Dipper Takeover? [Merged]

who ever owns liverpool doesnt need to build hotels or casinos around its stadium because they rake in around 165 m pounds annually and though its relatively healthy operating profits in are wiped out by interest payments on their borrowings from the Royal Bank of Scotland and the US bank Wachovia due to their loan on leveraging and even after an annual interest payments of 36.5 m pounds on their loan they reported a net +80 m operating profits for the last year.Its clear this is the factor that attracts most of the investors , the only thorn being the higher valuation expected by hick & gilette who are playing late to squeeze most of the club , but that has changed after broughton was brought into the board as chairman to see a formidable sponsor who clears the debt of the club and get significant investment in.

compared to this city had
Turnover: £87.0m

Operating profit: –£34.2m

Net debt: £194.4m

Interest payment: £14.4m
but the normal rules of business do not apply to us. The latest accounts show that with a turnover of £87m running at an operating loss of £34m and with an accumulated debt to Sheikh of £194m. Since then, the club has spent £117m on players, including Emmanuel Adebayor and Carlos Tevez. But Sheikh converted City's entire £305m debt to him into equity.
this is the game all big finance guyz play and i think the current Liverpool suitors are no strange to this , even though they just have to clear a debt of around 300 m pound by buying the club and rest assured they will add on a significant amount of investment in the squad to take their turnover even higher , which is not a longshot compared that LFC enjoys a huge popularity in asia.<br /><br />-- Thu Aug 05, 2010 1:44 pm --<br /><br />anyone here
 
The telegraph are saying Kenny Huang is not backed by CIC

<a class="postlink" href="http://www.telegraph.co.uk/sport/football/leagues/premierleague/liverpool/7928219/Liverpool-takeover-Kenny-Huang-denies-Chinese-government-backing.html" onclick="window.open(this.href);return false;">http://www.telegraph.co.uk/sport/footba ... cking.html</a>



Wednesday Huang confirmed his interested in buying the club, and sources in the UK told media outlets including the Daily Telegraph that the businessman's bid had the backing of the Chinese Investment Company, a sovereign wealth fund.

This morning Huang’s PR advisors, Hill and Knowlton Asia, issued a statement in response to UK media inquiries saying he would be making no further comment on his involvement with Liverpool. In a second statement, initially sent by Hill and Knowlton Asia to journalists in China, Huang went further, denying the involvement of “state-owned enterprises” in his business interests.

he statement read: “With reference to the recent media reports regarding Mr Huang’s investment interest in Liverpool Football Club, Mr Huang would like to emphasize that he is not able to offer any comment at this stage. Mr Huang would also like to deny that there is any involvement of Mainland China state-owned enterprises in his business dealings. If there is any related development, he will make a further announcement.”

When contacted by the Daily Telegraph to clarify the second statement a spokeswoman for Hill and Knowlton Asia said: “This is not an official statement.” She did not deny however that her office had generated the release.

Huang is understood to be travelling this afternoon and unavailable for comment, but if the disputed statement stands it casts fresh doubt on the source of his funding. The reference to mainland China suggests his funding may derive from Hong Kong, and the statement refers to current rather than future business interests, but it still offers little optimism for Liverpool fans hoping for a swift takeover.

The potential involvement of CIC was met with widespread scepticism in the Shanghai and Beijing business communities this morning. The group has investments across the world, including a stake in Canary Wharf and mineral reserves. By contrast a heavily-leveraged football club that will major investment in players before it turns a profit seems an unlikely target.

Huang’s London-based PR advisors, who were stood down on Wednesday afternoon, initially said that he was backed by an unspecified Far Eastern sovereign wealth fund. Huang is yet to provide proof of finance to Liverpool chairman Martin Broughton.

Well-placed independent sources have told the Daily Telegraph however that Huang appears to have genuine funds deriving from China. That view is not shared by the club’s American owners Tom Hicks and George Gillett, who are pursuing negotiations with Syrian businessman Yahya Kirdi. His spokesman said this morning that they hoped to get a deal done by next weekend
 
projectriver posted a while back on the thread that Liverpool's shares were effectively worthless as their maximum value was the value of their debt. I hesitate to argue with him as his postings are usually very close to the truth but I see things slightly differently.

He reckoned that football clubs should be valued at 2 - 2.5 times turnover but looking at the rags I see T/O of £250m and a value of £1bn (4 times T/O). Arsenal T/O £215m and value of £650m (3 times T/O). I've used the concept of Enterprise Value (which is market value of the company plus net debt).

If you take the debt out of that valuation for both of the clubs (£500m for the rags & just over £200m for Arsenal) then the equity is indeed valued at around 2 times turnover (where value = debt + equity).

This would therefore technically give an enterpise value for Liverpool of around £600m, which is what H&G reportedly want.

Liverpool's turnover is much less than the other big 3 because their stadium is smaller than the Swamp and Emirates plus they can't charge London prices. If you could build a new stadium, you could increase capacity by up to 50%, potentially adding £35-40m a year to their turnover. Therefore spending £500m on the club and £250m on a new stadium could actually be a decent piece of business. The downside is that you'd have to be able to guarantee CL football and that's one thing you can't do with us & Spurs now in the mix.
 
<a class="postlink" href="http://www.ft.com/cms/s/0/5db97946-a084-11df-a669-00144feabdc0.html?ftcamp=rss" onclick="window.open(this.href);return false;">http://www.ft.com/cms/s/0/5db97946-a084 ... ftcamp=rss</a>
China’s CIC denies interest in Liverpool FC

By Jamil Anderlini in Beijing and Justine Lau in Hong Kong

Published: August 5 2010 14:21 | Last updated: August 5 2010 14:21


A spokesperson for China Investment Corp, the country’s main sovereign wealth fund, told the Financial Times on Thursday they had never heard of a plan to buy Liverpool or of Kenneth Huang, the man widely reported to be fronting a Chinese bid to buy the English Premier League club.

UK media have reported that Mr Huang, owner of a small sports marketing company with an office in Beijing, is bidding for the club with backing from CIC.

But Mr Huang himself issued a statement on Wednesday night saying that although he has registered interest in investing in Liverpool, he has not made a formal bid.

“There has been much speculation and commentary from a wide array of people, many of whom have little knowledge of the facts,” Mr Huang said.

A person who has worked closely with CIC said there was “no way” the fund would get involved in such a high-profile, symbolic and potentially risky deal.

“Next they’ll say CIC is going to buy Playboy,” this person said.

A person close to Mr Huang told the Financial Times on Monday that his bid was backed by a “sovereign wealth fund from the Far East” but declined to name the fund.

There had been no suggestion internally at Liverpool that CIC was involved in Mr Huang’s bid, another person close to the situation said.

Portrayed in the UK press as a Chinese billionaire tycoon, Mr Huang runs QSL Sports Limited, a sports marketing company that is trying to develop a new basketball league in China and promote Little League (youth) baseball in a country where most people know nothing about the sport.

QSL’s website says the company is based out of Hong Kong and located at a prestigious address. However, when the Financial Times visited the office there was no sign of QSL and the management company of the building said no company by that name rented an office there.

A person who answered the phone at QSL in Hong Kong at first said the company was still at the address listed on the website, but when told that the management company of the building had denied this, then said the company had moved and its new address was a secret.

At QSL’s small office in central Beijing, company employees were still unpacking boxes having recently moved from a much smaller office. A staff member said the company employed around 15 people in Beijing but he had not heard about a plan to buy Liverpool FC.

After repeated questions to Mr Huang’s spokeswoman, the office addresses were removed from QSL’s website on Thursday afternoon.

An official biography of Mr Huang says he is an investor in a Chinese basketball team and in 1988 became the first Chinese college graduate from mainland China to work at the New York Stock Exchange, where he “started his career in public relations”.

He also founded an investment company called Rocket Capital with Leslie Alexander, owner of the Houston Rockets basketball team, and has made a number of investments in Chinese companies. Mr Huang’s spokeswoman could not confirm whether he was still involved with Rocket Capital.
Click to expand...
 
Chick Counterfly said:
http://www.ft.com/cms/s/0/5db97946-a084-11df-a669-00144feabdc0.html?ftcamp=rss
China’s CIC denies interest in Liverpool FC

By Jamil Anderlini in Beijing and Justine Lau in Hong Kong

Published: August 5 2010 14:21 | Last updated: August 5 2010 14:21


A spokesperson for China Investment Corp, the country’s main sovereign wealth fund, told the Financial Times on Thursday they had never heard of a plan to buy Liverpool or of Kenneth Huang, the man widely reported to be fronting a Chinese bid to buy the English Premier League club.

UK media have reported that Mr Huang, owner of a small sports marketing company with an office in Beijing, is bidding for the club with backing from CIC.

But Mr Huang himself issued a statement on Wednesday night saying that although he has registered interest in investing in Liverpool, he has not made a formal bid.

“There has been much speculation and commentary from a wide array of people, many of whom have little knowledge of the facts,” Mr Huang said.

A person who has worked closely with CIC said there was “no way” the fund would get involved in such a high-profile, symbolic and potentially risky deal.

“Next they’ll say CIC is going to buy Playboy,” this person said.

A person close to Mr Huang told the Financial Times on Monday that his bid was backed by a “sovereign wealth fund from the Far East” but declined to name the fund.

There had been no suggestion internally at Liverpool that CIC was involved in Mr Huang’s bid, another person close to the situation said.

Portrayed in the UK press as a Chinese billionaire tycoon, Mr Huang runs QSL Sports Limited, a sports marketing company that is trying to develop a new basketball league in China and promote Little League (youth) baseball in a country where most people know nothing about the sport.

QSL’s website says the company is based out of Hong Kong and located at a prestigious address. However, when the Financial Times visited the office there was no sign of QSL and the management company of the building said no company by that name rented an office there.

A person who answered the phone at QSL in Hong Kong at first said the company was still at the address listed on the website, but when told that the management company of the building had denied this, then said the company had moved and its new address was a secret.

At QSL’s small office in central Beijing, company employees were still unpacking boxes having recently moved from a much smaller office. A staff member said the company employed around 15 people in Beijing but he had not heard about a plan to buy Liverpool FC.

After repeated questions to Mr Huang’s spokeswoman, the office addresses were removed from QSL’s website on Thursday afternoon.

An official biography of Mr Huang says he is an investor in a Chinese basketball team and in 1988 became the first Chinese college graduate from mainland China to work at the New York Stock Exchange, where he “started his career in public relations”.

He also founded an investment company called Rocket Capital with Leslie Alexander, owner of the Houston Rockets basketball team, and has made a number of investments in Chinese companies. Mr Huang’s spokeswoman could not confirm whether he was still involved with Rocket Capital.
Click to expand...
Click to expand...

Surprise surprise. Just as I thought.
 
Prestwich_Blue said:
projectriver posted a while back on the thread that Liverpool's shares were effectively worthless as their maximum value was the value of their debt. I hesitate to argue with him as his postings are usually very close to the truth but I see things slightly differently.

He reckoned that football clubs should be valued at 2 - 2.5 times turnover but looking at the rags I see T/O of £250m and a value of £1bn (4 times T/O). Arsenal T/O £215m and value of £650m (3 times T/O). I've used the concept of Enterprise Value (which is market value of the company plus net debt).

If you take the debt out of that valuation for both of the clubs (£500m for the rags & just over £200m for Arsenal) then the equity is indeed valued at around 2 times turnover (where value = debt + equity).

This would therefore technically give an enterpise value for Liverpool of around £600m, which is what H&G reportedly want.

Liverpool's turnover is much less than the other big 3 because their stadium is smaller than the Swamp and Emirates plus they can't charge London prices. If you could build a new stadium, you could increase capacity by up to 50%, potentially adding £35-40m a year to their turnover. Therefore spending £500m on the club and £250m on a new stadium could actually be a decent piece of business. The downside is that you'd have to be able to guarantee CL football and that's one thing you can't do with us & Spurs now in the mix.
Click to expand...

PB, I was talking about turnover to EV ratio of 2-2.5 for Liverpool ie all the debt and equity. I would rate United and Arsenal as substantially more valuable than Liverpool though United at 4x revenue is toppy and I think, the Glazers are waiting for valuations to recover to get to £1bn. The way you have calculated the £600m Liverpool valuation is not technically correct. (You can't take the debt off to equate an equity value. You are coming up with a EV-debt over Turnover multiple not an equity multiple.)

At 2.5x revenue the Liverpool deal would be one of the highest multiples paid for a football club. It's also more than they paid and they bought the club at the top of the market. H&G can ask for 6x the forecast 2011 turnover but realistically only a lunatic would pay 6x revenue for any business and certainly not one that's got plenty of risk and little medium term ability to drive revenue.

On CIC, nice of them to set the record straight so quickly. How embarrassing for the Times and Tony Evans.

A deal even at £350m in this market and in these circumstances would be a major coup. I don't expect a deal before the window and what happens next depends on how the team performs on the field.
 
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