mrmojorisin75 Posted June 2, 2010 Share Posted June 2, 2010 http://www.guardian.co.uk/football/2010/jun/02/newcastle-debt-banks Newcastle United will this year recoup up to and above £10m from the past sales of some of its big-name players, but it has all been pledged to the bank. On 30 June last year, Newcastle's balance sheet showed their overdraft at Barclays Bank had leapt from less than £13m in 2008 to a whopping £47.87m by the end of their 2008-09 relegation season. Few lenders would be prepared to sustain this level of unsecured exposure to a Championship club and it appears Barclays took steps to reduce it. The following day, 1 July, a mortgage was registered assigning St James' Park, the club's training ground and academy centre to the bank, as well as all their intellectual property such as brand names and even Newcastle's "trade secrets", whatever they may be. In October Newcastle went further, with a secured loan that charged a number of deferred transfer-fee receipts, and this is what will really affect the club's cashflow. Among the items hocked is a £3,983,333 payment due from Aston Villa for James Milner on 29 August this year and two €1.68m (£1.4m) instalments from Wolfsburg for Obafemi Martins, the first on 31 August this year and the other a year later. Newcastle would already have received £3.25m from Wigan Athletic for Charles N'Zogbia in January this year and another €950,000 (£796,500) for David Rozehnal from Lazio. It means Newcastle have borrowed against a total of £10.8m in transfer fees between this January and next August, ensuring the pain of relegation endures even after promotion back to the Premier League. Hoping this insight doesn't mean that we're more fucked than we might have believed? jee-sus christ that's worrying, very very worrying indeed Link to post Share on other sites More sharing options...
ToonTastic 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 ?? Link to post Share on other sites More sharing options...
Liam Liam Liam O Posted June 2, 2010 Share Posted June 2, 2010 Sensationalist bollocks from the papers as normal. 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. 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. Link to post Share on other sites More sharing options...
NG32 Posted June 2, 2010 Share Posted June 2, 2010 So where are we at this pre season? Mortgaged the groud Mortgaged the training ground Mortgaged the "trade secrects" All monies coming in from outstanding debts being sent to the banks? So we have exactly nothing! lol 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). Link to post Share on other sites More sharing options...
Matt Posted June 2, 2010 Share Posted June 2, 2010 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. Because investors were happy with that arrangement- season ticket revenue was very solid. Also the loan wasn't to a single bank but to various funds, who are probably less demanding in terms of hard collateral (at least back then). It's a lot harder to get cashflow-backed security now unless you are a large company with a full structured financing in place. Really this news had no net debt impact- simply that incoming transfer money must be used to pay down the overdraft which seems fairly standard to me. However it will restrict our ability to spend anything in the transfer window. It's looking clear that Ashley's no 1 priority is to clear the overdraft. Link to post Share on other sites More sharing options...
Thespence Posted June 2, 2010 Share Posted June 2, 2010 Looking at that we seem to be have more on tick than we did under previous board. Link to post Share on other sites More sharing options...
Matt Posted June 2, 2010 Share Posted June 2, 2010 Looking at that we seem to be have more on tick than we did under previous board. Not numbers wise, it's just that Barclays wanted an 'everything plus the kitchen sink' guarantee in return for keeping the overdraft levels at what they were. According to the wonderful press statement, that is now fully-utilised at £20m. Link to post Share on other sites More sharing options...
UV Posted June 2, 2010 Share Posted June 2, 2010 Sensationalist bollocks from the papers as normal. The numbers and dates seem pretty specific and it's largely delivered as information without significant editorial comment. Care to expand on why it's sensationalist or more importantly on how it's bollocks? Link to post Share on other sites More sharing options...
ToonTastic Posted June 2, 2010 Share Posted June 2, 2010 It annoys me when people (usually mackems) spout this. I've had some harsh things put at me in my time but lumping me with that lot is below the belt. It was just a question. Link to post Share on other sites More sharing options...
Wilky Posted June 2, 2010 Share Posted June 2, 2010 It annoys me when people (usually mackems) spout this. I've had some harsh things put at me in my time but lumping me with that lot is below the belt. It was just a question. apologies. It just grates when people spout that we do not own our ground because we don't own the land. It's just wrong, especially as a long leasehold gives you most the rights of a freehold which gives a significant controlling interest in the land as well as the building on it. If you valued the land today NUFC's value would be more than the Council's. Link to post Share on other sites More sharing options...
Liam Liam Liam O Posted June 2, 2010 Share Posted June 2, 2010 Sensationalist bollocks from the papers as normal. The numbers and dates seem pretty specific and it's largely delivered as information without significant editorial comment. Care to expand on why it's sensationalist or more importantly on how it's bollocks? Because it's hardly surprising that the banks wanted some security over the borrowings ahead of a season in the Championship & some of the information itself has been in the public domain for 11 months. The loans are "secured against" those future funds, ie., we couldn't get/have that borrowing without promising those funds in the event that something catastrophic happened. The bank would then have first claim on that income. It's a bit like borrowing for a house, your mortgage is secured over your property in the event that you don't repay it, your house ultimately belongs to your mortgage company. This stuff was news weeks/months ago. 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. Link to post Share on other sites More sharing options...
NG32 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 Link to post Share on other sites More sharing options...
Wallace Posted June 2, 2010 Share Posted June 2, 2010 There have been a few people who have bought football clubs in the past with more interest in the value of the land than the football club so I think the council owning the land protects us a bit especially as we are located in the city centre. That is one of the themes that keeps coming up with Portsmouth as some of the "owners" have been property developers and the suspicion is that it is the land the club owns that they are really interested in. Link to post Share on other sites More sharing options...
quayside Posted June 2, 2010 Share Posted June 2, 2010 Gimp - Don't know for sure (especially the shops and warehouse) since the properties aren't listed in the accounts but you are probably about right. 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. Link to post Share on other sites More sharing options...
NG32 Posted June 2, 2010 Share Posted June 2, 2010 Gimp - Don't know for sure (especially the shops and warehouse) since the properties aren't listed in the accounts but you are probably about right. 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? 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. 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? 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. 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? Link to post Share on other sites More sharing options...
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