Most liked posts in thread: Ownership Structure

Sorry for the long post, but having seen some of the speculation around the holding structure I have decided to do a bit of my own research. I appreciate this is my first post on here but I used to go on C&B now and again, just don't have much free time at the minute. Here are my findings:

ER Sportsgroup GmbH is a German company which is owned 22.5% by Edin Rahic and 77.5% by ER Investment GmbH. ER Investment GmbH on the face of it seems to be controlled by Stefan Rupp & Michaela Rupp (I think Michaela could be Stefan’s sister, but I haven’t done too much digging on that).

The latest financials I can pull for ER Sportsgroup GmbH are dated 30/06/2017 so a bit out of date. They also contain very little information – just a balance sheet. What they do show is the following:

Fixed Assets: €6.98m – No detail but educated guess is that this is primarily the investment in BC Bantams Limited which ultimately owns Bradford City Football Club Limited. It would put the purchase price at around £5.5m.

Cash: €142k

Other Liabilities: €6.25m – Listed as payable within one year €714k, payable in more than one year €5.541m.

Accruals - €14k – Could be accountancy fees or similar – immaterial

Capital - €850k

The interesting part here is the other liabilities. In a note to the balance sheet it states that liabilities of €6.19m are owing to the shareholders. My speculation would be that this is a loan from Stefan Rupp or one of his controlled companies which enabled the company to purchase Bradford City. Interestingly the liabilities balance increased from €5.56m to €6.25m from 30/06/2016-30/06/2017. Again, pure speculation as I have no evidence, but my thoughts would be that this loan has not been paid back at all and the increase in balance is purely down to interest which would put the interest rate at around 12%.

The capital of the company (which I believe will comprise share capital + retained earnings) decreased by €400k in the year, meaning the company made a loss of €400k. If I am right about the loan interest, then that was around €700k meaning the company had to have received income during the year of around €300k to give a €400k loss. That is providing this company had no further costs and we don’t know that because there is no P&L account shown.

As far as I am aware the company only has one source of income and that source of income is its investment in BC Bantams/BCFC. The only way that this company can generate cash to repay this loan is to extract cash from BCFC. How can it do that? Well looking at the balance sheets of BCFC Ltd and BC Bantams Limited, both companies have negative retained earnings. What that means is that neither company can pay a legal dividend until those retained earnings become positive. Another way could be to extract via interest on a loan but there is no loan showing on the balance sheets. This is a good thing, in other cases of foreign owners buying football clubs they have saddled the actual football club with debt, this has not happened here so even if SR called in his loan it would not affect the football club and put them in liquidation. My speculation here is that the intention is for ER Sportsgroup to provide management services to BCFC and for that the club will effectively pay a management fee. This will of course reduce the amount of profit available for spending on actual football operations. They may have been such a payment in this case but there is not enough information available to tell.

In terms of the actual accounts for the 2 UK companies they are bland and nothing significant to report. The club made a small profit between July 2016 and June 2017. There is no P&L account, so we cannot see detail of any management recharges or salaries. There have been rumours of ER and his wife’s salary. None of that information is on the public record so if somebody does genuinely know those figures then they have been told them by someone close to the club or obtained by somehow seeing the payroll information.

What do we take from this? The actual football club isn’t saddled with debt itself so that means SR can’t call his loan in and force the club into liquidation to repay it which is obviously good news. The bad news is that it is probable SR will want repaying at some point and the only way to do that is to extract funds from the club. In my view it would be foolish to extract significant amounts at this point in time when the club doesn’t make fortunes anyway. Is he prepared to sit tight and hope the club can make it to the championship where the rewards are much greater? Obviously if he does this the balance on the loan will continue to mount up. I have no idea what the relationship between ER and SR is like but if I had €6m riding on BCFC being successful I would be pretty concerned!

 

Its starting to get very silly very quickly. We don’t have to speculate what Rahic has done on the field because it has been an unmitigating disaster but off the field its become a speculative free for all. Too many people on social media with their own little agendas.
Make no bones about it i would be happy to see him go due to his ineptitude with on field matters but off the field i’m sick of hearing unsubstantiated crap.

 

Ah so a new company accountant. Is that something like the 3rd or 4th since they took over? Edin finally appointing one that won't question his ways? I'm very worried by this, just what are they doing?

 

Arguably, it is a high risk venture because of the approach to funding the purchase. Wealth generates more wealth. Mr Rupp through the various companies set up, it appears, has used his wealth to generate a 12% return on his investment regardless of the actual performance of his ownership. Bearing in mind that German interest rates have been zero, if not negative, for years then this is pretty decent for him. The risk, I'd argue, is not making the return on investment he has set, which actually then threatens his capital investment.

From what you have said, we are not sure if interest is actually being repaid yet. However, 12% on £6m becomes £18m in 10 years if not serviced. However, as I suspect that this is not a commercial loan from a bank, rather from Mr Rupp's wealth, this isn't quite as terrifying as it might appear.

Whilst there was some lovely warm and fuzzy stuff about this being a family club, great support etc, it looks as though this was a money making exercise from the word go. Further to this, the purchase of the club saddled it with a sizeable debt by association without any immediate increase in income generating assets to service that debt.

The hope that the club could generate a return through the sale of players is a high risk strategy. It is possible, but not many clubs do it. Added to the point that clubs in the championship don't make money (broadly) then for me it is quite clear that the whole approach is flawed.

 

Oh shit, there you go again...

Let's look individually at things then...

YOU always bring up the xenophobia/race card whenever somebody criticises the owners, it's getting boring, we're going round in circles....no we are not we currently have a straight line down to League 2...we are the worst performing team in 2018 of the 92 clubs in the PL and EFL...FACT....we have had 5 managers/head coaches in 2018...FACT....had 2 entirely new squads.... FACT....

The club is falling apart currently....FACT....with the current owners....FACT....it's a collective when they are winning but only one person gets the shove when we are losing....FACT....the biggest decision for the club appointing head coach during the summer was err Collins, incorrect even Edin has said it....FACT....

Our philosophy was to play entertaining football, attacking football then got rid of a manager who did and tried to do it to be replaced by a reputable manager but one known for 'pragmatic' football shall we say....FACT....then promised entertaining, attacking, passing football under Collins which never materialised....FACT...

Policy was to bring on our own young players through the development squad, they aren't playing in a competitive league.....FACT....we signed 4 or 5 players for the development squad (Pybus, Patrick, Robinson, Grodolwski, Gunner), where are they now, near the first team? No....FACT....

I could go on but I'm bored as well....

 

Yep, wives are famous for never questioning their husband's ways.

 

Its *@?$ measuring time gents.

 

Yes cheap words and were we taken in :
https://www.thetelegraphandargus.co.uk/news/14514214.exclusive-new-bradford-city-owners-promise-no-hidden-agenda/

Edin Rahic and Stefan Rupp have assumed control at Valley Parade and believe the club tick all their boxes.

In an exclusive interview with the Telegraph & Argus, Rahic stressed they were happy to continue City's steady progress and had no plans to make big changes.

Rahic said: "I am 42 and Stefan 47. For us it's a long-term investment. We are not interested in thinking about an exit plan.

"We want to develop the squad and reach something. It takes time.

"We feel the mix between German and English football and business can be successful – but we don't want to run Bradford City as a German club.

"The Germans probably steer a club or company a little bit different but we will see.

"As long as we have an open and transparent relationship with the fans and the press, it would be great for me. We are not interested in anyone with a hidden agenda.

"For us, it's important not to have any pre-judgements."

 

I have read this a few times Brisbane and still not totally sure what you are trying to say as it goes a bit all over the place - but if you haven't yet realised the almighty bodge up the owners are making of our club and that is unfolding before our very eyes then I can only believe you have some closer attachment or vested interest in the stance you take. As well as the comments on this site I have just read the views on WOAP following yesterdays game and they are to a man and woman hoping Rahic never sets foot in our club again. I am not going to call our owners names and the vast majority are not making it personal - they are just totally fed up and at their wits end with the abysmal job ER has done at our club

 

Conspiracy theorists, on my whistle.....

 

Forget Silke, I'm more concerned that a man who is completely clueless and inept at his job is on £132k/yr

 

Ok - taking your points in order. Shareholders capital - that is the one I am least sure about, I will come back to that one.

Verbindlichkeiten - Do you have a copy of the balance sheet? On the second page there is an analysis and it states (translated from google) "The following rights and obligations apply to the shareholders:" then it has the Verbindlichkeiten amount of €6.192m and underneath it states "The figures also include the amounts attributable to the managing directors". I took that to read that €6.192m is owed to either the shareholders or directors which is either Rahic, Rupp or one of their companies. I don't think Rahic has that sort of cash so that is why I assumed Rupp.

I paid for a few documents earlier from the Unternehmensregister. Most had nothing relevant in but I did find the shareholders list. I was debating whether or not to share on here but think I would prefer not to even though a public doc.

Back to the share capital, I am not too sure but what I suggested was best guess. That would mean 300k income coming from somewhere, could that be a management recharge? We don't have enough information to know with certainty.

I agree with your other points. ER doesn't have the cash, is SR going to put anymore money in, knowing he has €6m plus original share capital investment at risk? I doubt it given Edin's track record so far. I honestly don't know what the future will bring, maybe it depends on how much SR needs €6m and if he has the appetite to speculate any further.

 

A very good point. My main annoyance with the way the the club is being run at the moment is the disconnect being created amongst the supporters and the club, especially the dyed in the wool fans. It felt like we had started to make inroads in to what has always been a pretty apathetic support amongst the Bradford public, almost like the club was at last heading in a direction that would encourage the next generation of fans to really start to love their club like other big cities seem to do. I don't really want to go back to that feeling of lower league tinpot club, farting about in the lower reaches of league 2. It has no appeal to me whatsoever and from talking and listening to other long standing fans it doesn't interest them either, and neither does sitting in a 25,000 seater stadium with 7,000 'true diehard fans' who deride the plastics for having temerity to jump ship. Bradford is a sinking shithole of a city, i'll be damned if I stand by and watch Rahic send my club the same way.

 

And there is the most significant problem in English football. The difference between the haves and the have nots. It should be a linear relationship between final league position and prize money, instead bottom of the PL gets £100m and top of the Championship gets £4.50 and a bag of out of date wagon wheels. Clubs in the bottom two divisions are reliant on owners putting money in, striking lucky on a cup run or player sale and at the same time the subs bench at a top six PL side could fund a club for a season with combined salary for a month.

 

Why do you have to use other clubs as a comparison I dont give a s**t about other clubs.
I don't understand how as a fan (not an employee) you can even contemplate they are doing things right financially to get us stable and not rely on Cup runs ETC, our club is falling apart before our very eyes and if you can't see that you are equaly as bad as the fans you are questioning with regards Edin being their only focus.
Do we have to go through a relegation to get to the stage where our club becomes finacially stable that is one hell of a gamble if so, sorry @brisbanebantams I honestly can't see how you can defend the undefendable, Edin is a walking disaster and Stefan can't be much better allowing this man free reign to do as he pleases with our club.