BFC Finances

[FactualFrank]

In a nutshell, are we saying that to buy players we would have to sell (without going into the red)?

Depends on Covid. We have the 'dry powder store', but I don't think we actually know whether it's needed to be paid back.

Royboy is more clued up - but this is what I'm understanding.

So we could buy somebody for £20 million, which we pay for by dipping.

[BOYSIE31]

Spent more in the championship

[Paul Waine]

Can you imagine making up the wages packet, like we did in the 60's and 70's?

I guess it would have been particularly difficult in the late 60s, before the UK went decimal and most pay was calculated by hand, rather than computers. Plus there were all the "extras" for "dirty money" "height money," "outdoor working" "indoor working" plus "time and half" "double time" etc. Imagine handling all that when we the country used £ s d: 12 pence (d) to a shilling, 20 shillings (s) to a pound (£).

I think we introduced decimal currency in 1971 - I'd a year left at school. Cash offices were still very common through the 80s - and wages made up and paid in cash every week for many. I think it required a change in law to allow employers to pay everyone into bank accounts - though I'm more than a little hazy on this.

Anyone got accurate info when cash pay packets went away?

[Paul Waine]

It is very questionable that loans were made at better rates than the banks would offer a club - even today where rates have been at huge lows for a decade or more clubs are being charged between 9% and 15% p.a. (occasionally more) depending on their risk assessment of the business and banks usually will not offer money to clubs, or even private equity that is then loaned to clubs (one of the big players in this area recently folded due to a combination of loans not being repaid to them on time and banks refusing to loan them new monies. It is telling that clubs like Southampton and Everton have had to go to Private Equity recently for loans as no bank saw them as credit worthy, even with their wealthy backers and Premier League TV income.

The Spurs loan from the Bank of England is interesting, but has to be repaid within 12 months I understand - they were able to secure it because their balance sheet/profit and loss accounts were so strong. It is telling that they are the only club to go down this route, the few others that may qualify (and it is a very few) have sought more flexible repayment terms at a higher cost.

I read it that the "directors at better rates" post meant that the directors lent money to the club at lower rates than any bank - or other source - would lend to the club.

I agree, football clubs, even Premier League clubs, are not attractive places to lend money - the high rates that they are required to pay, if they can borrow anything, tells us that. Every lender is supposed to have a high degree of confidence that their loan(s) will be repaid, according to the terms.

Anyone who is interested to learn more, I recommend they take a look at the Debenture that Burnley signed with Barclays Bank to take out a loan in 2014. The details are on Companies House site. The charge related to the loan was discharged in Jan this year. (Maybe that's where some of the £40 million cash has been spent - though that's just an idea in my mind - I've not examined the accounts in so much detail).

[AfloatinClaret]

...none of our Directors have taken a dividend/salary out of the Club for many years. Directors have made loans to the Club in the past at better rates than those available from the Banks...

To give a little perspective, Tottenham's directors were paid a total of £10.3 million in the financial year ending June '19. They still owe in excess of £660m for their new stadium...They've also had to borrow £175m from the Bank of England to support their cash-flow over the next 12 months ...

This a post which the 'We want/need outside investors' ought to consider. It appears that there's a general consensus that BFC have managed to clear circa £5 million a year whilst in the Premiership? So if you're going to pay the Directors/Investors £10 million/year, then we're immediately £5 million into the red before we even begin to repay any money which the new Directors may or may not put into the club. Sorry fellas, but in the real world 'Investments' are high interest loans, not gifts.

[TVC15]

The debenture will have been in relation to the overdraft facility they had at the time. It’s pretty standard security for any Bank to take for any limited company / PLC.
Don’t think we needed the overdraft.

In terms of loans from directors usually these are at higher rates than Banks - reflecting the risk to the individual rather than a multi national company like a bank.

But as Chester has said above and as I’ve said on different threads banks pretty much pulled out of lending to the football sector quite a long time ago now. This leaves a gap for people like the Glazers to charge pretty punishing rates of interest to the football clubs they lend money to.
Same with private equity companies - the rates they charge reflect the risk of lending to football clubs and it’s not just interest as it will invariably included huge commission fees. These will be much higher than any Bank used to charge the football club for charges businesses in other sectors.

Interesting exercise is to go through the list of professional clubs and see how many have gone into administration - a number of them more than once. If anyone knows of a sector where so many companies go into administration I’d like to know.

The only reason many banks used to lend to football clubs (certainly the reason my bank did) was to fuel the ego of the bank executive. They loved the kudos and many of them were involved with the clubs.

Things had started to change before the 2008/9 crash and banking crisis but that was the real watershed as the PRA (who run the banks now) effectively put an end to the irresponsible lending that was taking place to this sector.
It was always built on sand and the regulator decided to kick over the castle !

[Chester Perry]

I read it that the "directors at better rates" post meant that the directors lent money to the club at lower rates than any bank - or other source - would lend to the club.

I agree, football clubs, even Premier League clubs, are not attractive places to lend money - the high rates that they are required to pay, if they can borrow anything, tells us that. Every lender is supposed to have a high degree of confidence that their loan(s) will be repaid, according to the terms.

Anyone who is interested to learn more, I recommend they take a look at the Debenture that Burnley signed with Barclays Bank to take out a loan in 2014. The details are on Companies House site. The charge related to the loan was discharged in Jan this year. (Maybe that's where some of the £40 million cash has been spent - though that's just an idea in my mind - I've not examined the accounts in so much detail).

Paul was that not the "overdraft" credit facility that we hadn't pulled down on for 3 years so closed it

[TVC15]

Paul was that not the "overdraft" credit facility that we hadn't pulled down on for 3 years so closed it

Yes pretty sure it was.
Standard practice for bank to take a debenture - basically it’s a charge over the borrowers assets.

[claret2018]

I don’t think it helps that the fees for even bang average championship players have skyrocketed in the last 2 years

[brexit]

Hi brexit, hope you don't mind me saying your post gave me a laugh this morning.

If you are interested in the club's accounts they are available online at Companies House: Burnley Football Club Holdings Limited, company number 08335231. It's free to search Companies House Beta - it's been free to access for several years now (I'm not sure why they still call it "beta" after all this time).

Of course, there's a delay in the accounts being published. The latest set of accounts available were for the financial year 1-July-2018 to 30-Jun-2019 and were published on Companies House on 6 April 2020.

No I don't mind, anything to lighten the mood.

On aserious note this thread has probably been a reality to check to many fans who actually thought we were "rolling in cash".

[CombatClaret]

I'd wager everyone demanding the board spend has tighten up their own finances in the last 6months.

Like football is separate to reality.

[Jakubclaret]

I'd wager everyone demanding the board spend has tighten up their own finances in the last 6months.

Like football is separate to reality.

True, but with the lockdown & restricted opening hours & the lack of appetite to venture outdoors minimising the exposure to virus it's not really been dictated by choice more necessity if anything some will have a nest egg.

[Clarets4me]

It is very questionable that loans were made at better rates than the banks would offer a club - even today where rates have been at huge lows for a decade or more clubs are being charged between 9% and 15% p.a. (occasionally more) depending on their risk assessment of the business and banks usually will not offer money to clubs, or even private equity that is then loaned to clubs (one of the big players in this area recently folded due to a combination of loans not being repaid to them on time and banks refusing to loan them new monies. It is telling that clubs like Southampton and Everton have had to go to Private Equity recently for loans as no bank saw them as credit worthy, even with their wealthy backers and Premier League TV income.

The Spurs loan from the Bank of England is interesting, but has to be repaid within 12 months I understand - they were able to secure it because their balance sheet/profit and loss accounts were so strong. It is telling that they are the only club to go down this route, the few others that may qualify (and it is a very few) have sought more flexible repayment terms at a higher cost.

As " Paul Waine " inferred, when I said " better rates than the banks would offer a club ", I meant at a lower rate than the banks would charge, even if they would agree to the loan. For the directors, it would have been at a higher rate than their deposits would have attracted at a Bank or on the money markets, so it seems to have been a win/win arrangement .....

[Vegas Claret]

I'd wager everyone demanding the board spend has tighten up their own finances in the last 6months.

Like football is separate to reality.

football has been a million light years away from reality for at least 20 years, virus wont change anything

[randomclaret2]

We seem to be the only club in the Premier League for whom it does appear to have changed everything

[CrosspoolClarets]

The monies for the group stage are not huge, and neither would have been our gate receipts - the cost of getting to the group stage would have eaten a fair chunk of them - this off the top of my head about the group stages

- all wooden seats in the ground would have had to be replaced - UEFA requirement
- capacity in the ground would have been reduced to meet UEFA requirements on perimeter advertising
- no doubt we would have some major travel costs
- players would have accrued additional bonuses for their part in the games

on the up side we would have received additional commercial income from sponsors

and yes I was disappointed with that Athens side (more so with the officials) and thought we were desperately unlucky at the Turf

That season from the Europa (money from UEFA not gates etc) Chelsea got £46m for winning and Arsenal got £39m for 2nd place. We got £0.8m. If we had qualified for the group stages it would probably have been at least £5m (£2.75m for qualifying and £0.57m for each win).

If we did well, aka Wolves, we would have got far more. I can’t find what Wolves got, but I bet it was over £15m.

Players would have had bonuses but I bet not many had it tied into contracts unlike PL success. Unlike PL prize money, that would go mainly straight to the bottom line without being bled away in additional costs like bonuses (improved ground infrastructure would have improved our ground for years to come, so thats slightly different).

Ultimately, I don’t buy into the theory that it wasn’t worth our while competing in it. Hasn’t done Wolves much harm.

[CrosspoolClarets]

I’ll make a few guesses (guesses being the key word - I’m not claiming this is the case):

1. Have BFC got the cashflow to buy a couple of £10m signings and wages (to pay off over ‘x’ years as normal) - HIGHLY LIKLEY
2. Have BFC got the cash in the bank to cover the likely impact of Covid on revenues (i.e. without running out of cash to pay wages etc) - PROBABLY
3. Would BFC have players they could easily sell in the event of a new Covid revenue crisis - CERTAINLY
4. Would it be deemed acceptable to sell one big name per season to help finance the club, IF we hit stormy waters - CERTAINLY

So if these do prove to be the case, not spending it on signings is a choice, not a necessity (hence the alleged arguing behind the scenes, logic would say if the cupboard was bare there would be no arguing).

So my choice is to sympathise with the current difficulties but to criticise not plugging gaps in critical positions in the team, gaps which, as I predicted in the season predictions thread, will see us relegated (and also, in my view, not to return). I may be wrong about the finances, but I’m fairly confident.

It’s that this was so predictable that I find so depressing.

[SammyBoy]

The Secret Footballer in one of his books touched on how "earning £x per week" is a big misconception fans have about football, he stated they get paid monthly like most people.

[Paul Waine]

Paul was that not the "overdraft" credit facility that we hadn't pulled down on for 3 years so closed it

Hi CP, thanks for that. I'd had a look through the accounts after posting and couldn't find any significant borrowings that justified the debenture. I'd guess with an overdraft facility it would only show in the accounts if there was money drawn at the balance sheet dates.

[aggi]

The Secret Footballer in one of his books touched on how "earning £x per week" is a big misconception fans have about football, he stated they get paid monthly like most people.

And generally via PAYE (although image rights are a whole different ball game).

[aggi]

Hi brexit, hope you don't mind me saying your post gave me a laugh this morning.

If you are interested in the club's accounts they are available online at Companies House: Burnley Football Club Holdings Limited, company number 08335231. It's free to search Companies House Beta - it's been free to access for several years now (I'm not sure why they still call it "beta" after all this time).

Of course, there's a delay in the accounts being published. The latest set of accounts available were for the financial year 1-July-2018 to 30-Jun-2019 and were published on Companies House on 6 April 2020.

They heard you. It's now the snappily named https://find-and-update.company-informa ... ce.gov.uk/

[levraiclaret]

It is very questionable that loans were made at better rates than the banks would offer a club - even today where rates have been at huge lows for a decade or more clubs are being charged between 9% and 15% p.a. (occasionally more) depending on their risk assessment of the business and banks usually will not offer money to clubs, or even private equity that is then loaned to clubs (one of the big players in this area recently folded due to a combination of loans not being repaid to them on time and banks refusing to loan them new monies. It is telling that clubs like Southampton and Everton have had to go to Private Equity recently for loans as no bank saw them as credit worthy, even with their wealthy backers and Premier League TV income.

The Spurs loan from the Bank of England is interesting, but has to be repaid within 12 months I understand - they were able to secure it because their balance sheet/profit and loss accounts were so strong. It is telling that they are the only club to go down this route, the few others that may qualify (and it is a very few) have sought more flexible repayment terms at a higher cost.

In 2013 the bonds offered to finance the buy back of Turf Moor and the training ground had an interest rate of 5% for example.

[KRBFC]

I’m tired of all the negative threads. The club is financially sound and Covid has thrown a huge unknown element into future finances.

We are in our 5th season in the PL and finishing mid table. That’s a huge achievement from the Owners, Directors, Manager and players. Huge!

But some of you think outside investors would take us even higher. Really? We are never going to be a top 4 club because we don’t have a huge City fan base?

I suspect the board thought we would have sold one of our key players by now and that would have given Sean funds for 2 or 3 players. If an offer of £35million comes in today for Tarks, I would take it. But I don’t know if we could sign anyone so late in the day.

We’ve got off to a poor start, not for the first time. But the number of threads calling for Sean to move on or Garlick to go are very sad. I think we fans need to have more faith and toughen up, and get behind the Club and team.

Be realistic. Enjoy the season, we will improve!

You’re talking about the past and not looking at the present, we are woefully short and haven’t looked close to gaining a single point from 3 games.

While many happy clappers will accept and enjoy a relegation season where we didn’t try to survive by leaving ourselves desperately short in the market, quite rightly fans will ask why we didn’t back our greatest manager? Our players wanted arrivals too so they’ve been let down, it feels like Garlick has given up on the club with a potential impending sale.

I still remain hopeful we will get a couple in despite what Dyche says, we could do a hell of a lot worse than some of the free transfers available providing we can offset some of the wages with signing fees for the likes of Welbeck Wilshere Callejón or potentially work in the loan market for Delofeu Capoue Gray etc

[Jakubclaret]

You’re talking about the past and not looking at the present, we are woefully short and haven’t looked close to gaining a single point from 3 games.

While many happy clappers will accept and enjoy a relegation season where we didn’t try to survive by leaving ourselves desperately short in the market, quite rightly fans will ask why we didn’t back our greatest manager? Our players wanted arrivals too so they’ve been let down, it feels like Garlick has given up on the club with a potential impending sale.

I still remain hopeful we will get a couple in despite what Dyche says, we could do a hell of a lot worse than some of the free transfers available providing we can offset some of the wages with signing fees for the likes of Welbeck Wilshere Callejón or potentially work in the loan market for Delofeu Capoue Gray etc

We'll have a job on for delofeu.

https://www.watfordobserver.co.uk/sport ... confirmed/

[Down_Rover]

If we get to the point of having to sell to finance the costs of Covid it should not be assumed that the market will pay what we want or need

It will be a different market. We will be Smalling as a distressed vendor and there will be less buyers around as Covid hits them too. The market in this circumstances could be a disaster

[Paul Waine]

If we get to the point of having to sell to finance the costs of Covid it should not be assumed that the market will pay what we want or need

It will be a different market. We will be Smalling as a distressed vendor and there will be less buyers around as Covid hits them too. The market in this circumstances could be a disaster

It's also struck me that some of the potential fees for outgoing players ignores the sell-on clauses that are in place with at least some of our players. That's if the figures are realistic.