ALK Capital or Farnell/Elkashashy takeover

[blake's wand]

I just don't see stockpiling cash over the last few years as a primary way of increasing the club valuation - that's not how businesses work. Relegation looked likely at one point, and we still didn't chuck money at the problem to stay up. How much do you think relegation would have knocked off the valuation? However, leaving the club in a financially viable position would increase the valuation.

People are using the mortgage analogy - is your house worth more with 20k in a box under the stairs, or with 20k spent on improvements to add value?

[Claretforever]

I wonder if the difference in figures (the Athletic stated £80m loan and Bloomberg state £60m) has been cross wires when the Athletic were given the 80 million figure. Did they assume sterling and it was actually dollars?

The current exchange rate makes $80 million around £58.9m. I wonder if that’s why Alan Pace stated the figures the Athletic claimed were incorrect?

[Chester Perry]

I wonder if there is a market for my modest shareholding and if so how can I go about offloading them? Tips/advice anyone?

with the leverage on the club and it's cash assets now gone I suggest your share(s) is worth considerably less than the price the previous board achieved last week

[AfloatinClaret]

The Glazers...at Man Utd. They've still taken vast sums out of a previously debt free club over the last 15 years. Is the model that ALK are using much different?

No different at all NottsClaret, you've grasped it; whilst the Pace response might dispute the amounts/percentages quoted in the Article, even it doesn't question the principal.

I continue to be surprised by the inability of the average football supporter to learn/understand and must I suppose include myself in that assertion, insofar as I still allow myself to be surprised at the abject failure of many posters on here to grasp even the most basic concepts of finance and business:
An 'Investor' is not the same thing as Santa Claus, the Tooth Fairy or your Gran, they are hoping to get all of their money back again, along with some more money; the more the better!

That's actually no different from Mike Garlick, Barry Kilby, Brendan Flood and even Bob Lord in the past, they too were 'Investors' albeit that their desire to get 'more money' was no doubt tempered to a degree by their secondary desire of protecting and maintaining 'their' local club - they were Clarets. It is unlikely that Pace nor anyone else involved with ALK even knew of BFCs existence five years ago, they're not Clarets, so the desire to 'protect and maintain' the club for any reason beyond it's purely financial worth to them, will inevitably not be as strong; we're no longer going to get cheap/free loans, or Directors giving us their own time and business acumen for free.

[Chester Perry]

It should be remembered that if all this does go wrong quickly - it is Mike G and John B who will be left to pick up the pieces as the club reverts back to them - I doubt they will be spending too much of their windfall in the short term.

[CrosspoolClarets]

It should be remembered that if all this does go wrong quickly - it is Mike G and John B who will be left to pick up the pieces as the club reverts back to them - I doubt they will be spending too much of their windfall in the short term.

Genuine question - would they retain any “risk” in terms of payments already made to them, i.e. if they are handed a business again with a big debt on the balance sheet, does their limited liability mean there is no chance that money already paid to them could be at risk? I assume no risk, and that they could spend their windfall once it hits their own bank account, but this isn’t my specialist area.

[jedi_master]

I wonder if the difference in figures (the Athletic stated £80m loan and Bloomberg state £60m) has been cross wires when the Athletic were given the 80 million figure. Did they assume sterling and it was actually dollars?

The current exchange rate makes $80 million around £58.9m. I wonder if that’s why Alan Pace stated the figures the Athletic claimed were incorrect?

Good thinking Sherlock, I reckon you’re probably spot on there.

[MACCA]

I just don't see stockpiling cash over the last few years as a primary way of increasing the club valuation - that's not how businesses work.

It pockets the board a lot more money.
If that reserve was £1 the club would have sold for a lot less.

If you're selling a business you want it to look a lot more healthy and profitable
Not many people will buy a business struggling or losing money.

[jedi_master]

Pace with quotes I had never seen regarding the loan (from Burnley Express):

“I would tell you the way that we have done this, I am absolutely positively certain, it has never been done in the same way ever before, and has everything to do with making the fan base comfortable that this is the most sustainable form of what we could have done - bar none.

”I think people will realise that over time, we can’t speak about it for a whole bunch of reasons, but if I was in front of a number of fans at any given time, I can put my hand on my heart, look them in the eye and say ‘you should be proud of the way that this club has done what it has done, and you should be happy with knowing where it can go and will go, with the structures that have been put in place.


”I don’t mean to be over-dramatic, I can’t explain it, but if you know, you’d be like ‘oh my goodness, this is incredible’.

”You’re taking a mortgage - you don’t think twice about taking a mortgage for your house. But, it really does depend on which mortgage you take, how much you take, and what’s the structure and interest rate.

”Those are minor points, but it also depends on who you take it from, and what you do. All those things have a play, but hopefully someday people will look back and say this was pretty incredible.

”As a supporter, if I understood it the way I understand it, I’d be like ‘good on them, they’ve done a great thing for this club’.”

[daveisaclaret]

”I don’t mean to be over-dramatic, I can’t explain it, but if you know, you’d be like ‘oh my goodness, this is incredible’.

How wonderfully Trumpian

[jedi_master]

How wonderfully Trumpian

"This loan is a beautiful loan"

[jojomk1]

One note of caution still remains in the back of my mind

MG and JB are local guys, good businessmen, and without doubt, have the best interests of the club in their hearts

If ALK are happy with the financial loan arrangements as described within this thread, why didn't MG and JB consider a similar move when they were in charge

Maybe they didn't think such a financial commitment was sustainable

Having said that, both guys are, for the moment, happy to stay on the Board of Directors and we can only assume therefore that they are happy with the arrangement

They have no controlling power left in the boardroom but hope they remain there for the foreseeable future

I remain cautiously optimistic, but would have some worries if the local guys were to leave the club for any reason

[blake's wand]

It pockets the board a lot more money.
If that reserve was £1 the club would have sold for a lot less.

If you're selling a business you want it to look a lot more healthy and profitable
Not many people will buy a business struggling or losing money.

I agree to some extent - but would you not invest some of that £50m into the club to try and realise value from it? Buy a couple of undervalued players double your money on it etc?

[jojomk1]

Pace with quotes I had never seen regarding the loan (from Burnley Express):

“I would tell you the way that we have done this, I am absolutely positively certain, it has never been done in the same way ever before, and has everything to do with making the fan base comfortable that this is the most sustainable form of what we could have done - bar none.

”I think people will realise that over time, we can’t speak about it for a whole bunch of reasons, but if I was in front of a number of fans at any given time, I can put my hand on my heart, look them in the eye and say ‘you should be proud of the way that this club has done what it has done, and you should be happy with knowing where it can go and will go, with the structures that have been put in place.


”I don’t mean to be over-dramatic, I can’t explain it, but if you know, you’d be like ‘oh my goodness, this is incredible’.

”You’re taking a mortgage - you don’t think twice about taking a mortgage for your house. But, it really does depend on which mortgage you take, how much you take, and what’s the structure and interest rate.

”Those are minor points, but it also depends on who you take it from, and what you do. All those things have a play, but hopefully someday people will look back and say this was pretty incredible.

”As a supporter, if I understood it the way I understand it, I’d be like ‘good on them, they’ve done a great thing for this club’.”

The guy sounds like a genuine and very modest person

[KRBFC]

No different at all NottsClaret, you've grasped it; whilst the Pace response might dispute the amounts/percentages quoted in the Article, even it doesn't question the principal.

I continue to be surprised by the inability of the average football supporter to learn/understand and must I suppose include myself in that assertion, insofar as I still allow myself to be surprised at the abject failure of many posters on here to grasp even the most basic concepts of finance and business:
An 'Investor' is not the same thing as Santa Claus, the Tooth Fairy or your Gran, they are hoping to get all of their money back again, along with some more money; the more the better!

That's actually no different from Mike Garlick, Barry Kilby, Brendan Flood and even Bob Lord in the past, they too were 'Investors' albeit that their desire to get 'more money' was no doubt tempered to a degree by their secondary desire of protecting and maintaining 'their' local club - they were Clarets. It is unlikely that Pace nor anyone else involved with ALK even knew of BFCs existence five years ago, they're not Clarets, so the desire to 'protect and maintain' the club for any reason beyond it's purely financial worth to them, will inevitably not be as strong; we're no longer going to get cheap/free loans, or Directors giving us their own time and business acumen for free.

You say you understand finance but what is the problem with the new owners wanting a return? Personally I hope they’re desperate for a return and I hope once they sell, they make a huge profit.

[Stevie Morgan]

One note of caution still remains in the back of my mind

MG and JB are local guys, good businessmen, and without doubt, have the best interests of the club in their hearts

If ALK are happy with the financial loan arrangements as described within this thread, why didn't MG and JB consider a similar move when they were in charge

Maybe they didn't think such a financial commitment was sustainable

Having said that, both guys are, for the moment, happy to stay on the Board of Directors and we can only assume therefore that they are happy with the arrangement

They have no controlling power left in the boardroom but hope they remain there for the foreseeable future

I remain cautiously optimistic, but would have some worries if the local guys were to leave the club for any reason

They signed up to this deal. They are on the hook as much as, if not more so than ALK if it turns out to be a disaster.

[Cubanclaret]

Fair play to Chris Boden for getting a more personable story outside the confines of the presser the other day.
I’ve been quietly taking on some well balanced opinions expressed on here from many posters much more financially knowledgable than myself.
Is there a chance that some folks have been over-analysing the acquisition itself rather than the future strategy (which we know nothing of, as yet).
Sounds likely that MG and AB staying on the Board is partly a guarantee that there is some shared risk in the club’s direction. It also feels like ALK - an investment group - will potentially have ways and means of flexing in further investment as we go- as yet undeclared. Totally understand the payback bit - but we have to give some trust to our outgoing board that they have chosen the right people to take the club forward.

[Sproggy]

MG and JB are local guys, good businessmen, and without doubt, have the best interests of the club in their hearts

Yep. Just the value of their shares ahead of it in in their "best interests" list. A reminder that they were so concerned for the club that they were happy to start the season with Long and Dunne as our centre halves and 50 million quid in the bank.

Having said that, both guys are, for the moment, happy to stay on the Board of Directors and we can only assume therefore that they are happy with the arrangement

Staying on is likely to be part of the conditions of sale of their shares.

I remain cautiously optimistic, but would have some worries if the local guys were to leave the club for any reason

They will. And the reason will be "when the terms of the sale allow them to".

[claretandy]

It seems that ALK got the club for a knockdown price by paying the former directors off with the cash in the bank.

[blake's wand]

Yep. Just the value of their shares ahead of it in in their "best interests" list. A reminder that they were so concerned for the club that they were happy to start the season with Long and Dunne as our centre halves and 50 million quid in the bank.

How far does £50m go for a proven prem replacement CB with wages, transfer fees etc? Also, given that our monthly outgoings are in the region of £10 p/m according to last financial statements, is it not more likely that given COVID/possible relegation we were being prudent and could be under the assumption TV money might not be coming in? People need to realise it's not only transfers that cost a club money and that £50m was all we have. Sounds like a lot, but in the context of the club's finances, it isn't really.

[ClaretLoup]

“I would tell you the way that we have done this, I am absolutely positively certain, it has never been done in the same way ever before, and has everything to do with making the fan base comfortable that this is the most sustainable form of what we could have done - bar none.

”I think people will realise that over time, we can’t speak about it for a whole bunch of reasons”

Wasn’t one of Alan’s big things was to be open and honest with the fans with him becoming part of the community and all, if so why can’t he tell us how the deal is structured?

Eventually won’t it all come out in the accounts?

[MACCA]

I agree to some extent - but would you not invest some of that £50m into the club to try and realise value from it? Buy a couple of undervalued players double your money on it etc?

But they were and are businessmen first and foremost, so it was about making money and probably as much as the reasonably could

Theyve been looking to sell for a number of seasons, the transfer windows show you that.
Whilst hoping Mr Dyche worked miracles and kept is in the league on a small budget.

We know there wasn't lots of cash going spare but they were certainly some to avoid taking the risks we did it signing some of the dross/crocks we did.

[Hedontplayforyou]

Anyone more in the know have a clue about the structure of this loan etc etc or what Alan Pace was actually alluding to when he said we’d be amazed at how they’ve done it ....?

BenWickes?
DJW?
CT?
Chester Perry?

To name the ones I’m aware of sorry if I missed anyone or if you guys don’t want to divulge .

[Sproggy]

How far does £50m go for a proven prem replacement CB with wages, transfer fees etc? Also, given that our monthly outgoings are in the region of £10 p/m according to last financial statements, is it not more likely that given COVID/possible relegation we were being prudent and could be under the assumption TV money might not be coming in? People need to realise it's not only transfers that cost a club money and that £50m was all we have. Sounds like a lot, but in the context of the club's finances, it isn't really.

We don't generally buy proven premier league defenders. We used to have a strategy of buying potential, bedding them in and allowing players to leave for more than we bought them for with a ready-made replacement lined up. There's a risk in that though and it stopped roughly around the time that the directors decided to sell. If the rumours are true, the chairman was ready to sell Tarks in the last window behind the back of the manager too. More cash in the bank.

The focus over the last 18 months has been on maximising share value to the detriment of the playing squad. We could have spent £10m on Worrall in the last window and he *might* have been able to step in should Tarks leave this window. From that perspective, your £50m goes a long way as long as the risks pay off. Of course it could have been a wasted £10m too and I guess the knock on reduction in share value was a bit too much for the chairman to contemplate.

[summitclaret]

How far does £50m go for a proven prem replacement CB with wages, transfer fees etc? Also, given that our monthly outgoings are in the region of £10 p/m according to last financial statements, is it not more likely that given COVID/possible relegation we were being prudent and could be under the assumption TV money might not be coming in? People need to realise it's not only transfers that cost a club money and that £50m was all we have. Sounds like a lot, but in the context of the club's finances, it isn't really.

Have you heard of player loan deals. We knew Mee was out and we knew Tarky wanted away. We probably knew the MG wanted to sell Tarky.

[DCWat]

Some interesting views and points developing on this thread, despite some thinly veiled criticisms of those with limited or no financial knowledge.

I suspect that some of our in the know posters / those with their finger on the pulse of business finance may not fully understand the complexities of this takeover, so let’s not call out people’s lack of even basic understanding.

If anything, this thread should help people’s understanding, not criticise a lack of understanding.

[claretandy]

Anyone more in the know have a clue about the structure of this loan etc etc or what Alan Pace was actually alluding to when he said we’d be amazed at how they’ve done it ....?

BenWickes?
DJW?
CT?
Chester Perry?

To name the ones I’m aware of sorry if I missed anyone or if you guys don’t want to divulge .

I think the structure that he's alluding to is John B and Garlick only getting paid if the club is successful, (hence them staying on the board) if ALK fail, then John B and Garlick get the club back.

[ClaretLoup]

How far does £50m go for a proven prem replacement CB with wages, transfer fees etc?

Craig Dawson went to West Ham on a season long loan. Ok he is experienced at getting relegated but he matches your description.

Also I don’t think your statement is in alignment with our managers thinking. He has stated numerous times that there is plenty of dry powder in the store and has indicated that he wants to see some prudent investment. However the fact that he isn’t even talking to Garlick even though the latter is supposed to be the grown up running the club and he has never been given a budget since he became chairman perhaps indicates where Mr Garlick’s best interests lie.

[claretandy]

well this has all moved on since last night's discussion - I cannot say I am too surprised but I return to my initial thoughts of disappointment when we first heard of MSD's involvement.

aggi

- I agree, this kind of thing is what Matt Slater has built his excellent reputation on over a number of years, he is not known for putting stories out where he has a source in which he is not extremely confident

- not surprised by the cash in the bank - I expected us to get through the summer on existing cash and suggested we night have made a bit of an it does follow the narrative of what we know/expected on the sale structure operating profit last season. The biggest Premier League cash payment comes in the summer and we have probably cut our spend to around £6m p/m

- I was lambasted for suggesting these rates but as you say - not unexpected (unlike the actual loan sum quoted and it's purpose)

- it means we have to grow revenues substantially to help Sean with team building, because debt servicing is likely to be greater than the operating profits we have been generating up to now.
- as you say

EDIT if the loan sum was smaller the club could switch to more favourable terms (ALK certainly couldn't), but I fear this is just too much at this time for that to happen

What happened to the Covid has took all our money narrative ?

[aggi]

It pockets the board a lot more money.
If that reserve was £1 the club would have sold for a lot less.

If you're selling a business you want it to look a lot more healthy and profitable
Not many people will buy a business struggling or losing money.

That's a very simplistic layman's view. On that basis no-one would want to buy property as cash is "worth" more. Buying players doesn't have a huge impact on the bottom line, particularly if they're on a long contract.

[Hedontplayforyou]

I think the structure that he's alluding to is John B and Garlick only getting paid if the club is successful, (hence them staying on the board) if ALK fail, then John B and Garlick get the club back.

Really?

[CaptJohn]

with the leverage on the club and it's cash assets now gone I suggest your share(s) is worth considerably less than the price the previous board achieved last week

My thoughts entirely. The small share holders have been ignored by the big boys. I could use stronger language but will refrain from doing so until these new guys have been given a chance to show us what they can do. Not holding my breath though.

[aggi]

Anyone more in the know have a clue about the structure of this loan etc etc or what Alan Pace was actually alluding to when he said we’d be amazed at how they’ve done it ....?

BenWickes?
DJW?
CT?
Chester Perry?

To name the ones I’m aware of sorry if I missed anyone or if you guys don’t want to divulge .

I guess the most obvious would be that a large part of repayment (both interest and principal) is deferred until the club is sold and funded through the sale proceeds.

Or could be that the loan will convert to equity somewhere down the line.

Plenty of scenarios but they're all wild guesses.

[claretandy]

Really?

It's all there in the Bloomberg article, ALK are paying them in installments, if the fail to pay then Garlick and John B get there shares back.

[KRBFC]

What happened to the Covid has took all our money narrative ?

It was clearly never true, I don’t know why some chose to make it up to excuse the lack of any spending to back the board, bizarre really.

[Gordaleman]

I guess the most obvious would be that a large part of repayment (both interest and principal) is deferred until the club is sold and funded through the sale proceeds.

Or could be that the loan will convert to equity somewhere down the line.

Plenty of scenarios but they're all wild guesses.

https://footballeconomyv2.blogspot.com/ ... -from.html

[Chester Perry]

What happened to the Covid has took all our money narrative ?

Covid has taken the money we could have spent on transfers and maintained an operational profit (at least for a short time.

I have previously posted that the length of time we have spent in the Premier League meant that there was now little room between Operational Cost and Operational Revenue, as out costs (principally wages, but also other costs and staff numbers have grown significantly) grew. This lead to a reduced capability to spend and a need to balance the wages of the squad by moving people out to bring new ones in. I t is this that allows newly promoted clubs to spend so much in the first couple of seasons as they adjust to the new revenues.

Last season would have seen us with record revenues, but for Covid as we were on schedule to break £150m for the first time (thanks to a new TV cycle and sponsorship/commercial revenue growth), That would have allowed us to spend in the summer window. As it is we will likely record less revenue than the previous 2 seasons (even for 13 month accounts).

and before you mention the cash pile as something to be spent, spending that on players would generate an operational loss, and as already posted elsewhere, it had seemed that was earmarked in part for some infrastructural project

[FactualFrank]

Anyone more in the know have a clue about the structure of this loan etc etc or what Alan Pace was actually alluding to when he said we’d be amazed at how they’ve done it ....?

BenWickes?
DJW?
CT?
Chester Perry?

To name the ones I’m aware of sorry if I missed anyone or if you guys don’t want to divulge .

Royboy seems to be the most well up on finances, but not seen him post in a while.

[NewClaret]

Covid has taken the money we could have spent on transfers and maintained an operational profit (at least for a short time.

I have previously posted that the length of time we have spent in the Premier League meant that there was now little room between Operational Cost and Operational Revenue, as out costs (principally wages, but also other costs and staff numbers have grown significantly) grew. This lead to a reduced capability to spend and a need to balance the wages of the squad by moving people out to bring new ones in. I t is this that allows newly promoted clubs to spend so much in the first couple of seasons as they adjust to the new revenues.

Last season would have seen us with record revenues, but for Covid as we were on schedule to break £150m for the first time (thanks to a new TV cycle and sponsorship/commercial revenue growth), That would have allowed us to spend in the summer window. As it is we will likely record less revenue than the previous 2 seasons (even for 13 month accounts).

and before you mention the cash pile as something to be spent, spending that on players would generate an operational loss, and as already posted elsewhere, it had seemed that was earmarked in part for some infrastructural project

I'm not sure I can understand your point, CP? If this is article is correct, we had £55m cash in bank at the point of the transaction? How could some of that not be used to fund recruitment?

Operational losses do occur in businesses and are not necessarily a bad thing since they can be used to reduce tax liabilities. In that sense,large profits are arguably worse when you consider the tax payable (at percentages far higher than those being derided as unaffordable on a loan).

P.S. We're obviously not certain that the article is correct, and I doubt it personally.

[claretandy]

Covid has taken the money we could have spent on transfers and maintained an operational profit (at least for a short time.

I have previously posted that the length of time we have spent in the Premier League meant that there was now little room between Operational Cost and Operational Revenue, as out costs (principally wages, but also other costs and staff numbers have grown significantly) grew. This lead to a reduced capability to spend and a need to balance the wages of the squad by moving people out to bring new ones in. I t is this that allows newly promoted clubs to spend so much in the first couple of seasons as they adjust to the new revenues.

Last season would have seen us with record revenues, but for Covid as we were on schedule to break £150m for the first time (thanks to a new TV cycle and sponsorship/commercial revenue growth), That would have allowed us to spend in the summer window. As it is we will likely record less revenue than the previous 2 seasons (even for 13 month accounts).

and before you mention the cash pile as something to be spent, spending that on players would generate an operational loss, and as already posted elsewhere, it had seemed that was earmarked in part for some infrastructural project

We could have bought the 2 or 3 players SD said we needed, fact.

[claretandy]

I'm not sure I can understand your point, CP? If this is article is correct, we had £55m cash in bank at the point of the transaction? How could some of that not be used to fund recruitment?

Operational losses do occur in businesses and are not necessarily a bad thing since they can be used to reduce tax liabilities. In that sense,large profits are arguably worse when you consider the tax payable (at percentages far higher than those being derided as unaffordable on a loan).

P.S. We're obviously not certain that the article is correct, and I doubt it personally.

This. Making a loss every now and then is no bad thing to offset against tax. As long as the money is spent well.

[dandeclaret]

I'm not sure I can understand your point, CP? If this is article is correct, we had £55m cash in bank at the point of the transaction? How could some of that not be used to fund recruitment?

Operational losses do occur in businesses and are not necessarily a bad thing since they can be used to reduce tax liabilities. In that sense,large profits are arguably worse when you consider the tax payable (at percentages far higher than those being derided as unaffordable on a loan).

P.S. We're obviously not certain that the article is correct, and I doubt it personally.

The one element overlooked here though, is surely that most businesses do not run at a 25-40% risk of losing 75-90% of income, without being able to reduce costs at a similar ratio?

[CrosspoolClarets]

I’m currently weighing up additional borrowing for my house (genuinely).

One part of my brain (let’s call it the Garlick part) is saying don’t get lumbered with debt and live within my means.

The other part of my brain (lets call it the ALK part) is saying it is a risk worth taking in an environment where the asset value may go up as a result and the debt may get eroded away by ever increasing inflation in a post Covid world, making my interest payments worth it.

Apologies to both sides of my brain if I have misrepresented them, but it seems apt and may explain why the old board didn’t do the same course of action the new ones are - mentality (neither necessarily better than the other, just different).

[NewClaret]

"This loan is a beautiful loan"

Proper funny, that.

There's been some funny posts on here today, by new posters too.

[ClaretLoup]

Now the dry powder has all gone won’t all new transfers have to be funded by borrowing unless they are balanced out by sales?

[KateR]

it's to early and simply not enough is known in terms of facts regarding the deal to make any meaningful predictions beyond the move from what we were to what we are, that is in terms of different people with different ideas running the club and that we are in debt because of the loan taken.

My experience over the last two decades says that a lot of takeovers and business transformations fail to meet the original business plan, numerous reasons for this, usually over optimistic plans and changes to personnel. I don't see MG and JB being instrumental in any of this and the future, there value is in the knowledge around the club, PL, FA. etc. There value will diminish quickly as AP and Co get on with the job, I would be shocked if they have any ties into the risk of failure meaning they take on the debt. Have seen it all to often where we looked at smaller competitors and thought if we owned them we could be great, followed by buying, retaining CEO and changing the practices/processes and the way business is done to the company model. The fact that the lead sales people left, plus the Operations Manager, meant that the plan went out the window, persevered for a few years and then sold on, as a multi $Billion company, funds were not really the issue and the buyout funds were internal but the loan was monitored closely with no room to default. This is just one small example of many, but there were successes also, rarely have I seen the original company exec's stay beyond two years, extremely rarely in fact, typically they are the bridge between the old and the new.

For BFC the loan will have an effect and that will need to be serviced and will be first in terms of the yearly plan. I would say you can delay in buying players, doing upgrades/infrastructure but you can't delay on your repayments, this means less money available to the club if all things were equal, which they are in Jan 21 compared to Dec 20. This is where the "new ideas" and the ability to generate extra revenue, over and above the loan repayment comes in, we will all see just how good this executive management team is in the near/mid term and I look forward to being amazed.

[Tall Paul]

But in what way is Burnley FC better off?

On 31st December we had £50m in the bank and no debt.
Now we have nothing in the bank and £80m debt.
Allegedly.

What have Burnley FC gained in exchange for that £130m cost?

An inter-company debtor probably. Although the £80m debt probably doesn't sit on the club's balance sheet but is secured on it's assets.

[dsr]

I’m currently weighing up additional borrowing for my house (genuinely).

One part of my brain (let’s call it the Garlick part) is saying don’t get lumbered with debt and live within my means.

The other part of my brain (lets call it the ALK part) is saying it is a risk worth taking in an environment where the asset value may go up as a result and the debt may get eroded away by ever increasing inflation in a post Covid world, making my interest payments worth it.

Apologies to both sides of my brain if I have misrepresented them, but it seems apt and may explain why the old board didn’t do the same course of action the new ones are - mentality (neither necessarily better than the other, just different).

The difference is that according to the Athletic, Burnley FC haven't borrowed money to improve the value of the club, they have taken out a loan to pass on to ALK so that ALK can pay its debt to Garlick. BFC get no apparent benefit from this loan.

[NewClaret]

The one element overlooked here though, is surely that most businesses do not run at a 25-40% risk of losing 75-90% of income, without being able to reduce costs at a similar ratio?

True, although, without wanting to be pedantic about your broader point, in year one it is much less as parachute payments pay more in the first year. I think it's 55% in year one, but accept it's a big reduction.

We also have other leavers to pull to control costs if we were relegated; I have been told that all BFC players wages reduce automatically if relegated, we tend only to only offer shortish contracts (presumably in part to offer cost flexibility) and of course we can sell players to generate income/reduce spend.

[Jacko]

The alarm bells are ringing, it's whether we want to hear them.

The new owners appear to have taken the cash out of the club and also piled on £ms in debt. To fnd their own interests. No amount of media presentation will change the fundamental truth of that. They may put money in later, or they may raise more elsewhere, but they have not done yet. What they have done is buy the club largely using the value of the club.

It's not illegal - it happens as a way of leveraged purchasing - but it stinks when purchasing assets of community value, which football clubs are.

Sunderland and Portsmouth are two sad tales that come to mind here. Understand why people want to hope for the best but I can't help but think it's all very worrying.