| Takeover Confirmed on 14:41 - Jun 9 with 1186 views | Uxbridge |
| Takeover Confirmed on 14:38 - Jun 9 by londonlisa2001 |
Indeed - and neither is necessarily bad as you pointed out re debt.
Using debt to pay for stadium expansion is completely reasonable. Using it to pay for another Gomis is not. |
Indeed. And this is what annoys me when figures such as £50m being chucked at the squad ... where do people think that money is coming from?
Not that £50m gets you much these days in a playing squad sense. Unless you're talking £200m then investment in the playing squad isn't going to make a whole lot of difference. |  |
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| Takeover Confirmed on 15:17 - Jun 9 with 1158 views | MoscowJack |
| Takeover Confirmed on 14:41 - Jun 9 by Uxbridge |
Indeed. And this is what annoys me when figures such as £50m being chucked at the squad ... where do people think that money is coming from?
Not that £50m gets you much these days in a playing squad sense. Unless you're talking £200m then investment in the playing squad isn't going to make a whole lot of difference. |
Even in the past HJ & Co have spent quite a lot in the summer windows - usually around £15-20m (if you include signing on fees). With the huge increase in TV money this season, wouldn't we expect closer to £20-30m being spent (net)?
With Eder gone (£4m?), Ki likely to go (£7m?) and Ayew likely to leave too (£15m?) that means we're going to spend around £50m on new signings, which I can't see, to be honest.
If the Americans are going to add £20m to that, then this is going to mean some big (or a lot of) signings, but I can't see it to be honest.
Btw - what's our credit line now? Isn't it close to £30m? |  |
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| Takeover Confirmed on 15:57 - Jun 9 with 1112 views | Nookiejack |
| Takeover Confirmed on 14:21 - Jun 9 by Uxbridge |
We'd probably get into the unfairly prejudiced area in that scenario.
Dilution is a major concern of course. |
Once they achieve voting power more than 75% - then don't even have to ask the Trust to contribute their 21% of new share issue.
They just say £30m is needed to buy stadium and expand it and issue new shares - which they alone subscribe to - Trust therefore gets diluted.
That would not be unfairly prejudicial once they are in 79% voting rights position.
The unfairly prejudicial issue is how they actually got to the 79%
I.e. The second largest shareholder being totally kept out of discussions - with existing shareholders agreement in place - to be left as a single minority shareholder (assuming all the voting rights are assigned to the VCs).
To an extreme the VCs can issue £100m of new shares which they alone subscribe to - Trust's shareholding gets diluted to <10% - then once this happens the VCs can force the Trust to sell its remaining shares.
We will have 2 Directors on the Board though? | | | |
| Takeover Confirmed on 16:08 - Jun 9 with 1068 views | Nookiejack |
| Takeover Confirmed on 15:57 - Jun 9 by Nookiejack |
Once they achieve voting power more than 75% - then don't even have to ask the Trust to contribute their 21% of new share issue.
They just say £30m is needed to buy stadium and expand it and issue new shares - which they alone subscribe to - Trust therefore gets diluted.
That would not be unfairly prejudicial once they are in 79% voting rights position.
The unfairly prejudicial issue is how they actually got to the 79%
I.e. The second largest shareholder being totally kept out of discussions - with existing shareholders agreement in place - to be left as a single minority shareholder (assuming all the voting rights are assigned to the VCs).
To an extreme the VCs can issue £100m of new shares which they alone subscribe to - Trust's shareholding gets diluted to <10% - then once this happens the VCs can force the Trust to sell its remaining shares.
We will have 2 Directors on the Board though? |
Resolutions
Certain more fundamental matters relating to a company require a special resolution. If you hold 75% or more of the shares you can ensure the passing of a special resolution. If you hold more than 25% of the shares (i.e. 25% plus 1 share) you can block the passing of a special resolution.
Please see point below about 'dis applying members' pre emption rights when new share are issued.
'Special resolutions are required to:
- amend the company’s articles of association;
- change the company name;
- re-register the company as a public company;
- disapply members’ pre-emption rights when new shares are issued;
- reduce the company’s share capital;
- allow the company to buy back shares (including out of capital);
- wind the company up (though directors and creditors may also apply to court to initiate the winding up process in certain circumstances);
- if the company is being wound up in a solvent members’ voluntary liquidation, to authorise the liquidator to take certain steps in relation to the liquidation;
- to approve a scheme of arrangement or compromise with creditors proposed to be entered into by the company. ' | | | |
| Takeover Confirmed on 16:21 - Jun 9 with 1046 views | londonlisa2001 |
| Takeover Confirmed on 15:57 - Jun 9 by Nookiejack |
Once they achieve voting power more than 75% - then don't even have to ask the Trust to contribute their 21% of new share issue.
They just say £30m is needed to buy stadium and expand it and issue new shares - which they alone subscribe to - Trust therefore gets diluted.
That would not be unfairly prejudicial once they are in 79% voting rights position.
The unfairly prejudicial issue is how they actually got to the 79%
I.e. The second largest shareholder being totally kept out of discussions - with existing shareholders agreement in place - to be left as a single minority shareholder (assuming all the voting rights are assigned to the VCs).
To an extreme the VCs can issue £100m of new shares which they alone subscribe to - Trust's shareholding gets diluted to <10% - then once this happens the VCs can force the Trust to sell its remaining shares.
We will have 2 Directors on the Board though? |
Nookie - sorry but you are confusing minority protection rights with pre emption rights.
You can issue shares without pre emption rights with a special resolution although as has been said on here many times before it's a bit moot when the Trust can't afford to take them up anyway.
Minority protection doesn't disappear at 75% etc.
Again as has been said before, dilution is not only about % holdings, it's about value. If shares are Issued for value then the Trust doesn't get its value diluted (as it owns less of a bigger pie). | | | |
| Takeover Confirmed on 16:28 - Jun 9 with 1027 views | Nookiejack |
| Takeover Confirmed on 14:38 - Jun 9 by londonlisa2001 |
Indeed - and neither is necessarily bad as you pointed out re debt.
Using debt to pay for stadium expansion is completely reasonable. Using it to pay for another Gomis is not. |
I don't think I agree with this - when you buy an asset whether that is a stadium or a player you are always taking a risk.
Taking on debt to buy Bony for £12m would have been a great investment.
In contrast taking on £30m of debt to buy stadium and expand it - could be a really bad investment if we then are relegated and have resulting crowds of 15,000 in a 30,000 stadium.
Management of value of player assets might be more difficult in that you have to extend their contracts say 2 years into a 4 year contract (otherwise they leave on a Free transfer under Bosman rule after 4 years( and/or have to decide whether you have a policy of selling players before 30 when value then is likely to depreciate away at an accelerated rate.
You do though have plenty upside in player value as per Bony - which you don't with a stadium as you there are not many buyers for a football stadium. Your return will be mostly through filling the seats. Or as VCs plan to do - take 79% control, own stadium - then you have a full marketing package to sell to new buyers.
It would also be interesting if then new owners after VCs used leverage buyout model (using the club's assets, TV rights, season ticket sales etc) to buyout the VCs - with Trust left with 21%. What could the Trust do then? | | | |
| Takeover Confirmed on 16:37 - Jun 9 with 1010 views | Nookiejack |
| Takeover Confirmed on 16:21 - Jun 9 by londonlisa2001 |
Nookie - sorry but you are confusing minority protection rights with pre emption rights.
You can issue shares without pre emption rights with a special resolution although as has been said on here many times before it's a bit moot when the Trust can't afford to take them up anyway.
Minority protection doesn't disappear at 75% etc.
Again as has been said before, dilution is not only about % holdings, it's about value. If shares are Issued for value then the Trust doesn't get its value diluted (as it owns less of a bigger pie). |
Lisa,
I agree with your point about minority protection and your point about value.
I was replying to Moscow Jack's post about if say £20m was put into club by VCs could the Trust afford to contribute its 21% of the £20m.
My point was the VCs don't even have to ask the Trust to contribute - once they achieve 79%.
Do then agree with you that Trust would then have a diluted stake - but that would be of a larger value pot - hence the value of the Trust's stake would remain neutral - all other things being equal.
If taken to an extreme VCs could achieve 90% holding through this mechanism and then force Trust to sell its remaining stake.
Would agree with you again though that from a value perspective - Trust would not lose any value if forced to sell all its shares in this scenario. | | | |
| Takeover Confirmed on 16:44 - Jun 9 with 997 views | londonlisa2001 |
| Takeover Confirmed on 16:28 - Jun 9 by Nookiejack |
I don't think I agree with this - when you buy an asset whether that is a stadium or a player you are always taking a risk.
Taking on debt to buy Bony for £12m would have been a great investment.
In contrast taking on £30m of debt to buy stadium and expand it - could be a really bad investment if we then are relegated and have resulting crowds of 15,000 in a 30,000 stadium.
Management of value of player assets might be more difficult in that you have to extend their contracts say 2 years into a 4 year contract (otherwise they leave on a Free transfer under Bosman rule after 4 years( and/or have to decide whether you have a policy of selling players before 30 when value then is likely to depreciate away at an accelerated rate.
You do though have plenty upside in player value as per Bony - which you don't with a stadium as you there are not many buyers for a football stadium. Your return will be mostly through filling the seats. Or as VCs plan to do - take 79% control, own stadium - then you have a full marketing package to sell to new buyers.
It would also be interesting if then new owners after VCs used leverage buyout model (using the club's assets, TV rights, season ticket sales etc) to buyout the VCs - with Trust left with 21%. What could the Trust do then? |
It's all about matching Nookie. You take out a mortgage to finance a house not your monthly outgoings. Same applies here.
Taking on debt to finance Bony would have been spectacularly stupid.
When taking on debt to finance stadium expansion / purchase, they will factor in the risk of relegation and income generated by that asset in different scenarios. They won't assume that the ground sells out at 28,000 seats every week for 20 years. As long as the income generated by the asset exceeds the repayments (with things like relegation etc built into the model) it's fine and tax efficient as well. It's why FFP rules are different - they are theoretically trying to get clubs to act sensibly. | | | |
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| Takeover Confirmed on 17:27 - Jun 9 with 949 views | Nookiejack |
| Takeover Confirmed on 16:44 - Jun 9 by londonlisa2001 |
It's all about matching Nookie. You take out a mortgage to finance a house not your monthly outgoings. Same applies here.
Taking on debt to finance Bony would have been spectacularly stupid.
When taking on debt to finance stadium expansion / purchase, they will factor in the risk of relegation and income generated by that asset in different scenarios. They won't assume that the ground sells out at 28,000 seats every week for 20 years. As long as the income generated by the asset exceeds the repayments (with things like relegation etc built into the model) it's fine and tax efficient as well. It's why FFP rules are different - they are theoretically trying to get clubs to act sensibly. |
I can't agree with your point about taking on debt to buy a player like Bony as being spectacularly stupid.
Clubs do have very good experienced scouts and can identity players at an undervalue to market value. If they identified the next Messi and were convinced about this and had a previous track record of identifying high quality players - why would it be spectacularly stupid to take debt on to acquire that player. It might be spectularly stupid not to take debt on in that instance.
With regards to taking on debt under what FFP rules were recommending for stadium expansion understand where you are coming from.
If we are relegated though what size crowd do you think we will have in the championship. Maybe 15,000? So haven't we already got a big enough stadium?
Taking on debt for me for stadium expansion - means club then needs to seevice debt and interest - repayments and then may reduce options for player acquisition or retaining our best players in future.
I am also assuming VCs will lend money to club for stadium expansion with associated debt covenants - they will then have 2 controlling mechanisms through the debt and the 79% equity controlling interest. The Trust being resultingly pincered. | | | |
| Takeover Confirmed on 18:10 - Jun 9 with 904 views | tomdickharry |
The Yanks won't buy the Stadium which really is just a bundle of deeds or a Land Certificate, the value of which is in the land on which the Stadium is built,no responsible lending outlet would lend against the Stadium freehold as it's forced sale value is indeterminable.Expansion yes because there will be a return on the capital outlay. Yet again what are we looking at - Cordial relationship with the Trust: Investment in quality additions to the squad:Stadium Expansion: and completion of training facilities at Landore and Fairwood. A pretty clear cut straight forward structured agenda in the short/medium term geared to our club retaining its PL status and continuing growth. | | | |
| Takeover Confirmed on 18:13 - Jun 9 with 900 views | londonlisa2001 |
| Takeover Confirmed on 17:27 - Jun 9 by Nookiejack |
I can't agree with your point about taking on debt to buy a player like Bony as being spectacularly stupid.
Clubs do have very good experienced scouts and can identity players at an undervalue to market value. If they identified the next Messi and were convinced about this and had a previous track record of identifying high quality players - why would it be spectacularly stupid to take debt on to acquire that player. It might be spectularly stupid not to take debt on in that instance.
With regards to taking on debt under what FFP rules were recommending for stadium expansion understand where you are coming from.
If we are relegated though what size crowd do you think we will have in the championship. Maybe 15,000? So haven't we already got a big enough stadium?
Taking on debt for me for stadium expansion - means club then needs to seevice debt and interest - repayments and then may reduce options for player acquisition or retaining our best players in future.
I am also assuming VCs will lend money to club for stadium expansion with associated debt covenants - they will then have 2 controlling mechanisms through the debt and the 79% equity controlling interest. The Trust being resultingly pincered. |
Because as we've seen only too recently player acquisition is not an exact science and the same scouts that identified Bony are equally as likely to identify Gomis or Tabanou or Eder. And by that point you've already taken debt on (to find out which they are) so it's spectacularly stupid to do so.
I personally have no problem in taking on debt to finance expansion (I said before that I don't understand why the club didn't do it themselves). I have a huge problem if they take on debt to finance players, as that way lies disaster. If we go down then our income will obviously be affected and that need to be taken into account but of course if we go down that changes player values as well as a club potentially ends up having to have a fire sale.
If the club take on debt it is not particularly important whether that debt is from the owners or a bank - it depends on the interest rate and any covenants. The debt wil be secured anyway so the debt holder(s) will always have first dibs regardless. In some ways, it'd be better if the debt came from the owners as they would less likely to destroy their overall holding by calling it in than an independent third party would. As an example, Liverpool found themselves in a whole heap of problems a few years back because RBS (I think it was RBS) owned debt and didn't care too much how it was repaid as long as it was.
Player acquisitions can be financed out of the TV money with debt financing the stadium and repayments coming from stadium income.
Just my opinion. | | | |
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