Tylerdurdencfc, on 08 February 2012 - 01:11 AM, said:
Private investors get a return on their investment. Plain and simple. I don't think anyone's daft enough to believe that the investment doesn't have associated finance costs attached.
Please will you tell your Rotherham friend on here PAC17 this as he quite clearly doesn't understand this point...therefore he must be daft...
We'll have long-term liabilities of course,
Exactly and do you know what these long term liabilities at commercial rates will cost you....let me inform you...
Dave Allen our chairman lent the club money in the form of a loan to the tune of £2m initially, then to the tune of an extra £2.5-3million to cover the short fall from the sale of Saltergate (as at the time of the build it hadn't sold, luckily it has now)...these loans were at 5%...to which we payed £367,000 interest on in a year....this lead to us making a loss of £22,000 last year...and that was with the state of the art banqueting facilities sold out every match day, a massive rise in attendances, food and drink, merchandise etc plus the conference and banqueting facilities sold out practically 365 days a year...
So that was on the base of a £5+m loan with a team winning the league in its first season in a sold out season...
Now forgive me if I'm wrong but your stadium cost £17m to which it sounds like you got a football league grant...but sounds mostly like private investment...to which you are saying that it will be loans that have to be paid back at commercial rates. These commercial rates won't be 5% or even 6%, the businesses will be looking at getting 7% or more...now lets say £10m is coming in this form....
How much if its £10m do you think you will be paying on interest? Regardless you sell out the banqueting you want be able to repay it.
The first few seasons you will make a loss and not be able to invest in the squad exactly like ourselves....why do you think a team that won promotion, a team thats turnover double to £6.9m a year, yet we can't invest in big money players....the reason why is we owe the interest repayments for our loans to our chairman.....if he wants he con forgo them and turn it into equity in the club or reduce is rate if he likes....yours are private investors and won't do this...they will want a return on their money.
And before you jump in and say your wealthy investors will pump money into the squad...in 2014 i'm led to believe a FIFA rule that all teams must not spend more than 60% of their turnover on wages, signing on fees etc and will be scrutinised for accounts (i.e. your chairman can't bung the club money for nothing)...Chesterfield are well below this on their annual accounts...last years turnover was £6.9m with the squads budget and background staff at £1.5m well below the 60% stated. Rotherham will no doubt increase in turnover, but i guarantee you will make losses in the first few years....
The big question is, we had success, got lucky in the first season with promotion and still have the healthy crowds....what happens if Rotherham remain languished in the 4th tier....
Your interest repayments will be huge and thats why you will make the losses coming....I hope they don't but i fear for Rotherham due to the amount of private investment they have undertaken to get this off the ground...why did you not sell the stadium rights....surely this money could have then been used for squad development!
I hope it is a success but I think you will need the luck we had on the playing side of things as well...
And Ps thanks for the intelligent reply...nice to have a debate rather than PAC17 just talking rubbish.
Well I think the basis of the argument has changed hasn't it? It has seemed to have gone from...
a) The NYS is an inferior model to the b2Net (it clearly isn't).
b) Chesterfield have a larger fanbase than the Millers (they clearly don't, and I'll provide empirical evidence to prove it if this remains unchallenged).
So having settled the above, let's talk finance. Our Board, and particularly Tony Stewart came out a few months back saying we need to average 8,000 to break-even. Until we do (and unless we have a promotion season, I think we'll struggle to meet this in our first season if still in the 4th division), Stewart and the Board will be financing the deficit. The stadium, of course, was built fit for the Championship (even the outlay if it remained 12,000 would be great for teh Championship). If we get to the Championship (or even League 1) the 8,000 cited figure will be surpassed. That is why promotion is such a big deal to us. If we languish in this league for 5 seasons, the backers are taking a huge hit.
The composition of the investment isn't as clear-cut as you believe it to be. A good chunk of it comes from a Rotherham-based consortium where the chief backer is a lifelong Millers fan. Investment like that clearly won't be at commercial rates (which incidentally will be around 7.5% - 12% I'd imagine), so that dilutes the finance costs straight away. In this instance, we are talking equity holding. These guys are in it for the long haul, and so they'll be wanting in on shre ownership.
If we take a step back, and look at it without green eyes.... why would Tony Stewart (a self-confessed SWFC lifelong fan and Sheffield businessman) be championing and facilitating a project for Rotherham United Football Club? The answer is, there's something in it for him. No-one really knows the intracacies of what that involves, but at the end, Tony Stewart makes money out of this. As an absolute punt, I reckon RMBC and the Rotherham-based consortium would never get involved while Mr Ken Booth was the figurehead. Negotiations with the Council and Booth and with the consortium and the Booth family had broken down. The differences were allegedly irreconcilable. Therefore, Tony Stewart acts as a frontman and takes ownership of RUFC. Somewhere lurking in the background is the consortium and the Council. Negotiations break down between Stewart and the Board for the renting of Millmoor and its associated training facility (which incidentally was only going to be an interim solution until the new stadium was built). That's how we've ended up at Don Valley. We played chicken with Booth, Tony Stewart called Booth's bluff and we upped sticks and parted company with the beloved Millmoor. As an aside, Mr Booth was great for RUFC and had overwritten millions of pounds worth of debt over his tenure that was overlooked by the fans. However, allegedly stupid previous owners had a clause written into the contract to bail us out of admin that the lease be upped to £192k to pay back the money when CF Booth Ltd bailed us out at the 11th hour. Stewart's stance of course was that he wasn't paying/honouring that as it was nothing to do with his tenure.
This isn't aimed at you in particular Tyler (incidentally I look like you wanna luck and f#ck like you wanna f#ck), but many on here are implying there's something sinister about RU Estates Ltd owning the stadium and/or land. Well quite frankly, there isn't. It's very tranparent whom comprises the Board of RU Estates Ltd and it might even be 100% TOny Stewart. Has no-one ever heard of an SPV on here? It isn't that uncommon in the world of large financial projects for the project to be separated out to reduce the risk and free up the capital. In fact, it's pretty darn common.
I've got to be honest and say I'm not particularly savvy about the new turnover rule. I'm aware of it, but I'm not sure of the loopholes surrounding it. For example, it's been so poorly applied in the past that teams just completely go over it and it's overlooked. Failing that, and what RUFC have done is bump turnover figures by pumping marketing and advertising costs into the club from the owners. For example, ASD Lighting have probably chucked hundreds of thousands of pounds in, and it's perfectly legal to do so. If that rule is changing or being clamped down on, well I'm sure it's all in hand. And with respect, our conferencing and banqueting figures will be at least double the size of that of the b2Net.
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