Author Topic: Guochuan Lai  (Read 1299585 times)

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Re: Guochuan Lai
« Reply #6475 on: October 12, 2020, 10:12:53 AM »
That's a superb post, stoxman. A lot of stuff that isn't good to read, but of course perfect sense and needs to be said.

And COYB.
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Re: Guochuan Lai
« Reply #6476 on: October 12, 2020, 11:18:35 AM »
Could JP have got us a better buyer?  Who knows.   I hear that he was in talks with some serious people including Fosun.  We will never know how close they came.   However, as said earlier, it’s incredibly difficult getting any buyer to the finish line and with Lai lined up to pay a transformational amount of money, it would have taken a brave man to turn that down in the hope of landing someone who would also invest.  Could he have left some money in the deal for investment?  The problem is the irrelevance of large sums of money in football.   He could have agreed to take £20m less from Lai in return for that being invested back in the club.   What does that get us, a £10m left back and his wages for 3 years...?  A big sacrifice for JP but probably no difference to our destiny on the pitch.
As I recall, Peace personally paid very little when he acquired the club and didn't put any money into the club after that. Therefore, what he sold the club for was pretty much pure profit, so there wasn't a big sacrifice. Just how much money does one person need? If he'd truly had the best interests of the club at heart, he could have sold it for less and had a larger range of buyers to choose from, with whoever bought the club hopefully having been willing/able to spend more on building up the quality of the squad as a result of buying the club for a lower price.

Peace didn't do that, so you can only assume that he was simply looking after Number 1 and any notion of benevolence on his part is just a sham.

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Re: Guochuan Lai
« Reply #6477 on: October 12, 2020, 12:14:17 PM »
As a lifelong Albion fan I 100% agree with you.  However, as someone who has sold some large sporting assets professionally, it’s more difficult.  Selling any sporting asset is incredibly difficult and time consuming and reflected in the fees that are typically 3-5% of consideration.  Yep, on a £100m sale I have quoted and been paid £3-5m.  No one pays such large sums unless it’s recognised that the job is very difficult to achieve.  And that’s when I have the whole world of contacts to work my way through.   If the vendor says “you have to sell to someone who will invest in the club and put supporters interests first”, a small universe shrinks massively.   It’s a bit like selling your house but telling the agent that you will only sell to someone who will agree to keep your prize roses for the next 10 years.   You may still sell your house but it’s going to take a lot longer and you may have to accept a lower price. 

There’s also sadly no interest from within football for this to change.  I know for a fact that there have been lots of proposed changes to some of the ownership rules but there is no desire from the clubs to accept these changes.   And that’s not just the “big” clubs blocking such changes.  The reluctance goes all the way through football.   Most owners just don’t want to be told that they can’t sell their asset to a wealthy foreigner.   Again, think about it in the context of your biggest asset- would you volunteer to change the deeds of your house to prevent you selling it if a crazy foreign buyer offered you twice what it’s worth?   The governing bodies of football aren’t government departments or quangos.  They are ultimately clubs and can only do what members want and their members don’t want to exclude buyers who have got no “investment cash” or loyalty to the club.

Sadly, this isn’t going to change.   It really is sad in many ways because football clubs aren’t like other businesses.  People aren’t bereft when their local shop or cinema struggles but whole regions can be deeply affected by losses such as Bury.  Maybe in a post Covid world football will find a new level.   Lower league clubs should be profitable- they generate a huge amount of cash but need to pay players “only” £10k per week rather than £20k.  Maybe that will work it’s way through and find that smaller clubs will once again be owned by local people who have the interests of the club at heart.   Maybe clubs in L1 and L2 can be owned again by local people who have done well building a firm of accountants or selling a construction business; millionaires rather than multi billionaires.   I can’t see that trend ever reaching the Premier again.  The days when a local-lad-done-good buys the Albion are gone for ever.  Premiership clubs are global status symbols now alongside works of art and iconic buildings. 

Could JP have got us a better buyer?  Who knows.   I hear that he was in talks with some serious people including Fosun.  We will never know how close they came.   However, as said earlier, it’s incredibly difficult getting any buyer to the finish line and with Lai lined up to pay a transformational amount of money, it would have taken a brave man to turn that down in the hope of landing someone who would also invest.  Could he have left some money in the deal for investment?  The problem is the irrelevance of large sums of money in football.   He could have agreed to take £20m less from Lai in return for that being invested back in the club.   What does that get us, a £10m left back and his wages for 3 years...?  A big sacrifice for JP but probably no difference to our destiny on the pitch.

In the end, the Albion is a journey, not a destination.   We will have plenty of ups and downs over the years ahead and lots of twists to the plot.  Lai will one day be in the rear view mirror along side JP etc.   They won’t be Albion fans. They may or may not invest.  But we will still be there.   COYB.



A very interesting comment Stoxman.

As somebody with experience in changes of ownership of sports ventures, in your opinion, is it likely that GL paid £200 million for West Bromwich Albion?

Apart from the Palm project, very little is known about GL's personal wealth, & looking at the way that project has performed in the last 3 years, it's struggling to sustain itself, never mind providing funds for WBA.

There are a number of articles online on how to value a football club, & some of the KPI's include, turnover, profitability, attendance percentages & gate receipts & merchandising.

With the best will in the world, using those formulae, I'm finding it difficult to get a valuation of  £200 million & it's probably nearer to £50 million.

I'm really not sure that GL is as wealthy as some believe, & I wonder if, at the time of the sale, pounds sterling were being confused with Chinese Yuan.

GL is certainly a Yuan billionaire, but I'm not sure about pounds sterling.
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Re: Guochuan Lai
« Reply #6478 on: October 12, 2020, 02:52:33 PM »
Thank you for the post stoxman.

Your insight and knowledge in the area of buying and selling sports assets does shed light on the thought processes of both the buyer and the seller and the  difficulties of drawing up complicated contracts that provide 100% water tight guarantees for both parties.

To these buyers and sellers its just business, a materialistic, tangible and rational (maybe, maybe not) transaction. But us fans aren't materialistic when it comes to the team we support and our passion for our club is intangible and at times downright irrational.

Additionally, I'm of a mind that if "Project Big Picture" or a similar initiative comes to fruition, buying and selling will be even more complex.

Oh how I wish English football had a similar "Socios Partidarios" system to that of Spain
My posts are my personal views and any links or external inclusions are not necessarily an endorsement by me.
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stoxman

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Re: Guochuan Lai
« Reply #6479 on: October 12, 2020, 10:21:00 PM »


A very interesting comment Stoxman.

As somebody with experience in changes of ownership of sports ventures, in your opinion, is it likely that GL paid £200 million for West Bromwich Albion?

Apart from the Palm project, very little is known about GL's personal wealth, & looking at the way that project has performed in the last 3 years, it's struggling to sustain itself, never mind providing funds for WBA.

There are a number of articles online on how to value a football club, & some of the KPI's include, turnover, profitability, attendance percentages & gate receipts & merchandising.

With the best will in the world, using those formulae, I'm finding it difficult to get a valuation of  £200 million & it's probably nearer to £50 million.

I'm really not sure that GL is as wealthy as some believe, & I wonder if, at the time of the sale, pounds sterling were being confused with Chinese Yuan.

GL is certainly a Yuan billionaire, but I'm not sure about pounds sterling.

Valuing an asset such as Albion is as much art as science and is mostly about RELATIVE value rather than absolute.  You are right that on the basis of absolute value, football clubs make little sense.  If we price them off book value/ cash flow/ EBITDA etc then they all look expensive (unless we run a DCF that predicts a massive increase in cash flow in the future based on much higher TV rights).  I personally struggle with that argument for two reasons; firstly I think that the average football fan is probably near their maximum in terms of what they will pay to consume live televised football.   Most people simply won’t/can’t pay more and football viewer numbers aren’t growing that fast (after strong growth in the last 20 years) other than in Asia.  Even if you disagree with that view, I believe that if TV deals were to double again the majority of that would leak out to players and agents rather than in to club profitability.   

Therefore, if we assume that no one can justify £200m based on current assets or cash flows, there are only two reasons to justify the price.   One is what’s known colloquially as the “Greater Fool Theory”.   It doesn’t matter what price you pay for a club so long as one day a bigger fool will pay more for it.  The same can be said for a Monet or a case of Margaux.   Neither pays a yield or has any realisable asset value.  Indeed, you have to pay money to insure and store both.  Nevertheless, people buy them (apart from their true use) because they believe they will store value and be bought by someone for a higher price later albeit at a level which bears no relation to asset value.

Which brings us to relative value.  I once got a bid of €104m on a golf course from a Qatari Prince.  My seller wanted €115m and wouldn’t sell.  It’s still not sold 6 years later.  The club made €200k pa.   There was no development value.  It was just a famous club and the seller was looking at what other clubs were “worth” or more to e point, what they’d been sold for.  The value of a Monet is driven by other Monets.  The value of Margaux is driven by prices of other great wines.   That’s the same with football clubs.  I’ve never sold one personally but was involved in a fund that invested in them.   All the talk is about relative value.  It’s all “well if Aston Villa was worth X, we must be worth Y.”  The value is adjusted for land development rights, squad values etc but the key thing is, no one stops to ask whether the WHOLE MARKET is mad.    Buying one asset for 10% below market value looks like a bargain but not if the whole market is 5x over valued....

Where will it end?  That no one knows.  The biggest clubs have been wonderful investments and are bang on trend still with current investment market appetite.  Currently markets want enduring inevitable brands, the sort of things owned by LVMH, Diageo, Unilever etc.  Brands such as Man Utd fit this because they will still be selling branded shirts and Man U TV packages in 50 years time.   Where will West Brom’s value be?   My guess (and this is just that) is that £200m was the peak and that in a decade or two it will still not be surpassed....

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Re: Guochuan Lai
« Reply #6480 on: October 12, 2020, 11:05:25 PM »
Valuing an asset such as Albion is as much art as science and is mostly about RELATIVE value rather than absolute.  You are right that on the basis of absolute value, football clubs make little sense.  If we price them off book value/ cash flow/ EBITDA etc then they all look expensive (unless we run a DCF that predicts a massive increase in cash flow in the future based on much higher TV rights).  I personally struggle with that argument for two reasons; firstly I think that the average football fan is probably near their maximum in terms of what they will pay to consume live televised football.   Most people simply won’t/can’t pay more and football viewer numbers aren’t growing that fast (after strong growth in the last 20 years) other than in Asia.  Even if you disagree with that view, I believe that if TV deals were to double again the majority of that would leak out to players and agents rather than in to club profitability.   

Therefore, if we assume that no one can justify £200m based on current assets or cash flows, there are only two reasons to justify the price.   One is what’s known colloquially as the “Greater Fool Theory”.   It doesn’t matter what price you pay for a club so long as one day a bigger fool will pay more for it.  The same can be said for a Monet or a case of Margaux.   Neither pays a yield or has any realisable asset value.  Indeed, you have to pay money to insure and store both.  Nevertheless, people buy them (apart from their true use) because they believe they will store value and be bought by someone for a higher price later albeit at a level which bears no relation to asset value.

Which brings us to relative value.  I once got a bid of €104m on a golf course from a Qatari Prince.  My seller wanted €115m and wouldn’t sell.  It’s still not sold 6 years later.  The club made €200k pa.   There was no development value.  It was just a famous club and the seller was looking at what other clubs were “worth” or more to e point, what they’d been sold for.  The value of a Monet is driven by other Monets.  The value of Margaux is driven by prices of other great wines.   That’s the same with football clubs.  I’ve never sold one personally but was involved in a fund that invested in them.   All the talk is about relative value.  It’s all “well if Aston Villa was worth X, we must be worth Y.”  The value is adjusted for land development rights, squad values etc but the key thing is, no one stops to ask whether the WHOLE MARKET is mad.    Buying one asset for 10% below market value looks like a bargain but not if the whole market is 5x over valued....

Where will it end?  That no one knows.  The biggest clubs have been wonderful investments and are bang on trend still with current investment market appetite.  Currently markets want enduring inevitable brands, the sort of things owned by LVMH, Diageo, Unilever etc.  Brands such as Man Utd fit this because they will still be selling branded shirts and Man U TV packages in 50 years time.   Where will West Brom’s value be?   My guess (and this is just that) is that £200m was the peak and that in a decade or two it will still not be surpassed....

Thanks for that.
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Re: Guochuan Lai
« Reply #6481 on: October 13, 2020, 02:14:54 AM »
your point about relative value is well put, the club was worth 200million because Lai paid it, or near. However it was nowhere near any comparable value of a club that had sold in the same state. I think Peace got lucky , China was looking to explore investment in football and made it easy for that to happen. The investment strategy of organizations in China is still heavily state influenced. China has now problems with its international expansion through investment strategy and I doubt Lai would invest anymore whatever he wanted to do. I could quite believe that the club will never be valued at 200 million again, which leaves us stuck unless Lai decides to cut his losses.

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Re: Guochuan Lai
« Reply #6483 on: October 13, 2020, 03:29:56 PM »
https://www.buzzsprout.com/987004/5846599-baggies-ownership-riddle-pay-per-view-rick-parry

Worth a listen.

Thanks for that, to be frank there was not a lot we didn't already now, the confirmation of what a **** jockey Rick Parry is was amusing though!
« Last Edit: October 13, 2020, 03:36:28 PM by MarkW »
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Re: Guochuan Lai
« Reply #6484 on: October 13, 2020, 10:52:22 PM »
As I recall, Peace personally paid very little when he acquired the club and didn't put any money into the club after that. Therefore, what he sold the club for was pretty much pure profit, so there wasn't a big sacrifice. Just how much money does one person need? If he'd truly had the best interests of the club at heart, he could have sold it for less and had a larger range of buyers to choose from, with whoever bought the club hopefully having been willing/able to spend more on building up the quality of the squad as a result of buying the club for a lower price.

Peace didn't do that, so you can only assume that he was simply looking after Number 1 and any notion of benevolence on his part is just a sham.

And Peace saved around £45m in CGT by emigrating to Jersey

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Re: Guochuan Lai
« Reply #6485 on: October 16, 2020, 08:36:36 PM »
well with no help at all from our wonderful owner,  I think the recruitment staff have worked miracles to get these deals done.
we all want more but with so little backing, blimey.

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Re: Guochuan Lai
« Reply #6486 on: October 16, 2020, 10:31:18 PM »
Lai is useless. A no go anywhere leader. The only way he can retrieve himself is to fall on his sword and sell. Until everyone knows this, we are in the wilderness.,

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Re: Guochuan Lai
« Reply #6487 on: October 17, 2020, 12:15:08 AM »
We are probably worth 60million, lai would have a big pill to swallow. I said in a prior post I don’t see a way out unless China demands disposition of assets. We are stuck with an owner who paid way too much and no viable way to get to that valuation again.

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Re: Guochuan Lai
« Reply #6488 on: October 17, 2020, 12:45:22 AM »
We are probably worth 60million, lai would have a big pill to swallow. I said in a prior post I don’t see a way out unless China demands disposition of assets. We are stuck with an owner who paid way too much and no viable way to get to that valuation again.

The playing squad is worth more than that? But the true value lies in the TV deal. While we're not worth £200 million you can surely double your estimate.
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Re: Guochuan Lai
« Reply #6489 on: October 17, 2020, 08:41:57 AM »
The playing squad is worth more than that? But the true value lies in the TV deal. While we're not worth £200 million you can surely double your estimate.

The playing squad should have a value over £60 million, as you say, but if the base transfer fees are being paid in stages, (either directly to the selling club or via a loan) then that value will be off-set against a substantial debt.
Even with the TV deal, I would doubt we have a market value over £100 million.
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Re: Guochuan Lai
« Reply #6490 on: October 18, 2020, 04:36:48 AM »
The tv deal is only valuable if you are still in the premier league. I still don’t think anyone would value us much more than 60 million.

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Re: Guochuan Lai
« Reply #6491 on: October 18, 2020, 05:39:16 AM »
We are in the process of selling our house, currently it is SSC, and had to spend countless hours explaining to my wife that it is/was worth exactly whatever someone was prepared to pay for it and not what the one over the road sold for six months ago or what the one two doors down has just been put up for sale at, both of which were different sizes, different styles and different ages to our house.
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Re: Guochuan Lai
« Reply #6492 on: October 18, 2020, 06:05:26 AM »
We do have advantage that were are more or less debt free, and The club owns the Ground and the adjoining academy area I believe. That plus the value of the playing staff must put the value over £100 million and a bit more hopefully. If we are still Premier league this time next year
and life has returned to some sort of normally the value could rise to an amount when Lai may just consider jumping ship, we can but hope. Life springs eternal!

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Re: Guochuan Lai
« Reply #6493 on: October 18, 2020, 09:07:36 AM »
The tv deal is only valuable if you are still in the premier league. I still don’t think anyone would value us much more than 60 million.

Even more so when you consider in 12 months time we could be faffing around in the championship again.
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