New Everton Stadium

[indieman1]

8% interest on a loan
What bank charges that.
ECB rate is practically zero.
Even in Ireland where the banks are known to fleece their customers and we pay the highest rates the interest rate on mortgages is approx 3.5 %

I may be giving the board more credit than they deserve but you would hope, in the event additional debt finance was sought, that the club would want some certainty over interest rates.

Some kind of hedging would need to be put in place to achieve this, either by the lender or by the club. That will have a chunky cost itself and will be built into the effective cost of the financing.

The mortgage examples you quote will be for a very short fixed rate term. As the fixed term increases so does the risk to the lender and therefore the interest rate charged. In the case of a mortgage you simply wouldn’t be able to find a lender willing to offer a 25 year fixed rate deal. Interest rates for 10 year fixed deals are significantly higher than 3.5%

Also, default risk premiums will be built into the interest rates.

In the case of a standard home mortgage the lender has the security of knowing that in the event of non-payment they have the rights to an asset that should be roughly equal in value to the outstanding loan. The home owner is also usually required to put in a chunk of equity to further reduce the risks to the lender.

In the case of this stadium, in the event the club disappeared or defaults the lenders would be left with a half built or completed but empty stadium that isn’t going to be an especially valuable asset. The council have first dibs over most income streams like season tickets. A significant risk premium will therefore needs to be built in to the rates.

Finally the total cost of the project is still uncertain. Further inflation above £500m looks certain if the experience of other clubs is a guide. Anyone committing to provide finance now will want to build in that uncertainty into the rates they charge as it could affect the ability of the club to repay.

Given the likely length of the payback period I would personally be astonished if the club could achieve 8% for the bulk of that time. 12% -15% would be more plausible in the circumstances. It’s a moot and largely irrelevant point anyway. Be it 6%, 8% or higher, significant additional debt just doesn’t stack up.

Moshiri either digs deep or it just isn’t happening.

The worrying part is that the Club and Moshiri must have known this for a good while and yet here we are.

Still, at least the club is still paying Dan Meis millions to run his stadium porn tease-line via twitter. That should help deflect awkward questions for another 12 months or so.

 

[davek]

Enjoying reading indieman's analysis here.

 

[banno]

I may be giving the board more credit than they deserve but you would hope, in the event additional debt finance was sought, that the club would want some certainty over interest rates.

Some kind of hedging would need to be put in place to achieve this, either by the lender or by the club. That will have a chunky cost itself and will be built into the effective cost of the financing.

The mortgage examples you quote will be for a very short fixed rate term. As the fixed term increases so does the risk to the lender and therefore the interest rate charged. In the case of a mortgage you simply wouldn’t be able to find a lender willing to offer a 25 year fixed rate deal. Interest rates for 10 year fixed deals are significantly higher than 3.5%

Also, default risk premiums will be built into the interest rates.

In the case of a standard home mortgage the lender has the security of knowing that in the event of non-payment they have the rights to an asset that should be roughly equal in value to the outstanding loan. The home owner is also usually required to put in a chunk of equity to further reduce the risks to the lender.

In the case of this stadium, in the event the club disappeared or defaults the lenders would be left with a half built or completed but empty stadium that isn’t going to be an especially valuable asset. The council have first dibs over most income streams like season tickets. A significant risk premium will therefore needs to be built in to the rates.

Finally the total cost of the project is still uncertain. Further inflation above £500m looks certain if the experience of other clubs is a guide. Anyone committing to provide finance now will want to build in that uncertainty into the rates they charge as it could affect the ability of the club to repay.

Given the likely length of the payback period I would personally be astonished if the club could achieve 8% for the bulk of that time. 12% -15% would be more plausible in the circumstances. It’s a moot and largely irrelevant point anyway. Be it 6%, 8% or higher, significant additional debt just doesn’t stack up.

Moshiri either digs deep or it just isn’t happening.

The worrying part is that the Club and Moshiri must have known this for a good while and yet here we are.

Still, at least the club is still paying Dan Meis millions to run his stadium porn tease-line via twitter. That should help deflect awkward questions for another 12 months or so.

So it's off then? Despite still saying it's on. Are you 2nd guessing or do you know it's off for sure.

We may have escalating prices but I am sure it's still going ahead until I hear different.

 

[eddy]

Still, at least the club is still paying Dan Meis millions to run his stadium porn tease-line via twitter. That should help deflect awkward questions for another 12 months or so.[/QUOTE]


Mosh is no fool, he will have had Mies draw up plans and a scheme that can be shoehorned onto Goodison
Bill will sell it to us as after a `great deal of thought` we decided on a refurb ......

 

[Brisan123]

I may be giving the board more credit than they deserve but you would hope, in the event additional debt finance was sought, that the club would want some certainty over interest rates.

Some kind of hedging would need to be put in place to achieve this, either by the lender or by the club. That will have a chunky cost itself and will be built into the effective cost of the financing.

The mortgage examples you quote will be for a very short fixed rate term. As the fixed term increases so does the risk to the lender and therefore the interest rate charged. In the case of a mortgage you simply wouldn’t be able to find a lender willing to offer a 25 year fixed rate deal. Interest rates for 10 year fixed deals are significantly higher than 3.5%

Also, default risk premiums will be built into the interest rates.

In the case of a standard home mortgage the lender has the security of knowing that in the event of non-payment they have the rights to an asset that should be roughly equal in value to the outstanding loan. The home owner is also usually required to put in a chunk of equity to further reduce the risks to the lender.

In the case of this stadium, in the event the club disappeared or defaults the lenders would be left with a half built or completed but empty stadium that isn’t going to be an especially valuable asset. The council have first dibs over most income streams like season tickets. A significant risk premium will therefore needs to be built in to the rates.

Finally the total cost of the project is still uncertain. Further inflation above £500m looks certain if the experience of other clubs is a guide. Anyone committing to provide finance now will want to build in that uncertainty into the rates they charge as it could affect the ability of the club to repay.

Given the likely length of the payback period I would personally be astonished if the club could achieve 8% for the bulk of that time. 12% -15% would be more plausible in the circumstances. It’s a moot and largely irrelevant point anyway. Be it 6%, 8% or higher, significant additional debt just doesn’t stack up.

Moshiri either digs deep or it just isn’t happening.

The worrying part is that the Club and Moshiri must have known this for a good while and yet here we are.

Still, at least the club is still paying Dan Meis millions to run his stadium porn tease-line via twitter. That should help deflect awkward questions for another 12 months or so.

I’m talking 20 / 25 yr mortgages.
I’ve no real knowledge of financial markets and I’m mortgage free but I know what rates my 2 daughters are paying

 

[Brisan123]

Enjoying reading indieman's analysis here.

Of course you do Dave because it suits your agenda
You never quote or give praise to sensible educated posts that go against your agenda

 

[Thetigerblue]

Well as I said myself, I won't claim to know much about it either, but it seems to me like a lot of people are jumping to conclusions and being overly negative when they don't really seem to know the details involved. There was always risk with the previous deal but a lot more people seemed to go along with it back then and come round to the idea. Thankfully the ones who are dealing with the Stadium actually have in depth knowledge of the situation.

From the Echo article in March 2017 where they summarised what had been revealed it said:

* Doesn’t this put the council at risk? What if Everton get relegated?

• Essentially the council, through the SPV, gets first dibs on some of Everton’s most important sources of income – like season ticket sales.
• Everton FC has had to provide a “security package” as part of the deal to ensure that the SPV always gets paid.
• The Mayor said: “Liverpool Council will have first take on season tickets, on the players themselves, on the naming rights, on the ownership of the stadium and of the television rights.”

In the latest Echo article after they summarised the new deal:

• The mayor says the money for Everton would NOT come out of cash earmarked for day-to-day services.
• The council would have first dibs on some of Everton’s most important sources of income, potentially including TV income and season ticket sales, meaning repayments should be guaranteed.

So unless I am misunderstanding, in the event of things turning really serious, the risk still seems to be the same, yet there appears to be far more opposition on here now...Not sure why.

Because it fits an agenda.
As others have noted, some people on the forum must be big-finance specialists as well as directors of football in Premier League teams. It's very interesting to see the degree of....certainty....that some posters bring to the party.

 

[indieman1]

So it's off then? Despite still saying it's on. Are you 2nd guessing or do you know it's off for sure.

Put to one side the bluster of the board and Dan Meis and frankly we don’t really know what ‘it’ is yet. Everything has an element of conjecture at this point.

So, is it certainly of? No.

But, based on what we do know, (overall budget, probable borrowing costs, ballpark ticket revenue outcomes etc etc), is this £500m+ scheme going to happen without the outwardly wealthy Mr Morishi ponying up some significant equity? No

If Morishi is in a position to put in £200m odd of equity to move the project forward, is it odd that he hasn’t already done so or at least stated that he will do so? Yes

But even if the billionaire chairman can’t solve what is, compared to his self-stated means, a minor liquidity challenge, there remain options.

The club own the site and it is well suited to a big stadium, albeit expensive to fill in. LCC is (probably) willing to provide £300m odd of cheap finance to get something built there. That really should be enough to allow something worthwhile and sustainable to be delivered.

Frankly, were the club being more realistic in terms of what it was looking to achieve here I don’t think a new stadium would be half as dubious as it currently is.

Scale back from this 60k, statement architecture based one-upmanship nonsense to something more deliverable. Design in the ability to easily expand to 60K and beyond. Design in the ability to increase the scale and quality of corporate facilities in future (if justified). Do this you allow risk and cashflow requirements to be phased without putting any obstacles in the way of on pitch spending. Do all that and the club really might start moving in the right direction, even if Usmanov reduces Morishi’s pocket money.

Granted, such a positive ending note obviously requires us to ignore the utter incompetence of the board but hope springs eternal on that front.

 

[The binman chronicles]

Frankly, were the club being more realistic in terms of what it was looking to achieve here I don’t think a new stadium would be half as dubious as it currently is.

Scale back from this 60k, statement architecture based one-upmanship nonsense to something more deliverable. Design in the ability to easily expand to 60K and beyond. Design in the ability to increase the scale and quality of corporate facilities in future (if justified). Do this you allow risk and cashflow requirements to be phased without putting any obstacles in the way of on pitch spending. Do all that and the club really might start moving in the right direction, even if Usmanov reduces Morishi’s pocket money.

This is why I think the club will move to the docks regardless of what happens in the search for finance. At the end of the day 300 million (presume we could get that easily to 400 by not buying players for a couple of seasons) is enough to build something that will still yield more than Goodison and still get us on site in a prestigious location that the RS would love to have.

 

[davek]

Of course you do Dave because it suits your agenda
You never quote or give praise to sensible educated posts that go against your agenda

His points, as I see them, are inarguable: either the owner of this club lobs eventually what is likely to be £200M into the pot to cover the non-council secured loan or we forget about this, because the enormous levels of interest repayment due to length of period of borrowing and the risk involved in the nature of the project will completely outweigh the benefit accruing to the club...and that, after all, is what the objective is.

 

[blueblue]

I may be giving the board more credit than they deserve but you would hope, in the event additional debt finance was sought, that the club would want some certainty over interest rates.

Some kind of hedging would need to be put in place to achieve this, either by the lender or by the club. That will have a chunky cost itself and will be built into the effective cost of the financing.

The mortgage examples you quote will be for a very short fixed rate term. As the fixed term increases so does the risk to the lender and therefore the interest rate charged. In the case of a mortgage you simply wouldn’t be able to find a lender willing to offer a 25 year fixed rate deal. Interest rates for 10 year fixed deals are significantly higher than 3.5%

Also, default risk premiums will be built into the interest rates.

In the case of a standard home mortgage the lender has the security of knowing that in the event of non-payment they have the rights to an asset that should be roughly equal in value to the outstanding loan. The home owner is also usually required to put in a chunk of equity to further reduce the risks to the lender.

In the case of this stadium, in the event the club disappeared or defaults the lenders would be left with a half built or completed but empty stadium that isn’t going to be an especially valuable asset. The council have first dibs over most income streams like season tickets. A significant risk premium will therefore needs to be built in to the rates.

Finally the total cost of the project is still uncertain. Further inflation above £500m looks certain if the experience of other clubs is a guide. Anyone committing to provide finance now will want to build in that uncertainty into the rates they charge as it could affect the ability of the club to repay.

Given the likely length of the payback period I would personally be astonished if the club could achieve 8% for the bulk of that time. 12% -15% would be more plausible in the circumstances. It’s a moot and largely irrelevant point anyway. Be it 6%, 8% or higher, significant additional debt just doesn’t stack up.

Moshiri either digs deep or it just isn’t happening.

The worrying part is that the Club and Moshiri must have known this for a good while and yet here we are.

Still, at least the club is still paying Dan Meis millions to run his stadium porn tease-line via twitter. That should help deflect awkward questions for another 12 months or so.

A new stadium will offer new opportunities to raise funds, naming rights being the most obvious, but a brand spanking new stadium in a prime location will offer lots of earning opportunities which I imagine would be attractive to potential lenders.

I would imagine that interest rates will be fixed for an extended period but probably not longer than 10 years and if so then doubling the cost of money sounds excessive to me. Inflation will eat away at the real cost of repayments as it tends to do with all long term loans.

I do agree that the uncertainty relating to the final cost of the build would be the biggest concern for lenders as they would certainly be nervous about going into a project which has no clearly defined overall cost.

There is however always the opportunity to bring additional wealthy investors/owners into the club as there is approx. 51% of the shareholding to be transferred from existing owners to new investors.

 

[blueblue]

[

By William (Billy) Liddell..........

I would have thought it would be written in red.

 

[blueblue]

His points, as I see them, are inarguable: either the owner of this club lobs eventually what is likely to be £200M into the pot to cover the non-council secured loan or we forget about this, because the enormous levels of interest repayment due to length of period of borrowing and the risk involved in the nature of the project will completely outweigh the benefit accruing to the club...and that, after all, is what the objective is.

All a matter of opinion.

The enormous levels of interest( based on nothing other than guesswork) is going to outweigh the opportunity that a 60k new stadium in a prime location where billions are going to be invested in the next decade or so..... I don't think so.

 

[Toffeelover]

Don't forget it could be under water in 80 years too.

http://theconversation.com/new-ever...-up-underwater-thanks-to-global-warming-75247

Bit concerned about North Korea specifically targeting the new stadium as well with a test missile.

Let me see, 80 years???? well the loan is paid off in 25, no doubt the club will have insurance, no doubt as waters rise steadily ( not all at once) flood damage works will be on the go to protect Liverpool not just the stadium, will any of us be here in 8o year to worry about it. So what the hell is the point of the post lost me for sure.

PS the NK remark is just plain juvenile and stupid.

 

[Toffeelover]

You need to take your blue tinted specs off and see it from the view of a person who might be concerned.

They will be asking why a multi billion pound industry which Everton is a part of and its majority owner is a multi billionaire is getting LCC to loan us the money.

What happens if Farhad leaves or passes away, Everton get relegated from the premier league or the TV deal goes backwards in value.

It's all risk. LCC could be left with a hefty loan to pay cutting into budgets that are scraped to the bone already.

Thats how it will be viewed by some voters and Joe Andersons opponents.

What happens if Mosh does not die but hangs around for another 25 years and sells on to some one even richer? Everton win the PL and get into CL? The media deal gets bigger.

LCC loan reducing year on year and they are making a huge profit from it to help out services.

It could then be viewed by voters as being a good do.

Of course all speculation like your post and earns the pointless trophy!

PS Mosh is not a multi billionaire. Everton's share of the multi billion pound industry is already basically set and is not a billion never mind many.