Saints enter partnership with GAO family

And as I suspected:

"The Gao family personally, rather than their company Lander, is said to have paid for the 80% stake, using assets already held in Hong Kong, thereby complying with the restrictions in China."

Of course the Chinese restrictions on taking money out of the country may affect us in the future. We shall see.

 

Ralph speaks to the Daily Echo...



Q: What are your hopes and expectations now the move has gone through?

This partnership gives us an opportunity to move differently into the global arena first of all.

It solidifies what we have at home base. It solidifies our position and strengthens our outlook.

On the business side we will be laying out our plans of investment and all of that, but let the paint dry for now. That will be for after the transfer window and into September.

I have already had a few longer phone calls but I have known them for 16 months already so it’s been a long process.

I would say initially two things for sure. There is the stability of the club as it is, and its ability to compete in the Premier League which is getting more and more difficult every day.

Let’s be honest the competition’s not sleeping, teams coming up are investing heavily and teams in the Championship are hungry to get up here, so we know there’s a lot of competition.

We are excited for the knowhow they bring with intelligence and experience clearly in the Asian market too and the opportunity that grows out of this.

Our present sponsors like Virgin Media and Under Armour are very excited about this too. Although it’s a partner from Asia they see synergies that will help us in America and so on.

My immediate answer is on both fronts a strengthening of our club and a continuing growth which is what we need to have to be competitive.



Q: You explained the growth, so in what way is it strengthening the club?

When you have a partnership like this where Katharina is still on board and you add a very intelligent, warm businessman like Mr Gao and his family and Nelly into the equation you just get more depth right away.

For Katharina she had a feeling this was as far as she wanted to or could take the club alone and so the search for a partnership where she could stay on board, where the culture would stay intact and the way we operate stay intact. It’s not a huge leap we are looking for here.

We want this to continue the way it is, a sustainable model in the long term and where exactly that investment will come I am not in a position to list to you.

We are open and transparent and until we have had some time with their management team, our management team, all I know is there will be growth here and investment and this is the emotional change and the factual business comments will come over time. Just give us time to evolve these properly.



Q: You must have an idea whether we are talking some incredible investment from a very wealthy benefactor or a more stable evolution?

There is no question. We don’t want to go any other way than the way we are going now.

Let’s take an example of transfer markets.

We had three summers of turbulent, volatile, high change transfer markets.

Altogether it was 19 players in and 13 players out over a few summers.

This is my fourth summer going into fifth season. First summer was six out seven in, the next was three out seven in, then five out and five in. Now we have one out and two in.

That didn’t happen because of that change of this partnership but because we had need to increase our depth charts so we had to make the transactions we did over those years to get a deeper squad which we now have.

We have a strength of contracts which I spoke about months ago, and that has allowed us to change our plan and say now we need to focus on synergies and we want to build on continuity.

Great football teams are not built by permanent change. They are built by holding groups together, by building on it.

This partnership as it was evolving to the point it was going to happen gave us the strength and the confidence to go through this window the way we have and continue forward.

I am not trying to deflect the question but first we had to be sure we found a partner who embraced the 'Southampton Way' and we needed a partner who wants to continue to let it evolve.

Part of the 'Southampton Way' is improving incrementally in all areas, whether it’s the academy, recruiting a higher level of players, a higher level of coaches, or sports science, marketing, finance department, IT. That we all continue to improve is what we do here. We don’t do the big splash. That’s not who we are. It wouldn’t fit with us.

You are asking me a cultural question. Did we look for that kind of investment? No.

I believe this is the way a club like Southampton in the position we are in needs to evolve.

I am really excited that it is on track.

I swear business yesterday and today has continued exactly as the day before the change of partnership, which is something very few clubs can say.



Q: A lot of fans will say Katharina has now made a large profit on this football club. Most won’t begrudge her it, but fans will turn around and ask ‘what’s in it for us and the club?’

First of all we believe the fans in general have been pleased we have finished in the top eight for the last few seasons.

For Southampton Football Club looking at the decades before this has been an amazing era, a strong era of stability on and off the pitch.

We have been able to stay stable in our numbers, our performances, our expectations are growing with that stability and that’s the price you get. If you fight for relegation four years in a row you are happy to finish 13th.

We put ourselves in that position and we are not afraid of that bar we have set.

The fans have been very understanding of our process. It is not for me to judge the way the partnership has been formed, but I am certain it’s a win-win. Not only for the Gao family and Katharina but for our fans number one.

We understand why we are doing all of this and why Southampton Football Club exists.

They have trusted us in the last years. I can sense that through the communications they have with us. They trust our process at the present time and they need to continue to trust us and in the next few months we will be able to communicate where the business side of it will kick in and where the opportunity will come but they will see it happen.



Q: What do you say to people who will ask if this investment means the club will be looking to the next level, to the top eight or top six?

We were in Europe two years in a row which nobody would have expected.

We have slipped out of that field and we want to get back into that.

We respect how hard that is. Somebody above us needs to slip and/or we need to, from the outside perspective, over perform and truly hit potential the whole way through the season.

We all know how tough it is to get back into Europe but we believe we can get back there so that is what we are striving for on a humble basis. We are not going ‘we can’ but we believe it is possible and we are going to go for that.

You know, boy oh boy, how much investment is going on ahead of us. The Premier League is really a tough league and we needed to take this step with the Gao family to take that competitive step from the position we are in right now.

I can’t sit here and give you a big list of where it’s going to go but we are already looking at opportunities to strengthen our position and compete in the future.

We are ambitious to move up, but the big splash is first of all with Financial Fair Play and the regulations not the same as it used to be ten or 15 years ago. It’s a different environment and we play within the rules.

We believe this is the better way to run a business and it’s a lot of fun.

Our board is having a lot of fun and we have a lot of continuity within the management team which is important.

Everybody is staying where they are which after most partnership changes of this magnitude you would have a seismic shift of leadership of the club.

I personally have committed to this transaction over a year ago.

This isn’t about me but I had hockey opportunities last year but this is really exciting.

I don’t want to be euphoric on a partnership and promise people the world but I have been part of the process and it’s exciting me. My chairman phase one was with Katharina alone. Phase two I just feel I am so ambitious and love to win football games above all else that I am excited. That’s a personal statement here and I have seen a lot more than anybody else has.

They are warm, they are humble, they are intelligent, and they are ambitious.



Q: What do they actually want out of this? Fun, a hobby, an investment?

First of all as a good businessman it’s a statement of belief in the Premier League being the global leader in sports.

There is no question there is an interest to maximise and utilise the intellectual capital we have here.

For me, to tell you the truth what I like the most is I feel he is extremely competitive. He wants to have fun with this. It’s not fun as in disrespectful to the fans. For me fun is hard work, reaching your potential, go in where people don’t expect you to win. That’s fun. It’s not smiley, happy fun. It’s fun inside you doing that.

I truly feel that spirit and he love sports, he loves the game of football and he really likes this area.

He has been coming here for a few years now before this partnership. His first time in Hampshire I think was over five years ago.

I know that he loves this area of England too so there is more affinities there that will come out over time.

I feel a sportsman, and Nelly is a sportswoman, she likes sports too.

To be a fan is probably the main reason, and now to put it into play.

He has taken a lot of risks to invest and these are responsibilities that you take on so good on him he thinks this is worth doing.

 

I am not trying to deflect the question!


Thanks for posting DTLW.

 

He had me at "Hello"

 

Although very nervous about this "venture", the Lierberr regime have done nothing to endanger our club and have engendered huge amounts of trust.
Adding to the above, our successful management team have been kept in place by our new owners with a clear "We March On" message from Ralph, I must say I am beginning to relax a little more and look forward to this next stage of our wonderful history

 

You old romantic! Not a big fan of Tom Cruise, but enjoyed the film nevertheless.

 

Interesting to read the club didn't go looking for someone who would 'splash the cash' ala Man City/Chelsea. Slow and steady wins the race?

 

https://www.bloomberg.com/news/arti...er-is-said-to-get-loan-from-china-backed-bank

Report on Gao's purchase and how it was financed. At the end it mentions that Saints had a reported net profit of 27 million at June of this year.

 

Good to see the funding wasn't secured against the club.

 

As you can imagine this is causing gnashing of teeth with some fans....the fear that the debt will be fixed on the club as the United owners did. Whilst I would prefer that Gao had trunks full of gold, most rich men have their money tied up and borrow against assets to get a deal over the line.

 

Well as Katharina is still 20% owner she would have to agree to securing it against the club so I will choose to believe she won't allow this to happen.

 

https://www.thetimes.co.uk/edition/...io-pellegrino-he-has-no-extra-funds-6xz3ff8v6

 

Certainly not good news, but we had been prepared for no immediate injection of money on the day of the takeover. Sounds like Gao has raised all the money he can and there is no possibility of raising any more at the moment. This of course refers to extra money....I would hope the club itself has funds to finance the purchases of our present target(s). Kreuger would have known all this when he made his announcement...so I presume the 'VVD not for sale stance and still in market for new players' still stands.

As a side issue...it keeps being said that Katharina converted her loans to shares....how can you do that when you own 100% of something already. Surely that's a gift.

 

Very poor article to be honest. Pellegrino seems to already have a budget set out as the takeover was completed so late in the window. Don't think anyone expected any extra funds on top of the budget this window. All this comes from a poorly written Bloomberg article.

 

I note that some fans want clarification from the club....they can't seem to accept that the fans don't have a right to know anything about the finances of a privately owned business. We are not share holders in Saints....we are just interested observers and customers. Not nice, but true.

 

Mauricio Pellegrino, the manager, is aware of the situation, however, and has been told not to expect any additional transfer funds this month.

From that link.
All we can do is see how it pans out.not sure how they can help us get to the next level without funds

 

Bearing in mind that this summer transfer window has already been planned and budgeted for, we're not going to rip that up with 12 days of the window left are we? It's non-news, as far as I'm concerned.

 

From the clubs viewpoint nothing really changes between having a directors loan and share capital, especially if that loan was interest free. It moves from being a long term liability to share capital, but still a liability to the business.

From Kats viewpoint it harms her personal cash flow, but comes with a potential tax break.
It's much easier to get your money back out of a company when it's still a loan, even if you're the 100% owner. If after converting your loan to capital and you want your money back out without selling the business, then you'd have to give yourself a dividend, which would then be tax deductible.

On the flip side if you increase your capital share in a business and it gets sold, you'll have to pay much less capital gains tax.

That's my limited understanding on the subject

 

Not sure why anyone expects "extra funds" really. We have stated that we aim to carry in in a sustainable manner, the one difference being perhaps a stronger will to keep players.

 

They make it sound like Mauricio was called into a meeting where he demanded money and was told he couldn't have any. More likely to be quite low key where he was told everything was to remain the same....roughly what Kreuger said to the press on the day of the takeover announcement. We are not getting extra money, but that doesn't mean the club can't buy players they have budgeted for. I wonder what prices we would have been quoted if Gao had come out and said he was chucking money our way! The best scenario is that he bought it out of his own wallet and was giving us a fortune and the worst was that he is a complete chancer who plans to asset strip the club. Neither of these is true. He is a business man who started with nothing and became rich. Saints aren't a poor club with rich assets....we are a club with potential for a big income. Gao has every incentive to help us grow.