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Post by ZeroTheHero on Sept 19, 2016 9:17:06 GMT
To Clarify a few issues: The Club has a Licence to use the Stadium and associated areas (i.e. Parking and access roads) for a period of 20 years from March 2006. This can automatically be renewed at the end of the current term at the request of the club but only once. The initial Licence fee was £278,650 increased by RPI on each anniversary. The Club pays a separate fee for provision of services which include: To keep the stadium clean and tidy and provide adequate lighting internally and externally which for the avoidance of doubt includes all concourses, supplying hot and cold water to toilet and kitchen facilities. To keep and maintain the stadium in good and substantial repair and condition and in good suitable decorative order. Maintenance of pitch and floodlighting. So whilst the Stadco has to carry out the above the club has to pay for it. The licence fee will increase (by mutual agreement of the required sum) if the club is promoted to the Championship and/or if any additional development is provided for the benefit of the club. Its pretty clear really but what it means is that if the club wants the Stadco to carry out its obligations then it has to pay extra for it unless it is already paying for it and the Stadco is not providing the service paid for (e.g. hot water in the toilets (taps). Hi Scoob, Thanks for the info. That in itself raises a few more questions! If we can renew the licence in 2026 - how long for? Another 20 or 25 years? Why would we agree to an increase of the license fee if we get to the Championship? What would that gain us? Is that why the temp stand hasn't been built: Stadco says it is 'additional development of benefit to the club' and thus want to increase the license fee? The fee for the provision of services. Is that fixed? Or does it too rise by the RPI? What recourse does the club have if Stadco is NOT carrying out its duties under that agreement (no hot water, floodlights out, letting the pitch go to rack and ruin in past seasons etc)?
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Post by scoob on Sept 19, 2016 11:01:11 GMT
There is no mention of the length of the renewal but maybe it can be renewed for another 20 years automatically or a different term by negotiation.
Why did "we" agree to any of the terms of the licence agreement in 2006? Ask Merry/Lenegan & Co! - I assume that Kassam built this in because the club would gain massive additional payments at Championship level. There would be a reduction if we subsequently dropped out of the Championship back to the prior level plus RPI for the period that we were in the Championship. That seems fair but the increase if we go up seems very open ended but this would be down to agreement but if no agreement reached would be settled with the help of the Institute of Arbitrators. There is also a mention of a reduction in the Lease Fee if we dropped out of the Premiership but not an increase if we go up. This seems like an oversight in the original Licence!
I am assuming that there has been no agreement on the Licence Fee increase for the Temp Stand and that is what has prevented its erection. I guess it is not as simple as the building of a permanent stand. In that case the cost of building will be down to Stadco but subject to a negotiated increased Licence Fee.
I believe that the Fee for provision of services is not fixed but relates to the costs incurred by the Stadco. Some areas the costs will be split (i.e. conference centre) whereas other areas the cost will be 100% to the club (i.e. Concourses/toilets/offices etc) unless other parties are also using those areas (e.g. London Welsh in the past). There was a dispute over this a few years ago that eventually meant that Ian Lenegan had to pay a couple of hundred thousand in back payments and higher ongoing payments as a result. There were legal costs involved too.
If the Stadco is not carrying out its responsibilities then if this is not resolved by negotiation then the only recourse is to Law with associated costs so I guess the club has to decide if the risk of losing a case if worth the cost of fighting it as Kassam likes to involve Lawyers wherever possible.
By the way. The club can take over the catering by giving three months notice and by agreeing an additional Licence Fee based on the average payments received from the concessions in the previous two years. The club would then receive all revenue but probably not worth it for the risk. A similar situation was originally in place re pitch side advertising but presumably the club agreed an additional fee sometime in the past to take this over.
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Post by eighteen93 on Sept 19, 2016 11:14:16 GMT
You could have simply paraphrased that Scoob by typing that K@ss@m has us over a barrel.
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Post by arthurturner on Sept 19, 2016 12:44:20 GMT
Thanks, Scoob. That's the first time I've read what the terms of the club's "tenure" of the stadium are. Without being too technical, the club needs to establish if what they have is a Licence or a Lease. Very often a Licence is interpreted as a lease which imposes greater obligations on the tenant. For instance, if a Licence, it would be easier for the tenant to terminate the licence period if it wished. You say that the club has the right to renew the licence at the end of the licence period - but only once. That suggests to me that the "licence" has not excluded the statutory provisions for a new term at the end of the present term as per the Landlord & Tenant Act 1954.This might suggest it's a licence not lease. If it's a Lease to which the Act would apply then the tenant would have the right to a new term of the same length at the end of each and every term, subject to rent review, though there are some instances where the Landlord could defeat this eg if he wished to demolish the property. I assume the club has had expert legal advice on this document but it seems to me that there might be some wriggle room to walk away before 2026 should we wish to do so or to negotiate better terms going forward.
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Post by scoob on Sept 19, 2016 14:46:59 GMT
The 36 page document definitely states that it is a Licence with Licence Fees payable.
My understanding is that it is very difficult to negotiate anything with Kassam without expensive legal costs.
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Post by arthurturner on Sept 19, 2016 20:37:09 GMT
The 36 page document definitely states that it is a Licence with Licence Fees payable. My understanding is that it is very difficult to negotiate anything with Kassam without expensive legal costs. Who is the named licensee? Are the premises we can use clearly defined? Does the licensee have the exclusive use of such premises? Does the document specifically state that the licensee is obligated for the whole of the licence period? Is there any provision for termination?
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Post by Colin B on Sept 19, 2016 20:46:36 GMT
The 36 page document definitely states that it is a Licence with Licence Fees payable. My understanding is that it is very difficult to negotiate anything with Kassam without expensive legal costs. Who is the named licensee? Are the premises we can use clearly defined? Does the licensee have the exclusive use of such premises? Does the document specifically state that the licensee is obligated for the whole of the licence period? Is there any provision for termination? The named licensee is OUFC. The premises are clearly defined. The licensee has exclusive use for a certain number of times a year and for certain times of the day. Weirdly the licensee can use the buildings for an unspecified amount of hours a day, as long as the licensor is also using the building. It states 20 years and there are sections on termination, but I can't remember exactly what they say. I hope that helps, as its from memory, as I am typing on a different device to the one that I have my copy of the licence on. It is a ridiculously one sided "agreement" though!
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Post by scoob on Sept 19, 2016 22:18:39 GMT
The License states that there are various areas stated as: The Ground, Exclusive Areas (Offices), Shared Areas and Excluded Areas as shown on two plans (one being the overall stadium and the other the conference/office areas.) It states that the club has exclusive use of the Ground and Shared areas on Match Days. Exclusive use of Exclusive areas for normal business hours 09:00 - 17:30 and beyond that time if the Licensor is still using the offices! Use of other areas (e.g. boxes and other rooms) on non match days subject to prior agreement with the Licensor. The Licensor can exclude use of the Exhibition Bar and Restaurant on Match Days if it gives reasonable notice to the club (I don't think that this has ever happened).
The Licence Period: shall mean the period of 20 years from the date hereof or the earlier termination of the same and subject to renewal as set out in this Agreement.
The only provision for Termination is a clause that states that either party may terminate the Licence if the other party has not complied with its obligations and only if the breach has been notified in writing and a reasonable period has been given for the breach to be remedied.
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Post by arthurturner on Sept 20, 2016 13:45:08 GMT
The License states that there are various areas stated as: The Ground, Exclusive Areas (Offices), Shared Areas and Excluded Areas as shown on two plans (one being the overall stadium and the other the conference/office areas.) It states that the club has exclusive use of the Ground and Shared areas on Match Days. Exclusive use of Exclusive areas for normal business hours 09:00 - 17:30 and beyond that time if the Licensor is still using the offices! Use of other areas (e.g. boxes and other rooms) on non match days subject to prior agreement with the Licensor. The Licensor can exclude use of the Exhibition Bar and Restaurant on Match Days if it gives reasonable notice to the club (I don't think that this has ever happened). The Licence Period: shall mean the period of 20 years from the date hereof or the earlier termination of the same and subject to renewal as set out in this Agreement. The only provision for Termination is a clause that states that either party may terminate the Licence if the other party has not complied with its obligations and only if the breach has been notified in writing and a reasonable period has been given for the breach to be remedied. Scoob, I've sent you a PM.
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Post by minime on Sept 20, 2016 17:29:24 GMT
So, am I right in thinking then that the "Rent" is actually £278,650pa and not £500,000pa like people keep chucking around
Or
Is the "£278,650" divided by the length of the agreement (20 years) meaning that the actual yearly "rent" is£13,932.50???
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Post by oufcyellows on Sept 20, 2016 17:41:53 GMT
Isn't there rent , and then the servicing charges
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Post by scoob on Sept 20, 2016 17:43:18 GMT
I cant be bothered to look up the actual RPI figures but if the average was 3% then the Annual Licence Fee would now be about £375k but I think people also add in the Services Fee which, from memory, is another couple of hundred thousand. However, they forget that the club would have to incur most of those costs if they owned the stadium. The other cost is the loss of catering profit which is hard to quantify (profit is much lower than revenue). People also forget that there would be financing costs too if OUFC owned the stadium which could amount to several hundred thousand per year plus capital repayment costs so the true cost to OUFC is also hard to quantify.
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Post by oufcyellows on Sept 20, 2016 18:18:54 GMT
Those cost would surely be well outweighed by profit from conference, advertising and not having to pay rent though surely, other wise kassam would have sold years ago
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Post by scoob on Sept 20, 2016 21:20:21 GMT
Those cost would surely be well outweighed by profit from conference, advertising and not having to pay rent though surely, other wise kassam would have sold years ago They may be but you have to remember that the real cost to Kassam of the stadium was very little when the sale of the Manor is taken into account. It was financed by loans from his own companies so probably no real cost there in interest. It was/is producing significant amounts of cash for him each year but a significant amount is from the "rent" paid by OUFC. It has also enabled him to build his little empire around the stadium too. If the club bought he stadium it would have to finance most of the cost without any of the benefits that Kassam gained which would significantly reduce any benefit to the football club. Add that to the amount of money that has been pumped into OUFC by the last owner and the current one then the risks are multiplied if the stadium is bought too. What happens if we drop down a league or two again then the risk is massive. If it was that easy and risk free then it would have been done long ago. If the Stadco currently produces £600k return to Kassam of which nearly £400k comes from the rent paid by OUFC the club buys it and stops paying rent then the return comes down to £200k. If the Club had to pay 5pc interest on £10,000,000 of purchase cost then that would cost £500k so now the Stadco costs the club £300k per year so you have to nearly double the return currently made by the Conferencing and Hospitality catering part of the business. Kassam's expertise lie in this area and he has failed to produce that level of return in 15 years. It may be possible but is not quite as simple and easy as some people suggest.
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Post by Best Mate on Sept 20, 2016 22:05:14 GMT
The club will never be whole again until it owns its own stadium. Of course, long term - we all know ownership is preferable to renting (eventually, loan paid back, if in financial trouble 10 years after purchase, you have an asset to discuss with the bank etc). Yes, conferencing/ catering may not pay for the cost of the rent....but I am positive all would generate higher income in the clubs hands.
I also thought, though our current lease may run out in 10 years, the stadium itself has a 99 year guarantee that it will be used as a sports facility and cannot be redeveloped? I..e Kassam needs us as much as we need him in him. If that understanding is correct - surely we need to negotiate better terms.
Lastly, a grope about current status of getting served a beer from the catering company. The queues pre-game in the bar are huge. Swindon game (yes was busy, as was expected) was a 40 minute wait for a beer! Surely catering costs would be recouped with an additional members of staff serving booze pre-game.
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Post by oufcyellows on Sept 21, 2016 7:44:21 GMT
Those cost would surely be well outweighed by profit from conference, advertising and not having to pay rent though surely, other wise kassam would have sold years ago They may be but you have to remember that the real cost to Kassam of the stadium was very little when the sale of the Manor is taken into account. It was financed by loans from his own companies so probably no real cost there in interest. It was/is producing significant amounts of cash for him each year but a significant amount is from the "rent" paid by OUFC. It has also enabled him to build his little empire around the stadium too. If the club bought he stadium it would have to finance most of the cost without any of the benefits that Kassam gained which would significantly reduce any benefit to the football club. Add that to the amount of money that has been pumped into OUFC by the last owner and the current one then the risks are multiplied if the stadium is bought too. What happens if we drop down a league or two again then the risk is massive. If it was that easy and risk free then it would have been done long ago. If the Stadco currently produces £600k return to Kassam of which nearly £400k comes from the rent paid by OUFC the club buys it and stops paying rent then the return comes down to £200k. If the Club had to pay 5pc interest on £10,000,000 of purchase cost then that would cost £500k so now the Stadco costs the club £300k per year so you have to nearly double the return currently made by the Conferencing and Hospitality catering part of the business. Kassam's expertise lie in this area and he has failed to produce that level of return in 15 years. It may be possible but is not quite as simple and easy as some people suggest. It does come down 200k but we also save the 400k in not paying rent
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Post by arthurturner on Sept 21, 2016 8:36:08 GMT
There clearly are considerable financial savings to be made in owning our own home. And as Best Mate so rightly puts it, the club will never be whole again until we do. The current stadium could be made to work for us if we owned it. The stadium owner is not in the frame of mind at present to sell and there is no viable alternative on the horizon. The club is able to use the stadium for the forseeable future under the terms of a licence that appears to work more for the stadium owner than the club. These are the realities that DE and his board have to operate under until a Plan B is formulated. For now, there is no Plan B. That we have achieved so much during his ownership in spite of the situation is nothing short of remarkable. If the club continues on its progressive path and reaches the Championship then things will get critical in almost every aspect of the club's operation which will not be helped by the stadium owner who will become even more entrenched in its position by the prospect of making even more money on the back of the club's success. There are signs that the relationship between the club and the stadium owner (never fragrant at the best of times - like the toilets) is at breaking point and the whole situation is further complicated by the discussions around new housing development in the Grenoble Road area. There is a power broker in all of this, which should be hanging its head in shame over it's lack of support for the club over many years, namely Oxford City Council. If they had any sense of what this club means to the City and surrounding County, not only to the thousands of fans who turn up every week, but the tens of thousands of fans in Oxfordshire and surrounding Counties to whom the success of Oxford United is important ( witness the numbers who turn up at Wembley on the occasions we have been there), then they would be moving heaven and earth to find a solution to our predicament. Perhaps the time has come for the club to harness all this goodwill and to mobilise this support to put pressure on the Council to do just that.
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Post by eighteen93 on Sept 21, 2016 8:48:54 GMT
K@ss@m's expertise is being a slum landlord !
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Post by scoob on Sept 21, 2016 9:49:31 GMT
They may be but you have to remember that the real cost to Kassam of the stadium was very little when the sale of the Manor is taken into account. It was financed by loans from his own companies so probably no real cost there in interest. It was/is producing significant amounts of cash for him each year but a significant amount is from the "rent" paid by OUFC. It has also enabled him to build his little empire around the stadium too. If the club bought he stadium it would have to finance most of the cost without any of the benefits that Kassam gained which would significantly reduce any benefit to the football club. Add that to the amount of money that has been pumped into OUFC by the last owner and the current one then the risks are multiplied if the stadium is bought too. What happens if we drop down a league or two again then the risk is massive. If it was that easy and risk free then it would have been done long ago. If the Stadco currently produces £600k return to Kassam of which nearly £400k comes from the rent paid by OUFC the club buys it and stops paying rent then the return comes down to £200k. If the Club had to pay 5pc interest on £10,000,000 of purchase cost then that would cost £500k so now the Stadco costs the club £300k per year so you have to nearly double the return currently made by the Conferencing and Hospitality catering part of the business. Kassam's expertise lie in this area and he has failed to produce that level of return in 15 years. It may be possible but is not quite as simple and easy as some people suggest. It does come down 200k but we also save the 400k in not paying rent Yes but the "rent" is replaced by financing costs plus whoever buys the stadium will have to come up with around 40% of the cost in cash plus the borrowings will need to be repaid over time. I wish it could be as simple as you seem to think but I'm afraid it is not. We have to come up with a way of buying/replacing the stadium in the most cost efficient manner or it could simply compound the club's problems.
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Post by oufcyellows on Sept 21, 2016 11:58:39 GMT
Depends how it's financed, if it's people like sd and other fans putting the money up with maybe some more coming in from sponsorship. It might not be so bad, obviously that's spending other people's and if it was easy it would have been done already. But I think we're at a stage where costs are only every going to rise
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Post by Mark on Sept 21, 2016 18:39:30 GMT
Another factor is that Kassam has an interest in the ozone. Build a 4th stand = more fans = less parking for people going to the ozone for cinema. (On the basis that car parks will be busier before and after matches).
Also I'd think a part of the hotel occupancy is tied into conferences, weddings at the ground.
So I doubt he wants to let go of this control until he's sold all the rest of the bits around the ground and someone offers silly money for the stadium.
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Post by oufcyellows on Sept 21, 2016 18:45:42 GMT
Another factor is that Kassam has an interest in the ozone. Build a 4th stand = more fans = less parking for people going to the ozone for cinema. (On the basis that car parks will be busier before and after matches). Also I'd think a part of the hotel occupancy is tied into conferences, weddings at the ground. So I doubt he wants to let go of this control until he's sold all the rest of the bits around the ground and someone offers silly money for the stadium. I doubt he worries to much about car parking spaces or he wouldn't be planning to build on thousands on the over flow, The ones under the foot print of the stand must be additional to what was originally agreed anyway, as it was supposed to have a stand there
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Post by Mark on Sept 21, 2016 18:52:21 GMT
Another factor is that Kassam has an interest in the ozone. Build a 4th stand = more fans = less parking for people going to the ozone for cinema. (On the basis that car parks will be busier before and after matches). Also I'd think a part of the hotel occupancy is tied into conferences, weddings at the ground. So I doubt he wants to let go of this control until he's sold all the rest of the bits around the ground and someone offers silly money for the stadium. I doubt he worries to much about car parking spaces or he wouldn't be planning to build on thousands on the over flow, The ones under the foot print of the stand must be additional to what was originally agreed anyway, as it was supposed to have a stand there Are you taking the p*ss? Obviously houses or flats are worth more than parking spaces, but whilst there are parking spaces for customers to spend money at the ozone I reckon he'd prefer match day attendances to be lower, when he's getting a guaranteed rent and service charge.
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Post by oufcyellows on Sept 21, 2016 19:04:31 GMT
All of the businesses are franchised out, so once they have paid their rent I doubt he gives a shit how many parking spaces they have at their disposal
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Post by Mark on Sept 21, 2016 19:24:51 GMT
All of the businesses are franchised out, so once they have paid their rent I doubt he gives a shit how many parking spaces they have at their disposal I'd assume it's pretty important to keep the franchise tenants happy though. If parking for their customers becomes difficult or they find problems with football fans, they'll soon drive the rents down. Tell you what, look up who owns the ozone and stadium footprint , and whether the tenants are Kassam companies or not.
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Post by oufcyellows on Sept 21, 2016 19:30:28 GMT
Ozone is just the name of the building now, vue have the cinema, Hollywood bowl, all the restaurants, gala all tenants, you can't have it both ways, people says he doesn't give a shit about us as a tenant, so why would he any other companies. Like with bowlplex, if they don't like it he will find someone else the car park is already a nightmare for those companies on 23ish Saturdays a year. One of their busy days of the week. And how many parking spaces u actually talking about under that stand 50/100? In a car park of 2000. Not going to make a difference really is it? You ever been up to the cinema or bowling on a non match day and seen that car park full ? I haven't
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Post by ox4eva on Sept 25, 2016 11:30:27 GMT
Quite a bit of the signage within the stadium has the old badge on it and it would be good to see the revamped.
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Post by cedricterrier on Sept 25, 2016 11:49:41 GMT
We need to buy the ground ,or move , simple I know but that's it in a nut shell . As##m has us by the short and curly s . He's a business man . Stop for a moment and think about that . And sad to say a dam good one . I think we should move . Stop wasting time with this ground .
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Post by behindthegoal on Sept 26, 2016 17:37:37 GMT
WE ARE NOT GOING TO MOVE...I would like to, but I am dreaming, so....buying is the only option
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Post by londonroader on Sept 27, 2016 6:43:56 GMT
The stewards... who ever they are or think they are.
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