Burnley take-over

[The Bard]

https://www.theguardian.com/football/2021/feb/02/burnley-us-takeover-has-left-club-90m-worse-off-and-loaded-with-debt

The excellent David Conn explains the latest in a long line of appropriations of football clubs that put them more at risk than they were before.

 

[t_b]

Just came to share this. Well outlined as you say. 
Burnley have been the example of well managed financial stability for a decade. Now it’s gone.
 

Anyone who wants Lansdown out for a “lack of ambition” should be very aware of how most takeovers occur these days. What would our Plan B for ownership be?

For most owners there is no pot of money to back a club. It is serviced by the club and future incomes are sold off accordingly (witness all the financial problems in our league) when you start to hit problems. 

[Jeez]

Quite smart of the Burnley owners to include the cash in the sale, add it to the sale proceeds & take it out the club using entrepreneurs tax relief. That wil have made the outgoing owners 12+ million in tax savings.

It doesn't mean the new owners have used the club's cash to buy more over the deal was structured this way to reduce the tax liability of the seller. 

 

 

[Redwhitepurple]

Couldn't pay me to read such corrupt newspapers

[Port Said Red]

@underhanded if you are confused by our friend @Redwhitepurple the fact that he has described this person

Marjorie Taylor-Greene 

as a "Modern Day Hero" in the Biden - USA thread in the political forum, will perhaps tell you everything you need to know. 

'

[tin]

1 hour ago, tommy_b said:

Just came to share this. Well outlined as you say. 
Burnley have been the example of well managed financial stability for a decade. Now it’s gone.

Anyone who wants ansdown out for a “lack of ambition” should be very aware of how most takeovers occur these days. What would our Plan B for ownership be?

For most owners there is no pot of money to back a club. It is serviced by the club and future incomes are sold off accordingly (witness all the financial problems in our league) when you start to hit problems. 

With respect, I don't buy into this 'without SL, we'd be worse off' narrative. The fact is nobody knows where we'd be without SL; we might be better off, we might be worse off. It's all guesswork.

Take a look at the new training ground thread, specifcially at Leicester's new facility. In 2007/08, they were relegated to League One while we lost the Championship play-off final. Look at what they've achieved since - first through Mandaric, then through the Thai money - while we stagnate. 

Obviously, there's no guarantee that a change of ownership would lead to success, but I'd rather enjoy the ride than have decades of going round in circles as the current owners fail to learn from their previous mistakes.

As Einstein said: "the definition of madness is doing the same thing over and over again and expecting a different result." 

[Rudolf Hucker]

5 minutes ago, Port Said Red said:

@underhanded if you are confused by our friend @Redwhitepurple the fact that he has described this person

Marjorie Taylor-Greene 

as a "Modern Day Hero" in the Biden - USA thread in the political forum, will perhaps tell you everything you need to know. 

'

Do we need another right winger?

[Robin101]

“Burnley have great potential to grow commercially from shrewd recruitment of players, stadium improvements and wider marketing of the club”.

Burnley is a small town in Lancashire where football clubs are two a penny. They have done fantastically well to establish themselves as a lower-end Premier League club, but is there really much room for further growth? 

Not sure we’ll see the day when legions of Chinese and Indian fans are all sporting Burnley shirts. 

If I was a Wall St investor looking for a play thing I’d say someone like Oxford Utd or Cambridge Utd would be far more marketable abroad (once millions have been pumped in).

[Bristol Oil Services]

36 minutes ago, Redwhitepurple said:

Couldn't pay me to read such corrupt newspapers

Thanks, but this thread isn't about you. 

Being self-absorbed by yourself and your own bitterness and resentment and your life of disappointment is a miserable place to be but you can get help. Seriously. Your GP is a good place to start (when you can get to see one. It might not be a white, anglo-saxon one, but if you can get over that, then there is hope). 

Take care.

[slartibartfast]

1 hour ago, Redwhitepurple said:

Couldn't pay me to read such corrupt newspapers

Quite right, stick to the Sun and the Fail !

[BigTone]

41 minutes ago, tin said:

Obviously, there's no guarantee that a change of ownership would lead to success, but I'd rather enjoy the ride than have decades of going round in circles as the current owners fail to learn from their previous mistakes.

 

The simple solution then would to put together your own takeover consortium and put in a bid showing everyone how it should be done. You might find it is an expensive ride to enjoy.

[bcfc01]

34 minutes ago, Robin101 said:

“Burnley have great potential to grow commercially from shrewd recruitment of players, stadium improvements and wider marketing of the club”.

Burnley is a small town in Lancashire where football clubs are two a penny. They have done fantastically well to establish themselves as a lower-end Premier League club, but is there really much room for further growth? 

Not sure we’ll see the day when legions of Chinese and Indian fans are all sporting Burnley shirts. 

If I was a Wall St investor looking for a play thing I’d say someone like Oxford Utd or Cambridge Utd would be far more marketable abroad (once millions have been pumped in).

Being a town of somewhere between 80k-90k population it is remarkable the support and success they have and have had in the past. 

But is there room for further growth ? 

I think the question should be "can they sustain the relative success they have had."

No, would be my guess.

[Kingswood Robin]

12 minutes ago, bcfc01 said:

Being a town of somewhere between 80k-90k population it is remarkable the support and success they have and have had in the past. 

But is there room for further growth ? 

I think the question should be "can they sustain the relative success they have had."

No, would be my guess.

Blackburn amaze me even more. A population not much bigger than Burnley and certainly not the giant that some people think they are. Only 6/7 seasons outside the top 2 divisions in their entire history. Must be something in the water in that part of the world.

Edited February 2, 2021 by Kingswood Robin

[Lorenzos Only Goal]

It's always amazed me why this sort of deal is legal.

[grifty]

53 minutes ago, tin said:

With respect, I don't buy into this 'without SL, we'd be worse off' narrative. The fact is nobody knows where we'd be without SL; we might be better off, we might be worse off. It's all guesswork.

Take a look at the new training ground thread, specifcially at Leicester's new facility. In 2007/08, they were relegated to League One while we lost the Championship play-off final. Look at what they've achieved since - first through Mandaric, then through the Thai money - while we stagnate. 

Obviously, there's no guarantee that a change of ownership would lead to success, but I'd rather enjoy the ride than have decades of going round in circles as the current owners fail to learn from their previous mistakes.

As Einstein said: "the definition of madness is doing the same thing over and over again and expecting a different result." 

You should. You just need to balance it off with looking at other clubs who have had success with new owners, both on and off the field.

Man City, Leicester, Brighton, Brentford to an extent. That's the only ones I'd class as having true success on and off the pitch in terms of playing and infrastructure. Man City is an extreme example too as they were essentially bought by a country...

There's teams that have benefitted on the playing side only (as far as I'm aware) - Cardiff, Watford, Swansea, Villa, Bournemouth, Wolves.

The flip-side is Portsmouth, Derby, Sheff Wed, Birmingham, Forest, Coventry, Sunderland, Hull, Charlton, Ipswich, Wigan, Bolton. Teams who can't/couldn't pay players, fire-sale of players, points deductions, administration, tumbling down the leagues.

 

I believe SL has focussed on the infrastructure side first, and once this is done (is the training ground the last piece?) then only has the playing side to focus on. He hasn't 'neglected' the squad, still spending on wages and transfer fees, but I think that is to keep us constant in the championship so we are in a. good position to push.

On the balance of probability (and our luck) we'd be taken over by someone who would see us go backwards rather than forwards. I don't fancy risking the future of the club for a season or two in the prem and then 25 years trying to recover.

[Hxj]

As I said on the FFP thread:

"So I'm a Guardian journalist and I am bored so I will write a non-story and dress it up as something else.  I can't read and understand what is detailed on Companies House, but I use that as a source to justify my meaningless conclusions.

"That makes it difficult not to conclude that just to pay for ALK to take over, the club is now approximately £90m worse off, with interest to pay"

Or as an alternative the club is utilising it's cash resources by getting a far better rate of return than it was under the old management, so in fact the company is better off.  But that doesn't suit me as a Guardian journalist so I won't explain how that may have happened."

[Floatn Over]

18 minutes ago, grifty said:

You should. You just need to balance it off with looking at other clubs who have had success with new owners, both on and off the field.

Man City, Leicester, Brighton, Brentford to an extent. That's the only ones I'd class as having true success on and off the pitch in terms of playing and infrastructure. Man City is an extreme example too as they were essentially bought by a country...

There's teams that have benefitted on the playing side only (as far as I'm aware) - Cardiff, Watford, Swansea, Villa, Bournemouth, Wolves.

The flip-side is Portsmouth, Derby, Sheff Wed, Birmingham, Forest, Coventry, Sunderland, Hull, Charlton, Ipswich, Wigan, Bolton. Teams who can't/couldn't pay players, fire-sale of players, points deductions, administration, tumbling down the leagues.

 

I believe SL has focussed on the infrastructure side first, and once this is done (is the training ground the last piece?) then only has the playing side to focus on. He hasn't 'neglected' the squad, still spending on wages and transfer fees, but I think that is to keep us constant in the championship so we are in a. good position to push.

On the balance of probability (and our luck) we'd be taken over by someone who would see us go backwards rather than forwards. I don't fancy risking the future of the club for a season or two in the prem and then 25 years trying to recover.

Paragraph 5 “I believe.....” is spot on IMO, it’s frustrating waiting for sure but the stars are not aligned / ducks are not in a row.....Yet

[tin]

1 hour ago, grifty said:

You should. You just need to balance it off with looking at other clubs who have had success with new owners, both on and off the field.

Man City, Leicester, Brighton, Brentford to an extent. That's the only ones I'd class as having true success on and off the pitch in terms of playing and infrastructure. Man City is an extreme example too as they were essentially bought by a country...

There's teams that have benefitted on the playing side only (as far as I'm aware) - Cardiff, Watford, Swansea, Villa, Bournemouth, Wolves.

The flip-side is Portsmouth, Derby, Sheff Wed, Birmingham, Forest, Coventry, Sunderland, Hull, Charlton, Ipswich, Wigan, Bolton. Teams who can't/couldn't pay players, fire-sale of players, points deductions, administration, tumbling down the leagues.

I believe SL has focussed on the infrastructure side first, and once this is done (is the training ground the last piece?) then only has the playing side to focus on. He hasn't 'neglected' the squad, still spending on wages and transfer fees, but I think that is to keep us constant in the championship so we are in a. good position to push.

On the balance of probability (and our luck) we'd be taken over by someone who would see us go backwards rather than forwards. I don't fancy risking the future of the club for a season or two in the prem and then 25 years trying to recover.

In your opinion. 

[Port Said Red]

26 minutes ago, Floatn Over said:

Paragraph 5 “I believe.....” is spot on IMO, it’s frustrating waiting for sure but the stars are not aligned / ducks are not in a row.....Yet

While it is true that we don't know where we would be without SL, the only comparisons we can make are to previous incumbents.

In my lifetime, the only chairman/board/owner we have had that made a comparative investment (allowing for inflation) is Harry Dolman. He invested 25 years of his time and no small part of his personal fortune to put us in a position to achieve first division status, and even then we didn't make it until he had moved off the board.

By that reckoning, I think SL has put everything in place, and hopefully we will see the benefits start to come through.

[TonyTonyTony]

2 hours ago, Redwhitepurple said:

Couldn't pay me to read such corrupt newspapers

I was under the assumption you couldn't read to be honest. 

[CodeRed]

2 hours ago, Hxj said:

As I said on the FFP thread:

"So I'm a Guardian journalist and I am bored so I will write a non-story and dress it up as something else.  I can't read and understand what is detailed on Companies House, but I use that as a source to justify my meaningless conclusions.

"That makes it difficult not to conclude that just to pay for ALK to take over, the club is now approximately £90m worse off, with interest to pay"

Or as an alternative the club is utilising it's cash resources by getting a far better rate of return than it was under the old management, so in fact the company is better off.  But that doesn't suit me as a Guardian journalist so I won't explain how that may have happened."

You'll have to explain that please I don't get your point.

 

because as far as I can see.

• Burnley had £42M in the bank, and no debt

 

• The 2 main owners - majority shareholders- sold the club for £100M to ALK Capital

 

• In order to pay that £100M , ALK took £40M from Burnley's bank account and borrowed the other £60M from Michael Dell's MSD company and secured the loan against Turf Moor . The loan interest rate is unknown but MSD have loaned similar amounts to Southampton FC at 9.14% - 9 x the bank base rate.

So 2 months ago Burnley had £40M.....now they owe £60M

 

How can that be right, how can that be of benefit to the club, the fans, the community?

[JamesBCFC]

1 hour ago, tin said:

In your opinion. 

Which parts do you disagree with?

[Hxj]

44 minutes ago, CodeRed said:

You'll have to explain that please I don't get your point.

 

because as far as I can see.

• Burnley had £42M in the bank, and no debt

 

• The 2 main owners - majority shareholders- sold the club for £100M to ALK Capital

 

• In order to pay that £100M , ALK took £40M from Burnley's bank account and borrowed the other £60M from Michael Dell's MSD company and secured the loan against Turf Moor . The loan interest rate is unknown but MSD have loaned similar amounts to Southampton FC at 9.14% - 9 x the bank base rate.

So 2 months ago Burnley had £40M.....now they owe £60M

 

How can that be right, how can that be of benefit to the club, the fans, the community?

Starting with the Burnley cash.  That may well have been used as suggested, the point is that if Burnley FC Holdings Limited (or a subsidiary of that company), the old parent co, lent the money to Calder Vale Holdings Limited (the company which acquired Burnley FC Holdings Limited) then it would have a debtor equal to that sum on it's balance sheet, so it is no worse off at all.  The £40 milllion still exists, it just sits somewhere else.

Then the alleged MSD loan.  There is no loan to Burnley FC Holdings Limited.  There was a loan to Calder Vale Holdings to presumably fund the purchase of Burnley FC Holdings Limited, £100 million doesn't magic itself out of nowhere.  If you read the legal charge documents it refers to MSD as 'the Security Agent', compare this with the legal charge documents from MSD in relation to Derby County, which refer to MSD as 'the Lender'.  Despite what the sloppy journalist writes there is a important difference between being 'the Security Agent' for a loan and 'the Lender'.  Security Agents are generally used for perfectly legitimate reasons, one of which is to obsure the name of the lender, another is where you have several lenders on a syndicated loan.  I suspect, for a fee, MSD are acting to obscure the fact that the new owners also lent the funds.

So back to the loan.  There is no loan to Burnley FC Holdings Limited or any subsidary, so the football club is not £60 million worse off from the loan.

I accept that the loan to Calder Vale Holdings Limited carrys interest, and that needs to be funded from somewhere.  On the assumption that it carries interest at 5%, that would need a management fee of say £3 million a year between the Burnley FC Holdings Limited and Calder Vale Holdings Limited to cover the cost.  Given that in the last three years the Burnley FC Holdings Limited group has had pretax profits of around £72 million and saved £40 million in cash, we are hardly into rape and pillage territory.

Oh and if the community are really that concerned they could have bought the club. 

Edited February 2, 2021 by Hxj

[CodeRed]

38 minutes ago, Hxj said:

Starting with the Burnley cash.  That may well have been used as suggested, the point is that if Burnley FC Holdings Limited (or a subsidiary of that company), the old parent co, lent the money to Calder Vale Holdings Limited (the company which acquired Burnley FC Holdings Limited) then it would have a debtor equal to that sum on it's balance sheet, so it is no worse off at all.  The £40 milllion still exists, it just sits somewhere else.

Then the alleged MSD loan.  There is no loan to Burnley FC Holdings Limited.  There was a loan to Calder Vale Holdings to presumably fund the purchase of Burnley FC Holdings Limited, £100 million doesn't magic itself out of nowhere.  If you read the legal charge documents it refers to MSD as 'the Security Agent', compare this with the legal charge documents from MSD in relation to Derby County, which refer to MSD as 'the Lender'.  Despite what the sloppy journalist writes there is a important difference between being 'the Security Agent' for a loan and 'the Lender'.  Security Agents are generally used for perfectly legitimate reasons, one of which is to obsure the name of the lender, another is where you have several lenders on a syndicated loan.  I suspect, for a fee, MSD are acting to obscure the fact that the new owners also lent the funds.

So back to the loan.  There is no loan to Burnley FC Holdings Limited or any subsidary, so the football club is not £60 million worse off from the loan.

I accept that the loan to Calder Vale Holdings Limited carrys interest, and that needs to be funded from somewhere.  On the assumption that it carries interest at 5%, that would need a management fee of say £3 million a year between the Burnley FC Holdings Limited and Calder Vale Holdings Limited to cover the cost.  Given that in the last three years the Burnley FC Holdings Limited group has had pretax profits of around £72 million and saved £40 million in cash, we are hardly into rape and pillage territory.

Oh and if the community are really that concerned they could have bought the club. 

Ok,  The £40M Burnley had in the bank has been lent to CVL , and it's now on their balance sheet as a debt.  and the loan is to CVL not Burnley - but there is now a charge placed on the ground .

So they had £40M in cash, no debt, and no mortgage.   They now have no cash, are owed £40M , and have a mortgage.

I realise this is all legal but I know which I would prefer.  

 

[Hxj]

1 hour ago, CodeRed said:

I realise this is all legal but I know which I would prefer.  

I've no doubt what I would prefer as well, my complaint was about the quality of the journalism, not the morals or ethics of football finance.

Publishing badly researched and written pieces does no one any favours, least of all the fans.

Edited February 2, 2021 by Hxj

[Calculus]

I know this isn't anything to do with the takeover, but it is Burnley and it needs to be seen.

If only all press conferences were like this:

 

[Mr Popodopolous]

I've not had much chance to look at details at CH etc, seen the article and the headline figutres.

I would ask this one question, have read the thread a bit too- would Burnley benefit from this- as in does adding the debt/the security whatever enhance prospects for Burnley? One saving grace might be that if it's not paid in full, it goes back to Garlick and the other owner- they seem like a very well run club, wonder if it will remain that way.

Plus another sign that if SL sold and we got US Investors which has been mooted on here, that it might not be a good thing. Would they be coming and looking to splash cash willy nilly? Not sure! Signs of other US Investors, let alone with the context of a non Championship Parachute club would suggest not. 

That's a better scenario- a bad one might be a leveraged buyout type thing- a club with Championship Income streams and no Parachute Payments, this kind of deal would be a bad one for us.

[Mr Popodopolous]

Should also add, Man United- a club of that size and global reach can absorb it, albeit not without impact.

Burnley if they stay in the PL and don't start leveraging should be able to absorb it, but with more impact. If they go down though, problems would surely arise...and they are not a club you'd say are always certainties to survive.

Us? In the Championship, with no Parachute Payments. Couldn't see much upside at all! Of course, it could be more like a Derby under GSE- they funded losses up to a point but only up to a point. FFP no issue but think the average P&L loss was £5-10m- that's a major downsizing for us, unless we keep selling on. Maybe a mix of reasonably regular sales and downsizing.

Lerner at Aston Villa eventually went south, see also Short at Sunderland. Swansea seem to run a tightish ship but remember also Parachute Payments- a luxury we wouldn't enjoy.

Edited February 6, 2021 by Mr Popodopolous

[Mr Popodopolous]

Burnley could be heading for choppy waters IF relegated.

Couple of articles of late- getting relegated in the first few years wouldn't be in the script though they were one of the best run clubs in the country in the leadup to the takeover.

https://www.dailymail.co.uk/sport/football/article-10449797/Burnley-facing-60MILLION-hit-relegated-Premier-League.html

Essentially early repayment of the MSD loan.

https://www.dailymail.co.uk/sport/football/article-10419993/Pay-delays-raise-alarm-Burnleys-financial-position.html

Though Burnley do deny that there is a problem, for the purpose of balance. They're right too as while they're in the PL, they can absorb it without issue and pressure.

https://www.lancs.live/sport/football/football-news/burnley-alk-alan-pace-garlick-22815753

Perhaps a mix of cash buffer, wage cuts on relegation, player sales etc would see them okay if relegated but they're taking a bit of a chance.

£60m loan, over 5 years- at 9% interest. While you're in the PL that's easy...but that interest alone, let alone early repayment in the event of relegation could be interesting?

Edited January 28, 2022 by Mr Popodopolous

[BTRFTG]

On 02/02/2021 at 12:37, Hxj said:

As I said on the FFP thread:

"So I'm a Guardian journalist and I am bored so I will write a non-story and dress it up as something else.  I can't read and understand what is detailed on Companies House, but I use that as a source to justify my meaningless conclusions.

"That makes it difficult not to conclude that just to pay for ALK to take over, the club is now approximately £90m worse off, with interest to pay"

Or as an alternative the club is utilising it's cash resources by getting a far better rate of return than it was under the old management, so in fact the company is better off.  But that doesn't suit me as a Guardian journalist so I won't explain how that may have happened."

The Grauniad, that once fine newspaper brought low. A Rag dependant these past decades on the (once offshore) Scott Trust, the reserves of which they've decimated. The Rag who sack journalists on union minimum and replace with (parental subsidised) interns. The Rag who under the guise of terrorist attack sacked their printers to sub out to publishers they profess to attack in print though who in secret they adore and whose profits they engorge. The Rag whose badly and inaccurately bigoted wrote comes with an obligatory begging letter attached (it costs to produce untruth nobody believes or wishes to read so please donate such we may keep drinking our oat milk skinny lattes...) The Rag whose front page carries the horror that half Britain's kids go to bed hungry but fear not and turn to the supplement where you'll enjoy a list of the 10 'must have' shorts no discerning man may be seen without this summer (the cheapest of which retails at £350 a pair from Arsecheeks in Camden.) The Rag who'll implore those on benefits to cook not cheese on toast but Scallops and Samphire (just ensure those scallops are fresh, hand dived, not frozen - they taste so much better and are much kinder to the environment.)

Plus, and most importantly, since Araucaria passed their crossword's gone to pot and that for ages was the only reason to buy it.