ALK Capital or Farnell/Elkashashy takeover

[Tall Paul]

Hi TP, you ok, now, that is not the nominal value of the shares (1p) but the amount subscribed for the shares that determines the share capital?

Yes, I've acknowledged my error. I suppose I'm not used to seeing big share premium accounts in the companies I deal with.

[aggi]

Hi aggi, I know anyone can buy shares with money that they've borrowed..... But, we know that the lender will always want to know how the money they lend will be repaid and, in the first instance, without the need for the lender to exercise any security that supports the borrowing. Anyone borrowing money to buy shares will always face a sizeable "haircut" against the value of the shares. I'd be surprised if it was possible to borrow money with only a 50% haircut if the borrowed money was to be spent on buying shares in a football club.

Agree, no clarity on the information in the public domain. I think we can conclude that Alan Pace is correct when he say's that The Athletic (and others) have not got their facts right.

Exciting times.

UTC

Well I guess the question is which facts they have not got right? My suspicion is that the Athletic have got the majority of the facts right but may be a bit out on the numbers but I don't think there's anything out there that allows us to conclude either way.

[Paul Waine]

Well I guess the question is which facts they have not got right? My suspicion is that the Athletic have got the majority of the facts right but may be a bit out on the numbers but I don't think there's anything out there that allows us to conclude either way.

Hi aggi, where does Athletic say that Kettering Capital has got £98 million share capital? Isn't that a big, big gap in their reporting of the financing of ALK's acquisition of Burnley FC? That's a very material omission in their reporting, isn't it?

Let's see if Athletic publish an update on their report - now that there is some real information in the public domain.

Exciting times.

UTC

[aggi]

Hi aggi, where does Athletic say that Kettering Capital has got £98 million share capital? Isn't that a big, big gap in their reporting of the financing of ALK's acquisition of Burnley FC? That's a very material omission in their reporting, isn't it?

Let's see if Athletic publish an update on their report - now that there is some real information in the public domain.

Exciting times.

UTC

A load of equity appearing in a holding company doesn't prove or disprove the details of how the takeover was funded. We don't even know if it's directly related to the club, maybe it's all related to AI scout.

Elements of the Athletic's story are certainly correct but plenty isn't verified either way with neither the journalist or the Burnley board providing anything definitive.

[Paul Waine]

A load of equity appearing in a holding company doesn't prove or disprove the details of how the takeover was funded. We don't even know if it's directly related to the club, maybe it's all related to AI scout.

Elements of the Athletic's story are certainly correct but plenty isn't verified either way with neither the journalist or the Burnley board providing anything definitive.

Hi aggi, Kettering Capital has £98m share capital paid in on the same day that ALK announce the acquisition of Burnley FC.... and you think it may have something to do with AIScout?

OK.

Exciting times.

UTC

[aggi]

Hi aggi, Kettering Capital has £98m share capital paid in on the same day that ALK announce the acquisition of Burnley FC.... and you think it may have something to do with AIScout?

OK.

Exciting times.

UTC

It may well be to do with the club but my point is that there is nothing definitive out there that allows us to conclude that The Athletic (and others) have not got their facts right.

[Foreverly Claret]

Apologies if this has already been flagged up .My mate is a big City fan and he's just sent me a copy of an article which appears in the latest edition of the City fanzine King of the Kippax .It's by a guy called Colin Savage and I thought it was well worth reading .sadly I'm not very techy so I don't know how to import it to the Bee Hole End but I'm sure anyone interested will be able to access it through the usual channels .The writer is an accountant so you'd hope he knows his stuff but I found it a very objective view from his neutral viewpoint.

[Chester Perry]

Apologies if this has already been flagged up .My mate is a big City fan and he's just sent me a copy of an article which appears in the latest edition of the City fanzine King of the Kippax .It's by a guy called Colin Savage and I thought it was well worth reading .sadly I'm not very techy so I don't know how to import it to the Bee Hole End but I'm sure anyone interested will be able to access it through the usual channels .The writer is an accountant so you'd hope he knows his stuff but I found it a very objective view from his neutral viewpoint.

Savage has a long running reputation for his financial analysis on City especially - he has also done a lot of defence of city and their practices down the years

if you have a webpage with the article just cop and post the page address/url

[claretandy]

From Companies House filings: Kettering Capital Limited issued 99,000 shares, fully paid amount (rounded) £98,000,000 (£98 million) on 30th December. Notified to Companies House 26-Jan-2021.

That's £88 million more than the various 3rd party media reporters were saying - and that our Chairman, Alan Pace, had got their "facts" wrong.

It's not just a new set of Memorandum and Articles of Association.

Exciting times.

UTC

Still nothing from the usual suspects on Twitter on this, yet.

[NewClaret]

Hi aggi, Kettering Capital has £98m share capital paid in on the same day that ALK announce the acquisition of Burnley FC.... and you think it may have something to do with AIScout?

OK.

Exciting times.

UTC

Hi Paul,

I’ve not been following this thread so much recently, but if I understand it correctly, we’re saying Kettering owns Calder Vale, which owns the BFC assets? Then there’s been a £98m investment in Kettering, but Calder Vale has a loan secured against the BFC assets. So someone, somewhere has stumped up £98m, with the rest of the purchase funded by debt?

If so, certainly an improvement in the position than where we seemed to be a few weeks ago.

Exiting times.

NC

[Chester Perry]

Hi Paul,

I’ve not been following this thread so much recently, but if I understand it correctly, we’re saying Kettering owns Calder Vale, which owns the BFC assets? Then there’s been a £98m investment in Kettering, but Calder Vale has a loan secured against the BFC assets. So someone, somewhere has stumped up £98m, with the rest of the purchase funded by debt?

If so, certainly an improvement in the position than where we seemed to be a few weeks ago.

Exiting times.

NC

this money will have most probably been used to fund the initial payment for the shares in BFC holdings - there is a high probability that the monies borrowed from MSD form the greater proportion of these funds

[NewClaret]

this money will have most probably been used to fund the initial payment for the shares in BFC holdings - there is a high probability that the monies borrowed from MSD form the greater proportion of these funds

So, MSD lent money to Calder Vale, who we think gave it to Kettering to buy the shares in BFC? I’m completely lost, I have to say. Although maybe that’s the point.

[WalkdenClaret]

So, MSD lent money to Calder Vale, who we think gave it to Kettering to buy the shares in BFC? I’m completely lost, I have to say. Although maybe that’s the point.

I guess you're right NewClaret, big money buys don't need to be complicated unless there is a NEED for it to be complicated. (your words painted a picture of a tree or a pyramid...)

My fag packet reads 98M to be the MSD loan plus the cash plundered from the club's 'essential rainy day mattress', the deficit between 98m and quoted price is the bit that Pace is withholding / 3 year instalments.

If the current squad stays strong, and we can nick a few cheapie contracts in the summer, bed a couple of youngsters, fingers crossed, we can ride the storm of Covid losses / new interest debt payments and we may end keeping our place in the prem league and not losing control of the ground and Gawthorpe.

Exciting times (fingers crossed)

[Paul Waine]

So, MSD lent money to Calder Vale, who we think gave it to Kettering to buy the shares in BFC? I’m completely lost, I have to say. Although maybe that’s the point.

Hi New, I recommend you take a look at the information filed on Companies House - there's a little bit more on the site today.

We are all familiar with Burnley FC Holdings Limited being the owner of Burnley Football & Athletic Company. Also Longside Properties.

There are now details of the 5 new directors of these companies, along with Mike G and John B remaining of the original directors.

Calder Vale is the owner of Burnley FC Holdings.

Kettering is the owner of Calder Vale.

At this stage there's no filing that details the person(s) of significant control of Kettering.

Note that Alan Pace is listed as director of 4 companies under the name "Alan Pace" - and he's also listed as director of 3 further companies under the name "Alan Gary Pace."

Exciting times.

UTC

[aggi]

Hi New, I recommend you take a look at the information filed on Companies House - there's a little bit more on the site today.

We are all familiar with Burnley FC Holdings Limited being the owner of Burnley Football & Athletic Company. Also Longside Properties.

There are now details of the 5 new directors of these companies, along with Mike G and John B remaining of the original directors.

Calder Vale is the owner of Burnley FC Holdings.

Kettering is the owner of Calder Vale.

At this stage there's no filing that details the person(s) of significant control of Kettering.

Note that Alan Pace is listed as director of 4 companies under the name "Alan Pace" - and he's also listed as director of 3 further companies under the name "Alan Gary Pace."

Exciting times.

UTC

It would be really good if Companies House could somehow assign a serial number to directors. The difficulty in searching consistently by name has bugged me for years.

Anyway, I see that Calder Vale Holdings (who are owned by Kettering Capital) has also issued some shares (I assume financed by Kettering Capital). Only £10m has trickled down into that company though.

[Mala591]

Are our new American directors taking a ‘salary’ out of our club or are they hoping to earn a few bob from share dividends?

Does anyone know?

[KateR]

Hi New, I recommend you take a look at the information filed on Companies House - there's a little bit more on the site today.

We are all familiar with Burnley FC Holdings Limited being the owner of Burnley Football & Athletic Company. Also Longside Properties.

UTC

Paul, where do you see VSP sitting in this since you never mention them, they were reported to own 84% of Burnley FC?

https://www.burnleyfootballclub.com/con ... -takoeover

[Chester Perry]

Are our new American directors taking a ‘salary’ out of our club or are they hoping to earn a few bob from share dividends?

Does anyone know?

It is probable that at least 1 will take a salary, given his living in the area - equally there is the option to charge consultancy fees or take a dividend - I wouldn't be surprised to see at least 2 of those options in action in the future accounts (not the next set due which will reflect last season)

[Paul Waine]

Paul, where do you see VSP sitting in this since you never mention them, they were reported to own 84% of Burnley FC?

https://www.burnleyfootballclub.com/con ... -takoeover

It's a great question.

Companies House lists Velocity Sports Partners Limited, with Alan Pace and others as directors. However, VSPL is not mentioned in the "person with significant control" filings.

Of course, we know that Velocity Sports Partners were reported as the entity acquiring BFC.

I've googled "Velocity Sports Partners" - there's a report in the Washington Times that reports the takeover.

My expectation is that Velocity Sports Partners is the name of a US entity. Who knows, it may be a US LLP. Maybe it sits above Kettering Capital Limited, either directly, or with one or more other entities. Maybe "persons of significant control" filed for Kettering is in the process of being updated - 26-Oct-2020 the filing says "The company knows or has reasonable cause to believe that there is no registrable person or registrable relevant legal entity in relation to the company." Maybe there is some information in the way 50,000 shares were allotted for £200 and 49,000 for £1795.918?

I'm assuming that "significant control" filings apply to non-UK entities.

Exciting times.

UTC

[brunlea99]

I've updated the Magic Money Tree topic with a link to the ALK takeover:

An interesting article from Sportico on the ALK takeover:

https://www.sportico.com/business/sales ... 234621513/

[Chester Perry]

I've updated the Magic Money Tree topic with a link to the ALK takeover:

An interesting article from Sportico on the ALK takeover:

https://www.sportico.com/business/sales ... 234621513/

That is pretty close to what some of us have been saying on this thread, the only thing that is missing and really feeds into the risk element of that article is the short and mid-term pandemic influence finance problem for the Premier League and European football.

[Goalposts]

ALK CAPITAL BUYS BURNLEY WITH AGGRESSIVE DEBT STRUCTURE, DOUBTS EXIST ABOUT THEIR ABILITY TO SERVICE LOANS

Back on Dec. 31, Alan Pace’s ALK Capital closed on its acquisition of the English Premier League club, Burnley F.C. The deal, which reportedly valued the Lancashire-based team at roughly $271 million, was said to have included an upfront payment in the neighborhood of $140 million—the bulk of which came from a loan provided by Michael Dell’s MSD UK Holdings and equity taken out of the team itself. ALK Capital declined to comment on the terms of the loan or the sale saying it is “a private matter.” But if accurate, it’s certainly fair to wonder—as one English Football League club executive did—if a group “that couldn’t really afford [the club] and bought the business on a particularly aggressive debt structure” will be able to service the notes. For the record, Pace has publicly stated the loans are “absolutely reasonable and sustainable.”

Our Take: It’s important to understand that prior to the Burnley sale, no EPL ownership group had managed to unload a controlling stake in years. An influx of Chinese capital in the middle of the 2010s sent club valuations skyrocketing and a price imbalance has existed ever since. The dearth of interested buyers—particularly during the pandemic—may help explain why outgoing majority owner Mike Garlick agreed to the heavily levered deal.

U.S. leagues maintain all sorts of rules—including debt limits—to ensure their teams remain financially solvent (see: the Dodgers attempt sell off future TV rights). Those same controls do not exist in European football, which explains why ALK was allowed to structure the Burnley deal the way it did (see: little of its own money). The Football Association is not particularly concerned if any one club goes bankrupt (as several throughout history have) because the English system is “open.” It simply becomes next man up.

High-interest loans are not uncommon in sports—at least on the operational side of the business. While you won’t see NFL or NBA teams taking them out (COVID-19 aside, franchises in those leagues operate at break-even or in the black), NHL clubs hurting financially will borrow beyond the league’s credit facility (think: the Arizona Coyotes of the world). MSD Capital has also lent a handful of European football clubs money over the last year.

To be clear, borrowing money to fund the purchase of a sports team is not necessarily a bad idea. The issue here is the amount of money ALK borrowed (said to be about $82 million from MSD; it’s unclear how much was borrowed from the club’s own bank account) and the interest rate they’re believed to be paying (between 9.5-12%). European soccer clubs have been bought on debt before (see: Manchester United). But a club like MANU isn’t going to get relegated. It simply has greater resources than most. If Burnley stumbles, it is headed to The Championship. It’s unclear how ALK would manage to pay the loans back if the Clarets dropped down a division. Remember, relegation comes with a dramatic drop in revenues. The team’s television money alone would fall from roughly $130 million/year to about $4 million/year.

Burnley, a perennial outperformer on the pitch, has been profitable off it in recent years. And should the club manage to remain in the Premier League, ALK is unlikely to incur any problems meeting its debt obligations. “If they continue running the team the way it has been run (i.e. cost-efficient) and they remain in the Premier League for the next five years, the business will be able to service the debt for the new owners, and they’ll come out of this deal OK,” the EFL club executive said.

Still, that is a risky bet to make—even if ALK only invested a relatively nominal amount of its own capital. Three teams are relegated every year and Big Six aside, even the best-run clubs eventually find themselves playing on the Championship level (see: Aston Villa and Newcastle circa 2015-2016). If Burnley suffers an unfortunate on-field setback, “[ALK] is in big trouble. Even without debt, relegation is a massive problem when you have Premier League infrastructure and payroll,” the EFL club executive said from experience.

Mike Smith (Executive Partner, ALK Partners) agreed that in “many cases, with many clubs,” relegation threatens the business model. “You see a lot of balance sheets and a lot of [times it] is pretty ugly. And for that reason, for many, many football clubs, doing [a heavily levered deal] is not feasible or viable.” The ALK Capital partner says the difference with Burnley is that the team is being run with sustainability in mind (think: developing instead of buying players). Prior to buying Burnley, ALK kicked the tires on Sheffield United. “And Sheffield was a Championship club at the time. So, we actually developed a profitable business model that could function at a Championship level.” While it’s no doubt the club’s intention is to remain in the Premier League, Smith says Burnley is being structured in a way that the debt can be sustained at either level. The EFL club executive we spoke to had his doubts about achieving profitability in The Championship.

ALK reportedly agreed to turn the franchise back over to the outgoing shareholders should they fail to make one of the three deferred payments remaining on the club, so it’s fair to wonder why MSD would lend the money if there was a chance of default on the loan. Requests for comment went unanswered. But the EFL club executive suggested the loan is almost certainly secured by being “first out on parachute payments”—money designed to help clubs transition from a Premier League to a Championship League budget.E

[Chester Perry]

This is already on two other threads

[randomclaret2]

Who is the unnamed " English Football League Club executive "...Madame Rao ?

[ksrclaret]

Ah well. At least Garlick and the other directors have been remunerated beyond their wildest dreams.

[fatboy47]

Exciting times.

[arise_sir_charge]

Another day and another unnamed source second guessing and offering an opinion without knowing any detail. This will now be passed off as fact by some on here.

Infuriating times!

[fatboy47]

"" For the record, Pace has publicly stated the loans are “absolutely reasonable and sustainable.” ""

Phew! That's OK then.

[KRBFC]

and why do you think no signings have been made? We are skint, up to our neck in debt and cuts have to be made.

[arise_sir_charge]

and why do you think no signings have been made? We are skint, up to our neck in debt and cuts have to be made.

Bore off.

[Granny WeatherWax]

ALKs business model is based on championship revenues so find it hard to believe we couldn't service the loan at current.

[Chester Perry]

Can this please be merged with the takeover thread

- there is nothing all that new here, all of this has been discussed on that thread

[Nonayforever]

Well Goalpost,

You have certainly discovered something to shout about there !

[Jakubclaret]

Ah well. At least Garlick and the other directors have been remunerated beyond their wildest dreams.

I doubt that some on here robustly claim that MG & the other directors have never been paid & have worked for years for nothing.

[The Enclosure]

My head hurts.

[KRBFC]

Bore off.

I was very much excited for the takeover now it looks like a risky disaster waiting to happen, saddled with huge debt and relying on TV income to service that debt and the astronomical interest on top. The club is pretty much buying itself new owners for £50-90M, why don't ALK pay off the debt out of their own pockets? It should be their debt, not hung over the clubs head with the clubs future on the line.

Where is the transfer budget? who is funding these transfers? more loans?


I thought Pace wasn't a gambling man, signing nobody this window is gambling, saddling the club with unsustainable debt in the Championship is gambling.

[Chester Perry]

ALKs business model is based on championship revenues so find it hard to believe we couldn't service the loan at current.

I would be extremely interested to see that model in the current financial climate, given the scale of known rebates (£330m), non payments (£160m), reduced payments (£160m - £175m this season on the China tv deal), yet to be agreed rebates on this season, and the the yet to be concluded China TV deal next season (originally booked at £185m) - all of which will be reflected in Parachute Payments which the Premier League says will be impacted by the same formula as used for Promoted and Premier League clubs

I will also add there is a prospect of flat or declining revenues in the next TV cycle, which will be directly reflected in Parachute Payments

Then there is the more existential threat from the fallout of Project Big Picture the Premier Leagues own Strategic review, which is being done to prepare for the government's football review which may or may not lead to the introduction of a Football regulator - who may then make rules on the distribution of football monies including the removal/reduction of parachute payments on the grounds of sporting interest.

The other point about the strategic review is to prepare it for the demands being made in Europe for the revamped UEFA club competitions post 2024, there is a huge push to reduce the Premier League to 18 teams - it would be much harder for a club like ours to stay in an 18 team league. Those same pressures also wan to see the abolishment of the League Cup - over 60% of all EFL tv revenues come from the League cup

There is plenty to ponder in that model of being ok in the Championship with the debt to service

[fatboy47]

"" The club is pretty much buying itself new owners for £50-90M, why don't ALK pay off the debt out of their own pockets?""

ALK have barely put enough money into this to buy one of Tarkowski's legs.

[Duffer_]

"" For the record, Pace has publicly stated the loans are “absolutely reasonable and sustainable.” ""

Phew! That's OK then.

Chill out!! I was initially a bit sceptical about relying on the words of someone who was motivated to make it sound OK but then I remembered...it's OK because, as many have told us, MG would only ever act in the best interests of the club. He would continue to strive to better our club for the benefit of our fans and our community. No way that guy would put personal gain above those things, surely??!!

All is for the best in this best of all possible clubs.

[Chester Perry]

Chill out!! I was initially a bit sceptical about relying on the words of someone who was motivated to make it sound OK but then I remembered...it's OK because, as many have told us, MG would only ever act in the best interests of the club. He would continue to strive to better our club for the benefit of our fans and our community. No way that guy would put personal gain above those things, surely??!!

All is for the best in this best of all possible clubs.

Then there is the possibility that Mike believed the single most important thing was for the club to keep Dyche (it is a popular notion after all), which wasn't happening if he stayed in charge so he took the least worst option on the table

[quoonbeatz]

The dynasty starts here

[quoonbeatz]

La Spezia have had some nice kits over the years.

[bodge]

Interesting quoon, are we going to do what Watford did with Udinese and tie in with an Italian club ?

Big container port La Spezia, don't know owt else about it.

[quoonbeatz]

First ever season in Serie A this year so not quite an Udinese but widely acknowledged as everyone's favourite Italian underdog.

[Chester Perry]

lovely, are we now going to have our own football farm too - FIFA should have put a stop to that idea years ago, now it is more or less impossible to do so. Anyone know anything about financial registrations in Italy and understands all the Italian legal and financial terminology? love to know how that is being financed

They are also in a relegation tussle, this being their first season ever in Serie A, who will be the lead team in the group if we are relegated. Another small club punching above their weight

[dandeclaret]

First ever season in Serie A this year so not quite an Udinese but widely acknowledged as everyone's favourite Italian underdog.

When in Rome quoon........ il preferito di tutti sotto il cane

[KRBFC]

So we are buying a new football club, brilliant. Just maybe ALK could focus on Burnley for now, doubling their work already it seems.

[Nonayforever]

lovely, are we now going to have our own football farm too - FIFA should have put a stop to that idea years ago, now it is more or less impossible to do so. Anyone know anything about financial registrations in Italy and understands all the Italian legal and financial terminology? love to know how that is being financed

They are also in a relegation tussle, this being their first season ever in Serie A, who will be the lead team in the group if we are relegated. Another small club punching above their weight

Don't be surprised if MSD are involved.

[Chester Perry]

Don't be surprised if MSD are involved.

deliberately did not mention them - if this is true then the finances of ALK are very highly leveraged, I have been tracking the Serie A finances more this season and their TV rights negotiations are not going to plan at the moment, and a portion of that goes to Private Equity of the top - all in the MMT thread

[IanMcL]

A very prudent local ownership, running the club on a very tight financial basis, whilst putting money away for a rainy day...even with aspirations of replacing the Cricket field stand.

Then these same folk, stash their pockets with borrowed money, entirely at the expense of the club they invested in on a very careful basis!

The manager has been asking for a limited borrowing, against assets, to strengthen said assets.

Instead, that has been done, big time, with the winners being the former (mostly still present) directors.

That does not say much for Mr G or Mr B or am I being too harsh on them? What are they planning for their new excessive gains?