| Could SCFC buy The Liberty Stadium outright? 23:37 - Nov 11 with 12393 views | Lord_Bony |
Well Swansea City Counil own the land. A consortium of developers and the council built the stadium in 2005 at a cost of £26 million...upon further investigation the council have leased the ground to SCFC for a period of no less than 150 years!
So there is no danger of it being taken back in our lifetimes.
Feasibly the club could buy back off the council,who would be sympathetic to the cause for somewhere in the region of £15-20 million?
There would probably be a clause whereby we would have to give a good deal to The Ospreys and look after them so they may still enjoy there peppercorn rent they are currently paying.
The consequences of this would be very positive for the clubs future and a prime asset to own. [Post edited 11 Nov 2014 23:41]
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| Could SCFC buy The Liberty Stadium outright? on 04:30 - Nov 13 with 1304 views | phact0rri |
I think part of the picture of owning too... is that currently I don't know if there is enough of "other things" in the liberty to help it off set the cost to the club at the present moment? I don't know what events go on at the liberty or if there's enough to help off set the cost enough to make it a justifiable expense to just have naming rights or something like this?
But I would think that if it was a good investment that the club would be pushing ahead on that. I mean real estate portfolio is often hit or miss depending on the area and what the income generating turns out to be.
From the outside looking in it looks like we'd be losing money for more than a few years, where we could be using that same money to strengthen our development programs, investing in medicine technology, strengthening our first team, etc.
I'm with those that think as of right now, where we are... were better off renting. btw does anyone know if our rent will go down if we pay for expansion or is the club just going to be taking one for the city? |  |
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| Could SCFC buy The Liberty Stadium outright? on 04:44 - Nov 13 with 1297 views | Parlay |
| Could SCFC buy The Liberty Stadium outright? on 04:30 - Nov 13 by phact0rri |
I think part of the picture of owning too... is that currently I don't know if there is enough of "other things" in the liberty to help it off set the cost to the club at the present moment? I don't know what events go on at the liberty or if there's enough to help off set the cost enough to make it a justifiable expense to just have naming rights or something like this?
But I would think that if it was a good investment that the club would be pushing ahead on that. I mean real estate portfolio is often hit or miss depending on the area and what the income generating turns out to be.
From the outside looking in it looks like we'd be losing money for more than a few years, where we could be using that same money to strengthen our development programs, investing in medicine technology, strengthening our first team, etc.
I'm with those that think as of right now, where we are... were better off renting. btw does anyone know if our rent will go down if we pay for expansion or is the club just going to be taking one for the city? |
I think thats a pertinent issue. If it costs £15m to expand as Huw says then "taking one for the City" makes no sense financially.
It would be far better to buy the stadium for say £18m and then sell the naming rights to help pay the majority of the expansion (cardiffs naming rights were priced at £9m in the championship although obviously no takers, but we will go with that figure as a base).
That way instead of building a £15m extension to someone else's property and essentially lose that cash. We pay £23m and get a £20m+ stadium and real estate with an extension already paid for and all revenues coming to us. |  |
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| Could SCFC buy The Liberty Stadium outright? on 07:53 - Nov 13 with 1249 views | jacksinceever |
| Could SCFC buy The Liberty Stadium outright? on 17:03 - Nov 12 by Uxbridge |
True it's been a convenient excuse, but times it has, at least, slowed things down. At the very least, it removes an excuse! |
The problem is that all the thought and planning took place when it was envisaged that the Ospreys/regional rugby would take off in a big way, whilst Swans would probably at best bounce around the bottom three tiers.
Nobody envisaged that regional rugby would fail to continue to attract the numbers it used to draw, whilst Swans would climb to these heights .
Swans have now outgrown everything - the stadium (capacity wise), marketing and sales facilities (as in not being able to manage ticket sales and not being free to organise non-footballing events) and the infrastructure and parking
The multi-layered bureaucracy with which the organisation is run is frustrating enough for the ordinary fan (for example you buy a ST for Swans from the TO, then when you have any issues with it, the TO say(in effect)" nothing to do with us - you'll need to contact SCFC" (who are housed in the same building and are an internal phone-call away). This has been my experience several times - thanks to common sense at SCFC level the issues have been resolved
However to get back to and agree with the main point, those responsible need to take ownership of problems rather than hiding behind Stadco, etc |  | | |
| Could SCFC buy The Liberty Stadium outright? on 10:40 - Nov 13 with 1196 views | Shaky |
| Could SCFC buy The Liberty Stadium outright? on 04:44 - Nov 13 by Parlay |
I think thats a pertinent issue. If it costs £15m to expand as Huw says then "taking one for the City" makes no sense financially.
It would be far better to buy the stadium for say £18m and then sell the naming rights to help pay the majority of the expansion (cardiffs naming rights were priced at £9m in the championship although obviously no takers, but we will go with that figure as a base).
That way instead of building a £15m extension to someone else's property and essentially lose that cash. We pay £23m and get a £20m+ stadium and real estate with an extension already paid for and all revenues coming to us. |
This is the right way to evaluate the issue, but the practical problem is the timing.
1. Let's say you buy the stadium for £20m to include contingencies and fees.
The overdraft stands at £20m
2. I don't know much about the corporate sponsorship market but I would imagine if you can pre-sell the naming rights to a stadium that exists solely on an architect's drawing board, the going rate will be at a significant discount to the finished article. Since these deals appear to be longer term (8-10 years) that could cost you dearly over the life of the deal.
3. It would therefore be much better to complete the stadium expansion first at an estimated cost of £25m. On reflection you might additionally identify opportunities to cram in some extra top dollar executive entertainment type facilities that could easily add another £10m or so onto the bill.
Once all that is done your overdraft now stands at a minimum of £45m million rising to maybe £65-75m with extras and inevitable cost overruns.
At that point you can more than likely relatively easily find a 10year sponsorship deal that should recoup all of that and then some. But getting to that point requires some serious risk taking, and as I see it there is no way it could happen under the current regime. |  |
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| Could SCFC buy The Liberty Stadium outright? on 11:26 - Nov 13 with 1160 views | Lord_Bony |
| Could SCFC buy The Liberty Stadium outright? on 10:40 - Nov 13 by Shaky |
This is the right way to evaluate the issue, but the practical problem is the timing.
1. Let's say you buy the stadium for £20m to include contingencies and fees.
The overdraft stands at £20m
2. I don't know much about the corporate sponsorship market but I would imagine if you can pre-sell the naming rights to a stadium that exists solely on an architect's drawing board, the going rate will be at a significant discount to the finished article. Since these deals appear to be longer term (8-10 years) that could cost you dearly over the life of the deal.
3. It would therefore be much better to complete the stadium expansion first at an estimated cost of £25m. On reflection you might additionally identify opportunities to cram in some extra top dollar executive entertainment type facilities that could easily add another £10m or so onto the bill.
Once all that is done your overdraft now stands at a minimum of £45m million rising to maybe £65-75m with extras and inevitable cost overruns.
At that point you can more than likely relatively easily find a 10year sponsorship deal that should recoup all of that and then some. But getting to that point requires some serious risk taking, and as I see it there is no way it could happen under the current regime. |
Interesting view point.
Personally, I think the accountants would go for a long term mortgage than a short term overdraft purely because it is much more manageable and don't forget all payments are tax deduct able on the books at the end of the year so another big saving in tax.
Let's say we buy for £20m
We could EASILY raise £10m from the clubs coffers no problem.
Naming /branding £5 m upfront
Leaves £5m mortgage over say 20 years,monthly payments...peanuts.
In the meantime another loan for expansion of say £10m to be funded from the rental savings and extra income streams.
In the long run to buy the stadium would cost us nothing rather than going down the path we are now of renting. | |
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| Could SCFC buy The Liberty Stadium outright? on 12:31 - Nov 13 with 1114 views | Shaky |
| Could SCFC buy The Liberty Stadium outright? on 11:26 - Nov 13 by Lord_Bony |
Interesting view point.
Personally, I think the accountants would go for a long term mortgage than a short term overdraft purely because it is much more manageable and don't forget all payments are tax deduct able on the books at the end of the year so another big saving in tax.
Let's say we buy for £20m
We could EASILY raise £10m from the clubs coffers no problem.
Naming /branding £5 m upfront
Leaves £5m mortgage over say 20 years,monthly payments...peanuts.
In the meantime another loan for expansion of say £10m to be funded from the rental savings and extra income streams.
In the long run to buy the stadium would cost us nothing rather than going down the path we are now of renting. |
I used the term overdraft as a short hand for any type of debt, and didn't really expect the local Barclays to stump up a £75 million overdraft.
But the more I think about it the less likely I believe it is that you can pre-sell the naming rights on any kind of basis. There are always risks associated with any type of construction project, and that is especially true of what is in effect a conversion.
On that basis I can not imagine any rational potential sponsor signing up for naming rights for something that could for example suffer a partial collapse. Think of the massive negative publicity!
More generally it seems to me your kind of shoestring budget approach is just wrong. There has already been plenty of discussion about how the club's commercial activities need to be improved, but part that has to involve better facilities for corporate entertainment.
In fact if you were forced to chose between adding seating for regular punters and first class corporate entertainment facilities the latter would undoubtedly be more important to securing better long term profitability by setting the stage for significantly better sponsorship deals, etc.
However, it goes without saying that would not be a popular choice amongst the supporter base, so you would realistically have to do both to to assuage them. | |
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| Could SCFC buy The Liberty Stadium outright? on 12:43 - Nov 13 with 1098 views | Watchman |
| Could SCFC buy The Liberty Stadium outright? on 12:31 - Nov 13 by Shaky |
I used the term overdraft as a short hand for any type of debt, and didn't really expect the local Barclays to stump up a £75 million overdraft.
But the more I think about it the less likely I believe it is that you can pre-sell the naming rights on any kind of basis. There are always risks associated with any type of construction project, and that is especially true of what is in effect a conversion.
On that basis I can not imagine any rational potential sponsor signing up for naming rights for something that could for example suffer a partial collapse. Think of the massive negative publicity!
More generally it seems to me your kind of shoestring budget approach is just wrong. There has already been plenty of discussion about how the club's commercial activities need to be improved, but part that has to involve better facilities for corporate entertainment.
In fact if you were forced to chose between adding seating for regular punters and first class corporate entertainment facilities the latter would undoubtedly be more important to securing better long term profitability by setting the stage for significantly better sponsorship deals, etc.
However, it goes without saying that would not be a popular choice amongst the supporter base, so you would realistically have to do both to to assuage them. |
with regard to buying and selling the land / stadium etc. It includes in one of the clauses that no profit can be gained whatsoever and in doing so will result in all grants that were awarded to be paid in full |  |
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| Could SCFC buy The Liberty Stadium outright? on 12:48 - Nov 13 with 1093 views | Shaky |
| Could SCFC buy The Liberty Stadium outright? on 12:43 - Nov 13 by Watchman |
with regard to buying and selling the land / stadium etc. It includes in one of the clauses that no profit can be gained whatsoever and in doing so will result in all grants that were awarded to be paid in full |
1. Clause in what contract?
2. How much were the grants? | |
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| Could SCFC buy The Liberty Stadium outright? on 13:03 - Nov 13 with 1067 views | Shaky |
| Could SCFC buy The Liberty Stadium outright? on 12:48 - Nov 13 by Shaky |
1. Clause in what contract?
2. How much were the grants? |
Ok so I found this:
http://www.constructingexcellence.org.uk/pdf/Wales/061024_Interserve.pdf
. . .which indicates the maximum exposure is £5.5m which would be shown on the balance sheet as a long term asset; this would probably depreciated over 30 years giving you a maximum annual accounting expenditure of £183,000.
In other words even if you had to take the whole hit which I tend to doubt, it would still be peanuts compared to the potential income uplift from commercial activities. | |
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| Could SCFC buy The Liberty Stadium outright? on 13:17 - Nov 13 with 1056 views | londonlisa2001 |
| Could SCFC buy The Liberty Stadium outright? on 12:31 - Nov 13 by Shaky |
I used the term overdraft as a short hand for any type of debt, and didn't really expect the local Barclays to stump up a £75 million overdraft.
But the more I think about it the less likely I believe it is that you can pre-sell the naming rights on any kind of basis. There are always risks associated with any type of construction project, and that is especially true of what is in effect a conversion.
On that basis I can not imagine any rational potential sponsor signing up for naming rights for something that could for example suffer a partial collapse. Think of the massive negative publicity!
More generally it seems to me your kind of shoestring budget approach is just wrong. There has already been plenty of discussion about how the club's commercial activities need to be improved, but part that has to involve better facilities for corporate entertainment.
In fact if you were forced to chose between adding seating for regular punters and first class corporate entertainment facilities the latter would undoubtedly be more important to securing better long term profitability by setting the stage for significantly better sponsorship deals, etc.
However, it goes without saying that would not be a popular choice amongst the supporter base, so you would realistically have to do both to to assuage them. |
I believe that the fig I earlier quoted of £1,500 per seat for the extension includes corporate hospitality. The plans showed (assuming that they haven't changed) a whole row of corporate boxes along the East stand - similar to those in the west at the moment but between the existing and new seating.
On the pre sale bit - the Emirates was pre sold - it was constructed as the Emirates stadium from the start. The stadium could easily be named and the work carried out for expansion of that named stadium.
Everyone is getting very hung up on ownership though. The additional revenues from the stadium extension etc will come to us anyway (as will corporate hospitality and so on - same as it does now), so really can't see the point of buying the actual stadium itself. There is a limit forced on us by geography that restricts the amount of commercial revenue you could feasibly generate outside the games themselves.
As I said before, if even the budget no object people at Man City don't bother buying the Etihad, then why are we getting so wound up about buying the Liberty? The agreements re Stadco etc can and will be tweaked to take account of new circumstances (eg. us having put £18m into the stadium build). |  | | |
| Could SCFC buy The Liberty Stadium outright? on 13:21 - Nov 13 with 1052 views | londonlisa2001 |
| Could SCFC buy The Liberty Stadium outright? on 04:44 - Nov 13 by Parlay |
I think thats a pertinent issue. If it costs £15m to expand as Huw says then "taking one for the City" makes no sense financially.
It would be far better to buy the stadium for say £18m and then sell the naming rights to help pay the majority of the expansion (cardiffs naming rights were priced at £9m in the championship although obviously no takers, but we will go with that figure as a base).
That way instead of building a £15m extension to someone else's property and essentially lose that cash. We pay £23m and get a £20m+ stadium and real estate with an extension already paid for and all revenues coming to us. |
I really don't understand why we'd be taking one for the city. If we pay to expand, we get the income (full income) from those seats (less the costs of staffing them - extra stewards etc). we will also get the vast majority of the naming rights income. It's not really someone else's property. I mean, it's owned elsewhere, but we have such a long lease it really doesn't matter. | | | |
| Could SCFC buy The Liberty Stadium outright? on 13:57 - Nov 13 with 1024 views | MattG |
| Could SCFC buy The Liberty Stadium outright? on 13:21 - Nov 13 by londonlisa2001 |
I really don't understand why we'd be taking one for the city. If we pay to expand, we get the income (full income) from those seats (less the costs of staffing them - extra stewards etc). we will also get the vast majority of the naming rights income. It's not really someone else's property. I mean, it's owned elsewhere, but we have such a long lease it really doesn't matter. |
Agree with this, particularly given there's the thick end of 140 years still to run on the lease.
Provided we get the lion's share of any additional revenue generated by naming rights and / or corporate hospitality, there really doesn't seem to be any significant benefit.
Others have mentioned holding various events which, OK, would generate some further additional revenue but surely these would have to be limited in order to avoid excessive damage to the playing surface. |  | | |
| Could SCFC buy The Liberty Stadium outright? on 14:51 - Nov 13 with 998 views | Shaky |
| Could SCFC buy The Liberty Stadium outright? on 13:21 - Nov 13 by londonlisa2001 |
I really don't understand why we'd be taking one for the city. If we pay to expand, we get the income (full income) from those seats (less the costs of staffing them - extra stewards etc). we will also get the vast majority of the naming rights income. It's not really someone else's property. I mean, it's owned elsewhere, but we have such a long lease it really doesn't matter. |
Not owning clear title could well be an issue if you want to use project financing for the expansion.
As for the naming rights income, in fairness Swansea should get the lions share, but I bet that could easily require maybe years of legal wrangling. Owning the stadium outright for what sounds like a relatively modest outlay as part of a larger package would save all that farting around, with the added bonus of removing all division of responsibilities excuses inside the stadium. | |
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| Could SCFC buy The Liberty Stadium outright? on 15:03 - Nov 13 with 990 views | londonlisa2001 |
| Could SCFC buy The Liberty Stadium outright? on 14:51 - Nov 13 by Shaky |
Not owning clear title could well be an issue if you want to use project financing for the expansion.
As for the naming rights income, in fairness Swansea should get the lions share, but I bet that could easily require maybe years of legal wrangling. Owning the stadium outright for what sounds like a relatively modest outlay as part of a larger package would save all that farting around, with the added bonus of removing all division of responsibilities excuses inside the stadium. |
I don't think there will be an awful lot of wrangling on naming rights - as I understand it, it's already been discussed and accepted that it only arises due to the Swans. The article on Man City suggests that they pay £2m per year to Manchester City Council and keep £35m, so I guess in some ways that deal may create a precedent that the Swans could point to.
The responsibility 'excuses' bit is a good one. I would suggest though that the issue there may well be improved by 1 or 2 changes in who runs what at the club since 1 person in particular hides behind it frequently.
Look, over time, I can see the benefits of us owning the ground outright, I just think we've better things to do with £20m at the moment and the thing that people get wound up by, which is a mistaken belief that all 3 parties make the same amount of cash, is simply not true and will become even less true as we pay for stuff. Someone has already referred to the 'big screens' and pointed out that we get the income from that and are paid by the Ospreys for use (us, rather than Stadco) so there is some precedent at this stuff being resolved fairly amicably. | | | |
| Could SCFC buy The Liberty Stadium outright? on 15:16 - Nov 13 with 980 views | Shaky |
| Could SCFC buy The Liberty Stadium outright? on 15:03 - Nov 13 by londonlisa2001 |
I don't think there will be an awful lot of wrangling on naming rights - as I understand it, it's already been discussed and accepted that it only arises due to the Swans. The article on Man City suggests that they pay £2m per year to Manchester City Council and keep £35m, so I guess in some ways that deal may create a precedent that the Swans could point to.
The responsibility 'excuses' bit is a good one. I would suggest though that the issue there may well be improved by 1 or 2 changes in who runs what at the club since 1 person in particular hides behind it frequently.
Look, over time, I can see the benefits of us owning the ground outright, I just think we've better things to do with £20m at the moment and the thing that people get wound up by, which is a mistaken belief that all 3 parties make the same amount of cash, is simply not true and will become even less true as we pay for stuff. Someone has already referred to the 'big screens' and pointed out that we get the income from that and are paid by the Ospreys for use (us, rather than Stadco) so there is some precedent at this stuff being resolved fairly amicably. |
You ignore the issue of whether ownership is a prerequisite for obtaining project financing.
But all that aside, the basic evaluation is very easy; are rental savings + other income sources greater than the debt service costs on say a 25year commercial mortgage of maybe £18-20m.
I would have thought the answer was yes from day 1 with the potential for that spread to grow significantly over time. | |
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| Could SCFC buy The Liberty Stadium outright? on 15:22 - Nov 13 with 971 views | Lord_Bony |
| Could SCFC buy The Liberty Stadium outright? on 12:43 - Nov 13 by Watchman |
with regard to buying and selling the land / stadium etc. It includes in one of the clauses that no profit can be gained whatsoever and in doing so will result in all grants that were awarded to be paid in full |
This is true,the council cannot sell for a profit to a private group.
Investigations are still on going into any rules were broken when the grants were given for building in 2005 for the swans and ospreys..
A Swansea council spokesperson said: "The European Commission has asked us a number of questions in relation to the Liberty Stadium and currently we are in dialogue with them, as are a large number of sports clubs from across Europe."
If it is proved that the use of the Liberty Stadium breaks European law, then both clubs could face having to pay back money, plus interest. | |
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| Could SCFC buy The Liberty Stadium outright? on 15:26 - Nov 13 with 964 views | Shaky |
| Could SCFC buy The Liberty Stadium outright? on 15:22 - Nov 13 by Lord_Bony |
This is true,the council cannot sell for a profit to a private group.
Investigations are still on going into any rules were broken when the grants were given for building in 2005 for the swans and ospreys..
A Swansea council spokesperson said: "The European Commission has asked us a number of questions in relation to the Liberty Stadium and currently we are in dialogue with them, as are a large number of sports clubs from across Europe."
If it is proved that the use of the Liberty Stadium breaks European law, then both clubs could face having to pay back money, plus interest. |
Great, 'cos by the sounds of things the council would be selling at a loss! | |
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| Could SCFC buy The Liberty Stadium outright? on 16:13 - Nov 13 with 925 views | londonlisa2001 |
| Could SCFC buy The Liberty Stadium outright? on 15:16 - Nov 13 by Shaky |
You ignore the issue of whether ownership is a prerequisite for obtaining project financing.
But all that aside, the basic evaluation is very easy; are rental savings + other income sources greater than the debt service costs on say a 25year commercial mortgage of maybe £18-20m.
I would have thought the answer was yes from day 1 with the potential for that spread to grow significantly over time. |
I'm not sure how the financing is expected to work.
If it was up to me (which obviously it isn't!) I would look to do a mix of naming rights, multi year season ticket packages, additional premier club memberships (which start at about £1k per annum) and so on before going 'outside'. You may be right on the legal ownership, or it may be that if there is a contract which states (as it does now) that the income from seats sold above x (from memory the x here is something like 11,000 - 12,000 seats, but my recollection may be wrong) is ours then outright ownership of the whole stadium may not be an issue as the income from those seat is ours anyway and we are in an unbreakable lease.
As I said, I think the problem with the other income sources, is that the stadium is already, as I understand it, pretty much at capacity for everyday use, and although we could certainly look to increase this, potential will always be limited in Swansea. Don't forget as well, that even now we get some of this revenue (as a part owner of Stadco) so it would only be the increase x 2/3rds that would be a gain to us - we get 1/3rd anyway. | | | |
| Could SCFC buy The Liberty Stadium outright? on 16:45 - Nov 13 with 904 views | tomdickharry |
Which SCFC,the current board or the new board after investment.For the current board it would be beyond their means whilst the new board could be a whole different ball game. | | | |
| Could SCFC buy The Liberty Stadium outright? on 22:09 - Nov 13 with 842 views | Lord_Bony |
| Could SCFC buy The Liberty Stadium outright? on 13:03 - Nov 13 by Shaky |
Ok so I found this:
http://www.constructingexcellence.org.uk/pdf/Wales/061024_Interserve.pdf
. . .which indicates the maximum exposure is £5.5m which would be shown on the balance sheet as a long term asset; this would probably depreciated over 30 years giving you a maximum annual accounting expenditure of £183,000.
In other words even if you had to take the whole hit which I tend to doubt, it would still be peanuts compared to the potential income uplift from commercial activities. |
What do you mean?
The grant was for £5.5m? | |
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| Could SCFC buy The Liberty Stadium outright? on 00:37 - Nov 14 with 812 views | airedale |
Seems to me that our best option, if ownership of the Liberty Stadium asset is to be sold by the council to an interested party, and to minimise the chances of SCFC being seen by hawks as an interesting prospect, that ownership of the asset be undertaken by our Trust.
The benefits of this arrangement seem obvious to me. [Post edited 14 Nov 2014 0:41]
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| Could SCFC buy The Liberty Stadium outright? on 02:18 - Nov 14 with 789 views | phact0rri |
| Could SCFC buy The Liberty Stadium outright? on 13:21 - Nov 13 by londonlisa2001 |
I really don't understand why we'd be taking one for the city. If we pay to expand, we get the income (full income) from those seats (less the costs of staffing them - extra stewards etc). we will also get the vast majority of the naming rights income. It's not really someone else's property. I mean, it's owned elsewhere, but we have such a long lease it really doesn't matter. |
cheers lisa, that was my question. In my original post i asked if we made some sort of dividend on rent or if we shell it out and get no return other than just extra people which would extend our percentage of ticket.
if we get the full till on the expansion seats. then yeah it makes good sense if those seats can be filled | |
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| Could SCFC buy The Liberty Stadium outright? on 07:29 - Nov 14 with 758 views | cockneyswan |
| Could SCFC buy The Liberty Stadium outright? on 13:24 - Nov 12 by MattG |
Maybe it's just me but what really would be the point?
If we've got a 150 year lease and there is no objection in principle from Stadco to us expanding without actually owning the place outright then the only impact I can see of owning the Liberty is to increase our attractiveness to investors.
I can't see any genuine positives. |
This |  | | |
| Could SCFC buy The Liberty Stadium outright? on 09:11 - Nov 14 with 726 views | Shaky |
| Could SCFC buy The Liberty Stadium outright? on 22:09 - Nov 13 by Lord_Bony |
What do you mean?
The grant was for £5.5m? |
If the grants have to be repaid you have to hand over £5.5m in cash.
However, the grants originally financed a part of the costs for the stadium, which is a long term project.
As such you can capitalise the £5.5m rather that treating it as a current expense, and write off the amount/depreciate it over the useful economic life of the asset or a conventional proxy like 30 years.
That means the annual depreciation expense to your profit and loss account is £5.5m/30 years=£183,333 per annum.
And as regards the cash repayment you could undoubtedly roll that into the commercial mortgage, if you were so minded. | |
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| Could SCFC buy The Liberty Stadium outright? on 12:45 - Nov 14 with 669 views | Shaky |
As something of an aside to this discussion, I am very surprised that one of the finance professionals hasn't come along and objected to the idea of buying the stadium because it would kill return on capital employed.
Of course the reality is that few people in financial markets have heard of this and practically nobody really understands what it means, which is one of the symptoms that we are in such a massive financial bubble.
But I certainly thought that in the real world companies were looking at serious operating metrics; standards are slipping everywhere it seems. | |
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