RugbyRebels

Leicester Tigers has today announced plans for the sale of the club alongside a full strategic review as part of long-term plans to reclaim its status as a dominant force in English and European rugby.

The announcement follows CVC Capital Partners’ acquisition of a minority stake in Premiership Rugby Limited. CVC intends to develop the sport, repeating its success with Formula One and Moto GP.

CVC’s investment sparked several expressions of interest in the Tigers from new investors, prompting the Board to run a formal sale process in the best interests of the club, its players, supporters and shareholders.

Tigers is the most successful club of the professional era, winning more titles than any other English team. The club’s games are the most-watched and best-attended in English rugby and the club has a 90-per-cent season ticket renewal rate. The club is ideally positioned to capitalise on the new investment coming into the game.

The pay-out to Tigers from the Premiership Rugby stake sale to CVC means the club has no net debt and can look forward to greater incremental revenues as CVC’s marketing and commercial strategy gathers momentum and grows the game.

This makes the Tigers an attractive opportunity for an investor that shares the Club’s vision, with the ability to grow commercial revenues and accelerate development plans to the benefit of players, staff and fans.

Peter Tom CBE, Leicester Tigers Executive Chairman, said:

“CVC’s investment in Premiership Rugby has created a unique opportunity – catapulting the sport into the public consciousness like never before and broadening its appeal to potential investors. It is our duty as a Board to explore the Club’s strategic options and assess the best possible ownership structure to benefit from the changes ahead on and off the pitch.”

Simon Cohen, Leicester Tigers Chief Executive Officer, said:

“The investment and changes in English Premiership rugby present a huge opportunity for the Club and a new investor. As the most prestigious club in English rugby, this development will further support Leicester Tigers in its ambition to be the most successful club in England and Europe, to the benefit of our players, the Club and our loyal supporters.”

For more information, see the Shareholder Information page of the club website.

Not sure what to make of this. On the one hand, anything which could restructure the board is a definite win, but on the other, I'm not keen about interest drummed up by the CVC sale, as I'm not sure I want us owned by someone who sees us as a vehicle to squeeze money out of. There is a chance we could end up being owned by someone like SISU, with similar results.

Puja

Always been talked about for a while now, and was most likely always going to happen, although sound more like a 10 year thing not sudden thing.

Puja wrote:Not sure what to make of this. On the one hand, anything which could restructure the board is a definite win, but on the other, I'm not keen about interest drummed up by the CVC sale, as I'm not sure I want us owned by someone who sees us as a vehicle to squeeze money out of. There is a chance we could end up being owned by someone like SISU, with similar results.

Puja

......Like Coventry City Fc....

People talking of King Power maybe.

I don't see that happening, but they do love the city (Which makes a change since most don't).

I've no in-depth knowledge of the background to this. It strikes me that all top rugby clubs need an element of benevolent ownership. Basically, some rich individual/group with fan-like loyalty needed. Is there nobody in Leicester in that category to have expressed interest? Or is this a case of advertising for the closest possible?

It seems to me they want their cake and to eat it...

I don't see how investment is Leicester's problem: they're one of the richest clubs in the country due to that stadium and their support.

Leicester's problem has seemed to be direction for quite a long time. And that lack of direction has led to poor signings and poor performances on pitch.

Quins can also be seen to have shared that, but the club recognised it and changed it very quickly, in fairness to them.

The club are on a sound financial footing, no debt, have unrivalled support in England and are part of an enterprise that seeks to grow the game in this country.
Why would you sell now?

They seem to have made an operating loss of between 400k and £1m year on year for three years, with worsening cash flow and £17m of debt according to the last annual report.

Banquo wrote:They seem to have made an operating loss of between 400k and £1m year on year for three years, with worsening cash flow and £17m of debt according to the last annual report.

Most of those losses and 100% of the debt have been due to capital investment in upgrading the stadium, facilities, and the parking and hotel on site. They should turn a profit this year and the debt is gone with the CVC cash.

Puja

Unfortunately when it comes to financial backing Tigers are not one of the richest by some distance though despite the stadium and support.

An example is Tigers have wanted too for some time now invest in their Training ground but due to planning constraints and time limitations they have had to prioritise building stands and buying land over it, and missed out on the preferred new training ground location due to it. (Which TBFis better than a council dragging it's feet ala Bath) but still.

Also struggle to compete with the foreign marquee Prices for example our foreign marquee player is worth like £350K contract, which I believe is one of the lowest in the league, with Manu we get at least credits from the RFU.

There is a concern over how long the current salary cap will last and if Tigers could afford to pay it go up (or maybe even scrapped).

On why would you sell, guess strike when the iron is hot, CVC being involved and wiping the debt makes it very attractive, talk over if Tom Scott is looking to make a nice profit.

Also talk among the PRL is the next RFU/PRL deal might be pretty damn lower than it is now with CVC against them.

Puja wrote:

Banquo wrote:They seem to have made an operating loss of between 400k and £1m year on year for three years, with worsening cash flow and £17m of debt according to the last annual report.

Most of those losses and 100% of the debt have been due to capital investment in upgrading the stadium, facilities, and the parking and hotel on site. They should turn a profit this year and the debt is gone with the CVC cash.

Puja

I get the debt position from what you've stated, but not the operating loss, though there is a chunk of depreciation; why would they turn a profit this FY, unless their income is up/wages markedly down. Their cash position would hopefully improve. But obviously an ideal time for Toms/shareholders to get himself bought out.

edit- as Tigersman says...

There’s no time like present to sell the snake oil of a profitable professional rugby club.

Banquo wrote:

Puja wrote:

Banquo wrote:They seem to have made an operating loss of between 400k and £1m year on year for three years, with worsening cash flow and £17m of debt according to the last annual report.

Most of those losses and 100% of the debt have been due to capital investment in upgrading the stadium, facilities, and the parking and hotel on site. They should turn a profit this year and the debt is gone with the CVC cash.

Puja

I get the debt position from what you've stated, but not the operating loss, though there is a chunk of depreciation; why would they turn a profit this FY, unless their income is up/wages markedly down. Their cash position would hopefully improve. But obviously an ideal time for Toms/shareholders to get himself bought out.

edit- as Tigersman says...

Costs will be down cause they're not spending money on construction. Plus, income up as they have completed stadium and infrastructure and can utilise them fully.

Mind, when I say I expect them to turn a profit next year, I'm talking about effectively breaking even levels, rather than making massive returns to investors. As Mells notes, a rugby club will never be a money-making enterprise.

Puja

Puja wrote:

Banquo wrote:

Puja wrote:
Most of those losses and 100% of the debt have been due to capital investment in upgrading the stadium, facilities, and the parking and hotel on site. They should turn a profit this year and the debt is gone with the CVC cash.

Puja

I get the debt position from what you've stated, but not the operating loss, though there is a chunk of depreciation; why would they turn a profit this FY, unless their income is up/wages markedly down. Their cash position would hopefully improve. But obviously an ideal time for Toms/shareholders to get himself bought out.

edit- as Tigersman says...

Costs will be down cause they're not spending money on construction. Plus, income up as they have completed stadium and infrastructure and can utilise them fully.

Mind, when I say I expect them to turn a profit next year, I'm talking about effectively breaking even levels, rather than making massive returns to investors. As Mells notes, a rugby club will never be a money-making enterprise.

Puja

Construction costs would/should likely be capex and not in the operating costs. They'd have to boost their income substantially and reduce their wage bill to break even, even. Hard work, and likely why current team want to sell.

Rugby vs football

Banquo wrote:

Puja wrote:

Banquo wrote: I get the debt position from what you've stated, but not the operating loss, though there is a chunk of depreciation; why would they turn a profit this FY, unless their income is up/wages markedly down. Their cash position would hopefully improve. But obviously an ideal time for Toms/shareholders to get himself bought out.

edit- as Tigersman says...

Costs will be down cause they're not spending money on construction. Plus, income up as they have completed stadium and infrastructure and can utilise them fully.

Mind, when I say I expect them to turn a profit next year, I'm talking about effectively breaking even levels, rather than making massive returns to investors. As Mells notes, a rugby club will never be a money-making enterprise.

Puja

Construction costs would/should likely be capex and not in the operating costs. They'd have to boost their income substantially and reduce their wage bill to break even, even. Hard work, and likely why current team want to sell.

Indeed, and when they talk about debt being gone it might not be gone in the sense that debt is gone, I think the quote here talked of net debt and that can of course be offset, so they could be carrying rather a large amount of debt

twitchy wrote:Rugby vs football

I have heard of the Leicester defender, I did not know he'd been sold

Digby wrote:

Banquo wrote:

Puja wrote:
Costs will be down cause they're not spending money on construction. Plus, income up as they have completed stadium and infrastructure and can utilise them fully.

Mind, when I say I expect them to turn a profit next year, I'm talking about effectively breaking even levels, rather than making massive returns to investors. As Mells notes, a rugby club will never be a money-making enterprise.

Puja

Construction costs would/should likely be capex and not in the operating costs. They'd have to boost their income substantially and reduce their wage bill to break even, even. Hard work, and likely why current team want to sell.

Indeed, and when they talk about debt being gone it might not be gone in the sense that debt is gone, I think the quote here talked of net debt and that can of course be offset, so they could be carrying rather a large amount of debt

The published debt, including long term was 16 m in 17/18 accounts, but could easily be more now. They look like they got 17m from the CVC deal, whether they use that to pay off loans will be interesting, though suspect they wouldn't.

Banquo wrote:

Digby wrote:

Banquo wrote: Construction costs would/should likely be capex and not in the operating costs. They'd have to boost their income substantially and reduce their wage bill to break even, even. Hard work, and likely why current team want to sell.

Indeed, and when they talk about debt being gone it might not be gone in the sense that debt is gone, I think the quote here talked of net debt and that can of course be offset, so they could be carrying rather a large amount of debt

The published debt, including long term was 16 m in 17/18 accounts, but could easily be more now. They look like they got 17m from the CVC deal, whether they use that to pay off loans will be interesting, though suspect they wouldn't.

You could easily park that money from CVC for an accounting period and cite net debt is down to zero, not that that wouldn't be obvious under due diligence, unless maybe Chris Grayling is in charge of the review

Digby wrote:

Banquo wrote:

Digby wrote:
Indeed, and when they talk about debt being gone it might not be gone in the sense that debt is gone, I think the quote here talked of net debt and that can of course be offset, so they could be carrying rather a large amount of debt

The published debt, including long term was 16 m in 17/18 accounts, but could easily be more now. They look like they got 17m from the CVC deal, whether they use that to pay off loans will be interesting, though suspect they wouldn't.

You could easily park that money from CVC for an accounting period and cite net debt is down to zero, not that that wouldn't be obvious under due diligence, unless maybe Chris Grayling is in charge of the review

That's exactly what they seem to be saying, and obviously many have fallen for it. Its all about a nice cash rich exit for current investors imo