Topic: today's installment: Clubs told: Share a ground or there's no cash

[mark s]

from icliverpool.com

Clubs told: Share a ground or there's no cash
Sep 23 2003

By Bill Gleeson And Tony Barrett
 
LIVERPOOL Football Club was last night warned it must share its new stadium with rivals Everton - or miss out on public grants of up to £30m.

The stark message was delivered at a secret summit between the chief executives of the two clubs and their opposite numbers at Liverpool city council and the North West Development Agency.

Only one venue for a new shared stadium was on the agenda at the meeting - the site of Liverpool's proposed 60,000-seater new home in Stanley Park.

Council chief executive David Henshaw, and NWDA chairman Bryan Gray and chief executive Stephen Broomhead told Liverpool's Rick Parry and Everton's Michael Dunford that up to £30m could be available from the public purse - but only if the two clubs agree to share.

Both clubs are understood to have deep reservations about a ground share, but the financial argument is a persuasive one.

Liverpool FC needs to borrow £75m for its new stadium, but could save itself a huge amount of debt by agreeing to share.

Cash-strapped Everton, meanwhile, are thought to be worried about getting involved in Liverpool's project at such a late stage - but has no other realistic prospect of a new home to replace ageing Goodison Park.

Further talks are now being planned between the four parties.

 


 

[ttnbd]

we were not getting any public cash anyway so it makes no difference.

["17"]

I would prefer to sell Micky for 30m anduse that then ground share with those Bluenosed bastards

[Jimbo.]

we were not getting any public cash anyway so it makes no difference.

Exactly!

[moomooscouser]

how long would it take to repay the 75m debt?
in any case it'd be a lot shorter than the groundshare with the Blues...

[ttnbd]

it would take 25 years paying back £5m a year.

[ecmdtan]

Wow, that's a lot of interest!

[ttnbd]

It equals the equivalent of £2m interest per year on a £75m loan.  I know it doesn't quite work like that but that is it in its simplest form.

[Life]

If the ground is costing £120m (which sticks in my mind for some reason), then we must have £45m already (if we were going to be £75m in debt).  So we could take the £30m from the grant, and put £45m, and get the blues to put themselves in hock to the tune of the other £45m.
We'd have a stadium that the city can be proud of and NO DEBTS.
Jeez we can have neutral seats and put fancy red covers on every time we're at home if you want a splash of red.  Goodison could become our car-park (and save me £6 for parking on a school yard - we must have the richest schools in the land, not that you'd tell by looking at them...) and we'd be sorted.

I understand what you're all saying about not liking the idea of sharing - but to be debt free with a 60,000 seater stadium would be a fucking immense step in the right direction of matching that shower from down the lancs.  It's not taking it too far to the extreme to say you could be saying "I'd rather be bankrupt than share".  If you think Moores has bottomless pockets and what happened to Leeds couldn't happen to Liverpool - I think you're wrong.

[ecmdtan]

Since I've had nothing else better to do, I decided to calculate this out.  Am not sure what the loan rates are like in the UK, but I will assume it is 7.0% per annum.

Based on a 75 million pound loan over 25 years, the repayment (on a monthly basis) would come up to..

6,361,012.80 per year.....making that a total of about 160 Million pounds to be paid back

[Jonathan Hall ☆☆☆☆☆☆]

Think it's as Tim says.

£5mill a year for 25 years = £125 mill including interest (LFC estimation)

So if we make anything between £7-12 mill on the extra seats, we are still making a bigger profit.

[ttnbd]

Life it doesn't quite work like that.

One of the fundamental rules of business, or anyone in general actually, is do not pay for a property straight off.  Spread the costs over a long period, in this case 25 years, this will ensure you can have reserves in your bank should the need arise.

2nd, since the new stadium is self funding, ie the extra income more than pays the loan off, we can keep any of our funding reserve to use on players, wages, etc.

[Life]

But that means we don't get any benefit from having a bigger ground for 25 years - during which time a lot of things might happen.

And to extend the business analogy, if you were offered an office share that would save you 25 years of debt, have 1/4 of it's cost paid for outright, and then 37.5% paid for by your sharing partner, which would not affect the running of your business whatsoever - you'd snap their hands off.

[ttnbd]

But that means we don't get any benefit from having a bigger ground for 25 years - during which time a lot of things might happen.

We see the benefit immediately as the extra 17,000 seats would bring in revenue of £10m to £14m a year from gate receipts alone (clubs own figures, based on approx £29-£30 per ticket per game).  So immediately we would be making a profit of £5m to £9m.

And to extend the business analogy, if you were offered an office share that would save you 25 years of debt, have 1/4 of it's cost paid for outright, and then 37.5% paid for by your sharing partner, which would not affect the running of your business whatsoever - you'd snap their hands off.

But then you wouldn't own the whole building so that would cause you problems when trying to secure a long term loan should it be required in the future.

[Life]

We see the benefit immediately as the extra 17,000 seats would bring in revenue of £10m to £14m a year from gate receipts alone (clubs own figures, based on approx £29-£30 per ticket per game).  So immediately we would be making a profit of £5m to £9m.

Assuming we sell all the tickets, the team continues to improve etc etc etc  Didn't realise that - but compare it to "revenue of £16m - £20m a year".  That's one world class player every summer JUST from extra gate receipts.

But then you wouldn't own the whole building so that would cause you problems when trying to secure a long term loan should it be required in the future.

Fair point.  But saving ourselves 25 years of debt is just too big a pull for me.  All costs for the ground in future would be far less, and we'd be sharing any loans for future work on the ground anyway.

[Jonathan Hall ☆☆☆☆☆☆]

I'd rather stick with what we have, either staying put or at a push new ground.

However, if we are making the extra money from extra seats, which no doubt will go up each year by a quid, then we could start making even more money.

If we go to a shared stadium we lose control of any profits from the stadium being used for other purposes, and again this will keep our profit down a bit compared to owning it outright, and also means that EFC who cannot afford £30 mill as a tenth of the Kings Dock scheme being helped out financially off our backs.

We should be looking after our club only, strange that all this groundshare talks have hotted up since Kings Dock was shelved and Everton have to stay put.
The groundsgare wasn't mentioned during all the Kings Dock talks as the pro Everton based Echo and Post didn't need or want to drag it up.

[Life]

I know what you mean - but the fact that they weren't keen and now are is pretty obvious.  That doesn't mean we should cut off our nose to spite our face.  If it benefits us then I'm happy.

Parry won't let us get into something that doesn't benefit us, so if he comes down in favour of a groundshare, I'm behind him.
Anfield hasn't been Anfield to me since the Kop was seated anyway....the kop, kemlyn and anfield road stand are all different.  The pitch probably changes every summer.  The boot room has gone.  It's all different.  Moving 200 yards to a fantastic stadium (that I can get into every game) even if it's shared with the blues would be a good thing....imo.

[Tom iGor]

Give us the money, Everton can play in the car park.

[Jonathan Hall ☆☆☆☆☆☆]

I'm hoping Parry will take one of two choices.

Stay put and redevlop Anfield to 55000 or move by ourselves to Stanley Park for 60000.

I think he'd rather push us into Stanley Park on our own by forcing the issue and saying Stanley Park or groundshare.

He knows what the majority would take.