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Investment via Bond issue, could this be a way to upgrade club facilities


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We are now using bonds for social initiatives. If the funds raised were to deliver a new stadium with guaranteed income + a social youth program, there would be a lot of people keen to invest for a small return (2-3%). You just need someone to underwrite the initial investment. That’s where rugby union’s friends come in handy. 

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With a bond you need to pay the coupon regularly and then pay off the principal at the end of the period.So whatever you are using the funds for needs to be able to generate sufficient income to do that.

Wasps as pointed out raised ,I think,35million quid but are struggling to make the coupon payments let alone pay off the principal.
If you default the bond holders end up owning the asset.

 

 

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7 hours ago, DoubleD said:

You’re comparing a county with a city. Compare apples with apples - I would suggest there are more rich people in Yorkshire than Devon

Yes, but they don’t support Wakefield Trinity. Devon has 4 pro / semi pro sports teams, I can’t be bothered to count but Yorkshire has more than 20. 

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3 minutes ago, koli said:

With a bond you need to pay the coupon regularly and then pay off the principal at the end of the period.So whatever you are using the funds for needs to be able to generate sufficient income to do that.

Wasps as pointed out raised ,I think,35million quid but are struggling to make the coupon payments let alone pay off the principal.
If you default the bond holders end up owning the asset.

 

 

Very good point. How long does a 10,000 stadium take to build on average? 

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43 minutes ago, Eddie said:

Yes, but they don’t support Wakefield Trinity. Devon has 4 pro / semi pro sports teams, I can’t be bothered to count but Yorkshire has more than 20. 

And Yorkshire has a much larger population.
And by the same token everyone in Devon doesn’t support Exeter Chiefs 

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4 minutes ago, DoubleD said:

And Yorkshire has a much larger population.
And by the same token everyone in Devon doesn’t support Exeter Chiefs 

I know, like I said yesterday. I don’t know what your point is now but let’s leave it there. 

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12 minutes ago, Eddie said:

I know, like I said yesterday. I don’t know what your point is now but let’s leave it there. 

My point is you seem to be suggesting The Chiefs are achieving this due to some tenuous link to ‘wealthy rural Devon’ which is nonsense. Happy to leave it here as I’ve made my point 

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6 hours ago, yipyee said:

Also if football as an example owners were fans and pumped money in and wrote off losses where possible but businessmen have turned clubs into profit machines. 

Gone are the days of top footy clubs making no profit.

This is achievable in RL and I think warrington Saints Leeds have all done this pre covid all with different models.

 

Top flight football is even less relevant to Rugby League than union. Very few Rugby League clubs are going to be profit machines, it's just the nature of the beast. Warrington and Leeds had made themselves viable businesses (pre-Covid), but St Helens still isn't that close to achieving that.

6 hours ago, yipyee said:

Just out of interest whats stopping any of the above or any other top RL club building a hotel as part of a redevelopment. It would have actually helped the covid bubble for teams and rooms could have been sold as part of packages.

Imagine a hotel room with a view of the pitch!

Leeds operate the hotel at Headingley, albeit it has a view of the wrong pitch.

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2 hours ago, M j M said:

Top flight football is even less relevant to Rugby League than union. Very few Rugby League clubs are going to be profit machines, it's just the nature of the beast. Warrington and Leeds had made themselves viable businesses (pre-Covid), but St Helens still isn't that close to achieving that.

Leeds operate the hotel at Headingley, albeit it has a view of the wrong pitch.

St helens was profitable pre covid

Didnt know that about Leeds! Well done them

There is no reason why RL cannot become profit machines, football when say Blackburn for example had a local businessman take over and run them at a huge loss with no real interest in the commercial side. This is a bit like some RL clubs now. We need owners to treat clubs as businesses and not play things.

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33 minutes ago, yipyee said:

St helens was profitable pre covid

 

Saints were only close to profitable at EBITDA level (and even that was rare).

Given they'd spent/been given around £20m in the new stadium means they have never come close to paying for that. I think Coleman has written most of that debt off into equity now but the point remains they are nowhere near a viable, stand-alone business in the normal sense.

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Posted (edited)
2 hours ago, M j M said:

Saints were only close to profitable at EBITDA level (and even that was rare).

Given they'd spent/been given around £20m in the new stadium means they have never come close to paying for that. I think Coleman has written most of that debt off into equity now but the point remains they are nowhere near a viable, stand-alone business in the normal sense.

I disagree,

Firstly the old stadium was in a prime area of St Helens and they recieved a good amount for the land.

Secondly Tesco paid for the ground works and some other parts of the build to allow them to build a superstore as there was objections from the shopping area of fingerpost.

Thirdly the council paid for the roadwork acsess etc.

The stadium build was therefore all accounted for by the above and the only hole was a slight drop in price for the old stadium due to a delay when the build was referred to Parliment due to being close to some gas works or mains etc..

I think this cost and the million to play in Widnes (accounted for) is the only negative figures from the stadium build. The club never got into debt to build the new stadium.

Therefore your comments that they have never come close to paying for the stadium is false.

The old stadium lost money every matchday where as the new one makes money not to mention all the other functions that occur there and the stamping out of gate corruption (alleged).

Mcmanus is an ex banker too so I would imagine breaking even with no taxable profit is a skill

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8 minutes ago, yipyee said:

I disagree,

Firstly the old stadium was in a prime area of St Helens and they recieved a good amount for the land.

Secondly Tesco paid for the ground works and some other parts of the build to allow them to build a superstore as there was objections from the shopping area of fingerpost.

Thirdly the council paid for the roadwork acsess etc.

The stadium build was therefore all accounted for by the above and the only hole was a slight drop in price for the old stadium due to a delay when the build was referred to Parliment due to being close to some gas works or mains etc..

I think this cost and the million to play in Widnes (accounted for) is the only negative figures from the stadium build. The club never got into debt to build the new stadium.

Therefore your comments that they have never come close to paying for the stadium is false.

The old stadium lost money every matchday where as the new one makes money not to mention all the other functions that occur there and the stamping out of gate corruption (alleged).

Mcmanus is an ex banker too so I would imagine breaking even with no taxable profit is a skill

A quick look at the last financial statements over the past decade or so show the true position. It's really not hard to get at.

As of the 2020 year end, the group owes Mike Coleman £13.5m.

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13 hours ago, Man of Kent said:

Yes and that is the key. 

Rugby grounds need to be at the heart of the community all year round, not just on matchday, by having smart facilities for hire for conferences, dinners/awards, parties, weddings etc etc. 

This is one of the flaws in a lot of the commercial business plans of our clubs. We (quite often on this forum) are viewing them as sporting teams and our experience on a match day. Be that the product on the pitch or whether or not we have a family zone to entertain us. Yes, this is all very important and is the lifeblood of our game.

BUT we are missing a trick. Widen the lens, take a step back and look at the situation with a cold, hard business hat on. This is a conversation about assets to be able to drive revenue streams.

Genuine question to the forum - How many of our clubs have sold their stadium, or main asset, for the short term gain of a nice stadium/pay debts?

The long-term expense being they no longer own the asset in order to drive other revenues... Resulting in less assets, less revenues and weaker all round businesses.

Bond Issuance is a great way in certain circumstances to raise capital.

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16 hours ago, yipyee said:

I think the bond is a guarenteed return and would pay higher than a banks interest rate.

Also if football as an example owners were fans and pumped money in and wrote off losses where possible but businessmen have turned clubs into profit machines. 

Gone are the days of top footy clubs making no profit.

This is achievable in RL and I think warrington Saints Leeds have all done this pre covid all with different models.

Just out of interest whats stopping any of the above or any other top RL club building a hotel as part of a redevelopment. It would have actually helped the covid bubble for teams and rooms could have been sold as part of packages.

Imagine a hotel room with a view of the pitch!

 

It’s been thought of at Warrington, a while back after they opened the new corners in the East stand they mentioned the future developments that had been considered should the demand warrant it.

The next four stages are:

  1. Designs have been drawn for taking the roof on the North Stand higher and adding in a new level of hospitality boxes. All of the existing boxes are currently sold out.
  2. Adding a level seating above the terracing on the South Stand.
  3. Early stage discussions have taken place over adding a hotel to the North East corner of the stadium.
  4. The final improvements would see the final two corners filled-in - similar to the work done last year.


Nothing past the design stage at present, but there is a will to get the work done if it can be shown to be viable.

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I was just thinking about the Rugby League ''family''.

Imagine a real family, where the Dad loses his job and has to take another, on 3/4 pay.

The parents get together and discuss the dilemma and due to their reduced income, they decide to take the youngest of their 3 kids up the mountain, above the snow line and leave them up there!

Now because they have less money worries, they can focus more attention on the eldest two children believing they can achieve elite standards of education. This should guarantee a bright future, for the surviving children.

It turns out, that the Dad's brother has just built a hotel, on borrowed finance and catapulted his own income into the stratosphere.

But being a RL family, it never occurs to the poor dad to ask his big brother, how he did it, but someone suggests to his wife (in Aldi's) that he should ask his brother for some advice. 

Swallowing his pride, cap in hand, the poor dad, goes to his brother, to ask him how he did it.

His rich, successful brother refuses to tell him.  

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As someone who lives in Exeter the Chiefs have the benefit if drawing it's support from the whole of Devon, Cornwall and  some of Somerset. Top level sport is thin on the ground here so people will travel to watch it. Exeter, Torbay and Plymouth are no richer than anywhere else but there's enough money in surrounding areas to make the scheme viable.

The Chiefs make the whole day an event as well and there's hardly any pubs nearby so the money they make at the ground is huge. It's also situated perfectly on the M5 for conferencing.

The football team which is owned by it's supporters average about 4k and the support has held up well despite the Chiefs success, I know a few people who no longer go to the rugby because they have alienated them and priced them out of going.

Hope that clears up the geography. I've never set foot in the place even when offered a free bar. 

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On 10/08/2021 at 21:40, yipyee said:

Just sticking to League, if clubs need funding to build a new stadium then why wait for the local council or any dodgy deals with developers.

This seems like a bona fida way to raise capital. I once read that Catalan used to get 300 attendance and now they get over that in hospitality alone. Any expansion/development should lead to increased revenue from either match day or from a year round facility and therefore able to repay bonds. 

I would imagine a bond issue is far better than begging buckets at the turnstyles.

 

Look into how Exeter got the stadium they are in.

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The RL way is to form the lynch mobs and run the wealthy new boys out of town, slagging them off as they do so.

They then look at the wastelands aka RL and ask why few with wealth venture anywhere near them.

Every club in SL should put in  a £5m bond to be a member of it- wonder who would vote for that😂

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There are plenty of rich people involved with Rugby League. If someone else wants to come in it's not unreasonable to expect them to then pay players on time or at least vaguely follow the rules. 

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I suspect the key issue would be can you sell the bonds ?

Not to mention, can you find the funds to redeem them when they mature ?

I don't know the answer to those questions.

However, it is exactly how governments raise funds.

"We'll sell you a seat .... but you'll only need the edge of it!"

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3 hours ago, M j M said:

There are plenty of rich people involved with Rugby League. If someone else wants to come in it's not unreasonable to expect them to then pay players on time or at least vaguely follow the rules. 

Koukash was ran out of town for daring to challenge the status quo

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