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Stadium refinancing idea

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Ale taster

Ale taster

Striker
Just listened to Mr Donald's podcast for the second time and his idea (which is just that at this stage and may come to nothing) of securing £40m of borrowing against half the value of the ground to buy, for example, four hotels at £10m each that would each generate £2.5m per annum to be ploughed straight back into the team to help us compete against other clubs parachute payments in the Championship.
I think this makes perfect sense if done prudently which I trust SD would, but it does expose our ground to an element of risk.
What do the financial savvy think ?
@Grumpy Old Man etc. etc.
 
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Ale taster said:
Just listened to Mr Donald's podcast for the second time and his idea (which is just that at this stage and may come to nothing) of securing £40m of borrowing against half the value of the ground to buy, for example, four hotels at £10m each that would each generate £2.5m per annum to be ploughed straight back into the team to help us compete against other clubs parachute payments in the Championship.
I think this makes perfect sense if done prudently which I trust SD would, but it does expose our ground to an element of risk.
What do the financial savvy think ?
@Grumpy Old Man etc. etcp
Click to expand...
That’s not a bad idea business wise.

The club has an asset that stands empty most of the time and doesn’t make a return. Use some of the asset value to generate more return on capital employed.

Just need to make sure that they don’t lose control of the SoL and that they invest in profitable hotels.
 
EchoMan said:
That’s not a bad idea business wise.

The club has an asset that stands empty most of the time and doesn’t make a return. Use some of the asset value to generate more return on capital employed.

Just need to make sure that they don’t lose control of the SoL and that they invest in profitable hotels.
Click to expand...
Equity loan on your house?
 
As long as they're reasonably priced. I've often fancied staying at the Hilton after a match with my son but it's like 100 quid a night.
 
Whether this idea is the right one or not, I’m not so sure but what I do like is how the owners are trying to boost turnover by coming up with new ideas. Clearly they aren’t just following the same old business model but trying to be inventive. It will be interesting to see what they do.
 
EchoMan said:
That’s not a bad idea business wise.

The club has an asset that stands empty most of the time and doesn’t make a return. Use some of the asset value to generate more return on capital employed.

Just need to make sure that they don’t lose control of the SoL and that they invest in profitable hotels.
Click to expand...
Money making money. As you say our £80m stadium generates nothing.
Safeguards against losing control a must though.
 
I am sure Mr Donald can be trusted but he is unlikely to own SAFC for ever. It's what might happen 10 -20 years down the line that concerns me . Quite a few clubs have hit the buffers because they did not own the ground that they played on. Be satisfied that the ground is an asset that the Club can depend upon and has control over raising money on it is not such a great idea.
 
joop said:
Whether this idea is the right one or not, I’m not so sure but what I do like is how the owners are trying to boost turnover by coming up with new ideas. Clearly they aren’t just following the same old business model but trying to be inventive. It will be interesting to see what they do.
Click to expand...
Agreed. His whole outlook is refreshing and built on efficiency and leanness. We should make our assets (as a club) work for us (the club) with safeguards.
 
Ale taster said:
Just listened to Mr Donald's podcast for the second time and his idea (which is just that at this stage and may come to nothing) of securing £40m of borrowing against half the value of the ground to buy, for example, four hotels at £10m each that would each generate £2.5m per annum to be ploughed straight back into the team to help us compete against other clubs parachute payments in the Championship.
I think this makes perfect sense if done prudently which I trust SD would, but it does expose our ground to an element of risk.
What do the financial savvy think ?
@Grumpy Old Man etc. etc.
Click to expand...

Stupid idea IMO. I'm not keen on using the asset of the ground to borrow money. Look what happened to Coventry.
 
Ale taster said:
Just listened to Mr Donald's podcast for the second time and his idea (which is just that at this stage and may come to nothing) of securing £40m of borrowing against half the value of the ground to buy, for example, four hotels at £10m each that would each generate £2.5m per annum to be ploughed straight back into the team to help us compete against other clubs parachute payments in the Championship.
I think this makes perfect sense if done prudently which I trust SD would, but it does expose our ground to an element of risk.
What do the financial savvy think ?
@Grumpy Old Man etc. etc.
Click to expand...

Go straight to jail, do not pass go.
 
Easier to get a high occupancy at the SOL than in a hotel. How long would it take to get a profit on a ten million hotel?

Admittedly there is the capital asset but I think Stewie had just been playing Monopoly and had hotels on Mayfair and Park Lane (not the Sunderland one).
 
Can it guarantee 2.5 million a year per hotel? I think that will only be with further investment in the city of Sunderland to make it a place to visit. I'm sure with some European grants to improve the city it will make life easier... oh hang on. Although with brexit and global warming we could make Roker the Benidorm of the North.
 
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