Topic: can someone please explain??

[Bosshog]

http://news.bbc.co.uk/1/hi/england/merseyside/7063388.stm

New Anfield stadium costs soar 
 
The stadium will be able to hold up to 75,000 people
The projected cost of building Liverpool Football Club's new stadium has rocketed to "at least £400m".
The news of the £150m hike comes from the club's co-owner Tom Hicks, who together with fellow American George Gillett took over the club in March.

The Stanley Park stadium will have a capacity of 60,000 - 15,000 more than Anfield - when it opens, but that could increase to 75,000 in the future.

Plans go before planners at the city council on 5 November.

Mr Hicks said he was not worried about the radically revised figures: "I'm so excited about the new stadium because we'll be able to go do things for the fans we've never been able to do for them.

"Our fans are wonderful and over time we'll be able to give them the amenities, comfort and ease of getting tickets they have never had before."

 


i know this sounds stupid but just humour me.....
can someone please explain why the costs are soaring?
is it Materials, land, interest???
i dont know what has upped the price from £280 million to £400 million on the same design??

(sorry if this is on wrong froum)

[Stan.]

i know this sounds stupid but just humour me.....
can someone please explain why the costs are soaring?
is it Materials, land, interest???

Yes.

[NickoH]

I know material (steel, etc) costs have zoomed up in the last 12 months or so.........

[Rhino]

I know material (steel, etc) costs have zoomed up in the last 12 months or so.........

Rising steel prices always gets the blame for these soaring costs, steel must be more expensive than gold by now

[Rushian]

I'd guess it's something to do with trading up from the BMW we were building to a Lamborghini.

[Bosshog]

I'd guess it's something to do with trading up from the BMW we were building to a Lamborghini.

i thought the new stadium plans were at £280m
has there been even more added cost/facilities?

[reddwarf12003]

The cost has probally risen due to changes in the design made in consultation with the planning committee and other bodies.
Gives it a better chance of getting planning permission if they take in advise given to them .
Generally final plans are NOT set in stone so the cost will probally change again through out the construction process.
Unless they've managed to get the general contractor to sign a fixed price contract.

As they build the stadium the architects may issue changes to the design, what works on paper doesn't always work in the practise, this will add to the cost.

Also the stadium is built partly below ground. This is said to cost double of building above ground level.

Demolition cost's have risen as well in recent months .

[the red rebel]

flaming stay where we are, honestly dont think we will ever see it extended to 76 000 anyway, just me being pessimistic maybe but just my thoughts.
with a  recession on its way football wil be 1 of the 1st things hit to, so no way will we need that big of a ground anyway.

[Life]

We'd be fucking mad to build it now.  How long would it take to pay back £400m?  Our gate receipts are - I think - £15m less than Utds a year.  That's 26 years without the interest payments...which funnily enough, would probably be around £20m on that size debt.

Or more than the extra money brought in.

I know it's shite maths, probably doesn't take into account all kinds of financial shenanigans...but I really don't give a fuck how excited Hicks is...it's not worth it anymore.

[ds2190]

We'd be fucking mad to build it now.  How long would it take to pay back £400m?  Our gate receipts are - I think - £15m less than Utds a year.  That's 26 years without the interest payments...which funnily enough, would probably be around £20m on that size debt.

Or more than the extra money brought in.

I know it's shite maths, probably doesn't take into account all kinds of financial shenanigans...but I really don't give a fuck how excited Hicks is...it's not worth it anymore.

Gate receipts would be around £1.5-2m a game (purely from selling 60,000 tickets a game - obviously it will be a bit lower due to season tickets). So league games would bring in around £30-35m a season, then you add European and domestic cup games which would bring it up a bit more.

If we get a sponsorship deal then we'd get around £50-100m for naming rights. Obviously that would still leave a huge amount to pay back on the building of the stadium but it would be cleared relatively quickly (in terms of a long term investment anyway).

If we were to get £75m for sponsorship then once maintenance and such is taken into account we WOULD be able to pay it back in about 15 years. The owners would probably decide to spread it over a longer period though - more money for them in the short term.

I'm probably completely wrong though - I know fuck all about how to run a football club

[ttnbd]

the club would be looking to take in a minimum of £3m per game from a 60,000 seater stadium, that equates to £50 per ticket sold on average.  Current average is around the £33 to £36 per ticket mark.  The increase in corporate facilities will help the club achieve this target.

If the club achieved this £50 per ticket average in a 75,000 seater stadium then it would generate upto £4m per game in gate receipts, giving upto £70m in a league season.  An increase of over £40m.  There are things to take into account in all this like increased running costs and vat (as I was reminded about before).  However it also needs to be remembered that the Tax Man effectively pays 28% (as it will be) of any interest cost the club incurs as it is a tax allowable expense, aswell as increased depreciation will reduce future tax bills.  There is also the knock on effect of the increased capacity has on things like merchandise sales (just £13 per person per game, on average, in a 75,000 seater stadium would bring in merchandise revenues of close to £1m per game, maybe a tad optimistic but it will have a positive impact).

[Life]

...or, we could be relatively unsuccessful on the pitch, only sell 55,000 tickets a game and end up bankrupt.

It's just such a huge debt, when our revenue is so average...it seems like we're hoping a few things go right for this to work out. 
What if we didn't sell out the corporate boxes, or we had to resort to selling them at a reduced rate to what we hoped?
Less than £50 ticket average?  You're on about more than doubling our current £30m gate revenue?  Whose to say that can be realised?
60,000 average crowd with a £45 average ticket - revenue is £50m.  £20m out (basing it on your maths) and that likely does mean we pay nothing off the debt itself.

All far too optimistic, I'm starting to think this could be the death of us.
In the 80s we couldn't get 35,000 for a load of games - so football's changed, but it can change again.

[Dread Breath]

the club would be looking to take in a minimum of £3m per game from a 60,000 seater stadium, that equates to £50 per ticket sold on average.  Current average is around the £33 to £36 per ticket mark.  The increase in corporate facilities will help the club achieve this target.

If the club achieved this £50 per ticket average in a 75,000 seater stadium then it would generate upto £4m per game in gate receipts, giving upto £70m in a league season.  An increase of over £40m.  There are things to take into account in all this like increased running costs and vat (as I was reminded about before).  However it also needs to be remembered that the Tax Man effectively pays 28% (as it will be) of any interest cost the club incurs as it is a tax allowable expense, aswell as increased depreciation will reduce future tax bills.  There is also the knock on effect of the increased capacity has on things like merchandise sales (just £13 per person per game, on average, in a 75,000 seater stadium would bring in merchandise revenues of close to £1m per game, maybe a tad optimistic but it will have a positive impact).

Good post from you again, as always on these matters.

[ARMOLFC]

i know this sounds stupid but just humour me.....
can someone please explain why the costs are soaring?
is it Materials, land, interest???
i don't know what has upped the price from £280 million to £400 million on the same design??

(sorry if this is on wrong forum)
[/quote]

It won't just be the materials, they'll have to repay all the designers and all the people who produced the plans and completed the studies for the previous design, not sure either if we lost the council grant.

[ttnbd]

...or, we could be relatively unsuccessful on the pitch, only sell 55,000 tickets a game and end up bankrupt.

It's just such a huge debt, when our revenue is so average...it seems like we're hoping a few things go right for this to work out. 
What if we didn't sell out the corporate boxes, or we had to resort to selling them at a reduced rate to what we hoped?
Less than £50 ticket average?  You're on about more than doubling our current £30m gate revenue?  Whose to say that can be realised?
60,000 average crowd with a £45 average ticket - revenue is £50m.  £20m out (basing it on your maths) and that likely does mean we pay nothing off the debt itself.

All far too optimistic, I'm starting to think this could be the death of us.
In the 80s we couldn't get 35,000 for a load of games - so football's changed, but it can change again.

The club will know what sort of demand there is out there for each type of ticket.  They have waiting lists for all schemes they have (granted some are duplicated across schemes) from season tickets, PTS, corporate boxes, premier season tickets etc.  The demand is there for league games, the key is to price tickets in such a way that the capacity is always full, or near as makes no difference.

As for looking pessimistically at it, if everyone were to take that view then no business in the world would expand.  There will be more to the stadium than just hosting football matches.  General corporate functions could be held at the club, increased floor space at the club shop and museum, bars and resteraunts open on non-matchdays.  The days of a football stadium hosting just football matches are long gone.

There will be schemes to ensure that ticket revenues will continue to come in in the future, multi-season corporate sales (I think someone mentioned before that boxes at anfield are rented on a 3 season minimum), these new club level tickets etc.

[Life]

Tim, I know you know more about this area than most, but I've got to take issue with this line:
"As for looking pessimistically at it, if everyone were to take that view then no business in the world would expand."

That's just not true.  When you look at opportunities you look at worst case, best case and realistic.  You're right that the club will know what sort of demand is predicted - but its only ever going to be just that: predicted. Our worst case scenario could leave us wiped out - our best could see us pay off in what, 15 years, 20?  That's the best case?  It's all predictions, and I don't think we've got the fan-base or the corprorate interest that there is down the east lancs road.

And I've seen boxes going for £1200 on an ad-hoc basis on the official site, so they're obviously not selling out now, never mind on 3 year minimums.

That waiting list is full of duplications and people who think they might as well get on it, better to be on it and in with a chance of a season-ticket.  Stick the £500 bill under their door and I reckon a few people might realise they're happy sticking with their champions league runs and the odd game in the league.

And I know they'd be looking at increasing revenue from other streams, but again, is that potential there?  Bars and restaurants on non-match days?  Whose going to go?  Is there a demand for that in L4...because it doesn't look like there is whenever I've been past on non-match days.  They'll look to create the demand, so therefore are into the predicting game again.  And predicting it based on nothing.

And the new stadium was always predicated by the fact it cost £60m to redevelop the current site to 55,000; when the figure was standing at £100m for a new one.  What's the current ratio?  Does it still not make financial sense to redevelop?

My biggest worry is that Hicks and Gillett are on a no-lose gamble with the stadium.  It's a seperate financial entity that will own the ground, and own the debt...if it all goes tits up, they're not going to lose a bean, and we'll lose the lot.

[ds2190]

Tim, I know you know more about this area than most, but I've got to take issue with this line:
"As for looking pessimistically at it, if everyone were to take that view then no business in the world would expand."

That's just not true.

There is a reason why people like Richard Branson have made it big - people like him are willing to take risks and they pay off.

In order to succeed you have to take risks - we are behind Man Utd, Arsenal and Chelsea because we have stuck with what we have rather than taking the risk of stepping up to the next level.

[Onward Liverpudlian]

Does anyone agree with me that Everton moving out of the city will help us in the long run in building up our fanbase in the city even more over the coming years. North Liverpool for so long has had two football cathedrals on its landscape - you simply can't see one club without seeing the other - it's impossible - the kids have always had a choice, but with Everton now scurrying off to the outskirts that'll leave LFC exclusively in control of the future generations of kids growing up in Anfield, Everton, Walton and the wider Liverpool area. Just 2 miles from the city centre with the Kirkby blues hidden and tucked away 7 miles away from the city centre.

Gillett and Hicks arn't fools - they know we are soon to be a one club city and though I would've had my doubts a few years ago whether we could fill 75,000 seats I feel increasingly confident we will be able to - of course competing strongly every year for the PL and CL titles will be the main factor (as ever) of course.

[Life]

There is a reason why people like Richard Branson have made it big - people like him are willing to take risks and they pay off.

In order to succeed you have to take risks - we are behind Man Utd, Arsenal and Chelsea because we have stuck with what we have rather than taking the risk of stepping up to the next level.

Again, that's not true at all.
Gamblers take risks, and most of them are skint.
In order to succeed you need to take advantage of opportunities that come your way, mitigate or minimise the risks and work your arse off.
Richard Branson never got rich simply taking risks, he got rich spotting various opportunities arising, calculating in detail the likelihood of success with various business plans showing best case/worst case/realistic, accepting the possibility of failure and going for it.

That might be what we're doing, and god knows there's going to be some very clever people involved - but it won't be the first time clever people got carried away and went ahead with something even though it no longer made financial sense...
Branson's hero was Freddie Laker.

[FernandoTorres]

Does anyone agree with me that Everton moving out of the city will help us in the long run in building up our fanbase in the city even more over the coming years. North Liverpool for so long has had two football cathedrals on its landscape - you simply can't see one club without seeing the other - it's impossible - the kids have always had a choice, but with Everton now scurrying off to the outskirts that'll leave LFC exclusively in control of the future generations of kids growing up in Anfield, Everton, Walton and the wider Liverpool area. Just 2 miles from the city centre with the Kirkby blues hidden and tucked away 7 miles away from the city centre.

Gillett and Hicks arn't fools - they know we are soon to be a one club city and though I would've had my doubts a few years ago whether we could fill 75,000 seats I feel increasingly confident we will be able to - of course competing strongly every year for the PL and CL titles will be the main factor (as ever) of course.

Yes.

[trussell1982]

Does anyone agree with me that Everton moving out of the city will help us in the long run in building up our fanbase in the city even more over the coming years. North Liverpool for so long has had two football cathedrals on its landscape - you simply can't see one club without seeing the other - it's impossible - the kids have always had a choice, but with Everton now scurrying off to the outskirts that'll leave LFC exclusively in control of the future generations of kids growing up in Anfield, Everton, Walton and the wider Liverpool area. Just 2 miles from the city centre with the Kirkby blues hidden and tucked away 7 miles away from the city centre.

Gillett and Hicks arn't fools - they know we are soon to be a one club city and though I would've had my doubts a few years ago whether we could fill 75,000 seats I feel increasingly confident we will be able to - of course competing strongly every year for the PL and CL titles will be the main factor (as ever) of course.

Totally agree.

[Alf]

I'm beginning to wonder if building this new stadium is more trouble than its worth. I've been to the Emirates and I know its a licence to print money for Arsenal but we can't charge London prices and our place is going to cost more than there's

[richmiller1]

We'd be fucking mad to build it now.  How long would it take to pay back £400m?  Our gate receipts are - I think - £15m less than Utds a year.  That's 26 years without the interest payments...which funnily enough, would probably be around £20m on that size debt.

Or more than the extra money brought in.

I know it's shite maths, probably doesn't take into account all kinds of financial shenanigans...but I really don't give a fuck how excited Hicks is...it's not worth it anymore.

According to Parry earlier in the year Arsenal & United take in excess of £1m more than us every home game. Across all competitions that works out about £25M a season.

The other things to note are

1) As has already been pointed out its likely to increase revenue in other ways on matchday, and a top rate conference venue in the middle of a done up victorian park with Anfield Plaza next door suddenly makes us a pretty attractive non match day venue for companies and individuals.

2) Anfield Plaza. The site is huge, it'll be next to one of the country's landmark buildings & we own it. Whether we develop it in partnership with a developer (like Land Securities) or just sell it off up front, it is going to be worth millions and millions.

3) Naming rights. An utter certainty now but will still be worth a good few million

[ttnbd]

I'm beginning to wonder if building this new stadium is more trouble than its worth. I've been to the Emirates and I know its a licence to print money for Arsenal but we can't charge London prices and our place is going to cost more than there's

Ours is going to hold about 25% more fans.  Also does the £400m quoted include the ancilliary works around the stadium (Anfield plaza, the park and the train stations that have been suggested)?  I suspect it does.

[white pony]

the club would be looking to take in a minimum of £3m per game from a 60,000 seater stadium, that equates to £50 per ticket sold on average.  Current average is around the £33 to £36 per ticket mark.  The increase in corporate facilities will help the club achieve this target.

If the club achieved this £50 per ticket average in a 75,000 seater stadium then it would generate upto £4m per game in gate receipts, giving upto £70m in a league season.  An increase of over £40m.  There are things to take into account in all this like increased running costs and vat (as I was reminded about before).  However it also needs to be remembered that the Tax Man effectively pays 28% (as it will be) of any interest cost the club incurs as it is a tax allowable expense, aswell as increased depreciation will reduce future tax bills.  There is also the knock on effect of the increased capacity has on things like merchandise sales (just £13 per person per game, on average, in a 75,000 seater stadium would bring in merchandise revenues of close to £1m per game, maybe a tad optimistic but it will have a positive impact).

Using your figures then, in cash terms, we'd be pulling in £50*75,000 = £3.75m per game in ticket sales, let's say £4m including merch. Over 30 games a year at Anfield, that's £112.5m per year. If we borrowed at a rate of 6% let's say, that cashflow to perpetuity is 112.5m/0.06 = £1.875billion.

Less cost of £400m and you've still got yourself an earner.

Compare that with our current figues which are say £35*44,000*30 = £46.2m a year, you see the difference.

Those figures are crude and a lot more variables would have gone into the original calculations, but you can see what a difference this will make in cash terms alone.

[muz]

If we make a minimum £25m a year extra in revenue,we will pay £400m off in 15 to 20 years,a lot less shorter term than most mortgages,perfect value id say.

[Withnail]

I work at a builders merchants. Tom and George should have given me a shout, i would have got staff discount on all the materials