Bradford rent: what could happen to us in the future?

[ElstreeBlue]

Have wondered for a while whether we'd have to pay rent to the landlord (RM's companies or whoever they sell their interest to) if we ever get as far as FF, and how crippling that rent would be. Also, how easy it would be to get out of.

This makes for an interesting read: http://news.bbc.co.uk/sport1/hi/football/teams/b/bradford_city/9458919.stm

Don't know the full facts of the Bradford deal (just what's on the BBC site), but the article says the ground had been transferred for just £2.5m (10 years ago). They now pay rent of £700k a year. Interesting equation. Long lease contractually tying them in too.

 

[Firestorm]

I think that if RM, for whatever reason, is not involved with SUFC before FF is completed then the rental income for B&L and RH will become payable (520K pa)

As opposed to being recorded in the accounts and written off.

Unless FF is either handed over to the club or a long term lease at low rent negotiated then I can imagine that we would be due to pay some rent.

That was always going to be on the cards when we had run up debts which could eventually only be cleared by selling the assets , and that was 15 years ago !!

 

[Wise Head]

Don't know the full facts of the Bradford deal (just what's on the BBC site), but the article says the ground had been transferred for just £2.5m (10 years ago). They now pay rent of £700k a year. Interesting equation. Long lease contractually tying them in too.

I thought Ron's was a bad case of asset stripping when he acquired RH & Boots & Laces for £4 million (well below open market value) & then charged £520k per annum which was a 13% return. The Bradford case if true is outrageous. Valley Parade must have been worth more than £2.5 million at the time of sale & then to charge £700k rent equates to a return of 28% per annum.
If this is happening elsewhere then I think the football league need to get involved & protect clubs from being asset stripped. If this type of owner was prohibited from asset stripping then they wouldn't be interested in the clubs in the first place.

 

[Cricko]

I thought Ron's was a bad case of asset stripping when he acquired RH & Boots & Laces for £4 million (well below open market value) & then charged £520k per annum which was a 13% return. The Bradford case if true is outrageous. Valley Parade must have been worth more than £2.5 million at the time of sale & then to charge £700k rent equates to a return of 28% per annum.
If this is happening elsewhere then I think the football league need to get involved & protect clubs from being asset stripped. If this type of owner was prohibited from asset stripping then they wouldn't be interested in the clubs in the first place.

Did that ever enter the books as a paid figure..I don't recall seeing it and our debt suddenly being reduced by the same amount?

 

[Firestorm]

Directors report accounts 1998/99

On 2nd March 1999 the company sold, to Roots hall ltd, a company under common control, for 4M and leased back the football ground at Roots hall (400K pa rent)

On 9 April the company disposed of its lease on the training ground to Southe Eastern leisure Ltd for 500K (leased back 102K PA)

 

[fbm]

I thought Ron's was a bad case of asset stripping when he acquired RH & Boots & Laces for £4 million (well below open market value) & then charged £520k per annum which was a 13% return. The Bradford case if true is outrageous. Valley Parade must have been worth more than £2.5 million at the time of sale & then to charge £700k rent equates to a return of 28% per annum.
If this is happening elsewhere then I think the football league need to get involved & protect clubs from being asset stripped. If this type of owner was prohibited from asset stripping then they wouldn't be interested in the clubs in the first place.

If the club was ever shafted, it was back then. I was as vociferous then as anyone is now, but the trouble with selling from a position of weakness is that you never get good value, although with the rent RM has written off and the costs incurred you have to wonder who got the best end of the deal.

Our destiny has been out of our hands for a very long time.

 

[Cricko]

If the club was ever shafted, it was back then. I was as vociferous then as anyone is now, but the trouble with selling from a position of weakness is that you never get good value, although with the rent RM has written off and the costs incurred you have to wonder who got the best end of the deal.

Our destiny has been out of our hands for a very long time.

My question would still be though was the money borrowed by RM to buy the club for 4 mill with the cost remaining on the balance sheets as a debt or did the club start afresh with a limited small debt but owned by RM?

 

[Firestorm]

The 1998 and 1999 acounts show losses totalling almost 2.4M , thats 100k a month !! with a further 1.8m loss in 2000

 

[Firestorm]

My question would still be though was the money borrowed by RM to buy the club for 4 mill and the cost remained on the sheets as a debt or did the club start afresh with a limited small debt but owned by RM?

The debt was reduced by about a million but the accruing losses (see above) would have swallowed up the remainder

 

[Cricko]

The debt was reduced by about a million but the accruing losses (see above) would have swallowed up the remainder

So very little money went into the club as the debt has risen nearly every season since and remains on the books....Basically he got the club for about 1 million which was probably a bank loan.

It's a bit like Martin Dawn owning all this land when they owe banks 7.5 mill,they actually own nothing but paper and chances of future profits or losses.

 

[Firestorm]

So very little money went into the club as the debt has risen nearly every season since and remains on the books....Basically he got the club for about 1 million which was probably a bank loan.

It's a bit like Martin Dawn owning all this land when they owe banks 7.5 mill,they actually own nothing but paper and chances of future profits or losses.

I didn't make my self clear there John, those losses were the operating losses before the revenue due to the disposal of assets, thus the 4M would have reduced the debt originally then been used to underpin the losses on the next two years . He paid 4M and it all got used up in 2 - 3 years paying bills , so much so that during that Period Delancey had to step in with a loan (which lead to the JM situation) to keep the cash flow up.

Remember that RM did not buy the grounds in 98/99 RHL and SEL did and at the time they were a JV between MD and Delancey.

Martin Dawn (and Hence Ron) only got sole ownership of RHL and SEL some years later when Delancey had got fed up with constantly being asked to pump money in

 

[Cricko]

Ok so once again how much did RM pay Delancey for their shares as they seem to have been the powerhouse up to when they got fed up ..they do/did after all have huge backers. Did RM take it off they hands to save them losing money as they were not prepared to wait for the development.

I firmly believe RM got this club for a pittance and whatever he paid for it became a debt hidden and is still within the myriad of companies that the club and RM encompass.

 

[Firestorm]

I don't know how much MD will have paid Delancey as that will not be in the SUFC accounts, I would imagine that hard nosed busnessmen like the Ritblats would have wanted their investment back and a return....

I believe RM got the club for nothing, however he would have paid the club a fair amount for the Ground and the lease on B&L

 

[Cricko]

I don't know how much MD will have paid Delancey as that will not be in the SUFC accounts, I would imagine that hard nosed busnessmen like the Ritblats would have wanted their investment back and a return....

I believe RM got the club for nothing, however he would have paid the club a fair amount for the Ground and the lease on B&L

Why,from what I heard the Riblats etc were just happy to get out of it, they had shareholders to answer to and cut their losses.

 

[Pak Power]

Interesting piece here, they are wanting to try to buy their ground back!

Link:
http://www.claretandbanter.com/showthread.php/30350-Time-For-Action

 

[Firestorm]

I believe Ron acquired the club for nothing

RHL and SEL were then set up (50% Martin Dawn 50% Delancey)

RHL and SEL then bought the assets of SUFC

MD then paid Delancey then for their 50% of SEL & RHL and the additional money they had put in .

 

[Cricko]

I believe Ron acquired the club for nothing

RHL and SEL were then set up (50% Martin Dawn 50% Delancey)

RHL and SEL then bought the assets of SUFC

MD then paid Delancey then for their 50% of SEL & RHL and the additional money they had put in .

And this is where IMO he did not pay a penny and it remains as a debt within the companies..these debts get passed around year to year and the only way they survive is by some charges to SUFC that they either supposedly lent to the club or are owed and they take back in cash generated by the club.....all of his companies owe huge amounts and have for years....the banks will no longer lend him monies he has hocked every conceivable asset to Sainsbury's including 2nd charges on most of MD'd waste land fields for his dream. Just within 2 companies SUFC and MD there is 15 million of debt.

 

[Firestorm]

Can you point out which bits of our accounts indicate the supposed loans to the club ? as well as the cash being taken out ? It looks like I may have misinterpreted those particular bits, if I spotted them at all, and I would like to have another look.

 

[Cricko]

Can you point out which bits of our accounts indicate the supposed loans to the club ? as well as the cash being taken out ? It looks like I may have misinterpreted those particular bits, if I spotted them at all, and I would like to have another look.

Now I know you well enough not to have to throw the "creative accounting" term at you, but I would be interested to hear you deny it happens?

 

[Firestorm]

Now I know you well enough not to have to throw the "creative accounting" term at you, but I would be interested to hear you deny it happens?

I believe it happens, because of stories I have heard news articles I have seen , but I personally have never had any balance sheet item pointed out to me as being a cover for "creative accounting" or seen a set of accounts which was later proved to be "creative" so I honestly can't prove or disprove it in this instance, I am nowhere near the level of a forensic accountant I am afraid.....