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Gao Family Partnership (80% Stake)

JoeShmoe

By JoeShmoe,
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Graffito

Graffito

Posted
Posted

Gareth Rogers left after 6 years service to pursue other opportunities. Odd timing considering such an exciting takeover was imminent.

 

I'd be interested to know how the new partnership intends growing revenue. I read some rumour about academies to be set up in the Far East but there's been precious little concrete information for the fans. The Guardian has David Conn onto the story. He's just raising questions at the moment but some clarification from the club would be good.

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verlaine1979

verlaine1979

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Gao couldn't get his money out of China to buy us due to government financial regulations so borrowed the money from an off short bank to finance the deal while using his off shore assets as collateral.

 

Considering the Lander deal was also to be financed primarily through debt, I don't think it was really a question of whether he could get 'his' money out of China, but just whether he'd be able to borrow money from within the country to purchase a foreign asset. Either way, the club will now presumably be financing the repayments of the funds used to acquire it, quite possibly to the detriment of our ability to compete in the transfer market.

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Batman

Batman

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Considering the Lander deal was also to be financed primarily through debt, I don't think it was really a question of whether he could get 'his' money out of China, but just whether he'd be able to borrow money from within the country to purchase a foreign asset. Either way, the club will now presumably be financing the repayments of the funds used to acquire it, quite possibly to the detriment of our ability to compete in the transfer market.

 

but we have been told that this deal is to move us forward and make us stronger - financially

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doggface

doggface

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Posted

This is concerning. The club need to be transparent on this.

 

The noises that were fed to the club pet journos was now the club was effectively debt free, so somebody is being economical with the truth or lying at best.

 

 

"I wonder how much money ,if any , he'll have to take out of the club, to service the debt."

 

 

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doddisalegend

doddisalegend

Posted
Posted (edited)
This is concerning. The club need to be transparent on this.

 

The noises that were fed to the club pet journos was now the club was effectively debt free, so somebody is being economical with the truth or lying at best.

 

 

"I wonder how much money ,if any , he'll have to take out of the club, to service the debt."

 

 

 

 

 

Well I guess technically the club is debt free at the moment the new owner has seemingly borrowed the money own his assets. The question is whether he will try and pass the debt onto the club what ever I assume as he is now 210million in debt he isn't going to have any money to invest in the club.

Edited by doddisalegend
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aintforever

aintforever

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Posted
We'll I guess technically the club is debt free at the moment the new owner has seemingly borrowed the money own his assets. The question is whether he will try and pass the debt onto the club what ever I assume as he is now 210million in debt he isn't going to have any money to invest in the club.

 

Problem is if the debt gets passed onto the club and we get relegated it's pop time again.

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Red

Red

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Posted
Could this end up like the Glaziers' purchase of Man U when the loan is transferred immediately to the club?

 

And look where MU ended up as a result! Virtually all businesses and clubs are funded by investment or loans - shareholders in any company are loaners in a way. No one is going to incur a debt (personal, loans, or whatever) of over £200M to then p*ss it away. Gao is looking to grow his investment and the best way to do that is make us more valuable not less, i.e. to grow us and make us worth much much more.

 

If all he was interested in was money - he would cash all his assets (cira £1.4 Bn) and wallow in his cash pile! Sure there needs to be shrewd management of the business to balance debt versus growth, but most businesses seem to manage well, and our Gao seems to be bit of an expert - policeman to billionaire in short time, compared to Kate (not knocking her by any means) inheriting dad's companies and wealth and still having to sell to fund an impending tax bill (allegedly). Also most of ML's other business seem to have been closed down - certainly not grown. Know where I would put my money.

 

Also, the truly naive (absurd?) assumption that Gao raises £200M "debt" to pass on to the club and then plough every bit of SFC profit in to servicing /paying off that debt for the next 10 to 15 years to get back to square one is incredible. Remember he has secured the loans against his personal assets, so same as if you default on your mortgage you lose your house and probably a great deal more. He would be better off putting his money in a long term bond and make greater return. Even if his motives are purely financial, the best way he benefits is if we grow and become more profitable, which means we either sell a shed load more shirts or improve in the PL etc. or both ideally, which is good enough for me.

 

Blokes just put £200M+ of his own money or fifth of his wealth (one way or the other) on ensuring our success - how many others were willing to do that?

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shurlock

shurlock

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Posted
And look where MU ended up as a result! Virtually all businesses and clubs are funded by investment or loans - shareholders in any company are loaners in a way. No one is going to incur a debt (personal, loans, or whatever) of over £200M to then p*ss it away. Gao is looking to grow his investment and the best way to do that is make us more valuable not less, i.e. to grow us and make us worth much much more.

 

If all he was interested in was money - he would cash all his assets (cira £1.4 Bn) and wallow in his cash pile! Sure there needs to be shrewd management of the business to balance debt versus growth, but most businesses seem to manage well, and our Gao seems to be bit of an expert - policeman to billionaire in short time, compared to Kate (not knocking her by any means) inheriting dad's companies and wealth and still having to sell to fund an impending tax bill (allegedly). Also most of ML's other business seem to have been closed down - certainly not grown. Know where I would put my money.

 

Also, the truly naive (absurd?) assumption that Gao raises £200M "debt" to pass on to the club and then plough every bit of SFC profit in to servicing /paying off that debt for the next 10 to 15 years to get back to square one is incredible. Remember he has secured the loans against his personal assets, so same as if you default on your mortgage you lose your house and probably a great deal more. He would be better off putting his money in a long term bond and make greater return. Even if his motives are purely financial, the best way he benefits is if we grow and become more profitable, which means we either sell a shed load more shirts or improve in the PL etc. or both ideally, which is good enough for me.

 

Blokes just put £200M+ of his own money or fifth of his wealth (one way or the other) on ensuring our success - how many others were willing to do that?

 

Drivel.

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DistantSaint

DistantSaint

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Some people seem to forget that all clubs are serviced using debt. Do you think the owners of Chelsea and Man City just give the money to the club as a present to spend. Man City are in over £1Bn worth of debt! Now that is fine as long as the guy in charge wants to carry on.

 

Mr Gao has taken this loan against his own assets not the club. Now if he wants to transfer the debt to the club then that will sit there until he sells, or further investment is secured.

 

The only real worry I have is how he is planning to get any more money into the club for investment if he cant release the money from his company?

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verlaine1979

verlaine1979

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Posted
Some people seem to forget that all clubs are serviced using debt. Do you think the owners of Chelsea and Man City just give the money to the club as a present to spend. Man City are in over £1Bn worth of debt! Now that is fine as long as the guy in charge wants to carry on.

 

Mr Gao has taken this loan against his own assets not the club. Now if he wants to transfer the debt to the club then that will sit there until he sells, or further investment is secured.

 

The only real worry I have is how he is planning to get any more money into the club for investment if he cant release the money from his company?

 

Even assuming your basic premise is valid (it isn't, as owner debt can be converted to equity) this is a false equivalence. If you borrow money from a financial institution they charge interest and will insist on a defined and largely unyielding repayment schedule. If you 'borrow' money from a rich owner, then yes, the debt can theoretically sit there until the club is sold unless they insist on clawing the money back. I've no idea what the going rate for the loans Gao has taken out will be, but for reference, the Glazers used various sources of debt during their acquisition and refinancing of Man U that attracted interest rates of between 8-16%, which if the rumour of a ten year repayment schedule is true could see the club coughing up nearly a van Dijk per year in capital and interest repayments, just for the privilege of having a new owner.

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saint1977

saint1977

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Posted
Even assuming your basic premise is valid (it isn't, as owner debt can be converted to equity) this is a false equivalence. If you borrow money from a financial institution they charge interest and will insist on a defined and largely unyielding repayment schedule. If you 'borrow' money from a rich owner, then yes, the debt can theoretically sit there until the club is sold unless they insist on clawing the money back. I've no idea what the going rate for the loans Gao has taken out will be, but for reference, the Glazers used various sources of debt during their acquisition and refinancing of Man U that attracted interest rates of between 8-16%, which if the rumour of a ten year repayment schedule is true could see the club coughing up nearly a van Dijk per year in capital and interest repayments, just for the privilege of having a new owner.

 

Quite. Will keep an open mind but not getting a good feeling.

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Simon3737

Simon3737

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Posted

Debt isn't necessarily a bad thing or a good thing. What matters is two things:

 

1) Are the debt repayments affordable/sustainable in all circumstances (e.g. if we got relegated, TV money dropped, interest rates rise etc)?

 

2) How much do the annual debt repayments cost the club (because that's money we can't spend on transfers, wages etc) and is this cost offset by the benefits of the investment (bigger stadium revenue, qualifying for Europe regularly, Chinese shirt sales etc)?

 

If this is borrowing to invest long-term in the club to sustainbly 'move to the next level' then great. If it's going to be wasted on buying 32 year old players, gold toilets for the Board or large dividend payments to the Gao family then we should start panicking.

 

Unfortunately, I doubt us fans will ever find out if the debt is sustainable or how much it costs to repay because we're a privately owned company.

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hutch

hutch

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Posted

The two fundamental questions are not answered in any of the available information.....

 

Is the club part of the security package put up by the buyer?

 

Has any part of the club's income streams been assigned to the lender as security?

 

 

If the answer to both is no then we are probably fine. If the answer to either, and particularly the second one, is yes then the good times are probably behind us.

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Sour Mash

Sour Mash

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Posted
Debt isn't necessarily a bad thing or a good thing. What matters is two things:

 

1) Are the debt repayments affordable/sustainable in all circumstances (e.g. if we got relegated, TV money dropped, interest rates rise etc)?

 

2) How much do the annual debt repayments cost the club (because that's money we can't spend on transfers, wages etc) and is this cost offset by the benefits of the investment (bigger stadium revenue, qualifying for Europe regularly, Chinese shirt sales etc)?

 

If this is borrowing to invest long-term in the club to sustainbly 'move to the next level' then great. If it's going to be wasted on buying 32 year old players, gold toilets for the Board or large dividend payments to the Gao family then we should start panicking.

 

Unfortunately, I doubt us fans will ever find out if the debt is sustainable or how much it costs to repay because we're a privately owned company.

How can it be a good thing? Your post doesn't make sense.
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Simon3737

Simon3737

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Posted
How can it be a good thing? Your post doesn't make sense.

 

It can be a good thing if what we've been told is true, that the Gao family 'partnership' is going to enable the club to increase investment and enable us to 'move to the next level'. A level Kat could not afford to fund.

 

If the investment is affordable and sustainable (and greater than Kat would have spent), then having this funded by debt is a 'price worth paying'. It's basically like taking out a re-mortgage to pay for home improvements which will add value to your home and earn enough to both repay the mortgage and still earn a profit.

 

If the Times article is true and Mr Gao isn't going to increase spending, that suggests we've been lied to and the debt is just to enable him to funnel money out of the club by paying dividends to himself to repay his personal debt. If that's true, I'm afraid 'the Southampton way' will rapidly look more like the P*rtsm*uth way!

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benjii

benjii

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Posted

It all sounds a bit **** but as long as we retain a decent day to day management team and structure then hopefully there is little actual footballing impact.

 

When he appoints his nephew as President of Transfers, or whatever, the writing will be on the wall!

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alpine_saint

alpine_saint

Posted
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Great so the club is in real debt again.

 

I find the analogy to Chelsea and Mayoo having debts to be bizarre.

 

They have massive commerical interests

 

They have a massive fan base and much higher worldwide profile

 

They win things

 

We are not Chelsea or Manyoo

 

This takeover is sh*t. Markus was unique. We wont find another saint like him to bail us out again.

 

Annoyed at Frau Liebherr.

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rooney

rooney

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We shall have to make a credit search in the next few weeks on St Marys Football Group Ltd to see what changes have been made within the clubs financial arrangements. By then the Companies Register should have been brought up to date.

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trousers

trousers

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Posted
We shall have to make a credit search in the next few weeks on St Marys Football Group Ltd to see what changes have been made within the clubs financial arrangements. By then the Companies Register should have been brought up to date.
Do we know whether Goa invested in St Mary's Football Group or Southampton Football Club Ltd? And does it make any difference either way?
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trousers

trousers

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Posted
Gareth Rogers left after 6 years service to pursue other opportunities. Odd timing considering such an exciting takeover was imminent.

 

Agree. My hunch is that if we knew why Rogers left it would shed a fair amount of light on the circumstances behind the Gao takeover / partnership.

 

Gotta be someone ITK on that out there, surely? AR-10? ;)

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trousers

trousers

Posted
Posted
No and no (imo)
Katharina resigned from 'Southampton Football Club Ltd' before the takeover but not 'St Mary's Football Group'. Could that mean she is still the 100% of the 'parent company' that the football club resides under? I've no idea how this company hierarchy malarkey works so equally have no idea about the implications of any of this (Does it show?!)
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trousers

trousers

Posted
Posted (edited)
So essentially this takeover has no positives at all apart from making kat a bit richer? How does she have our best interests at heart in that circumstance?
Maybe she needs the money for something else? (the supposed tax bill on Markus's estate for example?)

 

So, in the scenario where she needed to raise funds for personal reasons she had two options:

 

1) maintain 100% ownership of Saints and realise the money she needs out of the club profits going forward, thus reducing the amount of money available in the club for maintaining the same levels of self sufficiency

 

Or

 

2) sell 80% of the club to someone who she is convinced will maintain the same level of self sufficiency that she's been able to uphold over recent years, thus not needing to tap into club profits as much as if she'd stayed on 100%

 

So, could it be argued that by taking option 2 she has, potentially, left the club in the best financial position overall, all things considered? i.e. the financial status quo has been maintained rather than us taking a step backwards?

 

Dunno. Just flopping it out there, so to speak

Edited by trousers
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Faz

Faz

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Posted
So essentially this takeover has no positives at all apart from making kat a bit richer? How does she have our best interests at heart in that circumstance?

 

Well, the Chicken Licken brigade are now out in full force.

 

I can understand why some are nervous about the takeover, but I think Kat has earned our trust on this, and will wait to see what actions the new owner takes rather than jumping at shadows. Not that any of us has any choice in the matter.

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hutch

hutch

Posted
Posted
Katharina resigned from 'Southampton Football Club Ltd' before the takeover but not 'St Mary's Football Group'. Could that mean she is still the 100% of the 'parent company' that the football club resides under? I've no idea how this company hierarchy malarkey works so equally have no idea about the implications of any of this (Does it show?!)

I think you're confusing directors with shareholders. There is no requirement for the two to be connected.

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angelman

angelman

Posted
Posted
Great so the club is in real debt again.

 

I find the analogy to Chelsea and Mayoo having debts to be bizarre.

 

They have massive commerical interests

 

They have a massive fan base and much higher worldwide profile

 

They win things

 

We are not Chelsea or Manyoo

 

This takeover is sh*t. Markus was unique. We wont find another saint like him to bail us out again.

 

Annoyed at Frau Liebherr.

 

Is it worth pointing out that the debt lies with Gao rather than SFC?

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angelman

angelman

Posted
Posted

You see, you have used the word "potentially". That may or may not turn out to be true, but people seem to have come to what ever conclusion they have while not knowing any of the facts. Supposition and assumption. Much better to get all exercised about it when it actually does happen. That is unless you like to do the "I told you so" routine.

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darren2

darren2

Posted
Posted

Right, I'm as concerned as anyone, and have been from the start. But the article only states that extra funds won't be made available DURING THIS TRANSFER WINDOW. But that's pretty straightforward, and as we'd expect. Don't get me wrong, I'm still concerned. But lets not wet our knickers over newspaper wording.....

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