On 24 Nov 2005 21:38:26 +0200, Andreas Heldal-Lund - www.xenu.net <heldal@online.no> wrote:

>The media needs is enquiring. How would you guys calculate an
>estimate of how much the Church of Scientology is worth?

By J. Swift on OCMB:

[START]

Andreas: The media has to distinguish between Scientology's assets and cash flow. Not all of Scientology assets are liquid.

Moreover, the media has to distinguish between Scientology's performing assests that generate revenue and non-performing assets. For example, the Trementina complex has had at least $166 million USD invested and there are no revenues realized from that site. It is rather all overhead for Scientology to maintain that site. Worse, it is not exactly a site that Scientology could borrow money against, for few groups would buy it if the cult defaulted on the loan. Likewise, the Super Power Building is a non-performing asset. I estimate $200 million into that project.

Gold Base in Hemet, CA, is also a non-performing asset. The land and buildings are probably worth $13 million tops. Hemet is not a destination and Gold is not a resort.

Between Trementina, the SP Bldg, and Gold there are $370 million in non-performing assets. These facilities are all overhead, an expense on the ledger. The facilities all have a payroll and berthing to service. They do not have health care to pay and the payrolls are very light. Assume $70 per week per person. Still with, say, 1000 people total among all facilities, that is $70,000 per week in payroll, or $280,000 per month.

With the cost of electricity in SoCal zooming, I bet Big Blue (AOLA) consumes at least $30,000 a week in power. Flag would be right there as well. Between Flag, AOLA, and Gold here are my guesses:

1. $300,000 per month in electricty costs
2. $150,000 per month in water and trash services
3. $ 80,000 per month in maintenance and upkeep,
4. $ 80,000 per month in insurance and accruals
5. $280,000 per month in payroll
6. $ 50,000 per month in vehicles, transportation, fuel,
7. $200,000 per month in facilities security and systems.
8. $400,000 per month in food for staff.
9. $100,000 per month in office expenses
10. $400,000 per month for Trementina
11. $200,000 per month related to the SP Bldg.

S/T $2,240,000 basic operating US costs per month excluding Freewinds and non-US operations. $75,600 net income per day is needed in a 30 day month.

Cash flow is handicapped by $370 million in non-performing, non-liquid real estate assests.

*****

The primary performing assets for Scientology are Flag and AOLA. Florida and California are home to 80-90% of all Scientologists. I would estimate the value of the Cedars complex as being $500 million USD. I say this based on the price of the Ambassador Hotel being purchased by the L.A. Unified School District less the negatives of Big Blue: It is an old property whose steel skeleton may be coated with asbestos that has been sprayed with materials to prevent it from becoming friable (airborne). The old linoleum floor tiles looked to me like they contain asbestos as well

Scientology may have been "grandfathered in" by LA County and and not required to do asbestos abatement as it is a private entity and has no tenants. The cost of demolishing Big Blue, should another party buy the land, could be prohibitive. This could run down the price $100 million or more. The Environmental Report on Big Blue any buyer would want on Cedars would likely look like a nightmare. That place was a hosptial and who knows what it did with its medical and chemical wastes? Who knows what soil samples would reveal? The environmental issues related to Big Blue are a big question and the same applies to CC.

The Flag property is the Fort Harrison and surrounding buildings and are worth perhaps $350 million depending on the condition of the FH's systems such as HVAC, boilers, chillers, electrical, etc, and if the FH has asbestos, which it may as it is an old building.

So, $950 million in performing real estate assests between Big Blue and Flag. To this is added $360 million in non-performing real estate assets, for a real estate portfolio of $1.3 billion USD, and here I am being generous. Add all other real estate around Hollywood such as the CC and Guaranty Trust, Washington D.C. etc, for $700 million and let's say all US real estate owned by Scientology real estate is worth $2.0 billion USD. I assume it is all paid for because Scientology pays cash and incurs no debts as I understand it.

The Freewinds has no value as a US asset if it indeed has deadly blue asbestos. It could be sold through its Liberian registry (?) for maybe $15 million depending upon its hull integrity, engines, and viability as a cruise ship. If The Freewinds needs a major overhaul and asbetos abatement, many Western buyers would pass on it.

***** Now cash flow per month. These are my guesses on what Scientology spends every month and they vary with income:

1. Basic Operations: $2,240,000 (see above)
2. Legal Operations: $2,000,000
3. Advertising: $5,000,000
4. OSA/RTC $1,000,000
5. PI's/Ops $1,000,000
6. Freewinds $1,500,000
7. Accruals $3,000,000 (to cover unexpected costs)
8. Video Prod. $1,000,000 (covers distribution/mat'ls)
9. Books $1,000,000 (dist+printing+fees)
10. Telecom $ 500,000
11. Computer Ops $1,000,000 (website/acctng/KR's)
12. Refunds $ 10 (had to make that joke)
13. PR $ 500,000
S/T $22,750,000 per month in operational costs.

Assume 50,000 core members "donating" an average of $455.00 USD per month and Scientology could support this overhead. All monies above this are invested or banked.

Now, if Scientology's cash flow from all sources dips below $22,750,000 per month (or whatever the actual number is), Scientology has to dip into its cash reserves in numbered secret accounts. If Scientology is burning cash now due to a decline in new and existing members, there is panic.

Scientology is strapped with $370,000,000 in non-performing and basically non-salable real estate between Trementina and the SP Bldg. What business would buy SP? It is not exactly attractive for an outside business to invest in a building in the heart of Mecca.

Scientology needs AOLA, CC, Gold, and Flag to generate income and can hardly sell this $2 billion real estate nest egg. In fact, AOLA, CC, and the FH may not be exactly salable if they have asbestos. Banks might not even loan against such properties, especially if financial statements show that Scientology is in negative cash flow and is burning through reserves. The current adverse PR that Scientology is encountering also works against any large loan.

Scientology might be backed into a corner financially. It burned all of its bridges with the world long ago thanks to things like Fair Game and its own viciousness.

***** The real question is not, "How much is Scientology worth?" The real questions are:

"How much in cash reserves does Scientology possess and how fast is it burning through those reserves?"

"What is the long-term financial outlook and viability for Scientology given the bad PR and cultural opposition it is facing?"

If we see signs of Scientology cutting costs, cutting staff, or selling real estate, we know that it is cash strapped. For instance, if Scientology mothballs The Freewinds, we know it is cost-cutting. The cult could transfer those courses to the FH or AOLA. A ship is very expensive to operate and maintain as compared to a building. The fuel bills for The Freewinds have to be enormous.

***** The foregoing was all speculative. Absent a balance sheet, or the IRS filings, there is no way to know the finanical position of Scientology. Maybe it is doing great and is piling up loads of cash in Bulgravia, though I doubt it.

A reporter would need a list of Scientology properties in L.A., Clearwater, New Mexico, and Hemet and local real estate appraisers to do a true and correct valuation. You would need a marine appraiser to give you the value of The Freewinds.

You would need IRS records to really get to the bottom line and those are all secret per the deal between Scientology and the IRS. [END]

Best wishes,
Andreas Heldal-Lund # home.online.no/~heldal # www.xenu.net
Ph: +47 8800 6666 # Addr: Postboks 131, N-4098 Tananger, Norway
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