Here are three seemingly unrelated snippets
Today the Irish Independent reports the hardly earth-shattering news that the Gaelic Athletic Association (Irish organisation that oversees gaelic football and hurling) is looking at properties in the NAMA portfolio as possible sites for new facilities including a new 25,000-seater stadium.
NAMA announced last month that it intends redeeming €500m of its NAMA bonds by the end of 2011. These are the pieces of paper which NAMA gave to the banks in return for the loans that were acquired last year. The banks exchange these pieces of paper with the ECB for cash. NAMA pays the holders of the pieces of paper 1.7% each year. NAMA is electing to redeem the bonds early, the agreement with the ECB is that they be redeemed by 2020.
Last week the Government announced €755m cuts to the State’s capital budget in 2012. The response from industry and from political opposition parties was of outrage as the cuts will cost jobs, perhaps as many as 10,000. The cuts were announced as part of the State’s commitment to balance its budget in 2015.
So drawing the three snippets together – the GAA has an immediate need, NAMA has cash which it intends using to redeem bonds which only cost it 1.7% and the Government has reduced the capital expenditure which will cost jobs. How about the following:
(1) NAMA sells land to the GAA which will be developed into stadia. NAMA agrees to fund the construction of the stadia. NAMA earmarks the cash that it was going to use to redeem its bonds to pay for the construction. NAMA charges the GAA 4% on the development funding.
(2) The GAA get the stadia and generate commercial income, which they use to repay NAMA for the next nine years. At the end of the nine years, if the GAA has not repaid all of the sums due to NAMA then it obtains a loan for the balance.
(3) The Government sees the construction of new facilities which will generate income in the economy and will reduce unemployment numbers and cost.
So win-win
(1) NAMA loans money at 4% which is only costing it 1.7% so NAMA makes a profit of 2.3% per annum on the loans to the GAA
(2) The GAA gets its facilities without needing to find the development finance now which would be a challenge anyway because banks aren’t lending. It pays NAMA a modest rate for the loans.
Oh yes, and a third win
The Government sees increased economic activity, lower unemployment, better sporting and social facilities, taxation.
Who loses in all this?
The ECB, which might have hoped to see an earlier repayment of NAMA bonds. But this isn’t costing the ECB anything at all, and the terms of the NAMA bonds say that they must be redeemed by 2020 so NAMA doesn’t need redeem them before then. The NAMA chairman Frank Daly says that the early repayments of NAMA bonds is now “copperfastened” into the IMF agreement but when asked to indicate that provision, there was no response from NAMA and the Memorandum of Understanding with the Troika contains no such term at all.
Of course this is just one example of how NAMA’s cheap cash could be used to stimulate the economy. NAMA has already reportedly lent €10m to Fingal council to build a road which would increase the value of NAMA’s property nearby. NAMA should only enter into these arrangements if it can generate a profit on them but it is hard to see from the above how Ireland would lose by making full use of the NAMA project.
NAMA Wine Lake 
@nwl excellent idea but how about the Govt. getting its ‘sh..’ together,and finishing off the ghost estates,which are blight on the landscape with FREE MONEY !!!
‘A SIGNIFICANT portion of a €35 million globalisation fund to retrain redundant workers may have to be returned to the EU because of mismanagement of the scheme, the Dáil has heard.’
‘Mr Quinn apologised to the workers involved. “They have been victims of maladministration by the department under the previous administration. It is now our responsibility to try to clear it up. I do not know how much we can clear up,” he said.’
‘The European Commission approved €35 million to provide support for 5,987 workers.’
http://www.irishtimes.com/newspaper/ireland/2011/1027/1224306561890.html
Ahh, No, NWL…… far to bright and logical a proposal for our lot. They could never get their heads ’round that. Teachers, lawyers and civil servants, who can misplace €3.5 billion – but no mathematicians or businessmen.
We seem to keep forgetting who shot the tiger, it wasn’t the teachers or civil servants, it was those bastions of free enterprise the seanies, fingers and the rest. The civil servants found 3.5 billio. It was our budding free marketeers that made it a rounding error in the debts we now owe.
The so called professions are just slurping at the trough like they always do. The lawyers are just painful to listen to as they out pocket the fees.
When everyone has emigrated who exactly will fill this stadium?
The only venture in Ireland I would recommend is building a giant bar next to a runway and becoming the world’s premier bachelor party destination.(imagine the ads: you can’t even get lost…it’s an Island— or good enough for Cowen – good enough for you)
Not quite as noble as the GAA of course, but I don’t see a vibrant youth culture in Ireland unless we are about to turn some proverbial corner.
Budget 2 of 3 might be a last straw to many as yet undecided about leaving.
And when the Internationals start taking their money/jobs back to their own countries more…well…
@wstt being very ‘tame’ today was anticipating a roar !
Paddy one could take the position that the nationalization of the banks debts,a decision taken by civil servants,elected officials was the worst ever decision in the history of the state.The RE Developers had no say in it.
What is this weird Irish obsession,child like almost in repaying bondholders,is there any discount for early repayment,or just another pat on the head !
You are calling for Mefo.
http://en.wikipedia.org/wiki/MEFO
The English article is a stub, don’t wish for this type of things, since they undermine democracy. I hope you still trust in it more than in dictaorship, even it is formed of technocrats. Ever heard of radio eriwan jokes? Quite common jokea in the eastern european countries in the time of glasnost, when technocrats took over.
The line went as gollows:
question: hello radio eriwan, when will the next erupt?
answer: questions belonging to the economy won’t be answered!
http://translate.google.de/translate?hl=de&sl=de&tl=en&u=http%3A%2F%2Ffun.wikia.com%2Fwiki%2FRadio-Eriwan-Witze
I don’t know how this story got legs. I thought it was nonsense when I first saw it and, having made some enquiries today from GAA folk, it’s not going to happen. I’ve no idea if NAMA would be willing to engage in the sell-off of land – assuming they have suitable land with zoning for leisure facilities – with other financing incentives thrown in, but what my GAA contacts tell me is that many county boards and clubs are saddled with big debts from existing vanity projects built during the boom and have almost no scope to engage in further developments. Croke Park no longer has the cash cow of IRFU and FAI matches to throw money around. Many GAA clubs are struggling to come up with innovative means of fundraising but are finding it harder and harder to get people to part with their money. The price of match tickets had to be lowered during the Summer to keep up attendances and sponsors are examining everything very carefully.
The plan was flawless up to this point. The reality is that the GAA is haemorrhaging both players and supporters to emigration, up and down the country and particularly in rural areas. They are going to have difficulties filling the stadia they have and won’t be able to bring in revenues to justify the construction of any new ones.
I fear that new gaelic ground stands and corporate booths will prove to have been yet another property boom phenomenon.
@omf really !
‘The perceived exodus of GAA players to jobs abroad is no greater than at the peak of the boom, research by the GAA has shown.
‘The research, conducted by Dr Mary Gilmartin of NUI Maynooth, looked at the official GAA records and was presented at a seminar on emigration at UCC. ‘
“There were more transfers recorded in 2004 than in any other year. But I think during the Celtic Tiger but we didn’t talk about it,” she said
http://www.irishexaminer.com/ireland/kfojideymhoj/rss2/#ixzz1do6exgIv
@ NWL I am not sure how the Dublin County Board can generate the income to repay any substantial loans. Funding for County Boards mainly comes from their internal county championships. Attendances at county championship matches in Dublin is very poor, particularly when compared to say Cork (football & hurling) or Tipperary (hurling)
The idea for this 25-30,000 ground has been around for some time Suggested locations have included Clonlife Road or the DCU grounds on Ballymun Road. However without a county championship which attracts good crowds, I really don’t see the demand. I must admit though that Parnell Park is an awful ground.
While they now have a lucrative sponsorship deal, I have no doubt that the cost of running the county teams take all of that plus an awful lot more.
Two clubs Ballyboden St Endas & Parnells have substantial cash in the bank and large development plans of their own see http://www.bodengaa.ie/_fileupload/File/Strategic%20Review/Challenge%202020(1).pdf & http://www.cumannparnell.com/, many GAA clubs are in dire financial straits. Sponsorship income in many clubs has fallen off a cliff due to economic conditions and bar turnover is also far below the good old days. Dublin GAA clubs remain the city &county’s biggest pub chain.
The Sports Capital Budget is also nearly wiped out under Government plans falling over each of the next five years. (Table 10, Page 34 Infrastructure and Capital Investment, 2012-16). I have no doubt that Mr. Kettle was expecting Dr. Leo to come up with a reasonable level of funding, which doesn’t seem to be there.
The main source of growth in the Dublin clubs over the past numbers of years is among girls and women. In some of the larger clubs, perhaps half the playing membership are now female. In that sense the GAA in Dublin is unique when compared to other field sports (except of course hockey). Again this has not attracted spectators to county matches.
There is a demand for more playing pitches, however this is best managed through local authorities rather than through the privatising of assets to one sporting body. Much of this plan strikes me as a pre-emptive strike against other sports.
@ OMF & John In relation to player loss, the new system of central registration of GAA members will only begin to reflect substantial levels of emigration from next year onwards. The number of players who have emigrated will be reflected when they re-register their membership.
The GAA suggests that many people who were not involved in the GAA in Ireland become involved when they emigrate because of the social and support networks the clubs provide
@NWL while i enjoyed your GAA ‘play’ how about Grangegorman Development Area-est cost just under the 500mil of the prepayment.
STUDENT HOUSING-very strong international investor demand.
Go big or go home !
http://www.ggda.ie/strategicplan.html
Cowen launches €486m DIT project
http://www.irishtimes.com/newspaper/ireland/2010/0922/1224279432963.html?via=rel
@John, to be clear you could substitute the GAA with any commercial viable enterprise and it doesn’t need to be socially attractive development, it could be health, education, security, office, retail, industrial, residential. The main point is that NAMA is sitting on a cash mountain, doesn’t need redeem its bonds until 2020 which presently cost it 1.7% and there’s a constraint on the State’s ability to fund capital development.
@NWL
An excellent idea. And as you point out it need not be confined to just the GAA.
@Joseph, from recollection others including yourself have repeatedly called for this type of initiative previously as well. Just seems that the Govt can’t co-ordinate with NAMA which can’t co-ordinate with development partners.
@NWL ‘The main point is that NAMA is sitting on a cash mountain’
If we had the accounts………will they give priority to properties they own,or may end up owning.To ‘flog a dead horse’ are half completed or partially completed projects in say London more ‘important’ than Irish ones.
How do they determine that and who makes the decision on allocation of funding?
@NWL the reason I utilized the GDA example,was that the commercial viability of the stadium was questioned.Student Housing is one the best performing sub-sectors of RE attracting very strong investor interest.
I’m still operating under the ‘belief’ that NAMA has a commercial mandate.
There are a number of exit strategies to pay back NAMA,spin off a student housing REIT,assuming legislation eventually gets passed,sell them to investors etc.
Historically Student Housing has performed very well,captive audience,barriers to entry,etc.
@John, absolutely agreed about student housing. The broader point is that there is a need for building and infrastructure, it’s not just Burkes follies for the 2010s. NAMA does have a cash mountain of €500m+ (the Q2,2011 accounts are due any day, they’ve been sitting on Minister Noonan’s desk since 30th September 2011) and recent disposals might mean it has €1-2bn.
@NWL at this point in the process and considering the amount of fees spent, the commercial viability or otherwise of the major developers plans must be completed.
Assume included in that is any funding requirements to complete partially or stalled developments.Curious what ‘metric’ or measurement they use to access say finishing a partially completed deal in London over one in Dublin.
State Street is in the market for large amount space in Dublin,how does NAMA decide which projects to finish ?