Club Finance Story - On Solent from 7am this morning

[Window Cleaner]

They took a £33m punt and if we go up, they could sell the club (assuming there are still Arab/Russian buyers around) and get a half decent return. We must be worth £50m+ on promotion based on being one of the few clubs with a genuine Premeirship infrastructure and debt free, with a good crowd base (about to get bigger when the only other Championship club nearby goes belly up).

 

My money is on a sale to the Chineses - the only soverign wealth fund yet to play in the football world to kmy knowledge...

 

Wouldn't that be a 33 million + Losses season 2011/12 punt? Say 40 million £.

[Matthew Le God]

Wouldn't that be a 33 million + Losses season 2011/12 punt? Say 40 million £.

 

That is still cheap for a Championship club of this size (and the assets it holds), let alone a Premier League club (which it could be in under a month's time).

[Legod Third Coming]

Wouldn't that be a 33 million + Losses season 2011/12 punt? Say 40 million £.

 

Depends on what that £33m is made up of I guess. I was just assuming that covered all their investment. Even so £40m for a £50m return, 25%. Not a bad day in the office

[Window Cleaner]

Depends on what that £33m is made up of I guess. I was just assuming that covered all their investment. Even so £40m for a £50m return, 25%. Not a bad day in the office

 

the 33 million is easy,

 

Acquistion 14 million, losses 2009/10 7.7 million,losses 2010/11 11.5 million = 33.2 million.

[buctootim]

the 33 million is easy,

 

Acquistion 14 million, losses 2009/10 7.7 million,losses 2010/11 11.5 million = 33.2 million.

 

Don't you mean additional capital investments?

[Sour Mash]

Thing is' date=' why the need to try and speculate on who is happy, unhappy? No need. Think this is a simple case of 2+2 =5. We KNOW the Leibherrs would probably sell if the price was right, nawt to do with being happy or otherwise, just different interests which is fair enough. We should still be very thankful that they have supported tehir late father's wishes and NC in delivering the plan to date - as NC has indicated, if they chose to sell, he has others waiting who would support teh fulfilment of the plan...[/quote'] Agreed.

[Jimmy_D]

As an aside, I'd imagine this along with the new training facilities will make us a shoe in for at least 'underwriter' sugar daddy status in the next FM. (Maybe even the next update.)

[Matthew Le God]

As an aside, I'd imagine this along with the new training facilities will make us a shoe in for at least 'underwriter' sugar daddy status in the next FM. (Maybe even the next update.)

 

I think I can now put a very good case together for it to the head of English research for FM13.

 

Which of Background/Foreground/Underwriter is the real decision to be made.

Edited 29 March, 2012 by Matthew Le God

[Saintandy666]

Great post by FC

[Frank's cousin]

I'm pretty sure there were people on here suggesting we were breaking even or there abouts. Were we ****. Our wage bill was huge (Lallana doesn't sign a 5 year deal for buttons when he had offers from the Premiership) and despite the decent crowds you can't cover top end Championship wages whilst in League 1 (you can't in the Championship).

 

Into the Championship and players like Cork and Sharpe will have expanded (£1m each a year maybe??) that wage bill considerably. Loses next year anyone? Jesus these Liebherrs have been brave. Thankfully it is paying off, but even they can't of expected us to go through the league. These kind of losses are exactly the reason why I've been asking questions. But I needn't have bothered as all my concerns have been washed away with the news of the debt being turned into equity. Brilliant news and fair play to those people on here telling me that the Liebherrs would do just that. You were spot on.

 

Thing is Chez - think of it this way - IF we had not committed to the 15 mil development of staplewood (Which is probably being covered by the Oxo Money) then that would in effect nearly halve those ''losses' meaning instead of 33 mil, it would be 18 mil of which 14mil was the purchase price - so as Because we had Liebherr backing we were able to reinvest that money in other areas of the business rather than using the funds generated form player sales to ensure we broke even.... considering through clever appointments and wise transfers we stand on the verge of promotion the PL in 3 seasons, would say that 4-5 mil (the loss without the oxo cash) would have not be such a big gamble - especially as we have assets worth way in excess of that which would be liquified to cover the risk if not promoted?

 

So although in theory we 'have not been breaking even', the fact remains that this is in part because we wanted to spend a huge chunk of revenue in other projects - which we could afford as the Liebherrs were supportive - I suspect that without the additional cash, we would have used the Oxo money, plus say a Lambo or Adam sale in the summmer to balance the books - It would only be a liabilty if we were in a position where our liabilities were greater than the asset value, or we were stuck with players on contracts way beyond their actual worth so impossible to shift... I agree we should always be looking to ensure the club has a sensible wage policy, but its been clear to many that NC is simply not the kind of man who would pay that level of wages if he could not GUARRANTEE that the funding would be there to cover it if needed - he has always stated provision has been made and we have had to trust him... this equity conversion shows we were right in doing so in MHO

Edited 29 March, 2012 by Frank's cousin

[Matty's Caddy]

So don't bother looking at anything financial while NC is here? Strange approach. He's doing a great job, but fans should still be aware and conscious of what is going on at their club. Also, just because NC is still here, doesn't necessarily mean the Liebherrs are happy with everything.

 

You can analyse all you like sour mash, it won't make a blind bit of difference what conclusion you come to.

If the club had been leveraged like man u, I agree that would be a concern, but there would still be fook all I could do about it

You might as well chill out and enjoy it

[The Kraken]

Thing is Chez - think of it this way - IF we had not committed to the 15 mil development of staplewood (Which is probably being covered by the Oxo Money) then that would in efecct nearly halve those ''losses' meaning instead of 33 mil' date=' it would be 18 mil[/quote']

 

The accounts are for 2010-11. So they're already around 9 months old. Some remedial work may have been done on the training ground works in that timeframe, and some design work, but only a small fraction of whatever the training ground costs will be. And you can bet we won't have spent £15M up front, so that full figure may not appear in the accounts until all work has been done and signed off.

[Frank's cousin]

The accounts are for 2010-11. So they're already around 9 months old. Some remedial work may have been done in that timeframe, and some design work, but only a small fraction of whatever the training ground costs will be.

 

Sorry Kraken you missed the point slightly - had the club NOT had the backing, I am sure that the 15 mil Oxo cash would have been set aside to cover the wage spend if we were going for a promotion push as we have done, without the guarranteed backing of the Liebherrs? This instead of investing 15 i Staplewood, we would be using that to pay off a chunk of the 33 mil or would probably ont have spent so much in the first place! My argument is taht I do not think we have a CEO who would sanction the kind of wage spend we have had without teh guarrantees in place that it would be covered.... That is what makes it so different from the risky strategies seen down the road

[The Kraken]

Sorry Kraken you missed the point slightly - had the club NOT had the backing' date=' I am sure that the 15 mil Oxo cash would have been set aside to cover the wage spend if we were going for a promotion push as we have done, without the guarranteed backing of the Liebherrs? This instead of investing 15 i Staplewood, we would be using that to pay off a chunk of the 33 mil or would probably ont have spent so much in the first place! My argument is taht I do not think we have a CEO who would sanction the kind of wage spend we have had without teh guarrantees in place that it would be covered.... That is what makes it so different from the risky strategies seen down the road[/quote']

OK, got you. And agreed.

 

It will be interesting though to see what the 2011/12 accounts are, when they come out. Revenue has increased massively, but then costs have also risen significantly (6 players arriving with only 1 leaving, plus new contracts aplenty for the players). I think we're still well short of break-even, but I expect a significant improvement on this set of accounts.

[Leicestersaint]

writing off £33m sit right for the imminent sale of the club (apparently)..?

 

does this take into account the sale of OxO?

 

No - AOC's salewas after July 2011.

 

The first point is simply bizarre - it would increase the value of the club which must now be approaching £100 million especially with promotion imminent and the investment at Staplewood. This is all good news for saints - and indicates that the Don and the Leibherrs are in it for the long haul despite waht the rumour-mongers who want to damage Saints would make out.

[Frank's cousin]

OK, got you. And agreed.

 

It will be interesting though to see what the 2011/12 accounts are, when they come out. Revenue has increased massively, but then costs have also risen significantly (6 players arriving with only 1 leaving, plus new contracts aplenty for the players). I think we're still well short of break-even, but I expect a significant improvement on this set of accounts.

 

True, but our last 2nd tier revenue (after losing teh parachutes) was around 23-26mil turnover if I recall - I suspect we have a wage bill around 13-15mil which would be managable on that turnover - remeber our last prem wage bill ws 26mil on a 48 mil turnover

[ThreeSixty]

So the 93% included Nige, NC etc's wages?

 

and Nige's compo payout to Scunny

 

and Promotion bonuses.

 

I'm not worried.

[Frank's cousin]

So the 93% included Nige, NC etc's wages?

 

and Nige's compo payout to Scunny

 

and Promotion bonuses.

 

I'm not worried.

 

Seriously NOT worried... If we had any other micky mouse, fan type chairman I might be, but as stated above - I do not believe NC would ever sanction that level of spending had he not had guarrantees the cash was there to cover it - and indeed he even saiud there was following Markus's death, but left the option open should the family wish to opt out - which would have been understandable.

[Window Cleaner]

True' date=' but our last 2nd tier revenue (after losing teh parachutes) was around 23-26mil turnover if I recall - I suspect we have a wage bill around 13-15mil which would be managable on that turnover - remeber our last prem wage bill ws 26mil on a 48 mil turnover[/quote']

 

I don't think you recall correct on our last CCC revenue,I saw an article the other day which had us down for about 14 million in revenues and 16 million in wages. I'll try to find it in the historic and post up a link,it was about sudden decline in revenues of clubs eventually going into admin.

[Frank's cousin]

I don't think you recall correct on our last CCC revenue,I saw an article the other day which had us down for about 14 million in revenues and 16 million in wages. I'll try to find it in the historic and post up a link,it was about sudden decline in revenues of clubs eventually going into admin.

 

Think the accounts show that the first season after relegation they were fell from 49 mil to 32 mil then down to 26 mil or there abouts - happy to be corrected though...

[Window Cleaner]

Think the accounts show that the first season after relegation they were fell from 49 mil to 32 mil then down to 26 mil or there abouts - happy to be corrected though...

 

But then we would have still have had PPs,in the 2008/9 season which was our last season in the CCC the figures seem to be much lower

 

http://www.onebooker.com/en/2010/09/are-premier-league-parachute-payments-distorting-the-competitive-balance-within-the-championship/

 

Although the TO given is for 2007/8 ie after the expiry of PP, doubt if it got much better in 2008/9 and of course no accounts were ever published for that year.

Edited 29 March, 2012 by Window Cleaner

[stevegrant]

When we were last in the top flight, parachute payments were only for two years and were £6.7m per year. They ran out after we missed out in the playoffs in 2007.

[Window Cleaner]

Thinking on our turnover of 2010/11 (and probably again this year).All football league clubs would have got a massive cash boost from the repromotion of Newcastle and West Brom after just one season each in the CCC/NPC,their reliquat of Parachute Payments would have gone to the Football League Solidarity fund and have been distributed principally amongst football league clubs.Don't know the breakdown division by division on that though.Could be that we got about a half million or so hand out.

[stevegrant]

Thinking on our turnover of 2010/11 (and probably again this year).All football league clubs would have got a massive cash boost from the repromotion of Newcastle and West Brom after just one season each in the CCC/NPC,their reliquat of Parachute Payments would have gone to the Football League Solidarity fund and have been distributed principally amongst football league clubs.Don't know the breakdown division by division on that though.Could be that we got about a half million or so hand out.

I'm sure I read somewhere that all of that money goes to the other Championship clubs, with none of it filtering down to the lower leagues

 

That said, if there was a trickle of money handed down to Leagues One and Two, it wouldn't have been much. Of the Football League's broadcast deal, the Championship receives 80% of the money.

[Window Cleaner]

I'm sure I read somewhere that all of that money goes to the other Championship clubs, with none of it filtering down to the lower leagues

 

That said, if there was a trickle of money handed down to Leagues One and Two, it wouldn't have been much. Of the Football League's broadcast deal, the Championship receives 80% of the money.

 

Could well be although I'm not at all sure that it hasn't been changed of late to ensure a bigger cut for the lower leagues.

Not the deal in general, just this part of it.

[The Kraken]

Thinking on our turnover of 2010/11 (and probably again this year).All football league clubs would have got a massive cash boost from the repromotion of Newcastle and West Brom after just one season each in the CCC/NPC,their reliquat of Parachute Payments would have gone to the Football League Solidarity fund and have been distributed principally amongst football league clubs.Don't know the breakdown division by division on that though.Could be that we got about a half million or so hand out.

 

Is that true? Slightly different scenario, but I'm sure when it was bein mooted that Pompey could go bust that their parachute payments would return to the PL.

[stu0x]

Hhmmm ok but I am a bit of a pessimist what if we don't as we have some real tough games still and West Ham will come good IMO???

You're missing the point. Wages were 93% of turnover for 2010-2011 (ie League One). Turnover since then has increased 70%. Assuming wages have not increased (of course they have, but we don't have accurate figures and in any event it certainly won't be a 70% increase), that makes a wages-to-turnover of 54%. In addition, that figure includes 1.4mill of one off payments that will further reduce the ratio.

 

The very high figure in L1 terms was planned for and expected. The substantially increased revenues of the Championship, and subsequent massively increased revenues of the PL, will more than compensate for it. But even if we don't get promoted, that figure will reduce considerably as a result of the turnover increase from L1 to CCC.

[Window Cleaner]

Is that true? Slightly different scenario, but I'm sure when it was bein mooted that Pompey could go bust that their parachute payments would return to the PL.

 

going bust is something different, but the PPs of repromoted clubs go to the Football League for distribution,just how I couldn't say.

So if West Ham get repromoted there would eventually be 32 million kicking around....so losing 2-0 to them when you've nothing left to play for isn't so bad after all.

[the saint in winchester]

In other news - Solent are having whatsisname, the Pompey administrator in tomorrow morning to take questions from the public. What questions shall we ask him? How about : why don't you just let it go, mate, as they are never a going concern? hehe

 

Just thinking either they are splitting these across Solent frequencies, or they are having a football morning, looking at both clubs' finances.

[Frank's cousin]

Think the Echo artical indicates that Turnover to June 2011 was 16.4 mil with 93% of that as wages = 15.7 mil wages.

 

If as they say turnover has increased 70% this year that gives a projection of 27.88 mil (although whether that includes player trading is not clear) - If we assume that 14.4 mil of last yaers wages was one offs, and lets assume 4 new players on 15k = +3.5mil or so then wages are now likely to be 17-18 mil which would be 62% of turnover which is way more like it.... however this is with the caveat that we are speculating on the turnover re player trades and the wage increases....

[Window Cleaner]

Think the Echo artical indicates that Turnover to June 2011 was 16.4 mil with 93% of that as wages = 15.7 mil wages.

 

If as they say turnover has increased 70% this year that gives a projection of 27.88 mil (although whether that includes player trading is not clear) - If we assume that 14.4 mil of last yaers wages was one offs, and lets assume 4 new players on 15k = +3.5mil or so then wages are now likely to be 17-18 mil which would be 62% of turnover which is way more like it.... however this is with the caveat that we are speculating on the turnover re player trades and the wage increases....

 

Up 70% without player trading now that would be a fair old boost.Can't see us having managed to get to 27 million with the AOC sale myself.That would be going on bottom end of the PL turnover.

[Frank's cousin]

Up 70% without player trading now that would be a fair old boost.Can't see us having managed to get to 27 million without the AOC sale myself.That would be going on bottom end of the PL turnover.

 

But our last prem legue turnover was close to 50mil with 27 from TV/Sky.... so not sure about how they could get 16.4 in L1! - although when you think about it 20000 gate averages x 23 games x say "20 ticket average is already 9.2 mil cup runs etc so its not impossible... but like you say, suspect that 70% increase includes a percentage of the Oxo monies?

[Saints foreva]

This can't be correct as I was told by a Skate that we owe the Liebherr's £35m as well as owing Aviva £30m for our Lego Stadium.

[aintforever]

Everything in that article is great news. There is no point analysing the figures because they are old and don't include player trading. It makes perfect sense to run at a loss for a few years to get back to the Prem. If they were trying to balance the books THEN I would worry.

[NickG]

Thing is' date=' why the need to try and speculate on who is happy, unhappy? No need. Think this is a simple case of 2+2 =5. We KNOW the Leibherrs would probably sell if the price was right, nawt to do with being happy or otherwise, just different interests which is fair enough. We should still be very thankful that they have supported tehir late father's wishes and NC in delivering the plan to date - as NC has indicated, if they chose to sell, he has others waiting who would support teh fulfilment of the plan...[/quote']

 

We don't know that at all.

 

For all we know they are desperate to keep the club in the family for generations...or sell in a couple of years.

 

Signs are they are here for while, but we know nothing so enjoy it!

 

These rumours of sale are just that, tittle tattle.

[SuperMikey]

You're missing the point. Wages were 93% of turnover for 2010-2011 (ie League One). Turnover since then has increased 70%. Assuming wages have not increased (of course they have, but we don't have accurate figures and in any event it certainly won't be a 70% increase), that makes a wages-to-turnover of 54%. In addition, that figure includes 1.4mill of one off payments that will further reduce the ratio.

 

The very high figure in L1 terms was planned for and expected. The substantially increased revenues of the Championship, and subsequent massively increased revenues of the PL, will more than compensate for it. But even if we don't get promoted, that figure will reduce considerably as a result of the turnover increase from L1 to CCC.

 

Great summary, and nothing to worry about in this set of figures. Even less for next year's figures when you take into account the AOC sale and the increased gate revenue and TV money.

[um pahars]

I was listening to the press pass on talksport the other week and debt was being discussed. The general opinion was that rich foregin owners were a bad thing if they loaded debt onto the club, ala Man U, or wanted their money back in the end ala Gaydamak. They all seemed to think that putting money into the club for equity was fine and the only way to go. I'm a bit ignorant about these things, but is that what's happened here? Am I right in assuming that if things go tits up, we wont owe ML's family £33mil they will just lose that money?

 

As Granty said somewhere the conversion of the debt/loans to equity should be a really positive thing as it probably removes any threat of immediate repayments etc. However a slight word of caution as after Abramovich had done the same at Chelsea David Conn of the Indy still had some doubts (think you have to look at the transaction itself and it's intention)

 

http://m.guardian.co.uk/football/2010/may/19/roman-abramovich-chelsea-loan-debt?cat=football&type=article

Edited 29 March, 2012 by um pahars

[dune]

Roll on Saturday when we can get back to the football. All these finance/new owner threads are boring me rigid already.

[Charlie Wayman]

We won't do a Skates. We are run by ze Germans.

 

I assume you are not an idiot so how come you didn't know they are Swiss?

[dune]

I assume you are not an idiot so how come you didn't know they are Swiss?

 

A cow can be born in a stable but that doesn't make it a horse.

[Charlie Wayman]

Wonder if the way they "gave" money to the club in "exchange" for shares is a way around the new finance rules coming in?

 

That was my suspicion as well. Having spent a lifetime in business, what one learns is that nothing is as simple as it is stated to be. There are always deeper and darker motives for these superficially glowing PR pronouncements. Sow's ears are always presented as Silk Purses.

[Frank's cousin]

That was my suspicion as well. Having spent a lifetime in business, what one learns is that nothing is as simple as it is stated to be. There are always deeper and darker motives for these superficially glowing PR pronouncements. Sow's ears are always presented as Silk Purses.

 

See if you had only said 'deeper' motives, I think only the most naive would not have agreed with you.... but by adding the typically foreboding agenda driven 'darker' you become guilty of the very PR (albeit cynically negative) you are critical of, and thus lose any credibilty in the post...

[Panda]

I love the way people challenge official statements. If they expect no return on their investment then they HAVE written it iff. If you think they have not - show me where in the Leibher accounts it is shown as an asset or debtor.

 

With respect, I did not challenge an 'official statement' I challenged the way the press worded it and the implied slant on it. The 'debt' has not been 'written off', it has been transferred to equity. The Leibher's do expect a return on their investment, to suggest they don't is ridiculous.

[Brizzie Saints]

Dont know if already posted from the Beeb

 

http://www.bbc.co.uk/sport/0/football/17547804

Southampton owners convert £33m loan into shares

 

 

Southampton have revealed that £33m of loans invested in the club by the estate of former owner Markus Liebherr will not have to be paid back.

The money was invested in the club over the two seasons to June 2011, but has now been converted into shares, removing it as a liability.

 

Chief financial officer Gareth Rogers told BBC Radio Solent: "Effectively the club no longer owes that money."

Saints made a net loss of £11.5m in winning League One promotion last term.

Asked if the club no longer faced the prospect of having to repay the loan, Rogers replied: "Absolutely."

Southampton were in administration and had just been relegated to League One when Swiss businessman Liebherr bought the club in 2009.

He appointed Italian banker Nicola Cortese to run the club as executive chairman, and announced a five-year plan to return the Saints to the Premier League. Liebherr died in August 2010 but Cortese remains in charge.

Former Southampton owner Markus Liebherr

 

And having guided the club into the Championship last season, and with Saints currently enjoying a five-point lead at the top of the division, manager Nigel Adkins now looks likely to achieve consecutive promotions.

Elsewhere the accounts show total revenue excluding transfers rose by 11% to £16.4m and that group wages made up 93% of turnover.

But Rogers said supporters should not be concerned about the latter figure.

"In isolation you could say it's a very scary figure, but in the context of the [five-year] plan it was expected. It includes £1.4m of one-off payments that won't re-occur."

He also acknowledged wage costs have risen in the Championship, and would rise further if the club goes into the Premier League, but insisted the figure was being carefully matched with the increase in revenues.

"The loss incurred to date is absolutely beneath what we expected, so perverse as it sounds, we're pleased with that size of loss," he said.

"I am absolutely confident fans need not be concerned about the future financial stability of the club.

"Nothing has changed operationally or strategically with Markus not being here. Nicola will drive the club forward and has every plan to do so."

Edited 29 March, 2012 by Brizzie Saints

[Chez]

the 70% increase in turnover will include the £12m AOC transfer fee, take that out of the equation and our wages to turnover ratio is going to be over 100% for 2011/12. But turnover DOES include player sales so it will be reduced in the next set of accounts. Removing the debt is what matters most. Huge sigh of releif from me. Blimey what an amazing three years we've had.

Edited 29 March, 2012 by Chez

[Third Division South Days]

I wouldn't be surprised if the current years accounts shows an additional share issue to cover the SW development.

[Golden Balls]

My god. A quick visit to skate forums and all of a sudden we're on the verge of admin. lol, they haven't got a clue.

 

 

WIFM

[stu0x]

I was discussing this story relatively briefly yesterday with a good acquaintance of mine. As an indication, he is now semi-retired, having worked his entire career as CFO or Finance/Ops Director in FTSE100 level organisations, including a stint a few years back with a Top 6 Premier League club. He currently 'helps out' with a L1 club. So he knows more than a small amount about 1) corporate accounting and 2) football club structure.

 

Anyway, his opinion was that the whole loan-to-shares thing made a lot of financial sense, and was a positive (rather than negative) indicator in terms of the long-term intentions of the owner. We chatted about the P&L figures that were released, and he said from his limited (!?) knowledge Saints are considered to be a very astutely and prudently run club. Yes we may play with sums that his current club and most others can only dream about, but it's all relative to income and investment streams, which in our case absolutely dwarf most other clubs, and the statement was absolutely nothing to be concerned about. He then utterly bamboozled me with some financial terms.

 

Anyway, what I took away from it was that if someone who actually understands what this accounting malarkey is all about seems to be unconcerned, I'm not going to get too worked up about the half-arsed 'analysis' of some people on here who have absolutely no professional understanding or experience of it.

[Frank's cousin]

I was discussing this story relatively briefly yesterday with a good acquaintance of mine. As an indication, he is now semi-retired, having worked his entire career as CFO or Finance/Ops Director in FTSE100 level organisations, including a stint a few years back with a Top 6 Premier League club. He currently 'helps out' with a L1 club. So he knows more than a small amount about 1) corporate accounting and 2) football club structure.

 

Anyway, his opinion was that the whole loan-to-shares thing made a lot of financial sense, and was a positive (rather than negative) indicator in terms of the long-term intentions of the owner. We chatted about the P&L figures that were released, and he said from his limited (!?) knowledge Saints are considered to be a very astutely and prudently run club. Yes we may play with sums that his current club and most others can only dream about, but it's all relative to income and investment streams, which in our case absolutely dwarf most other clubs, and the statement was absolutely nothing to be concerned about. He then utterly bamboozled me with some financial terms.

 

Anyway, what I took away from it was that if someone who actually understands what this accounting malarkey is all about seems to be unconcerned, I'm not going to get too worked up about the half-arsed 'analysis' of some people on here who have absolutely no professional understanding or experience of it.

 

Thing is stu, even without the benefit of extensive experience in Financial management, its relatively easy to see, if looked at in detail, that there was never any concern - its also a matter of trust. I trust NC. I admit most of that is based on the simple fact that Markus trusted him implicitly and given the ethical way he ran his business - I felt we were in safe hands - right from the start NC said we were debt free and we remained so as IMHO the intention was always to invest cash set aside for the project and and convert to equity at the appropriate time. The goal is self financing and I am 100% confident we will schieve that, having invested my guess will be 50mil for a club worth more than that in the prem... a nice modest return for what was a semi - retirement but still investment opportunity for Markus.

[hutch]

Dont know if already posted from the Beeb

 

http://www.bbc.co.uk/sport/0/football/17547804

Southampton owners convert £33m loan into shares

 

 

Southampton have revealed that £33m of loans invested in the club by the estate of former owner Markus Liebherr will not have to be paid back.

The money was invested in the club over the two seasons to June 2011, but has now been converted into shares, removing it as a liability.

 

Chief financial officer Gareth Rogers told BBC Radio Solent: "Effectively the club no longer owes that money."

Saints made a net loss of £11.5m in winning League One promotion last term.

Asked if the club no longer faced the prospect of having to repay the loan, Rogers replied: "Absolutely."

Southampton were in administration and had just been relegated to League One when Swiss businessman Liebherr bought the club in 2009.

He appointed Italian banker Nicola Cortese to run the club as executive chairman, and announced a five-year plan to return the Saints to the Premier League. Liebherr died in August 2010 but Cortese remains in charge.

Former Southampton owner Markus Liebherr

 

And having guided the club into the Championship last season, and with Saints currently enjoying a five-point lead at the top of the division, manager Nigel Adkins now looks likely to achieve consecutive promotions.

Elsewhere the accounts show total revenue excluding transfers rose by 11% to £16.4m and that group wages made up 93% of turnover.

But Rogers said supporters should not be concerned about the latter figure.

"In isolation you could say it's a very scary figure, but in the context of the [five-year] plan it was expected. It includes £1.4m of one-off payments that won't re-occur."

He also acknowledged wage costs have risen in the Championship, and would rise further if the club goes into the Premier League, but insisted the figure was being carefully matched with the increase in revenues.

"The loss incurred to date is absolutely beneath what we expected, so perverse as it sounds, we're pleased with that size of loss," he said.

"I am absolutely confident fans need not be concerned about the future financial stability of the club.

"Nothing has changed operationally or strategically with Markus not being here. Nicola will drive the club forward and has every plan to do so."

It might be semantic, but IMO that's poor reporting. When it was a loan of £33m, they hadn't invested anything. Think Chainrai, although I'm sure the terms were better. At the point when it was converted to equity, it became an investment.