With property development you generally borrow money and as long as the yield on the development is greater than the cost of capital then you make money.
It's a pretty simple calculation to do in fact. - It's said to cost 16m for the first stage. - It adds 2,500 seats. - 30 quid a seat is 75,000 - Times 19 games is 1.45m - That's a 9% yield. Fairly reasonable for property development. - I assume not all seats are filled but that the hospitality will offset that and I haven't included that. 9% seems about right though. - The expansion is being funded from cash flow though, so if the return on the expansion is better than the return on other forms of investment then you would expand Now try it when buying players so we can compare the returns and understand Morgan's logic. - Spend X million on a player? - Residual value of Y million? - Wages of say 1.5m a year? - What does it get you as a return? - What are the risks associated with getting those returns as it affects the rate of return you'd want. The risk is much higher so you'd want a much higher rate of return than for expanding the stadium On 19 May 2011 13:05, Marcus Chantry <marcus.chan...@macquarie.com> wrote: > You do the same ROI calculations on the cost for the stadium development > (make sure you factor in the lost revenue from being relegated ie ticket > sales, sponsorship deals, corporate functions etc) and the payback period to > get back to breakeven and then we can compare numbers. What period would > you like to run the projections over and also what is the ROC demanded of > the Board? > > > > > > *From:* nswolves@googlegroups.com [mailto:nswolves@googlegroups.com] *On > Behalf Of *Steven Millward > *Sent:* Thursday, 19 May 2011 12:56 PM > *To:* nswolves@googlegroups.com > *Subject:* Re: [NSWolves] RE: Progress [sec=unclassified] > > > > OK. And what's the cost in terms of players to move up a few places in > your view? > > > > And then what's the ROI? > > On 19 May 2011 12:51, Marcus Chantry <marcus.chan...@macquarie.com> wrote: > > Here is the prize money split for last season. So places make a fairly big > difference for two-bob clubs like ours (£800,000 per place): > > > > Chelsea - £16,000,000 (WINNERS) > Manchester United - £15,200,000 > Arsenal - £14,400,000 > Totenham Hotspur - £13,600,000 > Manchester City - £12,800,000 > Aston Villa - £12,000,000 > Liverpool - £11,200,000 > Everton - £10,400,000 > Birmingham - £9,600,000 > Blackburn - £8,800,000 > Stoke - £8,000,000 > Fulham - £7,200,000 > Sunderland - £6,400,000 > Bolton - £5,600,000 > Wolves - £4,800,000 > Wigan - £4,000,000 > West Ham - £3,200,000 > Burnley - £2,400,000 > Hull - £1,600,000 > Portsmouth - £800,000 > > > > > > > *From:* nswolves@googlegroups.com [mailto:nswolves@googlegroups.com] *On > Behalf Of *Morris, Lee SGT > *Sent:* Thursday, 19 May 2011 12:37 PM > > *To:* nswolves@googlegroups.com > *Subject:* RE: [NSWolves] RE: Progress [sec=unclassified] > > > > The ground is defiantely not full every week...far from it. > > > > I also though the prize money increases significantly eg - I read that > Stoke throwing in the towel this week could cost them a fair bit..although I > ahven't checked up on that. > > > > With the squad we have...we are about where we should be.....maybe a little > higher. > > > > > ------------------------------ > > *From:* nswolves@googlegroups.com [mailto:nswolves@googlegroups.com] *On > Behalf Of *Steven Millward > *Sent:* Thursday, 19 May 2011 12:23 > *To:* nswolves@googlegroups.com > *Subject:* Re: [NSWolves] RE: Progress [sec=unclassified] > > How can a more successful team generate more cash? The ground is full > every week and most people buy shirts. The prize money and TV increase is > relatively small for finishing a few places higher. > > > > Where do you think we should be in the table Lee, with the squad we have? > > On 19 May 2011 11:09, Morris, Lee SGT <lee.mor...@defence.gov.au> wrote: > > I always thought a successful team, even relatively, is what brings in the > cash. Wolves fans are amongst the most fickle in the land and the loss of > revenue through relegation this year would be enormous....Notice I said > "would" I think we will stay up by the skin of out teeth and the slowly > slowly routine can continue. > > > > Not for one moment would I suggest an all or nothing approach which is what > cost the likes of Leeds so dearly. > > > > At the end of the day its just debate, my club is in Morgan's hands, and > thats good enough for me....the team in Macarthy's is another matter. > > > ------------------------------ > > *From:* nswolves@googlegroups.com [mailto:nswolves@googlegroups.com] *On > Behalf Of *LEESE Matthew > *Sent:* Thursday, 19 May 2011 11:04 > > *To:* nswolves@googlegroups.com > *Subject:* RE: [NSWolves] RE: Progress [sec=unclassified] > > > > The new stadium is actually an opportunity to generate more money, not only > through increased capacity/ticket sales but through the 'non football' > facilities that will be included and allowing an income stream from the > stadium that is not so limited to match days. I'm aware there's already > facilities there for non match related activities but these will > (apparently) be substantially enhanced as part of the stadium upgrade. > Again, it comes down to a long term strategy for progress as opposed to a > 'quick fix'. If we invest the money in the short term in the team how does > that help us achieve longer term/sustained success? We may finish a couple > of places higher up the table in the first season but that doesn't generate > any more money to allow you to keep on building from there (OK a little bit > for each placing in the final table, but nothing substantial). The argument > then may be 'wouldn't that money have been better invested in upgrading the > stadium to allow us to build over the long term'. > > > ------------------------------ > > *From:* nswolves@googlegroups.com [mailto:nswolves@googlegroups.com] *On > Behalf Of *Morris, Lee SGT > *Sent:* Thursday, 19 May 2011 10:46 AM > *To:* nswolves@googlegroups.com > *Subject:* RE: [NSWolves] RE: Progress [sec=unclassified] > > I've got nothing against the short slow steps, as long as progress is being > made. Morgan is obviously no mug, and I do understand Matty's reasoning > behind teh timing of the stadium redevelopment. Did we really need it > though? Morgan obvioulsy know best but why wouldn't he wait until our safety > is guaranteed? > > > > Its great for the fans to have a fantastic new stadium to watch football > in, but I for one would prefer to watch PL action in the current stadium > rather than championship football in the all singing dancing stadium. > > > > Maybe what I'm trying to say is, wouldn't that money be better spent on > team building? > > > > > > > ------------------------------ > > *From:* nswolves@googlegroups.com [mailto:nswolves@googlegroups.com] *On > Behalf Of *Steven Millward > *Sent:* Thursday, 19 May 2011 10:36 > *To:* nswolves@googlegroups.com > *Subject:* Re: [NSWolves] RE: Progress [sec=unclassified] > > Agree. > > > > I don't understand where everyone gets these lofty expectations from. We > spent 30 years in the wilderness where the goal each and every crushing > season was simply to get back to the Premier League. Now we are there, some > people seem to think we should be pushing for Europe. > > > > Marcus, you say that it will be 100 years until we get to near the top of > the table. What makes you think that it is at all realistic for Wolves to > get near the top of the table? What makes you even think that a top half > finish is realistic? I assume you either expect money to be thrown at the > squad from some mysterious benefactor or that we will somehow magically make > more of the meagre squad that we have now. I believe we are already > punching above our weight based on value of squad and wages. > > > > The news for everyone is that there are 19 other clubs who have the same, > or higher, ambitions. Which clubs should we 'by right' finish higher > than? And for what reason? I'd love to know where people think we should be > in the table relative to the teams above us and their teams. If we expect > to finish 10th then presumably we clearly have a better team than ten other > teams? Which teams are they? > > > > The only club that has outperformed us is West Brom. Let's see how they do > next season before we claim the miracle of Hodgson. > > > > Wolves are no longer a big club and don't have any more money to spend than > other clubs. In fact we have less. We have a small stadium so potential > revenue growth is linked to telly money and inflation. The sensible thing > to do is to invest in infrastructure that will generate revenue. > > > > Seems everyone has got used to the golden tit where money was pumped in. > Morgan clearly doesn't want to spunk a load of money on players and that's > sensible. I certainly wouldn't if it was my money. > > > > It's harsh to say that we haven't made progress. Take where we were when > Hoddle left five years ago as a starting point. As a mid-point look at the > side we started the first Premiership season with, with Keogh as our striker > and Halford on the wing. > > > > By the way Marcus, enjoy your last four days of blaming Mick for everything > because it will all stop come Monday morning. > > > > :D > > > > On 19 May 2011 09:38, LEESE Matthew <matthew_le...@rta.nsw.gov.au> wrote: > > I'd say the small step approach seems a sensible and proven one - look at > teams like Stoke and Sunderland and compare their recent history with that > of clubs who have over committed financially such as Portsmouth, Hull and > Leeds. Unless you've got a Man City type owner where you're not bound by the > club's ability to generate money its not worth the risk. I don't doubt > Morgan's business acumen for a moment and I think he's taking the club in > the right direction with a sensible, sustainable approach. Morgan has > pointed out that now is a perfect time to be redeveloping the stadium in > terms of the financials as the building industry (and many others) in the UK > is on its arse and so its a buyer's market where he can get the work done > for a knock down price. The first stages of the re-development don't > significantly increase the capacity of a stadium that was never half full > (save for Carling Cup games), even in the super depressing Hoddle era. > > > ------------------------------ > > *From:* nswolves@googlegroups.com [mailto:nswolves@googlegroups.com] *On > Behalf Of *Morris, Lee SGT > *Sent:* Thursday, 19 May 2011 9:26 AM > *To:* nswolves@googlegroups.com > *Subject:* [NSWolves] Progress [sec=unclassified] > > I've changed the title because it would have been too long with my extra > bit added. > > > > Anyway, Morgan seems to be working on the small step theory, which totally > baffles me because he's just about to spend a fortune on a stadium which > will be half full if the small step we made this year isn't > enough??????????????????????????????????????? > > > ------------------------------ > > *From:* nswolves@googlegroups.com [mailto:nswolves@googlegroups.com] *On > Behalf Of *mark worrall > *Sent:* Thursday, 19 May 2011 09:13 > *To:* nswolves@googlegroups.com > *Subject:* Re: [NSWolves] Wolves owner Steve Morgan says he wants Mick > McCarthy to stay on as the club's manager even if they are relegated. > > Maybe thats based on Morgan only planning on putting in small amounts of > money each year, and measuring MM on what he achieved with it ? > > > > He wont get a big name manager in as they will expect lots of money to > spend, which he obviously doesnt want to pay. > > On Thu, May 19, 2011 at 9:03 AM, Marcus Chantry < > marcus.chan...@macquarie.com> wrote: > > What worries me is that Morgan has stated that Mick has made progress every > year since he took over but when you look at how he’s measured that it is > the context of very small fractions or single points, so based on that run > rate Morgan will be 100 years old before he sees us getting anywhere near > the top of the table (assuming everyone else stays stagnant for that entire > period). > > > > Why can’t Morgan accept that Mick has reached the limit of his ability and > take the plunge. 5 years is long enough in most roles. > > > > > > *From:* nswolves@googlegroups.com [mailto:nswolves@googlegroups.com] *On > Behalf Of *Marcus Chantry > *Sent:* Thursday, 19 May 2011 9:00 AM > *To:* nswolves@googlegroups.com > *Subject:* RE: [NSWolves] Wolves owner Steve Morgan says he wants Mick > McCarthy to stay on as the club's manager even if they are relegated. > > > > Good to see we’re both on the ball Mark. I just posted a link to the same > story on ESPN. > > > > *From:* nswolves@googlegroups.com [mailto:nswolves@googlegroups.com] *On > Behalf Of *mark worrall > *Sent:* Thursday, 19 May 2011 8:55 AM > *To:* nswolves@googlegroups.com > *Subject:* [NSWolves] Wolves owner Steve Morgan says he wants Mick > McCarthy to stay on as the club's manager even if they are relegated. > > > > http://news.bbc.co.uk/sport2/hi/football/13440664.stm > > > > -- > Q: If you could change one thing about Wolves history, what would it be? > A That Peter Knowles was on the bog when the door was knocked. > > The information contained in this email is confidential. If you are not the > intended recipient, you may not disclose or use the information in this > email in any way and should destroy any copies. Macquarie does not guarantee > the integrity of any emails or attached files. The views or opinions > expressed are the author's own and may not reflect the views or opinions of > Macquarie. > > > > -- > Q: If you could change one thing about Wolves history, what would it be? > A That Peter Knowles was on the bog when the door was knocked. > > -- > Q: If you could change one thing about Wolves history, what would it be? > A That Peter Knowles was on the bog when the door was knocked. > > > > -- > Q: If you could change one thing about Wolves history, what would it be? > A That Peter Knowles was on the bog when the door was knocked. > > -- > Q: If you could change one thing about Wolves history, what would it be? > A That Peter Knowles was on the bog when the door was knocked. > > Before printing, please consider the environment. IMPORTANT NOTICE: This > e-mail and any attachment to it are intended only to be read or used by the > named addressee. It is confidential and may contain legally privileged > information. No confidentiality or privilege is waived or lost by any > mistaken transmission to you. The RTA is not responsible for any > unauthorised alterations to this e-mail or attachment to it. Views expressed > in this message are those of the individual sender, and are not necessarily > the views of the RTA. If you receive this e-mail in error, please > immediately delete it from your system and notify the sender. You must not > disclose, copy or use any part of this e-mail if you are not the intended > recipient. > > -- > Q: If you could change one thing about Wolves history, what would it be? > A That Peter Knowles was on the bog when the door was knocked. > > > > -- > Q: If you could change one thing about Wolves history, what would it be? > A That Peter Knowles was on the bog when the door was knocked. > > -- > Q: If you could change one thing about Wolves history, what would it be? > A That Peter Knowles was on the bog when the door was knocked. > Before printing, please consider the environment. IMPORTANT NOTICE: This > e-mail and any attachment to it are intended only to be read or used by the > named addressee. It is confidential and may contain legally privileged > information. No confidentiality or privilege is waived or lost by any > mistaken transmission to you. The RTA is not responsible for any > unauthorised alterations to this e-mail or attachment to it. Views expressed > in this message are those of the individual sender, and are not necessarily > the views of the RTA. If you receive this e-mail in error, please > immediately delete it from your system and notify the sender. You must not > disclose, copy or use any part of this e-mail if you are not the intended > recipient. > > -- > Q: If you could change one thing about Wolves history, what would it be? > A That Peter Knowles was on the bog when the door was knocked. > > -- > Q: If you could change one thing about Wolves history, what would it be? > A That Peter Knowles was on the bog when the door was knocked. > > > > -- > Q: If you could change one thing about Wolves history, what would it be? > A That Peter Knowles was on the bog when the door was knocked. > > -- > Q: If you could change one thing about Wolves history, what would it be? > A That Peter Knowles was on the bog when the door was knocked. > > -- > Q: If you could change one thing about Wolves history, what would it be? > A That Peter Knowles was on the bog when the door was knocked. > > > > -- > Q: If you could change one thing about Wolves history, what would it be? > A That Peter Knowles was on the bog when the door was knocked. > > -- > Q: If you could change one thing about Wolves history, what would it be? > A That Peter Knowles was on the bog when the door was knocked. > > -- Q: If you could change one thing about Wolves history, what would it be? A That Peter Knowles was on the bog when the door was knocked.
