I see Gordon Gekko's point, if you want to know about something, go look it up. Knowledge is power and it makes life a lot more fulfilling. On another note, DAMN Cortese's got himself a sweet deal here.
I love knowledge and am especially interested in science, history, archaeology, and architecture, but have very little interest in finance. I would rather ask someone who does know...that is why people specialise. The piece about our finances on BBC website told me what I needed to know.
I do not think that paying a debt in shares will increase the value of the club at all. Its just a way of gifting the money to the club, so that it doesn't have to be repaid. Markus lent Saints the money, and now those loans are being repaid in the form of shares in SFC- but if you already own the whole company as the Liebherr's do, then it is effectively written off. At least, that is my understanding of the situation, and it's exactly what happened at Chelsea. It neatly sidesteps the "fair play" rules coming from UEFA.
Saints effectively had no money in the bank when bought, so Markus and Nicola worked out a business plan which involved investing more money into the club as working capital with a view to future profits. So he invested the cost of Saints (A) and working capital (B), so the family now own 100% of A + B as shares, rather than 100% of A plus waiting for repayment of the interest-free loan. No change in what they own, but they have removed our need to fund repayments out of our income. They would only regain their money if/when we are sold, but in the meantime we are more viable. If we are more successful because of this, their final return could be greater. Rather like releasing equity in your house with repayment after your death. That's how I see it.
The remarkable thing is that our wage:turnover ratio of .93:1 is probably better than a large portion of the Championship
OK in very simple terms is how I understand this. Markus Liebherr buys the club on the recommendation of his friend Nicola Cortese for £14m. Why? Because he thinks that potential future profits are worth this investment. However, they need to invest more to realise these profits. So they put in another £30m, as a loan to the club. The investment is successful. The club does well. It's looking incresingly likely that the team will make the PL, meaning profits of £50m (say) in the first year, more if we stay up but this is uncertain. Taking all the variables into account, let's say the club is now worth £100m (say). If someone buys the club, they still owe the Liebherr family £30m. Therefore, they wouldn't pay more than £70m for it. They would be buying a club with a debt of £30m, that they would need to pay off out of the future profits. However, the owners decide to convert the loan to equity. This means that a buyer would now pay £100m. So the Liebherr family now get £100m straight rather than £70m plus being owed £30m by the new buyer. Why do this now? Well partly because they think the club is now worth more than £30m which makes it feasible to do so. The investment that the Liebherr's made has paid off. BUT - it also makes the club a more atttractive prospect to a buyer. No-one knows of course, but there is a possiblity the family have done this to prepare the club for sale following promotion to the PL. Let's be realisitic, the Liebherr family might be keen to get a return on this investment now. This might not be a bad thing - as long as there is continued investment and Cortese carrries on with the plan. Never forget though, that the only reason anyone bought this club is as a venture. It's a bit like dragons den but with bigger numbers.
It worth remembering that Cortese always said that it was never about the money. Now don't get me wrong, the sums had to add up and Markus was never going to pour money into a black hole, but think about the mission statement. Doing it in the right way, without massive debt. A style of free-flowing, passing football which was to become known as the "Southampton Way". Half the first team being acadamy graduates. This is all good business, but it is so much more than this. Remember that Pardue kept being asked why his team committed so many fouls? This was never just about the money, and we are so, so lucky.
Someone on Twitter who had a meeting today at St. Mary's and got to see the Markus Liebherr Lounge and more uploaded a picture from the boardroom today... please log in to view this image
I'm sure that Cortese always fancied running a club and trying out his plans, but I suspect that Markus was already ill and he became involved in it as a fresh interest and a hobby (albeit a very expensive one). As someone quoted...in his last year Saints were his constant preoccupation and that must have made his last months much happier. In a photo at the JPT, his family are turned towards him basking in his joy. We are in safe hands.
