New beginnings - 25% Truth, 80% Bollocks

[reeves4england]

Kieran Maguire has done a brief rundown of L2 finances for 21/22

https://twitter.com/KieranMaguire/status/1688492064567095296?s=20

Not hugely deep or insightful and we all know the debt situation has changed over the past 12 months. This does however show that STFC had the second highest revenue and were one of only a handful of clubs to break even.

[horlock07]

This does however show that STFC had the second highest revenue

Interesting how high FGR's revenue was...

[RobertT]

FGR's Revenue number includes a rather generous Sponsorship deal with Ecotricity, which brings in somewhere between 2m and 3m I think (from looking at their accounts a few times).

That number is massively inflated vs. other clubs at this level, but their reasoning is the PR relationship both bring each other - using FGR as some sort of PR vehicle for Ecotricity which means it is more valuable than any normal football club to the sponsor.

This is also just Revenue, it ignores the ability of the ownership to source funding to cover losses - loans, capital investment etc.  I think clubs also report Transfer fees below the Gross Profit line, so outside of normal operations and therefore not in Revenue.  They report the profit on each deal as it happens like disposing of any fixed asset.

[The Artist Formerly Known as Audrey]

Why are Colchester top of the accumulated losses - around £35m? What have they done with all that?

[reeves4england]

Why are Colchester top of the accumulated losses - around £35m? What have they done with all that?

Why are Colchester top of the accumulated losses - around £35m? What have they done with all that?

Presumably something to do with building the new stadium?

[RobertT]

Colchester - Because it is still owned by this company:

https://www.aspiremediagroup.net/

And has intercompany loans amassing that amount to cover 2m a year in losses.  It's basically like Clem owning us and using Axis just for a little longer and allowing losses every year.

[RobertT]

And more specifically, it is Jobserve, within the group, that has loaned over 30m - no repayments have been requested but it is racking up 5% interest per year.

The do not have assets on the books that looks like the stadium, so likely that us held by another subsidiary?

[The Artist Formerly Known as Audrey]

Not having a financial head I never know if these structured deals are normal or just a step on the road to eventual oblivion.

When it comes to us - who/how is the CG upgrade going to be financed?

[horlock07]

Not having a financial head I never know if these structured deals are normal or just a step on the road to eventual oblivion.

When it comes to us - who/how is the CG upgrade going to be financed?

Commercial borrowings I suspect, secured against the bricks and mortar of the real estate.

[The Artist Formerly Known as Audrey]

So we’ll go from owning a dilapidated CG to being in hock for a slightly shinier CG?

[RobertT]

Not having a financial head I never know if these structured deals are normal or just a step on the road to eventual oblivion.

When it comes to us - who/how is the CG upgrade going to be financed?

That is two very different questions.

In general, football is a weird business that does not conform to the usual norms.  Companies who rack up such losses over a prolonged period of time will burn all their cash reserves and find financing incredibly difficult to come by to cover them as well.  They'd fall into liquidation much quicker.

Football however has an oddity - a customer base that continues to purchase even when the product is shit.  It also has a strange emotional pull for a local area above and beyond what any other business with such low turnover could hope to generate.  As such, it's really quite rare for them to go out of business.  The ridiculous cloak of secrecy that surrounds clubs also means you can get away with all sorts.

Overall - they just don't fall over very often, even when trading at losses that should be unsustainable and they generally attract the next investor because of that.

On the ground front - that's another issue for clubs - they tend to own stupidly good plots of land, which is why so many clubs have ended up with asset stripping owners down the past 20-30 years.

For us, the financing would be like taking a mortgage - someone would chuck us say 30m, and we'd spend that on the ground via the Joint Venture.  That company would then have to repay that loan over 30+ years, which it can do from one of two most likely sources - the club paying rent (which will not be enough) or from retaining revenue from the facility, which would mean things like subletting space, or retaining conferencing revenue outside of club activities etc.  If you look back, the Trust was floating the idea of someone developing the Town End but retaining all non football matchday revenue for 10 years.

[Mooneyraker]

That is two very different questions.

In general, football is a weird business that does not conform to the usual norms.  Companies who rack up such losses over a prolonged period of time will burn all their cash reserves and find financing incredibly difficult to come by to cover them as well.  They'd fall into liquidation much quicker.

Football however has an oddity - a customer base that continues to purchase even when the product is shit.  It also has a strange emotional pull for a local area above and beyond what any other business with such low turnover could hope to generate.  As such, it's really quite rare for them to go out of business.  The ridiculous cloak of secrecy that surrounds clubs also means you can get away with all sorts.

Overall - they just don't fall over very often, even when trading at losses that should be unsustainable and they generally attract the next investor because of that.

On the ground front - that's another issue for clubs - they tend to own stupidly good plots of land, which is why so many clubs have ended up with asset stripping owners down the past 20-30 years.

For us, the financing would be like taking a mortgage - someone would chuck us say 30m, and we'd spend that on the ground via the Joint Venture.  That company would then have to repay that loan over 30+ years, which it can do from one of two most likely sources - the club paying rent (which will not be enough) or from retaining revenue from the facility, which would mean things like subletting space, or retaining conferencing revenue outside of club activities etc.  If you look back, the Trust was floating the idea of someone developing the Town End but retaining all non football matchday revenue for 10 years.

I remember a high brow article in something financial stating that English League Football Clubs were statistically the most resilient businesses in the world. If you take circa 100 companies from any sector in the year 1900 and see how many are a going concern today, football clubs are absolutely miles ahead of anything else in terms of survivability, for the heart over head reasons that you point out above.

 

[The Artist Formerly Known as Audrey]

Another week, another sponsor.

Cotswold Farm Machinery - Away Shorts Sponsors

‘Kin el

[Batch]

Cotswold Farm Machinery - Away Shorts Sponsors

CFM have been sponsors for ages though, so it's good to see them continue

[Qunk]

Another week, another sponsor.

Cotswold Farm Machinery - Away Shorts Sponsors

‘Kin el

It’s all getting a bit Alan Partridge.