Steve L / Stadium Financing

[Cider Army]

This is just great news for us and the club..Steve lansdown loves this club and is for sure doing the buisness,its interesting times just think a release of shares of 47m then you have the ground being sold to so thts few more million then sponsers.

Bristol city is going to be in very good shape this ground has to go ahead and i really think now it is!!

Top man steve!

[Martyn Hocking]

just wanted to add my congrats and thanks to Steve L - hopefully this gives a timely perk up to the doom merchants.

Fantastic news indeed - and proof if any were needed that Steve L is willing to put his money where his mouth is. Assuming the new ground will cost around £30m to build, and that we will raise £10m+ from the sale of Ashton Gate, naming rights for the new ground etc, it looks like Steve has raised far more than we are likely to need - always nice to have a contingency fund for a major building project!

[Nibor]

Fantastic news indeed - and proof if any were needed that Steve L is willing to put his money where his mouth is. Assuming the new ground will cost around £30m to build, and that we will raise £10m+ from the sale of Ashton Gate, naming rights for the new ground etc, it looks like Steve has raised far more than we are likely to need - always nice to have a contingency fund for a major building project!

It'll be double that £30m at least sadly.

[Guest DanC]

Although it's great that Steve has done this what we must not forget it is not a donation and is either a loan or a investment. In this current climate it must have proved difficult to secure finance on favourable terms so has decided to either loan or invest the money himself. So in reality he is just being the bank.

[Tales From The Front]

Although it's great that Steve has done this what we must not forget it is not a donation and is either a loan or a investment. In this current climate it must have proved difficult to secure finance on favourable terms so has decided to either loan or invest the money himself. So in reality he is just being the bank.

To be fair that is all he has ever done (brought shares / debt for equity swaps) and quite rightly so. None of us should expect him to just "donate" this sort of money. Any one of us would expect a return of this sort of investment and I certianly don't begrudge him that. Be thankful that he is not the Glazers and we are saddled with having to finance a club with huge external debt.

[screech]

Although it's great that Steve has done this what we must not forget it is not a donation and is either a loan or a investment. In this current climate it must have proved difficult to secure finance on favourable terms so has decided to either loan or invest the money himself. So in reality he is just being the bank.

I'd rather it was Steve L being the bank than the bank itself. If he gets more than his money back eventually I wouldn't begrudge him it, I doubt this is the case though.

I'd much rather see a fan of the club getting the money out of the project than for it to end up at a bank where Fred the shred and his cronies sit on a beach eating caviar and drinking champagne retired at the grand old age of 51.

[City Ben]

I'd rather it was Steve L being the bank than the bank itself. If he gets more than his money back eventually I wouldn't begrudge him it, I doubt this is the case though.

You doubt that SL will get more than his original investment back? I don't, not for one minute. And, like you, I don't begrudge him that at all.

If him making a successful investment simultaneously completely restructures our (precarious) balance sheet, turns the club from loss making to profit making, and gets us a new stadium to boot then it seems like a win-win to me. Add in exciting development of the rest of the area (as mooted by Moor2Sea in the excellent "trojan horse" comment above) and I'm a happy boy.

Nibor - to try to distill the burning ownership question I've two scenarios for you to consider. Context: as a stadium operator (rather than a club), City currently makes a loss. This is largely because the stadium operating costs are too high, and non-match day revenue is minimal. So...

Scenario A - Stadium owned and operated by external company. Long lease to the club. City bares no stadium costs (ie only peppercorn rent). City gets match-day revenue only, maybe some non-match day revenue. Terms to be agreed! City therefore makes a profit on the relationship with the stadium. Our balance sheet shows no outstanding loans and a healthy cash balance.

Scenario B - City owns the stadium. City takes out significant loans in order to finance (be it from SL, a bank etc). City bares costs of operating stadium, and gets both match-day and non-match day revenues... but also takes the hit for the financing costs, and has big loans on its balance sheet.

There's no numbers against either, and it's easy to see that we should make a profit in comparison to where we are now. Probably more of a profit in Scenario B, but more risk with the financing too. To clarify a point you (angrily! - I like your look-out for City!) raised earlier - I don't think that a situation would ever be suggested whereby City took out loans, but didn't benefit from the revenues. That clearly makes no sense.

Bully - would like your take on this as well.

[bully]

You doubt that SL will get more than his original investment back? I don't, not for one minute. And, like you, I don't begrudge him that at all.

If him making a successful investment simultaneously completely restructures our (precarious) balance sheet, turns the club from loss making to profit making, and gets us a new stadium to boot then it seems like a win-win to me. Add in exciting development of the rest of the area (as mooted by Moor2Sea in the excellent "trojan horse" comment above) and I'm a happy boy.

Nibor - to try to distill the burning ownership question I've two scenarios for you to consider. Context: as a stadium operator (rather than a club), City currently makes a loss. This is largely because the stadium operating costs are too high, and non-match day revenue is minimal. So...

Scenario A - Stadium owned and operated by external company. Long lease to the club. City bares no stadium costs (ie only peppercorn rent). City gets match-day revenue only, maybe some non-match day revenue. Terms to be agreed! City therefore makes a profit on the relationship with the stadium. Our balance sheet shows no outstanding loans and a healthy cash balance.

Scenario B - City owns the stadium. City takes out significant loans in order to finance (be it from SL, a bank etc). City bares costs of operating stadium, and gets both match-day and non-match day revenues... but also takes the hit for the financing costs, and has big loans on its balance sheet.

There's no numbers against either, and it's easy to see that we should make a profit in comparison to where we are now. Probably more of a profit in Scenario B, but more risk with the financing too. To clarify a point you (angrily! - I like your look-out for City!) raised earlier - I don't think that a situation would ever be suggested whereby City took out loans, but didn't benefit from the revenues. That clearly makes no sense.

Bully - would like your take on this as well.

Ben you have distilled the possible scenarios far better than I attempted - whilst xmas would come early if Santa Steve funded the development without any financial partnerships, including the infrastructure needed to open the site for adjacent non football uses and handed all revenue to BCFC, I can't see it happening.

We would be in a fantastic situation in my view, if (A) above happened, and that would put us in a different league to the teams who have developed on the basis of long term Premier league gravy.

We would even be in pretty good nick if the long lease was geared to a low % of turnover or even better, net profit - therefore payments depend upon success so little exposure therefore if we run neutral or a slight loss.

Exciting times off the park - here's to it being matched on the pitch next season!

[Guest DanC]

You doubt that SL will get more than his original investment back? I don't, not for one minute. And, like you, I don't begrudge him that at all.

If him making a successful investment simultaneously completely restructures our (precarious) balance sheet, turns the club from loss making to profit making, and gets us a new stadium to boot then it seems like a win-win to me. Add in exciting development of the rest of the area (as mooted by Moor2Sea in the excellent "trojan horse" comment above) and I'm a happy boy.

Nibor - to try to distill the burning ownership question I've two scenarios for you to consider. Context: as a stadium operator (rather than a club), City currently makes a loss. This is largely because the stadium operating costs are too high, and non-match day revenue is minimal. So...

Scenario A - Stadium owned and operated by external company. Long lease to the club. City bares no stadium costs (ie only peppercorn rent). City gets match-day revenue only, maybe some non-match day revenue. Terms to be agreed! City therefore makes a profit on the relationship with the stadium. Our balance sheet shows no outstanding loans and a healthy cash balance.

Scenario B - City owns the stadium. City takes out significant loans in order to finance (be it from SL, a bank etc). City bares costs of operating stadium, and gets both match-day and non-match day revenues... but also takes the hit for the financing costs, and has big loans on its balance sheet.

There's no numbers against either, and it's easy to see that we should make a profit in comparison to where we are now. Probably more of a profit in Scenario B, but more risk with the financing too. To clarify a point you (angrily! - I like your look-out for City!) raised earlier - I don't think that a situation would ever be suggested whereby City took out loans, but didn't benefit from the revenues. That clearly makes no sense.

Bully - would like your take on this as well.

I thought the whole point in moving to a new stadium was so we could make more money from non match day income. As for us leasing teh stadium then sorry but that is a total no go for me even if we are leasing it off of SL, To make the best possible return on the stadium we need to own it 100%. Just look at Coventry, Niceish stadium but don't own it so they don't make as much money as they could make if they did own it.

[Nibor]

Nibor - to try to distill the burning ownership question I've two scenarios for you to consider. Context: as a stadium operator (rather than a club), City currently makes a loss. This is largely because the stadium operating costs are too high, and non-match day revenue is minimal. So...

Scenario A - Stadium owned and operated by external company. Long lease to the club. City bares no stadium costs (ie only peppercorn rent). City gets match-day revenue only, maybe some non-match day revenue. Terms to be agreed! City therefore makes a profit on the relationship with the stadium. Our balance sheet shows no outstanding loans and a healthy cash balance.

Scenario B - City owns the stadium. City takes out significant loans in order to finance (be it from SL, a bank etc). City bares costs of operating stadium, and gets both match-day and non-match day revenues... but also takes the hit for the financing costs, and has big loans on its balance sheet.

There's no numbers against either, and it's easy to see that we should make a profit in comparison to where we are now. Probably more of a profit in Scenario B, but more risk with the financing too. To clarify a point you (angrily! - I like your look-out for City!) raised earlier - I don't think that a situation would ever be suggested whereby City took out loans, but didn't benefit from the revenues. That clearly makes no sense.

I would be dead against Scenario A as described.

The theory's simple for me really. The whole proposition either makes money or it doesn't. If it makes money I want all of it going to the club. If it doesn't I don't want us to do it.

The only benefit of Scenario A appears to be reduced risk but I don't think this translates into reality. If the proposition fails it will **** us whether we own the ground or not IMO.

Some more slightly abstract reasons I don't like A:

1) I don't know of any football club in the UK that has built a new stadium they don't own and had financial success from it. I know of several clubs that have built a stadium they don't end up owning and are very likely to financially implode.

2) I want the ownership tied together so that sensible business decisions in the context of the whole proposition are made and continue to be made with the football club's interest prime amongst them. I don't want any conflict of interests in the future and no matter what's in the lease they can and will arise.

3) I don't mind the outstanding secured loans - we should be making more than enough revenue to service them. In fact I quite like them because they may make any future custodians of the club think carefully about further borrowing just for team investment. Kinda like your big mortgage makes you think twice about putting Xmas on a credit card.

4) In practise when Scenario A is followed the rent is rarely peppercorn and the lease is rarely watertight or proof against things like the stadium company going bust.

To be clear when I say "own" I still consider us to own Ashton Gate even though it's in a separate company because both that and the FC are wholly owned by a holding company which is the only one people invest in and trade shares in - they're currently tied together.

From Steve's interview, he intends to use the same structure for the new stadium but what isn't clear yet is how investment will be done. As long as it's investment in the holding company that remains the sole owner of both subsidiaries or it's repayable loans I'm happy.