SD has decided to sell!!

Some serious data mining going on there... let's hope Donald and the Dell boys agree a price soon. Football even to a non-insider like myself (albeit an accountant) is as murky as any. The music business with very dodgy characters, hangers on and very odd deals/contracts my be similar ( both have temperamental 'talent'). Was it not said how do you make a small fortune?, start with a large one and buy a football club.

The loan(?) From the Dell boys as has been said smacks of being a precursor to a buy..

 

Was he at the Doncaster match as well

 

I posted on RTG, in September, that I'd been told an ex-England manager has been advising the Americans.

As usual I was ridiculed by the usual bunch of creeps over there.

I assumed it was Allardyce because of his connections so asked the question ...

... I wasn't corrected so carried on believing it was him.

It may have been true, at the time, or it could've been Tufty ...

... or perhaps it was neither

 

Is Bob Murray still life President of the club does anyone know?

If so could the FPP boys take over and make Bob CEO so that he could look after the shop.

Then bring in Niall Quinn as DoF. Quinny either helps Parky to get on with the job or replaces him. If he looks to replace him, SKP springs to mind, but with his lack of managerial experience he could be a risk at this time.

This way you have local people involved or people who ‘get’ the club like Quinny does. This would all have to happen quickly to take advantage of the January window and I’m not sure how feasible that part of it would be?

 

We're the pits

 

or perhaps it was one of them. we may find out in the fullness of time.

 

L

Sunderpitt if you don't mind

 

Definitely not the Ritchie Pitts, at least until FPP takeover

 

Not coincidence, it is a definition. It’s why it is called a balance sheet - both sides will equal each other. What goes on to a balance sheet in accounting terms isn’t a market valuation necessarily. It would take too long to explain in detail but the basic gist is that any company will have assets and liabilities. The assets are what the company owns or is owed and the liabilities are what it owes (to creditors or shareholders).

So a company which has nothing other than £10m of cash as an asset but also owes £9m to a bank would have the liability side of the balance sheet as the £9m loan and £1m of shareholder equity, ie what is owed to shareholders after paying back the loan.

In terms of Madrox, the only asset it has is SAFC. The liabilities are the loans to SAFC and FPP as well as shareholders.

What SAFC is actually worth is not related to the number on the Madrox balance sheet. Not least because one of the assets of SAFC is a loan to Madrox.

The only number that matters is how much is left over for Madrox shareholders after the £37m of debts are repaid following a sale of SAFC. Very obviously, the sale price has to be above £37m for there to be anything. At £37m, Madrox make zero. A sale price below that level would simply mean Madrox would be bankrupted and would not repay the SAFC loan (which reduces the value of SAFC).

So the only real question is whether someone would pay more than £37m for a debt-free SAFC? I would imagine the odds of that are incredibly small. So whatever money has been put into this by SD and co has been lost. From his perspective, it makes no difference whether Madrox sells it for £1 to FPP and defaults on the loans (to SAFC and FPP) or sells it for £37m and pays back the loans. The outcome is basically the same.

The only reason to publicly announce a sales process (and/or to pay-back the FPP loan which would likely be through another loan secured on SAFC assets) is to try and stimulate an auction to see if someone will pay enough for Madrox equity to be worth more than zero. I doubt it is but I would try to do the same in his position.

The problem for SD is that he wants the equity in Madrox to be worth something equivalent to what he put in but it isn’t. That money has gone up in a puff of smoke.

 

Thanks for that. I do have a rudimentary understanding of balance sheets but hadn't realised that it was the Madrox balance sheet and that there were basically only two items on it.
As to the value of SAFC it depends on what assets are included. Debt free I'd have thought the stadium, AOL and playing staff would be worth £37m although IF it's currently losing money I can see why finding a buyer at that price might be difficult

 

"The only reason to publicly announce a sales process (and/or to pay-back the FPP loan which would likely be through another loan secured on SAFC assets)is to try and stimulate an auction to see if someone will pay enough for Madrox equity to be worth more than zero."

That's impossible.

If FPP want the club there's little Donald can do to stop them.

Donald hasn't actually announced a sales process and doesn't need to, everyone has known the club was for sale months ago.

The terms of the FPP 'loan' agreement stipulates that Donald would need their permission to raise a secured loan ...

.... that won't happen.

 

Not if he pays off the loan. He could pay it off (would require an equity injection into Madrox first to dilute CM) then he can pay off FPP and replace it with a different loan if he can find a lender. Not saying he will but the restrictions imposed by the loan only hold while the loan is outstanding.

There would only be a point in him doing that though if he thought he could find a buyer north of £37m which I doubt he will.

The main point is the equity value of Madrox is zero which is no doubt why CM bailed so quickly. SD and JS have real losses to wear but the prospects of them getting anything back is fairly remote.

That basically means that FPP have won the ‘auction’ as someone would have to pay £40m to out-bid them and no one will.

 

How much is something that loses money every year actually worth?

 

Depends whether you think you can do a better job than the bloke who's selling it

 

If he could afford to pay off £10 million he wouldn't have needed to borrow It.

No one will loan him the money imo.

FPP have all the decent cards and I fully expect Donald to fold.

 

Yes, FPP will almost certainly end up as owners, but they are debt holders and SD is the equity holder so ultimately he has the opportunity to find an alternate path. That is just how the priority of capital structures work. Equity holders take the most risk but they get the most control. Ultimately I expect Maddox to be liquidated as insolvent, but the timeframe for that remains in the hands of SD, not anyone else. The odds of any new bidder wanting to come in to change the situation is minimal.

I stated this in one of my very few posts a while back. The issue with SAFC is that SD overpaid and is going to take a big hit. The accusation that he is a chancer looking for a quick profit is nonsensical. He is going to lose everything that he put in.

 

Its nonsensical because he's failed twice now to get promotion. The first was agonisingly close despite basic errors like recruitment, Ross, Maja/Grigg and prioritising the cup run.

Of the two Methven was the chancer. Conveniently his shares in the club were in lieu of payment for PR work that started off very good, but latterly should've had him owing the club a big chunk of change due to the damage he caused.

 

The failed takeover by FPP earlier in the year was a big nail in his coffin for the Sunderland owners.
The owners allowed it to get out of hand and let everyone believe it was all done and dusted just about,so we all worked ourselves into a frenzy thinking we where going to be superpowers in football.
When the realisation hit home that we where a rudderless sinking ship the fans where sick as chips .

 

Exactly. So why do you think they fell out? How would you feel towards someone who had persuaded you to cut them into a deal for nought that was going to end up costing you £10m+?

 

What is the fascination with previous players, managers etc from safc.
Murray now getting 'fanonised ' ???
By the time he left and sold up to drumaville the vast majority couldnt wait for him to do one.
2 humiliatingly embarrassing relegations, hiring of howard wilkinson. He was held in as much disdain as donald is now.
But hey now he is the man in the white hat, our cavalry to the rescue.
FFS it would be another example of more foot shooting.
He is a doddery old codger who was a doddery old codger when he sold up. What on earth do you think he could offer almost 15 years on?
Oh yes, he was the owner years ago therefore if we bring him in again all of our problems will magically disappear.
No wonder straight jackets were a preferred form of treatment for some.