For those of you attending the Fans Forums this week, we bring you a report of what Tim Fisher had to say at a Forum hosted by Coventry City London Supporters Club last Wednesday.
The report, thanks to CCLSC is as follows:
TF asked SISU to do a deal with ACL on match-day revenues because of prospect of Financial Fair Play. His counterpart, Daniel Gidney, said ACL would reduce rent to £500k p/a and give them match-day revenues including catering and parking at the Ricoh for £24m consideration in effect - net present value over next 40 + years. In March 2012, SISU could not accept the big funding gap. Crowds were down and it tried again to discuss a deal to buy half the stadium company – the business, not the bricks and mortar. The Council had the right to veto any deal. SISU and Higgs signed a term sheet on 18 June 2012. To support the deal then, SISU negotiated with the Council to buy the Yorkshire Bank debt and to discharge the debt so that the value (of both halves) of the equity would go up. The leasehold would need to rise from 42 years to 125 years – again leading to an increase in the value of both equity stakes. On 2 August 2012, a heads of terms agreement was signed with the Council. Steve Brookfield was charged in his role of FD to do a pay-as-you-play deal with an interim rent. This was circa £10K per match. Something went wrong in about September/October 2012. The Council reneged on the deal agreed in August but the football club still needed a share of the stadium revenues. With the prospect of FFP, the terms of occupancy needed to be changed. A rent reduction was agreed from £1.3m to £400K. The club had also been paying rates of £197K p/a for the use of the stadium for as little as 23 match-days. These were subsequently marked down to £60K p/a - which created a rebate of circa £400K. The club had been paying £1.5m p/a including rent and all other charges under Robinson / early SISU. All contracts were reviewed – e.g. went from paying £20K p/a for cleaning training ground to £6K p/a. All invoices were checked including those without contract. CCFC was putting its house in order. This would naturally put more pressure on ACL. In December 2012, Yorkshire Bank said they were about to foreclose on ACL. Joy Seppala went to Leeds with ACL, and a deal was negotiated that would restructure the debt but allow the football club and the mortgage to stay in place. Despite SISU/CCFC agreeing the terms of a deal, the Council said “No.” YB said they would re-structure in order for ACL to survive. On 15 January 2013, however, the Council used £14.4m of tax-payers’ money to enable it to pay off the YB mortgage and to become ACL’s bankers. This is now the subject of an application for a judicial review. On 22 February 2013, Tim Fisher received a letter from ACL saying that negotiations were off. The ‘sunshine test’ told him that CCFC Ltd was technically insolvent. On 27 February 2013, ACL released its accounts in which it stated that it was a going concern based on both businesses negotiating the rent so that they remained sustainable into the future, thereby contradicting its letter of 22 February 2013. ACL claimed that it had been too late to interrupt the print run of the handful of accounts copies. The initial administration order was served on 13 March. On 21 March, Joy Seppala called Martin Reeves, head of ACL, and pleaded to adjourn over the weekend to negotiate. CCFC Ltd went into administration on 22 March. SISU is a distressed debt fund and therefore batters people in court. ACL had switched lawyers from Wragge’s to Walker Morris. Tim Fisher had not attended the creditors’ meeting with the administrator but had stayed at Ryton to look at plans for the football team for the new season. He met with Pressley and Waggott but the football side is all affected by the adjournment and prolonged administration We cannot live and deal with the Council. We need to be masters of our own destiny and to get our own ground in the Coventry area. There are loads of sites to choose from, an embarrassment of riches with brown-field sites, so it will be built. He derided claims that this was ‘smoke and mirrors’. CBRE had been involved for some time. This all led to the major problem: needing to ground-share for three seasons. He cannot sugar-coat it and make it attractive. He can reduce ticket costs, sell season tickets at a discount, but it requires our goodwill. The interim is a commercial nightmare that will need to be underwritten by SISU for the next three years, but only because in the long term it will start to make money. The rent being negotiated was closer to £170k. FFP is key. The offered revenue share of £100K per year is further hampered by the outsourcing to Compass of the catering contract. The club has become hamstrung. Even if they got the revenue it would not be enough. The playing budget was £4.25m last season; next season it will be circa £2m +. Yeovil went up on £1.2m. He wants what is right for the club and does not care about the stadium business per se. ACL is not even a real business – a synthetic only. Selling a ground-share is difficult. It will be painful. The total financing to be drawn down is £21m – some equity from SISU and some debt. ACL would not give them access to Compass and their revenue partners. The Charlton example in League One: £1.8Mio/£720K/40% margin v Compass 14% margin. The Council do not do commercial. SISU is prepared to take risks to make money – by its nature has ‘skin in the game’. The Council simply can rely on a budget of over half-a-billion pounds a year. Very different doctrines. A third party stadium operator should be brought in to develop the business. There is no such thing as a football administrator – however, there is a company administrator and beneficial economic rights. This is very much recognised by the Football League regulations AND is in accordance with insolvency law. No assets moved in the interim period. There is confusion around the ‘golden share’, and the issue arose around the time of the set-up of the Premier League – the company number originated in 1907 but the company was restructured in 1995 which has caused huge confusion. They have letters from FL saying that Holdings is the member. Holdings pay the wages and third party service providers. Legal advice says the FL has dealt with Holdings. Holdings is solvent; Limited is not. He gets accused of Paul Appleton being ‘in his pocket’. He would expect better from the people making these accusations. Paul A. is under pressure to deliver his report and begin the sales process. There are up to 6-7 expressions of interests. The football club is not for sale and a CVA is the preferred route. All Arvo-SISU funding engineered in the form of debt. It is the first time a football club had been subject to a third party debt order. Arvo crystalised their debt. ACL put the third party debt order “on the wrong company”. Historic player trading and property ownership was the only purpose of Limited. BDO did the due diligence. As with all administrations and insolvencies then TF is potentially personally liable, could be investigated, struck off and could be chased for £1.3m for the next 41 years. It is not a game of blink. CCLSC Ltd volunteered administration as a pre-emptive tactic. There will be some clubs whose home fixtures will not be aligned with CCFC in the FL’s preparation of the fixtures. Won’t go into discussions on the new ground due to NDA. Police bill huge for Blues; will not confirm Walsall. Nil possibility of starting the season at the Ricoh. Kits are in hand but being held up until the club comes out of administration. The football club’s relationship with Genesis is good – it has taken delivery of training kit. The club has a contract with Genesis. Kit has been designed, ordered, deposit paid and the balance will be paid at the end of administration. CCC could contact other councils and do a deal to support them against planning applications. However, CBRE do these deals all the time…it will be a brownfield site requiring a change of use etc. Coventry are not the first club who do not own their own stadium to experience administration. SISU should have done the deal with ACL in 2008 when they had the strongest bargaining power. The model was for Ray Ranson to run the football side of things, and the model was promotion. SISU could then either milk the Premier League monies in the West Brom mould or sell up for a profit. FL needs a financial plan which will require a bond, at least a theoretical one, thanks to the Wimbleon/MK model, which is repaid after three years. SISU will fund it. They had needed to see the route forward. The club will need to file statutory accounts. They will take ten days to audit. There is a viable business model if we can get everything right in terms of the revenue streams. There is no room for agreement. We were told ‘no commercial deal’. TF understands why ACL could not give up cash flow revenues but why not match-day revenues which were the deal breaker based on FFP? It’s not practical to consult fans over where to ground-share. Football League will not allow this. It would take an act of God to sign the club over to another bidder. SISU would not deal with them even if they take on the ground. There has to be a proper process. Instead, it has been a circus. It has certainly not been the strategy to destabilise ACL – or the football club. Joy does not want to make herself public - it is her choice. TF thinks it would make a difference. They should put a statue of Joy Seppala outside the ground for the £45m she has put into the club. It could all be OK if ACL go back to the terms agreed in August 2012.
Source: Coventry MAD
Source: FOOTYMAD
