Topic: Who benefits?

[Abrak]

I am not accusing anyone of anything here just making a theoretical point.

If we paid our owners 20m in dividends each year there would be a riot.

But if the new stadium is financed entirely out of our cashflows we may pay say 30m each year for 10 years to pay down the debt at which point they own the stadium. Clearly the business is worth a lot more with a bigger stadium debt free than without. I dont know if there will be equity involved.

It is just that I look at Arsenal that has paid no dividends but created huge amounts of shareholder value by getting their supporters to pay down the debt on the stadium. Someone has to pay for it. But a stadium to me is a very good way of getting a dividend out of supporters without them realizing it.

And my point is not that I think it is a rip off but that we are in fact doing something we wouldnt normally do without realizing it.

[CraigDS]

You really think Arsenal fans haven't realised they have been paying for it? I'd argue otherwise.

[JackBauer]

But a stadium to me is a very good way of getting a dividend out of supporters without them realizing it.

Don't understand this bit. A dividend is cash coming out of the company into the pockets of the shareholders.

Cash coming out of the company to pay down stadium debt is just like you making a mortgage repayment. You're financing the acquisition of an asset over time.

[Peter McGurk]

Don't understand this bit. A dividend is cash coming out of the company into the pockets of the shareholders.

Cash coming out of the company to pay down stadium debt is just like you making a mortgage repayment. You're financing the acquisition of an asset over time.

Indeed, all dividends come from earnings of one sort or another.

But the value of this asset is not how much it costs - it's how much it makes. A small error H&G can tell us all about. If some dumb-ass wants to spend £450m on an asset that generates £260m (pick a number) in value or pretend it's worth £450m when it's worth £260m, I guess they don't do so well.

Mamma! That man swindled me! Where's my billion?!!! Where's the value of my (unbuilt) stadium?!!!

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[ultimatewarrior]

FSG's plan is to live within its means. Until the the next set of figures come out we wont know how much of their own cash they have invested. They have said they will invest the profits back into the club but there havent been signs that the will invest anythig extra themselves.
 It seems that unless FFP was introduced, FSG wouldnt have bothered with us. If every penny brought in by the club is reinvested thats great ,but for the first 5 years of the FFP owners are allowed invest an extra 180m of their own money "to break even". Will we see this amount invested in the squad where its accounted for or in stadium , acadamy etc...?
 I understand football is a difficult business to make money in, and in most cases it costs a lot of money to achieve success. So in theory if FSG have a long term plan to benefit in some way. Do they want to build the clubs finances in order to sell it on at and make massive return on their investment? If so, wouldn't the a new stadium add huge value to the club rather than passing the club with the stadium problem(it is a problem) still to be solved.
Either way the club that invests the most in their acadamy and other infrastructure are going to see better results in the long run than the clubs who spend fuck all. As i said its great if we spend every penny of profit on the first team but i'd like to see FSG spend their own money in the areas the FFP ignore.

[Peter McGurk]

FSG's plan is to live within its means. Until the the next set of figures come out we wont know how much of their own cash they have invested....

The FFP is not a license to run a club recklessly. It’s the opposite. Just because you can spend millions on a stadium, it doesn’t mean that you should. The FFP is a calling to live with your means, not blow it on projects that are not viable.

If City or Chelsea’s owners weren’t there, they’d be bankrupt tomorrow. That’s not a business. It’s a hobby - and it’s a hobby that’s costing you money! Every time Abramovitch blows another £50m on a Torres, it inflates the cost of players and wages. You pay for that. I pay for that. Whether is via Sky or at the match.

So you’re right, FSG want no part of that. Without FFP they wouldn’t have bothered (they did say as much). They don’t want to try to compete on a playing field where some clubs can piss millions away with impunity.

***

If FSG are good to their word, we will see that they will have invested zero of their own money (since the time they bought the club) when the next figures come out. That’s a good thing.

Because of the ‘urgent need’ for players, they might have invested some of their money or they might have borrowed the money. If they’ve lent it to us or borrowed it from a bank, it will be based on earnings. That’s still living within their means (and ours).

Any first five years exemption of ‘personal investment’ would be a transition period from the old system to the new. Clearly the intention would be that that would not be part of any exempt payments (towards a stadium, for example - because it’s exempt already!). Frankly it’s a bit of a kop-out. If it were me I’d be saying, get your house in order five years before we start with FFP. How long does Chelsea need to wriggle?!!

And if there is £180m ‘personal investment’ exemption and again if FSG are true to their word, none of it will be spent. Whether it’s players or stadium or jets to the Bahamas, unless such a loan to the club both produces additional income and can be substantiated by earnings. Living within our means.

***

A huge stadium standing there in all it’s glory adds bugger all to the value of the club.

If we spend £300m on a new stadium we have a £300m cost. The ‘income’ on the other hand - the money that comes in through the door, generates the value. But if the cost exceeds the income then the value of the stadium and the value of the club as a whole goes down.

Or as in this case, if the cost equals the (additional) income, the value stays the same (and that assumes a guaranteed income). The only saving grace, the only source of money for the team, is naming rights. So, the entire source of funds for the team and the only increase in value of the club (from the stadium) is down to hard-to-find, come-day, go-day, annual, naming rights.

There may come a time when the costs of a new stadium are nil - ie., when it’s paid off. It is however in the nature of property development (particularly in relation to tax) that that time tends to be when the asset is exhausted ie., a major re-fit is required and the whole cycle starts again.

While all that shit is going on, a redevelopment would be earning money (for the team and even increasing value of the club) almost from day one - without the unlikely prospect of actually getting naming rights and without the risk of losing them.

***

As it happens, FSG don’t give a fig for value. They say if value comes, so be it - but their goal is a great club and a great football team.

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[ultimatewarrior]

So was ArsenalFC worth more when it was winning leagues and cups at Highbury or now (over £1bn) without a trophy in 5 years. What cheanged in that time to add so much value to the club?

[ultimatewarrior]

Peter you say a £300m stadium is a cost. If we spend £300m on players over 20 years(which we have done) does it guarantee to add value to the club , does it guarantee success does it even guarantee CL? What does it guarantee? Idont  know how much FSG paid for the club but i'm sure its worth than they paid because or revenues are growing (and hopefully profits). We still have debt  that is managable but the club services that. So if the club invest all the profit back into the team and ignores all other infrastructure , what is guaranteed to change? Nothing. We could be another 20 years down the line , unchanged, without any investment. Why not take the opportunity that FFP offers to spend cash instead of just ingnoring it?

[CraigDS]

You don't get what he is saying -

A £300m stadium may add £300m of value to the club, but it'll also add £300m of debt unless financed well (in the case of arsenal via selling the land/housing Highbury was on). We wouldn't have that luxury. We could see if realised other ways but that's what the club is exploring now.

£300m of player purchases isn't the bet example as most of those have a sell on value so if worse comes to worse can be sold on. A stadium doesn't offer that.

[ultimatewarrior]

I know what he is saying and understand , the only thing i'm trying to get across is , FSG seem to think they can achieve greatness again without any investment. Maybe they can but not by being a selling club. If we buy players to win titles we shouldnt be thinking about sell on value. Dont forget the wage bill alone is about 5 times that of stadium repayments anually. Hypothetcically if we make £50m profit every year and spend £50m on players every year, then great but without any new or expanded ground there is no pressure on the owners to do anything with the stadium as the answer will always be " we have to spend within our means". No fan can argue with that after 2018. But now we could say , " FSG show us you mean business" . This is an attack on the owners as I will support the club whatever the scenario, but I would like to see them spend the profits and invest the extra 30-40m a year until 2018 because ,believe me thats what Utd, City, Chelsea, probably Spurs will be doing.

[Peter McGurk]

Peter you say a £300m stadium is a cost. If we spend £300m on players over 20 years(which we have done) does it guarantee to add value to the club , does it guarantee success does it even guarantee CL? What does it guarantee? Idont  know how much FSG paid for the club but i'm sure its worth than they paid because or revenues are growing (and hopefully profits). We still have debt  that is managable but the club services that. So if the club invest all the profit back into the team and ignores all other infrastructure , what is guaranteed to change? Nothing. We could be another 20 years down the line , unchanged, without any investment. Why not take the opportunity that FFP offers to spend cash instead of just ingnoring it?

There a no guarantees anytime, anywhere, anyplace.

And a stadium is at best a secondary investment. ie., you are investing in a stadium in the belief that it will generate money for investment in primary investment in 'success-producing' players. Stadia can't score goals. Secondary assets give a club the means within which they have to live, as a business.

Not only that but players hold value better than gate receipts or a stadium (which as I said also has no intrinsic value). You can get something back for a player, the club can't sell a season ticket on (legitimately). You can't sell an empty stadium (and still be a football club).

***

The FFP is not an 'opportunity to spend cash'. Right now we have every opportunity to spend cash on whatever we damn well please. But we have to have the cash to do it!

I know you know this but just to emphasise the point, UEFA's not giving anyone any money. They are just taking away the 'right' to blow millions beyond your means - or rather a business's means - so that those who haven't got billions to splash (like us) can play on a level financial playing field.

And becasue blowing billions Abramovitch-style is not sustainable (maybe for him). It produces an unsustainable and unstable game. How many more liquidations do we need to see to see that? How much closer must we come to bankruptcy to understand? If FSG were to suddenly start pumping in hundreds of millions without a sensible return in prospect, it's time for Mr Grabiner again.

I know what he is saying and understand , the only thing i'm trying to get across is , FSG seem to think they can achieve greatness again without any investment. Maybe they can but not by being a selling club. If we buy players to win titles we shouldnt be thinking about sell on value. Dont forget the wage bill alone is about 5 times that of stadium repayments anually. Hypothetcically if we make £50m profit every year and spend £50m on players every year, then great but without any new or expanded ground there is no pressure on the owners to do anything with the stadium as the answer will always be " we have to spend within our means". No fan can argue with that after 2018. But now we could say , " FSG show us you mean business" . This is [not?] an attack on the owners as I will support the club whatever the scenario, but I would like to see them spend the profits and invest the extra 30-40m a year until 2018 because ,believe me thats what Utd, City, Chelsea, probably Spurs will be doing.

As I said above, the club needs a bigger capacity to generate the means to pay players with. Nobody is arguing for do nothing on a stadium.

FSG look to the sell-on value because they can re-invest it in the club! We should definitely look to sell players on when they’re past their best - at a time when they’re worth something. Not wait with them on the bench or ‘in the squad’ till they’re worth zip (a’right Michael...?).

It’s proper business. Not only is it proper business/money sense but FSG do mean business in terms of football and winning things.

***

Well look mate. Where’s the extra ‘£30-£40m a year because others are doing it’ going to come from (even if all of them do)? From FSG’s back pocket? Save us (and then spend like it doesn’t matter)! You don’t ask much.

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[west_london_red]

And just to add to what Peter has said, we think the game is in a state here, but what hasnt recieved much publicity is that state of the game in Spain, where 4 la liga clubs are in administration with payers not getting paid or paid late, then you have Rangers and Portsmouth here. The game is in a absolute mess and hopefully the effects of FFP filter down to all levels of the game.

[ultimatewarrior]

Correct but , i'm talking about "who benefits?" If FSG dont invest as much as other clubs and we dont improve on the field, are they setting themselves up for the fall. With their lack of knowledge of the game , they can only trust who they employ to build a winning team. If they decided Kenny and Comolli arent they way forward, are FSG qualified to hire the next coaching team  or will they be getting some advice from outside the club?
 Player valuation may drop after FFP but  in my opinion there will be more competition for the world class players and I can see those players getting huge salaries for choosing to play with X or Y. We may well see more players from the acadamy but when you see City's plans for their new acadamy, you can see how it will turn young lads heads. Without more success and an improved stadium, the only thing LFC can sell to world class players is our history.
I cant wait to see how clubs react to FFP. If we wait until the right naming rights deal comes along or until the council give PP, it might be too late. It could be another 10 years (seriously hope not) before we have our 65k stadium.
We know a new stadium costs more but what are the costs of doing nothing at all?. If we dont achieve success and CL ,that in turn secures a sufficient naming rights package and if the CC dont budge on redevelopment, where does that leave us?
Maybe i worry too much but definitely interesting times ahead.

[anfieldpurch]

And just to add to what Peter has said, we think the game is in a state here, but what hasnt recieved much publicity is that state of the game in Spain, where 4 la liga clubs are in administration with payers not getting paid or paid late, then you have Rangers and Portsmouth here. The game is in a absolute mess and hopefully the effects of FFP filter down to all levels of the game.

Who are the 4 La Liga clubs? Hadnt heard of any

[west_london_red]

Who are the 4 La Liga clubs? Hadnt heard of any

Cant remember off the top of my head which four it was at the time I heard but had a look on Google to find that Real Betis, Rayo Vallecano, Granada, Real Zaragoza, Racing Santander and Real Mallorca are in admistration or were in administration in the Summer, three of who were promoted this season. Some might have been relegated in the Summer however.

[Not A Scouser]

The idea is that a new stadium must add more value than its cost.  Value can be added with increased revenue and a rise in the general price of buying clubs with new stadiums.  I think Ian Ayre has been very clear that this is not the case without a very large naming rights contract.  It may be possible for such a deal to be made with a company that wants to greatly expand its global recognition.  Liverpool is known around the world.  Warrior paid over the odds for the shirt deal because no-one had heard of them around the world and they thought that the most effective method in terms of money to get that worldwide exposure was to pay for the shirts of a globally known club.
I am sure Ian Ayre has searched extensively for such a deal but there have not even been hints of an adequate sized deal.