ALK Capital or Farnell/Elkashashy takeover

[Boss Hogg]

I’d rather get relegated with cash reserves, no debt and people running the club who are experienced at that level. Relegation with this level of debt, added Directors salaries and several million a year in interest payments is not that appealing.

[jrgbfc]

Every time i see or hear Alan Pace i can't help but think of the Simpsons episode where the smooth talking salesman turns up and flogs the gullible townsfolk of Springfield an expensive monorail system that they don't need and proves to be nothing more than a massive con!

[Spijed]

Well one thing about this saga is that we've come to the attention of some of the more heavyweight journalists.

It's worth bearing in mind that everyone has different risk profiles. Having some debt isn't necessarily a bad thing if it can be serviced and it generates more turnover than it costs. If ALK bump our revenues by £15m and the debt costs £5m per year then we're not in a bad place.

A leveraged buy-out certainly isn't my preferred route for a takeover but it isn't the end of the world if managed well.

Yes, it's likely that we'll struggle if relegated but, on the flip side, the new owners may have access to more sources of funds than if we'd been relegated previously. The relegation cushion we'd previously built up would only last so long as well, it would still have been important to bounce back quickly.

And, of course, we don't yet know the full picture. Is the equity in the holding company coming from cash or loans. How much has been taken out of the club, how big is the MSD loan? It might be worse than people think, it might be better.

I'm certainly not keen on the way this seems to have happened and I have yet to hear much of substance from our new chairman but it isn't time for panic stations yet. Maybe I'm a little more sanguine as I never expected American private equity to be anything but aggressive but some people are getting very much worked up.

Out of interest, how will stock market fluctuations affect us?

For example, will we be badly affected if there were a crash on Wall street?

[arise_sir_charge]

I already thought Pace was talking nonsense when he said it was like getting a mortgage , is it heck. If you don't pay your mortgage the bank will take your house. If these guys don't pay the debt than the bank will seize the clubs assets not theirs . They haven’t got a pot to p In. Where will they get that cash to pay the 65 million back on time ? There is only two ways , the way they did before ,sell all the players or flog the ground .

Errrrrrrrm.......who owns the club Dixie? It's their asset the bank will seize.

As I said on another thread, the people lining up to pile in, based on next to no understanding of the situation is bewildering.

Let's see how things pan out before casting judgements just 30 or so days in.

THERE IS NOTHING WE CAN DO TO CHANGE IT NOW ANYWAY!

[martin_p]

As I said further up, I thought we already knew we were being loaded with debt. It only seems to be an issue now that we haven’t spent any cash in the transfer window.

[kentonclaret]

No, it's become more of an issue now because the story is headline news in The Guardian sports pages.

The reason we didn't spend is because the pot is empty.

[northernpowerhouse]

Pace, who spent considerable time looking for a club ALK could buy, previously coming close to purchasing Sheffield United, argues that Burnley have great potential to grow commercially from shrewd recruitment of players, stadium improvements and wider marketing of the club.

The bit about shrewd recruitment of players is worrying. We've got one of the oldest squads in the division, minimal sellable assets and have barely signed a player in years. It's going to be a long time before we can make a profit from selling players. Not without gutting the squad and getting relegated anyway.

[arise_sir_charge]

I’d rather get relegated with cash reserves, no debt and people running the club who are experienced at that level. Relegation with this level of debt, added Directors salaries and several million a year in interest payments is not that appealing.

Yes, but the people everyone trusted had a different view.

People are talking as though relegation is inevitable this season.

The longer we stay in this division the less of an issue it is and you'd like to think we have at least 18 months left at the top table from this point in time.

It's far to early to judge any aspect of this deal.

By all means people can express some concern but some folk are acting like we are due in the High Court at lunch time.

[Volvoclaret]

As long as the season tickets stay frozen as we play Noblot in div 2. Bring out the buckets.

[martin_p]

No, it's become more of an issue now because the story is headline news in The Guardian sports pages.

But surely it can’t be news to any of the posters on here! I was only half keeping track of the takeover as I wasn’t keen, but even I knew what it entailed.

[THEWELLERNUT70]

It's apparent that there a media movement that wants this deal to fail for whatever reason, probably because of the perception of Burnley as a whole.

For example where was the opinion pieces when Spurs found themselves 1billion in debt and a debt that will take approximately 30 years to discharge at todays overinflated PL TV and prize money deals ?

[Sunny Cornwall]

From what I’ve read £98m was raised through the issuing of shares in the parent company. That means somebody somewhere believes in the business plan as they have parted with real money. I expect they are astute business people who know a lot more about business than the average football supporter. Give the new owners a chance. At the end of the day they haven’t invested to lose money!!

[dsr]

But surely it can’t be news to any of the posters on here! I was only half keeping track of the takeover as I wasn’t keen, but even I knew what it entailed.

What we didn't know was the the new owners' first action would be to take £90m or some other stupidly large amount, out of the club.

[Dixie Normous]

Errrrrrrrm.......who owns the club Dixie? It's their asset the bank will seize.

As I said on another thread, the people lining up to pile in, based on next to no understanding of the situation is bewildering.

Let's see how things pan out before casting judgements just 30 or so days in.

THERE IS NOTHING WE CAN DO TO CHANGE IT NOW ANYWAY!

No mate, the debt is secured against the clubs assets not theirs . They have no money so they can’t buy new players . In US they flogged a whole team to pay their debt .

[Devils_Advocate]

Everyone needs to calm down and not worry about people enjoying discussing a football related topic on a football messageboard.

People seem to be lining up to pile into people who want to discuss the topic when there's sod all we can do to change what people choose to discuss anyway!

[Dark Cloud]

We have to assume that these are very clever and shrewd business people and they know exactly what they're doing business wise, so in financial terms we may well not have been sold down the river. Only time will tell on that one, BUT us not spending a single penny in the January window, especially after the chairman making noises to the contrary is rather more worrying as it may well show they don't know enough about football and don't see how relegation can happen to a club, even one who just a few weeks before the end of a season can look pretty safe until injuries to key players hit home. Winning at Anfield may have been a mixed blessing as Mr Pace could have thought there was no need to stump up for any new players, but winning at Anfield gets you 3 points, same as beating Sheff Utd at home, no more and I'm not convinced they get how precarious our football position is.

[martin_p]

What we didn't know was the the new owners' first action would be to take £90m or some other stupidly large amount, out of the club.

We knew the club was valued at £200m and that they were funding the deal through borrowing. It’s hardly a surprise.

[dsr]

" and if three further instalments are not paid, there is a mechanism by which ALK’s shares in the club go back to the outgoing shareholders." Does that mean that Garlick and JohnB would be back in the driving seat and take on whatever amount of debt is at that point or just that they regain shares?

Garlick and JohnB would be back in the driving seat but they would not have to repay any money to the club. That money has gone.

The money that has been taken out and the new, expensive bank loan, have both been replaced by an equivalent amount of interest-free loan owed to BFC by ALK (or equivalent). If ALK can't pay the £35m to Garlick, then they won't be able to pay the £90m or whatever that they owe to BFC either.

ALK can only pay the loan back buy taking more money out of the club (directors fees etc.) or by selling the shares at a profit or at break even. Unfortunately, having taken £90m out of the club, the club is de facto worth £90m less so selling the shares at a profit in the short term is going to be tricky.

[dsr]

We knew the club was valued at £200m and that they were funding the deal through borrowing. It’s hardly a surprise.

I assumed they were borrowing money on their own account.

[arise_sir_charge]

Everyone needs to calm down and not worry about people enjoying, people enjoying discussing a football related topic on a football messageboard.

People seem to be lining up to pile into people who want to discuss the topic of people piling into people, when there's sod all we can do to change what people choose to discuss anyway!

See DA, you're just doing what everyone else is doing even though you seemingly don't realise you're doing it.

As I have said multiple times, discussing is fine and expressing concern is equally fine but folk are casting quick judgements without very limited to no knowledge or understanding of how these things work.

[ksrclaret]

We knew the club was valued at £200m and that they were funding the deal through borrowing. It’s hardly a surprise.

Does that make it any more palatable, martin_p? That some people knew/ suspected it was going to happen anyway?

[NewClaret]

As owners it was their money though, not ours, yes it’s disappointing but they’ve not actually done anything wrong

Not suggesting they've done anything illegal at all, but I would position it as immoral.

It's not that they have ultimately taken some cash out (they would no doubt say that they were only withdrawing what they might've done in dividends/salary over the years anyhow - which would be a valid argument), it's the fact that they appear to have done this at the expense of supporting Dyche and developing the team/ground/facilities.

[arise_sir_charge]

No mate, the debt is secured against the clubs assets not theirs . They have no money so they can’t buy new players . In US they flogged a whole team to pay their debt .

I'll keep it simple, who owns the club?

[Belgianclaret]

It is was it is: a leveraged buyout pure & simple.

Is it unlawful? Unfortunately not.

Is it advisable? that depends on whether your buyer or seller...I know on which side I'd rather be at the moment.

[wilks_bfc]

We knew the club was valued at £200m and that they were funding the deal through borrowing. It’s hardly a surprise.

I don’t think people realised that the funds that were already in the club were being taken out to pay the outgoing shareholders.

[dsr]

Because we've not been in debt for sometime people are getting anxious, I get that but I'm sure it's sustainable. It's easy to dismiss the new owners and there ideas of how the club should progress, however, perhaps we should get behind them and at least give them an opportunity to move us forward. Time will tell.

I dare say it is sustainable. Just as if you are living your own life with £50k in the bank, and along comes someone with a bit of financial jiggery-pokery and takes your £50k and takes out a mortgage so you owe another £50k, you may find that to be sustainable. But it doesn't make it a good thing.

Think about relegation. If we had got relegated last season, we would have had a £50m cash pot to rebuild with. If we get relegated this season, we have no cash and we would have to repay a £50m loan before we start thinking about signing players. Is that sustainable?

I am willing to give the new owners an opportunity. An opportunity to tell us how this takeover deal has worked. It seems to me that they, along with Garlick and John B, are in it purely for the money and have little care what happens to the club. Let them take the opportunity to explain why that is wrong.

[arise_sir_charge]

Garlick and JohnB would be back in the driving seat but they would not have to repay any money to the club. That money has gone.

Yes, it's primarily gone into the pockets of the two men who end up back in charge. People seem to be missing that bit.

[martin_p]

Does that make it any more palatable, martin_p? That some people knew/ suspected it was going to happen anyway?

No it doesn’t, but as I said I haven’t been a fan of the takeover from the start. What I don’t understand is people only getting upset about it because it’s been in a newspaper when it’s been known for weeks.

[dsr]

I'll keep it simple, who owns the club?

Simple answer: ALK. They are perfectly entitled, legally, to sell all the assets and shut the club down.

That doesn't mean we have to like it.

[Bordeauxclaret]

Everyone needs to calm down and not worry about people enjoying discussing a football related topic on a football messageboard.

People seem to be lining up to pile into people who want to discuss the topic when there's sod all we can do to change what people choose to discuss anyway!

Yep, this “we can influence it anyway” stance it’s a bit weird on a football messageboard.
We can’t influence transfers, tactics, subs etc either but the very point of this messsgeboard is to discuss matters related to BFC.

[Dixie Normous]

I'll keep it simple, who owns the club?

Mate read the details , the debt is mortgaged against the clubs assets , it’s there in black and white , if they don’t pay up on the debt then it falls on club not them.

[Woonderbah]

To give things some perspective.. Nixon has said on Twitter that our bid for Collins was one of the highest of the window.. time will tell if Stoke's valuation is realistic but it seems we were definitely trying to add to the squad.

And surely anyone who has bought a property is immediately up to their neck in debt. However, there's a structured repayment in place.
Just as a house buyer needs to keep their income, BFC are now reliant more than ever to keep its place at the top table and there are too many examples of what happens if we don't.
There's an important summer ahead.

[randomclaret2]

I dare say it is sustainable. Just as if you are living your own life with £50k in the bank, and along comes someone with a bit of financial jiggery-pokery and takes your £50k and takes out a mortgage so you owe another £50k, you may find that to be sustainable. But it doesn't make it a good thing.

Think about relegation. If we had got relegated last season, we would have had a £50m cash pot to rebuild with. If we get relegated this season, we have no cash and we would have to repay a £50m loan before we start thinking about signing players. Is that sustainable?

I am willing to give the new owners an opportunity. An opportunity to tell us how this takeover deal has worked. It seems to me that they, along with Garlick and John B, are in it purely for the money and have little care what happens to the club. Let them take the opportunity to explain why that is wrong.

" Lifelong Burnley fans" , such as Garlick and Banaskiewicz , in it purely for the money ??

[dsr]

Our new owners don’t have any money - our old ones didn’t.

We’ve not signed anybody this window - didn’t happen under our old ones.

Our new owners have been trying to sell shares and raise money - wait till you hear what Garlick and John B have been up to the last 18 months.


The debt is a concern. But I’m not a financial expert and I’d wager that a lot of you worrying about this aren’t either. Some people on here know a lot and they’ve written well, but even they are admitting this could go either way.

If you’ve made your mind up based on one transfer window in the midst of a pandemic you’re an idiot. Sorry to be so brusque, but you are. Some of the stuff I saw on Twitter last night was crackers.

Do you support a balance sheet or a football team?

If we had got relegated last year, we would have gone down with a pot of £50m cash.

If we get relegated this year, we go down with no cash and a large bank loan to repay.

You don't need to be a financial epxert to see that is a bad thing. Having money is better than owing money. It's as simple as that.

[arise_sir_charge]

Mate read the details , the debt is mortgaged against the clubs assets , it’s there in black and white , if they don’t pay up on the debt then it falls on club not them.

Jesus wept, they own that club........use your mortgage analogy, what is your mortgage secured against? It's secured against the house the bank have leant you the money to buy. That is your asset! In this instance the debt is secured against the football club, that being the thing MSD have leant them the money to buy.....that is their asset.......it's the same thing.

[Sproggy]

As owners it was their money though, not ours, yes it’s disappointing but they’ve not actually done anything wrong

But it does seem to indicate why Garlick wouldn't sanction transfers during the protracted sale period. The club has been treading water for 2 years with cash in the bank.

[ksrclaret]

To give things some perspective.. Nixon has said on Twitter that our bid for Collins was one of the highest of the window.. time will tell if Stoke's valuation is realistic but it seems we were definitely trying to add to the squad.

And surely anyone who has bought a property is immediately up to their neck in debt. However, there's a structured repayment in place.
Just as a house buyer needs to keep their income, BFC are now reliant more than ever to keep its place at the top table and there are too many examples of what happens if we don't.
There's an important summer ahead.

All true. I would say it's a hell of a lot easier for your average homeowner to keep themselves in employment than it is for a club of the size of BFC to keep themselves in the Premier League for the rest of its days. The previous owners built an ethos around BFC's time in the PL not lasting forever.

Blimey. What a gamble. What a mess.

[dsr]

" Lifelong Burnley fans" , such as Garlick and Banaskiewicz , in it purely for the money ??

Apparently so. I didn't believe they were, and it's possible that they originally didn't intend to be, but the evidence as of December 2020 is that they wanted the money and the club could go whistle.

[BigChaCha]

I have wondered why the Cheshire cat has had a grin from ear to ear, this last few transfer windows but now it's obvious!... No wonder, he's been so happy and has become a fat cat by fattening up the goose!

[Dixie Normous]

Jesus wept, they own that club........use your mortgage analogy, what is your mortgage secured against? It's secured against the house the bank have leant you the money to buy. That is your asset! In this instance the debt is secured against the football club, that being the thing MSD have leant them the money to buy.....that is their asset.......it's the same thing.

But if it goes tits up they walk away with no debt on them and the club has to pay up , stop your rudeness mate, this is a discussion.

[martin_p]

I assumed they were borrowing money on their own account.

Back end of September 2020 was the first reference on the takeover thread of this being a Glazier/Man United type deal. It’s been apparent for a while.

[GodIsADeeJay81]

Apparently so. I didn't believe they were, and it's possible that they originally didn't intend to be, but the evidence as of December 2020 is that they wanted the money and the club could go whistle.

They built up a business and sold it on when it was at its peak and they'd reached their limitations for moving it forward again.
Their business decisions, for which they took no money during their tenure despite stupid occasional claims on here, led to the club being a financial stable club with a huge revenue in the top flight of English football.

Fan or not, in a business sense you'd be hard pressed to argue with the sale of this particular business.

[martin_p]

" Lifelong Burnley fans" , such as Garlick and Banaskiewicz , in it purely for the money ??

Were we expecting them to give away their shares? Some people have wanted them to ‘step aside’ for some time now, how did they think that was going to happen without them selling their shares?

[arise_sir_charge]

But if it goes tits up they walk away with no debt on them and the club has to pay up , stop your rudeness mate, this is a discussion.

Not being rude, just frustrated that you can't seem to link the fact that it is them that own the club, their name above the door and all over companies house etc.

As directors, there will be multiple penalties if it goes tits up, in a similar fashion to if you don't pay your mortgage etc.

[Longsidelenny1882]

Look at all the money we are saving with the lads out on loan it’s a start uptheclarets

[tim_noone]

Not sure this article says we're in £90m debt?

It says £60m + MG/JB have run off with £30-£40m of the cash in the bank.

No.........its been stated many times on here they take nothing from the Club....

[Dixie Normous]

Not being rude, just frustrated that you can't seem to link the fact that it is them that own the club, their name above the door and all over companies house etc.

As directors, there will be multiple penalties if it goes tits up, in a similar fashion to if you don't pay your mortgage etc.

But it’s the same levered buy out as many have seen, it’s not a mortgage on their assets at all , if they can’t pay they will walk with no penalties and clubs left with the debt

[randomclaret2]

Were we expecting them to give away their shares? Some people have wanted them to ‘step aside’ for some time now, how did they think that was going to happen without them selling their shares?

Its more the outcome, the financial predicament the club now appears to be in, heavily indebted whilst they personally appear to have benefitted enormously, that sits rather uneasily with the " lifelong supporters " tag.

[Hipper]

Our new owners have been trying to sell shares and raise money - wait till you hear what Garlick and John B have been up to the last 18 months.

What's this mean?

[ksrclaret]

Were we expecting them to give away their shares? Some people have wanted them to ‘step aside’ for some time now, how did they think that was going to happen without them selling their shares?

Again, isn't the issue here that they've taken the clubs money as their pay out? Rather than a pay out from the new guys?

If that is the case - which although not certain yet, every indication seems to be pointing that way - then questions about why that level of "cash reserve" was built up for so long whilst very little investment was made on the pitch become very relevant.

All valid questions, in my opinion. I'd certainly be interested in the answers if they were ever forthcoming.