Where did it all go wrong Daniel, Stuart, Delia?

[PurpleCanary 5,554]

13 hours ago, Parma Ham's gone mouldy said:

True and not true @PurpleCanary

There is a massive corporate finance elephant in that room as well you know. 

The issue is the capital gain on the shares. Bought for c£8m worth (say) between £60m-£90m depending on your flavouring.

Nobody could be expected to happily pay that money to just change the nameplate over the door. Nor would it benefit the club. It would basically still be a private transaction at this point and a buyer is down the best part of £100m. 

That issue cannot be theorised away. It would be unreasonable to expect a ‘gainer’ to not claim the win - particularly as the gain must equally transfer to the new owners - but the ‘loser’ has dumped a lot of cash for no club benefit (yet)…it is a canard n’est-ce pas?

Parma 

Parma, I was teasing a bit! Of course that is true. And as others have said, the best way for the club to benefit would be for the buyer to purchase new shares, and by definition that would have to be a considerably larger number than the 327,000 that S&J possess.

More than double that. Anyone looking seriously at buying the club would probably think that in an ideal world they would not start from such a position.

There is a French expression "Le sot l'y laisse" about diners refusing to touch a particularly delicate and tasty part of the chicken because of its unappealing position, as it were, in the bird. At a stretch one could see a parallel there with Norwich City FC...🤓

[shefcanary 2,388]

7 minutes ago, PurpleCanary said:

 the best way for the club to benefit would be for the buyer to purchase new shares, and by definition that would have to be a considerably larger number than the 327,000 that S&J possess.

More than double that.

The Companies House documents do include confirmation from the last AGM of the allotment of 1,000,000 shares available for the directors to sell should the need arise:

Four and half years and counting for this to be actioned!!

[Parma Ham's gone mouldy 2,219]

9 hours ago, shefcanary said:

The Companies House documents do include confirmation from the last AGM of the allotment of 1,000,000 shares available for the directors to sell should the need arise:

Four and half years and counting for this to be actioned!!

Doesn‘t that say '£1m worth‘ not 1,000,000 shares Shef? 

2 very different things….

Parma

[PurpleCanary 5,554]

11 hours ago, Parma Ham's gone mouldy said:

Doesn‘t that say '£1m worth‘ not 1,000,000 shares Shef? 

2 very different things….

Parma

Parma, I think these are shares with a nominal value of £1, so it is potentially up to 1m shares. Which is not to say the club would sell them at £1...

[Badger 2,405]

11 hours ago, Parma Ham's gone mouldy said:

Doesn‘t that say '£1m worth‘ not 1,000,000 shares Shef? 

2 very different things….

Parma

The nominal price of a share is normally very different to it's real price.

[BigFish 1,986]

21 minutes ago, Badger said:

The nominal price of a share is normally very different to it's real price.

It would be an interesting pricing issue indeed.

In balance sheet terms it would recapitalise NCFC as a company, and at that point the value of the existing shareholders' stake is unaffected. They have a smaller % of a bigger pie. So alls good one would think. However, this doesn't adjust the economic fundamentals of the club. If the club then chose to spend this capital on revenue items e.g. wages and transfer fees this would run the club at a loss, and dilute shareholder value. The pie effectively is shrinking. Brighton have lost £50m in each of the last two seasons so it would be easy to see City doing the same without any increase in the clubs value.

Investing the money on capital items would be different, but that is not what posters are asking for. If you are looking to get this money into the team, this idea is a complete non-starter.

[Badger 2,405]

3 minutes ago, BigFish said:

Investing the money on capital items would be different, but that is not what posters are asking for. If you are looking to get this money into the team, this idea is a complete non-starter.

I tend to agree. Some live in a fantasy world where are we going to find an owner, happy to gift us tens of millions of pounds a year.

[Parma Ham's gone mouldy 2,219]

@shefcanary @PurpleCanary @Badger 🦡 @BigFish

..do forgive me..that was something of a discovered check as the chess term has it…😊

I very much look forward to writing a cheque this very morning for £327,000.00 for the majority shareholding.

Correct n‘est-ce pas?

Parma 

[shefcanary 2,388]

25 minutes ago, Parma Ham's gone mouldy said:

@shefcanary @PurpleCanary @Badger 🦡@BigFish

..do forgive me..that was something of a discovered check as the chess term has it…😊

I very much look forward to writing a cheque this very morning for £327,000.00 for the majority shareholding.

Correct n‘est-ce pas?

Parma 

Not sure if that was a tongue in cheek statement, so forgive me if this is a "whoosh" moment! 

As mentioned above the shares are nominally priced at £1 each on issue / allotment, but on purchase the value per share placed on the transaction is what is agreed between the seller and the purchaser.  So there may be some forward thinking by the Board (yes I know that seems inconceivable, but ...) that 1,327,000 shares will change ownership in due course.  If so I think the actual total cost of that transaction will be £350 -400m - that is around £275 per share?  This is based on people quoting that Smith & Jones share is valued at £80-90m which is conjecture but not unreasonable for the controlling stake in a club yo-yoing between Chump & EPL.  

A widely quoted figure has been shares historically (despite the lack of a ready market) have been traded at £100 per share so for absolute control of the club £275 per share is a "fair" premium.  But all hypothetical as no signs of it happening in the near future.  

[BigFish 1,986]

49 minutes ago, shefcanary said:

Not sure if that was a tongue in cheek statement, so forgive me if this is a "whoosh" moment! 

As mentioned above the shares are nominally priced at £1 each on issue / allotment, but on purchase the value per share placed on the transaction is what is agreed between the seller and the purchaser.  So there may be some forward thinking by the Board (yes I know that seems inconceivable, but ...) that 1,327,000 shares will change ownership in due course.  If so I think the actual total cost of that transaction will be £350 -400m - that is around £275 per share?  This is based on people quoting that Smith & Jones share is valued at £80-90m which is conjecture but not unreasonable for the controlling stake in a club yo-yoing between Chump & EPL.  

A widely quoted figure has been shares historically (despite the lack of a ready market) have been traded at £100 per share so for absolute control of the club £275 per share is a "fair" premium.  But all hypothetical as no signs of it happening in the near future.  

By way of context that values the club at c£175m which as @shefcanary points out would seem about the going rate. It would also give the magical new owner 80% of the club, so they might need/chose to offer on the remaining shares which would be c£86 million on top of the c£360 million required to take up the share offer and buy out S&J.

So all we are looking for is an investor with £451 million.

How hard can it be?

[Parma Ham's gone mouldy 2,219]

Yes boys it was tongue-in-cheek - hence 'discovered check‘..Playing one innocuous move  to reveal another far more dangerous one. I am well aware of the situation. 

It does all rather ram home my point that the notional material gain on the original purchase of shares is a fundamental issue and de-facto blocks approaches.Any corporate buyer would want this addressed proctor hoc. 

Parma 

[Badger 2,405]

2 hours ago, BigFish said:

By way of context that values the club at c£175m which as @shefcanary points out would seem about the going rate. It would also give the magical new owner 80% of the club, so they might need/chose to offer on the remaining shares which would be c£86 million on top of the c£360 million required to take up the share offer and buy out S&J.

So all we are looking for is an investor with £451 million.

How hard can it be?

Don't forget that they also have to subsidize us tens of millions a year as well!

[Duncan Edwards 2,220]

1 minute ago, Badger said:

Don't forget that they also have to subsidize us tens of millions a year as well!

Tens? Not enough.

I want to see proper ambition.

[Badger 2,405]

11 minutes ago, Duncan Edwards said:

Tens? Not enough.

I want to see proper ambition.

I've got a feeling that this won't even be possible when the new sustainability (FFP) rules come in.

https://www.sportspromedia.com/news/uefa-cost-controls-financial-fair-play-rules-spending-limits/

 

Edited April 6, 2022 by Badger
Inserted link

[shefcanary 2,388]

Hmm, 90% of income (definition of this will be interesting especially for State sponsored clubs) plus £10m one-off leeway, with the hope of reducing this to 70% of income plus £10m one-off leeway after 3 years.  Is that a pig flying up there?

[BigFish 1,986]

1 hour ago, Parma Ham's gone mouldy said:

Yes boys it was tongue-in-cheek - hence 'discovered check‘..Playing one innocuous move  to reveal another far more dangerous one. I am well aware of the situation. 

It does all rather ram home my point that the notional material gain on the original purchase of shares is a fundamental issue and de-facto blocks approaches.Any corporate buyer would want this addressed proctor hoc.

Pretty true @Parma Ham's gone mouldy, S&J's happenstance of bailing out a distressed asset just at the point that Sky's billions created an unforeseen (certainly in magnitude) asset price bubble is good for them but prevents it happening again.

1 hour ago, Badger said:

Don't forget that they also have to subsidize us tens of millions a year as well!

The magical scenarion also includes the £275 million capitalisation of the 1,000,000 unallocated shares which if Brighton's example would mean the club would run out of cash in season 5.

[Badger 2,405]

14 minutes ago, BigFish said:

The magical scenarion also includes the £275 million capitalisation of the 1,000,000 unallocated shares which if Brighton's example would mean the club would run out of cash in season 5.

Brighton's ground is bigger than ours, so we'd need a bigger subsidy.

[Midlands Yellow 3,939]

Great reading today, keep going gents as I’m sure you will. 
 

[Parma Ham's gone mouldy 2,219]

@BigFish you are right. This is indeed the de-facto reality 👍🏽

'Pretty true @Parma Ham's gone mouldy, S&J's happenstance of bailing out a distressed asset just at the point that Sky's billions created an unforeseen (certainly in magnitude) asset price bubble is good for them but prevents it happening again.‘

So let‘s transpose this £8m purchase scenario to Mike Ashley‘s Newcastle - and his announcement of a Self-sustaining model and a request from fans for money to do up the training ground - what reaction might he expect?

Then he sits. Waits. And the elephant in the room that is the £80m asset gain absolutely discourages any would-be purchaser. Because they don‘t want to start from there. In their view the asset IS distressed again, as it‘s uncompetitive at the top sporting level and not only under-funded, but actively and proudly non-funded. 

S&J‘s intentions are honourable. I do not criticise them at all. It is what it is. Our fictional Mike Ashley‘s perhaps not so. And the difference in practice?

A corporate finance canard. Who wins?

Parma 

Edited April 6, 2022 by Parma Ham's gone mouldy

[BigFish 1,986]

😀 Who wins? Certainly not the club or the fans. Someone will realise the asset price growth, whether it is the current or future owners or even their beneficeries. Neither option gives the club additional funding because neither change the economic fundamentals of the club. City remain a mid-sized provincial club, remote, with negligible debt, a dated/restricted ground, a loyal fanbase providing a reasonable but not large revenue stream. In many ways the club's on-field success or lack of it is probably broadly in line with the median of clubs of this type/level. In that, although liking your idea of sporting distress, the club is not a distressed asset.

The fictional Mike Ashley solution can be seen in the actual Mike Ashley's exit. The Saudis were not interested in the financials, they wanted a trophy club and/or sportswashing. For most top end clubs this is true, with the possible exception of Man Utd. This is equally true of clubs like Brentford and Brighton that are owned by fans.

 

[Parma Ham's gone mouldy 2,219]

 

•  
  •  

Posted 25 minutes ago

 Who wins? Certainly not the club or the fans. Someone will realise the asset price growth, whether it is the current or future owners or even their beneficeries. Neither option gives the club additional funding because neither change the economic fundamentals of the club.
 

…and that is the canard…

well done @BigFish

Parma 

[Parma Ham's gone mouldy 2,219]

Here is one solution to the canard. As espoused in Sept `21

 

…`….If we really want to ‘do different’ it is time to reach out to the SME world, to the Tifosys trading ground bond supporters, small investors, loyal individuals and create a genuinely inclusive French-Shared-Mortgage model whereby the small slices of ownership fluctuate according to investment size at any given moment. Whereby any small (vetted) investor gets a marketing share of brand usage, whereby the community and collective spirit is honourably leveraged to create a membership-style model that would truly be a fitting legacy to Delia’s wonderful era. She herself could and should be a major part going forwards.…‘

Parma 

[Parma Ham's gone mouldy 2,219]

On 07/04/2022 at 10:23, Parma Ham's gone mouldy said:

Here is one solution to the canard. As espoused in Sept `21

 

…`….If we really want to ‘do different’ it is time to reach out to the SME world, to the Tifosys trading ground bond supporters, small investors, loyal individuals and create a genuinely inclusive French-Shared-Mortgage model whereby the small slices of ownership fluctuate according to investment size at any given moment. Whereby any small (vetted) investor gets a marketing share of brand usage, whereby the community and collective spirit is honourably leveraged to create a membership-style model that would truly be a fitting legacy to Delia’s wonderful era. She herself could and should be a major part going forwards.…‘

Parma 

Anybody interested?

Parma

[king canary 7,580]

12 minutes ago, Parma Ham's gone mouldy said:

Anybody interested?

Parma

I'd love to say yes but I'm not sure I fully understand...

[lake district canary 4,531]

1 minute ago, king canary said:

I'd love to say yes but I'm not sure I fully understand...

Nor me, but if 20,000 people and/or  businesses put in £5000 each then that would raise £100 million.  Or 2000 put in 50,000 comes to the same thing. 

Or anything in between....like 8 people put in 5m (40m) 10 people put in 2m (20m)100 people put in 100,000 (10m), 1000 people put in 10,000 (10m) and 10,000 put in 1000  (10m)  100,000 put in £100 (10m) and total is £100m. 

Biggest problem is making it attractive enough to entice people or businesses to part with their money............could it be done?

Maybe.

[hogesar 9,618]

1 hour ago, lake district canary said:

Nor me, but if 20,000 people and/or  businesses put in £5000 each then that would raise £100 million.  Or 2000 put in 50,000 comes to the same thing. 

Or anything in between....like 8 people put in 5m (40m) 10 people put in 2m (20m)100 people put in 100,000 (10m), 1000 people put in 10,000 (10m) and 10,000 put in 1000  (10m)  100,000 put in £100 (10m) and total is £100m. 

Biggest problem is making it attractive enough to entice people or businesses to part with their money............could it be done?

Maybe.

The biggest problem is repeating it. £100 million doesn't do much for our position as a club on it's own. £100 million a season on the other hand, just might.

[Midlands Yellow 3,939]

4 minutes ago, hogesar said:

The biggest problem is repeating it. £100 million doesn't do much for our position as a club on it's own. £100 million a season on the other hand, just might.

We just want to stay up, not compete with the top six. 

[Badger 2,405]

1 hour ago, Parma Ham's gone mouldy said:

Anybody interested?

Parma

I'm interested to hear how you think that this could work. I'm not sure that buying slices of the club for a marketing share of brand usage would be a worthwhile investment especially for SMEs. Wouldn't it also lead to a loss of other sponsorship revenues, especially shirt sponsorship (assuming we don't get it right this time!)?

I presume I'm missing something?

[Badger 2,405]

10 minutes ago, Midlands Yellow said:

We just want to stay up, not compete with the top six. 

So you think that £100 million would guarantee that? Facts tell us otherwise I'm afraid.

[Midlands Yellow 3,939]

3 minutes ago, Badger said:

So you think that £100 million would guarantee that? Facts tell us otherwise I'm afraid.

I think Hoggy is implying an additional £100m added to the Sky pot would make a difference. Your the numbers man, what have a club like Brighton spent for a mid table finish this season? I doubt it’s anywhere near £200m seeming as they sold one player for £50m last summer.