ALS’ resident accountant, Giles Mooney, explains the financials behind the takeover. Interesting stuff…
Following on my article last week, people seem unsure about Donald holding shares and why that would be. I’m also seeing lots of articles suggesting the only change in shares will relate to our new friend, KLD, with no increase in ownership for Juan Sartori. Let me offer the following maths as a possibility to show how I think this takeover could work and why the conclusion is that Donald effectively walks away and Sartori increases his involvement dramatically.
When the accounts came out recently, all evidence told us that, by the end of July 2019, the owners had paid £14.1m for the club and had paid an additional £2.4m since. That’s why, in previous articles, I’ve suggested that £16.5m was a fair asking price.
The information we have suggests that Donald had used just under £13m and, I believe, Sartori about £3m to buy the club. For the avoidance of doubt, these numbers include the infamous £20m which was taken out of the club to clear Short debts and will, after the planned takeover never be talked of again.
The problem with an easy sale is that Stewart has said he values the club at £37m which would mean he wants £28.12m to sell his shares.
So how do you square that circle?
It is quite common in businesses for the seller to want to keep some shares. This isn’t because they want to be involved but rather because they think the future is bright and they want to benefit from the potential uplift in value. I’ve written previously that Donald’s insistence on £37m seemed to be based on that potential increase in value. Let’s say after some haggling he’s persuaded it’s worth £34m (for the sake of argument).
My gut feeling on Donald keeping 15% is not a function of moving deckchairs around on the Titanic as some have suggested but rather a way to get the sale completed in a way that values the club fairly now and also gives him the possibility of getting to his target price in the future.
Let’s say the offer on the table is £16.5m today (which I think is fair). Donald is rumoured to be selling 60%. That would give Donald about £9.7m back. Enough to get four rich Americans off your back straight away but nowhere near the £25m he wants. So where does the other £15m come from? Well, the current owners have said many times that a club like Sunderland in the top half of the Championship would be worth in excess of £100m. Donald’s 15% of that would be £15m bringing his total to pretty much where he’d always hoped for.
Would I begrudge him that £15m? To be honest, if we were near the top of the Championship with a successful academy and two billionaire owners, ready to kick on to the next step, I’d say thanks for trying and thanks for the comedy podcasts.
I’m losing no sleep over Donald and Methven retaining 20% of the shares. It looks to me to be a very plausible and sensible business deal done by Sartori and friends. And, as we’re talking Sartori, I don’t believe for one second that KLD is buying the whole 60%. I believe Juan will at least match him in ownership perhaps buying an extra 20% making it 40% JS, 40% KLD, 15% SD, 5% CM.
If that’s the case and my previous numbers are about right, Juan will have bought 40% of the world’s greatest football club for around £6.5m. That’s the kind of businessman I can respect.
Why am I so convinced he’s leading the charge? Well, other than the fact he’s a clever businessman who wants to own a football club, the rumours over the weekend are that feeder clubs form part of the grand plan. Feeder clubs in Uruguay, to help young talent from Uruguay make their way to European football. Anyone who’s followed the story of Juan Sartori, future Uruguayan president, knows where that idea comes from.
And who else should appear as a possible key player in any future management structure over the weekend? Former manager, Sartori friend and well known Uruguayan, Gus Poyet.
The potential for this to be a very exciting Sartori/Louis-Dreyfus takeover fits with all the rumours and hearsay but let’s wait and see what develops over the next couple of weeks. I, for one, remain optimistic that the future might finally be bright.