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The Sunday Times: Saints up for sale

Discussion in 'Southampton' started by - Doing The Lambert Walk, Mar 8, 2020.

  1. Ronnie Hotdog (MLsfc)

    Ronnie Hotdog (MLsfc) Well-Known Member

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    F*ck all a deal like this has any chance of concluding before the window shuts
     
    #301
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  2. SaintInKuwait

    SaintInKuwait Well-Known Member

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    It’s reporting on Duncan Castle’s column which carried the story. He’s a journalist of repute, writing for Times and a few other national outlets. As with all things, we will see.
     
    #302
  3. Franny's Tache

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    Surely if any takeover was in the offing there would be a NDA in place. I will believe it when it happens, until then its just blah, blah, blah.
     
    #303
    Libby and thereisonlyoneno7 like this.
  4. Saints FC 76

    Saints FC 76 Well-Known Member

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    Does anyone with a bit of legal knowledge know whether it would be possible to put 'Covid clauses' in player contracts? For example, if the virus (or any future ones!) causes games to be played in an empty stadium, wages will be reduced by X% in line with the fall in club revenue?

    Not related to a takeover really, but interesting to know if it's possible.
     
    #304
  5. Negative Creep

    Negative Creep Well-Known Member

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    In theory yes, as football contracts are different to contracts of employment say you or I hold, in effect they are almost like a fixed term contract but way more complex.

    Getting players to agree them is on the other hand difficult. It's hard enough getting players to agree relegation clauses, and not all clubs put them in, eg Top 6 very unlikely to go down etc.
     
    #305
  6. Ronnie Hotdog (MLsfc)

    Ronnie Hotdog (MLsfc) Well-Known Member

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  7. Ronnie Hotdog (MLsfc)

    Ronnie Hotdog (MLsfc) Well-Known Member

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    For those without Athletic:

    Gao Jisheng, Southampton’s majority shareholder, is currently in talks to sell the club to American investor Joseph DaGrosa — but what do we know about the potential buyer, and is a loan from MSD UK Holdings going to be a problem?

    The Athletic has been asking those questions on your behalf:

    Who is DaGrosa?

    New York-born DaGrosa heads up General American Capital Partners, an investment firm that tried to buy Newcastle United but was put off by Mike Ashley’s asking price or, as one source explained, a disputed payment which may have to be paid later down the line.

    The businessman led the purchase of Ligue 1 side Bordeaux in November 2018 for €70 million but sold them only 13 months later. Despite this so far unsuccessful foray into club ownership, DaGrosa has ambitious plans to create a portfolio of teams, following a similar model to the City Football Group, and wants a Premier League side to be the crown jewel.

    Southampton owner Gao Jisheng is looking to sell the club (Photo: Catherine Ivill/Getty Images)
    Southampton could be viewed as an easy target in that sense. They have an owner looking to sell, a state-of-the-art training facility, a 32,000-seater stadium and a well-established academy system.

    Besides owning a football club(s), DaGrosa has invested in Soccerex, a London-based company specialising in hosting formal and informal networking events within the game.

    Why did he sell Bordeaux?

    Multiple reports suggest that he may have overvalued the club and thought it would be more profitable than it was.

    One source familiar with DaGrosa’s spell in France described him to The Athletic as a “nice guy, but he’s a promoter and knows nothing about running sports franchises”. The source added that the Bordeaux investment, roughly £23 million, came from relatively modest American pension funds. Buying several clubs, including a Premier League one, would require the support of much bigger, institutional backers, something DaGrosa is very unlikely to achieve.

    What has he said about buying a Premier League club?

    DaGrosa gave an interview to the Shields Gazette in May, where he discussed his failed attempt to purchase Newcastle but also shed light on his future plans.

    “Newcastle is the profile of club that we’d like to buy,” explained DaGrosa. “There are a few others out there that are in our sights, but that’s exactly the type of club that we’re looking for.

    “We’re not looking at a big six club at this point, purely from a cost point of view, but there are a few others out there that look very interesting. There’s a really big opportunity to build a platform similar to City Football Group, in a much shorter period of time and at a much lower cost.

    “That’s not a knock on the City Football Group at all – they did a very good job playing the cards they were dealt – but the effect of COVID-19 has brought about possibilities that just didn’t exist for City Football Group when they were building their platforms. We’d like to have our first club over the line in September or October.”

    Why Southampton, then?

    It’s clear from DaGrosa’s comments that Southampton aren’t the only club his investment group is interested in.

    From a buyer’s point of view, Southampton are undoubtedly tempting. The infrastructure is already in place and they have an owner looking to get out. DaGrosa has also spoken about having an “anchor club” with a highly-rated academy to be front and centre of his plans to create his own City Football Group-style portfolio.

    Southampton’s academy has Category One status, meaning it’s regarded as one of the best in England for its quality of coaching, facilities and strategic development.

    This would seemingly fit in with the American’s desire to have a production line of top-level youngsters.

    How much would Gao’s 80 per cent stake cost?

    This is where it gets interesting.

    It’s been reported that Gao paid £210 million to buy an 80 per cent share in Southampton in 2017. However, The Athletic can reveal that this isn’t the case. Instead, it’s understood he paid between £180 million and £200 million.

    Gao’s a successful businessman and won’t be keen to make a loss on his initial investment. There’s also an element of saving face back home in China. It’s more than likely that he won’t want to be seen as someone who failed to get a return on his purchase.

    But if he’s desperate to sell, then swallowing his pride is something he’ll have to do — especially if he can’t find a buyer willing to meet his valuation.

    Has DaGrosa got the capital to buy Southampton?

    To put it bluntly, no. But that doesn’t mean he won’t have it later down the line.

    Several sources have told The Athletic that DaGrosa’s GACP firm has been ringing around multiple investment companies asking for cash to buy Southampton. One source described the initial report about his proposed takeover as a “publicity stunt”.

    Another source, who helps broker takeovers, explained: “Southampton are on the market but where are the buyers? Ninety-nine per cent of the people we read about are full of bullshit.” But this bid seems more serious now.

    If DaGrosa borrows money to buy Southampton, will that not put the club at risk if it goes wrong?

    In theory, no.

    Because Southampton aren’t a publicly listed company, buyers won’t be able to use the club as leverage like the Glazers did with Manchester United. DaGrosa would need to have the capital already in the bank before Gao could sell.

    Because of this, any money lent to him would not be held against Southampton, it will be the American’s concern.

    What about Katharina Liebherr?

    The Athletic can reveal that Liebherr’s 20 per cent stake in the club is not part of any proposed takeover, meaning she will retain her position at Southampton, regardless of who, if anyone, buys them.

    What’s more, The Athletic also understands she can veto any proposed takeover.

    Is a takeover likely to happen?

    At this point in time, it’s hard to say definitively. When you weigh up the fact Gao is desperate to sell and Southampton are attracting interest, you’d expect a sale to happen at some point over the next few months.

    Southampton’s hierarchy regularly receives calls — one source said this happens as often as once a week — from people saying they want to buy the club but often don’t hear back when it’s explained what is required.

    DaGrosa is in a period of exclusivity with Gao, which means he has a limited amount of time to raise the required capital. But if he fails to do that, then it’s also worth saying that doesn’t stop him returning at a later date with the financial backing.

    If it’s not DaGrosa, will Michael Dell buy the club?

    Oh yes. The loan.

    No, multi-billionaire computer entrepreneur Dell doesn’t want to buy Southampton. The Athletic has been told by several sources that he has no interest in owning a football club.

    How much money did Southampton borrow from Dell’s MSD Holdings?

    It’s believed to be around £75 million.

    They had an existing set-up with Australian bank Macquarie Group Limited worth £32 million but decided to part company and dip their hands into Dell’s MSD Holdings wealth fund.

    Why have they done this?

    Southampton wanted to get ahead of the curve at the start of the pandemic. They felt the need to alleviate any possible cash flow issues which would be brought on by not being able to generate match-day income due to games being played behind closed doors.

    With COVID-19 wreaking havoc on businesses, the St Mary’s hierarchy believe there will come a point when Premier League clubs will turn to wealth funds to help them through uncertain times.

    Because of this, Southampton wanted to get in there first and secure capital before it was offered to other teams. Tottenham are one example of this, although they managed to secure a fantastic deal from the Bank of England — a £175 million loan at only 0.5 per cent interest.

    What do we know about MSD UK Holdings Limited?

    MSD UK Holdings Limited was registered at Companies House in Cardiff at the end of June, just days before the loan was paid to Southampton.

    There is no amount given on the charge documents for how much the club borrowed, but it does reveal that the capital is secured against the club, St Mary’s Stadium and other intellectual properties such as “The Saints” trademark.

    John Licciardello, Robert Platek and Marcello Liguori are all registered as directors for MSD UK Holdings.

    Should Southampton fans be worried about the stadium being used as security?

    It’s always hard to predict what will happen if the worst-case scenario were to happen and Southampton were unable to pay back the money owed.

    However, one source explained to The Athletic that MSD is one of the better companies to borrow capital from, saying: “MSD is not a hedge fund. The good news for the club is that the lender is a good lender who I imagine — if all else fails — is smart enough to do something with the assets. Think Elliott at AC Milan.”

    For context, Elliott is a big US hedge fund. Chinese businessman Li Yonghong borrowed money from it to fund his 2017 purchase of AC Milan but then defaulted on the repayments, so Elliott assumed control of the club.

    “Financial support, stability and proper oversight are necessary prerequisites for on-field success and a world-class fan experience,” read a statement from Paul Singer, the company’s founder and joint chief executive. “Elliott looks forward to the challenge of realising the club’s potential and returning the club to the pantheon of top European football clubs where it rightly belongs. Elliott also strongly believes in the value-creation opportunity at Milan.”

    Another respected source who is familiar with these deals, added: “Football financiers will give you the interest to pay back in four-five years if you haven’t defaulted but the management fee will be one-three per cent every year dependent on how much work is involved, with the interest of eight-nine per cent.”

    Will Southampton be paying interest on the loan?

    Dell isn’t giving money away for free.

    For comparison, The Athletic has been told Sunderland, who borrowed £9 million from the wealth fund, were paying around £1 million per year in interest, meaning it works out at roughly 11 per cent. Derby County have also received a loan from MSD UK Holdings, although the exact figure has not been revealed.

    The amount of interest Southampton will be paying is yet to be known. One source speculated it could be 9.5 per cent per annum, but others say it’s not as high as that.

    Will the circa £75 million loan make any potential takeover difficult?

    From sources The Athletic has spoken to, it should not be too much of an obstacle.

    It’s worth noting, though, that the loan will have to be taken on by whoever buys Southampton. Gao will not be wiping it clear when he sells. Furthermore, it’s understood that it won’t affect the majority shareholder’s asking price.

    What does this all mean for Southampton?

    First of all, time will tell whether DaGrosa can raise the funds. If he is to be successful, then there will undoubtedly be serious conversations held about whether to sell. Supporters have been longing for an owner willing to invest in the club, especially as Gao hasn’t put any money into Southampton since he took charge in 2017.

    The difficulty when trying to sell a club such as Southampton is that they are only a bad run of form away from being relegated to the Championship, resulting in their revenues dramatically falling.

    Had it not been for a global pandemic, it would be business as usual at Southampton. The loan from MSD UK Holdings is being viewed as a safety net should they need to generate cash flow.

    Football clubs will be determined to have fans returning to matches sooner rather than later due to them haemorrhaging substantial losses when it comes to match-day revenue. Southampton aren’t any different, which is why they turned to Dell’s wealth fund.

    But because they have around £75 million available to them doesn’t necessarily mean they have to use all of it.

    There is a desire at St Mary’s to use as little of the money as possible, although that’s more than likely going to be dictated by what happens with COVID-19.
     
    #307
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  8. Archers Road

    Archers Road Urban Spaceman

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    You can put anything you want in a contract (within reason). Getting someone to sign it would be another matter.
     
    #308
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  9. fran-MLs little camera

    fran-MLs little camera Well-Known Member

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    Investment company ALK in talks to buy Burnley.
     
    #309
  10. Saintjoey

    Saintjoey Well-Known Member

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    to me that would be a strange club to target
     
    #310
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  11. Brixham Saint

    Brixham Saint Well-Known Member

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    Apparently DaGrosa has now got backing from a private equity firm “Ares”, to purchase Southampton??
     
    #311
  12. Brixham Saint

    Brixham Saint Well-Known Member

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    A letter of intent from Kapital Football Group, has been submitted to purchase an 80% share of an unnamed premier league club for an initial $210 Million.
     
    #312
  13. Libby

    Libby 9-0

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    About 165 million? Probably about right though that'd be a big loss for Gao.
     
    #313
  14. st_brendy

    st_brendy Well-Known Member
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    I wonder which PL club has exactly 80% of their ownership up for sale...
     
    #314
  15. st_brendy

    st_brendy Well-Known Member
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    Initial $210m. Apparently a further $50m to potentially follow.
     
    #315
  16. Brixham Saint

    Brixham Saint Well-Known Member

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  17. Libby

    Libby 9-0

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    That'd be more likely.
     
    #317
  18. Saints_Alive

    Saints_Alive Well-Known Member

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    Exciting times ahead or a leap into the unknown?

    I'm happy that we will probably no longer treading water under Gao.
     
    #318
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  19. Libby

    Libby 9-0

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    Bit of both surely?
     
    #319
  20. tomw24

    tomw24 Well-Known Member
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    Certainly more promising than having Gao owner.
     
    #320
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