Andrea Radrizzani tonight tweeted the above cryptic message to his followers (ie supporters like me) and so it is valid for me to wonder just what message he is trying to send to me (and everyone else). Unless Andrea wants to expand on the tweet, this essay will have to be speculation (unlike most of my essays) and the numbers here are indicative.
The Hashtags
Radrizzani included two hashtags and I’m quite certain that the #mot, along with tagging LUFC into the tweet are just to alert Leeds United supporters to the tweet.
The Elland Road tag I think is significant and gives a large hint as to what is on his mind: he said way back in early January 2017 that his first task was to read up and analyse the contracts around buying back Elland Road and make a decision as to whether to buy back and renovate or do something different. Radrizzani has said that Elland Road needs updating and has travelled the world seeing first-hand new stadia being used for different sports, his partner Riccardo Silva has just had the Miami Football Club stadium named after himself having been a major contributor to its upgrade (he donated almost $4m – donated, not loaned, and will not get this gift back).
The financial case for buying back Elland Road is not clear cut at this moment: LUFC currently pays rent around £1.6m per annum and this rises every year. For LUFC to buy back Elland Road on a mortgage (as Massimo Cellino tried to do until it became clear institutions wouldn’t lend him the money) the club would need to find something like £17m at the moment: there are rumours that this price is an agreed fixed purchase price and other rumours that indicate this option expired and lapsed some years ago; however, this £17m figure is also the “present day value” of the future rents that LUFC is committed to.
For anyone new to “present day value” this is means how much something is worth in today’s money given that inflation in future years will devalue it. Anything looking into the future includes a degree of uncertainty and investors will gamble on different inflation rates etc – some will win, others will lose. A prudent accountant will take a middle ground approach and advise Mr Adler (Elland Road’s owner) that he would be just as well off if he took rent for 13 years or accepted £17m now.
So now I turn to financing a deal to buy Elland Road back: Cellino hasn’t got the money to do it (he’s already had to borrow money at 5% interest rate to fund Eleonora Sport Limited and has made no secret he that he needs a mortgage to buy Elland Road back if doing it on his own) but maybe Radrizzani has – however, Radrizzani and Cellino are locked in a 50:50 agreement that means Radrizzani won’t gift money unless Cellino does as well. Cellino would have to dip into the cash he received selling his 50% to do this and it strikes me he’d be better served paying off his other debts first. So I can conclude there may be difficulty getting ready cash from the 50:50 owners.
There will be no difficulty getting a mortgage if sufficient security is received and Radrizzani and Cellino are both in an excellent position to provide a top up security to that which the club itself may be lacking. The best 10 year, fixed interest repayment mortgage I can find at this moment has an interest rate of 3.89% and I’m sure the club could negotiate a mortgage on a similar rate. The debenture which Cellino has given to GFH means the security the club can provide for such a loan is much reduced and the equal co-owners will need to provide it instead.
So, now that Radrizzani is on board, the club should be able to fund the repurchase of Elland Road through owner personal guarantees if neither owner is willing to provide the cash themselves.
The problem is that the annual paybacks on a mortgage of £17m are just over £2m for 10 years: the club pays annual rent less than this so it is not attractive for a loss-making club struggling to find cash to pay wages and other costs.
If Radrizzani was to be sole owner, as has been mooted for the summer, then he would not be restricted by the 50:50 investment needs of the current arrangement and could use his own cash instead of a mortgage: this would come at a cost to Radrizzani since his cash in currently earning interest in other investments but maybe low returns on investments of, say, 3% are attached to his cash and then the cost to Radrizzani becomes perhaps less than £1m.
Returning to his tweet, I think one decision he cryptically means is that if we are promoted the decision to buy-back and modernise Elland Road becomes different and so it will wait.
I also think his tweet confirms his press statements that he has discussions and talks planned with Cellino that will not take place until the season end as to the ownership model for the next season and this too affects the decision to buy-back and modernise Elland Road.
To me, he comes across as someone well aware of fans’ desires and understands how fans have been let down by false promises and idiotic press statements and he is being as professional as he can by respecting the club’s need for confidentiality whilst also letting us know a sliver of his plans.
Other Talks and Decisions In June
I’m running out of time writing this tonight so it may update later.
The big issue with many LUFC fans at the moment is employment contracts for Garry Monk and the rest of his team. There are many, many other talks and decisions that need making in June, such as players’ contracts if we get promoted, new players to cope with the PL, if we’re not promoted talks about dropping players and bringing in new Championship level players.
Garry talks about a “group”: management speak is a “team”; fans are part of that team, we consume your products on matchday, buy merchandise all year round, we were here before the “team” and we’ll be here long after this “management team” but we all want the same success. We don’t mind paying for our enjoyment and don’t mind you benefiting financially and we have much more to offer than the club is getting from us.
Leeds United Supporters are not an “audience” going to the cinema; we are a “congregation” going to church.
And we want to help