Financial Fair Play

[Greatwesternline]

Deleted in error

[Live Fast Dai Yongge]

Anyone remember when we were in for Luis Castro before Gomes, with reports that he'd be given €100m over the next 2 transfer windows? It always seemed like hyperbole, but with the higher spending than anticipated this last week, I can't help but wonder if after they sorted the latest FFP returns, they had something up their sleeve all along to make this kind of spending possible...

[paultheroyal]

Just wondering if the tactics used in this article applies to us and would answer a lot of our questions.

https://www.dailymail.co.uk/sport/footb ... y-off.html

[Hound]

If the owners want to screw the club over, they will. Not much you can do about it - they own the club. Be it Man Utd, Bolton, Bury or whoever

Basically have to trust them. They have money, they seem to want to invest in the right way, certainly not after a quick buck

They must have lost a fortune already tbh. They could easily have cashed in on Moore, Loader, Barrow etc and pocketed it

Football is different to most businesses. Otherwise must clubs would be wound up now. It’s a status thing, and the small bits I know of the owners is they seem proud people who want to own a successful club for their own status

[3points]

Comparison to Coventry is just wrong. The football club (and its owners) have never owned the freehold or leasehold to the stadium. They were always a tenant to a council controlled entity. SISU's original beef was the rent didn't go down when they were relegated from the Premier League and remained at over £1m per season. In addition, the company that held the lease also took a significant slug of the matchday income as well for food, beverage and hospitality meaning it was difficult to generate income for the football club. It is understandable why SISU wanted something to change. Unfortunately, they played a game of poker over the long term ownership of the asset believing, ultimately, the council would have to sell it to them for virtually nothing, as there was no-one else who'd be interested. They got outflanked though when Derek Richardson came in and offered to buy it for a reasonable amount, which made it a sensible deal for the council to accept. SISU had never offered to pay anything like the amount Wasps did. CCFC were in residence at Northampton Town at the time so it was stood empty. Therefore, having a tenant in Wasps was better than having no tenant. Wasps agreed to make the stadium available to CCFC to share the stadium. The council insisted on this when selling it to Wasps. Wasps have a 250 yr lease on the stadium.

With RFC, our current owner still owns the ground, the training ground and the club. If he gets bored and decides to sell the club, it is entirely his discretion to sell it with the ground and training ground as well. The situation with the car park does make life more complicated. In reality, if he sells the club and the ground and decides to redevelop Bearwood into luxury housing, then that's not the end of the world. We'd just not have a Cat 1 academy anymore and the players would have to get used to a lower quality of training facilities.

[Elm Park Kid]

Comparison to Coventry is just wrong. The football club (and its owners) have never owned the freehold or leasehold to the stadium. They were always a tenant to a council controlled entity. SISU's original beef was the rent didn't go down when they were relegated from the Premier League and remained at over £1m per season. In addition, the company that held the lease also took a significant slug of the matchday income as well for food, beverage and hospitality meaning it was difficult to generate income for the football club. It is understandable why SISU wanted something to change. Unfortunately, they played a game of poker over the long term ownership of the asset believing, ultimately, the council would have to sell it to them for virtually nothing, as there was no-one else who'd be interested. They got outflanked though when Derek Richardson came in and offered to buy it for a reasonable amount, which made it a sensible deal for the council to accept. SISU had never offered to pay anything like the amount Wasps did. CCFC were in residence at Northampton Town at the time so it was stood empty. Therefore, having a tenant in Wasps was better than having no tenant. Wasps agreed to make the stadium available to CCFC to share the stadium. The council insisted on this when selling it to Wasps. Wasps have a 250 yr lease on the stadium.

With RFC, our current owner still owns the ground, the training ground and the club. If he gets bored and decides to sell the club, it is entirely his discretion to sell it with the ground and training ground as well. The situation with the car park does make life more complicated. In reality, if he sells the club and the ground and decides to redevelop Bearwood into luxury housing, then that's not the end of the world. We'd just not have a Cat 1 academy anymore and the players would have to get used to a lower quality of training facilities.

^^^ This.

The owners are not selling the ground to raise revenue, they are just moving around their own money on spreadsheets to get around FFP regulations.

When you are fully owned by someone who has enough money to keep you afloat regardless then the long term future of the club is simply dependent on how interested they are. The club could own Wembley and Windsor Castle and we could still be shut down tomorrow if the owners choose to do so.

[Nameless]

Would be interesting to know the terms of the sale of the ground and Bearwood.
What security of tenure do we have ?
You would hope we have a very long exclusive lease
Are there any restrictive covenants in place ?
Do we just have the right to use the ground for matches or can we still generate non match day income ?
What rent (if any) do we pay and to who ?
I think FFP rules mean a fair market rent is assumed, even if that is not what is paid.
Is that rent guaranteed long term ?
Who pays the running and maintenance costs ?
If these are covered by the owners and not the club it’s a huge saving as long as it’s within FFP rules

With most of the above I can see positive scenarios and less positive ones but can’t see why the owners would put anything in place that would have a negative effect on the club.

Would also be really interesting to know what is happening with the REP plans. You would imagine the Dai’s would want to take ownership of the development back rather than have a third party building the sort of thing they have made their fortune from . Perhaps now Bearwood is up and running and FFP under control REP might be next on the agenda.....

[Hound]

I’ve always thought we’d see the owners buy back the REP land sooner rather than later

I’m actually surprised it hasn’t happened yet

[3points]

Would be interesting to know the terms of the sale of the ground and Bearwood.
What security of tenure do we have ?
You would hope we have a very long exclusive lease
Are there any restrictive covenants in place ?
Do we just have the right to use the ground for matches or can we still generate non match day income ?
What rent (if any) do we pay and to who ?
I think FFP rules mean a fair market rent is assumed, even if that is not what is paid.
Is that rent guaranteed long term ?
Who pays the running and maintenance costs ?
If these are covered by the owners and not the club it’s a huge saving as long as it’s within FFP rules

With most of the above I can see positive scenarios and less positive ones but can’t see why the owners would put anything in place that would have a negative effect on the club.

Would also be really interesting to know what is happening with the REP plans. You would imagine the Dai’s would want to take ownership of the development back rather than have a third party building the sort of thing they have made their fortune from . Perhaps now Bearwood is up and running and FFP under control REP might be next on the agenda.....

The rent on the ground is £750k per year and is paid to Renhe Sports, the immediate parent company of RFC. I think the accounts said it was a 25 yr or 40 year lease. £750k is currently about 5% of our current turnover. So not too bad. I’d expect all the revenue and ground maintenance is still a cost of the football club, but the costs could be wrapped up in the lease.

[Elm Park Kid]

Would be interesting to know the terms of the sale of the ground and Bearwood.
What security of tenure do we have ?
You would hope we have a very long exclusive lease
Are there any restrictive covenants in place ?
Do we just have the right to use the ground for matches or can we still generate non match day income ?
What rent (if any) do we pay and to who ?
I think FFP rules mean a fair market rent is assumed, even if that is not what is paid.
Is that rent guaranteed long term ?
Who pays the running and maintenance costs ?
If these are covered by the owners and not the club it’s a huge saving as long as it’s within FFP rules

With most of the above I can see positive scenarios and less positive ones but can’t see why the owners would put anything in place that would have a negative effect on the club.

Would also be really interesting to know what is happening with the REP plans. You would imagine the Dai’s would want to take ownership of the development back rather than have a third party building the sort of thing they have made their fortune from . Perhaps now Bearwood is up and running and FFP under control REP might be next on the agenda.....

The rent on the ground is £750k per year and is paid to Renhe Sports, the immediate parent company of RFC. I think the accounts said it was a 25 yr or 40 year lease. £750k is currently about 5% of our current turnover. So not too bad. I’d expect all the revenue and ground maintenance is still a cost of the football club, but the costs could be wrapped up in the lease.

Tbf - Whilst the owners are subsidising the club, none of those questions matter that much (apart from whether there are legal restrictions that mean the stadium has to be used for RFC games).

We can have a 25 yr lease - but the owners run the club remember. So they can cancel the lease at any point if they want to.

[Nameless]

Would be interesting to know the terms of the sale of the ground and Bearwood.
What security of tenure do we have ?
You would hope we have a very long exclusive lease
Are there any restrictive covenants in place ?
Do we just have the right to use the ground for matches or can we still generate non match day income ?
What rent (if any) do we pay and to who ?
I think FFP rules mean a fair market rent is assumed, even if that is not what is paid.
Is that rent guaranteed long term ?
Who pays the running and maintenance costs ?
If these are covered by the owners and not the club it’s a huge saving as long as it’s within FFP rules

With most of the above I can see positive scenarios and less positive ones but can’t see why the owners would put anything in place that would have a negative effect on the club.

Would also be really interesting to know what is happening with the REP plans. You would imagine the Dai’s would want to take ownership of the development back rather than have a third party building the sort of thing they have made their fortune from . Perhaps now Bearwood is up and running and FFP under control REP might be next on the agenda.....

The rent on the ground is £750k per year and is paid to Renhe Sports, the immediate parent company of RFC. I think the accounts said it was a 25 yr or 40 year lease. £750k is currently about 5% of our current turnover. So not too bad. I’d expect all the revenue and ground maintenance is still a cost of the football club, but the costs could be wrapped up in the lease.

750k a year equates to roughly 25k per game which is about what London Irish pay I think. We get a lot more for our money than they do of course.
For FFP I don’t think the maintenance costs would matter because IIRC they are an allowable expense.

As to whether the landlords could cancel the lease I guess if they wanted to sell the land or get another tenant there would be ways of getting out of the lease , not least because they wouldn’t sue themselves for breach of contract !

[Forbury Lion]

Also, clearly, you can only sell your ground once.

Unless you buy it back.

Sell to owner for £100m
Spend £100m on players
Buy back from owner for £1
and repeat

The value of the club would, in theory increase significantly if the £100m was invested wisely so the owner's shares would increase in value by, I don't know..... £100m?

The process can then be repeated over and over again everytime a transfer of funds is required.... I'm sure the footballing authorities will crack down on this behavior if it becomes too blatant.

Re; The risk - If someone owns 100% of the club, then it's of little importance whether they have the stadium/property in a separate company or not.

I know of one real life non-footballing instance where something similar to this occurred with assets over-valued to compensate a 3rd party, The buyer can then capitalise those assets and take the hit on profits over 25-50 years of whatever as opposed to taking a massive hit in year 1 if they had just paid the amount due seperate to the asset sale.

[Forbury Lion]

Do the owners own 100% of the club? Didn't STAR have a few shares?

Some of this asset transferring / charging rent etc is perhaps just a way to ensure the owner receives a return on his indirect cash loan/investment. It can't be paid out as a dividend as other shareholders e.g. STAR would legally be entitled to a share, plus to keep up appearances of the club not owning the ground they surely have to pay some form of rent?

[Nameless]

Do the owners own 100% of the club? Didn't STAR have a few shares?

Some of this asset transferring / charging rent etc is perhaps just a way to ensure the owner receives a return on his indirect cash loan/investment. It can't be paid out as a dividend as other shareholders e.g. STAR would legally be entitled to a share, plus to keep up appearances of the club not owning the ground they surely have to pay some form of rent?

The club is 100% owned by the Dai’s.
There was a major restructuring a while ago (when SJM sold up). Can’t recall all the details but essentially the old RFC company which SJM owned 96% of and various others (including STAR) owned tiny amounts of was left as a shell and a new company formed which owned the club, stadium etc 100%.
Really don’t think the Dai’s are looking for dividend payments. First of all the club needs to be profit making and secondly they are billionaires and really don’t need it !

[Nameless]

Also, clearly, you can only sell your ground once.

Unless you buy it back.

Sell to owner for £100m
Spend £100m on players
Buy back from owner for £1
and repeat

The value of the club would, in theory increase significantly if the £100m was invested wisely so the owner's shares would increase in value by, I don't know..... £100m?

The process can then be repeated over and over again everytime a transfer of funds is required.... I'm sure the footballing authorities will crack down on this behavior if it becomes too blatant.

Re; The risk - If someone owns 100% of the club, then it's of little importance whether they have the stadium/property in a separate company or not.

I know of one real life non-footballing instance where something similar to this occurred with assets over-valued to compensate a 3rd party, The buyer can then capitalise those assets and take the hit on profits over 25-50 years of whatever as opposed to taking a massive hit in year 1 if they had just paid the amount due seperate to the asset sale.

The above is pretty much guaranteed to see you get a points deduction. It’s not even an attempt to get round FFP, it’s just a blatant breach of the rules !
And the ground has been in a separate company for a long time, and is the same at many clubs. It means if your club goes bust the ground can’t be taken by creditors and you can reform the club and carry on playing at the ground. Leicester did this for one and Chelsea own their ground but not their pitch !

[Forbury Lion]

Really don’t think the Dai’s are looking for dividend payments. First of all the club needs to be profit making and secondly they are billionaires and really don’t need it !

At one point they would have simply been millionaires and you could have argued then that they don't need anymore cash/assets, time to sell up/live life..... accumulation of wealth seems to be what it's all about for those who are successful and you don't turn down a profit because you've got enough.

[Ranger_762]

That's like this social experience that happened a couple years ago in New York: a guy walked down a street covered in $20 bills that were taped to him, telling people to take as much as they need. Some homeless or poor-looking people would take one, maybe two, and thank him for the good meal they'd have today, or for the new pair of jeans.
Then came another man, in a business suit, with an expensive watch, who just took everything else from the experimenting one, and when asked whether he did need all of this money, he answered (the rich guy) that "you've never got enough money".

[Greatwesternline]

Also, clearly, you can only sell your ground once.

Unless you buy it back.

Sell to owner for £100m
Spend £100m on players
Buy back from owner for £1
and repeat

The value of the club would, in theory increase significantly if the £100m was invested wisely so the owner's shares would increase in value by, I don't know..... £100m?

The process can then be repeated over and over again everytime a transfer of funds is required.... I'm sure the footballing authorities will crack down on this behavior if it becomes too blatant.

Re; The risk - If someone owns 100% of the club, then it's of little importance whether they have the stadium/property in a separate company or not.

I know of one real life non-footballing instance where something similar to this occurred with assets over-valued to compensate a 3rd party, The buyer can then capitalise those assets and take the hit on profits over 25-50 years of whatever as opposed to taking a massive hit in year 1 if they had just paid the amount due seperate to the asset sale.

The above is pretty much guaranteed to see you get a points deduction. It’s not even an attempt to get round FFP, it’s just a blatant breach of the rules !
And the ground has been in a separate company for a long time, and is the same at many clubs. It means if your club goes bust the ground can’t be taken by creditors and you can reform the club and carry on playing at the ground. Leicester did this for one and Chelsea own their ground but not their pitch !

Exactly, if a club could do this, there would be no such thing as FFP because every rich owner could simply take the pi$$.

[Linden Jones' Tash]

if the release of funds was due to some artifact around the sale of land, when/how would an ordinary fan find out about it?

is this the consensus regarding the perceived splurge before deadline day?

soz, i've been on hols