DIY....Falmer....Credit crunch

ewe2 · Mar 24, 2008

Have you bought any steel lately! The cost of materials and the credit crunch worries me . Please explain to me why i should not be concerned about the funding o
f Falmer.......I know we have all the PR,but........!

TSB · Mar 24, 2008

Because it's all been factored in?

clapham_gull · Mar 24, 2008

They are actively working to decrease the amount of steel in the stadium.

From the presentation we were given at SOL it would appear that the "credit crunch" won't affect a construction of this type.

It possibly work in our favour. A lot of the constructors working on the stadium (apart from the major infrastructure) will have been affected by the decrease in new house building. There should therefore be quite a lot of competition for the work.

Herr Tubthumper · Mar 24, 2008

clapham_gull said:
They are actively working to decrease the amount of steel in the stadium.

From the presentation we were given at SOL it would appear that the "credit crunch" won't affect a construction of this type.

It possibly work in our favour. A lot of the constructors working on the stadium (apart from the major infrastructure) will have been affected by the decrease in new house building. There should therefore be quite a lot of competition for the work.

.....but surely the credit crunch will affect the loans to pay for the building of the stadium?

Regardless of the choice of material it will still cost money to build...which will still need to be borrowed?

warsaw · Mar 24, 2008

I posted a similar thread last week. Not sure whether to worry or not. Surely a 'cooling off' of demand for steel, labour etc COULD work in our favour in terms of lower costs.

Not sure though, any construction industry buffs out there? :shrug:

Lord Bracknell · Mar 24, 2008

Some redesign work on the stadium has been done - saving an estimated £6 million on the price of the steel required.

Cue a thread suggesting that we spend the six million on a couple of defenders.

Herr Tubthumper · Mar 24, 2008

Lord Bracknell said:
Some redesign work on the stadium has been done - saving an estimated £6 million on the price of the steel required.

Cue a thread suggesting that we spend the six million on a couple of defenders.

That's the roofing gone then.

clapham_gull · Mar 24, 2008

Herr Tubthumper said:
.....but surely the credit crunch will affect the loans to pay for the building of the stadium?

Regardless of the choice of material it will still cost money to build...which will still need to be borrowed?

I don't know a lot about finance to be honest, but the question was asked and the answer was no - the advisors don't see a problem.

timbha · Mar 24, 2008

Herr Tubthumper said:
That's the roofing gone then.

or one of the stands!!

Herr Tubthumper · Mar 24, 2008

clapham_gull said:
I don't know a lot about finance to be honest, but the question was asked and the answer was no - the advisors don't see a problem.

Fair enough. I guess we will find out soon given the first bit of earth is to be dug in November.

bailey · Mar 24, 2008

Herr Tubthumper said:
.....but surely the credit crunch will affect the loans to pay for the building of the stadium?

Regardless of the choice of material it will still cost money to build...which will still need to be borrowed?

An interesting point. The banks have certainly become more risk adverse but that is more in the sub-prime consumer lending sector. Falmer would be commercial lending and if I remember correctly a large part of it is from a mortgage against season tickets, which further reduces the risk.

In the current environment the lending decision would probably be subject to more scrutiny but I doubt it will be a problem to secure finance. Ultimately the banks still have to lend money to make money and there's a huge difference between high-risk consumer lending and commercial lending to a club that's been around in one form or another for over 100 years.

Herr Tubthumper · Mar 24, 2008

Will the club be employing lazy British people to do the construction work or those super efficient polish workers?

dougdeep · Mar 24, 2008

We wont need steel until next year, hopefully the price will have stabilised by then.

Lord Bracknell · Mar 24, 2008

Herr Tubthumper said:
Will the club be employing lazy British people to do the construction work or those super efficient polish workers?

I don't think that any of the club's employees will be used to build the stadium.

Herr Tubthumper · Mar 24, 2008

bailey said:
An interesting point. The banks have certainly become more risk adverse but that is more in the sub-prime consumer lending sector. Falmer would be commercial lending and if I remember correctly a large part of it is from a mortgage against season tickets, which further reduces the risk.

In the current environment the lending decision would probably be subject to more scrutiny but I doubt it will be a problem to secure finance. Ultimately the banks still have to lend money to make money and there's a huge difference between high-risk consumer lending and commercial lending to a club that's been around in one form or another for over 100 years.

A fair reply but Liverpool had to scale down their plans for a new ground because of the credit crunch. Here is an article. All of the arguments you give can be used for Liverpool...and they struggled/failed to raise all the required money. If they have problems then surely we will?

http://www.telegraph.co.uk/sport/main.jhtml?xml=/sport/2007/12/18/sfnliv118.xml

clapham_gull · Mar 24, 2008

Herr Tubthumper said:
A fair reply but Liverpool had to scale down their plans for a new ground because of the credit crunch. Here is an article. All of the arguments you give can be used for Liverpool...and they struggled/failed to raise all the required money. If they have problems then surely we will?

http://www.telegraph.co.uk/sport/main.jhtml?xml=/sport/2007/12/18/sfnliv118.xml

We won't be borrowing any like what Liverpool require though. I'm not sure you can draw a comparision.

Herr Tubthumper · Mar 24, 2008

clapham_gull said:
We won't be borrowing any like what Liverpool require though. I'm not sure you can draw a comparision.

Fair point. I just wish the club would give a reason when they say it wont be a problem....to put my worry to rest.

Lord Bracknell · Mar 24, 2008

Herr Tubthumper said:
A fair reply but Liverpool had to scale down their plans for a new ground because of the credit crunch. Here is an article. All of the arguments you give can be used for Liverpool...and they struggled/failed to raise all the required money. If they have problems then surely we will?

http://www.telegraph.co.uk/sport/main.jhtml?xml=/sport/2007/12/18/sfnliv118.xml

Maybe the key bit of the Telegraph article is this:-

"The Americans, who bought the club from David Moores last January in a £174 million deal, want to re-finance the £298m they borrowed from Royal Bank of Scotland to pay for the deal and give them working capital for players and the stadium.

"That two-year loan expires in 2009 and Hicks and Gillett want to roll the deal into a long-term package to help them to pay for the new stadium".

Hicks and Gillett are up to something much more complicated than just building a new stadium. The banks may not be convinced that their bigger plan is viable (or even coherent).

Bozza · Mar 24, 2008

clapham_gull said:
We won't be borrowing any like what Liverpool require though. I'm not sure you can draw a comparision.

But Liverpool's revenue creation is many, many times that of the Albion too.

Lord Bracknell · Mar 24, 2008

Herr Tubthumper said:
Fair point. I just wish the club would give a reason when they say it wont be a problem....to put my worry to rest.

A public statement might put your worry to rest, but at this stage it might just as easily irritate the financiers, by giving the impression that they are being taken for granted.

I would expect that PricewaterhouseCoopers are advising the club to keep schtum right now.

Until the tenders are in, they certainly won't want the size of any potential loan being made public. That simply invites contractors to put their prices up.

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