|
QUESTION: How much of a part will SFX play in
the financing of the building of the Kings Dock project?
ANSWER: None.
Clear Channel Communications are the parent company
of SFX. According to correspondence from the Senior Vice President
in charge of investor relations at Clear Channel, they will take no
financial involvement in the development of a stadium complex in
Liverpool. They are interested in potentially using the stadium,
from time to time, to put on concerts, as they would any arena – new or
otherwise – but they will neither be party to management of the
entertainment facilities at the stadium complex, nor will they put up
funds to help secure the development. They have never had any
intention of doing so.
Strange that something so crucial an aspect to the
overall business plan for Kings Dock has no commercial link to SFX or
Clear Channel, other than the participation of one director, Paul Gregg
whose ultimate boss, the CEO of SFX, re-iterates this stance. SFX
will be putting no money into KD.
It therefore seems that SFX must be divorced from the
equation; any financial projections including and indicating perhaps £10
to £30 million investment at commencement from SFX will not now
happen. Similarly, their commitment – so vital in providing the
extra revenue often cited as a major reason for the complex – may now be
brought seriously into question. There have been figures suggested
of perhaps an extra £10 million yearly revenue share being generated from
concerts. These additional revenue streams should now be regarded as
highly speculative and may never come to fruition.
Another issue which SFX non-investment affects is the
point in the life of the project when it breaks even, and the various
investors finally start to see a profit. Conventional estimates
would put the breakeven point of the Stadium complex at seven years after
completion. If another investor of equal stature is not found, the
financing may be seriously impacted such that there is no breakeven point
in sight.
Without a financial commitment in the project, we may
question what incentive SFX would they have to choose the new Kings Dock
as a venue over and above other cities? The involvements of one
director of both organisations might be regarded by some as suspicious and
improper. Unless the view is taken that historically world class
acts have shunned Liverpool due to its poor facilities. Michael Jackson at
Aintree? Liverpool has always had the ability to stage “mega
concerts” when the desire and timing is right.
With loser scrutiny, the KD business plan was
extremely shaky. If there is no commitment from SFX, whose
determination to use the stadium on a regular basis was supposedly a key
factor to the overall plan, the project may no longer be financially
viable. Removing SFX from the financial equation means that EFC will
have to raise their own funds or find another partner to participate in
the cost of building the stadium complex and surrounding residential
developments. But with debts of anywhere between £20 and £30
million, this may be extremely difficult. Is the current
asset-stripping exercise of selling Jeffers, Ball and others and replacing
them with players on Bosmans, or through deferred payments guaranteed by
Benfield finance.
However, it is possible for one of the directors of
True Blue to put up his own funds. For
Paul Gregg to guarantee any loan, put up the money, or lend it to EFC as a
commercial loan, it would be usual for him to expect a dramatic revision
in the share holding of True Blue in his favour. Even then he is
only likely to do so if he sees the debt reduced to a more manageable
figure. He is unlikely to put up £20 and £30 million if the club
are in that level of debt, as the money would in effect serve no purpose
when you imagine that a true commercial value of the whole of EFC would
conservatively be put at 25mil in the current climate.
If, however, EFC/True Blue/SFX are putting no money
in, then it is fairly certain that the shareholding they receive, should
it now go ahead which looks increasingly unlikely, will be negligible
also. Will the other financial contributors be happy with this breakdown?
They have already seen the figures, perhaps they will now take the view
that it simply does not make financial sense. Without a financial
commitment from EFC then the project could be off.
This also reveals perhaps now the real reason for the lack of
resistance and efforts to keep messrs Ball and Jeffers.
In order to participate in the scheme financially, a
serious gamble has been taken with the quality of football on the pitch.
The desire to obtain KD, at any cost, has also reduced the primary
function of this club to a secondary activity. The aspirations of the
directors of True Blue must also now seriously be examined. KD is
obviously now the only game in town for those we hold in high regard with
the stewardship of our football club. Far more important to them, than the
quality and ambition of the football we will witness over the next decade.
Houston, we have a problem!
Paul Holmes
Previous
articles from Paul Holmes
|
Top of the Page