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Ministers were told Cardiff airport was worth £20m-£30m, months before the Welsh government bought it for £52m.
BBC Wales understands the estimate from accountants KPMG appears in a report to be published by the Wales Audit Office.
Despite the advice, it is understood the airport's Spanish owners Abertis were offered £41m, increased to £55m before the sale at £52m in 2013.
Bristol Airport chief executive Robert Sinclair had claimed the purchase price was well above market value.

they must have used the same valuers who valued Lisvane.

The Audit Office report is actually rather more nuanced than the leak suggests. It says that 'cost of capital' has a huge impact on the appropriate valuation, and that the initial KPMG figures used conservative assumptions on that, on non-core revenues (e.g. advertising) and revenue growth. It also says that valued in the way public sector schemes are valued - with much lower costs of capital, the value would be much higher than they paid.

So it doesn't look to be in quite the same league as the land sales issue. Still, I think that the Spanish owners must have been rubbing their hands with glee. For them it probably represented a very good price. And they knew that they could drive a hard bargain given that the Welsh government had quite the political imperative to act. They shouldn't have talked quite so much in public about the problems with the airport and the potential for a public buy out if they wanted to keep the price down!

Ultimately something is only worth what someone else is prepared to pay for it. So the value of anything is subject as far as I'm concerned.

We had a situation where a Spanish company which owned several UK airports was using our capital city's airport as a tax loss, i.e. they were quite content to leave it as a failing business. I don't often finding myself backing the idiots in Cardiff Bay, but they simply HAD to get the airport into the hands of someone who is able to make it a success. If that meant paying over the odds to get it then so be it.

Abertis didn't want to sell, so unless the Welsh Government could make a compulsary purchace on it (and that may be beyond their powers under the current devolution settlement) they had to cough up more cash.

"they simply HAD to get the airport into the hands of someone who is able to make it a success."

Why was it so imperative? Why not let it go bust if necessary - then they could get it for virtually nothing. And why is it so vital to have it? Just to say they have an international airport which no-one really needs other than the Welsh Assembly?

Baywatcher wrote:Why was it so imperative? Why not let it go bust if necessary - then they could get it for virtually nothing. And why is it so vital to have it? Just to say they have an international airport which no-one really needs other than the Welsh Assembly?

Name one capital city doesn't have a proper functioning airport?

If Cardiff is serious about being European capital city, capable of attracting investment from other EU countries, or North America, Asia, etc., then its to have an airport where business people can fly into. Its location is also well placed to serve Swansea too.

If you're trying to attract business from outside the UK and your nearest rival is Bristol, what chance do you think you have when the people you want to meet and greet have to fly in from London or Bristol? Bristol have great little airport, they're 1 hour closer to London and the electrification of the GWR will reach them first. It's a no-brainer! The only reason why they would choose Cardiff is because in Wales accept lower salaries than people in England!

That airport wasn't going to go bust, its previous owners were running it down intentionally. It was a deliberate exercise for tax purposes.

Loss-making businesses allow you to offset profits elsewhere in the business. But the amount you save in tax is only the tax_rate*the_loss. Which is less than the loss itself. With a corporate tax rate of say 20%, you still bear 80% of that loss yourself in lower post-tax earnings - why would you want to do that?

The report suggests the airport was actually very modestly profitable even in 2012 actually. So there could be two reasons they "didn't want to sell":

1) Is that they believed in the medium term there was scope for profits to rise back up to 2007-08 levels of about £7-8 million a year.
2) Is that they knew the Welsh Government really wanted to do a deal, and therefore they could drive up the price compared to what they really were willing to sell for.

[quote]
Name one capital city doesn't have a proper functioning airport?/[quote]

Bratislava.
Many similarities to Wales, they have a capital city in all but name.
Wales and Cardiff get over it, you ain't a country

Zach wrote:Bratislava.
Many similarities to Wales, they have a capital city in all but name.
Wales and Cardiff get over it, you ain't a country

Bratislava? Seriously? If you bothered to look on their airport's website, you'll see that their airport functions quite well. For one, Ryanair fly in and out of there quite often. There are direct flights to London (Luton and Stanstead), Dublin, Dubai, Liverpool, Birmingham, Brussells, Prague, Moscow, Madrid, Milan, Berlin, Barcellona. That was just today, I'm sure there's more.

http://www.bts.aero/en/passengers/
http://www.bts.aero/en/passengers/fligh ... -arrivals/

In fact, many people choose to fly to Bratislava and then get a bus service to Vienna because it's much cheaper.