Thanks Duane for bringing the actual debt figure into wider circulation. I've heard the story about the large debt load many times, but had never seen or heard anyone put a number to it. It is daunting, especially for a market that has the attendance and stability record it does (I grew up there, and most of my family is there; I'm not trying to crap on my hometown, but it's professional soccer history and attendance numbers and soccer business culture are what they are).
The investigative possibilities of the FCE story are vast. I don't see a path forward for FCE in the short term. Are you able, at some point over the winter maybe, to lay out the realistic paths? I have to imagine they are something like:
1) CSB continues to help the club limp along.
--Presumably similar to this season in providing travel costs, loanees with salaries paid by the parent clubs, etc.
--Unlikely if the CSB finances aren’t great, and if doing so would provide for an odd number of teams after VanFC enters, creating scheduling headaches.
--They would also need to put in some marketing money to drive bigger gates, which seems like something that wasn't done this year.
2) FCE goes dormant.
--Do we know if a dormant club would continue to receive, in full or in part, whatever revenue sharing exists in CSB/CanPL?
--Would doing this mostly eliminate their expenditures and allow them to slowly recoup some of the club’s debt to themselves? How long would it take to bring the debt down to a level that might be palatable to a new investor?
--With a debt that large, there had to have been some kind of long-term revenue projections from CSB that made everyone comfortable with the Fath’s entering with such a burden, right? Bueller?
3) CSB buys the Fath brothers out.
--The other owners (CSB) decide to swallow some bitter medicine, buy out the Faths, spread out / finance the debt, and seek new ownership with FCE’s restructured debt a collective liability instead of a singlular burden that a new owner is stuck with.
--Unless a new owner is ready to come in immediately, this operation probably also involves the club going dormant for a time.
Folding FCE doesn’t seem like a realistic possibility. The Faths presumably want some way to recoup their losses, and holding the guillotine over a new CanPL club in the sixth largest market in the country (and sixth largest by quite a gap over seventh, if we’re ranking by CMA size) is the tool they have (willingly given to them by the other owners). They aren’t going to walk away empty handed, right?
Moving the club to another market also seems like a non-starter. CSB have already granted the rights to clubs to other groups/individuals in other prospective markets, and I imagine the idea of heavily-indebted Edmontonians owning the club playing in, say, Kitchener-Waterloo-Cambridge, or London, ON (for argument’s sake), or Quebec City or Greater Montreal (for an even wilder thought experiment), but siphoning the first $30 million in profit back to Edmonton, would be less popular than a fart in a stuck elevator.
And even if they did move it, would the Faths still have a veto over another club/owner coming into the Edmonton market? Would they give that up? Would it expire if club moved? Would it only expire with their consent, regardless of other facts on the ground?
The question seems to be: how does CSB get out from under this albatross? Someone is going to have to eat substantial financial pain. It seems that it won’t be the Faths. Do the CSB owners think hoping for and doing a deal with a devil (insert unsavoury sovereign wealth fund here) is preferable to eating the Fath debt and spreading it out?
Thanks Duane for bringing the actual debt figure into wider circulation. I've heard the story about the large debt load many times, but had never seen or heard anyone put a number to it. It is daunting, especially for a market that has the attendance and stability record it does (I grew up there, and most of my family is there; I'm not trying to crap on my hometown, but it's professional soccer history and attendance numbers and soccer business culture are what they are).
The investigative possibilities of the FCE story are vast. I don't see a path forward for FCE in the short term. Are you able, at some point over the winter maybe, to lay out the realistic paths? I have to imagine they are something like:
1) CSB continues to help the club limp along.
--Presumably similar to this season in providing travel costs, loanees with salaries paid by the parent clubs, etc.
--Unlikely if the CSB finances aren’t great, and if doing so would provide for an odd number of teams after VanFC enters, creating scheduling headaches.
--They would also need to put in some marketing money to drive bigger gates, which seems like something that wasn't done this year.
2) FCE goes dormant.
--Do we know if a dormant club would continue to receive, in full or in part, whatever revenue sharing exists in CSB/CanPL?
--Would doing this mostly eliminate their expenditures and allow them to slowly recoup some of the club’s debt to themselves? How long would it take to bring the debt down to a level that might be palatable to a new investor?
--With a debt that large, there had to have been some kind of long-term revenue projections from CSB that made everyone comfortable with the Fath’s entering with such a burden, right? Bueller?
3) CSB buys the Fath brothers out.
--The other owners (CSB) decide to swallow some bitter medicine, buy out the Faths, spread out / finance the debt, and seek new ownership with FCE’s restructured debt a collective liability instead of a singlular burden that a new owner is stuck with.
--Unless a new owner is ready to come in immediately, this operation probably also involves the club going dormant for a time.
Folding FCE doesn’t seem like a realistic possibility. The Faths presumably want some way to recoup their losses, and holding the guillotine over a new CanPL club in the sixth largest market in the country (and sixth largest by quite a gap over seventh, if we’re ranking by CMA size) is the tool they have (willingly given to them by the other owners). They aren’t going to walk away empty handed, right?
Moving the club to another market also seems like a non-starter. CSB have already granted the rights to clubs to other groups/individuals in other prospective markets, and I imagine the idea of heavily-indebted Edmontonians owning the club playing in, say, Kitchener-Waterloo-Cambridge, or London, ON (for argument’s sake), or Quebec City or Greater Montreal (for an even wilder thought experiment), but siphoning the first $30 million in profit back to Edmonton, would be less popular than a fart in a stuck elevator.
And even if they did move it, would the Faths still have a veto over another club/owner coming into the Edmonton market? Would they give that up? Would it expire if club moved? Would it only expire with their consent, regardless of other facts on the ground?
The question seems to be: how does CSB get out from under this albatross? Someone is going to have to eat substantial financial pain. It seems that it won’t be the Faths. Do the CSB owners think hoping for and doing a deal with a devil (insert unsavoury sovereign wealth fund here) is preferable to eating the Fath debt and spreading it out?
What a mess indeed.
A sad state of affairs, that's for sure. And, oh, so familiar.
Who are the two teams ready to walk?