$250,000 – sounds good but just doesn’t cut it
We have heard of some recent deals where a developer gained exclusive control of club land through a payment of $200-300,000.
For a cash strapped club this may sound like a lot of money, but the truth is that while it may keep the wolves from the door for a while it is not enough to really turn things around.
Meanwhile, the club has now given away control of its most valuable asset and is completely reliant on the developer, leaving the club vulnerable and exposed to new and unknown risks with no control over its own destiny.
What’s the alternative?
We have been saving clubs in this exact situation of financial pressure for many years now, and there are three golden rules that we always follow before advising them to sign anything.
First, a couple of hundred thousand dollars just isn’t enough. We know that developers can and will pay a lot more for exclusivity and the partnerships that we have negotiated always include a non-refundable payment of between several hundred thousand and several million.
Second, any deal should include specific and strict obligations put back onto the developer, not just rights and options that only benefit the developer. This is crucial to ensure that you get a good outcome beyond the short term cash boost.
Third, we ensure that the partnership deal fully values your club property and uses competitive processes to lock in the best possible outcome for the club.
What if you need the money now?
The Augusta Advisors process and result described above can take less than six months, and there are other more favourable short term solutions to bridge you through that timeframe if needed.
Nothing is worth selling the club short and jeopardising the long term value to members. Pausing for breath and getting independent and expert club property advice prior to signing anything ensures that your legacy and leadership withstands the tests of probity and value now and into the future.
If you have already signed something like this, we may be able to still help you to make the best of a tough situation.
To learn more about how we will solve your club property development challenges please contact us on 02 9966 8898 or email us at admin@augustaadvisors.com.au.
