Thanks Old Feller... An interesting finance technique - short term gain for long term pain with the sounds of that!

This is called your price elasticity of demand. How responsive your market is to price. There are three factors to consider in this scenario 1) What is your ideal price point. I.e at Headingley what is the amount where we maximise revenue where if we lower the price we wont make that back in increased fans and if we increase price we lose more revenue from lost fans than we gain from an increased price
2) What is the elasticity of that demand. Whilst we may not make more money selling 20k tickets at £12 instead of 15k at £17, can we get 27k at £10

and thirdly, and perhaps most important for this scenario, can we change the demand. How many of those additional fans we get through at that lower price point can we make sticky. How many of those we can convince to pay the discount price can, once we have gotten them through the door a couple of times, can we then convince to pay the premium price. Or is the price so elastic that we have moved our ideal price point downwards.

You are arguing that price in RL is quite elastic. This is good news and an argument in favour of using Elland Road because an elastic price means lower price, big increase in sales, and the big benefit that Elland Road has is capacity.

If the council had finished off redeveloping South Leeds stadium I wonder if it would have been large enough to accommodate us for those games ? 12k would be enough I reckon

Hudds crowds have increased massively since they left Fartown. They aren't great in comparison to the size of the stadium but they are amazing compared to pre Mc Alpine days.

So has Headingley effectively been sold then??

No, the third party is building the shared stand on land owned by Yorkshire and Leeds who in turn rent that building.

Quote ="The Ghost of '99"No, the third party is building the shared stand on land owned by Yorkshire and Leeds who in turn rent that building.'" Correct, the Exec Board report gives further details re buy back etc. But there are a number of details yet to be resolved. This is the report the Exec Board of the Council has considered: democracy.leeds.gov.uk/documents ... 060417.pdf It's a right riveting read.

Quote ="The Ghost of '99"No, the third party is building the shared stand on land owned by Yorkshire and Leeds who in turn rent that building.'" Correct, the Exec Board report gives further details re buy back etc. But there are a number of details yet to be resolved. This is the report the Exec Board of the Council has considered: democracy.leeds.gov.uk/documents ... 060417.pdf It's a right riveting read.

Quote ="Old Feller"Correct, the Exec Board report gives further details re buy back etc. But there are a number of details yet to be resolved. This is the report the Exec Board of the Council has considered: democracy.leeds.gov.uk/documents ... 060417.pdf It's a right riveting read.'" As you quite rightly comment a right riveting read indeed. I suppose eventually we will find out the identity of the funding company, or individual putting up the cash. Seems like a good deal for them, highly unlikely that the lease payments would not be paid . I still think that it's not the best way to fund the scheme. I suspect the funding will be more expensive than the traditional way of borrowing money on the open markets . That way similar to purchasing your house on a mortgage you will eventually own the property. Thus owning a valuable asset. As I commented before, it looks like a perfect scheme to eventually sell off the club when the devolpment is complete.

Quote ="Old Feller"Correct, the Exec Board report gives further details re buy back etc. But there are a number of details yet to be resolved. This is the report the Exec Board of the Council has considered: democracy.leeds.gov.uk/documents ... 060417.pdf It's a right riveting read.'" As you quite rightly comment a right riveting read indeed. I suppose eventually we will find out the identity of the funding company, or individual putting up the cash. Seems like a good deal for them, highly unlikely that the lease payments would not be paid . I still think that it's not the best way to fund the scheme. I suspect the funding will be more expensive than the traditional way of borrowing money on the open markets . That way similar to purchasing your house on a mortgage you will eventually own the property. Thus owning a valuable asset. As I commented before, it looks like a perfect scheme to eventually sell off the club when the devolpment is complete.

So when are we likely to find out when building work will start?

Sounds like a PFI.
From what I know of that sort of scheme the only one who benefits is the one lending the money.
Hopefully I am wrong.

It didn't sound like we had too many finance options available. Is it a good deal, who knows, it depends how long and how much the lease is.

Presumably they've considered that as an option, unless of course the highly paid people they've consulted haven't considered it in which case apologies!

The reason for it being a PFI-style arrangement apparently is because Yorkshire want to keep the debt off their books - same logic as Gordon Brown and PFI in the first place. Leeds don't really mind either way although I doubt they would be keen if it significantly increased the cost of debt.

The difference being that PFIs normally operate & maintain the facility as well, using lower paid staff often TUPEd from the previous owner. I presume this will not be the case here.

It looks like this will be an expensive way to fund the development. What will the annual cost of the lease be? Likely to be starting in the region of £2-3 million p.a. just to repay the capital plus the profit for the 3rd party (and Council) plus any future increases in bank rate and annual inflation.

I note that the 3rd party will not only be lending the funds but also doing the development work. Therefore you have to ask is it a fixed price contract with time penalties or could it balloon in price and also be late in delivery?

It looks like security will be offered from the cricket side by using the income from stadium naming rights etc. Will this also apply to the rugby side?

Will the third party also be providing services to the new stands and if so at what cost and will this diminish the clubs earning potential?

At least there is the opportunity to pay off the lease for 1£ in 40 years and also to make lump some payments to reduce the annual rental costs.

It seems a big risk just to get a test match against Australia whose full potential income is not guaranteed (could be rained off or have an early finish) Could we not get assistance from the Lottery and the Sports council?

PFI`s will always cost the borrower more than a "normal" type of loan and heavy penalties can come the way of the borrower if additional work is required. Pinderfields Hospital is a prime example of the disaster it can get you into.
Other than it is our only option I would advise against this approach which pretty much sums up our position.
Lottery grants, LCC and smaller investors would be the way to go.
But that got us nowhere.
Could the private company be Caddick`s by any chance?

My money's on Caddick. Lend the money do the build and count the cash. What could possibly go wrong????

it's strange that the investor's name has not been revealed but i wouldn't be surprised if it was caddick.
imagine the scenario:
he loans the money for stands quoted at at a vastly inflated price,and then builds them both himself at a fraction of the cost quoted,and then reaps the rewards of inflated repayments with added interest

I wonder when they are going to release a statement as to when its going to start and the playing arrangement?

It goes for final approval in June. If it's approved, building work starts in September.

thanks

If Caddick wanted to extract money from Leeds he could do it quite easily (and has in the past). If he wanted to extract money from Yorkshire there are a lot easier ways of doing it than this - the shared stand is to be built largely on land Leeds own after all. I think it would have become apparent a lot earlier than now if he was the funder.

I heard today that the club will have the lower tiers of both the south and north stands open for the start of the 2018 season and that both will be standing room only.Construction will continue as normal whilst the top tiers of both stands are completed before the seating in the lower tier of the north stand is installed.

If true then this should enable the club to full fill it's home games without moving away from Headingley,although i'm not sure if the club will be able to temporarily allocate seats in the Carnegie stand for current north stand season ticket holders?

They must be do to ask you to renew your season ticket it is nearly May

I note in today's times that lords are insisting on staging 2 test matches . This at the same time the cricket board are planning to reduce the number of 5 day test matches.
With potentially 2 matches at lords 1 at the oval ,plus Birmingham, Manchester, and maybe Nottingham. Does not bode well for Leeds. So it looks like Leeds would have to make do with t 20 or one day matches.
Would the revenue from these matches justify the cost of the ground developments. Highly unlikely.