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Post by helsinkiyellow on Feb 25, 2012 8:33:22 GMT
I'm sure this has been discussed to death before but I couldn't find any relevant threads... do we have any estimation of how profitable buying the stadium would be?
By purchasing the stadium, the club would benefit from:
- non-matchday revenue streams from the conference and exhibition facilities (club currently receives nothing). - Sponsorship rights for the stadium name (club currently receives nothing) - Match day stadium revenue from food and beverages, both in the lounges and concourses (does the club currently receive commission?). - 100% of the pitchside advertising (currently it is 50%)
Any ideas of how profitable the above would actually be?
In terms of costs, as I understand, the club already pays a service fee which covers the the pitch maintenance, the club's share of the utilities, repairs and maintenance etc. I would assume the club already pays the costs of hosting the game directly e.g. police, stewards, PA guy etc.
Therefore, the only additional costs would be those directly related to the additional revenue streams which should be more than covered leaving, I would imagine, a profit.
However, any such profit from owning the stadium is likely to be more than countered by the loan repayments to fund the purchase - otherwise we could assume the club would have already acquired the stadium?
Realistically, the options are (a) Ka$$am to reduce his selling price (b) additional investments e.g. sharing with an egg chasing club, or building a 4th stand with incorporates student accommodation, offices or a casino or something.
Bit of a rambling post, just curious to see whether or not I fully understood the situation the club finds itself in.
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Post by didcotox on Feb 25, 2012 10:05:23 GMT
I thought I reaD somewhere we get all of the staff advertising now
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Post by Maurice Earp on Feb 25, 2012 12:08:30 GMT
I thought I reaD somewhere we get all of the staff advertising nowWhat do you mean???
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Post by scoob on Feb 26, 2012 2:19:24 GMT
It is a good question and is something I have tried to work out in the past.
I guess that the current Stadco profitability will give an indication of the initial revenue the club could expect to receive. Everyone assumes that once under co-ownership the stadium would become more attractive to anyone linked to OUFC than it currently is under Kassam's ownership and take of the profit. There is currently little incentive for the club or fans/sponsors to use the stadium for additional events so I guess that the club could quickly add additional revenue streams but that is very difficult to quantify especially as only profit rather than turnover will benefit the club (if the owner passes any profit to the club).
The last Stadco Accounts showed EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) of £706,000. This is the amount of cash generated by the stadco but deferred grant income of £42,600 is also included and I believe that this is money that Kassam received when he built the stadium and is included over a number of years so that it is not all lost in tax. I am not an accountant so I may be wrong on this but I believe that should be deducted to give a true cash figure so that reduces it down to £664k. The profitability fluctuates but was stronger last year as the average over the past 3 years was £505k.
We also have to remember that the club will need to continue paying rent. Last year rent received by the Stadco was £382k. The club also pays towards other costs (heat, light, admin, ground staff/costs, repairs?) and it has been stated that some of these costs have increased significantly recently. It could be that the club could reduce some of these costs once under co-ownership but that is impossible to quantify.
I understand that some sort of deal was agreed recently for the club to receive 100% of the advertising but I do not know if that is correct. KT said at a recent meeting that the club receives 100% of the Weber steps advertising revenue.
It is hard to say if the concourse catering could be made more profitable. I assume that, being professional external caterers, that the revenue generated is maximised. However quality and service improvements may lead to more profit and I am certain that the catering in the "corporate" area can be improved and made more profitable.
The problem is the cost/financing of the stadium. If someone paid cash of £13M then the return on that investment in terms of cash generation is only 5% (ie £663k/£13M) which is a poor return for a relatively high risk investment.
The situation is made even worse if financing costs are included. I am unsure of the current commercial rates but at 6% with 100% borrowing (not possible but this gives an indication of the true impact) the cost would be £780k meaning that the profitability of the stadium would have to increase by £115K for the club to be in the same position that it is now. If the owner used the cash to pay financing costs then £505k would cover borrowing of just over £11M meaning they would have to provide cash of £2M. But most lenders would probably need the owner to provide around 40% so they would probably need to borrow something like £8M and provide £5M of cash. There would also be interest rate risk with the likelyhood that rates will increase in the future. There is also profitability risk which is compounded by the fact that the fortunes of the Stadco are linked to those of the club so if the fortunes of the club go down then the Stadco profit is likely to reduce.
We also have to remember that any additions to the stadium will also need some cash from the owner to part fund it and the fourth stand will not be viable for some time. IL said that he had explored a number of partnership options but this had led to nothing.
I fully understand why the stadium has not been bought so far. Whilst the rent is high it is low risk. The football club is high risk and if it was my money I would not want to add another level of risk on top. It will be interesting to hear what the increased costs are and what they relate to as this may mean that there is more of an incentive to buy.
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Post by rollsy on Feb 27, 2012 18:12:37 GMT
But where is the club going to get £13million? If someone else, like Leneghan for eg, comes and buys it. Will things change? The club would still not own it and would still have to rent it.
The conference centre must make a bomb. My bro in law is there for work quite often. Its full and being used most days during the week.
I can't see OUFC owning the stadium in the next 20+ years
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sj87
Right Side. COYY!
Posts: 39
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Post by sj87 on Feb 27, 2012 19:52:36 GMT
It's only a Euromillions win away...
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Post by helsinkiyellow on Feb 27, 2012 20:09:54 GMT
Cheers Scoob. I had my money on you to be the first to shed some light on this matter! My first thought is that the stadium business is more profitable than I imagined. Although the proceeds currently line Ka$$am's pockets, it is positive that if/when the club acquire the stadium there is already a good income stream coming in.
Secondly, I'm sure a stadium sponsor, extra business generated through goodwill of the club taking over the ownership and a couple of Elton John concerts every summer could generate annual profits of £800k p/a. If the team was to continue climbing the league ladder, attendances should increase resulting in further match day sales. However, this would still not be enough to cover finance costs.
Quick question- are there not currently financing charges in the StadCo accounts? I assume that StadCo are still paying off the original construction costs?
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Post by Colin B on Feb 27, 2012 20:17:31 GMT
Just goes to prove what a robbing bastard kassam is.
God, how I hate that c*nt for what he has put us through. All of those figures and projections prove that the stadium is worth nowhere near the ludicrous sum he's asking for it. If it was, the club, or somebody else would have bought it by now.
I f*cking well hate those swindon scum, but I hate him just as much!!!
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Post by scoob on Feb 27, 2012 22:17:22 GMT
Eric I absolutely agree with you. He had his pound of flesh from all of the other developments around the ground, plus the Manor and now he wants another bucket full. I am sure he feels that if the club were to build their own stadium then it would cost more than he is asking and that is probably how he justifies the price. Of course we don't know if he would hold out for £13M if someone slapped less cash on the table in front of him but I can't see that there is a big incentive for him to accept a much lower price. I am told that the stadium was close to being sold to someone two or three years ago though! If you look at the bottom line on the accounts then it does not look so profitable but that is due to depreciation (£394k) and Interest (£60K) but the interest is the only element that reduces the cash to pay for it. Another important point is that only £8k was spent on replacing fixtures and fittings in the last accounts. The stadium is over 10 years old so many of the F&Fs must be coming close to renewal and I doubt Kassam has spent much in past years. For example, the carpets in the conference areas are in poor condition and don't look like they have been deep cleaned for ages. The accounts show the following debts: Bank Loans & Overdrafts £2.3M Group Undertakings (Firoka) £2.7M Related Undertakings ( ?) £2.0M Total £7.0M Deferred Grant Income is shown as a liability of £1.6M but this decreases each year in line with the income mentioned in my last post. Kassam pays only 1.75% above Base Rate on the bank loan so that is only 2.25%. Presumably this is so low because the parent company is providing a guarantee and the bank borrowing is less than 20% of the value of the stadium so there is virtually no risk to the bank. If the Club/Owner could secure a similar rate then it would make a big diffference to the funding of a purchase. £8M of borrowing would cost £180k so that is covered several times from the EBITDA. Ian Lenegan appears to now have the resources to secure that level of borrowing without the stadium asset so maybe it could be feaseable.
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Post by scoob on Mar 15, 2012 23:43:42 GMT
IL said at the Forum tonight that if the stadium is purchased at the right price then the club could generate an extra £500k from it.
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Post by Contact eaststandboy on Mar 16, 2012 7:41:14 GMT
IL said at the Forum tonight that if the stadium is purchased at the right price then the club could generate an extra �500k from it. And the conference facilities. Sent from my GT-I9000 using ProBoards
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Post by scoob on Mar 16, 2012 15:37:03 GMT
Yes as I understand it the two elements come as a package.
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Post by adeshell on Mar 27, 2012 20:37:32 GMT
I think they should demolish that hospital thing on the London Road in Headington and build a football stadium there.
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