wages than it actually earns in Turnover.

Bottom line is that monies put in as "investment" be it by SISU or GH or uncle Tom Cobley &all, will technically be loans to the company and repayable unless the loaner agrees to write it off

oldskyblue58 said:

"Covering Losses" I think people are confusing with covering a shortfall in cash flow. SISU cover the shortfall in cashflow. The losses include such things as depreciation of assets and amortisation of players contracts (approx £2m) that actually involve no cash flow movement so SISU do not need to cover it.

There are additional loans that the Club has taken out and by 31/05/10 these stood at £3m. So it would not be true to say we were currently debt free even if you play word semantics with the SISU "investment/loan"

The losses - may have been £500K by end of last season but unlikely to be that now due to players that left, old managers paid off no longer costing us, staff reductions, no new players, etc - my guess is closer to £300K pm. Still not good but better.

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So - cash flow wise - where do you think we stand now.
If the total loss is around 300K/m that equals to around 3.6m/yr
Take away depreciations an other non-cash flow items which is probably also reduced a bit - say 1.6m/yr that should leave a cash flow shortfall of around 2m/yr.

If this is correct then a sale of either Clingan, Juke or Turner will go a long way to balance out the cash flow deficit.

Or are there other items in the financial reports - which I haven't seen - that goes in the other direction?

assuming the starting point in my assumptions is correct that losses were £500K reduced to nearer £300K by wages savings then yes i think there is possibly a cashflow shortfall of between £2 and 3m is about right. As investors they might see that as moving in the right direction and fund it themselves - would hope they would see the sense in not selling more players but i would not guarantee it.

But it is only guesswork

"SISU/Board are right to try get the club living within its means. CCFC cannot continue to pay out more in wages than it actually earns in Turnover. "

And this is the critical point. Thankyou for your explanation with regards to the detail

oldskyblue58 said:

assuming the starting point in my assumptions is correct that losses were £500K reduced to nearer £300K by wages savings then yes i think there is possibly a cashflow shortfall of between £2 and 3m is about right. As investors they might see that as moving in the right direction and fund it themselves - would hope they would see the sense in not selling more players but i would not guarantee it.

But it is only guesswork

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Well, that at least supports my earlier speculation that the failure to sell Westwood and/or Gunnar last summer can very well have let to the final rift between Ranson and the owners. Add to that the increased wages for King and you may see how the finances spun completely out of control.

Looking forward - the current cash flow situation looks to be under control and this somewhat counter all claims of a looming administration or even liquidation.
It does however put SISU in a quite strong position when it comes to negotiations with Hoffman and his backers - or any other potential buyers. Why on earth would they walk away now taking a hit on their investments?
Which again leads to my final claim - a joint venture with new money is much more likely and will serve the club better short and long term.

Hoffman is only puutyting the consortium together. He had no influence over these crooks when he was on the board and had RR/JE to back him up. Any investment joint with SISU would require a controlling share as he has worked with them previously and knows what they are about.

So long or short term, I think the chances of them working together are less than slim. I hope one way or another a resolution can be reached as the current will he/won't he scenario serves for the benefit of nobody. We need a clear statement of intent one way or the other so we can avoid all this speculation and be happy with our 'lot' regardless of whether it is what we want.

yes exactly, its the not knowing that's so frustrating, even if the out come is not what we want at least we can roll our sleeves up and make the best of it without false glimmers of hope.

got to agree with Rob.

I can't see a partnership between GH & SISU working there is obviously a lot of bad blood between them if press statements and reports are to be believed.

Also think the finances are a reflection of attendances dropping as much as not selling Westwood & Gunnar who were within their rights to turn any move down anyway. I think the budget they set was based on better crowds and in that sense they caught a cold with the wages of King & co

Would agree that SISU might well be in a better position with the finances than has been portrayed in the press. I think this year there is a lot of cost that will be chopped from the budget - players wages, interest paid to RR, RR's salary, savings on back room staff, payments to former managers. If crowds even stay at last years levels then they will be in a better trading position than last year but the debt will still increase just not as quickly

The nature of venture capitalists/hedge funds isnt to keep hold of their investments long term so at some point SISU have an exit strategy.

Again I agree with Rob - do the deal or dont do the deal but make a decision and lets move forwards and not sit in limbo dithering

Yeah, but I said 'new money' - not specifically saying a joint venture between SISU and Hoffman was likely, just that SISU is now in strong position and will probably tell ANY potential investor: Either buy us out completely or respect our previous investments and lets work together (until criteria for our exit is reached).

And buying out SISU completely will have to include paying up the loans. I don't think SISU are prepared to leave the loans out of their own control.
Spending so much money on old debts is completely stupid unless someone with Bill Gates kind of money is involved. The money are much better spend on buying the stadium and giving the club a better position when the new rules are implemented next year.

Godiva said:

It really does no-one any good using more money than is coming in.

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Well, what about Robbins then. He spent a (comparative) fortune taking Cov up from the old 3rd division up to the first. Are you really saying that didn't do any good?!

We need another Robbins figure. Someone with money, who loves the club, and is willing to invest without expecting an immediate return.

LuckyGMan said:

Doesn't matter how you explain it.
The club is only worth what someone is willing to pay for it.
My opinion is SISU is going to squeeze out as much money to pay back as much money as it can and then sell it / crash it.
And all that crap about GH's offer not being on official paper is tosh. You can put a pre-lim offer on bog roll if you want. There is a lot of work to do before a final deal is worked out from both sides and that's even before Heads of Terms are signed.
Smoke and mirrors I tell ya.

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At last, the voice of reason.:claping hands:

Singers-Pore mentioned Derrick Robbins and he did indeed put a lot of money in, even before Jimmy Hill arrived. £30,000 on a brand new 5 man forward line. Which was big, big money in 1962. But Robbins and Hill had better support from the Coventry public. I keep saying it and some posters don't like to hear it, but with better 'unconditional' support from stayaway fans the position of the club would be greatly improved. More fans, more money. It ain't rocket science. Then we would be able to keep and sign players. The fans are the true investors. The fans who do come are terrific, it is the ones who CHOOSE to stay away that hurt the club.

I can't dispute that it would help snoz, but where are these fans coming from? Particularly when we constantly serve up second rate entertainment. We've not been well supported for over three decades now and the average attendances are about 5,000 down on the highest season in that period when we had our honeymoon moment in the new stadium.

Even in the unlikley world that we can persuade some of these 5 or 6 game a season fans to expand to full time season ticket holders we would be generate not a massive upturn in finances. If they attend 5 games at £20 that's £100. Average season tickets are probably around £240 if we factor in concessions. That means £140 extra per person. So even if we get the full 5,000 that only equates to £740,000 extra on the season.

£740k is nice and would of course help, but lets not pretend it would help us have saved any of those players who have left or deter the board from accepting a bid one of our current better players when we are losing that £740k on average every two months.