The Official Arsenal Board / Takeover etc thread

[kamikaze80]

btw, note how the fat russian says he'll never sell his shares as long as wenger is manager. of course not, wenger is a money machine. what a money-grubbing tosser. we should issue a press release saying joe kinnear is our new manager and dennis wise and damien comolli have been named our new co-directors of football and have been given a 70m warchest, wait for usmanov to sell his shares, then issue another press release saying we were just kidding.

 

[Feanor]

Man, how let the bean-counters out??? I'm not so concerned about the child-molesting russian, I'm more interested in the reports that ****bramovich took an 11 billion $ hit. Hope Chelski go bankrupt, couldn't happen to a nicer team.

 

[hackajack]

btw, note how the fat russian says he'll never sell his shares as long as wenger is manager. of course not, wenger is a money machine. what a money-grubbing tosser. we should issue a press release saying joe kinnear is our new manager and dennis wise and damien comolli have been named our new co-directors of football and have been given a 70m warchest, wait for usmanov to sell his shares, then issue another press release saying we were just kidding.

Meanwhile 60,000 supporters like me who weren't in on the scam will be found floating face down in the Thames.

 

[hesham]

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.

Agree with that, Its definitely going to slow our growth down to become one of the 'super power' clubs of the world. however real estate isn't our primary business though so we should come out of it ok, yes sale of most of the properties are subject to contract but there is a commitment there and people wanting to buy, people walking away from their deposits is not something they are going to do lightly. im hopeful that we have actually managed to finish up our business before the economy really starts to effect the average person.

Its things like this that show how important it is that we have a manager like AW. if times do start to get a bit rough financial for the club, there is no manager in world football who could keep us at the level we are now with limited resources

 

[hackajack]

My understanding is that we've ploughed about £100M into the development and projected a return of around £200M with a profit of £100M based on property price projections in 2003. When the property market was blazing away a year or so back good old PHW was talking about raking in £300M with a profit of £200M. I'd guess we're still OK for at least the originally forecast numbers (and stone cold certs to get the £100M back next year) even if we had to wait a year or two to get the upside.

 

[asajoseph]

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.

The problem is, with sales volumes as low as they are, it's hard to get a meaningful figure, and work things out with any comfort on an area-by-area basis. As I said in my first post, the Arsenal development has a lot going for it, and I think it's going to be outstanding when it's finished. But nevertheless, if I've put down a 10% deposit on it, and am hearing rumours of 20% falls already, before a recession has really kicked in, I'm going to be feeling very nervous about completing on a property that I'm paying too much for.

I think we're at risk from two directions:

1 - There could be people out there with who just aren't able to raise the balance payable on flats they've signed up for, because the assumptions they made about mortgage rates a year or two ago were so wildly underestimated. There will also be people who just can't borrow the type of money that's required any more, due to lenders tightening the criteria for who they'll lend what. Chances are, most people who could raise a 10% deposit are in a financial situation stable enough to be able to still afford the rates hikes, and convince the banks to lend to them, but I'd be surprised if this doesn't happen at all.

2 - There will be a lot of investors who'll see prices drop significantly and feel that if they walk away from their deposit now, they'll still be better off by investing their money in a better property, or indeed waiting for the same homes to come back on the market at a reduced price. The 10% for these people is now a sunk cost - if the market falls by 15% or more (which is very possible, even in an area like islington), despite the extra hassle, many will be considering walking away from the cash they've put down, and get more home for their money by investing what they have left in a different property.

A lot will depend on people's individual circumstances really - for example, you can't borrow 100% of the value of your property any more, as the lenders will be extremely conservative about the valuations of the properties they're lending against in a falling market. So people will have to raise deposits all over again if they decide to walk away from the Highbury apartments. For some, that will be easy, and these people are most likely to back out. For others, even if they could save more money in the long term, they won't really be able to get the same amount of money together quickly, and will pay over-the-odds for a property because it's their only realistic chance of buying. But still others could walk away simply because they don't want to take on the mortgage, and additional financial commitments with the economy as it is, and the housing market as uncertain.

As I said above, I think these sales represent a big challenge for the club - property may not be our core business, but a major part of the plan for financing our stadium move was based on this development, so there really is a lot at stake here. From reading the comments contained within the annual report, I think the club recognise this, and will be doing their best. Furthermore, I think that one of the reasons the club / Arsène has been so financially conservative over the last couple of seasons, is because he's been aware of this. Until that money's in the bank, it's not guaranteed, and we could well find ourselves far tighter for money than we thought we would be.

 

[tactica442]

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)?

First, yes I was being sarcastic.

Second, please don't be offended. You are entitled of your opinion and so am I.

 

[tactica442]

I don't think there would be a huge impact on the sale of Highbury apartment, even given the current economic climate. It's unlikely people would take 10% loss of their flats' values and walk away. It's still no small money. There might be a few people but I doubt there would be many. Highbury apartments are no ordinary apartments. I don't think the values of the properties can be evalauted like other household properties.

I think this due income will strengthen the club's debts. But is this going to make Wenger more willing to spend? No. I kinda give up on the hope of Wenger to spend 'properly' since he default his promise this summer.

 

[asajoseph]

don't think there would be a huge impact on the sale of Highbury apartment, even given the current economic climate. It's unlikely people would take 10% loss of their flats' values and walk away. It's still no small money. There might be a few people but I doubt there would be many. Highbury apartments are no ordinary apartments. I don't think the values of the properties can be evalauted like other household properties

It depends on what you mean by 'unlikely', but I think you're under-estimating the potential downturn we're currently in the process of seeing unfold in the property market.

You aren't going to spend £20k on a car you've put a deposit of £2k on, if another dealer down the street is selling a similar, or comparable car for £15k. It's a lot of money to walk away from, but if the market continues in decline, there's a pretty good chance that it could end up making financial sense for some people to do so.

Furthermore, you DO have to take into consideration the value of the surrounding market, because you're talking about the substitute products here. How many of these people do you think are only willing to buy a property in the old Highbury Stadium, and would not consider purchasing anything else? How many do you think are not sitting at home wondering how much extra they could get for their money if they take their money elsewhere, rather than pay full whack for a Highbury property?

Each case will, of course, work on an individual level, but if the market forces are all pulling together in the same direction (and right now, that's away from Highbury Square), more and more people will be swayed. There are a lot of flats still to be sold - we need as many to close at the original price as possible, and be able to re-market those that do fall through at a markdown smaller than the general trend in house-prices.

Is that possible? Yes. Is it a foregone conclusion? In this market, absolutely not.

 

[kamikaze80]

i stayed in balham a few months ago and saw loads of houses for sale, but have house prices dropped that much in central london (inside zone 2)? they havent dropped that much in manhattan, although volume is low as people are waiting on the sidelines hoping for prices to fall or for some signs of stability in the markets. also, as you said, many are having trouble getting financing.

i guess i just dont see the highbury square flats as being totally fungible - it's a marquee site. how many flats are there in london where you say the name and everyone instantly knows where youre talking about? i'd bet many of the purchasers are arsenal supporters or were hoping to sell to one later, and so are willing to pay a premium. then again, i guess you'd argue that that premium was already built into the sale price, which is no longer the market price. =\

 

[Anzac]

Didn't I read somewhere that last year we increased our development to upgrade the apartments towards the upper end of the market? Something about this being done in preparation to the current economic down turn in property values, and that the upper end of the property market is supposed to be the least affected in regards to the down turn.

 

[hackajack]

i stayed in balham a few months ago and saw loads of houses for sale, but have house prices dropped that much in central london (inside zone 2)? they havent dropped that much in manhattan, although volume is low as people are waiting on the sidelines hoping for prices to fall or for some signs of stability in the markets. also, as you said, many are having trouble getting financing.

i guess i just dont see the highbury square flats as being totally fungible - it's a marquee site. how many flats are there in london where you say the name and everyone instantly knows where youre talking about? i'd bet many of the purchasers are arsenal supporters or were hoping to sell to one later, and so are willing to pay a premium. then again, i guess you'd argue that that premium was already built into the sale price, which is no longer the market price. =\

 

[asajoseph]

I'm on my way to a job interview, so will have to keep this brief - I think the thing to remember is that firstly, when you walk around estate agents windows at the moment, the prices you're seeing are well, well above the prices they're selling these properties for. It will take some time for Londoners to get out of the mentality of the housing boom, and being able to sell their properties for stupid money. A friend of mine's trying to sell his flat in Holloway at the moment, and is getting offers on average 10-20% below the agent's price. He's had one offer only that he's accepted, but that bidder has gazundered him 3 times now.

The other thing to remember is that the majority of these 600 flats are in the sub £1m market. Though most still cost a lot of money, and the purchasers will be very wealthy, these aren't buyers who are only going to be interested in the prestige of the property, and will want a Highbury appartment regardless of the cost. You're right - the question of the value of the premium on Highbury Square is crucial. But as you say, that will have partly been priced in on the original sale, and regardless, it will be under as much deflationary pressure as everything else whilst the credit crunch takes hold.

 

[patrick42uk]

Job interview ASA? You didnt lose your job did you?

 

[asajoseph]

More or less - a victim of the Credit Crunch mate.

 

[patrick42uk]

Sorry to hear that. We have some people being let go where i work. Really unfortunate business.

I'm sure you'll get back on your feet

 

[asajoseph]

Cheers mate.

It's not too bad really though - I've just had my first firm offer, and have really landed on my feet compared with a lot of people.

Difficult times we're living in, however.

 

[Gooner_Stu]

On the Apartments, there was a Q&A in the matchday programme on the Highbury Flats, with Ken Friar. And it relates somewhat to whats been said here about the Sales and prices (and the looming recession). Just 2 of the questions for those who didnt go or have access to the Matchday Programme.

Q: How many apartments have been sold?
A [Ken Friar]: here are a total of 680 apartments in the development of which 655 appartments have been marketed so far. Of these, 598 have been already been pre-sold, which represents over 90 per cent of the development, a figure that we are obviously extremely pleased with. As mentioned, over 90 purchasers have completed so far, generating some £39million of sales income

and also

Q: There has been some suggestions that a significant number of purchasers have pulled out of the development. Is this true and if so, why do you think that is?
A: Absolutley not, this is completely untrue. To date, we have had just two purchasers who, due to personal circumstances, had to pull out and both of these were over 6 months ago. As it stands, we believe that we continue to outperform the market and indeed a recent independant valuation by Colleys concluded that all of the Highbury Square apartments have exceeded the prices contacted to be paid for them. However, we are not complacent or short-sighted about the current economic climate and with this in mind, we have enlisted the support of Savills Private Finance to assist purchasers in achieving finance where they require it.

and finally, if anyone was wondering....

Q: What types of properties are still for sale?
A: There are only 57 Units which are unsold and these are a mix of the one and two bedroom apartments.

Im not sure that answers all the questions we've been asking but I feel somewhat more at ease of this whole apartments and the housing market as it is. I see the club is making steps to ensure that the people who are buying them can do (with the private financer), although i dont believe a deal is done until the club as the money in the bank. But thats just me
There was other questions asked, but not that they bore much relevance to the thread, and also i couldnt be arsed to type them all out since i cant find an actually E-Link (and if someone does, please link it lol)

 

[tactica442]

Thanks for typing the report, Stu. I think arse.com will put a pdf version of the matchday programme. They have done it in the last two seasons so I guess they should have continued doing so. I haven't checked it this season though.

 

[banduan]

Makes me sad. Wish I was loaded enuff to own one of those beauts.