What it really means is rich daddies are not that rich afterall. The money they allegedly own in the stock market is as liquidous as toilet water. It can be flushed.AnthonyG said:
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The Official Arsenal Board / Takeover etc thread
- Thread starter junialum
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kooldawg
Established Member
Which means that he is probably going to sell his shares in Arsenal which would be a winning situation for us us 
hackajack
Established Member
Agreed though it depends on who he sells them to.
famous no 10
Established Member
hackajack said:
Abramovich. :wink:
hackajack
Established Member
I don't think he's allowed to have a big stake in two PL clubs thank fark (though I'm sure he could get one of his mates to buy in for him).
Tony Montana
Established Member
tactica442 said:
Call me an idiot but I don't understand. Why is my post refreshing and positive (or not if you're being sarcastic as I think you are)?
sesquioxide
Well-Known Member
quincy42 said:famous no 10 said:
Yeah, it is unlikely those companies will recover most of the value lost in the past 5 months if you consider that on the whole they will not be able to attract significant investment from anyone over the next two to three years at least.
I can see why football administrators are panicking. Right now the owners of Liverpool, Chelsea and United are in much poorer financial positions, and they will probably continue to slide in the next year. We have Usmanov who hopefully will dump our stock given the high opportunity cost due to the low dividend income. The question is, who would be able to afford to take the stake off his hands? Some preference shares for Warren Buffet perhaps?
Part of the reason the Russian market is down is certainly due to the recent concerns about debt, but the real decline began as a result of Russia's war with Georgia.
I hope forum members who slag off Fiszman and call for new ownership ought to think very seriously about who might or might not be a good owner. Despite winning a resounding victory in South Ossetia and proving (somewhat) the viability of their armed forces, the Russians still manage to find the markets hit and their wealth shrunk. We can not isolate the club from the events of the world, but do we really want to let the fate of the club hang on oil prices, wars in places most people cannot find on a map, and reckless speculation on debt?
qs said:
I absolutely agree. Our business model is built to succeed in times like this and I hope we manage to take advantage of the temporary weakness of our opponents. Certainly Chelsea and Manchester United have made much of our own temporary weakness over the last 2-3 seasons and they do not seem to be complaining.
hackajack
Established Member
looks like ****obollox isn't farking off....
The Russian billionaire Alisher Usmanov last night said that he had no intention of selling his stake in Arsenal despite the global economic crisis, and compared his love for the club under Arsène Wenger to that of a "man for a woman".
Usmanov said it was "inconceivable" that he would sell his 24% holding in Arsenal. He declared he wanted to increase his stake to 25% - an "objective" that he said he announced last year.
"When a man loves a woman he can't conceivably sell that love. I'm in love with Arsenal. I have no intention of selling it [my stake]," he told the Guardian yesterday.
He added: "That may be possible at some point in time when I know that Arsenal hates me. I will make sure this doesn't happen. I have not lost one single share."
He added: "As long as Arsène Wenger is manager that's not going to happen."
The Russian billionaire Alisher Usmanov last night said that he had no intention of selling his stake in Arsenal despite the global economic crisis, and compared his love for the club under Arsène Wenger to that of a "man for a woman".
Usmanov said it was "inconceivable" that he would sell his 24% holding in Arsenal. He declared he wanted to increase his stake to 25% - an "objective" that he said he announced last year.
"When a man loves a woman he can't conceivably sell that love. I'm in love with Arsenal. I have no intention of selling it [my stake]," he told the Guardian yesterday.
He added: "That may be possible at some point in time when I know that Arsenal hates me. I will make sure this doesn't happen. I have not lost one single share."
He added: "As long as Arsène Wenger is manager that's not going to happen."
We won't be immune to the economic crisis & reforms, but our business model means that we'll be in a much better position to weather the storm than most other PL clubs. Then there is the further question from UEFA re club debts.
As an investor we are exactly what the Dr ordered re stability, and you'd be an absolute mug to want to sell, unless you were completely wiped out.
As an investor we are exactly what the Dr ordered re stability, and you'd be an absolute mug to want to sell, unless you were completely wiped out.
asajoseph
Established Member
I think that we need to be mindful before we start feeling smug about avoiding the current financial crisis:
House sales fall to less than 2 per week (by agent)
Yet:
The majority of the completions on Highbury Square are due in the financial year May 08-09. Over 90% of the 'sold' properties are still subject to exchange of contract, and in the broader market, gazundering is already becoming widespread.
My view:
The 'rebound' in the markets we've seen over the last couple of days can at best be seen as the 'end of the beginning' of the current financial downturn. At worst, it may be nothing more than a temporary reaction to yet more billions ploughed into, and wasted on an economy based upon too much bad debt.
Either way, the full impact of what's going on is only beginning to be felt by the consumer - the economic slowdown, from the perspective of the man on the street, has only just begun. 2008/09 is a crucial year for Arsenal from a financial perspective, with the club planning to recognise key profit numbers from the Highbury development in the next annual accounts. Highbury Square is, undoubtebly an excellent development for many reasons, yet we are a club with a substantial amount of debt that we have planned to repay with income from our property investments.
These investment decisions were made at a time when the property market was on a definite upswing, and for years looked to be very sound. Yet we are now in a position whereby we're looking to complete a massive sale into a market with a vastly decreasing appetite for real estate, and a broader economy that is likely to shrink for at least the next few years.
This remains a very challenging time for Arsenal, yet we should know, in approximately 12 months time, exactly how strong we are financially. The successful completion of the outstanding 600+ Highbury Square appartments is absolutely vital, and, if the club can manage to publish the vast majority of the profits from this in the next set of annual accounts, then we'll be in a very strong situation. However, this is not something that I feel should be taken for granted.
A lot of the people who've agreed to buy these appartments but not exchanged their contracts are going to be looking closely at whether or not the prices they agreed to are really fair value in a deflating market. We're seeing more and more people willing to walk away from money they've already invested in a purchase, and, though the deposits on our appartments are not insignificant, neither are the devaluations we're seeing in the housing market.
It will be a fantastic achievement for the club to deliver on the promise they've made.
(Link to Arsenal's results to May 2008)
House sales fall to less than 2 per week (by agent)
Yet:
The majority of the completions on Highbury Square are due in the financial year May 08-09. Over 90% of the 'sold' properties are still subject to exchange of contract, and in the broader market, gazundering is already becoming widespread.
My view:
The 'rebound' in the markets we've seen over the last couple of days can at best be seen as the 'end of the beginning' of the current financial downturn. At worst, it may be nothing more than a temporary reaction to yet more billions ploughed into, and wasted on an economy based upon too much bad debt.
Either way, the full impact of what's going on is only beginning to be felt by the consumer - the economic slowdown, from the perspective of the man on the street, has only just begun. 2008/09 is a crucial year for Arsenal from a financial perspective, with the club planning to recognise key profit numbers from the Highbury development in the next annual accounts. Highbury Square is, undoubtebly an excellent development for many reasons, yet we are a club with a substantial amount of debt that we have planned to repay with income from our property investments.
These investment decisions were made at a time when the property market was on a definite upswing, and for years looked to be very sound. Yet we are now in a position whereby we're looking to complete a massive sale into a market with a vastly decreasing appetite for real estate, and a broader economy that is likely to shrink for at least the next few years.
This remains a very challenging time for Arsenal, yet we should know, in approximately 12 months time, exactly how strong we are financially. The successful completion of the outstanding 600+ Highbury Square appartments is absolutely vital, and, if the club can manage to publish the vast majority of the profits from this in the next set of annual accounts, then we'll be in a very strong situation. However, this is not something that I feel should be taken for granted.
A lot of the people who've agreed to buy these appartments but not exchanged their contracts are going to be looking closely at whether or not the prices they agreed to are really fair value in a deflating market. We're seeing more and more people willing to walk away from money they've already invested in a purchase, and, though the deposits on our appartments are not insignificant, neither are the devaluations we're seeing in the housing market.
It will be a fantastic achievement for the club to deliver on the promise they've made.
(Link to Arsenal's results to May 2008)
Biggus
Established Member
Thanks for that Asa, very informative. I share your pessimism that we are still in the early stage yet, and the markets will remain very volatile for some time whilst fear struggles with greed.
hesham
Established Member
Interesting to see that our 2008 PAT is 25 million up on previous years. I think we are in a very healthy position even if we do take a hit in the property department, with regards to last year, property revenue was less that 8% of the total club revenue and even if we sold absolutely nothing in 2007 our bottom line would still have been positive. So while we are not yet in a position to compete with the top clubs buying power (using our business model) we are definitely moving in that direction.
With regards to the "Highbury Square" developments I think if (big if) the sales goes through cleanly then it will be a HUGE boost for us, we will be able to repay a large chunk of the debt that we owe and in turn there will be a large drop in our finance costs, this will result in more cash available to spend in other areas (new signings), however even if we do struggle to sell all the Highbury Square property this year we should still be able to at least break even come the end of the financial year. Our business model is in place in such a way that the sale of the property is not 'vital' in repaying any of our debt and running of the business, we should be able to get by regardless
We have already sold 18mill worth which is to be included in 08/09 Figures according to the report... Also Our Debt has peaked so there is no extra debt expect in the near future and we are not affected by sharp increases in interest rates as our main borrowing is at a fixed rate. Sale of the property will speed up our progression in reducing our debt but I doubt we will be in any trouble if the club doesn't hit their targets relating to the sale of these properties
With regards to the "Highbury Square" developments I think if (big if) the sales goes through cleanly then it will be a HUGE boost for us, we will be able to repay a large chunk of the debt that we owe and in turn there will be a large drop in our finance costs, this will result in more cash available to spend in other areas (new signings), however even if we do struggle to sell all the Highbury Square property this year we should still be able to at least break even come the end of the financial year. Our business model is in place in such a way that the sale of the property is not 'vital' in repaying any of our debt and running of the business, we should be able to get by regardless
We have already sold 18mill worth which is to be included in 08/09 Figures according to the report... Also Our Debt has peaked so there is no extra debt expect in the near future and we are not affected by sharp increases in interest rates as our main borrowing is at a fixed rate. Sale of the property will speed up our progression in reducing our debt but I doubt we will be in any trouble if the club doesn't hit their targets relating to the sale of these properties
asajoseph
Established Member
Recognising the profit from the sales isn't as simple as taking the revenue and adding it to the bottom line profit. At the moment, over 90% of the total of the Highbury Square development is subject to contract, so the price on those properties is more or less agreed. If a significant number of that 90% chose to default, and walked away from the deposit, our position would be very unstable.
How would we offer those properties back to the market? We couldn't put them out there at a significant discount, as it could potentially create a snowball effect amongst other investors who have not yet defaulted. Yet if the discount is not significant, we risk having them sitting on our balance sheet, and open to impairment - in a worst-case scenario, this could end up hitting our bottom line, quite significantly.
The next 12 months is hugely important for us. 2 years ago, we were talking about imminently becoming a financial superpower in the game. If these sales go badly, we could spend most of the next decade just trying to consolidate.
How would we offer those properties back to the market? We couldn't put them out there at a significant discount, as it could potentially create a snowball effect amongst other investors who have not yet defaulted. Yet if the discount is not significant, we risk having them sitting on our balance sheet, and open to impairment - in a worst-case scenario, this could end up hitting our bottom line, quite significantly.
The next 12 months is hugely important for us. 2 years ago, we were talking about imminently becoming a financial superpower in the game. If these sales go badly, we could spend most of the next decade just trying to consolidate.
hackajack
Established Member
Worst case we could rent them out for 5 years and sell them when the market recovers, property at the top end of the London market is still selling since the people buying it don't need mortgages.asajoseph said:
asajoseph
Established Member
Even if we rent them, we'll still need to continually re-value them on our balance sheet, and will almost inevitably (considering the market) end up taking sizable losses to the P&L. There's no guarantee that the property market is going to recover to pre-recession levels in 5 years either, especially as the absurd flow of credit that we saw 3 years ago looks likely to never return.
Also, I think it's worth pointing out, the vast majority of the flats we're selling are not at the top-end of the property market, and even when you are talking about the few that are in the £1m+ range, it's still a market where mortgages ARE important.
hesham
Established Member
Yes, i said revenue not profit, that relating to last years figures.
90% of the property is subject to contracts going through, the club however is not relying on the sale of these properties to ensure the running of the business, the proceeds from the sale will be used to repay capital of debt... even if we do not sell as much property as we expected we are still making enough money from our core revenue to cover the costs both operations and finance. ofcourse the sale/non-sale of the property will effect our bottom line and selling them will definitely help us but i don't think its all doom and gloom if we don't. Our club is run extremely well
with regards to the revaluation of assets asa, unless there is something crazy like an 80% crash in prices(don't see that happening), we will be ok. either way it wont matter once the flats get sold, and they will get sold eventually, there in London.. like i said we have already sold 18mill worth.
90% of the property is subject to contracts going through, the club however is not relying on the sale of these properties to ensure the running of the business, the proceeds from the sale will be used to repay capital of debt... even if we do not sell as much property as we expected we are still making enough money from our core revenue to cover the costs both operations and finance. ofcourse the sale/non-sale of the property will effect our bottom line and selling them will definitely help us but i don't think its all doom and gloom if we don't. Our club is run extremely well
with regards to the revaluation of assets asa, unless there is something crazy like an 80% crash in prices(don't see that happening), we will be ok. either way it wont matter once the flats get sold, and they will get sold eventually, there in London.. like i said we have already sold 18mill worth.
entropy13
Established Member
You're right hesham, if we can actually make a profit from the flats considering the financial situation today is more of a bonus, and if we don't, it is more of an "oh well" type of thing with some scratch in the head but we'll still be able to pay our debt.
Gooner_Stu
Established Member
Surley if push comes to shove, and the club can see that its not going to make the hoped profit on the flats, will they sell the Flats at what they can get at that time? I mean, if the debt issue becomes a liabilty and that it will effect the chances to getting into Europe, or if the financial crisis worsens. Its still an income, and it would surley still pay off a significant part of the money owed??
asajoseph
Established Member
I'd love to know the book values of the property investment developments. I've had a bit of a look through the accounts, and the only number I could find at first glance was £386mm on Freehold Property, though I suspect that includes the stadium.
Now, I personally think it's highly unlikely that anything could possibly happen that threatens Arsenal as a business, but when you're talking about property in London falling by 20% (link) before we're even officially into a recession, you'll be talking about some fairly large potential hits to the profit of the business if we see a high number of buyers backing out, and being forced to place many flats back on the open market.
And we can't significantly reduce the prices of the properties we do have to remarket, until we've completed on as many of the STC appartments as we can.
The issue for me is more about whether or not we'll become the financially potent force we were aiming to be, and if so, how long that will take to achieve. No matter what happens in the market, I think we're still quite a long way from even talking about the business as a whole being threatened. Personally, I think we're going to see a softening in our core revenue streams over the next couple of years anyway, which makes getting the Highbury Square development sold (at a good price) vitally important.
kamikaze80
Established Member
great post asa. as a practical matter, how big are deposits in the uk typically? in the states, it varies but 10% is typical. you say that property values in london have decreased 20%, but i'd imagine that that figure would be less for a highly attractive development in a desirable area like islington which is close to city centre. lets say the market price for units at highbury square have dropped 10% - even if some buyers default and walk away, we'd still have their 10% deposit, and so long as a new buyer steps in at ~90% of the old price, we'd be okay. at those price levels, it should also prevent a cascade effect from occurring once units are re-placed on the market.
i know thats greatly simplifying it and i'm making large assumptions about the price decline and the existence of new buyers and their ability to obtain financing, but i really see it as a marquee address due to its history and location and i'm thus a bit more sanguine about its prospects even in this market.
i know thats greatly simplifying it and i'm making large assumptions about the price decline and the existence of new buyers and their ability to obtain financing, but i really see it as a marquee address due to its history and location and i'm thus a bit more sanguine about its prospects even in this market.
