Thursday, December 23, 2010

Saint Denis?

Whilst it's perhaps appropriate that we face the Saints during the festive season, most Addicks fans have their minds on far more important matters.

When the offer for Baton 2010 Ltd was confirmed on 2nd December, it was anticipated that the acquisition would be completed by Christmas Eve ie. tomorrow.

Although one particular individual with Millwall connections has been the focus of numerous rumours, it would be wise not to draw any firm conclusions.

Indeed both parties to the potential transaction ought to be congratulated for avoiding any untimely leaks to the media, a rare thing indeed in the Twitter age.

As I've written before, beggars cannot be choosers and we must accept that Richard Murray has most likely run out of the money or enthusiasm to keep the club going, or perhaps both concurrently.

It is highly unlikely given the circumstances that the people or entities behind the bid, will be met with universal acclaim by fans.

However as appears to be misunderstood by many, administration is not (and never was) a very likely outcome for the club, because the majority of the debt was owed to directors (and now there's not much debt at all). This is likely to change however.

The big problem however as Murray has rightly indicated, is the ongoing operational deficit that requires funding.

Thus in the absence of an acceptable bid (the definition of 'acceptable' somewhat softer than it might once have been), the most likely scenario would not be administration but further severe cost-cutting.

Neither outcome is particularly palatable, but there is an important difference.

If the bid succeeds, it does not alter the deficit problem. The key for the long-term future of the club is whether the owners fund the deficit via the injection of equity or debt. The identity of the owners is a secondary concern.

Of course, if the club is to have a meaningful prospect of returning to the Premiership, or failing that establishing itself in the Championship, then the deficits must increase.

The problem is that there is no guarantee that investment in the playing side will deliver a return, which becomes a potentially catastrophic outcome for the club if it was funded by debt.

At that point either the debt must be repaid (impossible), restructured (difficult) or paid off by a charitable new owner with more money than sense (unlikely).

The problem is of course that any equity value at this point is likely gone, so the owners (assuming they are not also fans like Murray) can walk away, leaving neither financial value nor emotional baggage.

Speaking of clubs who know about the catastrophic impacts of debt, Southampton arrive at The Valley (weather permitting) still installed as second favourites for the title, testament to the steady job Nigel Adkins has done since replacing the ego.

Financial constraints are history for now, as evidenced by Charlton's inability to turn down a bid for right-back Fraser Richardson in the summer.

With only a single League One fixture completed in the past 30 days, it's difficult to assess how much of a negative impact the Walsall debacle will have on Phil Parkinson's side.

Southampton's last fixture was equally bad (a 2-0 home defeat by Brentford), and they too will be looking to bounce back infront of large away support.

Defeat for Charlton could see them drop outside of the play-off zone, emphasising just how compressed League One is.

My fundraising website will expire at year-end, so I will have just two more charity bets.

I suspect Southampton are decent value at 7/4, a view I will express via a half-time/full-time forecast.

NY Addick bets £10 on Draw/Southampton (HT/FT) at 11/2


At 9:11 AM, Anonymous Herek Dales said...

Let's hope you lose your money!
My tea leaves are telling me 3-1 to the Addicks!
Happy Christmas!

At 3:29 PM, Anonymous Chris said...

Shame, I kinda liked the whole charity bet thing :(

Have a good xmas NYA

At 4:05 PM, Blogger Southdowns Life said...

There's a gloominess about this post NYA - me thinks the Walsall result and/or performance hit you hard. (We were terrible)
Your analyses of the take over is well written and considered as ever. I am gonna keep dreaming that the consortium has more money than sense until I wake up to the (likely) reality that they are just good at borrowing.
Good luck with all but this particular bet. How about giving us a win and loss balance to see how you got on...?
Happy Christmas and up the addicks!


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