The Financial Situation (15 Viewers)
- Thread starter ReBeL
- Start date
This is a great decision to invest into some club in Portugal. We'll have opportunity to develop our youngsters, possibility to get our hands on local talent and Portugal certainly don't lack these.
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Think of it as our subsidiary. We'll be financially involved in those deals and all potential gains will go to us.
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Think of it as our subsidiary. We'll be financially involved in those deals and all potential gains will go to us.
I don't know why I find this so interesting. 
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It reminds me of when I used to play FM and I couldn't afford the player I wanted so I just became the coach of that team and with Juventus I bid $0 for the player and then accepted the bid because I was also the coach of the other team.
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And if the player said no, being the new coach of the team I just disciplined & fined that player over and over again until he asked to leave.
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It reminds me of when I used to play FM and I couldn't afford the player I wanted so I just became the coach of that team and with Juventus I bid $0 for the player and then accepted the bid because I was also the coach of the other team.
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And if the player said no, being the new coach of the team I just disciplined & fined that player over and over again until he asked to leave.
Or I would have Real Madrid and all the other big clubs (by taking charge of them) max out there transfer amount by editing their salaries and have them spend 180m on some youth player I would never use.
I don't know why I find this so interesting.
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It reminds me of when I used to play FM and I couldn't afford the player I wanted so I just became the coach of that team and with Juventus I bid $0 for the player and then accepted the bid because I was also the coach of the other team.
- - - Updated - - -
And if the player said no, being the new coach of the team I just disciplined & fined that player over and over again until he asked to leave.
- - - Updated - - -
It reminds me of when I used to play FM and I couldn't afford the player I wanted so I just became the coach of that team and with Juventus I bid $0 for the player and then accepted the bid because I was also the coach of the other team.
- - - Updated - - -
And if the player said no, being the new coach of the team I just disciplined & fined that player over and over again until he asked to leave.
Or I would have Real Madrid and all the other big clubs (by taking charge of them) max out there transfer amount by editing their salaries and have them spend 180m on some youth player I would never use.
I don't know why I find this so interesting.
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It reminds me of when I used to play FM and I couldn't afford the player I wanted so I just became the coach of that team and with Juventus I bid $0 for the player and then accepted the bid because I was also the coach of the other team.
- - - Updated - - -
And if the player said no, being the new coach of the team I just disciplined & fined that player over and over again until he asked to leave.
- - - Updated - - -
It reminds me of when I used to play FM and I couldn't afford the player I wanted so I just became the coach of that team and with Juventus I bid $0 for the player and then accepted the bid because I was also the coach of the other team.
- - - Updated - - -
And if the player said no, being the new coach of the team I just disciplined & fined that player over and over again until he asked to leave.
I think we all did that at some point, but it became very boring after a while.
We want to be able to get our hands on Latin American players with Portugal having less non-EU restrictions. Read an article that stated that Juve were interested in James Rodriguez (an example) but couldn't pursue it entirely because of the non-EU rules in Italy. Same article goes on to mention Falcao, Hulk, Di Maria, etc were bought on the cheap and sold for millions.
Not a bad idea imo.
Not a bad idea imo.
So we can get half ownership for 500 euros? 
We'd pay 500 EUR for the "Equity Capital" or ownership, however, we'd have to bear all the future costs of keeping the company in business going forward, which include the fulfillment of ALL of its financial debt. The reason its equity capital costs 500 EUR (which appears to be a nominal payment to effectively say '0') is because its debt obligations are in excess of the total value of the company.
Just doing some research - and while I can't read Portuguese (thank you Google translate), a few things stand out about this club.
-It owned 270,000 EUR in 2012 for some player dispute with a Brazilian club, "Avai".
-As a result it sold 46% of the company to Rui Pedro Soares, a former director of Portugal Telecom, for 469 EUR in order to pay this obligation.
-Currently the book value of its equity is -7,100,000 EUR, while its total liabilities being ~8,000,000 EUR, which implies a total asset value of ~900,000 EUR.
-It had a run-rate annualized loss of 1,200,000 EUR when it was bought in 2012.
-Rui Pedro Soares claims an improved financial profile since he bought it particularly due to the promotion to the first division.
-These new owners have been paying off debt, but its still massively indebted. Last year, it paid off ~400,000 EUR in tax indebtedness. These put its ability to register for the league at risk so it had to be done.
However, in an interview, a former executive, Antonio Polena (who appears to be an idiot btw), highlights some other facts surrounding his decision to leave the club.
- He resigned (assuming I understood the translated article right) because the sale to the new shareholders would lead to serious austerity that would have the club's cash flow being used to reduce its financial debt and other liabilities (tax primarily)
- It has around ~5,000,000 EUR in financial debt to Banif, a bank in portugal, which runs the company ~500,000 EUR per year in interest.
- Management has reduce operating expenses from 1,800,000 EUR to 1,200,000 EUR
Using crude calculations:
Assuming:
1,200,000 EUR Deficit
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+ 600,000 EUR in OPEX savings
+ 500,000 EUR in Interest Expense
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- 100,000 EUR deficit
+ increased revenue from promotion to the first division, which I really don't know how large that is...
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Probably anywhere between 0-500,000 EUR in cash flow annually to pay interest, make player purchases, and invest in infrastructure.
Conclusion:
You have a business that barely breaks even, and has a debt-load of 5,000,000 EUR. It's very likely that given its limited to negative profitability that the club isn't worth more than 5,000,000 EUR.
To illustrate:
Hypothetically, let's say the value of the company (present value of its future cash flows) is 4,000,000 EUR (that would be ~8.0x my estimated high end cash flow, which I think is realistic).
Enterprise Value: 4,000,000 EUR
Less:
Value of Debt: 5,000,000 EUR
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Equity Value: -1,000,000 EUR x 50% = -500,000 EUR
Conclusion: This companies "equity value" is certainly negative because of its debt-load and limited profitability. Juventus investing in this business for 500 EUR is probably overpayment given that it would probably cost Juventus well in excess of that in terms of future investments to keep the company solvent, and actually use it as a satellite club. More realistic is probably becomes a permanent cost centre for Juve.
Strategically, it may have value for development, but even at 500 EUR it probably isn't really a deal.
My guess the stake (49%) is intentional because if it is 50% it means a majority stake, and likely trips "Change of Control" covenants in their bank loans, which likely would trigger the full repayment of all of the club's financial debt.
Also an update:
http://www.abola.pt/nnh/ver.aspx?id=506798
Apparently, Soares dismissed the report.
Blog on Football-Italia about Vidal and selling him for the money mentions the possibility of us going bankrupt in 2 years.
Dave Taylor said:
Website he provided was: http://www.macroaxis.com/invest/ratio/JVTSF--Probability-Of-Bankruptcy
Not sure if serious...
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@Bjerknes, any idea?
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It almost seems like a joke.
Dave Taylor said:
Website he provided was: http://www.macroaxis.com/invest/ratio/JVTSF--Probability-Of-Bankruptcy
Not sure if serious...
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@Bjerknes, any idea?
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It almost seems like a joke.
