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Jerseybean

Reading in a financial mess

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Wow, the figures are crazy,,, i would like to think that football is going to have to take a step back to realistic levels after it restarts, but if city and reading happened to be competing for the same player, inevitably they would start pushing the salary up to compete... its never going to end.

 

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Didn't they reduce allocations of away fans as they didn't want them to create an disadvantageous atmosphere. I remember we used to take 4,000 plus, but only allowed around 2,000 now

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10 minutes ago, The Bard said:

So blatantly flouting all the rules about sustainability.  

 

Yeah, i just checked, their average attendance is 14500, and they spent at least 10 million of jaio and puscas this summer, sooner or later the sums dont add up

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£26.5 million for the stadium? I know it's a bit tinpot but that wouldn't buy you the south stand, definitely a bit suspicious.

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2 minutes ago, pillred said:

£26.5 million for the stadium? I know it's a bit tinpot but that wouldn't buy you the south stand, definitely a bit suspicious.

The stadium values are wierd.... perhaps a rugby club might be interested but who is going to spend money to buy a stadium in reading? 
unless its to rent it back tonthe football club, like what happened at Coventry....

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5 minutes ago, Simon bristol said:

The stadium values are wierd.... perhaps a rugby club might be interested but who is going to spend money to buy a stadium in reading? 
unless its to rent it back tonthe football club, like what happened at Coventry....

It seems they pay £1.5 million a year in rent, but even that seems a bit low and there is no way that stadium is only worth £26.5 million there's a fiddle going on somewhere. 

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Kieran Maguire is a man to follow on this.

Worth looking at his account, Swiss Ramble for Reading 2017/18 to get a bit of a handle on losses minus allowable costs plus of course Reading accounts and Renhe Sports Management Limited- the latter seem to be a parent of some sort.

To June 2020 though, the period beginning in 2017/18, their FFP position- well it reminds me of Birmingham a few years ago.

To get a decent handle though, both Reading and Renhe Sports Management Accounts to June 2018 and June 2019.

The Madejski Stadium is quite interesting as it appears to have been or be in the process of being sold from Renhe to another commonly owned company, this one based in China I think.

RPTs and notes in each of those 4 accounts, esp. to June 2019 are worth a read.

Edited by Mr Popodopolous

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Read a little bit more and it appears that Renhe Sports Management Limited, the ones who purchased the Madejski last year for £26.5m, in turn sold it for £37.5m.

They (as in the immediate parent company) of Reading, sold on the Madjeski which they had brought the previous season to their parent company, which surely is based in Asia.

The rent which was £750,000, now £1.5m- which fits nicely for 25 years or 24 years rent for sale price, pretty well in line. About 4% of second sale price.

Included within other borrowings...got to wonder about them with FFP in the 3 years to June 2020, really have.

Edited by Mr Popodopolous

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Quite possible that.

Also quite possible that they gambled on promotion this season and it hasn't quite yet come off...

Do you mean like front-loaded losses which could in theory get wiped now due to this? To me, pandemic or no pandemic make adjustments for the loss of income post March for all clubs but that aside, I hope there isn't just a wiping of the slate.

In other words, keep it as an open case ready to analyse as and when some normality returns. The fact the EFL are appealing a verdict for a pretty minor accusation for Birmingham- the talk was a max of 3 points and a fine over a technical breach- makes me think they won't be letting clubs off the hook just yet.

Edited by Mr Popodopolous
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12 hours ago, Mr Popodopolous said:

.

Do you mean like front-loaded losses which could in theory get wiped now due to this? To me, pandemic or no pandemic make adjustments for the loss of income post March for all clubs but that aside, I hope there isn't just a wiping of the slate.

 

this is what crossed my mind.if it got wiped clean,they could have another go next season and borrow loads more??

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43 minutes ago, redsquirrel said:

this is what crossed my mind.if it got wiped clean,they could have another go next season and borrow loads more??

That'd make sense but there is no reason to wipe it clean.

Make some tweaks to account for this but nothing much beyond that.

No free passes I always say!

Edited by Mr Popodopolous

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https://www.getreading.co.uk/sport/football/transfer-news/reading-fc-stars-risk-chop-18166847

This is a further suggestion that SOME FFP issues could be on the horizon.

Remember, they signed Joao and Puscas AFTER these accounts were released- I wonder if it was in terms of FFP and the promotion bid shit or bust somewhat? They still had a profit from 2016/17 on the books for the 3 years to June 2019 after all but that is now wiped...they were even under a soft embargo for a while in summer 2019 too.

The new starting point or latest starting point is the 2017/18 accounts now, for FFP.

Edited by Mr Popodopolous

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My print screen is acting up but...the RPTs from the relevant companies in the last two seasons worth of accounts we have (2017/18 and 2018/19)- when I say the RPTs, I mean the substantive ones.

2017/18 Accounts

The only real one was below- and not even listed in RPTs, hence my wording.

Quote

The Reading Football Club Limited

Reading sells Madejski Stadium to Renhe Sports Limited for £26.5m.

Rent due to Renhe on a 25 year lease is £750,000 per season.

Quote

Renhe Sports Management Co Limited

Apart from the other half of the above, none.

2018/19 Accounts

Quote

The Reading Football Club Limited

The Company invoiced Sun Elegant Group £13,000,000 (2018: £nil) in respect of the disposal of the club's training facilities at Hogwood Park. Amounts due from Sun Elegant Group at the end of the Year. Amounts due from Sun Elegant Group at the end of the year is £13,000,000 which is included in loans from group undertakings. Mr Yongge Dai is a director and the ultimate owner of Sun Elegant Group.

The Company invoiced £3,000,000 (2018: £nil) to Beijing Renhe Football Club Co Ltd in respect of the loan of a player. The amount due from Beijing Renhe Football Club Co Ltd at the year end is £3,000,000 (2018: £nil). Ms Xiu Lu Hawken is a director of Beijing Renhe Football Club Co Ltd & Mr Yongge Dai is the ultimate owner of Beijing Renhe Football Club.

Quote

Renhe Sports Management Co Limited

Renhe Sports Management Limited invoiced Prestige Fortune Asia Limited £37,500,000 (2018 - £nil) in respect of the disposal of the Madejski Stadium. This amount was owing at the year end and is included in other borrowings. Mr Yongge Dai is a director and the ultimate owner of Prestige Fortune Asia Limited.

RFC Bearwood Limited invoiced Prestige Fortune Asia Limited £4,833,3333 (2018 - £nil) in respect of the disposal of the residential part of the land owned by the company. This amount was owing at the year end and is included in loans from group undertakings. Mr Yongge Dai is a director and the ultimate owner of Prestige Asia Fortune Limited.

Think you might be interested in this @Davefevs @downendcity @Vincent Vega

Oh yeah, almost forgot but just checked- rent for the Madjeski now £1.5m per season.

How it gained that extra £11m in a season ie it was sold in 2017/18 to Renhe and then in 2018/19 to Prestige Fortune Asia Limited...Quite interesting..?

Biggest mystery for me though,is the £3m loan fee for Sone Aluko ! 🤣

Edited by Mr Popodopolous
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I may as well take a look at the 3 year figures. Both for Reading FC and Renhe Sports Limited.

Reading FC 2016/17-2018/19

2016/17- PROFIT £4,661,550

INCLUDES LOAN WRITE OFF £9,252,004.

2017/18- LOSS £20,952,868

INCLUDES PROFIT ON STADIUM DISPOSAL OF £6,518,222.

2018/19- LOSS £30,115,218

INCLUDES PROFIT ON FIXED ASSET DISPOSAL OF £8,173,614.

INCLUDES £3m Aluko loan fee.

Total losses £46,406,536.

This is before FFP allowable exclusions and surely shows a PASS. 

However, loan write off are not meant to be permitted. Exclude that and it rises to:

£55,658,540.

Selling a stadium to a parent company is curious. Surprised it doesn't cancel out given Renhe and Reading are both in the UK. 

It's included but if it was deemed to be suspect it'd be:

£62,176,762.

The profit on disposal of fixed assets to related parties, in successive years. Would Parry have accepted it had he been in charge during these reporting periods?

Anyway, we're we to disregard all of the above  it's 3 year losses of:

£73,350,386. 

£73M!?!

Granted allowable costs but they've been really pushing it!

For what too? A playoff final, a relegation battle, another in the bottom third for large periods and a midtable/lower midtable season. 

God knows what their accounts could look like for 2019/20. (Excluding Covid related losses obvs).

Edited by Mr Popodopolous
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They've got a cluster of young, talented players who we would've been looking at no doubt.

There may be a time to pounce and bolster our quality.

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Think Loader was linked with Wolves the other summer. Meite of course is relatively young IIRC, Puscas was quite sought after- not really sure if striker an area we need to be looking at atm though.

Always thought Yiadom decent- could be a useful squad addition, think he can cover both RB and LB. He's 29 though, probably in peak years. Think he can play Wing Back certainly- good versatility.

Edited by Mr Popodopolous

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On 06/05/2020 at 05:45, Pickle Rick said:

They've got a cluster of young, talented players who we would've been looking at no doubt.

There may be a time to pounce and bolster our quality.

A fire sale beckons I think. Followed by relegation next year... Never to be seen in the top 2 divisions again. 

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3 hours ago, havanatopia said:

A fire sale beckons I think. Followed by relegation next year... Never to be seen in the top 2 divisions again. 

Could be a long road back.

Only big unknown in this scenario is if FFP gets suspended due to Covid 19. Their losses are a nonsense though so no existing cases or existing season cases should be let off. All clubs should get an adjustment for losses that are directly attributable to having been incurred due to Covid 19 but even without these...?

Edited by Mr Popodopolous

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The Renhe Sport Management Co Limited 3 years.

2016/17- Though listed as 2 month figures, but a LOSS of £1,562,411. Oddly, the party who seemed to control Reading before had a profit of £13m for that season, Reading Football Holdings Limited- they got taken over sometime in that financial year IIRC.

Broken down as Loss Attributable to:

  1. Owners of Parent Company- £1,341,773.
  2. Non-controlling interests- £220,638.

2017/18- LOSS £29,893,815

Broken down as Loss Attributable to:

  1. Owners of Parent Company- £27,781,920.
  2. Non-controlling interests- £2,111,895.

2018/19- LOSS £11,753,640.

INCLUDES:

PROFIT ON SALE OF TANGIBLE FIXED ASSETS- £29,929,818.

APPEARS TO INCLUDE ALUKO LOAN FEE WITHIN TURNOVER- £3M.

Broken down as Loss Attributable to:

  1. Owners of Parent Company- £10,073,427.
  2. Non-controlling interests- £1,680,213.

Though, the profit and loss reserves are more interesting.

Shown since the inception, though they mostly stack up, there is a differential in the controlling vs non controlling interests.

2016/17 appears to take their losses to £8,808,960.

P&L Reserves show as follows- and this is for 2016/17 alone:

  • Controlling Interests- £1,123,611
  • Non-controlling Interest- £7,865,069.

Edit- This is under "Group Statement of Changes in Equity".

Also worth noting though, that Reading's Supporters Trust analysis seems to think they're fine with FFP. 🤔

https://star-reading.org/news/2018-19-accounts-analysis

Bit odd for a start how the Madejski went up £11m in a year? That will have been included in their nearly £30m of profit on disposal last season, in the Renhe figures.

To be clear on that last point- EFL should be all over it incidentally.

Sold in 2017/18 from Reading to Renhe for £26.5m. Annual Rent £750k on a 25 year lease.

Sold AGAIN in 2018/19 from Renhe to Prestige Fortune Asia Limited for £37.5m. Annual Rent £1.5m on a 25 year lease.

Adding 41.5% in valuation in a year, with zero reference to independent advice taken with respect to these disposals- a requirement to disclose in accounts I believe, or if it isn't, then both clubs in Birmingham who sold their ground had this somewhere contained within. Happy to look again of course.

From what I've seen, I don't see how they have bolstered revenue or slashed wages drastically.

In Summer 2019, after the reporting period, they added:

  1. Morrison from Birmingham- free.
  2. Adam from Stoke- free.
  3. Rafael from Sampdoria- free.

No fee but not sure it's tiny wages x 3? The first two have good Championship experience, the latter is a goalie from Serie A. Middling squad player, but again would he come for little?

Then Joao from Sheffield Wednesday and Puscas from Inter Milan- fees maybe £11m in total so amortised out but tiny wages? Don't think there would be the latter!

Also amongst the loanees:

  1. Virginia- Everton
  2. Miazaga- Chelsea

Both youngsters but PL.

  1. Boye- Torino and Pele (not that one!) Monaco surely wouldn't be tiny wages. Both mid to late 20s at time of loan so not kids.
  2. Ejiara of course, loan renewed.

How about big savings in players going?

Well, yes- quite a lot did go but not much in the way of fees.

Even took a hit of £1-1.5m to get rid of Meyler. That Impairment means he's off the wage bill but it's still accounted for in terms of FFP.

https://en.wikipedia.org/wiki/2019–20_Reading_F.C._season#Transfers

Fine- subject to transactions being at fair value of course- to June 2019 but I really have to wonder about June 2020...

Edited by Mr Popodopolous

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Swiss Ramble and the Reading finances.

It's unclear to me whether we should use Renhe Sports or Reading, but either way it seems like they would face a significant challenge to hit the target this season.

I think a few sets of fans- and Reading quite likely to be one of them- will be pinning their hopes on an abolition of FFP for this season.

Edited by Mr Popodopolous

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On 08/04/2020 at 09:27, pillred said:

£26.5 million for the stadium? I know it's a bit tinpot but that wouldn't buy you the south stand, definitely a bit suspicious.

The value of the football ground isn't the stadium as without the FC the stadium has no income . The value lies in what could be built if the land was free and clear. 26m for building land the size of the ground, I also guess the car park which is huge, I reckon might not be far off that close to the M4. Any Reading area developers on here?

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40 minutes ago, REDOXO said:

The value of the football ground isn't the stadium as without the FC the stadium has no income . The value lies in what could be built if the land was free and clear. 26m for building land the size of the ground, I also guess the car park which is huge, I reckon might not be far off that close to the M4. Any Reading area developers on here?

You seem to know your stuff a bit, on this.

To add to the stadium sale thing, I note that it was sold again the following year from Renhe (immediate parent) to another of the owners companies- £37.5m.

Wonder which is right- if not both? Would have thought though I am certainly no expert, land in Reading surely above that of the sites of Hillsborough, Pride Park and Villa Park- St Andrews more central so less sure. 

That's interesting stuff though given the apparent independent valuations obtained for the following- grounds and values listed:

  1. Villa Park- £56.7m
  2. Hillsborough- £60m
  3. Pride Park- £81.1m

EFL hired valuer had Pride Park at £50m, really wonder about Hillsborough too...Villa Park I can't make my mind up on.

...OTOH, St Andrews at £22.25m I think it was, seems okay. Feels okay.

@downendcity I seem to recall you talking of valuation and valuation methods in the past- interested in your take, especially on Reading selling theirs in successive years, for an £11m- or roughly 41.5%- increase in Year 2 from 1.

As I recall too, you had a strong feeling that the sale price/profit reached might have been just about in line with necessity to comply with FFP.

Edited by Mr Popodopolous

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1 hour ago, Mr Popodopolous said:

You seem to know your stuff a bit, on this.

To add to the stadium sale thing, I note that it was sold again the following year from Renhe (immediate parent) to another of the owners companies- £37.5m.

Wonder which is right- if not both? Would have thought though I am certainly no expert, land in Reading surely above that of the sites of Hillsborough, Pride Park and Villa Park- St Andrews more central so less sure. 

That's interesting stuff though given the apparent independent valuations obtained for the following- grounds and values listed:

  1. Villa Park- £56.7m
  2. Hillsborough- £60m
  3. Pride Park- £81.1m

EFL hired valuer had Pride Park at £50m, really wonder about Hillsborough too...Villa Park I can't make my mind up on.

...OTOH, St Andrews at £22.25m I think it was, seems okay. Feels okay.

@downendcity I seem to recall you talking of valuation and valuation methods in the past- interested in your take, especially on Reading selling theirs in successive years, for an £11m- or roughly 41.5%- increase in Year 2 from 1.

As I recall too, you had a strong feeling that the sale price/profit reached might have been just about in line with necessity to comply with FFP.

At the risk of repeating my previous comments, the issue ( as I see it) revolves around the fact that there is no established or active market in the sale of football stadia on which anyone can draw readably accurate comparable values, such as would be the case when valuing a 3 bed semi.

The clubs defend their figures by saying that these were obtained by professionally qualified  "independent" valuers. However the cynic in me can't help but think that the circumstances under which Derby's owner retained his valuer to carry out the valuation of Pride Park are a little different from those applying to a valuer being appointed to cary out a mortgage valuation for a mortgage lender. 

A mortgage valuer knows that if his valuation is widely out, causing a mortgage application to be declined, he/she might then be required to defend the valuation knowing that market comparable might compromise his/her valuation. More importantly , he has no reason for providing anything but a truly impartial valuation as the lender ( from who he/she receives the instructions) has no motive for trying to influence the valuation up or down.

However, in, say, Derby's case the valuer would have been aware ( or if not, I'm certain that Derby would have made certain he/she was made aware) of the reason for, and importance of, the valuation to the club, who had instructed him to act for them. I would also be pretty certain that the valuer would have been made fully aware of the valuation figure that Derby needed, in order that they could realise sufficient profit to avoid ffp.

This being the case and given that there were no market comparable,  the valuer could then arrive at his valuation knowing that it would be difficult for anyone to question the accuracy of the valuation due to the absence of market comparable. Derby had run the stadium sale idea past the EFL before embarking on that course of action, and being given the green light. I suspect that this being the case, and knowing the lack of proper governance,oversight and calling account by the EFL they probably thought they had a clear run and that there would be no questioning of the transaction.

The above would also explain why the Madjesky increased in value over a 12 month period. If there were a market, it is highly doubtful there would have been that much of an increase ( unless there are other market factors of which I am unaware) but the valuer on the second sale would value at the level that Reading needed to achieve the paper profit necessary to include in their accounts.

I think I previously mentioned that there are  number of ways a commercial valuation of this nature can be based. One of those is to use the rental as the basis for the value. IIRC the rental Derby will be paying represent a pitiful yield when compared to the "sale price". If that rental was used to provide the market value then I suspect the value would be substantially lower than was produced. Of course, we know that the rental was agreed post sale, and undoubtedly to suite Derby from a financial point of view. If the rent reflected the market value, i.e. a full market rent, then it would impact on Derby's future profits, potentially compromising ffp again.

The simple bottom line is that because the the vendor, purchaser, valuer's client, the person agreeing the "sale price" and deciding the level of rent paid by the football club post sale is one and the same it is hardly surprising that a transaction of this nature and undertaken for the purpose it was/is,  is highly questionable. 

 

 

 

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14 hours ago, Mr Popodopolous said:

You seem to know your stuff a bit, on this.

To add to the stadium sale thing, I note that it was sold again the following year from Renhe (immediate parent) to another of the owners companies- £37.5m.

Wonder which is right- if not both? Would have thought though I am certainly no expert, land in Reading surely above that of the sites of Hillsborough, Pride Park and Villa Park- St Andrews more central so less sure. 

That's interesting stuff though given the apparent independent valuations obtained for the following- grounds and values listed:

  1. Villa Park- £56.7m
  2. Hillsborough- £60m
  3. Pride Park- £81.1m

EFL hired valuer had Pride Park at £50m, really wonder about Hillsborough too...Villa Park I can't make my mind up on.

...OTOH, St Andrews at £22.25m I think it was, seems okay. Feels okay.

@downendcity I seem to recall you talking of valuation and valuation methods in the past- interested in your take, especially on Reading selling theirs in successive years, for an £11m- or roughly 41.5%- increase in Year 2 from 1.

As I recall too, you had a strong feeling that the sale price/profit reached might have been just about in line with necessity to comply with FFP.

Readings ground is in Green Park which had high land values pre Covid and is likely to recover sooner than many others due to its proximity to the M4 into Heathrow and London so the patch of dirt the ground and associated parking etc sits upon is worth a whole lot more per acre than say Pride Park, Villa Park Hillsborough (or AG) (Unless any restrictive covenants are in place to retain a "leisure "type use which is unlikely given what is around it)

Edited by Natchfever
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4 hours ago, Natchfever said:

Readings ground is in Green Park which had high land values pre Covid and is likely to recover sooner than many others due to its proximity to the M4 into Heathrow and London so the patch of dirt the ground and associated parking etc sits upon is worth a whole lot more per acre than say Pride Park, Villa Park Hillsborough (or AG) (Unless any restrictive covenants are in place to retain a "leisure "type use which is unlikely given what is around it)

Exactly!

The values of the above grounds without the clubs is just the land value minus the cost to develop. To think dirt in Derby etc is worth more than that huge plot 60 seconds from the M4 is laughable.

Thats not to say that there are not shenanigans going on with the buying and selling of the stadium and adjacent land, there probably are, but if someone is looking at these transactions then Reading FC wont be the centre of attention.

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7 hours ago, Natchfever said:

Readings ground is in Green Park which had high land values pre Covid and is likely to recover sooner than many others due to its proximity to the M4 into Heathrow and London so the patch of dirt the ground and associated parking etc sits upon is worth a whole lot more per acre than say Pride Park, Villa Park Hillsborough (or AG) (Unless any restrictive covenants are in place to retain a "leisure "type use which is unlikely given what is around it)

 

2 hours ago, REDOXO said:

Exactly!

The values of the above grounds without the clubs is just the land value minus the cost to develop. To think dirt in Derby etc is worth more than that huge plot 60 seconds from the M4 is laughable.

Thats not to say that there are not shenanigans going on with the buying and selling of the stadium and adjacent land, there probably are, but if someone is looking at these transactions then Reading FC wont be the centre of attention.

There may be valuation issues of which I am unaware or missing, but surely all these grounds can only be valued as what they are - football stadia.

Whether they might have huge potential value as commercial or residential sites has to be completely academic if they are being valued and sold as stadia, given that the sales are being made to raise a profit to enable each club  to meet the financial criteria of it's governing body ( the EFL ) and thereby continue to play and ply it's trade within the football league as a professional football club. 

To do this they need their stadium!

Funnily enough, if a ground attracted an inflated valuation, because, say, the ground and surrounds were granted outline planning permission for , lets say, residential development and which would mean a massive financial windfall to the club, then the club would probably look to see and finance a new ground elsewhere. In that case there would be no jiggery pokery with valuations because the sale would be on the open market to a genuine third part purchaser ( as would have been the case had we sold to Sainsburys to fund Ashton Vale)

 

 

 

 

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1 hour ago, downendcity said:

 

There may be valuation issues of which I am unaware or missing, but surely all these grounds can only be valued as what they are - football stadia.

Whether they might have huge potential value as commercial or residential sites has to be completely academic if they are being valued and sold as stadia, given that the sales are being made to raise a profit to enable each club  to meet the financial criteria of it's governing body ( the EFL ) and thereby continue to play and ply it's trade within the football league as a professional football club. 

To do this they need their stadium!

Funnily enough, if a ground attracted an inflated valuation, because, say, the ground and surrounds were granted outline planning permission for , lets say, residential development and which would mean a massive financial windfall to the club, then the club would probably look to see and finance a new ground elsewhere. In that case there would be no jiggery pokery with valuations because the sale would be on the open market to a genuine third part purchaser ( as would have been the case had we sold to Sainsburys to fund Ashton Vale)

 

 

 

 

Don't know the ins and outs of the valuation approach but alternative use value must be a factor or should be in establishing the true value of a real estate asset. 

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36 minutes ago, Natchfever said:

Don't know the ins and outs of the valuation approach but alternative use value must be a factor or should be in establishing the true value of a real estate asset. 

As I mentioned, if a ground has outline or absolute planning permission for commercial or residential development, then a sale price or valuation would properly reflect that. In such circumstances the vendor would almost certainly be selling to cash in on the enhanced value resulting from such planning permission and the purchaser would be more than likely prepared to pay the enhanced price in order to take his/her own advantage of the development potential e,g, a house builder.

In the cases about which we are talking, in the absence of any such planning permissions, any suggestions that valuation should reflect enhanced value due to "alternative use" would be completely speculative. In the context of the already "vague" nature of stadium sales in the context of avoiding ffp sanctions this would make such transactions look even more dubious. Otherwise an owner in, say, Mel Morris' position could argue that residential development of the Pride Park site would make it worth £100m+. despite the fact that there would be not a cat in hells chance of planning approval for housing ever being obtained.

In Derby's case, if Pride Park has such an enhanced value due to potential alternative use, then why are the new owners not charging Derby a rental commensurate with that valuation?  The very nature of the transaction  ( the vendor and purchaser are effectively one and the same) means that Pride Park will be protected as Derby's stadium, so there is no way the purchaser can realise that enhance potential value. As Ive mentioned previously because these are paper transactions t related third parties the scope for manipulation is huge, not least because of the difficulty in determining the accuracy of any valuation. 

This being the case, it is clear why this type of transaction should never be allowed within the framework of a ffp regime. Clubs cannot be blamed that the EFL's cock up left this loophole, but it does to make it right if clubs have then inflated valuations to give a sale price sufficient to solve their individual ffp problems.

 

 

 

 

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12 hours ago, downendcity said:

As I mentioned, if a ground has outline or absolute planning permission for commercial or residential development, then a sale price or valuation would properly reflect that. In such circumstances the vendor would almost certainly be selling to cash in on the enhanced value resulting from such planning permission and the purchaser would be more than likely prepared to pay the enhanced price in order to take his/her own advantage of the development potential e,g, a house builder.

In the cases about which we are talking, in the absence of any such planning permissions, any suggestions that valuation should reflect enhanced value due to "alternative use" would be completely speculative. In the context of the already "vague" nature of stadium sales in the context of avoiding ffp sanctions this would make such transactions look even more dubious. Otherwise an owner in, say, Mel Morris' position could argue that residential development of the Pride Park site would make it worth £100m+. despite the fact that there would be not a cat in hells chance of planning approval for housing ever being obtained.

In Derby's case, if Pride Park has such an enhanced value due to potential alternative use, then why are the new owners not charging Derby a rental commensurate with that valuation?  The very nature of the transaction  ( the vendor and purchaser are effectively one and the same) means that Pride Park will be protected as Derby's stadium, so there is no way the purchaser can realise that enhance potential value. As Ive mentioned previously because these are paper transactions t related third parties the scope for manipulation is huge, not least because of the difficulty in determining the accuracy of any valuation. 

This being the case, it is clear why this type of transaction should never be allowed within the framework of a ffp regime. Clubs cannot be blamed that the EFL's cock up left this loophole, but it does to make it right if clubs have then inflated valuations to give a sale price sufficient to solve their individual ffp problems.

 

 

 

 

The valuation was set to suit the parties. In valuation terms "hope" value is most certainly a consideration and in the case of Reading a genuine one. I would suggest their stadium is substantially more valuable than any mentioned previously. The point being that the other valuations are false and if anything Reading's is on the low side. 

In terms of rent set that  is down to the purchaser and the return they seek. 

Edited by Natchfever

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20 hours ago, downendcity said:

 

There may be valuation issues of which I am unaware or missing, but surely all these grounds can only be valued as what they are - football stadia.

Whether they might have huge potential value as commercial or residential sites has to be completely academic if they are being valued and sold as stadia, given that the sales are being made to raise a profit to enable each club  to meet the financial criteria of it's governing body ( the EFL ) and thereby continue to play and ply it's trade within the football league as a professional football club. 

To do this they need their stadium!

Funnily enough, if a ground attracted an inflated valuation, because, say, the ground and surrounds were granted outline planning permission for , lets say, residential development and which would mean a massive financial windfall to the club, then the club would probably look to see and finance a new ground elsewhere. In that case there would be no jiggery pokery with valuations because the sale would be on the open market to a genuine third part purchaser ( as would have been the case had we sold to Sainsburys to fund Ashton Vale)

 

 

 

 

Supply and Demand applies. Villa Park has one user for example Aston Villa FC.

If the club sells its stadium to raise funds, the value of the stadium should be based upon a number of factors. Revenue created from rental to Aston Villa FC plus other revenues as a concert venue etc. See Ashton Gate, its used as a conference center, meeting rooms etc apart from the obvious football and concert revenue. With those factors how long will it take to make back the original investment (P/E)

However Villa Park also has value just for its position. It is in a residential area. If the owners were to sell, much like Arsenal, Spurs, West Ham etc etc there is no reason to expect the local authorities would not allow development. 

The difference in these cases is, as happened with SL, clubs are selling assets to board members of the FC. There is nothing wrong with this all the time the persons buying are devoted to their football team and the club are paying the going rate for usage of the stadium. Nevertheless that can change, then you have trouble like Coventry and Richo Stadium. 

Pride Park is one of the original updated stadiums, to my knowledge Derby County is the only club to play there and I have no memory of it as a concert venue, although they probably have revenue from Other business.

If Derby sold there ground for 55m the question is What are they paying in rent and what other revenues are coming in and how long will it take to make back the original investment (and what is the value of the dirt) If the P/E is high by comparison to other clubs This will be the first sign that the sale is iffy, before even looking at Books and payments

 

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33 minutes ago, REDOXO said:

Supply and Demand applies. Villa Park has one user for example Aston Villa FC.

If the club sells its stadium to raise funds, the value of the stadium should be based upon a number of factors. Revenue created from rental to Aston Villa FC plus other revenues as a concert venue etc. See Ashton Gate, its used as a conference center, meeting rooms etc apart from the obvious football and concert revenue. With those factors how long will it take to make back the original investment (P/E)

However Villa Park also has value just for its position. It is in a residential area. If the owners were to sell, much like Arsenal, Spurs, West Ham etc etc there is no reason to expect the local authorities would not allow development. 

The difference in these cases is, as happened with SL, clubs are selling assets to board members of the FC. There is nothing wrong with this all the time the persons buying are devoted to their football team and the club are paying the going rate for usage of the stadium. Nevertheless that can change, then you have trouble like Coventry and Richo Stadium. 

Pride Park is one of the original updated stadiums, to my knowledge Derby County is the only club to play there and I have no memory of it as a concert venue, although they probably have revenue from Other business.

If Derby sold there ground for 55m the question is What are they paying in rent and what other revenues are coming in and how long will it take to make back the original investment (and what is the value of the dirt) If the P/E is high by comparison to other clubs This will be the first sign that the sale is iffy, before even looking at Books and payments

 

I stand to be corrected if I'm wrong, but as far as I'm aware the sale of Ashton Gate to SL ( or one of his companies) was about restructuring rather than as a "capital raising " excercise, notwithstanding that there was probably some benefit to SL for so doing. 

Therein lies the underlying issue with the likes of Derby, Wednesday, Reading and ( as far as we believe) Villa, as all of them used the stadium sale as the means of generating a paper profit sufficient to avoid problems with ffp. where all other options had failed. Consequently there is widespread suspicion that the valuations were conveniently at the right figures to suite each club's financial needs and therefore lacking proper objectivity.

Im sure Mr P, in one of his previous missives, detailed the rental Derby will be paying the "new" owner and I am certain that the yield it represents is paltry. If it were a genuine commercial transaction then no purchaser would have paid such a price for so poor a return - unless, of course, they were being advised by Morris's professional valuer!

 

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35 minutes ago, downendcity said:

I stand to be corrected if I'm wrong, but as far as I'm aware the sale of Ashton Gate to SL ( or one of his companies) was about restructuring rather than as a "capital raising " excercise, notwithstanding that there was probably some benefit to SL for so doing. 

Therein lies the underlying issue with the likes of Derby, Wednesday, Reading and ( as far as we believe) Villa, as all of them used the stadium sale as the means of generating a paper profit sufficient to avoid problems with ffp. where all other options had failed. Consequently there is widespread suspicion that the valuations were conveniently at the right figures to suite each club's financial needs and therefore lacking proper objectivity.

Im sure Mr P, in one of his previous missives, detailed the rental Derby will be paying the "new" owner and I am certain that the yield it represents is paltry. If it were a genuine commercial transaction then no purchaser would have paid such a price for so poor a return - unless, of course, they were being advised by Morris's professional valuer!

 

Yes exactly with your last two paragraphs. 

As far as SL and AG, its impossible to know what was in mind back then. However what we do know is there has been massive investment in Bristol Sport, particularly City and The Bears. The ground if it ALL goes tits up is some small collateral on that investment, however the likelihood of that under any normal circumstance Is very low for us THANKFULLY!

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38 minutes ago, REDOXO said:

Yes exactly with your last two paragraphs. 

As far as SL and AG, its impossible to know what was in mind back then. However what we do know is there has been massive investment in Bristol Sport, particularly City and The Bears. The ground if it ALL goes tits up is some small collateral on that investment, however the likelihood of that under any normal circumstance Is very low for us THANKFULLY!

When SL embarked on the 5 pillars , which evolved into the sustainability model that's been in place now for a few seasons, it drew much criticism and ridicule from many fans, who saw it as an excuse for the owner not using his own money.

With hindsight, and seeing the desperate steps to which clubs like Derby, Wednesday etc have had to resort, in order to avoid ffp sanctions, makes us realise that SL's strategy and plan  was in fact  well considered foresight.

Indeed, when the Derby fan ( I think it was) posted on here that our attitude towards his club's actions regarding the stadium sale was in fact jealousy, because we could not do the same. His implication was that having "sold" AG a long time back, we were deprived of the same opportunity as other clubs,  the irony of his argument being that even if we could, we did not need to sell AG, due to the prudent financial management we have undertaken for a few seasons and which club's like Derby have failed to do.

Returning to the valuation issue, it is shambolic thanks to the EFL cock up with the new rules. Having left the loophole, which some clubs have gratefully exploited, whereby sale of grounds in itself does not break the rules, the EFL are trying to save face by questioning the valuations. While everyone might think they are highly questionable proving it is a much tougher task, not helped by the fact that the EFL effectively approved the sales at the outset and then allowed the resulting profits to be included in the latest accounts. 

I suspect that should the EFL persue clubs for overstated valuations, and thereby penalise them for ffp breaches, the clubs will feel they have strong enough grounds to counter with their own legal action. The one thing that might sway the balance is if the majority of championship clubs gave there full support to the EFL's actions, but that seems to have been sadly lacking up to now!

 

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1 hour ago, downendcity said:

When SL embarked on the 5 pillars , which evolved into the sustainability model that's been in place now for a few seasons, it drew much criticism and ridicule from many fans, who saw it as an excuse for the owner not using his own money.

With hindsight, and seeing the desperate steps to which clubs like Derby, Wednesday etc have had to resort, in order to avoid ffp sanctions, makes us realise that SL's strategy and plan  was in fact  well considered foresight.

Indeed, when the Derby fan ( I think it was) posted on here that our attitude towards his club's actions regarding the stadium sale was in fact jealousy, because we could not do the same. His implication was that having "sold" AG a long time back, we were deprived of the same opportunity as other clubs,  the irony of his argument being that even if we could, we did not need to sell AG, due to the prudent financial management we have undertaken for a few seasons and which club's like Derby have failed to do.

Returning to the valuation issue, it is shambolic thanks to the EFL cock up with the new rules. Having left the loophole, which some clubs have gratefully exploited, whereby sale of grounds in itself does not break the rules, the EFL are trying to save face by questioning the valuations. While everyone might think they are highly questionable proving it is a much tougher task, not helped by the fact that the EFL effectively approved the sales at the outset and then allowed the resulting profits to be included in the latest accounts. 

I suspect that should the EFL persue clubs for overstated valuations, and thereby penalise them for ffp breaches, the clubs will feel they have strong enough grounds to counter with their own legal action. The one thing that might sway the balance is if the majority of championship clubs gave there full support to the EFL's actions, but that seems to have been sadly lacking up to now!

 

Derby fan saying the Board of Directors of City are jealousy of Derby County.....Love it!

Yes the whole thing with Ground sales is shambolic, but the finances of clubs doing this and obviously not paying market rates for the sale or the rent shows how shambolic the accounts of those clubs are..

I cant remember what the value of AG was prior to the transfer,  at that time BCFC would have been the only client versus what it is now with multiple revenue streams plus an overarching sports group, but the value now is immense even without the Football Club

Next season Bristol Bears have a shot at real silverware and City will be on another promotion push....Yep I reckon I’d rather be in Derby‘;s position, still dreaming of getting that 7th point!

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Very interesting stuff on here, definitely.

Quick note on Sheffield Wednesday...saw this on their forum and still makes me wonder about their valuation...

Screenshot_20200521-185224_Dropbox.thumb

Now I've often wondered, does the valuation method make a tangible difference to the price? The valuation method for all of these transactions was not disclosed- just said independent advice sought and not even sure it did that for Derby and Reading.

The reason I bring up the valuation method differentials is:

Pride Park- £81.1m sale price, apparently an independent valuation sought.

EFL hired valuer commissioned valuation- £49-50m. An article did suggest it was using their own criteria:

Quote

Derby said that they had been told by the EFL that the league itself had made a mistake when it approved its submissions, and the league is understood to have had its own independent valuation of Pride Park carried out, using different criteria according to its rules.

This is an article from January of course. I assume it is referring to this:

Quote

1.1.8 Fair Market Value means the amount for which an asset could be sold, licensed or exchanged, a liability settled, or a service provided, between knowledgeable, willing parties in an arm’s length transaction.

Which feeds into this:

Quote

2.3 The Executive shall determine whether consideration included in the Club’s Earnings Before Tax arising from a Related Party Transaction is recorded in the Club’s Annual Accounts at a Fair Market Value. If it is not, the Executive shall restate it to Fair Market Value.

2.4 The Executive shall not exercise its power set out in Rule 2.3 without first having given the Club  reasonable opportunity to make submissions as to:

2.4.1 whether the said consideration should be restated; and/or

2.4.2 what constitutes its Fair Market Value.

I suppose a couple of questions here might be?

  1. How do we ascertain Fair Market Value for a football ground? It is a unique and specialised asset after all. I've always had a feeling it's linked to Depreciated Replacement Cost, ie could that be a bit of a proxy for Fair Market Value for such assets/transactions- or are they two wholly distinct and separate valuation methods?
  2. Makes me wonder what method Derby used for there to be such a large differential- and how those arose! Also makes me wonder if both valuations reached could in fact be correct.
Edited by Mr Popodopolous

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Reading fans appear to be quite relaxed, perhaps even bullish, about their FFP questions.

https://hobnob.royals.org/forum/viewtopic.php?f=1&t=186841&hilit

It's only a few posts tbh but some of their figures are questionable:

Quote

We won't be punished because we sold the stadium to ourselves (allowed by the EFL) at a fair market value (~£20m).

Err, was £26.5m or thereabouts. Again no issues on that score but...

How was it resold a year later for £37.5m?

Quote

As for us, we haven't broken any rules. FFP is over 3 seasons, we have just spent 3 seasons in one so are all clear......at the moment.

This one has a touch more caution.

Quote

Doesn't affect us. The EFL cleared us of any wrong doing when selling the Madstad to the owners. Derby however vastly vastly over-priced their pudding bowl and deserve everything coming to them.

Thought it was still technically under investigation?

Remember too, it wasn't just the stadium they sold (twice, when we include the Renhe deal last season) but a variety of other assets-  plus of course a £3m loan fee for Aluko (ha!) to Beijing Renhe, the owners Chinese club, which was £3m worth of their income for last season.

See a couple of them are posting on Twitter, under the Swiss Ramble thread about how FFP should be cancelled due to Covid 19. I don't think there is a case for that- amended yes, cancelled nope.

Edited by Mr Popodopolous

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19 hours ago, Mr Popodopolous said:

 

I suppose a couple of questions here might be?

  1. How do we ascertain Fair Market Value for a football ground? It is a unique and specialised asset after all. I've always had a feeling it's linked to Depreciated Replacement Cost, ie could that be a bit of a proxy for Fair Market Value for such assets/transactions- or are they two wholly distinct and separate valuation methods?
  2. Makes me wonder what method Derby used for there to be such a large differential- and how those arose! Also makes me wonder if both valuations reached could in fact be correct.

Had the EFL made the sale of clubs' stadia to  related third party allowable within ffp, then I am pretty certain that even the then inept administrators would have determined the basis of valuation that clubs should apply, in order to avoid any ambiguity.

As it is, stadium sales have been " allowed" due to the  EFL's error, meaning the valuation can of worms has been opened as there is no clear definition as to what is the acceptable method of valuation. As you say, football stadia are unique and specialised assets, and because of this I can see any club put in the dock defending itself on the basis that their valuation, and method by which it was obtained, is as valid and correct as any the EFL puts up in contradiction.

I can only see legal action being joined and especially given the current situation, will the EFl want to get embroiled in such litigation on top of the other pressing issues they have to face at the moment?

Having said that, if the season is to end (without being completed - of that makes sense)  I can easily see that clubs adversely affected might well flex their muscles if they see the EFL failing to punish clubs that appear to have flouted ffp through the sale of their stadium. 

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12 minutes ago, downendcity said:

Had the EFL made the sale of clubs' stadia to  related third party allowable within ffp, then I am pretty certain that even the then inept administrators would have determined the basis of valuation that clubs should apply, in order to avoid any ambiguity.

As it is, stadium sales have been " allowed" due to the  EFL's error, meaning the valuation can of worms has been opened as there is no clear definition as to what is the acceptable method of valuation. As you say, football stadia are unique and specialised assets, and because of this I can see any club put in the dock defending itself on the basis that their valuation, and method by which it was obtained, is as valid and correct as any the EFL puts up in contradiction.

I can only see legal action being joined and especially given the current situation, will the EFl want to get embroiled in such litigation on top of the other pressing issues they have to face at the moment?

Having said that, if the season is to end (without being completed - of that makes sense)  I can easily see that clubs adversely affected might well flex their muscles if they see the EFL failing to punish clubs that appear to have flouted ffp through the sale of their stadium. 

Thanks, yeah you really need a valuation basis- just like you need an amortisation basis- see Derby and their unique way of accounting for it, which forms part of the EFL's current case against them.

Parry has clearly come in, took one look at things, at what he has inherited and said "WTF" or similar. I have faith in Parry, him vs Harvey night and day.

The only thing it does say in the regs is "Fair Market Value".Lot of ambiguity as you say.

There could easily be some very busy sports related lawyers whichever way it goes. We have something to work with though, in theory- £50m for Pride Park vs £81.1m. I believe the £50m is the basis for which FFP was recalculated for those 3 years.

God knows what Hillsborough is worth- I somehow doubt it is £60m however!

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3 minutes ago, Mr Popodopolous said:

Thanks, yeah you really need a valuation basis- just like you need an amortisation basis- see Derby and their unique way of accounting for it, which forms part of the EFL's current case against them.

Parry has clearly come in, took one look at things, at what he has inherited and said "WTF" or similar. I have faith in Parry, him vs Harvey night and day.

The only thing it does say in the regs is "Fair Market Value".Lot of ambiguity as you say.

There could easily be some very busy sports related lawyers whichever way it goes. We have something to work with though, in theory- £50m for Pride Park vs £81.1m. I believe the £50m is the basis for which FFP was recalculated for those 3 years.

God knows what Hillsborough is worth- I somehow doubt it is £60m however!

Parry is an experienced administrator, and will understand how clubs work. The crucial question is whether he has the balls to face down clubs , even if they threaten legal action.

It is a shame that the corona virus has caused such disruption, as without it I think things might have got quite "interesting" at the tail end of the season for clubs that had sold their grounds. What Parry could do is canvas the opinions of top valuation firms, to find a consensus ( or as near as) as to the most acceptable method of valuation, apply that to each stadium and the, if there are big discrepancies and he takes punitive action under ffp, he has a strong basis to fight the EFL's corner.

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12 minutes ago, downendcity said:

Parry is an experienced administrator, and will understand how clubs work. The crucial question is whether he has the balls to face down clubs , even if they threaten legal action.

It is a shame that the corona virus has caused such disruption, as without it I think things might have got quite "interesting" at the tail end of the season for clubs that had sold their grounds. What Parry could do is canvas the opinions of top valuation firms, to find a consensus ( or as near as) as to the most acceptable method of valuation, apply that to each stadium and the, if there are big discrepancies and he takes punitive action under ffp, he has a strong basis to fight the EFL's corner.

Agreed. His track record is great- he was an early, possibly even the original head of the PL. Senior at Liverpool. He was even on the UEFA FFP committee.

Plus crucially for this kind of thing, he was an accountant by trade AND has experience auditing- you couldn't ask for a better arbiter for this kind of thing, IMO- in terms of quality and experience. Harvey had a range of experiences too at a number of clubs...most of them bad! 

Have a look at his track record- on the face of it, it's not very good, Harvey that is! How on earth did he get anywhere near head of the EFL!?

https://beta.companieshouse.gov.uk/officers/MgdjpUB-G2dMg2lu_BhNdMrcMEg/appointments

Agreed-that is a million dollar question, facing down clubs that threaten legal action. In theory as the EFL is a members club, I wonder if that risk maybe overstated a little in some ways but yes the million dollar question.

Oh I think so. As it goes, Sheffield Wednesday's hearing is in July and Derby's mooted as that too- Reading is an interesting one as they surely will run into difficulties for the 3 years to June 2020 unless FFP scrapped. That seems a good way for me, the first we have seen is Derby at £50m vs £81.1m- it's all quite fuzzy though- I assume the EFL will have access or be able to request access to valuation methods used by the clubs, the accounts at CH show no such transparency though- simply on those that bothered says something like "Sought Independent advice" or words to that effect- under old accounting standards I believe you had to disclose the valuation company, the price and the valuation method. Still do possibly in Hong Kong- Wigan's stadium was valued at £29m or thereabouts, I saw online and it disclosed:

  • The price/value.
  • The method.
  • The company used.
  • Hell, even the guy who valued it!
Edited by Mr Popodopolous

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19 hours ago, Mr Popodopolous said:

Agreed. His track record is great- he was an early, possibly even the original head of the PL. Senior at Liverpool. He was even on the UEFA FFP committee.

Plus crucially for this kind of thing, he was an accountant by trade AND has experience auditing- you couldn't ask for a better arbiter for this kind of thing, IMO- in terms of quality and experience. Harvey had a range of experiences too at a number of clubs...most of them bad! 

Have a look at his track record- on the face of it, it's not very good, Harvey that is! How on earth did he get anywhere near head of the EFL!?

https://beta.companieshouse.gov.uk/officers/MgdjpUB-G2dMg2lu_BhNdMrcMEg/appointments

Agreed-that is a million dollar question, facing down clubs that threaten legal action. In theory as the EFL is a members club, I wonder if that risk maybe overstated a little in some ways but yes the million dollar question.

Oh I think so. As it goes, Sheffield Wednesday's hearing is in July and Derby's mooted as that too- Reading is an interesting one as they surely will run into difficulties for the 3 years to June 2020 unless FFP scrapped. That seems a good way for me, the first we have seen is Derby at £50m vs £81.1m- it's all quite fuzzy though- I assume the EFL will have access or be able to request access to valuation methods used by the clubs, the accounts at CH show no such transparency though- simply on those that bothered says something like "Sought Independent advice" or words to that effect- under old accounting standards I believe you had to disclose the valuation company, the price and the valuation method. Still do possibly in Hong Kong- Wigan's stadium was valued at £29m or thereabouts, I saw online and it disclosed:

  • The price/value.
  • The method.
  • The company used.
  • Hell, even the guy who valued it!

I'm certain that if big hitting firms of surveyors were involved. the valuations could be justified in every instance simply because they will have a basis. Whether that basis is contentious remains to be seen of course. DRC is a long established method of valuing "unique" properties and was (maybe still is ?) used by local authorities on libraries, swimming pools etc in the days when creativity over the alternative use of such buildings wasn't prevalent.A stadium located in a shithole is probably going to be valued that way whereas Reading for example has a much more lucrative alternative use. Even Pride Park has a lot of office development around it. One factor to consider though is the return required by the "purchaser" If they want 5% for example and the tenant is prepared to pay a high rent then the sale price will reflect that.

In a different life I was involved in the sale and leaseback of the freehold portfolio of a company and in essence, because they had an excellent covenant the purchaser was happy to base the purchase price upon the annual leaseback rent provided its required yield was met.This is important because a "special" purchaser can argue it has a different yield requirement than the so called market.Where it gets indefensible if if there is absolutely zero correlation between sale price and the subsequent annual rent.

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1 hour ago, Natchfever said:

I'm certain that if big hitting firms of surveyors were involved. the valuations could be justified in every instance simply because they will have a basis. Whether that basis is contentious remains to be seen of course. DRC is a long established method of valuing "unique" properties and was (maybe still is ?) used by local authorities on libraries, swimming pools etc in the days when creativity over the alternative use of such buildings wasn't prevalent.A stadium located in a shithole is probably going to be valued that way whereas Reading for example has a much more lucrative alternative use. Even Pride Park has a lot of office development around it. One factor to consider though is the return required by the "purchaser" If they want 5% for example and the tenant is prepared to pay a high rent then the sale price will reflect that.

In a different life I was involved in the sale and leaseback of the freehold portfolio of a company and in essence, because they had an excellent covenant the purchaser was happy to base the purchase price upon the annual leaseback rent provided its required yield was met.This is important because a "special" purchaser can argue it has a different yield requirement than the so called market.Where it gets indefensible if if there is absolutely zero correlation between sale price and the subsequent annual rent.

Your last sentence was my point earlier. Valuation methods are all very well and i know we have a couple of high flying (please forgive the terms guys) accountants who come to this place, however this is a sale of fixed assets, in this case a stadium. The correlation has to be between sale price and yield of the stadium. (Plus what is the dirt worth if the FC leaves to recapture so0me loss/profit?)

Thus the time to recapture the initial capital in rent At the time of sale is the best indicator of if the sale is iffy. 

Edited by REDOXO
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Some interesting lines from Mark Bowen. Happy to get onto the valuation stuff later or tomorrow as it's very interesting, but some interesting lines:

Quote

Recruitment on hold

Reading boss Mark Bowen says all areas of recruitment are on hold as the club seeks to manage a way through the coronavirus pandemic.

Reading's latest set of accounts made for grim reading and highlighted the urgent need to cut costs and sell players to help balance the books and meet the Football League's guidelines.

A massive clear-out of players is expected, therefore, as the club looks for some financial stability.

So far, so normal...

Quote

"Even with FFP (Financial Fair Play) at this moment in time we're not 100 per cent certain where we'll be and at what level we'll be able to bring players in," Bowen said.

"It's very hard and very complicated because if you don't know what level you can bring in at in terms of money - how much you can spend - then it certainly limits where you can look in the market place.

"You've got to keep tabs on many, many players at different levels.

"With FFP if we go in to an embargo then that affects us in a different way. If club A goes into an embargo then the club has to sell players for certain money to get to a certain level to get out of that embargo.

"But in today's climate I don't know how or when you're going to be able to sell players to a certain level. Who knows what's going to happen to the transfer market?

"So if you haven't got any possibility to get out of the embargo restrictions then how can they be enforced?

Shouldn't overspend then should you!! Shouldn't spend and then sell assets not just in season 1 but season 2! Indeed, one of the asset sales was the stadium in successive seasons!

Clear to me they gambled on promotion this season.

Continued.

Quote

"I don't know how you can go and imply an embargo onto a club if they haven't got a chance of getting out of it.

"I understand you only go in because the club didn't do things at the right time but two wrongs don't make a right.

"Maybe, and I say this tongue in cheek, they will have to delay these financial restrictions for a year or 18 months until the game gets back to normal again."

Check your spending!

Most others managed it- and you were clearly very close in summer 2019!

Delay? No! Tongue in cheek? I hope! Modify? Maybe! I'd be happy for losses and only losses directly incurred through Covid 19 to be added onto the £39m + allowables, or waived or whatever but if you're on course to fail regardless, ie even after the deductions that's your own fault! Nobody elses!

The cheek of them eh? @Davefevs @Vincent Vega @downendcity

Selling the Madejski was one thing- £26.5m in 2017/18 though the rent seemed a bit low at £750,000.

Selling further assets from Renhe to Chinese companies- that is something else.

Selling the Madejski again- this was curious. Rent did double though so on one level it seems to match- £37.5m price, £1.5m rent x 25 years.

£3m loan fee for Aluko was a joke! Worse than the asset sales if anything.

The worst thing was they did NOT use this to restructure significantly. Well they did at first- but when released from embargo they signed Joao and Puscas!

NO. BLOODY. SYMPATHY.

I seem to recall Danny Loader was touted as a sale last summer, to help with FFP. Now it is mooted he is leaving on a free- shame. Having said that, his age and his mooted talent- compensation? Would have to look into it further.

Edited by Mr Popodopolous
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