Tuesday, July 27, 2010

Murray Minted

I thought it was curious that Richard Murray appeared to be the only Charlton director present at Barnet on Saturday.

However now it seems clearer, because surely the best news to have emerged from the club since May 2006 was quietly released on the website tonight.

In terms of the club's fightback from the lowly position in which it finds itself, I find myself quoting Winston Churchill: "Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning."

There isn't enough information in the brief statement to form very robust conclusions, but the wording makes it clear that it's now a one-man show.

Murray describes it as a management buyout of the Plc's two subsidiaries (but the debt to the directors sits at the Plc level), and that he obtains control of the 'football club'.

My knowledge of the legalities of corporate finance are rusty, but I would guess therefore that the Board has agreed to sell (or more likely give) the subsidiaries to Murray, in return for a substantial restructuring of the holding company (plc) debt.

Given that the value lies in the subsidiaries (the stadium and the football club), it implies that the equity in the Plc is worthless (which is what I thought all along).

More information on the exact structure of the transaction will no doubt be contained in the proposal to be put to shareholders.

It may be a mere coincidence, but the company that Murray founded and remains a key shareholder of (Avesco), received a substantial positive legal ruling earlier this month relating to a dispute with Disney.

The stock has rallied 38% in the past month, providing a meaningful boost to his net worth.

If this very recent factor is indeed contributory, then it perhaps explains why the clear focus of the club has remained frugal until today's sudden announcement.

Either way, Murray was certainly under no obligation to put more of his wealth at risk in SE7, so it once again proves just how fortunate we are to have him (now very firmly) at the helm.

As I have discussed on this blog, the club's financial difficulties were complicated by the fact that the bulk of the debts were owed to directors.

With regard to the restructuring of the debt, presumably Murray has persuaded his fellow directors to agree to a substantial haircut on their portion.

This is a valuable gesture on their part (although their other options were admittedly limited), and this would seem an appropriate moment to thank them warmly for their own support.

Their financial circumstances are varied and hard to decipher, but I think it's fair to say that some will have taken a substantial and meaningful hit to their net worth in favour of the club's future.

I suspect that in time they will not regret this particular move, but I'd imagine they deeply regret ever agreeing to lend the club money in the first place.

So I view this as extremely positive news, but from a low base. It is likely merely a stepping stone and the future remains unclear, even if one man now has substantially more ability to dictate it.

Murray will seek new investment, but the football industry remains deeply in the doldrums. Rarely a week goes by without another fellow mid-sized club displaying extreme financial distress.

Unfortunately I suspect the scope for genuine 'real money' institutional investment is virtually nil, so horrifically are football club finances biased towards its employees (they make investment banks look positively shareholder-friendly).

We continue to hope for the classic dumb billionaire (ideally a well-intentioned one) or more likely, precisely the type of foreign (particularly Gulf-based) investor that we so nearly secured in 2008.

The club's strong family reputation and London location should not be underestimated in this regard.

Simply taking on new investment in the form of a million here and a million there will not take us much further, and the club's finances will again resemble those that Murray has clearly worked so hard behind the scenes to restructure.

So today's news removes some considerable uncertainty, but we remain far from the Championship-level stability that seems a reasonable medium-term target.

The most likely short-term outcome remains continued frugality, perhaps with a highly limited budget for transfers provided to boost our depleted squad.

Murray's plans for the club rely upon improvement on the pitch, which Phil Parkinson will now be under pressure to deliver.

Whatever the resources ultimately at his disposal come August 7th, if this is not achieved then all other plans are moot.


At 7:00 AM, Blogger Dave said...

NYA - missed the news on Avesco and Disney altogether, so pleased to learn this. I understand Disney are appealing (well you would with $200-odd at stake), but I'm guessing this might transform Richard Murray's personal financial circumstances if the 38% stock rise hasn't already. He obviously still wants to find a bigger long-term investor but this has to be good news for League One this season.

At 1:38 PM, Anonymous Anonymous said...

I can confirm that talks are ongoing about a take-over after having dialogue this lunchtime with an interested party. It could be happy days ahead, but there is still a long way to go.

Pedro 45

(PS Shouldn't the title be M 1 NT -ed)
(PPS That was a clue!)

At 4:25 PM, Blogger southdownscounselling said...

Thanks for the analyses NYA, so much more than is available elsewhere. Personally, I am not averse to a dictatorship. The simplicity of the decision making process could be really helpful - as long as the dictator is 'good' rather than 'evil' that is.

As for the news from Pedro 45 - can you work out the clue? I must be dim.

At 4:26 PM, Anonymous newyorkaddick said...

Nope, it's completely over my head too.

I'm happy to wait and hear as and when there's something official to report.

At 8:20 PM, Anonymous Anonymous said...


At 10:07 PM, Anonymous newyorkaddick said...

There's definitely something brewing here (check out the Companies House website too), but I'm not sure I like it.

At 10:54 PM, Anonymous Anonymous said...

Charlton Athletic 2010 Ltd!?!

By the way NYA, when a company reports a 'statement of capital' what does it refer to? The PLC states ours is about ±£31m is that the total of the perceived assets?


At 10:54 AM, Anonymous newyorkaddick said...

No, it's the amount of called up/fully paid share capital in the business.

The Plc has 63.9m ordinary shares of 50p each = £31.9m. When added to the £2.9m in the 'share premium' account, it represents the accumulated amount of equity that has been injected into the business.

At 11:47 AM, Blogger 家唐銘 said...

Make hay while the sun shines...................................................


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