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I dont have a subscription so cant read it
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The athletic, might as well be in the s*n.
Itâs clear from DaGrosaâs comments that Southampton arenât the only club his investment group is interested in.
From a buyerâs point of view, Southampton are undoubtedly tempting. The infrastructure is already in place and they have an owner looking to get out. DaGrosa has also spoken about having an âanchor clubâ with a highly-rated academy to be front and centre of his plans to create his own City Football Group-style portfolio.
Southamptonâs academy has Category One status, meaning itâs regarded as one of the best in England for its quality of coaching, facilities and strategic development.
This would seemingly fit in with the Americanâs desire to have a production line of top-level youngsters.
How much would Gaoâs 80 per cent stake cost?
This is where it gets interesting.
Itâs been reported that Gao paid ÂŁ210 million to buy an 80 per cent share in Southampton in 2017. However, The Athletic can reveal that this isnât the case. Instead, itâs understood he paid between ÂŁ180 million and ÂŁ200 million.
Gaoâs a successful businessman and wonât be keen to make a loss on his initial investment. Thereâs also an element of saving face back home in China. Itâs more than likely that he wonât want to be seen as someone who failed to get a return on his purchase.
But if heâs desperate to sell, then swallowing his pride is something heâll have to do â especially if he canât find a buyer willing to meet his valuation.
Has DaGrosa got the capital to buy Southampton?
To put it bluntly, no. But that doesnât mean he wonât have it later down the line.
Several sources have told The Athletic that DaGrosaâs GACP firm has been ringing around multiple investment companies asking for cash to buy Southampton. One source described the initial report about his proposed takeover as a âpublicity stuntâ.
Another source, who helps broker takeovers, explained: âSouthampton are on the market but where are the buyers? Ninety-nine per cent of the people we read about are full of bullshit.â But this bid seems more serious now.
If DaGrosa borrows money to buy Southampton, will that not put the club at risk if it goes wrong?
In theory, no.
Because Southampton arenât a publicly listed company, buyers wonât be able to use the club as leverage like the Glazers did with Manchester United. DaGrosa would need to have the capital already in the bank before Gao could sell.
Because of this, any money lent to him would not be held against Southampton, it will be the Americanâs concern.
What about Katharina Liebherr?
The Athletic can reveal that Liebherrâs 20 per cent stake in the club is not part of any proposed takeover, meaning she will retain her position at Southampton, regardless of who, if anyone, buys them.
Whatâs more, The Athletic also understands she can veto any proposed takeover.
Is a takeover likely to happen?
At this point in time, itâs hard to say definitively. When you weigh up the fact Gao is desperate to sell and Southampton are attracting interest, youâd expect a sale to happen at some point over the next few months.
Southamptonâs hierarchy regularly receives calls â one source said this happens as often as once a week â from people saying they want to buy the club but often donât hear back when itâs explained what is required.
DaGrosa is in a period of exclusivity with Gao, which means he has a limited amount of time to raise the required capital. But if he fails to do that, then itâs also worth saying that doesnât stop him returning at a later date with the financial backing.
If itâs not DaGrosa, will Michael Dell buy the club?
Oh yes. The loan.
No, multi-billionaire computer entrepreneur Dell doesnât want to buy Southampton. The Athletic has been told by several sources that he has no interest in owning a football club.
How much money did Southampton borrow from Dellâs MSD Holdings?
Itâs believed to be around ÂŁ75 million.
They had an existing set-up with Australian bank Macquarie Group Limited worth ÂŁ32 million but decided to part company and dip their hands into Dellâs MSD Holdings wealth fund.
Why have they done this?
Southampton wanted to get ahead of the curve at the start of the pandemic. They felt the need to alleviate any possible cash flow issues which would be brought on by not being able to generate match-day income due to games being played behind closed doors.
With COVID-19 wreaking havoc on businesses, the St Maryâs hierarchy believe there will come a point when Premier League clubs will turn to wealth funds to help them through uncertain times.
Because of this, Southampton wanted to get in there first and secure capital before it was offered to other teams. Tottenham are one example of this, although they managed to secure a fantastic deal from the Bank of England â a ÂŁ175 million loan at only 0.5 per cent interest.
What do we know about MSD UK Holdings Limited?
MSD UK Holdings Limited was registered at Companies House in Cardiff at the end of June, just days before the loan was paid to Southampton.
There is no amount given on the charge documents for how much the club borrowed, but it does reveal that the capital is secured against the club, St Maryâs Stadium and other intellectual properties such as âThe Saintsâ trademark.
John Licciardello, Robert Platek and Marcello Liguori are all registered as directors for MSD UK Holdings.
Should Southampton fans be worried about the stadium being used as security?
Itâs always hard to predict what will happen if the worst-case scenario were to happen and Southampton were unable to pay back the money owed.
However, one source explained to The Athletic that MSD is one of the better companies to borrow capital from, saying: âMSD is not a hedge fund. The good news for the club is that the lender is a good lender who I imagine â if all else fails â is smart enough to do something with the assets. Think Elliott at AC Milan.â
For context, Elliott is a big US hedge fund. Chinese businessman Li Yonghong borrowed money from it to fund his 2017 purchase of AC Milan but then defaulted on the repayments, so Elliott assumed control of the club.
âFinancial support, stability and proper oversight are necessary prerequisites for on-field success and a world-class fan experience,â read a statement from Paul Singer, the companyâs founder and joint chief executive. âElliott looks forward to the challenge of realising the clubâs potential and returning the club to the pantheon of top European football clubs where it rightly belongs. Elliott also strongly believes in the value-creation opportunity at Milan.â
Another respected source who is familiar with these deals, added: âFootball financiers will give you the interest to pay back in four-five years if you havenât defaulted but the management fee will be one-three per cent every year dependent on how much work is involved, with the interest of eight-nine per cent.â
Will Southampton be paying interest on the loan?
Dell isnât giving money away for free.
For comparison, The Athletic has been told Sunderland, who borrowed ÂŁ9 million from the wealth fund, were paying around ÂŁ1 million per year in interest, meaning it works out at roughly 11 per cent. Derby County have also received a loan from MSD UK Holdings, although the exact figure has not been revealed.
The amount of interest Southampton will be paying is yet to be known. One source speculated it could be 9.5 per cent per annum, but others say itâs not as high as that.
Will the circa ÂŁ75 million loan make any potential takeover difficult?
From sources The Athletic has spoken to, it should not be too much of an obstacle.
Itâs worth noting, though, that the loan will have to be taken on by whoever buys Southampton. Gao will not be wiping it clear when he sells. Furthermore, itâs understood that it wonât affect the majority shareholderâs asking price.
What does this all mean for Southampton?
First of all, time will tell whether DaGrosa can raise the funds. If he is to be successful, then there will undoubtedly be serious conversations held about whether to sell. Supporters have been longing for an owner willing to invest in the club, especially as Gao hasnât put any money into Southampton since he took charge in 2017.
The difficulty when trying to sell a club such as Southampton is that they are only a bad run of form away from being relegated to the Championship, resulting in their revenues dramatically falling.
Had it not been for a global pandemic, it would be business as usual at Southampton. The loan from MSD UK Holdings is being viewed as a safety net should they need to generate cash flow.
Football clubs will be determined to have fans returning to matches sooner rather than later due to them haemorrhaging substantial losses when it comes to match-day revenue. Southampton arenât any different, which is why they turned to Dellâs wealth fund.
But because they have around ÂŁ75 million available to them doesnât necessarily mean they have to use all of it.
There is a desire at St Maryâs to use as little of the money as possible, although thatâs more than likely going to be dictated by what happens with COVID-19.
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hope that helps
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Weâre skint hence Tom Davies on loan.
Bertrand was on loan before a ÂŁ10m purchase. Ings was on loan before ÂŁ20m changed hands. KWP was on loan first too. You are clueless
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Why am I clueless if Iâm saying weâre skint, we took a ÂŁ75 Million loan out.
Taking a player on loan does not mean we are skint
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And DaGrosa is as skint as Gao, charlatan if ever there were one.
Taking a loan out of ÂŁ75 Million means we donât have ÂŁ75 Million to spend.
Try reading the whole thing, not just stopping at a number and drawing conclusions from that.
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I did, weâre skint and DaGrosa is no improvement over Gao.
The end.
So why did we take out the loan then? And if the only reason you can come up with is âbecause weâre skintâ then youâve either not read it or not understood it.
I have serious doubts about this DaGrosa character as well, though at least itâs good to see that neither he nor any other potential buyer can borrow the money using the club as leverage.
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Well why would you take a loan varying between 1% to 9% according to that of ÂŁ75 Million if you were flush?
Riddle me that.
The answer is right there in the article.
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Again.
Cash flow due to lack of match day revenue since covid. It was a fail safe
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When do you need cash?
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