The most concerning financial journo article yet!

[Paul Waine]

This is where Pauls says it....

viewtopic.php?f=2&t=58606&p=1732590&hilit=102#p1732590

Thanks for finding that link, Pete. It appears that it isn't me that's assuming that there are further instalments to be paid, but Alan Pace, Mike Garlick and John B. Additionally, John B's business Freight Investors reports in the annual report - credit to Chester Perry for researching this source - mentions that the purchase price would be paid in 5 instalments, and that these instalments were due in 2021, 2022 and 2023. (Note: there are also one or two unexplained discrepancies in Freight Investor accounts re this item).

[KRBFC]

Why would i need to make it up, why not try to be as smart as you think you are & read his articles & quotes on the deal.

Well Kieran Maguire certainly isn't saying it's the greatest deal in football for the club.

[Devils_Advocate]

I think this is the bit that is you just assuming

I've suggested a few times on here that I believe the 3 instalments are due at the end of this season and the next two seasons, provided BFC remain in the Premier League. The logic is MG/JB wanted to sell a Premier League team, ALK agreed this price, but they were also aware of the risk of relegation, so they only pay the full £170 million if the club isn't relegated in their first full 3 seasons in charge - this gives ALK plenty of time to re-fresh the playing squad.

[KRBFC]

Hi, there are 2 Kevin mcguires, 1 writes for chip papers with no background in finance, the other is seen as the senior authority on football finance deals & is a lecturer on finance at Liverpool university & is often asked to give advice on club takeovers. I know which one i believe………

You said Kieran Maguire in your original post, so for clarification, you were talking about somebody else?

[SydneyClaret]

I’m sure a lot of journalists just write this stuff wishful thinking. No one likes us, that’s apparent. MSD will have to accept their payment in free Championship shirt sponsorship. Lol.

[gawthorpe_view]

I’m sure a lot of journalists just write this stuff wishful thinking. No one likes us, that’s apparent. MSD will have to accept their payment in free Championship shirt sponsorship. Lol.

Nah, just bung 'em a few Twixes and a bottle of Béné.

[Cirrus_Minor]

So, according to that, we have gone from being “the best run club in the premier league” during 2029-2020 to being in danger of falling down the leagues if we get relegated.

****ing brilliant!

[gawthorpe_view]

So, according to that, we have gone from being “the best run club in the premier league” during 2029-2020 to being in danger of falling down the leagues if we get relegated.

****ing brilliant!

Bit of a typo in your post but yeah.

[gawthorpe_view]

So if we get relegated, do we have to pay MSD £60 million in one go or, for example, 10 payments of £6 million for a decade. Plus interest of course?

[DCWat]

No need to worry - if we all knew the details of this deal, which we can’t because it’s private, we’d all think what a super deal it was.

Nothing to worry about here, nothing at all!

[NewClaret]

I know what we need… another thread about the ALK takeover posing questions nobody really knows the answer to!

[CrosspoolClarets]

The only thing certain about this is that it emphasises why us fans need to get 100% behind the whole club in a gargantuan effort to stay up.

Relegation is the thing that wrecks this club in the new structure so its all about staying up, but as a fallback I do believe that if we went down we have 1-2 seasons to bounce back before gravity becomes fairly permenant.

[NewClaret]

The only thing certain about this is that it emphasises why us fans need to get 100% behind the whole club in a gargantuan effort to stay up.

Relegation is the thing that wrecks this club in the new structure so its all about staying up, but as a fallback I do believe that if we went down we have 1-2 seasons to bounce back before gravity becomes fairly permenant.

I’m not sure it wrecks the club. Not if Garlick had anything about him or spoke a word of truth on exit.

But I agree entirely on the importance of now getting behind the team. We need to turn up, back the lads and keep doing it week in, week out, whatever the circumstances.

[aggi]

Bit of a shonky article. Talks about wages exceeding £100m but doesn't mention that it's for a 13 month period. That instantly suggests to me that they either want the highest figure regardless of fact or haven't understood the numbers. Neither make for a convincing article.

Watford, who actually have a higher wage bill than we do, will be fine because they have relegation clauses. It's pretty widely reported that we do as well but that doesn't seem to get a mention.

There's a hefty element of guesswork in there predicting who is going to go back up. Watford will sell their best players but go straight back up so they'll be fine ...

[ClaretPete001]

I think this is the bit that is you just assuming

I've suggested a few times on here that I believe the 3 instalments are due at the end of this season and the next two seasons, provided BFC remain in the Premier League. The logic is MG/JB wanted to sell a Premier League team, ALK agreed this price, but they were also aware of the risk of relegation, so they only pay the full £170 million if the club isn't relegated in their first full 3 seasons in charge - this gives ALK plenty of time to re-fresh the playing squad.

Indeed - can you clarify Paul - is the clause relating to relegation just conjecture?

[aggi]

I think this is the bit that is you just assuming

I've suggested a few times on here that I believe the 3 instalments are due at the end of this season and the next two seasons, provided BFC remain in the Premier League. The logic is MG/JB wanted to sell a Premier League team, ALK agreed this price, but they were also aware of the risk of relegation, so they only pay the full £170 million if the club isn't relegated in their first full 3 seasons in charge - this gives ALK plenty of time to re-fresh the playing squad.

The Freight Investor Holdings (John B's company) accounts strongly suggest this isn't the case and there is no contingent element with payment varying depending on relegation. It's the full amount regardless.

[ClaretPete001]

Bit of a shonky article. Talks about wages exceeding £100m but doesn't mention that it's for a 13 month period. That instantly suggests to me that they either want the highest figure regardless of fact or haven't understood the numbers. Neither make for a convincing article.

Watford, who actually have a higher wage bill than we do, will be fine because they have relegation clauses. It's pretty widely reported that we do as well but that doesn't seem to get a mention.

There's a hefty element of guesswork in there predicting who is going to go back up. Watford will sell their best players but go straight back up so they'll be fine ...

It's the Daily Mail - they are telling a story.

The substance of their view on Watford is the squad has recent experience of the Championship, they have well known millionaire owners with affiliations in Italy and have experience of managing the club through relegation and promotion.

Anyone would look at it and suggest that there is some evidence to believe they would have a chance at managing relegation reasonably well.

We on the other hand have relatively unknown owners with no evident wealth and a team that largely hasn't played in the championship of quite a number of years.

I agree that on the face of it if Watford had a sustained period in the EPL then it seems hard to envisage how they would sustain those debts even with owner that reportedly has a £100 million (peanuts in Premiership terms)

[Elizabeth]

I think this talk of free fall is absolute rubbish

[Vegas Claret]

I know what we need… another thread about the ALK takeover posing questions nobody really knows the answer to!

yep

[ClaretPete001]

The Freight Investor Holdings (John B's company) accounts strongly suggest this isn't the case and there is no contingent element with payment varying depending on relegation. It's the full amount regardless.

It just gets worse....!

[Chester Perry]

It just gets worse....!

no different to what I posted up the thread

though there is some stuff I am saving for the corrected article

[Newcastleclaret93]

Bit of a shonky article. Talks about wages exceeding £100m but doesn't mention that it's for a 13 month period. That instantly suggests to me that they either want the highest figure regardless of fact or haven't understood the numbers. Neither make for a convincing article.

Watford, who actually have a higher wage bill than we do, will be fine because they have relegation clauses. It's pretty widely reported that we do as well but that doesn't seem to get a mention.

There's a hefty element of guesswork in there predicting who is going to go back up. Watford will sell their best players but go straight back up so they'll be fine ...

Is it reported anywhere we have relegation clauses? The only place I ever see it is on this board

[RVclaret]

Is it reported anywhere we have relegation clauses? The only place I ever see it is on this board

Id say it’s 99.99% likely there will be hefty relegation clauses in contracts. I think you’d have to check back to the last time we were relegated and look at the accounts then for evidence? Then assume the same management would apply the same logic when we came back up and ever since.

For example Dyche is rumoured to have signed a 75k a week 4 year deal recently, there’s not a chance that doesn’t include a big relegation cut, it would be insanity - these are business people that have been running our club not dodgy ones like the Venkys, Shebby Singh and Jerome Anderson.

[taio]

Is it reported anywhere we have relegation clauses? The only place I ever see it is on this board

Yes it's been reported in the past and it's an absolute certainty in any case

[Newcastleclaret93]

Yes it's been reported in the past and it's an absolute certainty in any case

I know there was the last time we were relegated but I vividly remember Garlick or Dyche doing an interview a few years back where he said we know pay comparative wages in the league and all the clauses that come with that.

I think in any matter it won’t be a big problem as we are losing half of our squad anyway. However it would be interesting to see if the clauses were still in place in the event of relegation

[ClaretPete001]

Id say it’s 99.99% likely there will be hefty relegation clauses in contracts. I think you’d have to check back to the last time we were relegated and look at the accounts then for evidence? Then assume the same management would apply the same logic when we came back up and ever since.

For example Dyche is rumoured to have signed a 75k a week 4 year deal recently, there’s not a chance that doesn’t include a big relegation cut, it would be insanity - these are business people that have been running our club not dodgy ones like the Venkys, Shebby Singh and Jerome Anderson.

The Venky's run a billion and a half dollar empire that stretches across south Asia - you can't compare them in anyway to the Directors of ALK.

And there are two sides to every deal

[ClaretAndJew]

Other than owning our rivals, how are Venky's dodgy?

[RVclaret]

The Venky's run a billion and a half dollar empire that stretches across south Asia - you can't compare them in anyway to the Directors of ALK.

And there are two sides to every deal

True - then why did they make such a hash of Rovers (at first)? They lacked any kind of sports knowledge so hired the likes of Anderson to run the club and ended up with the likes of Danny Murphy and Dickson Etuhu on 40k a week in the Championship.

At least ALK have sports knowledge and experience, plus will have the all the financial modelling skills required for future cash flow forecasting from their investment banking backgrounds. But anyway most of the contracts are either expiring or were put in place prior to them coming in by Garlick who, as we know, ran the club very tightly and I find it impossible to believe wouldn’t have instilled sizeable relegation clauses in contracts (which was my initial point).

[RVclaret]

Other than owning our rivals, how are Venky's dodgy?

More so the dodgy crowd they initially introduced to the club.

[JohnMcGreal]

I think the fact that the MSD loan is interest only (?!) kind of speaks volumes about the people they lent it to, if that is indeed true.

There are almost no interest only mortgages left in the UK for a reason. They were often predatory loans lent to people who couldn't really afford to buy a property in the first place, which then entrapped them in a never ending cycle of debt repayments without ever paying off any capital.

Obviously that's great news for the lender. But it also makes sense that they'll want the capital to start being repaid after relegation. Those parachute payments won't last forever, so they'll want the debt settling within a couple of years I imagine. The people running MSD's portfolio aren't daft. They know they'll get their money even in the event of relegation.

Once again I'm left asking myself how BFC benefits from any of this.

[ClaretPete001]

True - then why did they make such a hash of Rovers (at first)? They lacked any kind of sports knowledge so hired the likes of Anderson to run the club and ended up with the likes of Danny Murphy and Dickson Etuhu on 40k a week in the Championship.

At least ALK have sports knowledge and experience, plus will have the all the financial modelling skills required for future cash flow forecasting from their investment banking backgrounds. But anyway most of the contracts are either expiring or were put in place prior to them coming in by Garlick who, as we know, ran the club very tightly and I find it impossible to believe wouldn’t have instilled sizeable relegation clauses in contracts (which was my initial point).

Because they thought they were smart, have lots of money and got a bloody nose. And to be fair they didn't do any worse than being bottom of the Premiership with 1 win in 19 in their first year in charge.

Moshiri has spent 100s of millions and are a few points better off than us. Kroenke is a multi billionaire and Arsenal have been as low as tenth this year. The Glazers have invested a billion in their squad and they got run ragged by us for 45 minutes on Tuesday.

So, I think a bit of perspective is required.

There maybe relegation clauses but in a competitive marketplace you also have to persuade players to sign them... Why would any chairman put a relatively small buyout clause in a contract? If the player demands it and you want him then he'll get his way.

[Chester Perry]

Is it reported anywhere we have relegation clauses? The only place I ever see it is on this board

It is in the accounts (every year) detailed as a the key mitigation against the single biggest risk - relegation and subsequent reduction of biggest revenue generator -(TV money) and given that our single biggest annual expense is wages

[RVclaret]

Because they thought they were smart, have lots of money and got a bloody nose. And to be fair they didn't do any worse than being bottom of the Premiership with 1 win in 19 in their first year in charge.

Moshiri has spent 100s of millions and are a few points better off than us. Kroenke is a multi billionaire and Arsenal have been as low as tenth this year. The Glazers have invested a billion in their squad and they got run ragged by us for 45 minutes on Tuesday.

So, I think a bit of perspective is required.

There maybe relegation clauses but in a competitive marketplace you also have to persuade players to sign them... Why would any chairman put a relatively small buyout clause in a contract? If the player demands it and you want him then he'll get his way.

Didn’t do any worse? Perspective would be referring to the fact we’ve been in the PL for 6 straight years rather than just referring to 1 season, as well as the fact during those 6 years under the Venkys, that club is now £185m+ in debt, got relegated to League One and has lost half its fan base.

[NewClaret]

It is in the accounts (every year) detailed as a the key mitigation against the single biggest risk - relegation and subsequent reduction of biggest revenue generator -(TV money) and given that our single biggest annual expense is wages

Thanks CP.

In any event, half our squad being OOC mitigates this risk further.

[RVclaret]

Thanks CP.

In any event, half our squad being OOC mitigates this risk further.

The majority of them will all be big earners too I’d have thought.

[ClaretPete001]

Didn’t do any worse? Perspective would be referring to the fact we’ve been in the PL for 6 straight years rather than just referring to 1 season, as well as the fact during those 6 years under the Venkys, that club is now £185m+ in debt, got relegated to League One and has lost half its fan base.

Your original point was that we now have businessmen in charge unlike Rovers who have the Venky's. This is the first season in charge for the current owners.

Rovers are third in the Championship and have gates similar to ours when we were in the Championship (other than winning it).

We had £80 million in the bank 3 years ago and no debt. After the takeover we likely have nothing in the bank and at now have at least £128 million in debt.

The difference is that Rovers have billionaire owners who can probably subsidise it.

Have a look at the turnover of championship clubs that are bigger than we are who do not benefit from parachute money? It's less than the money we will have to repay to the former owners.

Have a look at Rover's turnover for y/e 2020 - what is it?

[ClaretPete001]

And I didn't mean Rovers are bigger than us - also have a look at Nottingham Forrest - what is Forest's?

[GodIsADeeJay81]

Your original point was that we now have businessmen in charge unlike Rovers who have the Venky's. This is the first season in charge for the current owners.

Rovers are third in the Championship and have gates similar to ours when we were in the Championship (other than winning it).

We had £80 million in the bank 3 years ago and no debt. After the takeover we likely have nothing in the bank and at now have at least £128 million in debt.

The difference is that Rovers have billionaire owners who can probably subsidise it.

Have a look at the turnover of championship clubs that are bigger than we are who do not benefit from parachute money? It's less than the money we will have to repay to the former owners.

Have a look at Rover's turnover for y/e 2020 - what is it?

20220210_103332.jpg (398.42 KiB) Viewed 2152 times

[GodIsADeeJay81]

And I didn't mean Rovers are bigger than us - also have a look at Nottingham Forrest - what is Forest's?

20220210_103455.jpg (503.32 KiB) Viewed 2148 times

[aggi]

I think the fact that the MSD loan is interest only (?!) kind of speaks volumes about the people they lent it to, if that is indeed true.

There are almost no interest only mortgages left in the UK for a reason. They were often predatory loans lent to people who couldn't really afford to buy a property in the first place, which then entrapped them in a never ending cycle of debt repayments without ever paying off any capital.

Obviously that's great news for the lender. But it also makes sense that they'll want the capital to start being repaid after relegation. Those parachute payments won't last forever, so they'll want the debt settling within a couple of years I imagine. The people running MSD's portfolio aren't daft. They know they'll get their money even in the event of relegation.

Once again I'm left asking myself how BFC benefits from any of this.

I don't think it tells you anything unless you didn't realise what being taken over by American private equity meant (and I think a lot of Burnley fans did seems to view them as benefactors first and businessmen looking for a profit second for some reason).

They are in it to make a profit. The most likely route to a substantial profit is selling the club for a significant amount. In that context an interest only loan isn't unusual, the expectation is that it gets repaid on sale.

[NewClaret]

The majority of them will all be big earners too I’d have thought.

Tbh, I jus cannot believe there is also much debate/concern about potential relegation when it’s a known fact we have relegation clauses, performance-related incentives, and half of our most senior/expensive people are OOC.

[ClaretPete001]

Tbh, I jus cannot believe there is also much debate/concern about potential relegation when it’s a known fact we have relegation clauses, performance-related incentives, and half of our most senior/expensive people are OOC.

Look at the turnover of Championship clubs with no parachute money NewClaret and think again.

[NewClaret]

Look at the turnover of Championship clubs with no parachute money NewClaret and think again.

The parachute money exists for several years (albeit reducing) over a time period under which time all our contracts will end. You’re also failing to factor in income from player sales.

If you want to worry about it, that’s fine, but I’m not.

[Spijed]

When ALK were negotiating this deal with the current chairman and directors didn't the likes of Clive Holt get involved in the negotiations to make sure that the club wouldn't be put in jeopardy?

[GodIsADeeJay81]

The parachute money exists for several years (albeit reducing) over a time period under which time all our contracts will end. You’re also failing to factor in income from player sales.

If you want to worry about it, that’s fine, but I’m not.

There have been talks in the last 12 mths about getting rid of parachute payments, which would potentially be done in 3yrs at the end of any current deals.

[ClaretPete001]

The parachute money exists for several years (albeit reducing) over a time period under which time all our contracts will end. You’re also failing to factor in income from player sales.

If you want to worry about it, that’s fine, but I’m not.

Indeed so over three years the club loses over a £100 million quid in Premiership money. At the same time it has to pay off at least £128 million quid's worth of debt because no club can pay that debt off interest only on a turnover of £20 million.

Sell it's best players and replace them with contracts that can be lived on with on a Turnover of around £20 million. if you calculate players wages at 50 per cent of turnover - the entire squad would cost £10 million quid or less.

In other words, the club has to pay out at least £228 million quid less what we can generate in sales while losing over £100 million quid's worth of revenue and at the end of it will have a playing squad worth less than £10 million on a turnover of £20 million.

3 years ago we had £80 million quid in the bank.

I stood on the Bee Hole with my Dad - he is 87 now....! I grew up with this club.

You must be mildly irritated at least?

[ClaretPete001]

Note: the above should say £128 million not £228 million

Apologies

[BurnleyFC]

So this is why we’ve been bulking up the under 23 squad, because they’ll end up being our first team squad next season.

Nice one, Mike.

[arise_sir_charge]

Indeed so over three years the club loses over a £100 million quid in Premiership money. At the same time it has to pay off at least £128 million quid's worth of debt because no club can pay that debt off interest only on a turnover of £20 million.

Sell it's best players and replace them with contracts that can be lived on with on a Turnover of around £20 million. if you calculate players wages at 50 per cent of turnover - the entire squad would cost £10 million quid or less.

In other words, the club has to pay out at least £228 million quid less what we can generate in sales while losing over £100 million quid's worth of revenue and at the end of it will have a playing squad worth less than £10 million on a turnover of £20 million.

3 years ago we had £80 million quid in the bank.

I stood on the Bee Hole with my Dad - he is 87 now....! I grew up with this club.

You must be mildly irritated at least?

So the squad is only worth what the wage bill is.

Interesting.

[Devils_Advocate]

Tbh, I jus cannot believe there is also much debate/concern about potential relegation when it’s a known fact we have relegation clauses, performance-related incentives, and half of our most senior/expensive people are OOC.

For me the risk around relegation isnt that we aren't able to use relegation clauses and parachute payments to manage the debt and consolidate us as a Championship club in reasonable shape but the risk and reward element of ALK strategy.

Im not saying the following is likely to happen but I think it is a definite possibility and would be the scenario that really screws up the club

Im not going to be exact about figures as its not needed to illustrate my point but lest say ALK have risked £15m of their own money and all the rest has been generated by borrowing, cash in the bank and future instalments payments.

If ALK keep Burnley in the Premier League they will be able to service the debt and potentially either pay themselves a salary and/or increase the value of the club to flip for a profit.

If Burnley go down then ALK in my view are unlikely to make any profit on the £15m as long as we stay in the Championship as we will have to cost cut and really stretch ourselves just to service the debt and break even. A long spell in the Championship leaves a reasonable chance that overtime ALK will lose their £15m investment so it really needs a promotion for them to make money

Therefore the best (and maybe only) chance ALK have of making a profit or even negating a full loss is to get us back into the Premier League. The best chance of that would be in the first years after relegation so ALK might look to use the parachute payments to throw money at the squad and keep as many of our best player and look to sign top Championship players or even Premier League players to really push hard for promotion

If they are successful then brilliant we are back in the Premier League and back making money for them and increasing the clubs value. If they fail and the club goes tits up cos it still has a loan to service and it still has a high wage bill then they lose their £15m and walk away. If they are going to lose their £15m whatever happens by remaining in the Championship then from their perspective they have nothing to lose by gambling with our club as either way they lose the same amount but the riskier strategy gives them far more chance of being successful.

I would hope that if we do go down either ALK are happy to play the long game and risk their £15m on doing it the right way for the club or they are at least not the kind of people who would risk a football club to try and make themselves money but the truth is we just dont know.

Under the previous owners we know that had we gone down they would have taken the safe and sensible route but we dont know what ALK are capable of and with a large loan against the club then it is a possibility that ALK roll the dice with their £15m but more importantly with the whole financial security of our club.

That in my opinion is the real risk that relegation brings and whilst im not gonna worry about it and if I had to call it then I would side with ALK being more responsible rather than money chasing businessmen who dont worry about who gets hurt along the way but this kind of ruthless money driven business types are unfortunately very common these days