SUFC: The Future SUFC up for sale

[Texas Eslan]

As we know, Ron is selling "an opportunity". As we also know, the club owns very, very little. So what actually is up for sale?

In many companies, not that many years ago, goodwill was a huge benchmark of a companies worth, until it became obvious that goodwill actually meant very little. Except maybe for football clubs, where it is a huge asset. We have a solid hard-core fan base of 4-5000, with the potential to increase that to 6-7000. These are fans who will attend regardless of what division we are in. In monetary terms, assuming an average ticket price of, say, £15, a regular 5000 paying customers will provide £1.75m per season in ticket revenue. That will be bolstered by away fans, cup runs (Ha! Fat chance!) and attendances over 5000. All in all, it would probably be safe to budget for £2m ticket sales income per season.

On top of that, there is TV money, sponsorship, transfer fees, prize money (HA!), merchandise sales, matchday bar/food income and any other income the club or stadium can generate.

I don't know what these figures actually are, but added together it will equate to the income the club can expect to receive. Let's just say, for the sake of argument, that it all comes to £3m.

That's what's being sold. An opportunity to take over an established club with a £3m seasonal income stream.

Any buyer will then have to see what profit they can make out of that.

Don't worry too much about the debt; it will either be paid off or written off before any owners take it on. They will get it "clean", I'm sure.

Don't worry too much about the stadium either; there are many businesses that don't own their own premises. At the moment as I understand it we are paying about £250k per year in maintenance costs so we can get a safety certificate for RH anyway. The rent I would imagine would be in the region of £400k so it's not a million miles away.

When you look at it like this, we are actually a fairly attractive proposition; a club on it's knees, punching well below where it should be, yet still with a solid fan base and the opportunity to play in a brand new stadium.

Wrexham didn't have that, but look at the interest in them now. That's down to their high profile owners and a huge amount of cash investment that they must be confident will generate a return to make it worthwhile doing. Their owners paid under £3m for Wrexham which now, frankly, looks like a steal. They have purchased their own stadium back and it wouldn't surprise me if, within 10 years, they have built another one and sold off the old one for development. Ker-ching.

Makes it sound so easy, doesn't it?

Well written post. Not sure how much the numbers stand up (genuinely I have no clue) but you make some good points.

I don’t think Ron is far off though when he says he is selling an opportunity. The average attendance does not necessarily reflect the actual numbers of locals (and not so locals) who support/follow the club. I would argue that number could be anywhere from 30k all the way up to 70k (these are totally made up). A new owner cannot look too deeply in current cash flows as this should, theoretically at least, be at its lowest ebb.

A new ground should also see a boost in both attendance and income through being able to use it as a multi purpose venue (this is what he is selling, truth or not).

The club is not a short term flip though. It will take a lot of upfront investment before anyone will start to see any potential returns and I think that’s the key here and may put those without deep enough pockets off. We have potential to be League One/Championship level with the right set up and if we were at this level then an investor will start to reap what they have sown (only in a new stadium mind).

We just have to hope someone can see this potential and that the numbers due genuinely add up.

 

[pottster]

As we know, Ron is selling "an opportunity". As we also know, the club owns very, very little. So what actually is up for sale?

In many companies, not that many years ago, goodwill was a huge benchmark of a companies worth, until it became obvious that goodwill actually meant very little. Except maybe for football clubs, where it is a huge asset. We have a solid hard-core fan base of 4-5000, with the potential to increase that to 6-7000. These are fans who will attend regardless of what division we are in. In monetary terms, assuming an average ticket price of, say, £15, a regular 5000 paying customers will provide £1.75m per season in ticket revenue. That will be bolstered by away fans, cup runs (Ha! Fat chance!) and attendances over 5000. All in all, it would probably be safe to budget for £2m ticket sales income per season.

On top of that, there is TV money, sponsorship, transfer fees, prize money (HA!), merchandise sales, matchday bar/food income and any other income the club or stadium can generate.

I don't know what these figures actually are, but added together it will equate to the income the club can expect to receive. Let's just say, for the sake of argument, that it all comes to £3m.

That's what's being sold. An opportunity to take over an established club with a £3m seasonal income stream.

Any buyer will then have to see what profit they can make out of that.

Don't worry too much about the debt; it will either be paid off or written off before any owners take it on. They will get it "clean", I'm sure.

Don't worry too much about the stadium either; there are many businesses that don't own their own premises. At the moment as I understand it we are paying about £250k per year in maintenance costs so we can get a safety certificate for RH anyway. The rent I would imagine would be in the region of £400k so it's not a million miles away.

When you look at it like this, we are actually a fairly attractive proposition; a club on it's knees, punching well below where it should be, yet still with a solid fan base and the opportunity to play in a brand new stadium.

Wrexham didn't have that, but look at the interest in them now. That's down to their high profile owners and a huge amount of cash investment that they must be confident will generate a return to make it worthwhile doing. Their owners paid under £3m for Wrexham which now, frankly, looks like a steal. They have purchased their own stadium back and it wouldn't surprise me if, within 10 years, they have built another one and sold off the old one for development. Ker-ching.

Makes it sound so easy, doesn't it?

Good summary, although you left out the club is losing 200k a month as well!

 

[fbm]

Good summary, although you left out the club is losing 200k a month as well!

It's irrelevant to that argument though. We are losing money because of years of historic debt, primarily caused by spending way too much on wages, plus having a crumbling stadium and insufficient cash flow.

New owners will have it "clean". They'll pay Ron £5m or something and he'll take on the debt (most of which is to him anyway). Or they'll pay £1 for it and pay the debt off rather than pay Ron. I'd rather they did the former, but it's not my call.

 

[Tommy2holes]

Good summary, although you left out the club is losing 200k a month as well!

Says Ron.

The club is really poorly run.

Matchday being a prime example. So much more could be done to generate revenue but it isn't. The fare on offer is the same now as it was 20 years ago.

A few crappy tasting burgers, poor alcohol selection, no pre match entertainment or anything for the kids.

Wouldn't make fortunes but just an obvious example.

 

[Medway Blue]

It's irrelevant to that argument though. We are losing money because of years of historic debt, primarily caused by spending way too much on wages, plus having a crumbling stadium and insufficient cash flow.

New owners will have it "clean". They'll pay Ron £5m or something and he'll take on the debt (most of which is to him anyway). Or they'll pay £1 for it and pay the debt off rather than pay Ron. I'd rather they did the former, but it's not my call.

Yeah this is where I am. People keep mentioning the £200k loss per month.

If the only thing that changed right now was the owner of the club, and they put in (or didn't) the same amount of money each month that RM supposedly does, I'm not convinced that the monthly loss would be that big.

That's not me accusing anybody of taking any money out, but the scale of financial mismanagement and the weaving of a complex financial web over many years has been staggering.

 

[Medway Blue]

Says Ron.

The club is really poorly run.

Matchday being a prime example. So much more could be done to generate revenue but it isn't. The fare on offer is the same now as it was 20 years ago.

A few crappy tasting burgers, poor alcohol selection, no pre match entertainment or anything for the kids.

Wouldn't make fortunes but just an obvious example.

I said the exact same thing to someone the other week. A bit of innovation, even to the offering at Roots Hall, could generate more revenue and reduce losses.

 

[fbm]

Says Ron.

The club is really poorly run.

Matchday being a prime example. So much more could be done to generate revenue but it isn't. The fare on offer is the same now as it was 20 years ago.

A few crappy tasting burgers, poor alcohol selection, no pre match entertainment or anything for the kids.

Wouldn't make fortunes but just an obvious example.

To change anything needs investment into new lines, probably new catering equipment, more staff (and paying them), more relationships with suppliers (and paying them)...

I think we've hit the reason it hasn't happened.

 

[Medway Blue]

To change anything needs investment into new lines, probably new catering equipment, more staff (and paying them), more relationships with suppliers (and paying them)...

I think we've hit the reason it hasn't happened.

This is where it doesn't add up to me though. A club the size of ours and generating the revenue that it generates shouldn't be completely unable to do a few things like this.

Nobody's expecting the Buckingham Palace caterers, or mega money to be spent, and nor should it need to. But the fact that *no* additional money whatsoever can be spent in the short term in order to generate more revenue in the medium term is alarming to me.

There is no black and white here and it is such a tangled web he's woven that nobody will ever know for sure, but I just can't believe it's a simple as the club is losing £200k per month and will do the same for the next owner even if everything else is equal. The club and its finances have been horrendously mismanaged.

 

[pottster]

I dont think the 200k loss each month is irrelevant. Any prospective buyer will see it as a liability, and one that they will have to overcome. I have no idea for the reasons on this monthly loss but its there. If it was so easy to turn the club fortunes around why hadn't tge club/ Tom Lawrence done this if it was that easy.

 

[Medway Blue]

I dont think the 200k loss each month is irrelevant. Any prospective buyer will see it as a liability, and one that they will have to overcome. I have no idea for the reasons on this monthly loss but its there. If it was so easy to turn the club fortunes around why hadn't tge club/ Tom Lawrence done this if it was that easy.

I'm not saying it's irrelevant, but I also don't think it'll be as off-putting as some seem to think. Anybody with an ounce of competence could reduce that loss figure without lifting a finger.

Tom Lawrence is very competent but his hands are tied, and there is nothing that he can do about Ron's tangled and shady web of companies and how he moves money around.

 

[ColinMorrisWalksOnWater]

Just one small point.on this massive issue.

When the zoom call included the football solicitor and the representative from the Football fans association, they both said that this was the most unusual scenario of a football club in trouble. In all the other cases they had been involved in it was a case of owners taking money out. Here we have an owner who has put money and lots of it in, but has simply run out.

Now l am far from a Con Martin supporter and anyone who knows me knows that in spades, but we have to remember to base our views on facts where we can and not hearsay, which I admit with Ron involved is hugely difficult to do, but l just wanted to raise that point, especially if some hadn't seen that particular broadcast of the supporters group meetings.

Thanks.

 

[pottster]

Any new owner would have to put in at least 6 million to keep the club on life support for the next 3 years just to maintain our present position. Thats without any extra investment to playing staff or other revenue streams. A new owner would not invest any money into roots Hall as they dont own it, neither will Ron. The new stadium is probably 3 years away if it ever does get built, I hope the new owner has deep pockets! There's never a Saudi billionaire when you need one is there!

 

[Fairport]

I said the exact same thing to someone the other week. A bit of innovation, even to the offering at Roots Hall, could generate more revenue and reduce losses.

The problem is that every part of Roots Hall looks tatty. People will pay if the facilities on offer are good. A prime example is Chelmsford City racecourse where they make far more revenue in their plush restaurant than they do on punters paying just general admission. Football clubs with modern facilities also get a good income from hospitality.

 

[fbm]

I dont think the 200k loss each month is irrelevant. Any prospective buyer will see it as a liability, and one that they will have to overcome. I have no idea for the reasons on this monthly loss but its there. If it was so easy to turn the club fortunes around why hadn't tge club/ Tom Lawrence done this if it was that easy.

I didn't mean it was irrelevant in general but I said it was irrelevant to the argument I was making. Whatever the monthly losses are, the new owners won't have them.

There is a multitude of reasons why we are in the state we are. Every club will have good and bad times, ups and downs. They'll get the odd promotion, sell the odd player, have a good cup run etc. We haven't done any of that for some time.

What that means is that whatever we have budgeted for in the summer for any forthcoming season, we will rarely hit it. Every so often the club takes a gamble and signs a player it probably can't really afford but they hope it will get them to the next level. If it works, great. If not, they've lost.

Sacking managers costs money and that has also cost a fortune. over the years.

When you're in that situation, in order to stay solvent you get money in early, i.e. season ticket monies, which will see you through the summer (hopefully). But when things get bad you defer paying HMRC on the PAYE or the VAT. You delay paying suppliers as long as possible. You have a bad run of luck where several home games are postponed and there's no gate receipts for a few weeks.

Then you are in trouble as, without a sudden windfall, you can never catch up. In the past Ron has provided that money, but not for a few seasons now.

We used to get out of jail with the academy as there were some decent transfer fees there, but now that's not an option anymore either.

The only windfall left is new money.

 

[Medway Blue]

The problem is that every part of Roots Hall looks tatty. People will pay if the facilities on offer are good. A prime example is Chelmsford City racecourse where they make far more revenue in their plush restaurant than they do on punters paying just general admission. Football clubs with modern facilities also get a good income from hospitality.

Oh absolutely, and I do think that the state of facilities are a barrier to getting more people in through the gates. But better quality food and drink options would probably get the people that *do* come through the gates to spend more money.

Christ, have you seen some of the food offerings at some of our non-league opponents? Even a quick browse of the Footy Scran Twitter page would show how much better the club can do in that aspect.

 

[Holy Joe]

Wrexham aren’t going to be moving from the Racecourse - Rob and Ryan are very proud of it being the oldest football stadium in the World that’s still in use.

They are spending many millions building a new Kop stand:

New Kop stand at Wrexham AFC's Racecourse Ground secures planning go-ahead

The development will raise the capacity of the stadium to 15,500

www.dailypost.co.uk

I heard their local council and I think the Welsh govt are giving a massive grant towards the costs

 

[Blue Yonder]

I don’t think we ‘lose’ 200k per month do we ? Isn’t that a negative cash flow of 200k per month because season ticket money has been spent before the previous season has even finished rather than being in the bank to smooth cash flow over the next year.

 

[fbm]

Just one small point.on this massive issue.

When the zoom call included the football solicitor and the representative from the Football fans association, they both said that this was the most unusual scenario of a football club in trouble. In all the other cases they had been involved in it was a case of owners taking money out. Here we have an owner who has put money and lots of it in, but has simply run out.

Now l am far from a Con Martin supporter and anyone who knows me knows that in spades, but we have to remember to base our views on facts where we can and not hearsay, which I admit with Ron involved is hugely difficult to do, but l just wanted to raise that point, especially if some hadn't seen that particular broadcast of the supporters group meetings.

Thanks.

I've made this point for years and is why I am less anti-Ron than most. He has basically chased his losses and it's very easy for us to use the "Would've. could've, should've" argument, but when you are actually in that position it's the hardest thing in the world to actually make the right call.

But we are where we are. It's what happens from here that's crucial and I hope he's made the right decision now and in time.

 

[pottster]

I don’t think we ‘lose’ 200k per month do we ? Isn’t that a negative cash flow of 200k per month because season ticket money has been spent before the previous season has even finished rather than being in the bank to smooth cash flow over the next year.

It's still a loss whichever way you skin it. The cash still has to be found by season tickets, transfers, sainsburys, rich benefactor, back of the sofa, or even the war chest

 

[Blue Yonder]

It's still a loss whichever way you skin it. The cash still has to be found by season tickets, transfers, sainsburys, rich benefactor, back of the sofa, or even the war chest

Spending next seasons ticket money now on historic debt means an absolute certainty that we will have dreadful cash flow issues again over the next 12 months. Of the solutions you offer the season ticket money will have gone, we have no players worth a decent transfer fee, there is no Sainsbury’s on the horizon, no money down the back of the sofa and no war chest which leaves one possible salvation.