The club will never sell for 40m but I hope the club is sold to a party that has an interest in our future and the fans. The sooner the two shysters & Kevin Cash hurry up and go the better.
If I was an investor than I couldn't really give a toss how much money the previous owner has put into the business, I want to know what kind of return I'm likely to get on my investment irrespective of that. Money sunk into the business might be interesting to me if its gone into capital expenditure or building a profitable infrastructure but when debt has been racked up due to consistent operating losses then why on earth would an investor add it to their purchase price?! Who knows if there's anything in this story but if so then it's no wonder that potential buyers are nowhere near meeting the valuation.
We're hardly an attractive proposition, we're in net debt and racking up operating losses annually which are significant percentage of turnover. I'm far from an expert on football finance but I can't for the life of me see how the current owners are in anything but a really weak bargaining position and going to have to write off some losses to offload the club.
I'm praying for a very rich Charlton fan or genuine football lover looking for a hobby because from an investment point of view we're a big gamble at best.
If I was an investor than I couldn't really give a toss how much money the previous owner has put into the business, I want to know what kind of return I'm likely to get on my investment irrespective of that. Money sunk into the business might be interesting to me if its gone into capital expenditure or building a profitable infrastructure but when debt has been racked up due to consistent operating losses then why on earth would an investor add it to their purchase price?! Who knows if there's anything in this story but if so then it's no wonder that potential buyers are nowhere near meeting the valuation.
We're hardly an attractive proposition, we're in net debt and racking up operating losses annually which are significant percentage of turnover. I'm far from an expert on football finance but I can't for the life of me see how the current owners are in anything but a really weak bargaining position and going to have to write off some losses to offload the club.
I'm praying for a very rich Charlton fan or genuine football lover looking for a hobby because from an investment point of view we're a big gamble at best.
Basically agree with your sentiment. Mundell of course was trying to explain how the current owners might have arrived at the figure - he wasn't endorsing their proposition.. Another way to look at it is that the current lot "paid for" the previous debt when they bought the club, and have then taken the club a division higher, so they would in turn expect to be paid for the debt that has been racked up getting there, because the new owners are so much closer to FAPL financial goldmine than the current lot were when they took over. Of course I don't endorse that thinking either. I'm sure you are right that most potential buyers will laugh at the proposition.
I watched the documentary on Swansea last night. It didnt get much comment on here because it mainly concentrated on the football side - makes better TV. However it was the passion of the fans which attracted a consortium of local businessmen. Together they raised the money. Most of the money came from the local businessmen but the fans continued to drive the club forward. Interesting that the businessmen didnt do it as an ego purchase. They allowed the fans to run the club. Shades of Charlton in the 90s This fits my dream of the Trust. Build a vibrant Trust, with a smart and realistic understanding of the finances, and maybe within the West Stand lounges there are a group of businessmen fans with enough wedge, (not 40m, see above), who are persuaded because of the quality of the Trust people and their plans. The interesting thing is that one person who knows all such Lounge Lizards is Peter Varney. But right now I honestly don't know whether he is prepared in any way to get involved again with CAFC. But I ended up thinking that we might be able to follow the Swansea template. We have to show a different kind of passion - the Swansea fans were bloody angry, and mobilised the entire community. Hopefully we won't need to get that angry, our passion will be for not just turning up on Saturdays but doing everything we can to help make CAFC financially healthy.
I have read some of the comments and having interviewed Martin Simons ex chairman of the football club and one of the people who is 'owed money' he will not be driving down to the Valley on the day of our promotion to the Premiership to collect his money?. The interview is in the next issue of Trust news 4, out at the end of August.
Well, no he won't, because he isn't one of the ex-directors owed money . . .
Not what he claims airman..... he mentions a bond? ( he was not the only one) By the way sent his regards. I am sure you are well up on the financial aspects of the club , but Martin was the chairman of the football club, so should be in a position to clarify what money he is owed/lent/given. I am just reporting what told me?.
Enterprise Value as a way of valuing a takeover only makes sense if the debt has been incurred in capital investment. Racking up debt as a result of covering recurring deficits for a business that is and will continue (in all liklihood given that promotion is unlikely) to be loss-making does not contribute to the value of a takeover proposition.......IMHO.
I have read some of the comments and having interviewed Martin Simons ex chairman of the football club and one of the people who is 'owed money' he will not be driving down to the Valley on the day of our promotion to the Premiership to collect his money?. The interview is in the next issue of Trust news 4, out at the end of August.
Well, no he won't, because he isn't one of the ex-directors owed money . . .
Not what he claims airman..... he mentions a bond? ( he was not the only one) By the way sent his regards. I am sure you are well up on the financial aspects of the club , but Martin was the chairman of the football club, so should be in a position to clarify what money he is owed/lent/given. I am just reporting what told me?.
Interesting, but I cannot see that anything could exist now which is not disclosed. Martin is a top bloke, however.
Well that is my opinion, never met the man before, but was entirely open with me, so I took on board what he said in good faith! Too say that he had been generous with his time and money was an understatement, clearly loved the club, and has always been supportive of fan involvement.
When Richard Murray bought out the PLC shareholders (pre Slater and Jiminez) the Directors' Bonds of £15m (approx) were written off according to Peanuts Molloys' excellent post here:
Enterprise Value as a way of valuing a takeover only makes sense if the debt has been incurred in capital investment. Racking up debt as a result of covering recurring deficits for a business that is and will continue (in all liklihood given that promotion is unlikely) to be loss-making does not contribute to the value of a takeover proposition.......IMHO.
Don't really disagree with this. A business is worth what somebody is prepared to pay for it and this, in turn, really ought to be based on a realistic assessment of its potential future cash flows. In Charlton's case, this might be seen as the combination of a series of negative cash flows plus the option value of the (possible) positive cash flows which might arise in the (highly uncertain) event that the Club were promoted to the Premier League. On that basis, realistically, the Club probably isn't worth very much at all.
Damn, just checked my coat pockets, back of the sofa, pot in the car and the copper jar, and it only come to £37m.
Oh well, this time next year Rodders....
Crazy price, but no doubt it covers all liabilities, including those contingent on promotion.
…but in the light of your post I thought I’d attempt to rationalise, not justify, the Owner’s (apparent) valuation.
The Owners clearly have a real problem. Nobody in their right mind is going to pay them anything like £40m for the Club whilst it's playing in the Championship. Or, indeed, anything like circa £30m (the current level of debt). It follows that they're stuck and bound to lose money, unless, perhaps, their loans (i.e. those from CAFCH) are senior to those from Richard Murray and the former Directors - possible, but probably unlikely in the event of a change of control.
It may be that the only option they have is to try to get something for their equity now and leave the rest (the repayment of their loans) to chance, i.e. contingent on promotion. That might just work for TJ and pals and a potential buyer whilst not facing a challenge from other creditors.
This strategy might then explain the apparently ludicrous asking price, the key to which is that a buyer is only liable for most of the asking price on promotion. Whilst this is being pitched, TJ no doubt says "....and once you're in the Premier League £24m (or more) is peanuts. Fulham has just sold for £200m ... and we're a bigger Club....".
All speculation which, perhaps, I should never have started!!
Enterprise Value as a way of valuing a takeover only makes sense if the debt has been incurred in capital investment. Racking up debt as a result of covering recurring deficits for a business that is and will continue (in all liklihood given that promotion is unlikely) to be loss-making does not contribute to the value of a takeover proposition.......IMHO.
Don't really disagree with this. A business is worth what somebody is prepared to pay for it and this, in turn, really ought to be based on a realistic assessment of its potential future cash flows. In Charlton's case, this might be seen as the combination of a series of negative cash flows plus the option value of the (possible) positive cash flows which might arise in the (highly uncertain) event that the Club were promoted to the Premier League. On that basis, realistically, the Club probably isn't worth very much at all.
Damn, just checked my coat pockets, back of the sofa, pot in the car and the copper jar, and it only come to £37m.
Oh well, this time next year Rodders....
Crazy price, but no doubt it covers all liabilities, including those contingent on promotion.
…but in the light of your post I thought I’d attempt to rationalise, not justify, the Owner’s (apparent) valuation.
The Owners clearly have a real problem. Nobody in their right mind is going to pay them anything like £40m for the Club whilst it's playing in the Championship. Or, indeed, anything like circa £30m (the current level of debt). It follows that they're stuck and bound to lose money, unless, perhaps, their loans (i.e. those from CAFCH) are senior to those from Richard Murray and the former Directors - possible, but probably unlikely in the event of a change of control.
It may be that the only option they have is to try to get something for their equity now and leave the rest (the repayment of their loans) to chance, i.e. contingent on promotion. That might just work for TJ and pals and a potential buyer whilst not facing a challenge from other creditors.
This strategy might then explain the apparently ludicrous asking price, the key to which is that a buyer is only liable for most of the asking price on promotion. Whilst this is being pitched, TJ no doubt says "....and once you're in the Premier League £24m (or more) is peanuts. Fulham has just sold for £200m ... and we're a bigger Club....".
All speculation which, perhaps, I should never have started!!
Hmm. That might suit TJ, I wonder if it would suit MS's financier, who might just be the major creditor and seems to want his money out now...
Enterprise Value as a way of valuing a takeover only makes sense if the debt has been incurred in capital investment. Racking up debt as a result of covering recurring deficits for a business that is and will continue (in all liklihood given that promotion is unlikely) to be loss-making does not contribute to the value of a takeover proposition.......IMHO.
Don't really disagree with this. A business is worth what somebody is prepared to pay for it and this, in turn, really ought to be based on a realistic assessment of its potential future cash flows. In Charlton's case, this might be seen as the combination of a series of negative cash flows plus the option value of the (possible) positive cash flows which might arise in the (highly uncertain) event that the Club were promoted to the Premier League. On that basis, realistically, the Club probably isn't worth very much at all.
Damn, just checked my coat pockets, back of the sofa, pot in the car and the copper jar, and it only come to £37m.
Oh well, this time next year Rodders....
Crazy price, but no doubt it covers all liabilities, including those contingent on promotion.
…but in the light of your post I thought I’d attempt to rationalise, not justify, the Owner’s (apparent) valuation.
The Owners clearly have a real problem. Nobody in their right mind is going to pay them anything like £40m for the Club whilst it's playing in the Championship. Or, indeed, anything like circa £30m (the current level of debt). It follows that they're stuck and bound to lose money, unless, perhaps, their loans (i.e. those from CAFCH) are senior to those from Richard Murray and the former Directors - possible, but probably unlikely in the event of a change of control.
It may be that the only option they have is to try to get something for their equity now and leave the rest (the repayment of their loans) to chance, i.e. contingent on promotion. That might just work for TJ and pals and a potential buyer whilst not facing a challenge from other creditors.
This strategy might then explain the apparently ludicrous asking price, the key to which is that a buyer is only liable for most of the asking price on promotion. Whilst this is being pitched, TJ no doubt says "....and once you're in the Premier League £24m (or more) is peanuts. Fulham has just sold for £200m ... and we're a bigger Club....".
All speculation which, perhaps, I should never have started!!
Hmm. That might suit TJ, I wonder if it would suit MS's financier, who might just be the major creditor and seems to want his money out now...
Yes. I think that's probably the main stumbling block and TJ's main problem at the moment - MS is still on board, and probably party to any sale negotiations, to (try to) ensure that his boss gets his money back...
I think the problem with the proposed deferring of the loans until Premier League status is reached is that TJ, it would appear, thinks he is smarter than the average football club owner. Thus he is likely to be reluctant to trust someone else to ensure the promotion that would return all of his money.
I also think that there is a massive risk of administration (or the threat of it) meaning that if they don't get their money out now they never will.
It may well be that they have already lost their money they just don't know it yet. Even if someone would be willing to pay £40m they would, no doubt, hold out for less if they know that TJ and MS are at the end of their various lines of credit. As has already been mentioned, in the end they (and the previous directors) will have to write off all their loans if there is no funding available when HMRC come knocking with a winding up order for failure to pay taxes.
I'm not suggesting that I have any knowledge of this being imminent, but if the only way to raise money is to sell players then in the end relegation will happen and the likelihood of any loans being repaid reduces and reduces.
On reflection RM and the old board did exceptionally well to get someone to buy the club (all be it for £1), bankroll it and agree to repay their loans (even in the event of promotion to the Premier League). If we fell into League One again and had serious funding issues I can't see anyone else taking on massive debts, especially if the club is close to administration and could be bought for a fraction of the value of the debts.
If FFP reduces the losses enough and the current debts can be structured so as to make less demand on the income the club could be worth 'taking over' but I can't see how anyone can hope to get back £30m+ even if we had a sustained period in the Premier League - after all the players would want the increase and then some!
All good points. However, beggars can't be choosers. If the Owners (whoever is pulling the strings) are rational they'll find a way of getting a deal across the line because the alternatives, barring a "shock" promotion, are all almost certainly worse. If, God forbid, we were to end up back in Division One, the wheels really would come off, as KHA says.
As I've said before, let's just hope that ego or sheer bloody mindedness don't get in the way of common sense. Oh...., and that the buyer, whoever that may be, has enough brain cells to know what they are doing and deep enough pockets to do it.
Enterprise Value as a way of valuing a takeover only makes sense if the debt has been incurred in capital investment. Racking up debt as a result of covering recurring deficits for a business that is and will continue (in all liklihood given that promotion is unlikely) to be loss-making does not contribute to the value of a takeover proposition.....IMHO.
When it's all going well and the club is climbing the leagues then these operating losses are almost equivalent to Work in Progress or goodwill because the potential value is increasing... When you arrive at The finish line you sell up or re-finance.
When I did a loft conversion in Blackheath once two sets of estate agents gave me completely different valuations once the shell work was done - one could see the value and one couldn't - I was simply trying to evaluate the budget for a final fit out to get the place ready to rent - once the work was done I lifted £30k off the mortgage and it now achieves 50% more than pre conversion.
My point is that you need the design, architecture, cashflow and escape plans ready or you need a wedge of cash to buy your way through the rocky bits.
The numbers look very big but I am certain matters will get resolved one way or another.
Interesting analogy SR. I think the issue with the finish line is that it is always moving, and there is never a predetermined end. We may yet make the Premier League, yet we may fall into League One again. Thus it is difficult to know exactly when to sell up or refinance. Thus I don't think you can value goodwill in terms of potential. The only real asset is the players (assuming we are not including asset stripping) and their value is so fragile, especially when they have short term contracts or high wages that might make 'giving them away' impossible.
The loft conversion has the benefit of knowing the outcome. Even if the Agents were not all as good at valuing it, it was, never the less, going to add sq ft to the property. There is no guarantee than investing in a football club will improve it's fortunes. Equally there is no guarantee that short term removal of capital will worsen the club's fortunes. The board could sell Wiggins, Solly, Morrison and Jackson to make a trading profit this season and still finish 6th and win the playoffs. Equally they could spend £20m on players and still finish third from bottom.
Thus there is no way to estimate the return on the investment. Only someone arrogant and/or stupid would think that they could make money owning a football club without a massive stroke of luck. Clearly MS and TJ thought they would be able to do just this. I'll leave you to decide what that says about them.
The two most likely scenarios, in my view, are that we are bought by someone that cares about the club and is willing to give up their own money to bankroll it for a while (like the previous board) or someone with a lot of money that considers our football club to be a hobby or past time. These people might have so much money that they can afford to 'spend' £20m (or more) a season on their hobby like we choose to spend a few hundred on ours.
Without significant increase in income (unlikely) or significant reduction in running costs, basically players wages, I can't see how our club can be owned or run by any other entity, including a Supporters' Trust, than the two I mentioned above - unless it is for a very short period of time. If FFP does manage to bring the accounts of football clubs into the real world then there is a possibility that the club could be owned by shareholders that would not be expected to invest capital on a regular basis. That would, however, still be reliant on the club avoiding relegation because that could well reduce the income to the point that investment would, again, be required.
I don't know much about Swansea's setup, but I am confident that Portsmouth will be unable to climb back up the divisions without major investment that the fans will just not be able to raise.
It is not realistic to compare a football club to a commercial business. To many people its what you buy for fun when you have more money than you can spend in a lifetime. Also fans in a business would be customers, if they got a bad product they would switch to another provider. From a fan's perspective following a football club is more like being in a religious cult than being a customer
Interesting analogy SR. I think the issue with the finish line is that it is always moving, and there is never a predetermined end. We may yet make the Premier League, yet we may fall into League One again. Thus it is difficult to know exactly when to sell up or refinance. Thus I don't think you can value goodwill in terms of potential. The only real asset is the players (assuming we are not including asset stripping) and their value is so fragile, especially when they have short term contracts or high wages that might make 'giving them away' impossible.
The loft conversion has the benefit of knowing the outcome. Even if the Agents were not all as good at valuing it, it was, never the less, going to add sq ft to the property. There is no guarantee than investing in a football club will improve it's fortunes. Equally there is no guarantee that short term removal of capital will worsen the club's fortunes. The board could sell Wiggins, Solly, Morrison and Jackson to make a trading profit this season and still finish 6th and win the playoffs. Equally they could spend £20m on players and still finish third from bottom.
Thus there is no way to estimate the return on the investment. Only someone arrogant and/or stupid would think that they could make money owning a football club without a massive stroke of luck. Clearly MS and TJ thought they would be able to do just this. I'll leave you to decide what that says about them.
The two most likely scenarios, in my view, are that we are bought by someone that cares about the club and is willing to give up their own money to bankroll it for a while (like the previous board) or someone with a lot of money that considers our football club to be a hobby or past time. These people might have so much money that they can afford to 'spend' £20m (or more) a season on their hobby like we choose to spend a few hundred on ours.
Without significant increase in income (unlikely) or significant reduction in running costs, basically players wages, I can't see how our club can be owned or run by any other entity, including a Supporters' Trust, than the two I mentioned above - unless it is for a very short period of time. If FFP does manage to bring the accounts of football clubs into the real world then there is a possibility that the club could be owned by shareholders that would not be expected to invest capital on a regular basis. That would, however, still be reliant on the club avoiding relegation because that could well reduce the income to the point that investment would, again, be required.
I don't know much about Swansea's setup, but I am confident that Portsmouth will be unable to climb back up the divisions without major investment that the fans will just not be able to raise.
So I managed the shell work myself with the assistance of a structural engineer and a couple of builders and a plumber... and a bottle of win every day after 10 hours labour... then got some other friends to deliver final fit out because local building crowds were unable to deliver a quote on "plaster, laminate floor, magnolia"
The job over ran and took my time/focus from the day job and family but the job was eventually completed for less than £30k.
There was a finish line and it was the day that the apartment (not flat!) became inhabitable / rentable... trying to sell or refinance a month before was never going to realise the value.
We know what the desired outcome is for CAFC* for the players, fans, creditors and shareholders and we also know that anything else is failure. The question is whether the project can be re-engineered to deliver success or whether someone picks it up on the cheap to execute final fit out, delivery and sale or perhaps rental.
There is a lot of luck involved - I was fortunate to fall in with a bunch of ethical builders and plumbers - but...
*sorry there are two outcomes - Peterborough break even or CAFC/Reading/Palace yo-yo - which will the stakeholders choose?!
All good points. However, beggars can't be choosers. If the Owners (whoever is pulling the strings) are rational they'll find a way of getting a deal across the line because the alternatives, barring a "shock" promotion, are all almost certainly worse. If, God forbid, we were to end up back in Division One, the wheels really would come off, as KHA says.
As I've said before, let's just hope that ego or sheer bloody mindedness don't get in the way of common sense. Oh...., and that the buyer, whoever that may be, has enough brain cells to know what they are doing and deep enough pockets to do it.
If my auntie, etc.
Mundell, just want to say that if there's any value to be talked about, your posts should be right up there. Thanks, they're very insightful and constructive.
every book/toy/car/house/business seller knows .. always ask for a lot more than you really expect to get
I've about as much chance of selling my 18 year old Peugeot 205 diesel for £1000, as Charlton have selling for £40m If i use your logic Lincs, the Addicks should be actually worth about £20m??
It is not realistic to compare a football club to a commercial business. To many people its what you buy for fun when you have more money than you can spend in a lifetime. Also fans in a business would be customers, if they got a bad product they would switch to another provider. From a fan's perspective following a football club is more like being in a religious cult than being a customer
This is always a tricky issue to agree on. It's a business in the sense that it has revenues and costs, and if the costs outweigh the revenue, someone has to make up the difference. But tehre'sa strong argument that football would be healthier if there were less of that, and clubs were made to operate within their P&L. Or at least, less dependent on one person, the burden of finance spread across many people, mainly supporters.
Are supporters customers? Yes in the sense that they pay good money. They deserve the respect and careful treatment that goes with that. Clubs should find out what they would prefer to eat and drink for example at the game, and whether some of them would pay to stand. They don't generally switch clubs, but they do stop going, or start going again. As Seriously Red has pointed out, attendances in 92-97 grew partly through careful attention to what would make all those past Charlton fans become active again.
It's wise to think of fans as customers in the best sense. Be nice to them, find out what they want, give it to them if it doesnt result in losses. But the difference is a lot of them can become stakeholders, potentially helping or even investing in the business in which they are customers. And of course they are part of the product itself.
Comments
We're hardly an attractive proposition, we're in net debt and racking up operating losses annually which are significant percentage of turnover. I'm far from an expert on football finance but I can't for the life of me see how the current owners are in anything but a really weak bargaining position and going to have to write off some losses to offload the club.
I'm praying for a very rich Charlton fan or genuine football lover looking for a hobby because from an investment point of view we're a big gamble at best.
I watched the documentary on Swansea last night. It didnt get much comment on here because it mainly concentrated on the football side - makes better TV. However it was the passion of the fans which attracted a consortium of local businessmen. Together they raised the money. Most of the money came from the local businessmen but the fans continued to drive the club forward. Interesting that the businessmen didnt do it as an ego purchase. They allowed the fans to run the club. Shades of Charlton in the 90s This fits my dream of the Trust. Build a vibrant Trust, with a smart and realistic understanding of the finances, and maybe within the West Stand lounges there are a group of businessmen fans with enough wedge, (not 40m, see above), who are persuaded because of the quality of the Trust people and their plans. The interesting thing is that one person who knows all such Lounge Lizards is Peter Varney. But right now I honestly don't know whether he is prepared in any way to get involved again with CAFC. But I ended up thinking that we might be able to follow the Swansea template. We have to show a different kind of passion - the Swansea fans were bloody angry, and mobilised the entire community. Hopefully we won't need to get that angry, our passion will be for not just turning up on Saturdays but doing everything we can to help make CAFC financially healthy.
By the way sent his regards.
I am sure you are well up on the financial aspects of the club , but Martin was the chairman of the football club, so should be in a position to clarify what money he is owed/lent/given.
I am just reporting what told me?.
Too say that he had been generous with his time and money was an understatement, clearly loved the club, and has always been supportive of fan involvement.
http://www.charltonlife.com/discussion/comment/1478366#Comment_1478366
I guess the question now is whether or not they were "resurrected" as part of the Slater Jiminez takeover.
Hence, I said;
The Owners clearly have a real problem. Nobody in their right mind is going to pay them anything like £40m for the Club whilst it's playing in the Championship. Or, indeed, anything like circa £30m (the current level of debt). It follows that they're stuck and bound to lose money, unless, perhaps, their loans (i.e. those from CAFCH) are senior to those from Richard Murray and the former Directors - possible, but probably unlikely in the event of a change of control.
It may be that the only option they have is to try to get something for their equity now and leave the rest (the repayment of their loans) to chance, i.e. contingent on promotion. That might just work for TJ and pals and a potential buyer whilst not facing a challenge from other creditors.
This strategy might then explain the apparently ludicrous asking price, the key to which is that a buyer is only liable for most of the asking price on promotion. Whilst this is being pitched, TJ no doubt says "....and once you're in the Premier League £24m (or more) is peanuts. Fulham has just sold for £200m ... and we're a bigger Club....".
All speculation which, perhaps, I should never have started!!
I also think that there is a massive risk of administration (or the threat of it) meaning that if they don't get their money out now they never will.
It may well be that they have already lost their money they just don't know it yet. Even if someone would be willing to pay £40m they would, no doubt, hold out for less if they know that TJ and MS are at the end of their various lines of credit. As has already been mentioned, in the end they (and the previous directors) will have to write off all their loans if there is no funding available when HMRC come knocking with a winding up order for failure to pay taxes.
I'm not suggesting that I have any knowledge of this being imminent, but if the only way to raise money is to sell players then in the end relegation will happen and the likelihood of any loans being repaid reduces and reduces.
On reflection RM and the old board did exceptionally well to get someone to buy the club (all be it for £1), bankroll it and agree to repay their loans (even in the event of promotion to the Premier League). If we fell into League One again and had serious funding issues I can't see anyone else taking on massive debts, especially if the club is close to administration and could be bought for a fraction of the value of the debts.
If FFP reduces the losses enough and the current debts can be structured so as to make less demand on the income the club could be worth 'taking over' but I can't see how anyone can hope to get back £30m+ even if we had a sustained period in the Premier League - after all the players would want the increase and then some!
All good points. However, beggars can't be choosers. If the Owners (whoever is pulling the strings) are rational they'll find a way of getting a deal across the line because the alternatives, barring a "shock" promotion, are all almost certainly worse. If, God forbid, we were to end up back in Division One, the wheels really would come off, as KHA says.
As I've said before, let's just hope that ego or sheer bloody mindedness don't get in the way of common sense. Oh...., and that the buyer, whoever that may be, has enough brain cells to know what they are doing and deep enough pockets to do it.
When I did a loft conversion in Blackheath once two sets of estate agents gave me completely different valuations once the shell work was done - one could see the value and one couldn't - I was simply trying to evaluate the budget for a final fit out to get the place ready to rent - once the work was done I lifted £30k off the mortgage and it now achieves 50% more than pre conversion.
My point is that you need the design, architecture, cashflow and escape plans ready or you need a wedge of cash to buy your way through the rocky bits.
The numbers look very big but I am certain matters will get resolved one way or another.
The loft conversion has the benefit of knowing the outcome. Even if the Agents were not all as good at valuing it, it was, never the less, going to add sq ft to the property. There is no guarantee than investing in a football club will improve it's fortunes. Equally there is no guarantee that short term removal of capital will worsen the club's fortunes. The board could sell Wiggins, Solly, Morrison and Jackson to make a trading profit this season and still finish 6th and win the playoffs. Equally they could spend £20m on players and still finish third from bottom.
Thus there is no way to estimate the return on the investment. Only someone arrogant and/or stupid would think that they could make money owning a football club without a massive stroke of luck. Clearly MS and TJ thought they would be able to do just this. I'll leave you to decide what that says about them.
The two most likely scenarios, in my view, are that we are bought by someone that cares about the club and is willing to give up their own money to bankroll it for a while (like the previous board) or someone with a lot of money that considers our football club to be a hobby or past time. These people might have so much money that they can afford to 'spend' £20m (or more) a season on their hobby like we choose to spend a few hundred on ours.
Without significant increase in income (unlikely) or significant reduction in running costs, basically players wages, I can't see how our club can be owned or run by any other entity, including a Supporters' Trust, than the two I mentioned above - unless it is for a very short period of time. If FFP does manage to bring the accounts of football clubs into the real world then there is a possibility that the club could be owned by shareholders that would not be expected to invest capital on a regular basis. That would, however, still be reliant on the club avoiding relegation because that could well reduce the income to the point that investment would, again, be required.
I don't know much about Swansea's setup, but I am confident that Portsmouth will be unable to climb back up the divisions without major investment that the fans will just not be able to raise.
Also fans in a business would be customers, if they got a bad product they would switch to another provider. From a fan's perspective following a football club is more like being in a religious cult than being a customer
The job over ran and took my time/focus from the day job and family but the job was eventually completed for less than £30k.
There was a finish line and it was the day that the apartment (not flat!) became inhabitable / rentable... trying to sell or refinance a month before was never going to realise the value.
We know what the desired outcome is for CAFC* for the players, fans, creditors and shareholders and we also know that anything else is failure. The question is whether the project can be re-engineered to deliver success or whether someone picks it up on the cheap to execute final fit out, delivery and sale or perhaps rental.
There is a lot of luck involved - I was fortunate to fall in with a bunch of ethical builders and plumbers - but...
*sorry there are two outcomes - Peterborough break even or CAFC/Reading/Palace yo-yo - which will the stakeholders choose?!
Mundell, just want to say that if there's any value to be talked about, your posts should be right up there. Thanks, they're very insightful and constructive.
Are supporters customers? Yes in the sense that they pay good money. They deserve the respect and careful treatment that goes with that. Clubs should find out what they would prefer to eat and drink for example at the game, and whether some of them would pay to stand. They don't generally switch clubs, but they do stop going, or start going again. As Seriously Red has pointed out, attendances in 92-97 grew partly through careful attention to what would make all those past Charlton fans become active again.
It's wise to think of fans as customers in the best sense. Be nice to them, find out what they want, give it to them if it doesnt result in losses. But the difference is a lot of them can become stakeholders, potentially helping or even investing in the business in which they are customers. And of course they are part of the product itself.