Guided Missile Posted 7 November, 2008 Share Posted 7 November, 2008 The benefit of the recent Bank of England base rate cut will do little to help Southampton Leisure plc. It must have seemed like a good idea when our club negotiated a 25 year fixed rate interest of 8.35% on the stadium loan, at a cost of £560,000 back in 2001. With a base rate of 3% that seems like a pi££ poor deal now. Luckily the £1,000,000 loan we got in 2003 was borrowed at base rate plus 2% which means the recent rate cuts will save the club £20,000 in interest per year compared to a couple of months ago. Unfortunately, the £500,000 a year potential savings on the stadium loan, if we had negotiated a tracker rate, disappeared in the stroke of Lowe's pen, together with the £560K mortgage fee. Suckers..... Link to comment Share on other sites More sharing options...
s0108787 Posted 7 November, 2008 Share Posted 7 November, 2008 to be fair, with the sums we are talking about a business cannot afford to play russian roulette with interest rates. A fixed rate will aid in cash flow forcasting and budgeting. Hindsight is always a wonderful thing. Link to comment Share on other sites More sharing options...
Scudamore Posted 7 November, 2008 Share Posted 7 November, 2008 Hindsight is always a wonderful thing. And that is all that can really be said about this thread... Link to comment Share on other sites More sharing options...
Guided Missile Posted 7 November, 2008 Author Share Posted 7 November, 2008 And that is all that can really be said about this thread... It was a bad deal in 2001, a fact that was confirmed when a base rate linked loan of £1M was negotiated by the club in 2003. The fact is, Lowe has lumbered the club with an expensive loan which will continue to be the driving force behind our rapid descent into administration. There were other ways, in my opinion, to have structured the finance for the new stadium. One way would have been for the club to have leased the stadium from a holding company who owned the ground. Either way, the terms of the loan and the way it has saddled the club with a level of debt that requires the sale of players every year is something that could have been achieved with a far lower cost/risk to the club.... Link to comment Share on other sites More sharing options...
Mole Posted 7 November, 2008 Share Posted 7 November, 2008 And that is all that can really be said about this thread... You must really love Lowe, your blind support really is astonishing. Link to comment Share on other sites More sharing options...
Scudamore Posted 7 November, 2008 Share Posted 7 November, 2008 You must really love Lowe, your blind support really is astonishing. And your avatar does really, really offend me...i'll be asking for it's removal... Now onto the frankly preposterous notion that i am in some way even vaguely fussed about Rupert Lowe, let alone in love with him. Grow the **** up. I don't love him, i don't support him, i don't even mention him in 99% of my threads. And yet some people can't get enough of posting about him. I make fun of such people as i find their actions a little absurd. That is all... Link to comment Share on other sites More sharing options...
trousers Posted 7 November, 2008 Share Posted 7 November, 2008 Hindsight is always a wonderful thing. Disagree that this has anything to do woth hindsight. Securing an 8.35% fixed rate in 2001 is bad foresight IMHO. Might have been a good deal in the late 80s perhaps but in the early 00's?! Link to comment Share on other sites More sharing options...
trousers Posted 7 November, 2008 Share Posted 7 November, 2008 And your avatar does really, really offend me...i'll be asking for it's removal... Why is it offensive? Link to comment Share on other sites More sharing options...
Scudamore Posted 7 November, 2008 Share Posted 7 November, 2008 Why is it offensive? I'll not be drawn into that discussion i'm afraid... But i think it's pretty obvious... Link to comment Share on other sites More sharing options...
benjii Posted 7 November, 2008 Share Posted 7 November, 2008 together with the £560K mortgage fee. Suckers..... Which, coincidentally is also the amount the club paid out in termination payments when Wilde came in. I'll not be drawn into that discussion i'm afraid... But i think it's pretty obvious... I think it's rather jaunty. Link to comment Share on other sites More sharing options...
Scudamore Posted 7 November, 2008 Share Posted 7 November, 2008 You must really love Lowe, your blind support really is astonishing. I like your new avatar...do you know who it is? Link to comment Share on other sites More sharing options...
s0108787 Posted 7 November, 2008 Share Posted 7 November, 2008 Disagree that this has anything to do woth hindsight. Securing an 8.35% fixed rate in 2001 is bad foresight IMHO. Might have been a good deal in the late 80s perhaps but in the early 00's?! I acknowledge that it seems a little high compared with the prevailing rate at the time, but i would imagine given the precarious, fickle nature of football - particularly for clubs outside the higher reaches of the premier league - the banks would look to cover their risk by only offering inflated rates compared to businesses in other industries. As with the current credit crunch, things can change very quickly - especially given that the loan is over such a long term. Who's to say we wont see a return of 12% interest rates in 5 - 10 years time? If you have that sort of knowledge then you know more than the rest of us! Link to comment Share on other sites More sharing options...
Mole Posted 7 November, 2008 Share Posted 7 November, 2008 I like your new avatar...do you know who it is? I read the filename you gave it on your PC - "Rupert". Link to comment Share on other sites More sharing options...
Leicestersaint Posted 7 November, 2008 Share Posted 7 November, 2008 It is difficult to see far into the future but for that reason alone a fixed rate of over 8 % over 25 years is very bad business - why tie oneself up for that long when history shows that 8 % is high and better rates are likely to occur during the period. Who in their right mind would do that with any sort of loan including their mortgage? Link to comment Share on other sites More sharing options...
Scudamore Posted 7 November, 2008 Share Posted 7 November, 2008 I read the filename you gave it on your PC - "Rupert". http://familyguy.wikia.com/wiki/Rupert I thought i was being all ironical like at the time... But now it would appear that i am in love with Rupert Lowe... Link to comment Share on other sites More sharing options...
exit2 Posted 7 November, 2008 Share Posted 7 November, 2008 Looking at the bank rate from back then, it ranged from 5.25% to 6%. But agree a fixed term on that amount is taking a gamble. The only thing is that youknow what you are paying for the next 25yrs, with out the the threat of of it increasing to stupid amounts if the rate went up on a varible. But its too late know and no one would remortage us in a million years at the moment Link to comment Share on other sites More sharing options...
Channon's Sideburns Posted 7 November, 2008 Share Posted 7 November, 2008 As a mortgage adviser for over 14 years, I can only raise one issue - the situation depends a lot on how the loan was arranged - plus commercial finance remains a totally different proposition to residential finance. The 'current' deal of 2% above BBR is a standard type of deal - and back 2001 even on residential terms many people WANTED Fixed Rates - there were very very few Trackers available at that time (especially on Commercial Terms). Don't get me wrong, I DO think that a 25 year Fixed Rate is decidedly questionable - would be interested to know who BROKERED the deal, and pocketed the commission.... Now, THAT would be interesting to know.... Link to comment Share on other sites More sharing options...
Mole Posted 7 November, 2008 Share Posted 7 November, 2008 Don't get me wrong, I DO think that a 25 year Fixed Rate is decidedly questionable - would be interested to know who BROKERED the deal, and pocketed the commission.... Now, THAT would be interesting to know.... One of Lowes cronies i would think. Link to comment Share on other sites More sharing options...
Channon's Sideburns Posted 7 November, 2008 Share Posted 7 November, 2008 One of Lowes cronies i would think. Or the financial arm of Saints at that time - SIS ??? It could be (a 'Long Shot' I guess!!) that the £560k might actually have stayed within the club..... Don't get me wrong, I dislike Rupey Baby with a passion, but he might just have kept the deal in house - which would have been good business. Link to comment Share on other sites More sharing options...
dubai_phil Posted 8 November, 2008 Share Posted 8 November, 2008 Actually, compared to some deals people have done around football clubs, it seems a pretty sensible deal http://www.telegraph.co.uk/sport/football/2290302/Hicks-admission-casts-doubt-on-Benitez-plans.html After all a business having to pay out 30 mil a year so that it could have new owners is much more sensible than making sure you have a fixed plannned expenditure into the future Liverpool's American owners have admitted for the first time that the football club will have to finance around £30 million in annual interest payments on new loans taken out to pay for their takeover of Anfield last February. Just remember, rates can go up as well as down, the late '80's we had them up in the 20% levels. But I suppose many on here seriously believe Lowe is at fault for not first spotting and then stopping the global credit crunch.... So while we are being negatitve, let's also lol then at all those fools who took out fixed rate mortgages, what's that? about 80% of all of them in the UK? Good grief. Link to comment Share on other sites More sharing options...
wild-saint Posted 8 November, 2008 Share Posted 8 November, 2008 And we can also laugh at the 99.9 percent that didnt sell there houses 12 monts ago, move into rented and save 15percent of the value of thier houses. Link to comment Share on other sites More sharing options...
Foxy Posted 8 November, 2008 Share Posted 8 November, 2008 And we can also laugh at the 99.9 percent that didnt sell there houses 12 monts ago, move into rented and save 15percent of the value of thier houses. Or indeed those who did that and will mis-time their return into the market and come in at a similar rate they got out at having blown a fortune on fees, comissions, rent and general pain in the arseage. Or better still at the bloke I used to work with who sold up five years ago in anticipation of a crash and has been renting since as even now can't afford to get back to where he was. Hindsight a wonderful thing indeed. Link to comment Share on other sites More sharing options...
INFLUENCED.COM Posted 8 November, 2008 Share Posted 8 November, 2008 It could be (a 'Long Shot' I guess!!) Please expand on 'long Shot', are you suggesting this poster who has suggested he is ITK through conversations he has had with Falsehope & Co was involved in the brokering of this deal, ex employee ? Barclays employee ? N U employee ? Link to comment Share on other sites More sharing options...
Tac-tics Posted 8 November, 2008 Share Posted 8 November, 2008 Apparently the credit crunch is the reason Craig David can't pump money into Saints. but in his own words "maybe after a few more records" ha Link to comment Share on other sites More sharing options...
Mole Posted 8 November, 2008 Share Posted 8 November, 2008 Apparently the credit crunch is the reason Craig David can't pump money into Saints. but in his own words "maybe after a few more records" ha Thank **** for that, the blokes a complete nob. I didn't even know he was a Saints fan until he saw the opportunity for self publicity during the 2003 cup run. And then there's his crap music - every song he writes includes his own name in the lyrics. Link to comment Share on other sites More sharing options...
Gemmel Posted 8 November, 2008 Share Posted 8 November, 2008 I seem to remember that at the time, the finance was all in place spread across a number of German banks and then at the last minute it was switched to Norwich Union, although it was always phrased as an "unnamed" financial institution and have never been sure why they wouldnt say who it was. i assumed it was Friends Provident, given the sponsorship etc. Link to comment Share on other sites More sharing options...
hughieslastminutegoal Posted 8 November, 2008 Share Posted 8 November, 2008 The fact is, Lowe has lumbered the club with an expensive loan which will continue to be the driving force behind our rapid descent into administration. There were other ways, in my opinion, to have structured the finance for the new stadium. One way would have been for the club to have leased the stadium from a holding company who owned the ground. Exactly - something I was suggesting might be an option, when I said they just might separate the football club from the SLH, put SLH into administration, let the mortgage co. take on the stadium, and arrange a lease deal. After all, who else could the mortgage co. let it to? If all the player salaries etc are payable by the football club, and they are predominantly loanees with no capital value to the club, and the playing costs are driven down as low as possible, the above might just be feasable. If they are clever about it, they might just get away with it. I was never convinced Lowe ever really wanted this stadium, but was "embarrased" by the Council's offer of land and planning permission into getting it built. Maybe he thinks it's time to unload it. If we have no players of any substantial value, and the stadium is more of a liability than an asset financially, the real value of the football club is the fact that it is a CCC "franchise". Link to comment Share on other sites More sharing options...
Gemmel Posted 8 November, 2008 Share Posted 8 November, 2008 Exactly - something I was suggesting might be an option, when I said they just might separate the football club from the SLH, put SLH into administration, let the mortgage co. take on the stadium, and arrange a lease deal. After all, who else could the mortgage co. let it to? There are laws preventing companies dumping assets and then going into administration. Bascially you can't do it. Link to comment Share on other sites More sharing options...
jonah Posted 10 November, 2008 Share Posted 10 November, 2008 The benefit of the recent Bank of England base rate cut will do little to help Southampton Leisure plc. It must have seemed like a good idea when our club negotiated a 25 year fixed rate interest of 8.35% on the stadium loan, at a cost of £560,000 back in 2001. With a base rate of 3% that seems like a pi££ poor deal now. Can't say I agree with your take on this GM. Commercial property loans typically require a 20-25% deposit and rent should be at least 130% of loan cost. For SLH it was a 100% loan and the "rent" came from within the same parent company - we were what would now be called "Sub-Prime" in terms of commercial property "mortgages"! Commerical property mortgages typically ranged from 1-5% over BoE base rate at that time (*), and at the time the base rate was 5.75%, so I think 8.35% was actually pretty good given our situation. Also, we offset the £560k against the loan so it's amortised over 25 years, and we also negotiated a capital repayment holiday of 1 year. The original loans with Fortis and DG Bank were 10 year floating rate notes for £17m - nobody wants to run a cash-critical business on a floating rate do they? Far far easier to budget with a fixed rate - if they want to take a mix of fixed/floating they can always take out an Interest Rate Swap but why would they want to other than taking a punt on short-term rates? I don't think it makes that much sense, especially as we have floating rate exposure in the other loan. As far as the short-term interest rates go, well yes they are low at the moment if you simply look at the BoE Base Rate, but that's not overly relevant unless you are lucky and have a genuine base-rate tracker - the real rate that matters is 3 month LIBOR which is at 5.84%, which is pretty much where we were when they first took that loan out (LIBOR was 5.75% at the start of 2001). Also many commercial loans based upon BoE rate have caps and floors on the rate range so no guarantee it would go much lower, and floating rates are usually negotiated on shorter terms - we would not want to be trying to renegotiate our debt in this market, we would be absolutely crucified. (*) At that time LIBOR was only 20-30bps over BoE base rate - nowadays, as mentioned above, LIBOR is incredibly higher, a full 284bps - and it's the LIBOR rate which is important, so 1-5% over BoE rates then is more like 3-7% over BoE rates now given credit conditions. PS. If our short-term floating rate loan is with Barclays, you'll find they usually have small print to the effect that they don't use BoE base rate at all but rather the "Barclays Base Rate" which is not guaranteed to be the same... there's always a way out for the banks! Link to comment Share on other sites More sharing options...
Channon's Sideburns Posted 10 November, 2008 Share Posted 10 November, 2008 Please expand on 'long Shot', are you suggesting this poster who has suggested he is ITK through conversations he has had with Falsehope & Co was involved in the brokering of this deal, ex employee ? Barclays employee ? N U employee ? Sorry to burst the conspiracy bubble Inf, but it was only meant as an 'in joke' about those supposedly ITK - apologies for any other impression given by my inclusion of that... Cherrypip still around?? I am very interested to see if we can get some guidance as to whether the original mortgage was brokered through SIS though - anyone know? Link to comment Share on other sites More sharing options...
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