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Front page article - The Harsh Reality

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Neiler said:
£250 mill for the future ground costs, + the wage bill, + interest costs 10-15% on £300 mill of external debt on our existing loans, its very possible mate.
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That's only one year. Once the ground is done, we won't need that 250m a year (but will be paying back debt on it yes).
 
One has to ask that if administration was so inevitable, why would 777 be looking to buy the club now. Surely they would be better to wait for administrators to step in at which point it would be a fire sale and they would get the club for next to nothing with debts settled and a clean start albeit in the Championship.
 
indieman1 said:
In some circumstances it can result in a reduction in total debt. Doesn't seem likely in our case.
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I'd say it's very likely for a business like ours with the debts we are carrying.

If it's a small business gone into administration and you as a supplier are owed say 10,000 and they are offering you a few pence in the pound then you'd probably say no out of spite. We've got at least three creditors owed over one hundred million! If a sale cannot be agreed at a price that covers those debts in full they may well agree to getting less back as as an alternative to seeing nothing bar the few bits and bobs that have been secured on property which let's face it even Goodison is only worth 15 million tops so it's not like they'll be getting anywhere near what they are actually owed. Getting 90-50% back is way more preferential than getting 0-25%.
 

EFC offers three things to buyers:
  1. A 60% complete stadium that with another 300m, is worth 800m - WIN
    Refinance to say 500m. So you've now 500m in you're hand (bear in mind our investor started with 300m)
  2. Debt - don't know precisely what we're in for here... pls advise. Assuming worst case 500m (essentially the sale price)? So then a buyer is evens + the loan cost for that 500m BUT
    1. The woodworm, incompetence and cancer in our board is then past. We're in organisational remission. We should look at the likes of Brighton, Brentford as comparators for well run clubs (also both British businessmen with finance, sportsbook, moneyball type backgrounds).
    2. Also the the relatively quick rebounds of well supported clubs like Southampton, Norwich, West Ham, Villa, Newcastle , and also Leicester going strong after shedding some Prem fat. Yes Bradford, Bolton, Barnsley, Pompey, Wigan for balance. We could end up like Ipswich or Sunderland with an extended stay outside the top tier. Our financial ineptitude is perhaps similar in magnitude to Bolton and Sunderland, but most of that is waste in recruitment, which is a relatively quick fix once the cancer's out.
    3. Revenue potential - Everton is the same or VASTLY bigger than most clubs above (on par with Villa, Barcodes, West Ham in attendance) with the profile and the other potential incomes with that ground on the Mersey.
  3. The teams.
    Which are a mixture of good and bad
    1. The good (women's, youth, reserve teams and community groups) not being worth the kind of money to rescue us financially but part of the reason we'll retain a huge profile.
    2. The bad. Men's first X1. Worth around 150m-200m ALL in, 'feasibly' facing relegation, maybe 50/50. . NONE OF US WANT THAT AND IT CAN BE AVOIDED

I think a buyer knows fundamentally, yes we shed a few leading lights for 100m, rebuild in the Championship and as the revenues come in we become a giant in that league and we're back in the Prem in something like worst case <2-3 seasons with a rudely healthy bottom line. Can you imagine the surge of people going to BMD the 1st day back in the Prem. It'd be like England had won the World Cup. They'll be bands, fireworks, and christ knows waht going on at the place week in week out entertainment wise.

And that's worst case.

Best case is we go the same way retaining prem status following the same mgt principles as Brighton / Brentford. I trust some whizz bang American investors more than what we've got, but my underlying concern is EFC will lose some control of the ground, and effectively part rent it's premises as security for any buyer - that and the loans (rather like the Glazers at Man Utd) would be a longer term constraint for the club. That's why we need to be careful.

Mosh won't care. Bill knows he might have more resting on it
 
malcson said:
One has to ask that if administration was so inevitable, why would 777 be looking to buy the club now. Surely they would be better to wait for administrators to step in at which point it would be a fire sale and they would get the club for next to nothing with debts settled and a clean start albeit in the Championship.
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Indeed.

As a mere lay person in these matters, that would seem a no brainer.
 
Khalekan said:
Indeed.

As a mere lay person in these matters, that would seem a no brainer.
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If the club goes into administration the administrators may choose to sell assets to reduce liabilities or provide future working capital, also the administrators may take the extreme move of winding the company up which would mean that all assets would be used to pay secured creditors and anything left over would likely be needed to settle with unsecured creditors. This could include the stadium project. Getting in before them allows the owner to act with the assets in place and make decisions. Clearly the stadium would be a big part of the appeal of buying. Plus 777 would want the club in the prem, a points deduction for the club puts that in jeapordy
 

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