The Championship FFP Thread (Merged)

[downendcity]

3 minutes ago, Mr Popodopolous said:

You see, I wondered that- and it is the most sensible view by far.

My take on Derby's ground sale is that £50-55m, maybe £56m "feels" about right. Rumours were that Sheffield Wednesday sold for £30m, ground value around £22-22.25m. No idea on Birmingham, whether they've got their act together on it is debatable.

The recurring theme though, certainly with Reading and if the rumours were true, Sheff Wed is that the profit is somewhere between 25%-35%- that somehow feels right what with additions to tangible fixed assets, land value rises minus depreciation- oh and in 2007 Pride Park was valued at £55m as per their own accounts- my method with it admittedly loose method was take that valuation, take additions and subtract depreciation- not yet got into looking at land prices in that area of Derby etc since 2007.

It's benchmarking after all- something the EFL need to look into as a matter of urgency, well they should have as soon as Derby approached with the proposal tbh.

Ive said previously that with Derby and Villa it seems to me that the valuation figures were just what the club wanted ( and needed) them to be.

Football stadia are not like residential properties, in that there is no established and active market in sales of stadia so no market comparable exist. This being the case it would be tricky for a valuer to be challenged about the accuracy of his/her valuation, which is why I suspect Villa and Derby have been so financially "successful" with the sale of their grounds. 

I studied professional valuation in my younger days, but never got into practice. There are a few valuation principles I can recall but don't want to quote them on here in case my memory is a bit hazy or if valuation practices are different these days. 

 

 

[chinapig]

10 minutes ago, downendcity said:

Ive said previously that with Derby and Villa it seems to me that the valuation figures were just what the club wanted ( and needed) them to be.

Football stadia are not like residential properties, in that there is no established and active market in sales of stadia so no market comparable exist. This being the case it would be tricky for a valuer to be challenged about the accuracy of his/her valuation, which is why I suspect Villa and Derby have been so financially "successful" with the sale of their grounds. 

I studied professional valuation in my younger days, but never got into practice. There are a few valuation principles I can recall but don't want to quote them on here in case my memory is a bit hazy or if valuation practices are different these days. 

 

 

Would the market value of the land be a proxy for the value of the stadium?

[Bristol Rob]

19 minutes ago, Davefevs said:

My thoughts for a long time.  One big club to go to the wall, or Sky / BT to start paying less.

We are positioning ourselves sensibly.

@Mr Popodopolous pretty sure Kelly will be in 18/19s accounts....and that’s not just because it happened on 18th May.  Think the England u21 tournament was a reason for getting it done and dusted (not pending).

Agree with a lot of that, but then you look at Arsenal...

For years it looked like they were going to be the benchmark for sustainable football, frugal in the transfer market, looking to pay off the stadium ahead of schedule and then a new Sky Deal comes along and re-levels the playing field.

A salary cap might be interesting, either in terms of percentage of turnover or a divisional total (divided by club), if you want to bring in another superstar, you might have to let someone else go. Would help with the stockpiling of players at some clubs.

Seems there is no clear answer to this.

[Mr Popodopolous]

5 minutes ago, Bristol Rob said:

Agree with a lot of that, but then you look at Arsenal...

For years it looked like they were going to be the benchmark for sustainable football, frugal in the transfer market, looking to pay off the stadium ahead of schedule and then a new Sky Deal comes along and re-levels the playing field.

A salary cap might be interesting, either in terms of percentage of turnover or a divisional total (divided by club), if you want to bring in another superstar, you might have to let someone else go. Would help with the stockpiling of players at some clubs.

Seems there is no clear answer to this.

Arsenal actually madly could be in some sort of FFP waters- different calculations online but that poster boy of FFP seemed to depend a decent amount on regular CL revenue.

Throw in caution being lifted on fees, wages, general inflation elsewhere playing its part, as you say the Sky deal- Arsenal drop out top 4? One year is okay, 2 years is alright but now they are unbelievably a bit restricted, with a mix of STCC and FFP.

One of the last clubs I thought would be anywhere near this. Because when you subtract profit on player transactions from actual profit, and then the net difference between Europa League revenue and CL revenue, things look different. Hamstrung? Like I say never thought Arsenal might be near or at least in the same ballpark as FFP. Think property revenues don't count towards FFP either- if not that's another that needs to be crossed off the profit.

Edited July 1, 2019 by Mr Popodopolous

[downendcity]

 

10 minutes ago, chinapig said:

Would the market value of the land be a proxy for the value of the stadium?

It's possible but as Im reading it the purchasers have purchased the stadia and it is the stadia that have been valued.

Happy to be corrected by those with current valuation knowledge.

 

[Mr Popodopolous]

If anyone has a proper subscription to RICS guide for valuation and especially football stadia, that could be very interesting.

A friend tried to get a free trial a while ago but wasn't navigating it so well.

Isurv. Valuation calculations- something like this.

Edited July 1, 2019 by Mr Popodopolous

[downendcity]

4 minutes ago, Mr Popodopolous said:

If anyone has a proper subscription to RICS guide for valuation and especially football stadia, that could be very interesting.

A friend tried to get a free trial a while ago but wasn't navigating it so well.

Isurv. Valuation calculations- something like this.

A friend of mine is an RICS  qualified Commercial Valuer. His company manages substantial commercial property assets in and around London.

Im hoping to have a chat with him to find out how a stadium would be valued and will post on here when I have.

[Mr Popodopolous]

11 minutes ago, downendcity said:

A friend of mine is an RICS  qualified Commercial Valuer. His company manages substantial commercial property assets in and around London.

Im hoping to have a chat with him to find out how a stadium would be valued and will post on here when I have.

Thanks- that'll be very interesting to see, to hear.

If my friend can ever properly navigate the free trial for it- or better yet knows someone who is a valuer, using isurv etc I'll post that too.

As a layman, still thinking in the £50-55m bracket but we'll see I guess...

Edited July 1, 2019 by Mr Popodopolous

[Mr Popodopolous]

Took a bit of a look at those Derby accounts in full for 2015-16 to 2017/18- not really looked at Sevco 5112 Limited much yet but for the sake of argument let's assume the reason Derby did the Sevco 5112 Limited thing and all the associated companies was because of massaging FFP/accounting figures? Tax efficiency too? This is before/without stadium shenanigans etc obviously!

Derby County 2015/16

Loss- £14,725,353- However included within is exceptional operating income of some £12,433,568. Don't think that should be included for FFP so let's adjust that to £27,589,921? This is headline loss/adjusted loss after player sales, interest reserve etc but before adjustments for FFP e.g. infrastructure, depreciation youth etc. 

Derby County 2016/17

Loss- £7,872,715

Derby County 2017/18

Loss £25,368,759

Total losses- before the allowables of course- of £60,400,395.

However allowables now kick in:

2015/16

• £5.815,221 on Infrastructure Expenditure- under Purchase of Tangible Fixed Assets
• £2,445,890 in terms of Depreciation of Tangible Fixed Assets
• No figure for Youth Expenditure- that's as distinct from improvements to ground, academy etc. The average figure for the 2 subsequent years added then divided seemed to be £4.29m per year so let's go with that?
• Let's assume £500,000 in total for Women's and Community?

2016/17

• £4,160,399 in Infrastructure Expenditure- under Purchase of Tangible Fixed Assets.
• £3,176,360 in terms of Depreciation of Tangible Fixed  Assets
• £3,961,509 in Youth Expenditure
• Let's assume the £500k still holds.

2017/18

• £1,469,814 in Infrastructure Expenditure- under Purchase of Tangible Fixed Assets.
• £3,451,513 in terms of Depreciation of Tangible Fixed Assets.
• £4,624,162 in Youth Expenditure.
• Let's assume the £500k still holds.

Not done the calcs yet but I think they pass to June 2018 even without ground transaction, albeit not by a huge amount- even if Youth Expenditure in 2015/16, plus Women's and Community expenditure in those three seasons is zero- which I doubt of course.

Edited July 4, 2019 by Mr Popodopolous

[DerbyFan]

10 minutes ago, Mr Popodopolous said:

Took a bit of a look at those Derby accounts in full for 2015-16 to 2017/18- not really looked at Sevco 5112 Limited much yet but for the sake of argument let's assume the reason Derby did the Sevco 5112 Limited thing and all the associated companies was because of massaging FFP/accounting figures? Tax efficiency too? This is before/without stadium shenanigans etc obviously!

Derby County 2015/16

Loss- £14,725,353- However included within is exceptional operating income of some £12,433,568. Don't think that should be included for FFP so let's adjust that to £27,589,921? This is headline loss/adjusted loss after player sales, interest reserve etc but before adjustments for FFP e.g. infrastructure, depreciation youth etc. 

Derby County 2016/17

Loss- £7,872,715

Derby County 2017/18

Loss £25,368,759

Total losses- before the allowables of course- of £60,831,359.

However allowables now kick in:

2015/16

• £5.815,221 on Infrastructure Expenditure- under Purchase of Tangible Fixed Assets
• £2,445,890 in terms of Depreciation of Tangible Fixed Assets
• No figure for Youth Expenditure- that's as distinct from improvements to ground, academy etc. The average figure for the 2 subsequent years added then divided seemed to be £4.29m per year so let's go with that?
• Let's assume £500,000 in total for Women's and Community?

2016/17

• £4,160,399 in Infrastructure Expenditure- under Purchase of Tangible Fixed Assets.
• £3,176,360 in terms of Depreciation of Tangible Fixed  Assets
• £3,961,509 in Youth Expenditure
• Let's assume the £500k still holds.

2017/18

• £1,469,814 in Infrastructure Expenditure- under Purchase of Tangible Fixed Assets.
• £3,451,513 in terms of Depreciation of Tangible Fixed Assets.
• £4,624,162 in Youth Expenditure.
• Let's assume the £500k still holds.

Not done the calcs yet but I think they pass to June 2018 even without ground transaction, albeit not by a huge amount- even if Youth Expenditure in 2015/16, plus Women's and Community expenditure in those three seasons is zero- which I doubt of course.

We announced the FFP loss in 2015/16 as £9m here

[Mr Popodopolous]

53 minutes ago, DerbyFan said:

We announced the FFP loss in 2015/16 as £9m here

EFL permitted the loan settlement then or? Exceptional items like that don't usually count towards FFP. Still you have said before your youth/academy expenditure quite high, it is a Category One Academy and the figures do bear this out. £9m feels in the right ballpark though if loan settlement excluded it is a bit- based on my calcs and what the accounts show, for £9m assuming loan settlement excluded, then £9,828,810 on Youth Expenditure that year- was there a lot of work done on it 2015/16, the academy? Unless the £9m refers to the Sevco 5112 figures, which I haven't really looked at much yet.

Anyway my calculations- done quickly and will probably require revision:

Total loss on accounts for Derby £47,966,827.

Subtract:

1. Infrastructure Expenditure to June 2018- £11,445,434
2. Depreciation on Fixed Assets- £9,073,763
3. KNOWN Youth Expenditure- we can only guess for 2015/16, something between £4-4.5m? Anyway known youth expenditure would be £8,585,671.
4. ASSUMED Womens and Community Expenditure- £1.5m over 3 years seems a reasonable guess? If you have any more info that'd be interesting.

Add back for FFP purposes the loan cancellation/settlement whatever it was £12,433,568.

You definitely pass without Stadium transaction, for Derby County that is. Sevco 5112 if that's used for your 3 year submissions/rolling figure, then it'd be more than likely a different matter without the sale and leaseback.

Edited July 4, 2019 by Mr Popodopolous

[downendcity]

9 minutes ago, Mr Popodopolous said:

EFL permitted the loan settlement then or? Exceptional items like that don't usually count towards FFP. Still you have said before your youth/academy expenditure quite high, it is a Category A Academy and the figures do bear this out. £9m feels in the right ballpark though if loan settlement excluded it is a bit- based on my calcs and what the accounts show, for £9m assuming loan settlement excluded, then £9,828,810 on Youth Expenditure that year- was there a lot of work done on it 2015/16, the academy? Unless the £9m refers to the Sevco 5112 figures, which I haven't really looked at much yet.

Anyway my calculations- done quickly and will probably require revision:

Total loss on accounts for Derby £47,966,827.

Subtract:

1. Infrastructure Expenditure to June 2018- £11,445,434
2. Depreciation on Fixed Assets- £9,073,763
3. KNOWN Youth Expenditure- we can only guess for 2015/16, something between £4-4.5m? Anyway known youth expenditure would be £8,585,671.
4. ASSUMED Womens and Community Expenditure- £1.5m over 3 years seems a reasonable guess? If you have any more info that'd be interesting.

Add back for FFP purposes the loan cancellation/settlement whatever it was £12,433,568.

You definitely pass without Stadium transaction, for Derby County that is. Sevco 5112 if that's used for your 3 year submissions/rolling figure, then it'd be more than likely a different matter without the sale and leaseback.

Fair play Mr P for the in depth analysis of clubs accounts that you have done over recent months and for documenting it in an easily understood ( well relatively so!) format.

Something that has just crossed my mind. For Villa and Derby, now they no longer own their own ground, how do they stand in terms of spending on infrastructure i.e. the stadium, that would normally be allowable expenditure under ffp? My guess is that the tenancy agreements both clubs have make provision for this but it is an interesting point if ffp allows spending on fixed assets owned by the football club.

[DerbyFan]

13 minutes ago, Mr Popodopolous said:

EFL permitted the loan settlement then or? Exceptional items like that don't usually count towards FFP. Still you have said before your youth/academy expenditure quite high, it is a Category A Academy and the figures do bear this out. £9m feels in the right ballpark though if loan settlement excluded it is a bit- based on my calcs and what the accounts show, for £9m assuming loan settlement excluded, then £9,828,810 on Youth Expenditure that year- was there a lot of work done on it 2015/16, the academy? Unless the £9m refers to the Sevco 5112 figures, which I haven't really looked at much yet.

Anyway my calculations- done quickly and will probably require revision:

Total loss on accounts for Derby £47,966,827.

Subtract:

1. Infrastructure Expenditure to June 2018- £11,445,434
2. Depreciation on Fixed Assets- £9,073,763
3. KNOWN Youth Expenditure- we can only guess for 2015/16, something between £4-4.5m? Anyway known youth expenditure would be £8,585,671.
4. ASSUMED Womens and Community Expenditure- £1.5m over 3 years seems a reasonable guess? If you have any more info that'd be interesting.

Add back for FFP purposes the loan cancellation/settlement whatever it was £12,433,568.

You definitely pass without Stadium transaction, for Derby County that is. Sevco 5112 if that's used for your 3 year submissions/rolling figure, then it'd be more than likely a different matter without the sale and leaseback.

I don't know re. the loan settlement.

There was a lot of work done on the academy, but I'm not sure on the timings of it, some may have been later, I'm also not sure if it would come under the Infrastructure Expenditure or the Youth Expenditure, it almost doubled in size area wise (I don't think the first team use the pitches in the new area, so that may come under the Youth?) and there were buildings added inside the main u-shaped one (which I assume everyone will use, so probably the Infrastructure?).

That article does say:

Quote

Almost £6m was invested on operational functions across both Pride Park Stadium and the Training Centre in partnership with the University of Derby. Developments included; new undersoil heating, a top class pitch and LED floodlights at the stadium and the completion of further significant pitch and infrastructure improvements at the Training Centre. 

That could mean the replacement pitches (changed to hybrid), as I think they were installed at the same time as the stadiums, and not the brand new ones in the newly acquired area, which is the bit I think could have been later.

Re. 4, I know we do a lot of Community work, but I've no idea of the costs involved.

[Mr Popodopolous]

2 hours ago, DerbyFan said:

I don't know re. the loan settlement.

There was a lot of work done on the academy, but I'm not sure on the timings of it, some may have been later, I'm also not sure if it would come under the Infrastructure Expenditure or the Youth Expenditure, it almost doubled in size area wise (I don't think the first team use the pitches in the new area, so that may come under the Youth?) and there were buildings added inside the main u-shaped one (which I assume everyone will use, so probably the Infrastructure?).

That article does say:

That could mean the replacement pitches (changed to hybrid), as I think they were installed at the same time as the stadiums, and not the brand new ones in the newly acquired area, which is the bit I think could have been later.

Re. 4, I know we do a lot of Community work, but I've no idea of the costs involved.

It's hard to say IMO. I have had, though I might be wrong the Academy Expenditure down as operational spending- i.e. cost of running it to that category, whereas Infrastructure would be improvements to it, the ground other factors- overall Expenditure- possible I'm double counting in some places though!

Are the Training Centre and Academy as one, concurrent? Assuming yes- most clubs are now.

Yeah we can only guess on that one really- and the same for Derby FC Women's team.

On your academy expenditure I did a search of financial results Derby and it did suggest- well a below the line commenter did anyway, called "hkram" that your academy expenditure is/was £5.5m per year! Like I say, never been so sold on Derby failing FFP without the ground transaction, using these results- the Sevco 5112 results may show a different story.

@downendcity Yeah they may well have provisions. Failing that, quite possible that expenditure on the ground wouldn't show in the club accounts as such- but they can spend on other areas of Fixed Assets e.g. Training Ground, academy which would all come up under both expenditure and depreciation I believe. 

[Mr Popodopolous]

Ohhh and something interesting from another forum- been on the cards for some while?

 

Will be interesting to a) See the benchmark ratio b) Whether it actually solves their issues- Reading's £6.5m profit was no fix really and c) What will come first- their 2017/18 accounts at Companies House or Sheffield Wednesday being allowed to sign, spend etc!

One more note to add on stadium sales and FFP.

Being 3 year rolling, it drops off the calculations after this season, and the transaction for Pride Park took place in 2017/18 reporting period.

Disregarding any fallout from Gibson legal action, or the Aston Villa thing leading to some sort of dispute over £81.1m price, discounting that, way the rolling system works means that if Derby don't go up this season, that profit drops off the calculations which makes for a bit of pressure? Not a huge amount but a bit.

Edited July 4, 2019 by Mr Popodopolous

[Mr Popodopolous]

Something interesting- possibly interesting- anyway on Sheffield Wednesday. I appear to have spotted it before Kieran Maguire but he can probably explain it better.

1. Sheffield 2 Limited- Update. "Statement of Capital following an Allotment of Shares". £1,000 GBP. 
2. Sheffield 3 Limited- Now owned by Sheffield 5 Limited as opposed to Sheffield 4 Limited. The officer listed though is still Chansiri.
3. Sheffield 4 Limited- Update. Statement of Capital following an Allotment of Shares". £1,000 GBP. 
4. Sheffield 5 Limited- Update. Statement of Capital following an Allotment of Shares". £1,000 GBP.

Additionally:

Quote

On Sheffield 2 Limited and Sheffield 4 Limited

Non-cash consideration

"Shares allotted in consideration for the transfer of the entire issued share capital of SWFC Holdings Limited".

Quote

Sheffield 5 Limited

"Shares allotted in consideration for the transfer of the entire issued share capital of Sheffield 3 Limited".

Maybe completely wrong but my initial guess is one of these is for a mooted sale and leaseback of Hillsborough and another 2 or 3 are for hiving off of salary costs but sufficiently small not to have to publish full accounts for each- parent/holding company surely either Sheffield Wednesday FC or Sheffield Wednesday Holdings- of which there is no sign. Maybe all of those full costs would be in Sheffield Wednesday Holdings- unclear if it's in transit, going to be based overseas or in UK.

Struggle to see how the share thing should make any substantial difference to FFP or the accounts beyond pushing up allowable losses from £5m + deductible costs to £13m + allowable costs which is the benchmark anyway surely, the ground thing might. The accounts incidentally which were originally due on February 28th 2019 for the period to May 31st 2018, 2 months moved- presumably to buy time so due at end of April. Been a few bank holidays since then but 2 months and a bit overdue even so.

Edited July 8, 2019 by Mr Popodopolous

[Mr Popodopolous]

Oh yeah, plot thickens.

Sheffield 4 Limited voluntarily liquidated/wound up according to "Open Corporate". Or looking like it might be- 2nd July, maybe it takes a while to feed through to Companies House.

That would help to explain perhaps why Sheffield 5 Limited now "own" Sheffield 3 Limited as opposed to Sheffield 4 Limited doing so. Chansiri appears to be the ultimate controlling party in all cases though.

All 4- or soon to be 3 it seems- Non-trading companies too. To own assets or split payment of wages IMO.

Edited July 8, 2019 by Mr Popodopolous

[Mr Popodopolous]

Interesting bit of news.

Borner announced by Sheffield Wednesday- free transfer from Bundesliga 2, reasonable player more than likely, CB, apparently decent technically etc. Solid signing- but what makes it interesting and more than a bit odd, is that though it was clearly agreed in early May or mid May, whenever- is that his signing has been announced before their accounts have appeared at Companies House- their accounts for season 2017/18 which were due at end of April, which in turn was a presumably pre-arranged extension from end of February- reporting period was until 31st May 2018 and extended to July 31st 2018.

To me, no accounts at CH, no signings until it happens. Within allowable wage limits of the terms of a soft embargo or not, failure to submit accounts as it stands at all, let alone in a timely manner to CH should supersede this surely!

Edited July 10, 2019 by Mr Popodopolous

[Natchfever]

On 01/07/2019 at 14:42, downendcity said:

Ive said previously that with Derby and Villa it seems to me that the valuation figures were just what the club wanted ( and needed) them to be.

Football stadia are not like residential properties, in that there is no established and active market in sales of stadia so no market comparable exist. This being the case it would be tricky for a valuer to be challenged about the accuracy of his/her valuation, which is why I suspect Villa and Derby have been so financially "successful" with the sale of their grounds. 

I studied professional valuation in my younger days, but never got into practice. There are a few valuation principles I can recall but don't want to quote them on here in case my memory is a bit hazy or if valuation practices are different these days. 

 

 

Depreciated replacement cost.

"The DRC method is a form of cost approach that is defined in the RICS Valuation – Global Standards 2017 (RB Global) Glossary as: ‘The current cost of replacing an asset with its modern equivalent asset less deductions for physical deterioration and all relevant forms of obsolescence and optimisation. The DRC method is based on the economic theory of substitution. Like the other forms of valuation it involves comparing the asset being valued with another. However, DRC is normally used in situations where there is no directly comparable alternative"

The DRC method may be used for the valuation of specialised property, which is defined in the RB Global Glossary as: ‘A property that is rarely, if ever, sold in the market, except by way of a sale of the business or entity of which it is part, due to the uniqueness arising from its specialised nature and design, its configuration, size, location or otherwise.’ 

This is the RICS approach so gospel and often applied to public buildings.

Edited July 10, 2019 by Loon plage

[Mr Popodopolous]

26 minutes ago, Loon plage said:

Depreciated replacement cost.

 "The DRC method is a form of cost approach that is defined in the RICS Valuation – Global Standards 2017 (RB Global) Glossary as: ‘The current cost of replacing an asset with its modern equivalent asset less deductions for physical deterioration and all relevant forms of obsolescence and optimisation. The DRC method is based on the economic theory of substitution. Like the other forms of valuation it involves comparing the asset being valued with another. However, DRC is normally used in situations where there is no directly comparable alternative"

 The DRC method may be used for the valuation of specialised property, which is defined in the RB Global Glossary as: ‘A property that is rarely, if ever, sold in the market, except by way of a sale of the business or entity of which it is part, due to the uniqueness arising from its specialised nature and design, its configuration, size, location or otherwise.’ 

 This is the RICS approach so gospel and often applied to public buildings.

Sounds like you know a fair bit about this stuff, valuation, methodology etc.

Intrigued to know your take on £81.1m for Pride Park and especially in an RPT such as that. I've always had a feeling £50-55m or so but purely a layman's take looking at such factors as 2007 valuation (£55m), additions to Tangible Fixed Assets since then, minus cost of depreciation since that- the 2013 revaluation appears not to be public knowledge and not even in their accounts, perhaps that gave it a large rise.

Were it a truly a Arm's length transaction for that cost at a sale and leaseback, with no RP involvement nobody could question the £81.1m IMO but other factors surely add doubt/query.

Edited July 10, 2019 by Mr Popodopolous

[Natchfever]

43 minutes ago, Mr Popodopolous said:

Sounds like you know a fair bit about this stuff, valuation, methodology etc.

Intrigued to know your take on £81.1m for Pride Park and especially in an RPT such as that.

I haven't undertaken asset valuations for donkeys years Mr P, I deal with commercial property acquisitions, disposals and everything in between i'm afraid so can't comment on the valuation, particularly as I have no idea whether it was the stadium solely or associated leisure outlets etc, but I would say that the oft quoted figure of £1m per 1,000 seats is woefully outdated and fails to properly account for facilities within stadia,anyone putting their name to a valuation of £81m would have to be qualified to do so, and further, when you consider the costs of stadia coming out of the ground elsewhere recently, I think it would probably be very difficult to challenge the sale price.

Interesting stuff about Aberdeen's 20,000 capacity stadium https://www.eveningexpress.co.uk/fp/aberdeen-fc/donsnews/cost-of-stadium-to-rise-to-45-50m/

Edited July 10, 2019 by Loon plage

[bcfc01]

1 hour ago, Loon plage said:

I haven't undertaken asset valuations for donkeys years Mr P, I deal with commercial property acquisitions, disposals and everything in between i'm afraid so can't comment on the valuation, particularly as I have no idea whether it was the stadium solely or associated leisure outlets etc, but I would say that the oft quoted figure of £1m per 1,000 seats is woefully outdated and fails to properly account for facilities within stadia,anyone putting their name to a valuation of £81m would have to be qualified to do so, and further, when you consider the costs of stadia coming out of the ground elsewhere recently, I think it would probably be very difficult to challenge the sale price.

Interesting stuff about Aberdeen's 20,000 capacity stadium https://www.eveningexpress.co.uk/fp/aberdeen-fc/donsnews/cost-of-stadium-to-rise-to-45-50m/

General rule of thumb is £2k per 1,000 seats for a new build with an average finish, so thats about right if they're going for a decent finish.

 

[Davefevs]

4 minutes ago, bcfc01 said:

General rule of thumb is £2k per 1,000 seats for a new build with an average finish, so thats about right if they're going for a decent finish.

 

So Derby’s £81.1m (if just Stadium) is way over with “depreciation”. 

[downendcity]

1 hour ago, Loon plage said:

Depreciated replacement cost.

"The DRC method is a form of cost approach that is defined in the RICS Valuation – Global Standards 2017 (RB Global) Glossary as: ‘The current cost of replacing an asset with its modern equivalent asset less deductions for physical deterioration and all relevant forms of obsolescence and optimisation. The DRC method is based on the economic theory of substitution. Like the other forms of valuation it involves comparing the asset being valued with another. However, DRC is normally used in situations where there is no directly comparable alternative"

The DRC method may be used for the valuation of specialised property, which is defined in the RB Global Glossary as: ‘A property that is rarely, if ever, sold in the market, except by way of a sale of the business or entity of which it is part, due to the uniqueness arising from its specialised nature and design, its configuration, size, location or otherwise.’ 

This is the RICS approach so gospel and often applied to public buildings.

 

9 minutes ago, bcfc01 said:

General rule of thumb is £2k per 1,000 seats for a new build with an average finish, so thats about right if they're going for a decent finish.

 

 

4 minutes ago, Davefevs said:

So Derby’s £81.1m (if just Stadium) is way over with “depreciation”. 

Can't remember the figure for Villa Park's sale and leaseback, but Im sure it was substantially less than Derby's £82m for Pride Park.

Even if you factor in a deduction for physical deterioration and obsolescence for Villa Park, being a much older ground, Pride Park's figure doesn't seem to stand up. Even more so when compared  against the figure Reading showed for for their stadium sale - a comparable modern stadium. 

[Mr Popodopolous]

11 minutes ago, downendcity said:

 

 

Can't remember the figure for Villa Park's sale and leaseback, but Im sure it was substantially less than Derby's £82m for Pride Park.

Even if you factor in a deduction for physical deterioration and obsolescence for Villa Park, being a much older ground, Pride Park's figure doesn't seem to stand up. Even more so when compared  against the figure Reading showed for for their stadium sale - a comparable modern stadium. 

£56.7m IIRC.

Derby did additions though, and it was valued in 2007 at £55m- my basic, probably sketchy method has been to add on work- I assume "Additions" to constitute improvement to Pride Park and subtract depreciation in that timespan and that is how I came to the £50-55m range.

Another method I have used, less viable I know,  is rate of property/land prices in Derby between a certain period. Would have to check again but I believe that the net figure now for growth-depreciation fell within £50-55m range.

A third method I have used- benchmarking against similar transactions. Reading's Madejski Stadium value £20m in books, sold to owners for a sale and leaseback for £26.5m- about 32.5% uptick. Again you've guessed it- fell to within £50-55m range! If the mooted figures for Hillsborough of £22-22.25m in accounts, sold for £30m then yet again it is that range. Villa Park is hard to value, there was a downward revaluation in 2016, and some non depreciable land- I'll continue to look at sale price-NBV so that one is unclear as to whether the uptick is 25-35% so far.

Yet for all this, I fear what @Loon plage says is spot on- it'd be very hard to challenge a valuation such as Pride Park, especially since it has gone through and was approved by the EFL. The EFL incidentally have huge questions to answer for seemingly removing that clause- difficult legal ones I hope, for allowing this to be a method of offsetting FFP- would not be saying this if it was a third party, but IMO the methodology and documentation for such a valuation and transaction with a Related Party should be publicly available but that's likely wishful thinking.

Edited July 10, 2019 by Mr Popodopolous

[bcfc01]

15 minutes ago, Davefevs said:

So Derby’s £81.1m (if just Stadium) is way over with “depreciation”. 

The 2k per 1000 is for new build.

If Pride Park had to be built from scratch now and assuming a good finish (2,4k per seat) the cost could well be around 81m imo.

 

[Mr Popodopolous]

10 minutes ago, bcfc01 said:

The 2k per 1000 is for new build.

If Pride Park had to be built from scratch now and assuming a good finish (2,4k per seat) the cost could well be around 81m imo.

  

Does that factor in a 2007 revaluation at DRC method of £55m, and subsequent depreciation- and additions admittedly?

Looked for the 2013 revaluation at DRC method, but seems to be listed nowhere.

Edited July 10, 2019 by Mr Popodopolous

[bcfc01]

8 minutes ago, Mr Popodopolous said:

Does that factor in a 2007 revaluation at DRC method of £55m, and subsequent depreciation- and additions admittedly?

Looked for the 2013 revaluation at DRC method, but seems to be listed nowhere.

No, purely indicative build costs.

 

[Mr Popodopolous]

59 minutes ago, bcfc01 said:

No, purely indicative build costs.

 

Thanks- it just "feels" out of kilter though- the Madejski Stadium, a ground admittedly not as good as Pride Park and smaller, completion 1998- sold in 2017/18 to owners for £26.5m, book value £20m. Possible there's been no revaluation of any kind in that time- not looked at their 20 years of accounts.

Major discrepancy not talking gross cost but everything else. Maybe there's been no upgrades in last 2 decades there.

It is largely the fault of the EFL too for seemingly changing the regulations to allow this as a safety valve in terms of FFP- hopefully Aston Villa spend themselves stupid, come back down and fail FFP in the 3 years to May 2021, Derby stay down and that profit drops off the books from 2017/18 as it will and Sheffield Wednesday stay in a soft embargo, lose Bruce and slip further into issues.

PS- Bruce quitting Sheffield Wednesday, potentially for Newcastle. Some rumours say it is due to "broken promises" on transfers- for that read soft embargo, unable to sign players except within strict limits.

That would be karma- sure @chinapig @Davefevs @downendcity might concur? Shame eh, if it happens and if that part is also accurate.

Unsure about @Owl Visiting ?

Edited July 10, 2019 by Mr Popodopolous

[chinapig]

52 minutes ago, Mr Popodopolous said:

Thanks- it just "feels" out of kilter though- the Madejski Stadium, a ground admittedly not as good as Pride Park and smaller, completion 1998- sold in 2017/18 to owners for £26.5m, book value £20m. Possible there's been no revaluation of any kind in that time- not looked at their 20 years of accounts.

Major discrepancy not talking gross cost but everything else. Maybe there's been no upgrades in last 2 decades there.

It is largely the fault of the EFL too for seemingly changing the regulations to allow this as a safety valve in terms of FFP- hopefully Aston Villa spend themselves stupid, come back down and fail FFP in the 3 years to May 2021, Derby stay down and that profit drops off the books from 2017/18 as it will and Sheffield Wednesday stay in a soft embargo, lose Bruce and slip further into issues.

PS- Bruce quitting Sheffield Wednesday, potentially for Newcastle. Some rumours say it is due to "broken promises" on transfers- for that read soft embargo, unable to sign potentially.

That would be karma- sure @chinapig @Davefevs @downendcity might concur? Shame eh, if it happens and if that part is also accurate.

Unsure about @Owl Visiting ?

Who me? Are you implying I'm cynical about FFP and wish bad things on all those big clubs who should be in the Premier League as of right?

I'm shocked I tell you, shocked!