Not really

Prepared to be bored:

I was kicking around the seemingly general assumption that the board are being completely unreasonable in their expectations for a buy-out and was thinking of comparing it to a recent takeover of a Championship club not too far from home. Do bear in mind that I'm pretty much a financial ignoramus, but here goes.

Let's start with the figure of ?56m. That can be cut to ?36m for starters as it included the entirely notional figure of ?20m to purchase players - a figure introduced by Peter Cullum, NOT by the board.

Of that ?36m, ?4m (At the time) consisted of director's loans. Whether these directors could be convinced not to call them in (I suspect so) is open for debate. What is not open to debate is the ?16m in loans & mortgages which are required to be refinanced in the event of a major change of ownership. While this does NOT mean a new owner has to pay them off, they must assume the liability for those loans in some manner.

The final figure remaining is ?16m to cover purchase of up to 100% of the shares in the club, as required by stockmarket rules.

Heading south of the border, Marcus Evans bought out the liability for ?32m in loans which Ipswich Town FC were unable to service. Exactly how much he paid to assume that liability is not clear.

More to the point, he forked out ?12m to create shares giving him an 87.5% shareholding in a concern which has very little in terms of fixed assets. Based on that rate, it valued the club at approximately ?13.7m.

Given that Ipswich seemingly don't own a pot to piss in, is the board really being unreasonable in valuing the club at only ?2m more when the club owns much more in the way of property and assets?

The answer, of course, is that the club - and any other - is only worth what someone is prepared to pay.

Posted By: Iwan Husarmi on October 5th 2008 at 15:33:40

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