Heron Posted June 2, 2010 Share Posted June 2, 2010 Taking SJP out, what do we own? Training ground Academy Warehouse Shops (must be rented retail space) Land at the back of the Gallowgate Sunderland. Link to post Share on other sites More sharing options...
Cronky Posted June 2, 2010 Share Posted June 2, 2010 We don't owe the ground St James Park is on though, the council does, so it's surely worth next to noubt to any bank ?? It annoys me when people (usually mackems) spout this. NUFC own the ground and it is worth a lot of money. They own the land on an effective freehold (long leasehold) where a small peppercorn rent will be paid. If you bought a flat you would not own the land in which it lies - you cannot own a flying freehold (unless you bought the entire block or entered into a commonhold with neighbours). The head lessee (Council) do have some rights (within reason) but in my view this is a good thing as it restricts Ashley or anyone else redeveloping the ground without Council permission (also would need Local Planning Authority permission mind). The value of the ground therefore has to be as its existing use as there is little chance the Council would allow it to be brought into other uses. To some extent this limits its value as it is only NUFC who could reasonably occupy it with its current capacity, but the value of the ground is linked to its income, which is considerable - although volatile should any reasonably boycot take off - which will be factored into the banks risk. Ok but Toontastic has a point - and it is why the debt on the redevelopment of the stadium (that Ashley was forced to pay off) was mortgaged on future season ticket revenue and not the stadium itself. There was no collateral for the bank in the stadium and none of the club's debt has ever been mortgaged on SJP. I'm not sure how true that is. In the valuation of this type of property (Leisure) its value is linked to its income (i.e. season ticket sales and other commercial uses - e.g retail/catering/conferencing). In essence it is a valuation of the ground, as the ground has a value but the profit method of Property Valuation is derived from its income. I haven't looked at great detail in the accounts but don't get confused with lending against season ticket sales and lending against the stadium (which is valued based on income - including season ticket sales). I would never deny that the value of the stadium (especially to the football club) is immense. The issue was whether a bank would lend against it. The mortgages the Guardian is referring to are not specific and relate to "all property" owned by the club. The Guardian has (incorrectly imo) assumed that this includes SJP. I can't see any reason why the bank would not lend against SJP? In fact I can't see any reason why Ashley, if he has mortgaged other property would not mortgage the property which is worth the most. It's to do with security. In the event of the club going bust (say) and the bank needing to call in a loan that is secured on the stadium how could the bank realise anything from it? The council own the land and they haven't granted a mortgage on that so whats left for the bank to get its hands on? The club have an effective freehold on the land and as I said earlier their interest is worth more than the Council's. If you were to get a mortgage on a flat or an apartment you wouldn't need to get permission off the holding company who owns the land. Risk is of course taken into account (for example the club going bust), however if the club ceased to exist and no pheonix co was forthcoming the ground would not just remain a white elephant in the middle of a city centre. It would then unlock the potential redevelopment - and given this is in an area which is attracting significant leisure investment (hotels) and office development which I think has prime Newcastle rents it would be very attractive for the bank to posession of. So, if it is such an attractive piece of collateral, why did the previous board not borrow against the stadium? Do we definately know that they didn't? I don't know what they loaned money on. Perhaps they didn't need to in that particular lending market? All I'm saying is that NUFC owning a long leasehold (effective freehold) on the land should be no obstacle to the ground being mortgaged. The previous board borrowed money secured on just about every asset and income source the club had - but never against the stadium. Why? Surely if they don't own the land that the stadium is built on, then the stadium on its own is worthless from the point of view of collateral. The land is the real asset. The stadium is only valuable to a football club. Link to post Share on other sites More sharing options...
Wilky Posted June 2, 2010 Share Posted June 2, 2010 We don't owe the ground St James Park is on though, the council does, so it's surely worth next to noubt to any bank ?? It annoys me when people (usually mackems) spout this. NUFC own the ground and it is worth a lot of money. They own the land on an effective freehold (long leasehold) where a small peppercorn rent will be paid. If you bought a flat you would not own the land in which it lies - you cannot own a flying freehold (unless you bought the entire block or entered into a commonhold with neighbours). The head lessee (Council) do have some rights (within reason) but in my view this is a good thing as it restricts Ashley or anyone else redeveloping the ground without Council permission (also would need Local Planning Authority permission mind). The value of the ground therefore has to be as its existing use as there is little chance the Council would allow it to be brought into other uses. To some extent this limits its value as it is only NUFC who could reasonably occupy it with its current capacity, but the value of the ground is linked to its income, which is considerable - although volatile should any reasonably boycot take off - which will be factored into the banks risk. Ok but Toontastic has a point - and it is why the debt on the redevelopment of the stadium (that Ashley was forced to pay off) was mortgaged on future season ticket revenue and not the stadium itself. There was no collateral for the bank in the stadium and none of the club's debt has ever been mortgaged on SJP. I'm not sure how true that is. In the valuation of this type of property (Leisure) its value is linked to its income (i.e. season ticket sales and other commercial uses - e.g retail/catering/conferencing). In essence it is a valuation of the ground, as the ground has a value but the profit method of Property Valuation is derived from its income. I haven't looked at great detail in the accounts but don't get confused with lending against season ticket sales and lending against the stadium (which is valued based on income - including season ticket sales). I would never deny that the value of the stadium (especially to the football club) is immense. The issue was whether a bank would lend against it. The mortgages the Guardian is referring to are not specific and relate to "all property" owned by the club. The Guardian has (incorrectly imo) assumed that this includes SJP. I can't see any reason why the bank would not lend against SJP? In fact I can't see any reason why Ashley, if he has mortgaged other property would not mortgage the property which is worth the most. It's to do with security. In the event of the club going bust (say) and the bank needing to call in a loan that is secured on the stadium how could the bank realise anything from it? The council own the land and they haven't granted a mortgage on that so whats left for the bank to get its hands on? The club have an effective freehold on the land and as I said earlier their interest is worth more than the Council's. If you were to get a mortgage on a flat or an apartment you wouldn't need to get permission off the holding company who owns the land. Risk is of course taken into account (for example the club going bust), however if the club ceased to exist and no pheonix co was forthcoming the ground would not just remain a white elephant in the middle of a city centre. It would then unlock the potential redevelopment - and given this is in an area which is attracting significant leisure investment (hotels) and office development which I think has prime Newcastle rents it would be very attractive for the bank to posession of. So, if it is such an attractive piece of collateral, why did the previous board not borrow against the stadium? Do we definately know that they didn't? I don't know what they loaned money on. Perhaps they didn't need to in that particular lending market? All I'm saying is that NUFC owning a long leasehold (effective freehold) on the land should be no obstacle to the ground being mortgaged. The previous board borrowed money secured on just about every asset and income source the club had - but never against the stadium. Why? No idea you know the accounts better than I do, but I have not seen any reason as to why the club cannot borrow against the stadium. I can't think of any restrictions (nor understand why) the council could legally place on a lease of this sort that would restrict it, if there is something it is highly unusual and I haven't seen it in practice. The fact is, contrary to what has been reiterated to the point that it appears fact, they do own the ground and have pretty much all the rights a freeholder has and that is not a reason to stop someone borrowing off it. To be honest, you are more likely to come up with a reason the previous board did not borrow against the stadium. But I can't see any legal reason (in terms of Property Law) as to why they couldn't. Link to post Share on other sites More sharing options...
Guest BooBoo Posted June 2, 2010 Share Posted June 2, 2010 I know we've known it for a while but despite promotion, the club remains in a god awful mess. I can see this forthcoming season being a nightmare. It's clear that signings will either be non existant or last minute loans and if the powers that be really think the current squad can punch their weight in the PL, they are in for a big shock. Link to post Share on other sites More sharing options...
quayside Posted June 2, 2010 Share Posted June 2, 2010 We don't owe the ground St James Park is on though, the council does, so it's surely worth next to noubt to any bank ?? It annoys me when people (usually mackems) spout this. NUFC own the ground and it is worth a lot of money. They own the land on an effective freehold (long leasehold) where a small peppercorn rent will be paid. If you bought a flat you would not own the land in which it lies - you cannot own a flying freehold (unless you bought the entire block or entered into a commonhold with neighbours). The head lessee (Council) do have some rights (within reason) but in my view this is a good thing as it restricts Ashley or anyone else redeveloping the ground without Council permission (also would need Local Planning Authority permission mind). The value of the ground therefore has to be as its existing use as there is little chance the Council would allow it to be brought into other uses. To some extent this limits its value as it is only NUFC who could reasonably occupy it with its current capacity, but the value of the ground is linked to its income, which is considerable - although volatile should any reasonably boycot take off - which will be factored into the banks risk. Ok but Toontastic has a point - and it is why the debt on the redevelopment of the stadium (that Ashley was forced to pay off) was mortgaged on future season ticket revenue and not the stadium itself. There was no collateral for the bank in the stadium and none of the club's debt has ever been mortgaged on SJP. I'm not sure how true that is. In the valuation of this type of property (Leisure) its value is linked to its income (i.e. season ticket sales and other commercial uses - e.g retail/catering/conferencing). In essence it is a valuation of the ground, as the ground has a value but the profit method of Property Valuation is derived from its income. I haven't looked at great detail in the accounts but don't get confused with lending against season ticket sales and lending against the stadium (which is valued based on income - including season ticket sales). I would never deny that the value of the stadium (especially to the football club) is immense. The issue was whether a bank would lend against it. The mortgages the Guardian is referring to are not specific and relate to "all property" owned by the club. The Guardian has (incorrectly imo) assumed that this includes SJP. I can't see any reason why the bank would not lend against SJP? In fact I can't see any reason why Ashley, if he has mortgaged other property would not mortgage the property which is worth the most. It's to do with security. In the event of the club going bust (say) and the bank needing to call in a loan that is secured on the stadium how could the bank realise anything from it? The council own the land and they haven't granted a mortgage on that so whats left for the bank to get its hands on? The club have an effective freehold on the land and as I said earlier their interest is worth more than the Council's. If you were to get a mortgage on a flat or an apartment you wouldn't need to get permission off the holding company who owns the land. Risk is of course taken into account (for example the club going bust), however if the club ceased to exist and no pheonix co was forthcoming the ground would not just remain a white elephant in the middle of a city centre. It would then unlock the potential redevelopment - and given this is in an area which is attracting significant leisure investment (hotels) and office development which I think has prime Newcastle rents it would be very attractive for the bank to posession of. So, if it is such an attractive piece of collateral, why did the previous board not borrow against the stadium? Do we definately know that they didn't? I don't know what they loaned money on. Perhaps they didn't need to in that particular lending market? All I'm saying is that NUFC owning a long leasehold (effective freehold) on the land should be no obstacle to the ground being mortgaged. The previous board borrowed money secured on just about every asset and income source the club had - but never against the stadium. Why? Surely if they don't own the land that the stadium is built on, then the stadium on its own is worthless from the point of view of collateral. The land is the real asset. The stadium is only valuable to a football club. Thats what I think is the reality, and why the bank would not lend against it. Link to post Share on other sites More sharing options...
Wilky Posted June 2, 2010 Share Posted June 2, 2010 We don't owe the ground St James Park is on though, the council does, so it's surely worth next to noubt to any bank ?? It annoys me when people (usually mackems) spout this. NUFC own the ground and it is worth a lot of money. They own the land on an effective freehold (long leasehold) where a small peppercorn rent will be paid. If you bought a flat you would not own the land in which it lies - you cannot own a flying freehold (unless you bought the entire block or entered into a commonhold with neighbours). The head lessee (Council) do have some rights (within reason) but in my view this is a good thing as it restricts Ashley or anyone else redeveloping the ground without Council permission (also would need Local Planning Authority permission mind). The value of the ground therefore has to be as its existing use as there is little chance the Council would allow it to be brought into other uses. To some extent this limits its value as it is only NUFC who could reasonably occupy it with its current capacity, but the value of the ground is linked to its income, which is considerable - although volatile should any reasonably boycot take off - which will be factored into the banks risk. Ok but Toontastic has a point - and it is why the debt on the redevelopment of the stadium (that Ashley was forced to pay off) was mortgaged on future season ticket revenue and not the stadium itself. There was no collateral for the bank in the stadium and none of the club's debt has ever been mortgaged on SJP. I'm not sure how true that is. In the valuation of this type of property (Leisure) its value is linked to its income (i.e. season ticket sales and other commercial uses - e.g retail/catering/conferencing). In essence it is a valuation of the ground, as the ground has a value but the profit method of Property Valuation is derived from its income. I haven't looked at great detail in the accounts but don't get confused with lending against season ticket sales and lending against the stadium (which is valued based on income - including season ticket sales). I would never deny that the value of the stadium (especially to the football club) is immense. The issue was whether a bank would lend against it. The mortgages the Guardian is referring to are not specific and relate to "all property" owned by the club. The Guardian has (incorrectly imo) assumed that this includes SJP. I can't see any reason why the bank would not lend against SJP? In fact I can't see any reason why Ashley, if he has mortgaged other property would not mortgage the property which is worth the most. It's to do with security. In the event of the club going bust (say) and the bank needing to call in a loan that is secured on the stadium how could the bank realise anything from it? The council own the land and they haven't granted a mortgage on that so whats left for the bank to get its hands on? The club have an effective freehold on the land and as I said earlier their interest is worth more than the Council's. If you were to get a mortgage on a flat or an apartment you wouldn't need to get permission off the holding company who owns the land. Risk is of course taken into account (for example the club going bust), however if the club ceased to exist and no pheonix co was forthcoming the ground would not just remain a white elephant in the middle of a city centre. It would then unlock the potential redevelopment - and given this is in an area which is attracting significant leisure investment (hotels) and office development which I think has prime Newcastle rents it would be very attractive for the bank to posession of. So, if it is such an attractive piece of collateral, why did the previous board not borrow against the stadium? Do we definately know that they didn't? I don't know what they loaned money on. Perhaps they didn't need to in that particular lending market? All I'm saying is that NUFC owning a long leasehold (effective freehold) on the land should be no obstacle to the ground being mortgaged. The previous board borrowed money secured on just about every asset and income source the club had - but never against the stadium. Why? Surely if they don't own the land that the stadium is built on, then the stadium on its own is worthless from the point of view of collateral. The land is the real asset. The stadium is only valuable to a football club. 1) They do own the land through an effective freehold 2) There is a significant investment value to a football stadium. If as an invester you purchased the stadium, leased it back to the club on a fixed term basis then you control the revenue that stadium brings in. That is not worthless! Link to post Share on other sites More sharing options...
quayside Posted June 2, 2010 Share Posted June 2, 2010 We don't owe the ground St James Park is on though, the council does, so it's surely worth next to noubt to any bank ?? It annoys me when people (usually mackems) spout this. NUFC own the ground and it is worth a lot of money. They own the land on an effective freehold (long leasehold) where a small peppercorn rent will be paid. If you bought a flat you would not own the land in which it lies - you cannot own a flying freehold (unless you bought the entire block or entered into a commonhold with neighbours). The head lessee (Council) do have some rights (within reason) but in my view this is a good thing as it restricts Ashley or anyone else redeveloping the ground without Council permission (also would need Local Planning Authority permission mind). The value of the ground therefore has to be as its existing use as there is little chance the Council would allow it to be brought into other uses. To some extent this limits its value as it is only NUFC who could reasonably occupy it with its current capacity, but the value of the ground is linked to its income, which is considerable - although volatile should any reasonably boycot take off - which will be factored into the banks risk. Ok but Toontastic has a point - and it is why the debt on the redevelopment of the stadium (that Ashley was forced to pay off) was mortgaged on future season ticket revenue and not the stadium itself. There was no collateral for the bank in the stadium and none of the club's debt has ever been mortgaged on SJP. I'm not sure how true that is. In the valuation of this type of property (Leisure) its value is linked to its income (i.e. season ticket sales and other commercial uses - e.g retail/catering/conferencing). In essence it is a valuation of the ground, as the ground has a value but the profit method of Property Valuation is derived from its income. I haven't looked at great detail in the accounts but don't get confused with lending against season ticket sales and lending against the stadium (which is valued based on income - including season ticket sales). I would never deny that the value of the stadium (especially to the football club) is immense. The issue was whether a bank would lend against it. The mortgages the Guardian is referring to are not specific and relate to "all property" owned by the club. The Guardian has (incorrectly imo) assumed that this includes SJP. I can't see any reason why the bank would not lend against SJP? In fact I can't see any reason why Ashley, if he has mortgaged other property would not mortgage the property which is worth the most. It's to do with security. In the event of the club going bust (say) and the bank needing to call in a loan that is secured on the stadium how could the bank realise anything from it? The council own the land and they haven't granted a mortgage on that so whats left for the bank to get its hands on? The club have an effective freehold on the land and as I said earlier their interest is worth more than the Council's. If you were to get a mortgage on a flat or an apartment you wouldn't need to get permission off the holding company who owns the land. Risk is of course taken into account (for example the club going bust), however if the club ceased to exist and no pheonix co was forthcoming the ground would not just remain a white elephant in the middle of a city centre. It would then unlock the potential redevelopment - and given this is in an area which is attracting significant leisure investment (hotels) and office development which I think has prime Newcastle rents it would be very attractive for the bank to posession of. So, if it is such an attractive piece of collateral, why did the previous board not borrow against the stadium? Do we definately know that they didn't? I don't know what they loaned money on. Perhaps they didn't need to in that particular lending market? All I'm saying is that NUFC owning a long leasehold (effective freehold) on the land should be no obstacle to the ground being mortgaged. The previous board borrowed money secured on just about every asset and income source the club had - but never against the stadium. Why? Surely if they don't own the land that the stadium is built on, then the stadium on its own is worthless from the point of view of collateral. The land is the real asset. The stadium is only valuable to a football club. 1) They do own the land through an effective freehold 2) There is a significant investment value to a football stadium. If as an invester you purchased the stadium, leased it back to the club on a fixed term basis then you control the revenue that stadium brings in. That is not worthless! The council has the right to dictate what purpose the land is used for. How risky is that for a lender? Just for info here is a list of loans the club had at the end of the previous board's reign: - £42.5 million at 7.65% interest secured on future season ticket and hospitality income - £13.1 million at 8.55% interest secured on future sponsorship income - £4.5 million at interest of LIBOR +2.25% secured on the first team training ground - £8 million at11.72% interest secured on future broadcasting income - £1.5 million secured as a second charge on the training ground Link to post Share on other sites More sharing options...
Teasy Posted June 2, 2010 Share Posted June 2, 2010 I know we've known it for a while but despite promotion, the club remains in a god awful mess. I can see this forthcoming season being a nightmare. It's clear that signings will either be non existant or last minute loans and if the powers that be really think the current squad can punch their weight in the PL, they are in for a big shock. Things were never going to improve over night just because we got back into the Premiership. Also how is it clear that any signings will be last minute? Link to post Share on other sites More sharing options...
Happy Face Posted June 2, 2010 Share Posted June 2, 2010 - £42.5 million at 7.65% interest secured on future season ticket and hospitality income - £13.1 million at 8.55% interest secured on future sponsorship income - £4.5 million at interest of LIBOR +2.25% secured on the first team training ground - £8 million at11.72% interest secured on future broadcasting income - £1.5 million secured as a second charge on the training ground Total £69.77m Where do we stand now? £111m at 0% interest secured against Mike Ashley. £20m overdraft ? Link to post Share on other sites More sharing options...
quayside Posted June 2, 2010 Share Posted June 2, 2010 - £42.5 million at 7.65% interest secured on future season ticket and hospitality income - £13.1 million at 8.55% interest secured on future sponsorship income - £4.5 million at interest of LIBOR +2.25% secured on the first team training ground - £8 million at11.72% interest secured on future broadcasting income - £1.5 million secured as a second charge on the training ground Total £69.77m Where do we stand now? £111m at 0% interest secured against Mike Ashley. £20m overdraft ? Something like that. And just for clarification I was only trying to make the point that the stadium was not used as collateral - there will be no old board v new board crap from me this afternoon Link to post Share on other sites More sharing options...
Stu Posted June 2, 2010 Share Posted June 2, 2010 We don't owe the ground St James Park is on though, the council does, so it's surely worth next to noubt to any bank ?? It annoys me when people (usually mackems) spout this. NUFC own the ground and it is worth a lot of money. They own the land on an effective freehold (long leasehold) where a small peppercorn rent will be paid. If you bought a flat you would not own the land in which it lies - you cannot own a flying freehold (unless you bought the entire block or entered into a commonhold with neighbours). The head lessee (Council) do have some rights (within reason) but in my view this is a good thing as it restricts Ashley or anyone else redeveloping the ground without Council permission (also would need Local Planning Authority permission mind). The value of the ground therefore has to be as its existing use as there is little chance the Council would allow it to be brought into other uses. To some extent this limits its value as it is only NUFC who could reasonably occupy it with its current capacity, but the value of the ground is linked to its income, which is considerable - although volatile should any reasonably boycot take off - which will be factored into the banks risk. Ok but Toontastic has a point - and it is why the debt on the redevelopment of the stadium (that Ashley was forced to pay off) was mortgaged on future season ticket revenue and not the stadium itself. There was no collateral for the bank in the stadium and none of the club's debt has ever been mortgaged on SJP. I'm not sure how true that is. In the valuation of this type of property (Leisure) its value is linked to its income (i.e. season ticket sales and other commercial uses - e.g retail/catering/conferencing). In essence it is a valuation of the ground, as the ground has a value but the profit method of Property Valuation is derived from its income. I haven't looked at great detail in the accounts but don't get confused with lending against season ticket sales and lending against the stadium (which is valued based on income - including season ticket sales). I would never deny that the value of the stadium (especially to the football club) is immense. The issue was whether a bank would lend against it. The mortgages the Guardian is referring to are not specific and relate to "all property" owned by the club. The Guardian has (incorrectly imo) assumed that this includes SJP. I can't see any reason why the bank would not lend against SJP? In fact I can't see any reason why Ashley, if he has mortgaged other property would not mortgage the property which is worth the most. It's to do with security. In the event of the club going bust (say) and the bank needing to call in a loan that is secured on the stadium how could the bank realise anything from it? The council own the land and they haven't granted a mortgage on that so whats left for the bank to get its hands on? The club have an effective freehold on the land and as I said earlier their interest is worth more than the Council's. If you were to get a mortgage on a flat or an apartment you wouldn't need to get permission off the holding company who owns the land. Risk is of course taken into account (for example the club going bust), however if the club ceased to exist and no pheonix co was forthcoming the ground would not just remain a white elephant in the middle of a city centre. It would then unlock the potential redevelopment - and given this is in an area which is attracting significant leisure investment (hotels) and office development which I think has prime Newcastle rents it would be very attractive for the bank to posession of. So, if it is such an attractive piece of collateral, why did the previous board not borrow against the stadium? Do we definately know that they didn't? I don't know what they loaned money on. Perhaps they didn't need to in that particular lending market? All I'm saying is that NUFC owning a long leasehold (effective freehold) on the land should be no obstacle to the ground being mortgaged. The previous board borrowed money secured on just about every asset and income source the club had - but never against the stadium. Why? Surely if they don't own the land that the stadium is built on, then the stadium on its own is worthless from the point of view of collateral. The land is the real asset. The stadium is only valuable to a football club. 1) They do own the land through an effective freehold 2) There is a significant investment value to a football stadium. If as an invester you purchased the stadium, leased it back to the club on a fixed term basis then you control the revenue that stadium brings in. That is not worthless! LAW3013 tomorrow morning? Good luck. Link to post Share on other sites More sharing options...
Guest neesy111 Posted June 2, 2010 Share Posted June 2, 2010 our finances looked fucked tbh, ashley is just to blame as he's been 3 years now and actually increased our wage budget Link to post Share on other sites More sharing options...
jdckelly Posted June 2, 2010 Share Posted June 2, 2010 our finances looked fucked tbh, ashley is just to blame as he's been 3 years now and actually increased our wage budget tbh a fair chunk of the increased wage budget we had could be put down to fat sam viduka geremi smith barton beye was probably on a good wage and that was happening while ashley was getting to grips with owning a football club Link to post Share on other sites More sharing options...
Guest neesy111 Posted June 2, 2010 Share Posted June 2, 2010 our finances looked fucked tbh, ashley is just to blame as he's been 3 years now and actually increased our wage budget tbh a fair chunk of the increased wage budget we had could be put down to fat sam viduka geremi smith barton beye was probably on a good wage and that was happening while ashley was getting to grips with owning a football club true, but he should of done due diligence as it would of shown this stuff, but he didn't so it's his own fault Link to post Share on other sites More sharing options...
Wilky Posted June 2, 2010 Share Posted June 2, 2010 The council has the right to dictate what purpose the land is used for. How risky is that for a lender? Do they? I'm not saying you are incorrect, they could restrict the land to be used as a football stadium only. That would increase risk but not to the point where it is impossible to lend on. It would appear that Ashley has expoloited this by using the stadium as a degree of collateral. The LTV ratio and the interst will be variable as to the risk but there is still no real reason why any owner would not mortgage the stadium. (of course none of us have seen a copy of the terms and conditions) Also the ability to dictate use of a site will not necessarilly be a factor in risk, for example the Local Planning Authority dictates what sites should be developed and how. The valuation of the site will take this into account, the valuation of SJP will take the fact it can only be a football ground (for example) into account but it doesn't give rise to a situation whereby it is that great a risk where no bank would loan against it (particularly in the care free lending period that existed whilst Shepherd and Hall were in charge). Link to post Share on other sites More sharing options...
Guest neesy111 Posted June 2, 2010 Share Posted June 2, 2010 The council has the right to dictate what purpose the land is used for. How risky is that for a lender? Do they? I'm not saying you are incorrect, they could restrict the land to be used as a football stadium only. That would increase risk but not to the point where it is impossible to lend on. It would appear that Ashley has expoloited this by using the stadium as a degree of collateral. The LTV ratio and the interst will be variable as to the risk but there is still no real reason why any owner would not mortgage the stadium. (of course none of us have seen a copy of the terms and conditions) Also the ability to dictate use of a site will not necessarilly be a factor in risk, for example the Local Planning Authority dictates what sites should be developed and how. The valuation of the site will take this into account, the valuation of SJP will take the fact it can only be a football ground (for example) into account but it doesn't give rise to a situation whereby it is that great a risk where no bank would loan against it (particularly in the care free lending period that existed whilst Shepherd and Hall were in charge). The council can't do anything while we hold the lease to the land, and the council has IIRC made sure the land can't be used for anything over than football while NUFC exist Link to post Share on other sites More sharing options...
Matt Posted June 2, 2010 Share Posted June 2, 2010 The only reason I can think of as to why it was not used as collateral before was that there was simply no call for it. The old board may have been reckless in some regards but they were not likely to fund a transfer spree and wages secured on the stadium (nor would a bank be keen to lend for that purpose given how much other external debt we had at the time). That would have been madness. With the stadium expansion secured on cashflows, there was no need to throw the stadium into the ring- plus it left that major asset unemcumbered should the shit really hit the fan. Link to post Share on other sites More sharing options...
Stu Posted June 2, 2010 Share Posted June 2, 2010 our finances looked fucked tbh, ashley is just to blame as he's been 3 years now and actually increased our wage budget tbh a fair chunk of the increased wage budget we had could be put down to fat sam viduka geremi smith barton beye was probably on a good wage and that was happening while ashley was getting to grips with owning a football club true, but he should of done due diligence as it would of shown this stuff, but he didn't so it's his own fault Surely you're not throwing this old chestnut into the conversation (2008 is calling, it wants it's argument back) - the overall view of the club's finances has to be an improvement from where we were in 2006. It's a slow process, it's a painful process, but he does seem to be getting us there, even if it's only for his own benefit. Link to post Share on other sites More sharing options...
Wilky Posted June 2, 2010 Share Posted June 2, 2010 The council has the right to dictate what purpose the land is used for. How risky is that for a lender? Do they? I'm not saying you are incorrect, they could restrict the land to be used as a football stadium only. That would increase risk but not to the point where it is impossible to lend on. It would appear that Ashley has expoloited this by using the stadium as a degree of collateral. The LTV ratio and the interst will be variable as to the risk but there is still no real reason why any owner would not mortgage the stadium. (of course none of us have seen a copy of the terms and conditions) Also the ability to dictate use of a site will not necessarilly be a factor in risk, for example the Local Planning Authority dictates what sites should be developed and how. The valuation of the site will take this into account, the valuation of SJP will take the fact it can only be a football ground (for example) into account but it doesn't give rise to a situation whereby it is that great a risk where no bank would loan against it (particularly in the care free lending period that existed whilst Shepherd and Hall were in charge). The council can't do anything while we hold the lease to the land, and the council has IIRC made sure the land can't be used for anything over than football while NUFC exist It may well be that it can't be used for anything other than a football stadium, but that in itself has nothing to do with mortgaging the stadium. It means that the existing use value is curtailed, but it is still valuable. Realistically what are the chances of NUFC moving grounds? What are the chances of SJP not being used as a football venue in a town like ours? If the banks won't touch SJP with regards to lending (which I can't see), it is not because the land is on a long leasehold or because the land is restricted in its use. There a thousands of commercial lending loans against properties which are on leasehold land where the covenants are restricted to a certain use. Link to post Share on other sites More sharing options...
quayside Posted June 2, 2010 Share Posted June 2, 2010 The council has the right to dictate what purpose the land is used for. How risky is that for a lender? Do they? I'm not saying you are incorrect, they could restrict the land to be used as a football stadium only. That would increase risk but not to the point where it is impossible to lend on. It would appear that Ashley has expoloited this by using the stadium as a degree of collateral. The LTV ratio and the interst will be variable as to the risk but there is still no real reason why any owner would not mortgage the stadium. (of course none of us have seen a copy of the terms and conditions) Also the ability to dictate use of a site will not necessarilly be a factor in risk, for example the Local Planning Authority dictates what sites should be developed and how. The valuation of the site will take this into account, the valuation of SJP will take the fact it can only be a football ground (for example) into account but it doesn't give rise to a situation whereby it is that great a risk where no bank would loan against it (particularly in the care free lending period that existed whilst Shepherd and Hall were in charge). And with all that in its favour Shepherd and Hall didn't borrow against it. Why do you think that was the case? From what you have said it would seem that future season ticket, hospitality and broadcasting income would present a greater risk to a bank - how much of that could the bank be sure of receiving in the event of the club going bust or even being relegated? Yet they loaned against that and not against the stadium. Link to post Share on other sites More sharing options...
jdckelly Posted June 2, 2010 Share Posted June 2, 2010 before any serious debate on then vs now really begins it must be remembered that when the stadium expansion loan was got the banks were coming into the stride of the thick stupid stage of easy credit, now they're gone way the other direction. if a similar loan was gotten now theres no doubt that the bank would want it secured on the stadium not on future season ticket cash etc Link to post Share on other sites More sharing options...
Wilky Posted June 2, 2010 Share Posted June 2, 2010 And with all that in its favour Shepherd and Hall didn't borrow against it. Why do you think that was the case? From what you have said it would seem that future season ticket, hospitality and broadcasting income would present a greater risk to a bank - how much of that could the bank be sure of receiving in the event of the club going bust or even being relegated? Yet they loaned against that and not against the stadium. I have no idea what the lending rates were back then, nor the reasoning behind Shepherd and Hall's business decisions. And to be honest I'm not interested. I'm also not saying what scenario is at the most risk - I don't know the value of either. Although it is interesting you mention broadcasting rights, because there may lie your answer. The broadcasting rights are incredibly lucrative and back then may have offered a safe investment by lending institutions, post relegation and Premier League security less assured, the stadium may now offer greater security. All I'm saying is that unless there is some bizarre ristriction in place in the long leasehold (and I can't see it) there is no reason why the stadium cannot be mortgaged. I guess we will see when the next accounts are published, which may well confirm the article to be correct. Link to post Share on other sites More sharing options...
quayside Posted June 2, 2010 Share Posted June 2, 2010 before any serious debate on then vs now really begins it must be remembered that when the stadium expansion loan was got the banks were coming into the stride of the thick stupid stage of easy credit, now they're gone way the other direction. if a similar loan was gotten now theres no doubt that the bank would want it secured on the stadium not on future season ticket cash etc But then we are back to whether SJP would be the sort of collateral a bank could accept and FWIW I can see any number of reasons why it might not be. Link to post Share on other sites More sharing options...
UV Posted June 2, 2010 Share Posted June 2, 2010 The council has the right to dictate what purpose the land is used for. How risky is that for a lender? Do they? I'm not saying you are incorrect, they could restrict the land to be used as a football stadium only. That would increase risk but not to the point where it is impossible to lend on. It would appear that Ashley has expoloited this by using the stadium as a degree of collateral. The LTV ratio and the interst will be variable as to the risk but there is still no real reason why any owner would not mortgage the stadium. (of course none of us have seen a copy of the terms and conditions) Also the ability to dictate use of a site will not necessarilly be a factor in risk, for example the Local Planning Authority dictates what sites should be developed and how. The valuation of the site will take this into account, the valuation of SJP will take the fact it can only be a football ground (for example) into account but it doesn't give rise to a situation whereby it is that great a risk where no bank would loan against it (particularly in the care free lending period that existed whilst Shepherd and Hall were in charge). And with all that in its favour Shepherd and Hall didn't borrow against it. Why do you think that was the case? From what you have said it would seem that future season ticket, hospitality and broadcasting income would present a greater risk to a bank - how much of that could the bank be sure of receiving in the event of the club going bust or even being relegated? Yet they loaned against that and not against the stadium. In all likelihood it's simply just as Matt said above that there was no NEED to mortgage the stadium, not because it was impossible to do so. If there are other options - as there plainly were - mortgaging the stadium is the last resort. I really don't comprehend why anyone would think there is zero collateral value in the stadium. If NUFC goes completely out of business there are 2 options. 1) United of Newcastle FC is formed, starting at the bottom of the league structure, but still with a massive level of support (or maybe Gateshead would be adopted as the successor to Newcastle and offered the facility of SJP). The ground would be massively under utilised for a number of years but would still generate revenue for the owner of it. 2) No-one wants to bother with starting a new football club in Newcastle (), in which case what is the council going to do? a) Put it's foot down and just let the the land rot with an ever dilapidating stadium standing on it as a massive eyesore? b) Allow it to be used for other purposes - a massive concert/random sporting event venue. c) Allow it to be knocked down and allow a hotel or shopping centre to be built on prime land? It wont be option (a) for long that's for sure. Link to post Share on other sites More sharing options...
Stu Posted June 2, 2010 Share Posted June 2, 2010 And with all that in its favour Shepherd and Hall didn't borrow against it. Why do you think that was the case? From what you have said it would seem that future season ticket, hospitality and broadcasting income would present a greater risk to a bank - how much of that could the bank be sure of receiving in the event of the club going bust or even being relegated? Yet they loaned against that and not against the stadium. I have no idea what the lending rates were back then, nor the reasoning behind Shepherd and Hall's business decisions. And to be honest I'm not interested. I'm also not saying what scenario is at the most risk - I don't know the value of either. Although it is interesting you mention broadcasting rights, because there may lie your answer. The broadcasting rights are incredibly lucrative and back then may have offered a safe investment by lending institutions, post relegation and Premier League security less assured, the stadium may now offer greater security. All I'm saying is that unless there is some bizarre ristriction in place in the long leasehold (and I can't see it) there is no reason why the stadium cannot be mortgaged. I guess we will see when the next accounts are published, which may well confirm the article to be correct. Have you read the leasehold agreement between NUFC & NCC? Link to post Share on other sites More sharing options...
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