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Volume 6 No. 216


Scottish Premier League Heart of Midlothian FC has "rejected a takeover offer from the former owner of Livingston, believing Italian businessman Angelo Massone may not be the right person to take the club forward," according to the Scotland DAILY RECORD. The Italian revealed that he was fronting a £4.3M ($6.8M) bid for the "troubled Edinburgh club" on behalf of a group of Italian businessmen. The news "surprised fans and commentators alike, in particular fans of Livingston who saw Massone take their club into administration and to the brink of bankruptcy." Now, "perhaps with that record in mind," Hearts has rejected the bid. A statement on the club's website read, "Heart of Midlothian FC can today reveal that it has rejected a bid from businessman Angelo Massone to buy the club" (DAILY RECORD, 11/19). SUPER SPORT reported that Hearts made reference to Massone's previous involvement in the Scottish game as it opted not to accept his bid. A spokesperson for the club said, "We are aware of Mr. Massone's previous involvement in the game in Scotland, and the board has decided not to pursue his offer any further. In the view of the board, the bid he made also undervalued the club. Vladimir Romanov remains willing to discuss the sale of Hearts to anyone with a genuine interest, and ability, to take the club forward." The spokesperson added, "Bidders will need to provide a financial offer to reflect the value of the club, be fit to run it as required by the Scottish FA and disclose their plans going forward" (SUPER SPORT, 11/19).

German luxury carmaker Daimler "has taken full control" of the Mercedes F1 team after "buying a 40% stake owned by Abu Dhabi sovereign-wealth fund Aabar Investments," according to Keith Weir of REUTERS. The sale of the F1 stake "is a logical step for Aabar, which has been cutting its ties with Daimler." Sources familiar with the matter said that Aabar's disposal in October "was triggered by a failed derivatives deal underpinning the investment firm's purchase of the shares." Regulatory approval "is still required for the sale of the stake in the F1 team, and financial terms were not disclosed" (REUTERS, 11/19). On Nov. 16, 2009, Daimler and Aabar purchased a 75.1% stake in the Brawn GP team. This stake grew to 100% in the company in February '11, with a proportion of 60-40. Daimler now has taken the final stake in the company, which is now 100% in Daimler control. Mercedes-Benz Motorsport Communications Manager Bradley Lord said, "In that context you can see a level of process to it. The other context is that Aabar has recently divested itself with shareholding in Daimler AG. So, the move certainly didn't come out of the blue" (SBD Global). BLOOMBERG's Mahmoud Kassem reported the "Abu Dhabi sovereign-wealth fund unloaded its remaining stake in Daimler in October." Aabar "had bought a 9% stake in the Stuttgart, Germany-based manufacturer in March '09 after financial markets collapsed." As part of the partnership, Aabar acquired 40% of the Mercedes F1 team (BLOOMBERG, 11/19). AUTOSPORT's Pablo Elizalde reported Daimler "confirmed it is now the only owner" of the Brackley, England-based squad "after completing the purchase of the final stake for an undisclosed figure" (AUTOSPORT, 11/19).

Fans of the National Rugby League club South Sydney Rabbitohs, often "regarded as the people's club," could have "the chance to become shareholders" in the club, following the decision by actor Russell Crowe to sell his stake by the end of next season, according to Stuart Honeysett of THE AUSTRALIAN. The concept, similar to the NFL Green Bay Packers, was floated by Souths Chair Nicholas Pappas Monday "as one of the solutions available to members," with the club being worth "anything from A$7M ($7.3M) to A$14M." Crowe and co-Owner Peter Holmes a Court paid A$3M for it in '06. Pappas and CEO Shane Richardson stressed that "it was business as usual despite the club facing life with Crowe when he withdraws his financial clout." Additionally, Crowe "may not be the only owner heading for the exit, with Homes a Court expected to decide by the end of the week whether he will follow suit." The pair took 75% ownership of the club in '06 (THE AUSTRALIAN, 11/20). In Sydney, Brad Walter noted the value of the 75% stake "is difficult to ascertain," as the money Crowe and Holmes a Court paid in '06 was during "a time when the Rabbitohs were struggling to pay their players." The club is "now predicting a A$1M profit" next year. However, Souths also carries debt of A$6M "from loans given to the club by Crowe and Holmes a Court to cover losses incurred between '06 and '08." A source close to Crowe and Holmes a Court said that while the club was now "much more valuable than when they bought it, that was unlikely to be a significant factor in determining the sale price." It has also been suggested that Crowe's "preference would be to sell the club back to its members as he is a life-long" Rabbitohs fan, "who only became involved to keep Souths alive and not for financial gain" (SYDNEY MORNING HERALD, 11/20).

WHEN ONE DOOR CLOSES...: In Sydney, Tim Boreham wrote the sale "opens the way for either another equally impassioned private investor to step forward" or for the shares to sold "to the devoted 22,5000 members." Another gambit is a "public listing, although the rocky public record of listed sporting plays globally suggests this could be the last-resort option." According to "those familiar with valuing sporting club assets, the latter approach is hazardous because the usual valuation disciplines are clouded by other variables, such as supporters' passion." Investors "pay more than they really should." Brand Finance Dir Tim Heberden said, "There's a bit of a chequered track record. In terms of methodology they're similar to valuing other entities in that you look at the cashflows they are expecting to generate." Heberden added: "But once you get private investors you have qualitative considerations, whether it be your love of the club or love of the spotlight" (THE AUSTRALIAN, 11/20).

WHAT THE NUMBERS SHOW: In Sydney, Paul Kent noted Pappas described Souths as the "envy of the code." Richardson explained with an example, saying that the Rabbitohs "continue to be profitable in the tough Sydney market." Richardson said, "This year is the fourth year that we'll make an EBITA profit, a cash flow profit." An EBITA profit is earnings before interest, taxes, depreciation and amortisation, and the club's true finances "are not quite so rosy." The club's last annual report revealed "the club recorded an A$864,225 loss last year, amassing A$10.6M in liabilities against A$4.6M in assets." While it has often been stated Crowe and Holmes a Court poured A$11M "of their own money" into the club, the A$6.15M was a loan, at more than 9% interest, initially due to have been paid Sept. 30." Unable to meet the payments, "the club renegotiated the loan." Repayments are now scheduled to begin on Oct. 31, 2015 and will continue for the decade after that. Before renegotiation, if Crowe and Holmes a Court had insisted in calling in the loan, "it almost certainly would have sent the club broke" (TELEGRAPH, 11/20).