Thursday 13 November 2014

Wasps - Ricoh Stadium - "Coventry or Die"

Difficult to know where to start, but suppose it best to pin my colours to the mast. I will not support the move to the Ricoh Stadium simply because I think it is wrong in principle to move any sports Clubs from the historical base and heartland. In the case of Wasps this move has been presented and justified as a "do or die" or "Coventry or Die" scenario and as being the only option. Well on both counts this simply is not the case.

Looking back, when did the troubles begin? The first stage was the refusal of Wycombe Council to grant the " Booker" project permission to proceed. Steve Hayes was angered by this and having invested and supported Wasps heavily over several years with this project as a long term objective all bets were now off. Steve introduced more cuts backs with the operation of Wasps and at the same time sought another buyer, he wanted out. 

Another buyer was found in the Barnet FC owner, name escapes me, however for whatever reason he dropped out just before completion, again around, February 2012. This further angered Steve Hayes and the cut backs increased to the point of Steve all but ceasing funding Wasps any longer. The process of running the Club based on revenue received had effectively begun. This led to issues with cash flow, payment of creditors and finally wage bills. The only cash potential Wasps had was via the P Shares which were viewed as the "Crown Jewels". Currently worth some 5m.

In April 2012 a meeting was held, organised by Ivor Montlake and Chaired by Mark Rigby. It was not a formal minuted company based meeting, it involved highly qualified individuals from various professions brought together under an umbrella of commonality which was Wasps. Mostly members of the Wasps FC from the past and present also some past players who were now heavily involved in business in the city of London. I was also in attendance, no others from the RFC were present.

Also attending this meeting were representatives of 2 multi national, worldwide based companies who had previously registered interest and started offer transactions with Steve Hayes before the Barnet FC was  chosen as the preferred bidder. Wasps had no money, no assets apart from P shares but did have a positive brand name. The aim to build a stadium within the region was the main attraction to these investors.

The meeting focussed on how to pay the forthcoming May 2012 wage bill. This was resolved short term, however looking longer term it was made clear by all it would take some 5 months to search and locate further investment interest from the City and indeed for those investors present to reignite their businesses to formulate another offer. I should say at this point that those potential investors that were present knew full well about the state of the Wasps financial position as they had already undergone the early stages of the due diligence process. Equally the likely costs to fund Wasps over a period of 5, 6 years to find a site and build a stadium were well know and not regarded at this stage as a negative. The Wasps brand name was still very strong and desired.

The other issue needing resolution was taking over ownership from Steve Hayes. Many options were discussed and presented to Steve, these eventually resulted in a club announcement that a Consortium headed up by Ken Moss, who was also present at the meeting, were to take over ownership of Wasps. This however was mostly smoke and mirrors to enable funds from outside the club to be provided on a loan basis in order to pay wage bills, with the "Crown Jewels" as a last resort fall back option. It was indeed seat of the pants time.

Now from this point onwards, April 2012, events become very unclear. All I do know is that further investors were being sought and I have to assume this led to the current position. The cash flow from May to September, the 5 month period, was limited but did cover immediate costs. David Thorne appeared on the scene in August 2012 as CEO/Owner (all very unclear) and then in November 2012 another significant event occurred. Nick Eastwood, who had been runner up for the England CEO role, arrived. A man of huge ability and experience taking on a role of CEO at Wasps, which was to all intent and purpose still a basket case. Why ? Had Wasps finally cracked it and had Nick been brought in to sort the club and take the stadium project forward ?

Well admittedly it is assumption, but I think we can today see the answer. During this 5 month period from May to Sept 2012 I presume Derek Richardson was also unearthed being a colleague of David Thorne and options regarding the Ricoh Stadium were presented to the Wasps board, which at that time effectively would be Ivor Montlake and Mark Rigby. The DR/DT option was chosen, the initial action being to recruit a CEO, Nick Eastwood, in order to deliver the project. 

Now the ins and outs of all this activity is unclear, however the Club also reported others investors were in tow as early as Feb 2012. They also stated that a move out of region would not be considered. To me any plan that countenanced a move out of region was not an option. Other options regarding stadiums within region would have been difficult, painstaking, long winded, costly and has to be said could potentially be unfulfilled. However I do believe other options were on the table from May 2012 but the Ricoh offered a quick fix. That does not mean the option chosen was not the best or not better. Only time will tell us the answer that question.

But for me when people justifiy this action as it was " Coventry or Die" or " It was the only option" I simply do not believe that was the case. So was Nick lying ? No, because when he took over it was the only option, it had already been decided by the Wasps board which way to proceed. That's why he was attracted and he was brought in. I watched the video of the Fans Forum and noted with interest how Nick started to distance himself from the "Coventry or Die" strap line, crediting it, if that's the correct phrase, to one of the supporters. I think he knows it was not the case.

However, the deal is now done the initial project completed. I do sincerely hope it does well. I, as I have said already, I cannot support it on principle and indeed as things progress there certain aspects I find very distasteful and to my mind not in line with rugby values which I most cherish. I feel particularly aggrieved that the RFU/PRL have sanctioned/approved this move and hope that Wasps have not taken on too much of a challenge or too much debt.

Was this the best deal for Wasps? Only time will tell. Were there other options ? Most certainly. Why was this option chosen? Again how can we assess this process with so little information. In the fans forum video, some 1hr 40mins, I think only two questions were asked about the business structure.

With regard to the financial set up of Wasps we simply do not know any or hardly any of the details. What we do know is Wasps RFC are the trading company,  have bought the leasehold, most likely pay rent to CCC on the freehold, own 50% or 100% of ACL the operating company. Wasps are 100% owned by Canmango Ltd a holding Company registered in London, largest shareholder David Thorne. Canmango Ltd are 100% owned by Moonstone Ltd who shares are 100% owned by MGI Fiduciary Services in which Derek Richardson is the primary shareholder. Both Moonstone Ltd and MGI are Malta registered companies, so quite difficult to establish details.The funding for the purchase will have come down from these Companies and will be presented as loans in the Wasps accounts.




Tuesday 11 November 2014

Ricoh - The Final 50%

It has been reported today that the Alan Edward Higgs Charity (AEHC) will decide this week on the two bids they have received from Wasps RFC and CCFC (SISU) in relation to the 50% shareholding they currently hold in Arena Coventry Limited (ACL) and whether to accept or reject one or both bids. This may or may not be true, however one would assume all the necessary requirements would be in place and easily available in order to make this decision. The Wasps RFC bid is unconditional whilst the SISU bid is conditional reportedly based on information relating to the ongoing Judicial Review.

Should Wasps RFC secure the 50% they would have a 100% shareholding in ACL. If SISU are successful then they and Wasps RFC would hold 50% each. One can present a case of which would be the better outcome and often this would be based on which club you support, however from a purely business, commercial assessment a joint holding of 50% each would appear to be the stronger option in terms of increased revenue and profit in the medium to long term for ACL. This is based on the fact that should SISU fail with their conditional bid it is hard to see a future for CCFC as purely tenants, hence the crowd size and income this generates for ACL would be significantly reduced. Two factors would change this. One Wasps RFC develop an average gate size of around 15k and significantly improve the performance of ACL. Two SISU sell up CCFC to a new ownership and they can turn the club around progressing up the league and more significantly restore the average attendance to around 15 to 20k.

Now whilst all this is of some interest it is mostly irrelevant to AEHC and how they will make their decision. It will be the board of AEHC who will make the decision as to what to do with their 50% shareholding in ACL, despite the other shareholder, Wasps RFC, having the ability to block or accept any deal. Only the AEHC board can give approval to any offer. Any decision the AEHC board make will be based on commercial criteria in the best the best interests of the Children's  Charity. They have 3 options - 

1) Accept the SISU offer, which if Wasps RFC blocked  - then move to 2) or 3).
2) Reject the SISU offer and accept the Wasps RFC offer
3) Reject both offers

Whilst we do not know the details of any of the bids, the SISU offer is conditional and may well not be acceptable commercially on the basis as it could lead to further court action and incur further costs. In any event Wasps RFC could block this deal. Accepting the Wasps RFC unconditional offer would be a straight forward option, supposing both offers from SISU and Wasps RFC are roughly similar. However the AEHC must act in the best interests of the Charity, nothing else. Whilst the Coventry City Council (CCC) deal with Wasps RFC had a strong degree of political influence about it, this decision will be commercially centred. Now option 3) for the AEHC board would on the face of it present the best commercial gain, that is without knowing the full details of the bids to date.

Already with the Wasps RFC and CCC deal done the value, revenues, profits of ACL has already increased, simply by increasing the usage and profile of the Stadium. The AEHC 50% shareholding is now worth significantly more than 30 days ago. So both offers submitted should reflect this, if not they may well be rejected. The lawyers and accountants will be viewing the business plan projected figures submitted by Wasps, unless the offers submitted reflect the projected improved performance in ACL with Wasps RFC now in place, the AEHC board will be duty bound to reject both offers and stay, in the best interests of the Charity, as joint owners of ACL. They are not duty bound to sell. It will be the lawyers and accountants who prepare and present the criteria on each of the options, it will not be based on sentiment, polical pressure or preference. It will be based on the financial facts relating to the long term interests of the Charity. Simply the amount Wasps RFC paid CCC for their 50% shareholding will have increased in value, hence the bids on the table should be more, otherwise the AEHC board would not be fulfilling their duty the the Charity.

Having said all this, the most likely chain of events which has brought us to this point is that initially Wasps RFC approached the Council and most likely AEHC at the same time, showed an interest and negotiated an offer to buy both shareholdings of ACL. It was only when a covenant was discovered requiring first option sale must go to CCFC that things changed. However the initial figures scrutinised by the AEHC board have now significantly changed due to the deals not being completed simultaneously.

My preference is for Wasps RFC and CCFC (SISU) to share the spoils and get on and make it work. It is after all a sports stadium and with two clubs progressing and successful that can only be good for everyone. We shall see how it all unfolds, hopefully this week.