Bianconeri

Your right leg I love, it’s a great leg. I’ve nothing against your right leg. ......trouble is neither have you. (one legged man auditions for Hamlet)

I think it originated in one of the satire shows in the 1960s in the ‘what was the worst job you’ve ever had?’ sketch.

The great Pete and Dud as Derek and Clive - “Laugh? I nearly shat. I haven’t laughed so much since Grandma died or Auntie Ada caught her left tit in the mangle”

Oh dear. How sad. Never mind.

3000 prowed and loyal away fans in a crowd of 2890 wasn’t it?

I think it’s serious addition of working capital as well as covering any new debt in the current year. How much is the new training facility costing?

The lender would view football as an income stream for whichever company took out the mortgage / owned the asset. So if the asset was repossessed or sold the rent for playing football there would be payable to the new owner (who might be the lender). As someone else said, the real value is in the land, the lender won’t want to end up owning a stadium - important point, you don’t structure these things hoping they’ll fail, lenders want their cash back / predictable income streams not an eclectic mix of assets. So Sags would have a contract to use the stadium for ‘x’ years at ‘y’ rent to DS Offshore. If DS Offshore went pop this contract would have to be novated / renegotiated with the new owners. Since DS Offshore owns virtually all of SagFC if one goes the other does, however DS Offshore could sell off the ‘asset’ called SagFC and end up as landlords to a third party? DS Offshore needs to have enough equity in the asset to make winding up a highly unattractive option. The lenders have first charge and may prevent any further charges in the asset.

Good analogy I think. Would the lenders be happy with this though? I guess if it’s secured on the asset and the asset can be repossessed and sold for enough to cover the loan they might be.

Not far off in my opinion but the affordability / stress test would be on revenues generating enough pre-tax profit to cover the interest and not the lender taking a share of the revenue to cover the interest. That sort of shared risk approach is quite possible but would probably drive the credit risk premium higher (in my opinion). EDIT - come to think of it this is basically taking equity in the company and getting rewards through dividends. Interest is tax-deductible but you still need to make enough to cover it, no profit equals no tax due equals no deduction for interest payments. The repayment of the principal at the end of the term is less of an issue as refinancing Is possible.

Strangely that’s the sort of finance package that Islamic Banks often construct for large capital projects. They set up a special-purpose company that builds or buys the asset then rents it to the end-user for a period of time. The rent is distributed, after costs, to investors who buy shares in the SPC. The end-user pays for operations and maintenance and redeems the loan, buying the asset, at the end of the term. Simplistic overview but that’s my understanding - PFI for companies via a souped-up bond arrangement. Sometimes it would be nice to be as academically and intellectually gifted as Stan Gasman eh? In summary, not a snowball’s chance in hell of it happening without the vast majority coming from equity investment as with Steve L’s in us.

Sad reality of external investment. Since you have to make a profit to pay a dividend then equity holders may get fed up and sell their shares if they can. Of course over the, say, 30 year life of the project finance the asset should grow in value (the land will almost certainly) and the £80k’s paid back in 2050 are worth much less in today’s terms than the ones paid back in 2020. Revenue will grow as long as crowds stay stable but costs will increase. A fascinating NPV model I think - but I ain’t going to write it.

We’ve got a few related things here. On the one hand is how much the capital will cost the company. Any self-respecting CFO will know this, made of of the blended cost of equity and cost of borrowing. Let’s assume this investment would be entirely financed. Any investor will want a rate of return based on the risk free rate (what is available risk-free, usually the return on 25 yr government bonds) plus the credit risk premium that relates to the company, the investment, the industry etc. Risk free rate is going to be about 2.8%, credit risk premium is really hard - heavily indebted company not currently making a profit, industry probably past peak revenues BUT the lending would be secured on the new asset. Moot point, would the new asset plus the eventual sale of the Minimal cover the current plus new debt? Then you have the issue if having an old stadium while the new one is built - costs go up considerably in the short term, this really hurt Arsenal so heaven knows what it does to a small club. I’d say they’d be lucky to get away with an interest rate of less than 8%. That means each million costs £80k a year in interest alone, and the investment also has to be paid back at some point. Payingf for the ‘80k’s’ is not a simple income generation issue. It’s virtaully unheard of for each £1 of additional revenue to add £1 to the coffers. So what margin will these ‘new income streams’ generate? We know that Ashton Gate now generates lots of new income but it’s hard to say what profit each activity delivers, though the club will know (obviously). We’ve got first mover advantage so Sags would be trying to attract market share away from an established supplier. Maybe they undercut us in their new megabowl, except that hurts margin and they’ve got all those £80ks to pay.... i wouldn’t want to have to write this an investment proposal!

Don’t forget the thousands of us in the away end that helped swell the ‘crowed’ to 10 ½ thousand. Must be 35000 locked out today, or a cycle race, or a sale in Poundland to judge by the attendance

Yes, classic approach to an Islamic mortgage. There are a number of other products to mirror HP, savings deposits, etc... Sukuk is a common ‘bond’ approach to large investments via a special purpose company. I did wonder if that was what the bank had done, take over ownership of the asset, charge rent for its use and then distribute a share of the rental to investors. That wouldn’t account for the escalting debt caused by operational losses. I think Dwayne (as a Jersey based company) has taken out a conventional mortgage.

They just operate differently to conventional banks and generate income in other ways. If anything they have greater liquidity due to principles of risk sharing and the prohibition of speculation.

That is very odd because Shar’ia compliance would mean not charging interest. In practice Islamic financial institutions often quote ‘interest equiivalents’. I’m not familiar with the flavour of compliance used in Jordan but the basic principles tend to be similar across the Islamic Finance market. There are some highly complex ‘compliant’ products that mirror conventional products. Have a look at the OECD, IFSB and World Bank reports if you are very bored. My point is that the overt quotation of interest suggests that Dwayne borrowed the money from a source other than ‘the family’.

Islamic banks don’t charge interest. It’s absolutely forbidden. When I last looked the Al Qadis were shareholders in an Islamic Bank. It’s another reason not to understand the way this whole thing is set up.

Excellent....

The ‘new’ Servette play there in Tier 2 of the Swiss League (about League 1 level). The reformation was ‘interesting’ , the old team’s U-21 side joined at tier 3 and there have been a couple of promotions and relegations since. It’s just absurd that a world-class stadium hosts such tiny crowds. Sags couldn’t afford a parking space in Geneva.

Not Salisbury mate, they used to play in a ground inside a council park (like Aldershot) and moved to a new ground in the late 90s which I think was built as part of a new housing development. I think you mean Dorchester - smashing ground funded by Tesco or maybe even Yeovil (again Tesco and a decent ground). I was told something amusing today. Around 2000 Servette’s old ground at Chemilles was falling apart around them and the fans referred to it as ‘Chernobyl’. They built a fantastic new ground (Stade de Geneve) and even with masses of help from the Canton to fund it ended up going bust. Last time I went there the crowd was about 2500 in a ground that holds 32000. There’s a lesson there too.

I imagine the nine of them will be a mite downhearted.

Didn’t we also have ‘don’t forget how many were in the home end and in the boxes’ when they were challenged about official numbers being at odds with theirs?

Truro must be in that world of pain too. I think their ‘derby’ this season is with WSM, must be a 300 mile round trip.

Hellenic Premier fits the bill, level 9, but as a Bath-based team I suppose it would be Western Premier. We can hope they end up ground squatting in somewhere like Aberdeen I suppose.

The precedents are that new clubs now tend to start no higher than the equivalent of Western League Premier. Recently, that’s where reformed Aldershot, Hereford and Salisbury restarted (probably a few more but that’ll do for an example). It causes problems with away attendances but usually only for one season, if you are the best funded by miles you tend to get promoted. In one respect I like the way it spreads the money around, every other team in that league gets a bumper home gate. I know in Hereford’s season in the Midland League the attendance for their game at a club was invariably more than the rest of the season’s home gates combined. In other respects it’s daft, clubs with home gates of 100 usually can’t cope with (say) 500 visiting supporters (and since most games are local that can easily happen). Throw in a bit of bad behaviour from the visitors and it’s a bad recipe. Should the implosion happen I think relocation to Twerton is very likely, followed by rapid amalgamation of the clubs should the EFL be content for Bath City to take over the sags’s EFL persona.