So, bearing in mind that even if it did get planning permission (a big IF), The Valley is a brown field site needing clearing of existing structures and possibly decontaminating before it could be redeveloped, I assume the major part of the land value is at Sparrows Lane, and in the Green Belt?
£50M did someone say? Houses in Kensington? Hahahahahahaha! Castles in the air, more like!
I hope the latest accounts are published in time for some numerate members of FF to get their heads round them before the upcoming meeting!
To be clear, -£10m is a number I pulled out of the air for illustrative purposes.
The buildings, certainly those at The Valley, are the property of Charlton Athletic Football Company Ltd, and stand at approx. £42m under the depreciated cost approach I bored you witless with a few posts ago. To recap, that isn't the cost, it's what the value would be if they were constructed now, but depreciation applied over the period of their existence (a real hybrid method that only accountants would devise).
Cheers,
I'm trying to construct a valid valuation in my semi-financially literate head.
I don't doubt the "club" as a whole package ie team, league membership, buildings and land has some value but want to base that on something sensible not nonsense like "enterprise value" or guess work.
To be clear, -£10m is a number I pulled out of the air for illustrative purposes.
The buildings, certainly those at The Valley, are the property of Charlton Athletic Football Company Ltd, and stand at approx. £42m under the depreciated cost approach I bored you witless with a few posts ago. To recap, that isn't the cost, it's what the value would be if they were constructed now, but depreciation applied over the period of their existence (a real hybrid method that only accountants would devise).
Cheers,
I'm trying to construct a valid valuation in my semi-financially literate head.
I don't doubt the "club" as a whole package ie team, league membership, buildings and land has some value but want to base that on something sensible not nonsense like "enterprise value" or guess work.
To be clear, -£10m is a number I pulled out of the air for illustrative purposes.
The buildings, certainly those at The Valley, are the property of Charlton Athletic Football Company Ltd, and stand at approx. £42m under the depreciated cost approach I bored you witless with a few posts ago. To recap, that isn't the cost, it's what the value would be if they were constructed now, but depreciation applied over the period of their existence (a real hybrid method that only accountants would devise).
Cheers,
I'm trying to construct a valid valuation in my semi-financially literate head.
I don't doubt the "club" as a whole package ie team, league membership, buildings and land has some value but want to base that on something sensible not nonsense like "enterprise value" or guess work.
I suppose an approach would be to use other recent club sales to build a benchmark but that would entail knowing the equivalent land and building components in each of those transactions. if you separated that out then I suppose you start to get a value for the "club". There would I suppose then need to be some kind of "location factor" applied.
Difficult for us. However I remember from our meeting with Harvey at the EFL that he mentioned that he was confident that he knew the value of a club based on detailed knowledge of all the recent clubs sale transactions, and so he had a "view" on the asking price for Charlton. He of course did not expand to us on what his view was, however, and it could just be my wishful thinking, I detected a distinct scepticism when he said that.
To be clear, -£10m is a number I pulled out of the air for illustrative purposes.
The buildings, certainly those at The Valley, are the property of Charlton Athletic Football Company Ltd, and stand at approx. £42m under the depreciated cost approach I bored you witless with a few posts ago. To recap, that isn't the cost, it's what the value would be if they were constructed now, but depreciation applied over the period of their existence (a real hybrid method that only accountants would devise).
Cheers,
I'm trying to construct a valid valuation in my semi-financially literate head.
I don't doubt the "club" as a whole package ie team, league membership, buildings and land has some value but want to base that on something sensible not nonsense like "enterprise value" or guess work.
I suppose an approach would be to use other recent club sales to build a benchmark but that would entail knowing the equivalent land and building components in each of those transactions. if you separated that out then I suppose you start to get a value for the "club". There would I suppose then need to be some kind of "location factor" applied.
Difficult for us. However I remember from our meeting with Harvey at the EFL that he mentioned that he was confident that he knew the value of a club based on detailed knowledge of all the recent clubs sale transactions, and so he had a "view" on the asking price for Charlton. He of course did not expand to us on what his view was, however, and it could just be my wishful thinking, I detected a distinct scepticism when he said that.
Not really.
RD has said he would "give the club away" for £1.
This is a nonsense but he is publicly saying he is basing his price on the land and buildings of CAFC so comparison of sale prices of say Bolton aren't valid.
The exercise I was trying to complete was to value just the land and buildings as that was the benchmark set by Duchatelet. He's lying, as ever, but I wanted to put that lie to bed.
A side note is that it is quite possible that the EFL have already told Duchatelet what they feel the value of CAFC is and it is that which has, in part, triggered his attack on them
Good luck with that, both of you! The other key asset is player registrations, which are rather more volatile than tangible fixed assets. Still, the way the club is signing up so few players it should be straightforward to attribute a value to the few we know we have.
So if the value of the buildings is simply the value it would cost to rebuild them now, that figure doesn’t really hold any real weight in terms of a purchase valuation, does it?
It doesn’t factor how much revenue can potentially be generated from those buildings, the state of repair required etc.
Surely if anything in terms of ‘assets valuation’ is to be used as a base figure should it not be the valuation of the land plus the valuation of the sale of the building assets (ie steel, fixtures & fittings etc)?
He’s already said he’ll chuck in the club so there is no need to calculate player valuations, club related revenue streams etc, is there?
Valuing unprofitable niche businesses is notoriously difficult.
The valuation of profitable businesses is most often on the basis of a multiple of normalised earnings before interest, tax, depreciation and amortisation (EBITDA). The multiple depends on a number of factors, including size of business, sector, earnings trends, prospects. Assets are generally ignored, regarded as being the engine that drives profits.
Lossmakers may well be sold on break up value, and in the case of a league one club, that isn't going to be much - player registrations become worthless, restrictions on land use render property value low.
Anyone buying CAFC knows that huge investment is required before profitability can be achieved, if ever, so funding losses will be an immediate drain.
Its not that uncommon for owners of unprofitable businesses to basically give them away to end the funding requirements - we've all heard of big businesses being sold for £1 - so in a dispassionate sense CAFC is really worth just about nothing.
It has a crappy balance sheet and assets that only retain a material value on a going concern basis.
It really does come down to what someone is willing to pay. If I had a spare £100m kicking about I'd still think twice about it, and it would be £20m for the club at the most, and £20m a year for four years losses and player investment which would probably give you one run at the prem.
i suspect the harsh realities of football finance have scared off many who've considered buying the club, especially given RD's pipedream pricing.
So is there some sort of logic in a £50M asking price ?
£42M to rebuild the buildings £12M land.
Total £54M
I have to say to rebuild the buildings, would that not mean a new equivalent stadium ? I can't see how you could rebuild The Valley & Sparrows Lane for £42M, but that's off the top of my head.
A fairer valuation in my mind would be between £20M & £35M absolute tops.
buildings worth 40 odd £million but unable to generate a profit through operating them.
alternative would be to get planning for resi but then the buildings are a liability as you have to pay a lot for them to be demolished and removed!
i have long thought we are worth £1 as a huge loss making entity but that RD may get £15-20m because football is crazy. Anything more than that is idiocy.
It's largely down to the shoddy state of football as a whole nowadays.
I have some sympathy with RDs views on FFP rules being diluted to the point of worthlessness, but it was always going to happen, and his original vision was predicated totally on that.
The premier league, or whatever that particular shitshow is called this week, pulled up the ladder a long time ago.
I think one important point here is that the value to a developer is £12m less the amount it will cost to demolish the current buildings, plus any scrap value. Unless there’s another club out there who wants to buy a functioning stadium, the buildings are pretty much worthless.
Just for completeness, I've had a deeper look at the CAHL accounts. They confirm that the asset is the land upon which the stadium stands (edit:) and at Sparrows Lane. Its total value in 2012 was 5.81m, revalued to 10.35m in 2013, this being the professional 5 yearly review. In 2016, now treated as an investment property under FRS102, it increased a further £1.35m to 11.7m where it stands now. However, the accounts to 30 June 2018, currently awaited, will show a further professional revaluation and it will be interesting to see how much the value has risen. I'd suppose it might be a fair bit, and is therefore causing RD to believe it is worth more than it really is and hang on for what he perceives is something close to this value.
I assume the investment value is base on its rental value rather than development value, which makes sense.
The facilities, if rented by the owner would generate £xm a year. The club is in theory paying £xm a year and the owner receiving £xm a year. Because they are owned by the same entity they cancel one another out. Just because no cash movement for rent is visible it does mean the land does not have rental value as long as it can be sold without having to sell the club as well..
If the club and the land are under separate ownership, then the land's rental value crystallises and a £20m valuation might represent the discounted value of 10 years rent.
The man's ramblings show he is fixated on releasing the rental value of the land and the only way of doing that is for him or a purchaser is to separate club and land. His strategy is now clear to me entirely about separating land and club, he doesn't care if it's Charlton or MK Dons at the Valley and whether the club folds or not as long as a football club tenant is in situ.
The only reason he continues support Charlton is to ensure there is a tenant and its costs are cut to the bone to minimise his financial support while he is also the tenant.
I don't think RD is basing his valuation on the assets of the club. He is basing it on the debt he now owns. Which I hear is over £60M? Does RD seem like the type to write off debt? He should, but does he?
I've been working on this the last few nights for a trust article.
The valuation for existing use is the 11.7m, this is the only figure in the company accounts that owns the land/property. In the football accounts (i.e. CAFC or Baton 2010) this shows the same figure but also tenants improvements.
Just for completeness, I've had a deeper look at the CAHL accounts. They confirm that the asset is the land upon which the stadium stands. It's value in 2012 was 5.81m, revalued to 10.35m in 2013, this being the professional 5 yearly review. In 2016, now treated as an investment property under FRS102, it increased a further £1.35m to 11.7m where it stands now. However, the accounts to 30 June 2018, currently awaited, will show a further professional revaluation and it will be interesting to see how much the value has risen. I'd suppose it might be a fair bit, and is therefore causing RD to believe it is worth more than it really is and hang on for what he perceives is something close to this value.
Just for completeness, I've had a deeper look at the CAHL accounts. They confirm that the asset is the land upon which the stadium stands. It's value in 2012 was 5.81m, revalued to 10.35m in 2013, this being the professional 5 yearly review. In 2016, now treated as an investment property under FRS102, it increased a further £1.35m to 11.7m where it stands now. However, the accounts to 30 June 2018, currently awaited, will show a further professional revaluation and it will be interesting to see how much the value has risen. I'd suppose it might be a fair bit, and is therefore causing RD to believe it is worth more than it really is and hang on for what he perceives is something close to this value.
Just for completeness, I've had a deeper look at the CAHL accounts. They confirm that the asset is the land upon which the stadium stands. It's value in 2012 was 5.81m, revalued to 10.35m in 2013, this being the professional 5 yearly review. In 2016, now treated as an investment property under FRS102, it increased a further £1.35m to 11.7m where it stands now. However, the accounts to 30 June 2018, currently awaited, will show a further professional revaluation and it will be interesting to see how much the value has risen. I'd suppose it might be a fair bit, and is therefore causing RD to believe it is worth more than it really is and hang on for what he perceives is something close to this value.
Just for completeness, I've had a deeper look at the CAHL accounts. They confirm that the asset is the land upon which the stadium stands. It's value in 2012 was 5.81m, revalued to 10.35m in 2013, this being the professional 5 yearly review. In 2016, now treated as an investment property under FRS102, it increased a further £1.35m to 11.7m where it stands now. However, the accounts to 30 June 2018, currently awaited, will show a further professional revaluation and it will be interesting to see how much the value has risen. I'd suppose it might be a fair bit, and is therefore causing RD to believe it is worth more than it really is and hang on for what he perceives is something close to this value.
Just for completeness, I've had a deeper look at the CAHL accounts. They confirm that the asset is the land upon which the stadium stands. It's value in 2012 was 5.81m, revalued to 10.35m in 2013, this being the professional 5 yearly review. In 2016, now treated as an investment property under FRS102, it increased a further £1.35m to 11.7m where it stands now. However, the accounts to 30 June 2018, currently awaited, will show a further professional revaluation and it will be interesting to see how much the value has risen. I'd suppose it might be a fair bit, and is therefore causing RD to believe it is worth more than it really is and hang on for what he perceives is something close to this value.
Comments
So, bearing in mind that even if it did get planning permission (a big IF), The Valley is a brown field site needing clearing of existing structures and possibly decontaminating before it could be redeveloped, I assume the major part of the land value is at Sparrows Lane, and in the Green Belt?
£50M did someone say? Houses in Kensington? Hahahahahahaha! Castles in the air, more like!
I hope the latest accounts are published in time for some numerate members of FF to get their heads round them before the upcoming meeting!
Sorry @IdleHans; thought deadline was 1st March for some reason. Makes more sense for it to be after 25th I guess.
Ah well, ready for April's FF meeting then - which on current showing might as well be on 1st April for all the nonsense coming from the club.
I'm trying to construct a valid valuation in my semi-financially literate head.
I don't doubt the "club" as a whole package ie team, league membership, buildings and land has some value but want to base that on something sensible not nonsense like "enterprise value" or guess work.
You carry on and I'll mark your work :-)
Difficult for us. However I remember from our meeting with Harvey at the EFL that he mentioned that he was confident that he knew the value of a club based on detailed knowledge of all the recent clubs sale transactions, and so he had a "view" on the asking price for Charlton. He of course did not expand to us on what his view was, however, and it could just be my wishful thinking, I detected a distinct scepticism when he said that.
RD has said he would "give the club away" for £1.
This is a nonsense but he is publicly saying he is basing his price on the land and buildings of CAFC so comparison of sale prices of say Bolton aren't valid.
The exercise I was trying to complete was to value just the land and buildings as that was the benchmark set by Duchatelet. He's lying, as ever, but I wanted to put that lie to bed.
A side note is that it is quite possible that the EFL have already told Duchatelet what they feel the value of CAFC is and it is that which has, in part, triggered his attack on them
The other key asset is player registrations, which are rather more volatile than tangible fixed assets. Still, the way the club is signing up so few players it should be straightforward to attribute a value to the few we know we have.
It doesn’t factor how much revenue can potentially be generated from those buildings, the state of repair required etc.
Surely if anything in terms of ‘assets valuation’ is to be used as a base figure should it not be the valuation of the land plus the valuation of the sale of the building assets (ie steel, fixtures & fittings etc)?
He’s already said he’ll chuck in the club so there is no need to calculate player valuations, club related revenue streams etc, is there?
The valuation of profitable businesses is most often on the basis of a multiple of normalised earnings before interest, tax, depreciation and amortisation (EBITDA).
The multiple depends on a number of factors, including size of business, sector, earnings trends, prospects. Assets are generally ignored, regarded as being the engine that drives profits.
Lossmakers may well be sold on break up value, and in the case of a league one club, that isn't going to be much - player registrations become worthless, restrictions on land use render property value low.
Anyone buying CAFC knows that huge investment is required before profitability can be achieved, if ever, so funding losses will be an immediate drain.
Its not that uncommon for owners of unprofitable businesses to basically give them away to end the funding requirements - we've all heard of big businesses being sold for £1 - so in a dispassionate sense CAFC is really worth just about nothing.
It has a crappy balance sheet and assets that only retain a material value on a going concern basis.
It really does come down to what someone is willing to pay. If I had a spare £100m kicking about I'd still think twice about it, and it would be £20m for the club at the most, and £20m a year for four years losses and player investment which would probably give you one run at the prem.
i suspect the harsh realities of football finance have scared off many who've considered buying the club, especially given RD's pipedream pricing.
£42M to rebuild the buildings
£12M land.
Total £54M
I have to say to rebuild the buildings, would that not mean a new equivalent stadium ?
I can't see how you could rebuild The Valley & Sparrows Lane for £42M, but that's off the top of my head.
A fairer valuation in my mind would be between £20M & £35M absolute tops.
I know that makes no sense but it's how the accounting works.
The key is that the assets only have material inherent value if there's (the financial millstone of) a football club playing in them.
buildings worth 40 odd £million but unable to generate a profit through operating them.
alternative would be to get planning for resi but then the buildings are a liability as you have to pay a lot for them to be demolished and removed!
i have long thought we are worth £1 as a huge loss making entity but that RD may get £15-20m because football is crazy. Anything more than that is idiocy.
I have some sympathy with RDs views on FFP rules being diluted to the point of worthlessness, but it was always going to happen, and his original vision was predicated totally on that.
The premier league, or whatever that particular shitshow is called this week, pulled up the ladder a long time ago.
The facilities, if rented by the owner would generate £xm a year. The club is in theory paying £xm a year and the owner receiving £xm a year. Because they are owned by the same entity they cancel one another out. Just because no cash movement for rent is visible it does mean the land does not have rental value as long as it can be sold without having to sell the club as well..
If the club and the land are under separate ownership, then the land's rental value crystallises and a £20m valuation might represent the discounted value of 10 years rent.
The man's ramblings show he is fixated on releasing the rental value of the land and the only way of doing that is for him or a purchaser is to separate club and land. His strategy is now clear to me entirely about separating land and club, he doesn't care if it's Charlton or MK Dons at the Valley and whether the club folds or not as long as a football club tenant is in situ.
The only reason he continues support Charlton is to ensure there is a tenant and its costs are cut to the bone to minimise his financial support while he is also the tenant.
I am extremely worried.
The valuation for existing use is the 11.7m, this is the only figure in the company accounts that owns the land/property. In the football accounts (i.e. CAFC or Baton 2010) this shows the same figure but also tenants improvements.
oh yeah & the ditches...