125 year lease- impact on a takeover?

[East End Old Boy]

3 hours ago, Eddie Hitler said:

 

Well done on finding it Mr P, though that to me looks like the restructure which other clubs were doing where, from having one company holding everything, we changed to a holding company (in which some fans still have shares) which wholly owned a club subsidiary and a ground subsidiary (Ashton Gate Limited).

This was done so that if the football club went bust then it wouldn't take the ground with it.

At that stage the freehold remained owned by AG Ltd and, through them, BC Holdings Ltd.

I will also have a poke about the accounts to see when the freehold went outside the Holdings group, as I said this is all news to me.

Steve & Maggie own the ground through Pula Sports.

[Mr Popodopolous]

6 minutes ago, One Team said:

Not sure I’ve got this, but are we saying the rugby club has a right to play at the Gate for 125 years as well?

If Gavin Marshall is correct, it would seem so.

[One Team]

1 minute ago, Mr Popodopolous said:

If Gavin Marshall is correct, it would seem so.

Good grief! 

[East End Old Boy]

1 minute ago, Mr Popodopolous said:

If Gavin Marshall is correct, it would seem so.

Yep, Gavin explained this at this month’s Senior Reds lunch.

[One Team]

Just now, East End Old Boy said:

Yep, Gavin explained this at this month’s Senior Reds lunch.

So even if the Lansdowns sell up the rugby club still gets to play at Ashton Gate?

[East End Old Boy]

6 minutes ago, One Team said:

So even if the Lansdowns sell up the rugby club still gets to play at Ashton Gate?

Apparently so - and the football club!

[One Team]

3 minutes ago, East End Old Boy said:

Apparently so - and the football club!

Well thank goodness for that!

Oh well, Bears for life then…..

[Bristol Rob]

3 hours ago, Mr Popodopolous said:

I know it was mentioned in the main thread but does this deserve a thread of its own.

On one hand, security of tenure is all well and good but otoh surely if you are an investor you would not want to buy club without stadium etc.

I even get it from the POV that it would protect from a rogue owner who sees real estate potential, but the question is then does it 'protect' from anyone who wants to invest verbatim!

I think the speculation-train is doing some heavy lifting here!

Anything can be negotiated at the point of investment or sale. 

And you'd have to be a right Mark Goldberg to buy the liabilities without a significant stake in the assets. 

As for the lease, without seeing it, we have no way of knowing what exit and break clauses are in there, could be that a new investor/owner comes in and exercises a notice to quit as they are building a new stadium could be that there are similar clauses on the other side that allow the stadium owners to force the clubs to vacate. 

[Mr Popodopolous]

10 minutes ago, Bristol Rob said:

I think the speculation-train is doing some heavy lifting here!

Anything can be negotiated at the point of investment or sale. 

And you'd have to be a right Mark Goldberg to buy the liabilities without a significant stake in the assets. 

As for the lease, without seeing it, we have no way of knowing what exit and break clauses are in there, could be that a new investor/owner comes in and exercises a notice to quit as they are building a new stadium could be that there are similar clauses on the other side that allow the stadium owners to force the clubs to vacate. 

Well yes this is true, of current can be negotiated.

Question is what degree of control do the Lansdowns want to retain, not necessarily for nefarious reasons either. However if this remains in place it could act as a barrier to new ownership, investment less so, staged takeover or buyout again less so.

The particulars of the lease are key as you say, could he break clauses, could be variable, etc.

[Bristol Rob]

3 minutes ago, Mr Popodopolous said:

Well yes this is true, of current can be negotiated.

Question is what degree of control do the Lansdowns want to retain, not necessarily for nefarious reasons either. However if this remains in place it could act as a barrier to new ownership, investment less so, staged takeover or buyout again less so.

The particulars of the lease are key as you say, could he break clauses, could be variable, etc.

Again, it's assumed that the Lansdown family want to retain some control. 

My impression is that (again) everything is open to negotiation, if you think that the only member of the Lansdown family working at the club is Jon and most seem unconvinced as to the specialist skills he brings to the club, then what value would there be in a partial deal. Alternatively, they might look to retain some interest if they aren't 100% convinced that a new owner will be a great fit.

[Mr Popodopolous]

3 minutes ago, Bristol Rob said:

Again, it's assumed that the Lansdown family want to retain some control. 

My impression is that (again) everything is open to negotiation, if you think that the only member of the Lansdown family working at the club is Jon and most seem unconvinced as to the specialist skills he brings to the club, then what value would there be in a partial deal. Alternatively, they might look to retain some interest if they aren't 100% convinced that a new owner will be a great fit.

Sorry by control I mean especially ownership of the ground or sporting fixed assets.  As opposed to control of the football, rugby clubs etc.

Of course that can all change, negotiations can occur- would a sale have a legal clause ensuring the continuity of the current arrangements irrespective of a change of ownership.

116 years left is it.

Edited November 28, 2023 by Mr Popodopolous

[ExiledAjax]

3 hours ago, Eddie Hitler said:

 

I've cribbed a definition below, the lease is the legal agreement under which the long term rental happens.

Granting a 125 year lease would mean that the football club company would own, as in have exclusive rights to, Ashton Gate for 125 years in exchange for an agreed rental stream.

As long as the rent is paid as agreed then BCFC Ltd effectively owns the ground, whilst paying a rent to the freeholder as someone owning a leasehold flat would pay ground rent.

And to suggest that having given a 125 year lease to BCFC from the stadium company that the rugby club has similar is a nonsense.

Though as I said the guy was put in the spot, in a similar situation I might have blurted out "lease" but I would have corrected myself.

 

 

 

What Is a Lease?

A lease is a contract outlining the terms under which one party agrees to rent an asset—in this case, property—owned by another party. It guarantees the lessee, also known as the tenant, use of the property and guarantees the lessor (the property owner or landlord) regular payments for a specified period in exchange. Both the lessee and the lessor face consequences if they fail to uphold the terms of the contract. A lease is a form of incorporeal right.

It will be a licence rather than a lease. One condition of a lease is that the tenant has exclusive possession of the property. BCFC don't have that.

I suspect AG is a freehold title under which the titleholder - Ashton Gate Limited - has granted licences to BCFC and the Bears, and occasionally grants temporary licences to touring companies and the like.

Edit: assuming I accurately remember my Real Estate seat in my training contract from a decade ago.

Edited November 28, 2023 by ExiledAjax

[Davefevs]

We have some real expertise on this forum.

[Mr Popodopolous]

2 hours ago, East End Old Boy said:

Yep, Gavin explained this at this month’s Senior Reds lunch.

Can you expand on what Gavin Marshall said today?

Sounds like his answer at the Fans Forum was a bit sketchy or unclear at least.

Edited November 28, 2023 by Mr Popodopolous

[sh1t_ref_again]

Seem to remember Jon saying about investors and what expertise they can bring, so could mean that the new investor runs the club with the Lansdowns in the background and shared ownership, of course could mean a lot of things 

[ExiledAjax]

12 hours ago, ExiledAjax said:

It will be a licence rather than a lease. One condition of a lease is that the tenant has exclusive possession of the property. BCFC don't have that.

I suspect AG is a freehold title under which the titleholder - Ashton Gate Limited - has granted licences to BCFC and the Bears, and occasionally grants temporary licences to touring companies and the like.

Edit: assuming I accurately remember my Real Estate seat in my training contract from a decade ago.

Ok so I've checked this and thank goodness it seems my memory is not yet a sieve.

For BCFC to have a proper legal LEASE over AG it would need to have been granted exclusive possession of AG. 

Exclusive possession means the tenant has the power to exclude the landlord and third parties from AG. If you rent your home then it's this principle which means the landlord needs to give you advance notice to come and check the place. 

What we likely have in place is a licence to occupy/use the space. This is simply a contract where Ashton Gate Ltd grants BCFC the right to do something on the property - in this case I'd guess that is to host and play football matches, and to use the facilities for ancillary activities.

It's absolutely possible for AG to grant multiple licenses simultaneously - to the rugby club, the women's football club (a subsidiary company of BCFC so there would need to be another licence there), to the various concession stands and food trucks, to Take That, to the Vegan Association, to whoever wants to use AG.

IF BCFC do have a LEASE then it's BCFC Ltd who would be granting these licences, and that's unlikely as we don't see that income in BCFC Ltd's accounts, we see it in AG Ltd's instead.

So it's likely that Marshall is technically mistaken when he describes the relationship as a "lease". A very common mistake amongst the non-legally trained btw. 

In answer to Pop's OP - I would see absolutely no reason why this arrangement would be a problem for any prospective buyer or investor.

Edited November 29, 2023 by ExiledAjax

[Mr Popodopolous]

5 hours ago, ExiledAjax said:

Ok so I've checked this and thank goodness it seems my memory is not yet a sieve.

For BCFC to have a proper legal LEASE over AG it would need to have been granted exclusive possession of AG. 

Exclusive possession means the tenant has the power to exclude the landlord and third parties from AG. If you rent your home then it's this principle which means the landlord needs to give you advance notice to come and check the place. 

What we likely have in place is a licence to occupy/use the space. This is simply a contract where Ashton Gate Ltd grants BCFC the right to do something on the property - in this case I'd guess that is to host and play football matches, and to use the facilities for ancillary activities.

It's absolutely possible for AG to grant multiple licenses simultaneously - to the rugby club, the women's football club (a subsidiary company of BCFC so there would need to be another licence there), to the various concession stands and food trucks, to Take That, to the Vegan Association, to whoever wants to use AG.

IF BCFC do have a LEASE then it's BCFC Ltd who would be granting these licences, and that's unlikely as we don't see that income in BCFC Ltd's accounts, we see it in AG Ltd's instead.

So it's likely that Marshall is technically mistaken when he describes the relationship as a "lease". A very common mistake amongst the non-legally trained btw. 

In answer to Pop's OP - I would see absolutely no reason why this arrangement would be a problem for any prospective buyer or investor.

Thanks EA. License not lease then pretty much.

I vaguely recall discussion of Mike Ashley and Lease or license for the Ricoh Arena or whatever it is called these days, wasn't aware licenses were so long.

Who would take ownership of AG in the event of a sale then?

Bit poor of a senior member of the hierarchy to mix this up in a public Fans Forum though, Marshall is Group CEO isn't he?

Edited November 29, 2023 by Mr Popodopolous

[ExiledAjax]

20 minutes ago, Mr Popodopolous said:

Who woukd take ownership of AG in the event of a sale then?

Depends on what is sold and how the sale is structured.

If we assume that it is BCFC Holdings Ltd that is sold and there are no simultaneous changes to the corporate structure below it, then direct ownership would not change. BCFC Holdings would remain the owner of Ashton Gate Ltd and of BCFC Ltd and any contract or licence between those two subsidiary companies would (if desired) remain as they are.

If only BCFC Ltd was sold then the assumption is that Ashton Gate Ltd would remain with BCFC Holdings Ltd, which if still owned by Pula Sports and the Lansdowns, means it stays with them. Even so, the licence could probably remain in place, or more likely a new licence would be put in place under new terms.

But that second scenario is very unlikely. Honestly who is going to buy the club and not the stadium. It's not going to happen. You don't buy an engine and some seats but not the chassis of a car do you? No one buys all your furniture if they don't have a house as well. I'd the club is bought as a going concern then it's just not realistic to worry about Ashton Gate Ltd and BCFC Ltd not being a package deal.

20 minutes ago, Mr Popodopolous said:

Bit poor of a senior member of the hierarchy to mix this up in a public Fans Forum though, Marshall is Group CEO isn't he?

I have sympathy tbh. It's a technical, legal, distinction that pretty much no one gets right other than lawyers who regularly deal with real estate. In the heat of a moment in the pub I can easily forgive such a slip up.

Edited November 29, 2023 by ExiledAjax

[Hxj]

I do love these rabbit holes that OTIB goes down sometimes 

To add to the fun it doesn't matter if you call it a lease or a licence or something else, it is the terms of the contract which determine what you have.

Plus, to give some context, imagine being asked to explain the differences between a lease (commonly understood term) or a licence (commonly misunderstood term)at a Fans Forum in the pub.  Using 'audience appropriate language' is a good skill.

Edited November 29, 2023 by Hxj

[ExiledAjax]

10 minutes ago, Hxj said:

I do love these rabbit holes that OTIB goes down sometimes 

To add to the fun it doesn't matter if you call it a lease or a licence or something else, it is the terms of the contract which determine what you have.

Plus, to give some context, imagine being asked to explain the differences between a lease (commonly understood term) or a licence (commonly misunderstood term)at a Fans Forum in the pub.  Using 'audience appropriate language' is a good skill.

As ever you make some excellent points.

[Davefevs]

22 minutes ago, Hxj said:

I do love these rabbit holes that OTIB goes down sometimes 

To add to the fun it doesn't matter if you call it a lease or a licence or something else, it is the terms of the contract which determine what you have.

Plus, to give some context, imagine being asked to explain the differences between a lease (commonly understood term) or a licence (commonly misunderstood term)at a Fans Forum in the pub.  Using 'audience appropriate language' is a good skill.

Thanks Gavin