McCabe, still there

[raul]

Serious question. In the late 90's (or whenver it was) with KM finding a few extra million quid burning a hole in his back pocket and was wondering what to do with it, do you think he was advised to invest in in that mediocre second tier football club in Sheffield as that looked like a pretty good way to make his money grow?

Well, Yes. For a relatively small investement it would have been possible to hit paydirt (if everything went well) by becoming stable members of the Prem. This route to wealth was already well set in stone.

It wasn't a cast iron guarantee of earning and for every success there have been more failures, but not the out of the question idea your rhetorical has suggested.

 

[alcoblade]

The thing is HH I see things a little darker than some, IMO we are still paying the price of KM's mistakes, when I say "we" I mean us the fans a generation who have only ever known 1 season in the top flight. I don't see KM paying the price I see him collecting interest on loans, the Tevez cash (SUFC were cheated not just KM) I see him bit by bit building useless hotels and business centres proposed flats etc on land that he has hived off from the football club, land given by an old duke as a place of entertainment for the people of Sheffield not to line the pockets of a local boy made good. It may be all good and legal but i'll tell yer summat it's fookin immoral, there will be no sporting traditions left when the remaining land is full of offices and student flats or when SUFC move to the DVS.

And while I've criticised him (above), to temper your point - remember that the interest charged on the loans just increases the debt - he doesn't actually see any of this cash. If he then swaps debt for equity (cancelling the debt effectively) then it really doesn't hurt us in any way. The Tevez money wasn't snaffled by McCabe, just used to pay off debt incurred by the club (albeit debts attributed to his poor decision making).

As for the bit about building - we've got the sporting tradition that counts - we still play at BDTBL. We've invested in an academy to bring on local youth. The rest of it is just noise - I don't really care what happens to the land around BDTBL - it's not affecting our traditions in any way.

UTB

 

[Darren]

Well, Yes. For a relatively small investement it would have been possible to hit paydirt (if everything went well) by becoming stable members of the Prem. This route to wealth was already well set in stone.

It wasn't a cast iron guarantee of earning and for every success there have been more failures, but not the out of the question idea your rhetorical has suggested.

But that's the million dollar question isn't it? How any other medium sized football clubs are there hoping to "hit paydirt" by becoming stable members of the prem and how many of them acheive? Not many.

No sane person who was primarily motivated with a return on his investment would invest in a club like SUFC. Clubs like United are toys for rich men who have made their wedge and want to spend a bit. Some rich men choose to spend their money on loose women, yachts and expensive cars; some spend on football clubs. Neither is really looking for a return on their investment (though if one comes along they wpuldn't be averse to it).

 

[Sothall_Blade]

As for the bit about building - we've got the sporting tradition that counts - we still play at BDTBL. We've invested in an academy to bring on local youth. The rest of it is just noise - I don't really care what happens to the land around BDTBL - it's not affecting our traditions in any way.

Really? Can I take possession of your car as long as I let you carry on driving it then?

 

[Darren]

Really? Can I take possession of your car as long as I let you carry on driving it then?

A better analaogy would be if you owned a car and then transferred ownership of it to a company of which you were the 90% owner. Would you consider the car any less yours?

 

[Grecian2000]

A better analaogy would be if you owned a car and then transferred ownership of it to a company of which you were the 90% owner. Would you consider the car any less yours?

Depends what appears on my P11D.

 

[metalblade]

As an asides all the above, I hear Sheffield City council are mooting over the prospect of demolition for the DVS as they are desperate to offload in a cost cutting exercise. Now that would be a very good acquisition at a give away price for a local property developer. Pay £1m for DVS move the Blades there (not an ideal venue for football but fook the fans) and kerching re-develop the Bramall lane site and make£20m.

 

[Sothall_Blade]

A better analaogy would be if you owned a car and then transferred ownership of it to a company of which you were the 90% owner. Would you consider the car any less yours?

Are you referring to the ground? I was really referring to the land the hotel was built on.
Sheffield United owned that land, borrowed money to build a hotel, built it and paid off 20% of the debt.
Then someone took the hotel and the land off the club and said I'll keep this and pay off the other 80%.
So United lost the money they'd already paid out and the land and the potential to make use of the land.

The point is that previously the land benefitted me, Alco and every other supporter.
(Even if only by Sheffield United charging people to park on it.)
Now it benefits nobody but the McCabe family and that's not right.

 

[TarquinDelouche]

The point is that previously the land benefitted me, Alco and every other supporter.
(Even if only by Sheffield United charging people to park on it.)
Now it benefits nobody but the McCabe family and that's not right.

I thought the original complaint was that the hotel wasn't making money, and was harming SUFC by draining funds?

 

[Darren]

Are you referring to the ground? I was really referring to the land the hotel was built on.
Sheffield United owned that land, borrowed money to build a hotel, built it and paid off 20% of the debt.
Then someone took the hotel and the land off the club and said I'll keep this and pay off the other 80%.
So United lost the money they'd already paid out and the land and the potential to make use of the land.

The point is that previously the land benefitted me, Alco and every other supporter.
(Even if only by Sheffield United charging people to park on it.)
Now it benefits nobody but the McCabe family and that's not right.

Fair enough. I don't pretend to know the ins and outs of the hotel shenanigans, but wouldn't whichever arm of the McCabe empire bought the hotel be obliged to pay the market rate for it? Wouldn't it be some kind of fraud if they didn't?

 

[Sothall_Blade]

Fair enough. I don't pretend to know the ins and outs of the hotel shenanigans, but wouldn't whichever arm of the McCabe empire bought the hotel be obliged to pay the market rate for it? Wouldn't it be some kind of fraud if they didn't?

It beats me too to be honest but I'm not an accountant.
To a laymam, extracts like this from the "2010 Accounts" don't sound great from United's point of view:-

"£13.5 million (2009: £13.5 million) of the loans due in one year relate to a development overdraft facility used to
finance the construction of the hotel next to the stadium. On 9 November Sheffield United Football Club Limited raised a £15.5m loan from Santander, secured on the future receipts from West Ham United in respect of the Tevez case. This debt will be repaid as the Tevez money is received over the next 3 years.

£4m of this debt has been used to repay part of the Hotel debt, reducing the net liabilities in that company. Following this repayment Sheffield United (Hotel) Limited was sold to Scarborough Partnership Limited for a consideration of £1. Scarborough Partnership Limited have assumed responsibility for the remaining Hotel debt."

 

[alcoblade]

Really? Can I take possession of your car as long as I let you carry on driving it then?

If I don't own "my" car, you can take it, yes...

A better analogy would be that if you want to put your car in your wife's name, it makes fuck all difference to me.

McCabe owned SUFC before. He then owned SUFC PLC which owned SUFC. You can get upset about the ownership between those groups if you like, but I wont be losing any sleep over it. And I certainly don't see how any of it is pissing on any tradition.

UTB

 

[alcoblade]

A better analaogy would be if you owned a car and then transferred ownership of it to a company of which you were the 90% owner. Would you consider the car any less yours?

Sorry, I missed this before my previous reply.

UTB

 

[Sothall_Blade]

If I don't own "my" car, you can take it, yes...

A better analogy would be that if you want to put your car in your wife's name, it makes fuck all difference to me.

McCabe owned SUFC before. He then owned SUFC PLC which owned SUFC. You can get upset about the ownership between those groups if you like, but I wont be losing any sleep over it. And I certainly don't see how any of it is pissing on any tradition.

UTB

As mentioned above, 30,000 fans benefit from the land and property owned by SUFC/PLC and any income derived.
It's when he takes it off SUFC/PLC and moves it into one of his own personal companies that I have a concern.

 

[alcoblade]

It beats me too to be honest but I'm not an accountant.
To a laymam, extracts like this from the "2010 Accounts" don't sound great from United's point of view:-

"£13.5 million (2009: £13.5 million) of the loans due in one year relate to a development overdraft facility used to
finance the construction of the hotel next to the stadium. On 9 November Sheffield United Football Club Limited raised a £15.5m loan from Santander, secured on the future receipts from West Ham United in respect of the Tevez case. This debt will be repaid as the Tevez money is received over the next 3 years.

£4m of this debt has been used to repay part of the Hotel debt, reducing the net liabilities in that company. Following this repayment Sheffield United (Hotel) Limited was sold to Scarborough Partnership Limited for a consideration of £1. Scarborough Partnership Limited have assumed responsibility for the remaining Hotel debt."

Difficult to assess this bit. Whatever United had paid, if the venture had gone tits up, it had gone tits up. There's the possibility that we'd be worse off, had we held on the hotel, than we are now.

But remember the "we" is the bit that we are emotionally attached to but doin't own - the football club. None of it is, or was, ours. It was always all McCabe's. So I can't get fluxed about any of it without viewing the way he runs the club on the whole - and with this we probably agree - not very well.

UTB

 

[alcoblade]

As mentioned above, 30,000 fans benefit from the land and property owned by SUFC/PLC and any income derived.
.

Or probably not - more likely they "lost out" on the losses the property was making, as mentioned above.



UTB

 

[Revolution]

But that's the million dollar question isn't it? How any other medium sized football clubs are there hoping to "hit paydirt" by becoming stable members of the prem and how many of them acheive? Not many.

No sane person who was primarily motivated with a return on his investment would invest in a club like SUFC. Clubs like United are toys for rich men who have made their wedge and want to spend a bit. Some rich men choose to spend their money on loose women, yachts and expensive cars; some spend on football clubs. Neither is really looking for a return on their investment (though if one comes along they wpuldn't be averse to it).

But you forget McCabe thought he could beat the system with the satellite clubs/property development concept. He wanted to make United a profitable arm of his empire. He said so on many occasions. This was no vanity project.

 

[Darren]

It beats me too to be honest but I'm not an accountant.
To a laymam, extracts like this from the "2010 Accounts" don't sound great from United's point of view:-

"£13.5 million (2009: £13.5 million) of the loans due in one year relate to a development overdraft facility used to
finance the construction of the hotel next to the stadium. On 9 November Sheffield United Football Club Limited raised a £15.5m loan from Santander, secured on the future receipts from West Ham United in respect of the Tevez case. This debt will be repaid as the Tevez money is received over the next 3 years.

£4m of this debt has been used to repay part of the Hotel debt, reducing the net liabilities in that company. Following this repayment Sheffield United (Hotel) Limited was sold to Scarborough Partnership Limited for a consideration of £1. Scarborough Partnership Limited have assumed responsibility for the remaining Hotel debt."

If the hotel was sold for only £1 that must be because that was its commercial value - i.e. it was a drain on the club. For McCabe with his hat on as a director of SUFC to sell the hotel at a massive undervalue to another of his companies would be a serious criminal offence.

 

[Darren]

But you forget McCabe thought he could beat the system with the satellite clubs/property development concept. He wanted to make United a profitable arm of his empire. He said so on many occasions. This was no vanity project.

So why do it with United rather than a more likely candidate? I can think of any number of clubs with greater name recognition in the Far East. Was it just a conincidence he was a United fan?

The reality is that it was primarily a vanity project with KM holding the optimistic delusion that he wouldn't have to pay for his vanity in the usual way.

 

[Sothall_Blade]

Or probably not - more likely they "lost out" on the losses the property was making, as mentioned above.



UTB

Also from the 2010 Accounts:- "2010 marked the first full year trading for Copthorne Hotel Sheffield, turnover of £2.4m generated a profit before depreciation, interest and exceptionals for the Club of £124k".

 

[Revolution]

quote="Darren, post: 464448, member: 2293"]So why do it with United rather than a more likely candidate? I can think of any number of clubs with greater name recognition in the Far East. Was it just a conincidence he was a United fan?/quote]

He was already on the board (which may be a vanity move ) and the club dropped into his lap after the McDonald/colombotti fiascos. He got it on the cheap. That was a good springboard.

 

[Darren]

quote="Darren, post: 464448, member: 2293"]So why do it with United rather than a more likely candidate? I can think of any number of clubs with greater name recognition in the Far East. Was it just a conincidence he was a United fan?/quote]

He was already on the board (which may be a vanity move ) and the club dropped into his lap after the McDonald/colombotti fiascos. He got it on the cheap. That was a good springboard.

But he wouldn't have got on the Board without a substantial financial "investment" into the club.

I think we are agreed that his originally motivation for pumping money into SUFC in the first place was vanity/genuine support. He then (rather stupidly on the whole) thought he could make his vanity pay.

 

[Darren]

Also from the 2010 Accounts:- "2010 marked the first full year trading for Copthorne Hotel Sheffield, turnover of £2.4m generated a profit before depreciation, interest and exceptionals for the Club of £124k".

Well it beats me. As I say, it would have been a fraud on SUFC and a breach of Company law for a director to sell property belonging to one company to another company owned by him at an undervalue.

 

[Sothall_Blade]

Millenium & Copthorne Group Accounts:- "2010 was a successful year for the Group, with profits before tax increasing by 57.0% to £128.6 million (2009: £81.9 million)".

Hardly an indication of a venture that had gone "tits up".

 

[Balham]

Sothall_Blade and Darren

There are people on this forum with better knowledge than me but the key in the profit statement about the hotel is that it made "£124k before depreciation, interest and exceptionals".

If United borrowed £15m at 7.5% to build the hotel repayable over 30 years, the annual interest would have been in the region of £1m. In addition, the accounting regulations state that the cost of the hotel needs to be spread out over a defined period (the depreciation). This is likely to have added another £500k-£1m in costs.

So, the hotel is likely to have made a loss of around £1.5m-£2m: far worse than the £124k operating profit. It's described as having "net liabilities" too - that's not a good sign for any business.

Millenium & Copthorne Group Accounts:- "2010 was a successful year for the Group, with profits before tax increasing by 57.0% to £128.6 million (2009: £81.9 million)".

Hardly an indication of a venture that had gone "tits up".

That's Copthorne as a whole - not the Bramall Lane hotel. It's likely that some of their hotels were raking in a fortune while others struggled.
If I remember correctly the deal United signed with Copthorne was heavily dependent on the success of the hotel at the Lane - ie United would bear the majority of the losses.

 

[Darren]

Sothall_Blade and Darren

There are people on this forum with better knowledge than me but the key in the profit statement about the hotel is that it made "£124k before depreciation, interest and exceptionals".

If United borrowed £15m at 7.5% to build the hotel repayable over 30 years, the annual interest would have been in the region of £1m. In addition, the accounting regulations state that the cost of the hotel needs to be spread out over a defined period (the depreciation). This is likely to have added another £500k-£1m in costs.

So, the hotel is likely to have made a loss of around £1.5m-£2m: far worse than the £124k operating profit. It's described as having "net liabilities" too - that's not a good sign for any business.


That's Copthorne as a whole - not the Bramall Lane hotel. It's likely that some of their hotels were raking in a fortune while others struggled.
If I remember correctly the deal United signed with Copthorne was heavily dependent on the success of the hotel at the Lane - ie United would bear the majority of the losses.

I don't know if you can answer this, but it seems that McCabe was taking the hotel off United and selling it to Copthorne to relieve United of an ongoing deby liability, unlikely to be covered by hotel revenue. That looks a bad deal for Copthorne. How could he legally do that consonant with his duties as a director of Copthorne?

 

[metalblade]

Sothall_Blade and Darren

There are people on this forum with better knowledge than me but the key in the profit statement about the hotel is that it made "£124k before depreciation, interest and exceptionals".

If United borrowed £15m at 7.5% to build the hotel repayable over 30 years, the annual interest would have been in the region of £1m. In addition, the accounting regulations state that the cost of the hotel needs to be spread out over a defined period (the depreciation). This is likely to have added another £500k-£1m in costs.

So, the hotel is likely to have made a loss of around £1.5m-£2m: far worse than the £124k operating profit. It's described as having "net liabilities" too - that's not a good sign for any business.


That's Copthorne as a whole - not the Bramall Lane hotel. It's likely that some of their hotels were raking in a fortune while others struggled.
If I remember correctly the deal United signed with Copthorne was heavily dependent on the success of the hotel at the Lane - ie United would bear the majority of the losses.

And even David Blunkett could see it was going to lose money in the short term, you have to ask why it was ever built in the first place ? Despite all these schemes of McCabe's "for the benefit of Sheffield United" (McCabes words) not a single one as bore any fruit, we have a enterprise centre on the other corner which was mostly so empty we moved the Police control room in there and KM wants to fill in kop/south stand corner with a similar white elephant. Let's not mention the student flats worth £50k each, lets be honest he will not make a vast amount selling these but for SUFC it is more land and value lost forever. The only party making good from these dumb ideas is Kevin McCabe, certainly they have not been any benefit to SUFC all we are left with is a ground that we no longer own which will now be very difficult to expand should we ever become established in the top flight. May as well start again at the DVS it is going very cheap they say.

 

[TarquinDelouche]

Drop it Darren. You're digging in the wrong places. Let it go. It would be terrible if one of your lovely family were to meet with an unfortunate accident.

 

[Darren]

And even David Blunkett could see it was going to lose money in the short term, you have to ask why it was ever built in the first place ? Despite all these schemes of McCabe's "for the benefit of Sheffield United" (McCabes words) not a single one as bore any fruit, we have a enterprise centre on the other corner which was mostly so empty we moved the Police control room in there and KM wants to fill in kop/souuth stand corner with a similar white elephant. Let's not mention the student flats worth £50k each, lets be honest he will not make a vast amount selling these but for SUFC it is more land and value lost forever. The only party making good from these dumb ideas is Kevin McCabe, certainly they have not been any benefit to SUFC all we are left with is a ground that we no longer own which will now be very difficult to expand should we ever become established in the top flight. May as well start again at the DVS it is going very cheap they say.

You have surpassed yourself is saying contradictory things in consecutive sentences.

 

[Hartley Hare]

In response to some of the above comments;

Transfers of assets between group companies can be undertaken at no gain/no loss. This is a standard procedure. Group companies are effectively treated as one for Corporation Tax.

I suspect the value of the outstanding hotel loan matched the cost of the hotel and that is why the hotel was transferred for a peppercorn amount + the liability of the loan.

When I looked at the last accounts I commented on how highly geared the company was. In other words we have too much debt on our balance sheet when compared to equity (shares).

Debt leads to interest charges which we can not afford and increase our loss. Shares pay dividends which can only be paid from profit or reserves, and in these austere times would not be paid.

If the debt is with other companies owned by McCabe, or with him personally, then the interest may never be paid. In my view, in time, the debts will be swapped for equity to prevent our balance sheet from becoming insolvent.

Lots of clubs have developed their grounds incorporating hotels etc as a means to raise finance and cash nothing new here.

I do not know the true extent of McCabe's personal or business wealth. I wonder how much he is actually worth?

HH (FCCA)