Thoughts on SISU (2 Viewers)

Revenue loss, but...

Maybe no-one knows the full extend of the income loss next year, but the figure of £4m seems to be popular. It seems to me that they would've needed to invest substantially more than that to ensure our survival in the championship. Heck, we nearly did it (might do yet, but I've kinda given up on that) with the asset stripping we've seen.

Clubs like Forest, who spent money we could barely dream of, only got a handful of points more than us.

Say they spent £12m more than us, but will only get £4m more income than us next year. And they have a good fan base, which we do not. We'll probably have the same die-hards next year as this. Maybe we're headed where we deserve to be as a club. Shame.

singers_pore said:

According to TommyA our financial problems can be blamed solely at the fans for not turning up in enough numbers.

Well let's look a bit more carefully at this lazy assertion shall we?

1. Our average attendance this year is 14,993 which is the 14th highest in the Championship.

2. Our average attendances were higher in previous years and yet we never even finished as high as 14th since SISU took over.

3. In the Premiership there are three clubs with average attendances <=20,000. They are Swansea, Wigan and QPR all of whom have traditionally had lower attendances than us. If we were in the Premiership I am sure we would average more than 20,000.

4. Our player wage expense in previous years is less than 14th. Our wage expense this season is probably the lowest in the division (this is to be confirmed once the accounts are filed). Players' wages are by far the biggest factor determining a club's league position (this assertion has been well demonstrated in an empirical study by Prof Symanski). Thus, our very poor league position is down to our relatively low wages. It is not due to our long-suffering fans.

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You should have started that post with "Now here comes the science bit!". I like it

Godiva. I take it we agree that they didnt understand the business that they were investing millions in then ? We agree that they had a man on all the Boards from day 1 and that the board of directors would get monthly financial figures presented to them ? We agree that the only source of funds was from SISU investors acting as a bank?

I agree that hedge funds or private equity firms etc generally operate in a hands off manner. But usually they will have representation on the board and it is a one off or structured investment. In this case as has been stated several times SISU acted as the bank - banks have different criteria and require more current financial info. There was no planned or ordered draw down of funds from Day 1 - they failed in their duties to their investors if we just accept they were totally hands off. They cant say they didnt have access to the info because they had someone on the board. To be clear I am not talking about the number of kit washes paid for, the major financial transactions they should and will have been aware of particularly as the only way those transactions happened was by draw down of SISU investor funds and that it quickly went off budget. But they sat back and let it go tits up for four years ?

SISU accepted RR's budgets etc ......... so where was their proper due diligence, where was their risk assessment, where was their strategy for planning the clubs future and protecting their investors. Apparently they trusted in RR to get it right. Borders on negligence to me if I were an investor

First thing business recovery people do when they go into a company is look at and reduce cost. They were looking at a business recovery (we were all but out of business) and left the cost cutting until 4 years later. They had seen the financial info prior to takeover, had seen RR budgets etc I fail to see why they were so blissfully unaware and trusting for 4 years. This was a high risk investment in a high risk industry.

Given that they knew very little to do with football, had no real interest in it, surely a prudent investor would want to know more, make sure they knew more and would take extra steps to protect their clients money. To do otherwise puts that money at great risk. It doesnt mean that Joy Seppalla ran the thing but perhaps they put someone in place to monitor the situation? It didnt matter that RR was there or it might step on his toes SISU could out vote him any time they chose to.

I can accept that what you say is normal business practice, I can accept what you say as what may have happened. BUT in accepting that I strongly believe that it is another indicator of poor business practice by SISU, lack of knowledge and understanding and frankly seems negligent towards their investors. These problems didnt just happen after 4 years - the info was there month by month and SISU through Onye had access to it. Surely business practice has to adapt to the individual requirements of each individual case, or do we accept all cases have to be treated in only one way.

From day 1 there was the matter of going concern...... SISU had to be closely involved in the forward planning budgets etc together with a good understanding of the business and its practice. They controlled the flow of funds to CCFC - how did they control that or monitor that if they didnt know what was going on ? They had to know and be involved in all that info to be able to give any assurances as to going concern - to not have that control or info is grossly unprofessional, negligent and puts them at risk should the business collapse

Of course decisions were made in the board room but they were sanctioned by SISU because SISU controlled the "bank" How do they contol the bank if they dont know what is going on and are not involved. In the first year we exceeded the budgets because costs came up that were not expected and that restricted funds going into the squad. Shouldnt alarm bells have rung at that point - or are we saying that they know there is a problem but stay out of it because RR is dealing with it. This is SISU's investment reputation on the line (probaly their most public investment) and they just leave it to RR?

I accept what is normal practice but this is not and never has been a "normal" business proposition - SISU should have been on their guard from day 1. Clearly some large mistakes have been made in the last five years and if what you say is true then none larger than accepting normal practice and staying hands off - its cost their clients over £30m. I am damn glad i do not invest with them if thats the case

I think it is generally accepted that things have not been worse than over the last year or so, isnt that coinciding with SISU taking even more control of things ? Trying to salvage something for their investors after not reacting quickly enough in the first place maybe? Not on about the micro management of the business but the major financial decisions and strategy.... andthe only source of additional funds was ? - SISU

SISU messed up from Day 1 ...... but they were not the only ones

If anyone wants to call sisu head office and ask them for our club back this is their number 02072905450

OSB,

You say sisu could have removed Ranson any time they wanted ... I am not so sure. First, 'normal practice' would only give them one vote at the board. Second, as Ranson was shareholder we need to know the content of the shareholder agreement to know if they could remove him at a GA. I don't think that they could ... but may be wrong ... and that the only way to remove Ranson was if he breeched the shareholders agreement - for instanse by not being able to pay his part of further capital injections if needed. If Ranson was removed last year, this may be down to him not being able to put in his share of what extra capital was needed.

The only other way to get rid of Ranson was to have him resign himself. That could be achieved if sisu refused to put in more money ... even if Ranson was ready and able to put in more himself. In that situation the club faced administration and Ranson would have the choice of going down with the ship or abandon and let sisu salvage the remains.

Whatever it was that finally got Ranson out of the way, we may never know, but I am convinced the contracts made it impossible to simply out-vote him on a GA.

There is always a way Godiva. To get their own way at directors meetings (which is what we are talking about) then appoint more directors. They owned 75% + of the company in terms of shares thats effectively full control under the Companies Acts. They may have had to pay him out yes, but even that can dragged out. There may have clauses for compensation etc but lets be honest I doubt RR was the hardest set of nuts that SISU have busted. Looks like they did get rid in the end shareholders agreement or not

Sure, there's always a way, and they employed it.

I don't think they wanted to remove him from day one - they probably supported him till sometimes in the third year. Maybe the 'King' saga had something to do with it. An ex-con, out of football for a year or so, demanding a high salary when the budgets were already broken. Fan base protesting on fansites. The press rediculing the club. Add to that the failure to sell Westwood and Gunnar to pay for MK9's salary. All that combined may have been the tilting point.
Then it takes some time to actually get to the point where he resigns or breech the shareholders agreement.

Godiva said:

This were we mostly disagree - and probably always will.

Hedgefunds are like banks and their employees are like bank emploees - they basically understand only three things: Money, money and money.

Usually they don't go knocking on doors and ask permission to invest in your company, they sit and wait till you turn up and ask for their money. Then they look into your businessplan by consulting experts from the industry. When all reports are supporting the businessplan and if the investment plan looks feasible, they open the vault and let you have a look inside. Then they say: Here's our money, now YOU put in a substantial part ... preferbly all ... of your own wealth. This will reassure us you will fight for the case till you drop. If the project goes down in flames, then you will burn up with it.
In the mean time we will be in our offices looking over the monthly reports. We will put in a representative on the board, but as we know nothing about the business, our representative will only have one vote and no right of veto. Majority voting will ensure all around the table have his say and equal power to the others. The businessplan, the operating and investment budgets are to be excecuted as priority no 1. Any deviation will be handled by the board.

So Ranson went to sisu with his plan, and sisu have consulted experts within the football area, and they finally went along for the ride. Ranson put in his Prozone and got his 15-20% part of the shares.

This is all normal practice.

Then you say: From day 1 I think they failed to plan and control the business.
I think not! Sisu will have overseen everything, but left it to the board to solve deviations to the original plan ... and those deviations started quickly when the gates declined and kept on doing so. The consequences we know all too well.

Sisu did however take control last year when they finally got rid of Ranson and the rest of the original board ... all those who failed to make the plan work. But by then the money was long gone and the radical surgery was all that was left.

If you accept what sisu are and how they work, then the next question really is: Should a hedgefund ever get involved in football?

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Not sure what your experience in these matters is Godiva, but this doesn't accord with mine.

Where I've been involved with PE investors, they've had a shareholders' agreement that gives them the veto over all significant financial decisions. In this context, the word significant tended to have a fairly low threshold. This veto would cover all capital expenditure, any new employees earning over £xxk etc. etc.

So I suspect that SISU's influence may have been a little stronger than you suggest.

DazzleTommyDazzle said:

Not sure what your experience in these matters is Godiva, but this doesn't accord with mine.

Where I've been involved with PE investors, they've had a shareholders' agreement that gives them the veto over all significant financial decisions. In this context, the word significant tended to have a fairly low threshold. This veto would cover all capital expenditure, any new employees earning over £xxk etc. etc.

So I suspect that SISU's influence may have been a little stronger than you suggest.

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I sit here with my shareholders agreement, and yes major financial decisions outside of the businessplan requires unanimity between the shareholders (and if needed, capital injection divided between the shareholders as a percentage of their holdings).
So as long as the board could handle deviations from the businessplan (e.g. through player sales), then sisu would not have tools (or reasons) to take control.

Godiva said:

I sit here with my shareholders agreement, and yes major financial decisions outside of the businessplan requires unanimity between the shareholders (and if needed, capital injection divided between the shareholders as a percentage of their holdings).
So as long as the board could handle deviations from the businessplan (e.g. through player sales), then sisu would not have tools (or reasons) to take control.

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Obviously differing agreements then, so unless someone has a copy of the SISU/CCFC one, we'll never know.

But thats where i think the problems came Godiva. In the first year there were significant expenditure that was outside the budget expected and things started to slide at that point. I seem to remember RR commenting on it when trying to explain where the money invested had gone, said things were worse than they thought. I dont think he had any more money to put in so the SISU investors bore the brunt of it, which in turn affected player purchases and sales. Wouldnt give you much confidence but should sound alarm bells that things are not right. Many "football folk" are good at spending the money they very often do not understand the limitations in getting it in the first place. In a general sense thats why football is is in such a mess - unrealistic expectations of the few that are prepared to invest.

DazzleTommyDazzle said:

Obviously differing agreements then, so unless someone has a copy of the SISU/CCFC one, we'll never know.

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Yes, I kind of said that in another reply to OSB.

Godiva said:

..... Second, as Ranson was shareholder we need to know the content of the shareholder agreement to know if they could remove him at a GA. I don't think that they could ...

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For those who dont blame SISU

Before you say it. I agree there are lots of reasons however SISU's actions are the dominant reason IMO

Coventry finish 17th 2006-2007

2007-2008

Key Players brought in

Arjan de Zeeuw
Julian Gray
Ellery Cairo Dimitrios Konstantopoulos Michael Hughes Donovan Simmonds
Zavon Hines
Robbie Simpson
Danny Fox
Gary Borrowdale Scott Dann
Leon Best

Key players Out

Andy Whing Colin Cameron Robert Page
Andy Gooding
Dele Adebola
Khalilou Fadiga Zavon Hines Chris Birchall *
Stuart Giddings * Wayne Andrews * Kevin Kyle *
Dimitrios Konstantopoulos *
Donovan Simmonds * Wayne Andrews * Colin Hawkins * Kasper Schmeichel
Richard Duffy

Manager Dowie IMO opinion our squad was strengthened over this season.

In my opinion SISU not to blame for 17th place finish Dowie to primarily take the blame blame

dongonzalos said:

Before you say it. I agree there are lots of reasons however SISU's actions are the dominant reason IMO

Coventry finish 17th 2006-2007

2007-2008

Key Players brought in

Arjan de Zeeuw
Julian Gray
Ellery Cairo Dimitrios Konstantopoulos Michael Hughes Donovan Simmonds
Zavon Hines
Robbie Simpson
Danny Fox
Gary Borrowdale Scott Dann
Leon Best

Key players Out

Andy Whing Colin Cameron Robert Page
Andy Gooding
Dele Adebola
Khalilou Fadiga Zavon Hines Chris Birchall *
Stuart Giddings * Wayne Andrews * Kevin Kyle *
Dimitrios Konstantopoulos *
Donovan Simmonds * Wayne Andrews * Colin Hawkins * Kasper Schmeichel
Richard Duffy

Manager Dowie IMO opinion our squad was strengthened over this season.

In my opinion SISU not to blame for 17th place finish Dowie to primarily take the blame blame

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I have lost the will to live with this but the nest season after this the squad is made stronger again. again managers fault.

Each season afeterwards it is progressively made weaker and weaker eventually you have a cross over the managers responsibility becomes less than the owners

TommyAtkins said:

You may have 20 years experience but so have many other people who have led companies and businesses into ruin. Marconi being an obvious example.

And of course, you are wrong as well - being a soldier doesn't exempt me for controlling a multi-million pound budget for an ISTAR unit.

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Now I understand the problem.

You are controlling a COST budget and it would appear, applying your experience to the situation at CCFC.

In your situation, if you have a cost overrun, the only way to resolve the position is to cut costs. As I seem to recall you saying in an earlier post - you like things simple.

The world of business is sadly less simple.

You have to manage costs and you also have to manage revenues. Action that you take to cut costs may - if badly judged - cut your revenues by even more. I think there's a very recent example that's pretty close to home!

Not content with ruining our football club their now trying to get money out of a load of OAPs!

http://www.northernlife.ca/news/localNews/2012/04/12-sisu-fundraising-donation-sudbury.aspx

sisu r total shit bags

This thread was a great debate (in a masochistic kinda way). Some good points made. I have a nagging fear CCFC could be heading for admin or, perish the thought, liquidation. I know people say "but all the money is owed to Sisu's investors" but there surely comes a time when they'll decide it's better to cut their loses than throw more money after bad. The hit from relegation and the stadium rent malarky makes me suspect that moment is approaching. If anyone can cheer me up on that score, I'd welcome hearing it!

Sky Blues said:

This thread was a great debate (in a masochistic kinda way). Some good points made. I have a nagging fear CCFC could be heading for admin or, perish the thought, liquidation. I know people say "but all the money is owed to Sisu's investors" but there surely comes a time when they'll decide it's better to cut their loses than throw more money after bad. The hit from relegation and the stadium rent malarky makes me suspect that moment is approaching. If anyone can cheer me up on that score, I'd welcome hearing it!

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I'll give it a go...how about: SISU would potentially stand to gain more if they sold, even at a low level-say £1 up front, plus £5m to be re-paid of their "loans" over 5 years, maybe a few more if we made the Prem-than if they just liquidated us. Even the possibility of some return is better than nothing, right?

Plus, if there is any potential new owner, the FA and the Football League-not to mention Parliament-would not stand idly by and allow SISU to simply liquidate us out of convenience. Football clubs are not like any other business in that regard.

Thanks! Though wouldn't a potential purchaser see that we're a busted flush when they did due diligence and simply hold back until the inevitable happened? Then they could pick us up for something akin to the value of the brand (as we have little in the way of other assets) and the league entry? And is the brand worth very much, particularly in League 1?

covcity4life said:

sisu plus aidy boothroyd would have kept us in championship i beleive

we ended up giving a inexperienced manager the job with a stingy board,ended in disaster

boothroyds simple play and avoiding midfield probably would have kept us up at least

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Everyone is entitled to an opinion. However when there is you and 2 others and 100 thinking you are wrong. That is generally when you should probably consider that your opinion may be not the correct one. Just IMO