ALK Capital or Farnell/Elkashashy takeover

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by android » Sun Jan 10, 2021 10:00 am

Tall Paul wrote:
Sun Jan 10, 2021 8:52 am

I wasn't suggesting there had been a dividend payment, I was saying that it would be likely that HMRC would see the inter-company transaction as a distribution of profits and treat it as such, which is why I'm extremely dubious of the reports that they've used the club's cash in that way.
Thanks for the clarification Paul. Apart from natural curiosity about the structuring, one of my motives for posting yesterday was to try to dampen down speculation about "cash being stripped out of the club" or that type of talk and try to see what completely legitimate and fair action might have been taken. I think it would be natural for many to assume that mention of a distribution of profits was referring to a dividend being paid, which as we know has not happened (and ALK and co would be smart enough to not allow some other action to be treated as such by HMRC as you say).

I like what I am hearing so far at least - and of course this is the easy bit - but the relocation to live in the area, the desire to retain Dyche, the continuing engagement with MG/JB (including it seems a claw back provision although this bit is not confirmed) are all good signs, which we might not have seen from a different buyer.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Spijed » Sun Jan 10, 2021 2:50 pm

Paul Waine wrote:
Sun Jan 10, 2021 12:13 am
Thanks, android. I recall some of the exchange of views you mention. I agree, at this stage my view that ALK Capital would offer to acquire 100% of the shares isn't proving accurate. I hadn't factored both MG and JB remaining as directors and both retaining 4,000 shares - which we are told BFC directors are required to hold.

Of course, there've been a lot of different numbers reported by the media. Is Bloomberg accurate, or the Athletic or any of the other figures quoted elsewhere. It may be some time before we have better ideas.

Your "pro forma" guestimated balance sheet looks reasonable. I'd read it as your own estimates. Then I read CP's comment and started to search for your sources that I appeared to have missed. Of course, you corrected CP's initial view that you'd got a firmer basis/source(s) for the figures than you do, or that any of us can have. I'm sure there will be things in the way the deal is structured that we won't have guessed at.

Of course, I'm looking forward to how the next few weeks unfold. What will we do "in the market" in January. What actions will be taken with player contracts through the end of the season. And, who will we get in the FA Cup 4th - and 5th - round.

Exciting times.

UTC
The one quote from the article in the Atlantic is very worrying indeed though:

"“American hedge funds are very aggressive when things go wrong — forced sale of players and so on. It won’t end well. They will get relegated in the next few years and the loan will be called, much like Sunderland and (that club’s former owner) Ellis Short. And the problem is Burnley are a relatively small club, historically.”

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by aggi » Sun Jan 10, 2021 4:23 pm

claretandy wrote:
Sun Jan 10, 2021 8:31 am
The 4000 share rule isn't a rule as such, it was a self-imposed minimum you had to buy to get a seat on the board, it could be changed to any number.
It's a rule inasmuch it's in the Articles of the company. They'd have to be amended to change it.
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Take over

Post by boatshed bill » Sun Jan 10, 2021 6:56 pm

Is this true?
Exclusive: New Burnley owner only put in ‘around £15m’ up front to fund takeover
New Burnley owner ALK Capital borrowed a sum in the region of £80 million from American technology billionaire Michael Dell’s investment firm to complete its takeover of the Premier League club, The Athletic understands.

According to several well-placed sources, ALK paid about £150 million for 84 per cent of Burnley’s shares but has put in only around £15 million of its own money up front. The rest has come from MSD Capital, the private equity firm set up in 1998 to manage the Dell family fortune — and approximately £55 million from Burnley’s own bank account.

Sorry if covered before.
This looks well dodgy.

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Re: Take over

Post by tarkys_ears » Sun Jan 10, 2021 6:59 pm

...if only there were a 147 page thread about it!

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Re: Take over

Post by DomBFC1882 » Sun Jan 10, 2021 6:59 pm

It's happened now so we will have to hope it works out well 🙏

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Re: Take over

Post by Wellsy1882 » Sun Jan 10, 2021 7:05 pm

Old news

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Re: Take over

Post by boatshed bill » Sun Jan 10, 2021 7:10 pm

Wellsy1882 wrote:
Sun Jan 10, 2021 7:05 pm
Old news
Not to me, not the bit about them taking £55m out of the club's bank account.
For a start I thought we were skint :D

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Re: Take over

Post by Chester Perry » Sun Jan 10, 2021 9:10 pm

boatshed bill wrote:
Sun Jan 10, 2021 7:10 pm
Not to me, not the bit about them taking £55m out of the club's bank account.
For a start I thought we were skint :D
if it is true we sure are now

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Re: Take over

Post by Spijed » Sun Jan 10, 2021 9:12 pm

Chester Perry wrote:
Sun Jan 10, 2021 9:10 pm
if it is true we sure are now
What worries me is the Article in the Atlantic with the following quote:

“American hedge funds are very aggressive when things go wrong — forced sale of players and so on. It won’t end well. They will get relegated in the next few years and the loan will be called, much like Sunderland and (that club’s former owner) Ellis Short. And the problem is Burnley are a relatively small club, historically.”

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Re: Take over

Post by Burnley1989 » Sun Jan 10, 2021 9:13 pm

Worry about it if it happens, at this moment in time it’s not worth even thinking about. Worrying won’t help anything now

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Re: Take over

Post by arise_sir_charge » Sun Jan 10, 2021 9:14 pm

Spijed wrote:
Sun Jan 10, 2021 9:12 pm
What worries me is the Article in the Atlantic with the following quote:

“American hedge funds are very aggressive when things go wrong — forced sale of players and so on. It won’t end well. They will get relegated in the next few years and the loan will be called, much like Sunderland and (that club’s former owner) Ellis Short. And the problem is Burnley are a relatively small club, historically.”
Yes, I always get worried by anonymous quotes in articles that lack any real substance.

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Re: Take over

Post by Chester Perry » Sun Jan 10, 2021 9:15 pm

Spijed wrote:
Sun Jan 10, 2021 9:12 pm
What worries me is the Article in the Atlantic with the following quote:

“American hedge funds are very aggressive when things go wrong — forced sale of players and so on. It won’t end well. They will get relegated in the next few years and the loan will be called, much like Sunderland and (that club’s former owner) Ellis Short. And the problem is Burnley are a relatively small club, historically.”
and so it should, you have to hope it goes to plan for ALK - it is far too easy for a season to go wrong and trigger such problems in my eyes though - the risk/reward meter has been ratcheted up very high

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Bin Ont Turf » Sun Jan 10, 2021 9:17 pm

Excruciating times
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Re: Take over

Post by arise_sir_charge » Sun Jan 10, 2021 9:19 pm

Chester Perry wrote:
Sun Jan 10, 2021 9:15 pm
and so it should, you have to hope it goes to plan for ALK - it is far too easy for a season to go wrong and trigger such problems in my eyes though - the risk/reward meter has been ratcheted up very high
Saddens me a little that folk are being so quick to question and point fingers. 10 or so days in, Pace has denied its true but folk age treating it as gospel.
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Re: Take over

Post by ClaretTony » Sun Jan 10, 2021 9:20 pm

arise_sir_charge wrote:
Sun Jan 10, 2021 9:14 pm
Yes, I always get worried by anonymous quotes in articles that lack any real substance.
I’m assuming he means The Athletic.

I’d agree with arise_sir_charge not to get worried by anonymous quotes. For what it’s worth I’ve spoken to a couple of independent people on this and both have said the report isn’t true and there is nothing to worry about.
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Re: Take over

Post by arise_sir_charge » Sun Jan 10, 2021 9:21 pm

ClaretTony wrote:
Sun Jan 10, 2021 9:20 pm
I’m assuming he means The Athletic.

I’d agree with arise_sir_charge not to get worried by anonymous quotes. For what it’s worth I’ve spoken to a couple of independent people on this and both have said the report isn’t true and there is nothing to worry about.
That’s good to hear.

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Re: Take over

Post by aggi » Sun Jan 10, 2021 9:37 pm

ClaretTony wrote:
Sun Jan 10, 2021 9:20 pm
I’m assuming he means The Athletic.

I’d agree with arise_sir_charge not to get worried by anonymous quotes. For what it’s worth I’ve spoken to a couple of independent people on this and both have said the report isn’t true and there is nothing to worry about.
Which elements are not true? Some parts are clearly true in substance if not necessarily detail (e.g. there is a loan from MSD which has been used to fund the purchase but the detail of how big that loan is isn't known).
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Re: Take over

Post by ClaretTony » Sun Jan 10, 2021 9:54 pm

aggi wrote:
Sun Jan 10, 2021 9:37 pm
Which elements are not true? Some parts are clearly true in substance if not necessarily detail (e.g. there is a loan from MSD which has been used to fund the purchase but the detail of how big that loan is isn't known).
Don’t think anyone is doubting the loan, but the figures are inaccurate among other things. Isn’t the writer the bloke from the Farnell camp who told us the Egyptian deal was all but done?

I’m not an expert on these matters, I don’t think I’ve even reached novice level, but got assurances from people more knowledgeable and closer to it.
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Re: Take over

Post by Chester Perry » Sun Jan 10, 2021 10:02 pm

ClaretTony wrote:
Sun Jan 10, 2021 9:54 pm
Don’t think anyone is doubting the loan, but the figures are inaccurate among other things. Isn’t the writer the bloke from the Farnell camp who told us the Egyptian deal was all but done?

I’m not an expert on these matters, I don’t think I’ve even reached novice level, but got assurances from people more knowledgeable and closer to it.
Not convinced that Matt Slater is a fan of Farnell

and the comment about the hedge funds is not about ALK, or even MSD it is about the funds that have loaned money to MSD which they have then loaned onto ALK via the Velocity controlled companies Calder Vale and Kettering, still trying to get my head around the need for so many companies, there is possiblity of wanting to the spread of risk and assets, but what and to where. there here is that other very big issue in terms of transparency - Delaware

It is easy to say don't be over dramatic, it is also easy to become an unwitting mouthpiece especially in areas you freely admit to not understanding - to be clear not doubting your intentions or understanding just raising the need for caution - I was apprehensive when this was first touted - I am a little more so now given the limited facts on the table
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Re: Take over

Post by aggi » Sun Jan 10, 2021 10:36 pm

ClaretTony wrote:
Sun Jan 10, 2021 9:54 pm
Don’t think anyone is doubting the loan, but the figures are inaccurate among other things. Isn’t the writer the bloke from the Farnell camp who told us the Egyptian deal was all but done?

I’m not an expert on these matters, I don’t think I’ve even reached novice level, but got assurances from people more knowledgeable and closer to it.
So I guess the question then becomes what is an acceptable loan level? £40m, £50m, £60m?

I think Slater did one story saying that the Egyptian bid had moved ahead of ALK, I'm not sure if that's putting him in the Farnell camp. He's one of the writers that the Athletic paid a lot to bring in with a lot of experience in football finance.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Stalbansclaret » Sun Jan 10, 2021 10:51 pm

I 've always regarded myself as fairly financially literate but I struggle with understanding aspects of the deal as outlined , for example how a Club's own cash reserves can in some way be used as part of the purchase consideration for shares in the Club ? What bothers me is that we seem to be in exactly the same position asset wise ,ie we have no more cash and no more players, but have gone from being debt free to having to service a loan of £80M or whatever.

I hope I'm wrong in this statement. I seem to remember the Man Utd fans outrage when the Glazers did this kind of thing when they bought that club.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Paul Waine » Sun Jan 10, 2021 11:06 pm

Stalbansclaret wrote:
Sun Jan 10, 2021 10:51 pm
I 've always regarded myself as fairly financially literate but I struggle with understanding aspects of the deal as outlined , for example how a Club's own cash reserves can in some way be used as part of the purchase consideration for shares in the Club ? What bothers me is that we seem to be in exactly the same position asset wise ,ie we have no more cash and no more players, but have gone from being debt free to having to service a loan of £80M or whatever.

I hope I'm wrong in this statement. I seem to remember the Man Utd fans outrage when the Glazers did this kind of thing when they bought that club.
How did it go for ManU?

Exciting times.

UTC

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Re: Take over

Post by Paul Waine » Sun Jan 10, 2021 11:14 pm

Chester Perry wrote:
Sun Jan 10, 2021 10:02 pm
Not convinced that Matt Slater is a fan of Farnell

and the comment about the hedge funds is not about ALK, or even MSD it is about the funds that have loaned money to MSD which they have then loaned onto ALK via the Velocity controlled companies Calder Vale and Kettering, still trying to get my head around the need for so many companies, there is possiblity of wanting to the spread of risk and assets, but what and to where. there here is that other very big issue in terms of transparency - Delaware

It is easy to say don't be over dramatic, it is also easy to become an unwitting mouthpiece especially in areas you freely admit to not understanding - to be clear not doubting your intentions or understanding just raising the need for caution - I was apprehensive when this was first touted - I am a little more so now given the limited facts on the table
Glad you've posted this, CP. I was wondering where the hedge funds come into the equation. Obviously, not ALK Capital, as they've drawn the loan. I couldn't work out if it was intended to be MSD, but I didn't see how anyone could describe MSD as a "hedge fund." So, the "hedgies" are the guys who are buying MSD loan notes, that provide the funds for MSD to lend money to Velocity. I think I've seen posted that MSD has debt securities listed in Guernsey. Is there any documentation in the public domain that can give us a sense of how these instruments are set up? Do they holders of these MSD securities have recourse over the assets secured by MSD on Kettering and Calder Vale? I wonder are these issued as collateralised loan obligations? And, taking this a step further, are any of MSD's instruments rated by any of the credit rating agencies?

Exciting times.

UTC

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Paul Waine » Sun Jan 10, 2021 11:17 pm

Bin Ont Turf wrote:
Sun Jan 10, 2021 9:17 pm
Excruciating times
Hi BOT, I'm assuming "predictive txt." ;)

It should be.....

Exciting times.

UTC

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Bin Ont Turf » Sun Jan 10, 2021 11:55 pm

Paul Waine wrote:
Sun Jan 10, 2021 11:17 pm
Hi BOT, I'm assuming "predictive txt." ;)

It should be.....

Exciting times.

UTC

I'll meet you halfway Paul and go with elongated times. :)
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Re: ALK Capital or Farnell/Elkashashy takeover

Post by FactualFrank » Sun Jan 10, 2021 11:59 pm

BOT actually made me laugh. Fair play.

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Re: Take over

Post by Nonayforever » Mon Jan 11, 2021 7:25 am

ClaretTony wrote:
Sun Jan 10, 2021 9:54 pm
Don’t think anyone is doubting the loan, but the figures are inaccurate among other things. Isn’t the writer the bloke from the Farnell camp who told us the Egyptian deal was all but done?

I’m not an expert on these matters, I don’t think I’ve even reached novice level, but got assurances from people more knowledgeable and closer to it.
Have these people giving assurances been paid out in full or are they owed large amounts money ?

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Spijed » Mon Jan 11, 2021 7:42 am

Paul Waine wrote:
Sun Jan 10, 2021 11:06 pm
How did it go for ManU?

Exciting times.

UTC
Man U. have arguably the world's biggest fan base so there is no shortage of income to repay the owners.

What will we be relying on if/when we eventually get relegated and the parachute payments have dried up?
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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Hapag Lloyd » Mon Jan 11, 2021 7:53 am

Paul Waine wrote:
Sun Jan 10, 2021 11:06 pm
How did it go for ManU?

Exciting times.

UTC
That comparison has me even more worried 😟

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Re: Take over

Post by joey13 » Mon Jan 11, 2021 7:57 am

ClaretTony wrote:
Sun Jan 10, 2021 9:54 pm
Don’t think anyone is doubting the loan, but the figures are inaccurate among other things. Isn’t the writer the bloke from the Farnell camp who told us the Egyptian deal was all but done?

I’m not an expert on these matters, I don’t think I’ve even reached novice level, but got assurances from people more knowledgeable and closer to it.
So you not worried Tony? After being so positive last week , the whole deal stinks IMO, explains why there’s been hardly any investment in the team fo the last couple of years so the directors can pocket the cash , it’s all very worrying to me .
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Re: ALK Capital or Farnell/Elkashashy takeover

Post by jojomk1 » Mon Jan 11, 2021 8:34 am

Don't know exactly where the original quote was seen but hasn't Mr Pace described the deal as pretty much the best in the world
"If people really understood how we have financed this deal they would be in awe of our business acumen"
(or words to that effect)

And the deal certainly has been done, so don't see much point in guys continually speculating on the financial figures after the stable door has shut

Well reported that ALK had been close to a similar link up with Sheff Utd - which party got cold feet on that deal ?

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Re: Take over

Post by Herts Clarets » Mon Jan 11, 2021 8:50 am

joey13 wrote:
Mon Jan 11, 2021 7:57 am
So you not worried Tony? After being so positive last week , the whole deal stinks IMO, explains why there’s been hardly any investment in the team fo the last couple of years so the directors can pocket the cash , it’s all very worrying to me .
Which to me was an indicator that MG was looking to sell and cash in his investment. Post profits, cash in the bank, minimise headcount, all things you would do when positioning a business for sale. I was told that a prudently run business looks similar to one that is being set up for sale, clearly it was the former. I think it was CT on this thread that alluded to MG being more a fan of making money than he was of the club.
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Re: ALK Capital or Farnell/Elkashashy takeover

Post by aggi » Mon Jan 11, 2021 8:53 am

jojomk1 wrote:
Mon Jan 11, 2021 8:34 am
...

Well reported that ALK had been close to a similar link up with Sheff Utd - which party got cold feet on that deal ?
Neither. Through a rather complex court case it ended up that the person intending to sell to ALK didn't actually own the club.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Paul Waine » Mon Jan 11, 2021 9:32 am

Spijed wrote:
Mon Jan 11, 2021 7:42 am
Man U. have arguably the world's biggest fan base so there is no shortage of income to repay the owners.

What will we be relying on if/when we eventually get relegated and the parachute payments have dried up?
Hi Spijed, do you think Alan Pace has told MSD that Burnley also have a "massive, global fan base?" Do you think MSD would have believed him if he had told them what only someone with "claret tinted glasses" could see? However much MSD has loaned to ALK and is secured on BFC assets, we can be sure that they've done their own due diligence, understand football finance and are comfortable that they will be repaid - always within the parameters of the pricing of the loan.

Exciting (and elongated) times.

UTC

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Re: Take over

Post by Paul Waine » Mon Jan 11, 2021 9:40 am

Herts Clarets wrote:
Mon Jan 11, 2021 8:50 am
Which to me was an indicator that MG was looking to sell and cash in his investment. Post profits, cash in the bank, minimise headcount, all things you would do when positioning a business for sale. I was told that a prudently run business looks similar to one that is being set up for sale, clearly it was the former. I think it was CT on this thread that alluded to MG being more a fan of making money than he was of the club.
Hi Herts, didn't we know that MG was looking to sell in 2018? I recall there were rumours early that year. It now puts some logic on US media doing features on Burnley around that time. Re you list of "all things you would do...." headcount at the club wasn't being "minimised." The 2018/19 set of accounts report significant growth in employees across the club. I agree, of course, that we weren't seeing much growth in 1st team strength and depth - except we had enough to finish 10th last season.

Exciting times.

UTC

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Re: Take over

Post by AfloatinClaret » Mon Jan 11, 2021 9:56 am

Herts Clarets wrote:
Mon Jan 11, 2021 8:50 am
...I was told that a prudently run business looks similar to one that is being set up for sale...
Well, prudently run businesses do tend to sell a lot more easily and for a much better price than businesses that haven't. A simple analogy: Which twenty car would you prefer to buy? The one which has been owned from new by a nice lady of a certain age, that's enjoyed a weekly clean & polish and been regularly serviced at a reputable garage, or the one that hasn't.

To me this takeover's a lot like The EU/Brexit: There were things about what we had that I didn't like, but to my mind the alternatives were no improvement and potentially worse. However, others had a different opinion and my vote/opinion didn't hold sway. C'est la vie, there's no going back now, so I might as well get on with supporting what we have going forward as that's constructive, whereas sitting around bitching about it isn't helpful to anyone.
Last edited by AfloatinClaret on Mon Jan 11, 2021 10:07 am, edited 1 time in total.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Rodleydave » Mon Jan 11, 2021 9:57 am

There are clearly a handful of guys on this thread that know their way round the way finances are set up. Fascinating and educational to read their stuff. When Pace refers to the Athletic article being untrue, my guess is he is referring to the actual figures. The mechanics of the deal and where the money is coming from, including the club's own money, is in other reports I've read. But the figures have been lower. Me at novice level as well, in such things, but borrowing the club's own money to help fund the deal, is that basically the same as taking out a second mortgage, or equity release.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Mala591 » Mon Jan 11, 2021 10:08 am

So,
Turf Moor has been mortgaged
The training complex has been mortgaged
The value of the players has been mortgaged

Do we still have £50 million in the bank?

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Nonayforever » Mon Jan 11, 2021 10:49 am

Mala591 wrote:
Mon Jan 11, 2021 10:08 am
So,
Turf Moor has been mortgaged
The training complex has been mortgaged
The value of the players has been mortgaged

Do we still have £50 million in the bank?
You forgot the TV money has been mortgaged and two directors haven't been paid for their shares yet.

Devils_Advocate
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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Devils_Advocate » Mon Jan 11, 2021 10:54 am

Not sure I should be saying this in public but I dont think Alan Pace knows where the dry powder store is so all is not lost

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by dsr » Mon Jan 11, 2021 11:21 am

Rodleydave wrote:
Mon Jan 11, 2021 9:57 am
There are clearly a handful of guys on this thread that know their way round the way finances are set up. Fascinating and educational to read their stuff. When Pace refers to the Athletic article being untrue, my guess is he is referring to the actual figures. The mechanics of the deal and where the money is coming from, including the club's own money, is in other reports I've read. But the figures have been lower. Me at novice level as well, in such things, but borrowing the club's own money to help fund the deal, is that basically the same as taking out a second mortgage, or equity release.
Put it in property terms. Mr Garlick owns a house, Mr BurnleyFC lives in it.

Then along comes Mr ALK who wants to buy the house. But he can't afford it. So he gets the tenant, Mr BurnleyFC, to take out a mortgage, and Mr ALK takes the mortgage money and for good meansure he takes Mr BurnleyFC's life savings. He gives the money to Mr Garlick.

So Mr Garlick is happy because he has his money for the house, Mr ALK is happy because he has got the house and hasn't had to pay for it, and Mr BurnleyFC is not happy because he used to have savings and no debt and now he is heavily in debt and has no savings.

This is the difference between a second mortgage. If an individual takes out a second mortgage, then the individual gets to spend the money how he wants. Burnley FC has got the mortgage but not got the cash.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Spijed » Mon Jan 11, 2021 11:28 am

dsr wrote:
Mon Jan 11, 2021 11:21 am
Put it in property terms. Mr Garlick owns a house, Mr BurnleyFC lives in it.

Then along comes Mr ALK who wants to buy the house. But he can't afford it. So he gets the tenant, Mr BurnleyFC, to take out a mortgage, and Mr ALK takes the mortgage money and for good meansure he takes Mr BurnleyFC's life savings. He gives the money to Mr Garlick.

So Mr Garlick is happy because he has his money for the house, Mr ALK is happy because he has got the house and hasn't had to pay for it, and Mr BurnleyFC is not happy because he used to have savings and no debt and now he is heavily in debt and has no savings.

This is the difference between a second mortgage. If an individual takes out a second mortgage, then the individual gets to spend the money how he wants. Burnley FC has got the mortgage but not got the cash.
That doesn't sound like a good situation.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by dsr » Mon Jan 11, 2021 11:30 am

Spijed wrote:
Mon Jan 11, 2021 11:28 am
That doesn't sound like a good situation.
Correct.

Last month, subject to variation in figures, Burnley FC had £50m in the bank and no debt. Now we have nothing in the bank and £50m expensive loans. I don't see how that can be good.

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Re: Take over

Post by dandeclaret » Mon Jan 11, 2021 11:42 am

joey13 wrote:
Mon Jan 11, 2021 7:57 am
So you not worried Tony? After being so positive last week , the whole deal stinks IMO, explains why there’s been hardly any investment in the team fo the last couple of years so the directors can pocket the cash , it’s all very worrying to me .
If the Football Club had invested some of it's cash asset, into player assets, the value of the club wouldn't have changed, as the total assets remain the same - the directors leaving would have been paid broadly the same amount - assuming the purchasers thought it was a similarly strong investment to the value of cash. So they haven't "Pocketed the cash".

The reality is (as I've posted a few times through this thread)

Assumed cash balance £55m (Probably high)

Wage bill of £87m (accounts 2018/2019)
Assumed Wage cut (agressive) at 25% - Wage Bill becomes £66m

Income (excluding Broadcasting) £22.8m -assumed cut of 35% - 14m

Shortfall of £52m

Offset by Parachute payments of £42m and £35m

Leaves a £10m shortfall year 1, £17m in year 2 and £52m in year 3 (And this excludes likely £2 - £4m pa increase in costs for the academy)

All of a sudden, that £55m doesn't look too big. If all of a sudden, you invest in a couple of players, you're likely to see a further £30m of that disappear over 3 years, and if you sign players and they don't work out, and you get relegated, it's fairly easy to see how things can turn bad quickly.

Player recruitment at Burnley has been prudent, and allowed for 2 top 10 finishes in the last 3 years. It has been mainly unexciting, but effective.
This user liked this post: Rileybobs

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by dandeclaret » Mon Jan 11, 2021 11:47 am

dsr wrote:
Mon Jan 11, 2021 11:21 am
Put it in property terms. Mr Garlick owns a house, Mr BurnleyFC lives in it.

Then along comes Mr ALK who wants to buy the house. But he can't afford it. So he gets the tenant, Mr BurnleyFC, to take out a mortgage, and Mr ALK takes the mortgage money and for good meansure he takes Mr BurnleyFC's life savings. He gives the money to Mr Garlick.

So Mr Garlick is happy because he has his money for the house, Mr ALK is happy because he has got the house and hasn't had to pay for it, and Mr BurnleyFC is not happy because he used to have savings and no debt and now he is heavily in debt and has no savings.

This is the difference between a second mortgage. If an individual takes out a second mortgage, then the individual gets to spend the money how he wants. Burnley FC has got the mortgage but not got the cash.
The only thing you've missed is that at no point did Mr BurnleyFC pay Mr Garlick for living in his house. Thus, if he had, those life savings would have been significantly lower.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by dsr » Mon Jan 11, 2021 11:50 am

dandeclaret wrote:
Mon Jan 11, 2021 11:47 am
The only thing you've missed is that at no point did Mr BurnleyFC pay Mr Garlick for living in his house. Thus, if he had, those life savings would have been significantly lower.
Correct. we will now (almost certainly) be paying the new "landlords" directors' fees. Yet another way in which we are worse off, though of course in this case there is the chance that they have increased business acumen and/or money raising abilities, so that might work out in our favour. It's the £100m or so that we have lost that sticks in my craw,

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Mala591 » Mon Jan 11, 2021 11:56 am

Where does the money/investment come from to improve the pace/technical ability/quality of our playing squad?

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Tall Paul » Mon Jan 11, 2021 12:09 pm

dsr wrote:
Mon Jan 11, 2021 11:21 am
Put it in property terms. Mr Garlick owns a house, Mr BurnleyFC lives in it.

Then along comes Mr ALK who wants to buy the house. But he can't afford it. So he gets the tenant, Mr BurnleyFC, to take out a mortgage, and Mr ALK takes the mortgage money and for good meansure he takes Mr BurnleyFC's life savings. He gives the money to Mr Garlick.

So Mr Garlick is happy because he has his money for the house, Mr ALK is happy because he has got the house and hasn't had to pay for it, and Mr BurnleyFC is not happy because he used to have savings and no debt and now he is heavily in debt and has no savings.

This is the difference between a second mortgage. If an individual takes out a second mortgage, then the individual gets to spend the money how he wants. Burnley FC has got the mortgage but not got the cash.
Isn't Mr ALK borrowing Mr BurnleyFC's life savings, and taking out the mortgage himself (albeit secured on the house)?

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Re: Take over

Post by claretandy » Mon Jan 11, 2021 12:10 pm

dandeclaret wrote:
Mon Jan 11, 2021 11:42 am
If the Football Club had invested some of it's cash asset, into player assets, the value of the club wouldn't have changed, as the total assets remain the same - the directors leaving would have been paid broadly the same amount - assuming the purchasers thought it was a similarly strong investment to the value of cash. So they haven't "Pocketed the cash".

The reality is (as I've posted a few times through this thread)

Assumed cash balance £55m (Probably high)

Wage bill of £87m (accounts 2018/2019)
Assumed Wage cut (agressive) at 25% - Wage Bill becomes £66m

Income (excluding Broadcasting) £22.8m -assumed cut of 35% - 14m

Shortfall of £52m

Offset by Parachute payments of £42m and £35m

Leaves a £10m shortfall year 1, £17m in year 2 and £52m in year 3 (And this excludes likely £2 - £4m pa increase in costs for the academy)

All of a sudden, that £55m doesn't look too big. If all of a sudden, you invest in a couple of players, you're likely to see a further £30m of that disappear over 3 years, and if you sign players and they don't work out, and you get relegated, it's fairly easy to see how things can turn bad quickly.

Player recruitment at Burnley has been prudent, and allowed for 2 top 10 finishes in the last 3 years. It has been mainly unexciting, but effective.
Do you think Tarky and pope are valued in the accounts the same as what we payed for them ? of course they aren't.

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