Why Dejphon Chansiri is set to get a smaller pay-off from Sheffield Wednesday takeover | OneFootball

Former Sheffield Wednesday owner Dejphon Chansiri may have hoped to cash in Hillsborough, but the involvement of administrators makes this unlikely.

The soon-to-be former owner of Sheffield Wednesday was hoping to cash in as the owner of the club's Hillsborough stadium, but the intervention of the administrators seems likely to limit this.

If there's one thing that can be said for what happens to any football club when it enters into administration, it's that some people and organisations will lose out. Any business entering into administration is effectively admitting defeat.

It's an admission that they are insolvent - that's to say, unable to discharge their financial responsibilities as and when they fall due - and to do so is a last resort before bankruptcy and winding up.

It is an inevitable consequence of this process that many creditors will miss out. In the case of Sheffield Wednesday, the fact that they're a football club does offer them some protection. EFL rules state that in order to avoid a 15-point deduction for the start of the following season, unsecured creditors have to be offered a minimum dividend of 25p in the pound, and this seems likely to be met by this case.

But Sheffield Wednesday weren't the only company to be put into administration on the 24th October. Another was S3 Holdings, the company which owns the club's Hillsborough stadium and which was also owned by the club's soon-to-be former owner Dejphon Chansiri. But if Chansiri hoped that he could cash in because he also owned the stadium, there's a strong possibility that he could also end up disappointed on this front too.

The administrators' valuation of Hillsborough is a "fair bit less" than Dejphon Chansiri's valuation of it

Journalist Alan Nixon has reported through Patreon that the legal process by which the value of Hillsborough is worked out could be set to frustrate Chansiri. He reports that the Thai businessman had been hoping to get £60 million from the sale of the stadium, but that the valuation obtained by Begbie's Traynor, the insolvency specialists dealing with the administration, is a "fair bit less" than this.

Nixon reports that "the value of the ground is proving a snag with some of the interested parties." In other words, the amount that those bidding to buy the club and the stadium value Hillsborough is some way short of what Chansiri believes it to be worth. Nixon also says that "he seems sure to have a claim that stands up" and that the valuation and sale of the stadium is "major issue to be settled."

"Value" is often subjective, and Dejphon Chansiri has a track record of getting it wrong when it comes to Sheffield Wednesday

The matter of what something is worth can be difficult to pin down, and it's often highly subjective. Hillsborough stadium is not in good condition and requires substantial renovation to bring it into the 21st century. It's in a part of Sheffield that is not an especially valuable area and, were it to be sold to a property developer, it would probably be demolished. In some respects, it could be argued that it's not very valuable at all, no more than the land upon which it's built.

Yet in other ways, it is valuable. You can't, for example, put a price on what it's worth to Sheffield Wednesday fans, while the cost of knocking it down and building a replacement would run to hundreds of millions of pounds. When it comes to commercial property, value is often not even easy to define.

But Dejphon Chansiri has a history of getting valuations wrong when it comes to Sheffield Wednesday. Earlier this year, it became known that the owner had put a £100 million value on the club and this was preventing serious negotiations to sell the club from progressing.

It now seems likely that his valuation of the club included the £60 million that he hoped to recoup from Hillsborough itself, and this would tally with the amount that he paid for it when he bought it in an attempt to swerve sanctions over the vast financial losses made after his financially profligate early years of owning the club.

If this is the case, well, he's likely in for a nasty surprise, because valuing property doesn't normally work like that. Hillsborough isn't worth what he paid for it, and it's not worth what he feels he should get paid for it. It's worth what a valuation of it now says it's worth, and this may well not benefit him.

Quite asides from anything else, the ground is in a state of disrepair following years of neglect. Any new owner of the club would have to spend a lot of money on bringing it up to date, and that may be tempering what prospective buyers are prepared to offer for it.

The administrators know what they're doing and have long-established processes that they will be following, and while the soon-to-be former owner of the club could challenge their valuation, he would have to provide a more compelling argument than they can in order to force them to try to sell it for more. Based on his previous decisions, there's little to suggest that he would be able to.

The most likely outcome is that Dejphon Chansiri will have to settle for a "fair bit less", but the first rule of investment risk is that the value of your investment can always go down as well as up.