RugbyRebels

Wasps are also quite reliant on income from the convention centre so covid hit them doubly hard

Wasps aren't moving out, the arena has substantially more value while it is occupied. Worst case scenario is they (or the security trustee on the instruction of the bondholders) call the administrators in to get a prepack done that sells the venue and goodwill to a newco to maximise returns to bondholders. If it isn't the home ground for a major sports team at the point of sale then it's just a load of seats, a bit of grass and a bunch of parking. The other events it holds are bonus revenue at best, it's not the O2 because Coventry.

What was the purchase price on the Ricoh? I'm curious about the effective value of the security on the bonds when they were issued.

I always thought the whole point of it was that the conference centre etc would subsidise the rugby.

Mellsblue wrote:I always thought the whole point of it was that the conference centre etc would subsidise the rugby.

It was, then there was a pandemic which killed that sort of event.

Raggs wrote:

Mellsblue wrote:I always thought the whole point of it was that the conference centre etc would subsidise the rugby.

It was, then there was a pandemic which killed that sort of event.

There was a pandemic?!? Must’ve completely missed it.

My point was in reference to Danny posting ‘The other events it holds are bonus revenue at best’.

Mellsblue wrote:

Raggs wrote:

Mellsblue wrote:I always thought the whole point of it was that the conference centre etc would subsidise the rugby.

It was, then there was a pandemic which killed that sort of event.

There was a pandemic?!? Must’ve completely missed it.

My point was in reference to Danny posting ‘The other events it holds are bonus revenue at best’.

Any money being paid in regards to a lease from a sports club will be the back bone of the business. Conferences, weddings etc are the nice side earner, unlikely to pay for the entirety itself the match day crowds are worth a fair bit.

Coventry City are back playing at the ground so there would be at least one lease being paid. I thought the idea of Wasps being there was that they weren't stuck making lease payments and not being able to keep any of the income.
Should that change it may come to a point where it's not sustainable for them to remain and once you've sold the place who cares what the new owners would prefer if they won't give you the deal you need.

FKAS wrote:

Mellsblue wrote:

Raggs wrote:
It was, then there was a pandemic which killed that sort of event.

There was a pandemic?!? Must’ve completely missed it.

My point was in reference to Danny posting ‘The other events it holds are bonus revenue at best’.

Any money being paid in regards to a lease from a sports club will be the back bone of the business. Conferences, weddings etc are the nice side earner, unlikely to pay for the entirety itself the match day crowds are worth a fair bit.

Coventry City are back playing at the ground so there would be at least one lease being paid. I thought the idea of Wasps being there was that they weren't stuck making lease payments and not being able to keep any of the income.
Should that change it may come to a point where it's not sustainable for them to remain and once you've sold the place who cares what the new owners would prefer if they won't give you the deal you need.

Where have you found the info for your first paragraph?
It’s a massive venue: hotel, music concerts etc. From my understanding gleaned from articles when Wasps first moved, these income streams were meant to financially help the rugby operation. As the conference facilities at Sandy Park do.
I don’t know much about the economics of the relevant industries, but there are numerous profitable hotels, concert venues and conference facilities all over the country and very few profitable professional rugby clubs.

Mellsblue wrote:

FKAS wrote:

Mellsblue wrote: There was a pandemic?!? Must’ve completely missed it.

My point was in reference to Danny posting ‘The other events it holds are bonus revenue at best’.

Any money being paid in regards to a lease from a sports club will be the back bone of the business. Conferences, weddings etc are the nice side earner, unlikely to pay for the entirety itself the match day crowds are worth a fair bit.

Coventry City are back playing at the ground so there would be at least one lease being paid. I thought the idea of Wasps being there was that they weren't stuck making lease payments and not being able to keep any of the income.
Should that change it may come to a point where it's not sustainable for them to remain and once you've sold the place who cares what the new owners would prefer if they won't give you the deal you need.

Where have you found the info for your first paragraph?
It’s a massive venue: hotel, music concerts etc. From my understanding gleaned from articles when Wasps first moved, these income streams were meant to financially help the rugby operation. As the conference facilities at Sandy Park do.
I don’t know much about the economics of the relevant industries, but there are numerous profitable hotels, concert venues and conference facilities all over the country and very few profitable professional rugby clubs.

Leases are guaranteed income, you work out your business model from there. The hotel may also be a lease rather than run internally to allow stability and remove admin. The side earners may be very lucrative but there's unlikely to be consistent levels of income from those so you make those your core business it adds an element of risk. You can't bank on there being a large number of 200+ weddings every year, when there are that's great and fill your boots, same with big conferences they tend to be annual so get in the ones you can but it's diversification of the core business.

If you were buying the Ricoh or whatever it's called now you'd want to create a value and you'd do that by projecting what income can be received over a given period (discounted cash flows). If Wasps were selling they'd agree a lease period, Cov City have a lease period (8 year remaining I think) so you'd start to build that value you up from that income you know you will receive, subject to the financial capabilities of the tenants though you can get insurance to cover that. Same with the hotel if leased and the casino which I'm pretty sure is leased. It's unlikely any investment arm buying the place will actually want to run it so the more agreements in place which pay them rent without them doing anything is preferred and easier to assign value. The conference centre would be leased off to a management company as soon as possible rather than retained to generate in the way a number of clubs use their facilities to do so.

But yes you are right in that entertainment venues can be very lucrative when run correctly and not held during a pandemic.

FKAS wrote:

Mellsblue wrote:

FKAS wrote:
Any money being paid in regards to a lease from a sports club will be the back bone of the business. Conferences, weddings etc are the nice side earner, unlikely to pay for the entirety itself the match day crowds are worth a fair bit.

Coventry City are back playing at the ground so there would be at least one lease being paid. I thought the idea of Wasps being there was that they weren't stuck making lease payments and not being able to keep any of the income.
Should that change it may come to a point where it's not sustainable for them to remain and once you've sold the place who cares what the new owners would prefer if they won't give you the deal you need.

Where have you found the info for your first paragraph?
It’s a massive venue: hotel, music concerts etc. From my understanding gleaned from articles when Wasps first moved, these income streams were meant to financially help the rugby operation. As the conference facilities at Sandy Park do.
I don’t know much about the economics of the relevant industries, but there are numerous profitable hotels, concert venues and conference facilities all over the country and very few profitable professional rugby clubs.

Leases are guaranteed income, you work out your business model from there. The hotel may also be a lease rather than run internally to allow stability and remove admin. The side earners may be very lucrative but there's unlikely to be consistent levels of income from those so you make those your core business it adds an element of risk. You can't bank on there being a large number of 200+ weddings every year, when there are that's great and fill your boots, same with big conferences they tend to be annual so get in the ones you can but it's diversification of the core business.

If you were buying the Ricoh or whatever it's called now you'd want to create a value and you'd do that by projecting what income can be received over a given period (discounted cash flows). If Wasps were selling they'd agree a lease period, Cov City have a lease period (8 year remaining I think) so you'd start to build that value you up from that income you know you will receive, subject to the financial capabilities of the tenants though you can get insurance to cover that. Same with the hotel if leased and the casino which I'm pretty sure is leased. It's unlikely any investment arm buying the place will actually want to run it so the more agreements in place which pay them rent without them doing anything is preferred and easier to assign value. The conference centre would be leased off to a management company as soon as possible rather than retained to generate in the way a number of clubs use their facilities to do so.

But yes you are right in that entertainment venues can be very lucrative when run correctly and not held during a pandemic.

You still haven’t said where you found your info in your first para from your initial reply. There was plenty of info going around at the time of the deal that the leisure facilities at the stadium were meant to subsidise the rugby operation and there doesn’t seem to be any evidence to refute that.
As for how to run the business, we’re discussing ifs, what’s and maybes seeing as neither of us know how the business is set up. Not that I agree the business model will be based almost entirely on the lease from the sports club, especially as I doubt Cov City FC are paying much given their previous.

FKAS wrote:

Mellsblue wrote:

Raggs wrote:
It was, then there was a pandemic which killed that sort of event.

There was a pandemic?!? Must’ve completely missed it.

My point was in reference to Danny posting ‘The other events it holds are bonus revenue at best’.

Any money being paid in regards to a lease from a sports club will be the back bone of the business. Conferences, weddings etc are the nice side earner, unlikely to pay for the entirety itself the match day crowds are worth a fair bit.

Coventry City are back playing at the ground so there would be at least one lease being paid. I thought the idea of Wasps being there was that they weren't stuck making lease payments and not being able to keep any of the income.
Should that change it may come to a point where it's not sustainable for them to remain and once you've sold the place who cares what the new owners would prefer if they won't give you the deal you need.

Coventry City were unable to play their opening home game of the season as the pitch is in such a poor condition. This issue was raised with Wasps (who are responsible for the pitch) last season in the hope it would be fixed during the summer but no action was taken. Concerts & Commonwealth Games taking place in the arena have caused it to deteriorate apparently.

https://www.ccfc.co.uk/news/2022/august ... postponed/

Pictures of the pitch there and it doesn't look good.

FKAS wrote:https://www.ccfc.co.uk/news/2022/august ... postponed/

Pictures of the pitch there and it doesn't look good.

That is pretty shitty behaviour by Wasps. Granted, they are legally the owners and prime tenants, but the stadium was designed to be CCFC's home. The owners are a bunch of idiots who deserve everything they get, but their fans have every right to be fuming that Wasps have come in and bought out their home from under them (while the City owners were being idiots but that's not the fans' fault) and then not bothered to ensure it's suitable for them to use.

And, from a financial perspective, I can't imagine it's making them many friends and encouraging many cross-over fans from CCFC. Likely cost them more in the long run to be a lackadaisical landlord.

Puja

Puja wrote:

FKAS wrote:https://www.ccfc.co.uk/news/2022/august ... postponed/

Pictures of the pitch there and it doesn't look good.

That is pretty shitty behaviour by Wasps. Granted, they are legally the owners and prime tenants, but the stadium was designed to be CCFC's home. The owners are a bunch of idiots who deserve everything they get, but their fans have every right to be fuming that Wasps have come in and bought out their home from under them (while the City owners were being idiots but that's not the fans' fault) and then not bothered to ensure it's suitable for them to use.

And, from a financial perspective, I can't imagine it's making them many friends and encouraging many cross-over fans from CCFC. Likely cost them more in the long run to be a lackadaisical landlord.

Puja

There's a picture of a tweet going around showing that the commonwealth games are basically responsible for the pitch until the 14th of August and it's repair, and a game shouldn't have been scheduled then regardless.

Even if true, it's not a good look.

As you say Raggs, sounds like Wasps have bitten back a bit, Cov City were desperate for the game to go ahead at the weekend and pushed for it even though the stadium wasn't technically available. They've then thrown their toys out the pram because the pitch isn't ready a week earlier than it should have been. But of a douche move by Cov but I'm guessing they were keen to have the home game on a sunny weekend when the crowd was likely to be bigger.

Looks like the relationship between Wasps and Cov City might not be improving anytime soon.

I see there's also talk (speculation?) that Wasps financial issues are a bit too well known, so no company is willing to carry out the groundwork without full payment up front.

Which Tyler wrote:I see there's also talk (speculation?) that Wasps financial issues are a bit too well known, so no company is willing to carry out the groundwork without full payment up front.

Bit of a worry cause these things can become a self-fulfilling prophecy. The actual financial structure might be absolutely fine, but if the perception that they're broke gains traction, then it'll very rapidly become reality, whether it was true in the first place or not.

Puja

Puja wrote:

Which Tyler wrote:I see there's also talk (speculation?) that Wasps financial issues are a bit too well known, so no company is willing to carry out the groundwork without full payment up front.

Bit of a worry cause these things can become a self-fulfilling prophecy. The actual financial structure might be absolutely fine, but if the perception that they're broke gains traction, then it'll very rapidly become reality, whether it was true in the first place or not.

Puja

Very true. Could make a mess of their cashflow planning if their suppliers change terms to withdraw the credit period and invoice pro forma.

On that note, perhaps Premiership financial issues is a better thread title...

Rumours among bondholders that Wasps will be proposing a CVA (a legally binding payment plan) soon. If that doesn't go through it'll be Administration

Mr Mwenda wrote:On that note, perhaps Premiership financial issues is a better thread title...

Done.

Mod

Puja wrote:

Mr Mwenda wrote:On that note, perhaps Premiership financial issues is a better thread title...

Done.

Mod

Quadrophenia?

Banquo wrote:

Puja wrote:

Mr Mwenda wrote:On that note, perhaps Premiership financial issues is a better thread title...

Done.

Mod

Quadrophenia?

He won't reply he's off down Brighton Beach to have a scrap with some rockers.

Danno wrote:Rumours among bondholders that Wasps will be proposing a CVA (a legally binding payment plan) soon. If that doesn't go through it'll be Administration

Which means what? Expelled from the league structure and build back up from the bottom?
12 man premiership (a good thing - but is it too late to re-write the fixture list to avoid clubs having 4 fallow weekends?), and an entire club's worth of talent suddenly jobless, with no room in the salary cap for anyone to take them on?

Would that lead to an increase in the cap for everyone else? would that be allowing next year's increase (?) to come a year early, or "just" divide the £6.4M+ marquee by 12 to allow redistribution of talent? And how many cubs could afford to pay the wages of that extra, without having budgeted for it in advance (probably ruling out Worcester and Newcastle, maybe also LIrish, Sale and maybe anyone without a sugar daddy)?

Which Tyler wrote:

Danno wrote:Rumours among bondholders that Wasps will be proposing a CVA (a legally binding payment plan) soon. If that doesn't go through it'll be Administration

Which means what? Expelled from the league structure and build back up from the bottom?
12 man premiership (a good thing - but is it too late to re-write the fixture list to avoid clubs having 4 fallow weekends?), and an entire club's worth of talent suddenly jobless, with no room in the salary cap for anyone to take them on?

Would that lead to an increase in the cap for everyone else? would that be allowing next year's increase (?) to come a year early, or "just" divide the £6.4M+ marquee by 12 to allow redistribution of talent? And how many cubs could afford to pay the wages of that extra, without having budgeted for it in advance (probably ruling out Worcester and Newcastle, maybe also LIrish, Sale and maybe anyone without a sugar daddy)?

Shotgun for Alfie Barbeary!

Puja

I doubt Tigers would have the available funds to take on more than one or two. The club got hit hard during the pandemic as most did so there isn't bundles of cash, the year of reduction was probably handy to rebuild cashflow. It's probably the same for more the others.

The RFU might help with some of the English players but most of the foreign players will be left to look overseas.