Alan Nixon on ALK, worrying

[CrosspoolClarets]

You obviously haven’t seen the league table & grasped the impact of relegation.

Not relevant to my post.

If we go down we may have a fire sale, but their finances are better protected by using parachutes to get back up.

In the meantime we are 4/7 with Skybet to go down, Newcastle only slightly better, so the odds of a profit for ALK are better when going full tilt at survival, relegation would be worse for them but even then there is a chance we bounce back.

If we stay up, which I expect, where we have been in the league is of no consequence. Nor is the buyout structuring, as long as the TV money rolls in. Not ideal, but we are not at risk as fans. We have more chance of staying up under ALK because they are more willing to splash out.

It will be roll on next season with a bit of luck.

[Jakubclaret]

Not relevant to my post.

If we go down we may have a fire sale, but their finances are better protected by using parachutes to get back up.

In the meantime we are 4/7 with Skybet to go down, Newcastle only slightly better, so the odds of a profit for ALK are better when going full tilt at survival, relegation would be worse for them but even then there is a chance we bounce back.

If we stay up, which I expect, where we have been in the league is of no consequence. Nor is the buyout structuring, as long as the TV money rolls in. Not ideal, but we are not at risk as fans. We have more chance of staying up under ALK because they are more willing to splash out.

It will be roll on next season with a bit of luck.

I admire your optimism regarding the money being reinvested back into the club.

[Paul Waine]

So, if ALK defaulted on the loans to JB / MG but not MSD you are suggesting that theoretically MG /JB would be contractually allowed to take their shares back but presumably would have to incur the liability of the 60 million pound loan from MSD.

In other words JB / MG would effectively have borrowed 60 million quid from MSD to pay themselves and in turn the money would be secured by the assets of Burnley Football Club.

Somewhere out there is 42 million quid, which is unaccounted for but at best the club would inherit a 60 million pound debt.

If the club is relegated the 68 million still owed to MG /JB disappears but the club still has to service at least 60 million quid's worth of debt or simply absorb the repayments - so theoretically 60, 70 , 80 million would be held on its balance sheet to be funded at some future point dependent upon the repayment method.

If the club did get relegated and did not get promoted back immediately that debt would begin to look quite substantive. The clubs turnover would plummet from 140 million to around 40 / 50 million within 3-4 years (that is the experience of other clubs of our size relegated from the Premiership) and at that point we would have a turnover of 40 - 50 million and debts of potentially over 60 million.

On the upside, the club could stay in the premiership and in 3 or 4 years time ALK could realise the value of their asset? The only problem with that is that only one club of our size has managed to do that - Blackburn Rovers when it was bankrolled by Jack Walker. Since then Premiership clubs are owned by Oligarchs, billionaires and Arab states.

And then there is ALK a company with no trading history, a web site, which shows no activity and a company that has no obvious signs of being able to generate income other than an investment in an AI product.

Seriously, Paul you cannot think that is good news for Burnley FC.

And herein lies the problem

If ALK cannot meet the 68 million to MG / JB then they will be lumbered with at least a 60 million debt from MSD.

A company that cannot even afford a decent web site is not going to fund a 60 million debt on an asset they do not own.

MSD would would liquidate the assets of the club....!

You are asking us to believe that an American venture capital company is so utterly stupid they have allowed a loophole whereby MG / JB can get back their asset and keep 102 million quid because MSD are too stupid to know any better.

This is not any kind of business reality that I have ever encountered I can only assume I have misunderstood your point.

Hi Pete, "so if ALK defaulted on the loans to (sic) MG / JB but not MSD..." No, that's not what I'm saying, rather exactly the opposite. (ALK, btw has received loan from MG/JB not given loan to them). The Term Loan Agreement which governs the loan from MSD to ALK will include language that also references the loan from MG/JB to ALK (and any other ALK indebtedness) and it will include what is called a "cross-default" clause, such that if ALK default on the loan from MG/JB then it will also be a default on the loan to ALK from MSD. In that way MSD can seek all the remedies that are included in the TLA and MSD will be "calling the shots" on what happens next.

Keep in mind that we can all read the "charges" that MSD holds over Calder Vale, Kettering Capital and BFCHL (and other BFC entities). These are (part of) the security that MSD holds for the £60 million loaned to ALK.

However, as we can't read the Term Loan Agreement - it's not in the public domain and we only know of its existence because it's mentioned several times in the Debenture (i.e charge) between Calder Vale and MSD - we can only speculate as to the specifics in the TLA with respect to the shares in the club. I think I'm right in saying that Alan Pace has stated that MG will get the club back if ALK don't pay the 3 instalments (I hope my memory is accurate on this - but, I've not been keeping notes on everything), so, I'm guessing that there is some arrangement between MG/JB and MSD as to how this happens. Pure speculation on my behalf, but maybe MG/JB have to pay something to MSD towards any default by ALK on the loan from MSD... (If I'd have been writing this agreement, I'd have got a bank guarantee that was in part covered by MG/JB cash deposit or other assets). So, my speculation would be that MG/JB get the shares to the club in return for paying off (some of) the £60m loaned by MSD.

So, as I say, a default by ALK would end up very differently from the way you describe. MG/JB get the club back, but the club doesn't have any continuing liability to MSD for the £60m loan to ALK because MG/JB only get the club back if they pay something towards clearing the MSD loan - and they do this from the money they rec'd for their sale of shares in the first place.

Cutting a long (and speculative) explanation short: MG / JB get the club back almost as if they never sold it in the first place. Of course, this will only happen if ALK's ownership doesn't come to fruition in the way that they plan and BFC is successful.

Yes, I've seen this before in the corporate world - a firm wants to sell a business, a sale is achieved, but then the new ownership doesn't succeed and the business ends up back with the original owners.

Re ALK trading history, website etc: Alan Pace set up ALK to buy an English football club - the letters "A L and K" are the initials of his 3 daughters. We shouldn't be looking for any "trading history" because it's a new entity set up for the purpose it is pursuing. The small investment in AI Scout (and I think there's another one?) is just part of this plan. But, the plan is successful ownership of Burnley Football Club and success is defined as participating in the increasing value of the Premier League and the clubs in the Premier League over the coming years. ALK's view is that the Premier League will increase in value in a similar way to the increase in value of the US sports leagues. The big driver of this increase in value will come from world wide audiences for the sports. The big challenge for ALK (just as for any owner) is keeping Burnley in the Premier League.

ALK's success will be the "good news for Burnley FC" and for all us Burnley fans. If they don't success, at least someone "gave it a go." If they don't succeed Burnley FC will be starting again, maybe in the same place as we would have ended up if MG/JB hadn't sold the club or maybe where BFC would have ended up if any other owner had come in.

Exciting times.

UTC

[Paul Waine]

I have literally never seen a multi million pound company without a website.

You've probably never looked. I'd estimate there are many thousands if not many millions.

[groove]

More bad news.

https://www.burnleyexpress.net/sport/fo ... w8lKvRBJ3o

No wonder they like us actual fans who turn up to matches.

Bit misleading in that every empty seat being counted as a loss. The club's mentioned aren't losing anything, they're just getting less than if the grounds were full.

[Winstonswhite]

Bit misleading in that every empty seat being counted as a loss. The club's mentioned aren't losing anything, they're just getting less than if the grounds were full.

It’s a bullish!t story. I can’t believe people get paid to write stuff like that.

[Newcastleclaret93]

You've probably never looked. I'd estimate there are many thousands if not many millions.

Any examples? I had a look and can’t see any multi million pound companies without a website

[morpheus2]

What an absolute steaming pile of lazy trashy generic Sun gutter journo ****, even managed to typo the journo's name wrong - not worth talking about.

[Burnley Ace]

Any examples? I had a look and can’t see any multi million pound companies without a website

Which would only make sense if you checked every multi million pound company.

[taio]

Any examples? I had a look and can’t see any multi million pound companies without a website

A definition of scraping the barrel.

[DCWat]

Surely searching online for companies that don’t have websites is like visiting Big Bills Beef Burger Bar to survey vegans.

[Devils_Advocate]

Which would only make sense if you checked every multi million pound company.

Im not sure bout your logic here but if people are suggesting there are thousands and maybe millions of multi million pound company's without a website and someone challenges it I would think it would be up to those making the claim to provide at least one example rather than the other person having to check every multi million pound company in the world to prove their case

[Jakubclaret]

I think we’ll be waiting a long time.

[taio]

Im not sure bout your logic here but if people are suggesting there are thousands and maybe millions of multi million pound company's without a website and someone challenges it I would think it would be up to those making the claim to provide at least one example rather than the other person having to check every multi million pound company in the world to prove their case

Companies if you're wanting him to search for more than one

[Rombald]

Hmmm. Let me search for something that's not there. See, there aren't any. Proved my case.

[GodIsADeeJay81]

Any examples? I had a look and can’t see any multi million pound companies without a website

Hedge funds don't tend to have a website, because up until 2013 it was illegal in the USA for them to advertise and they've just carried on as they are.
Plus they prefer to be secretive, the sort of place you'd need to be in the know about to gain access to their services.

Bernie Madoff and his famous Ponzi scheme did so well precisely because he didn't have a website.

[Devils_Advocate]

Companies if you're wanting him to search for more than one

I dont want anyone to search for anything but if there's a discussion going on about it then I would suggest Burnley Aces logic of who should be doing what is just not very logical

[taio]

I dont want anyone to search for anything but if there's a discussion going on about it then I would suggest Burnley Aces logic of who should be doing what is just not very logical

Could be worse...could be trawling the web for companies that don't have a website.

[Devils_Advocate]

Could be worse...could be trawling the web for companies that don't have a website.

Very true but I'll leave that up to them

[Culmclaret]

This is the disaster that was waiting to happen when ALK took over. A leveraged buyout of Man Utd is one thing, but for a club like ours it was only going to end one way…….

[taio]

This is the disaster that was waiting to happen when ALK took over. A leveraged buyout of Man Utd is one thing, but for a club like ours it was only going to end one way…….

Correct. It's ok though - someone on here will be able to impart their primary school level business studies project on how the club can increase its commercial revenue to bridge the gap. That'll sort it.

[DCWat]

Correct. It's ok though - someone on here will be able to impart their primary school level business studies project on how the club can increase its commercial revenue to bridge the gap. That'll sort it.

The joint statement put out, did little to allay my concerns. If anything, it did the opposite.

The one thing that gives me a modicum of positivity is Dyche agreeing to a new deal. Unless he and his representatives have been hoodwinked, I’d have thought that he must have seen a positive way forward to agree to a new contract.

He could of course have seen an opportunity to line his own pockets, but that would very much go against many of the things he’s said about the club over the years.

[taio]

The joint statement put out, did little to allay my concerns. If anything, it did the opposite.

The one thing that gives me a modicum of positivity is Dyche agreeing to a new deal. Unless he and his representatives have been hoodwinked, I’d have thought that he must have seen a positive way forward to agree to a new contract.

He could of course have seen an opportunity to line his own pockets, but that would very much go against many of the things he’s said about the club over the years.

You make a really good point. My only hesitation would be that it was probably a no-brainer for Dyche to sign a new contract.

[Paul Waine]

Any examples? I had a look and can’t see any multi million pound companies without a website

For a start I recommend you take a look at all the entities that own each of the 20 Premier League clubs. So, not the clubs themselves, but the entities that own them.

[Burnley Ace]

Im not sure bout your logic here but if people are suggesting there are thousands and maybe millions of multi million pound company's without a website and someone challenges it I would think it would be up to those making the claim to provide at least one example rather than the other person having to check every multi million pound company in the world to prove their case

He made the statement and said he had a look and couldn’t find one, which in itself doesn’t make sense because he’s looking for something that doesn’t exist.

There will be plenty of private family companies that have over a million pounds of assets but don’t have a website. There are at least two regular posters on here that do!

[Paul Waine]

You make a really good point. My only hesitation would be that it was probably a no-brainer for Dyche to sign a new contract.

I imagine Sean Dyche may have asked about funding for incoming transfers. He may also have asked can the club afford to pay his salary.

[taio]

I imagine Sean Dyche may have asked about funding for incoming transfers. He may also have asked can the club afford to pay his salary.

I'm sure he did ask about funding for incoming transfers and he got told what he wanted to hear. I doubt he asked if the club could afford his salary.

[claretandbluesky]

Still do not see where the revenues came from if we get relegated. The debts still need servicing alongside the repayments. Once relegated players valuation will plummet and we will be left with a small squad with no chance of making a challenge and no money to buy in. Can’t see where the optimism lies.

[taio]

Still do not see where the revenues came from if we get relegated. The debts still need servicing alongside the repayments. Once relegated players valuation will plummet and we will be left with a small squad with no chance of making a challenge and no money to buy in. Can’t see where the optimism lies.

At least, if nothing else, thinking from such a low base with an enormous amount of pessimism things can only get better for you.

[Jakubclaret]

You make a really good point. My only hesitation would be that it was probably a no-brainer for Dyche to sign a new contract.

Well based on nobody else wanting him & the security he’s got here I’d agree with you in this rare instance, the flip side it will cost a fortune to get rid of him which is far more likelier than somebody else poaching him.

[taio]

Well based on nobody else wanting him & the security he’s got here I’d agree with you in this rare instance, the flip side it will cost a fortune to get rid of him which is far more likelier than somebody else poaching him.

Agree in this instance- sort of what I was getting at but happy he signed the contract. As an aside, I will worry about my own judgement and that of others when you routinely agree with me and other people.

[Jakubclaret]

Agree in this instance- sort of what I was getting at but happy he signed the contract. As an aside, I will worry about my own judgement and that of others when you routinely agree with me and other people.

Don’t worry it won’t be habitual.

[arise_sir_charge]

Can’t be bothered reading The whole thread but has anyone made reference to Dyche sayings he’s more than happy?

[dermotdermot]

What a carry on! Twisted knickers galore!

[Spijed]

I thought John B was a supporter so why is he happy to go along with the leveraged buyout?

[Winstonswhite]

I imagine Sean Dyche may have asked about funding for incoming transfers. He may also have asked can the club afford to pay his salary.

If I was signing a four year contract for 3.5 million a year, the only thing I would have been asking about is where’s the pen!

[Paul Waine]

If I was signing a four year contract for 3.5 million a year, the only thing I would have been asking about is where’s the pen!

You and me, too, WW. However, as a football manager you might also think about the alternatives. Remember when Sean Dyche first arrived at Burnley and wouldn't sign a term contract?

BTW: wasn't £3.5m his previous contract. I'd got the impression ALK had improved the new one.

[ClaretTony]

I thought John B was a supporter so why is he happy to go along with the leveraged buyout?

Did he have an option?

[IanMcL]

Did he have an option?

One man responsible.

[ClaretPete001]

Hi Pete, "so if ALK defaulted on the loans to (sic) MG / JB but not MSD..." No, that's not what I'm saying, rather exactly the opposite. (ALK, btw has received loan from MG/JB not given loan to them). The Term Loan Agreement which governs the loan from MSD to ALK will include language that also references the loan from MG/JB to ALK (and any other ALK indebtedness) and it will include what is called a "cross-default" clause, such that if ALK default on the loan from MG/JB then it will also be a default on the loan to ALK from MSD. In that way MSD can seek all the remedies that are included in the TLA and MSD will be "calling the shots" on what happens next.

Keep in mind that we can all read the "charges" that MSD holds over Calder Vale, Kettering Capital and BFCHL (and other BFC entities). These are (part of) the security that MSD holds for the £60 million loaned to ALK.

However, as we can't read the Term Loan Agreement - it's not in the public domain and we only know of its existence because it's mentioned several times in the Debenture (i.e charge) between Calder Vale and MSD - we can only speculate as to the specifics in the TLA with respect to the shares in the club. I think I'm right in saying that Alan Pace has stated that MG will get the club back if ALK don't pay the 3 instalments (I hope my memory is accurate on this - but, I've not been keeping notes on everything), so, I'm guessing that there is some arrangement between MG/JB and MSD as to how this happens. Pure speculation on my behalf, but maybe MG/JB have to pay something to MSD towards any default by ALK on the loan from MSD... (If I'd have been writing this agreement, I'd have got a bank guarantee that was in part covered by MG/JB cash deposit or other assets). So, my speculation would be that MG/JB get the shares to the club in return for paying off (some of) the £60m loaned by MSD.

So, as I say, a default by ALK would end up very differently from the way you describe. MG/JB get the club back, but the club doesn't have any continuing liability to MSD for the £60m loan to ALK because MG/JB only get the club back if they pay something towards clearing the MSD loan - and they do this from the money they rec'd for their sale of shares in the first place.

Cutting a long (and speculative) explanation short: MG / JB get the club back almost as if they never sold it in the first place. Of course, this will only happen if ALK's ownership doesn't come to fruition in the way that they plan and BFC is successful.

Yes, I've seen this before in the corporate world - a firm wants to sell a business, a sale is achieved, but then the new ownership doesn't succeed and the business ends up back with the original owners.

Re ALK trading history, website etc: Alan Pace set up ALK to buy an English football club - the letters "A L and K" are the initials of his 3 daughters. We shouldn't be looking for any "trading history" because it's a new entity set up for the purpose it is pursuing. The small investment in AI Scout (and I think there's another one?) is just part of this plan. But, the plan is successful ownership of Burnley Football Club and success is defined as participating in the increasing value of the Premier League and the clubs in the Premier League over the coming years. ALK's view is that the Premier League will increase in value in a similar way to the increase in value of the US sports leagues. The big driver of this increase in value will come from world wide audiences for the sports. The big challenge for ALK (just as for any owner) is keeping Burnley in the Premier League.

ALK's success will be the "good news for Burnley FC" and for all us Burnley fans. If they don't success, at least someone "gave it a go." If they don't succeed Burnley FC will be starting again, maybe in the same place as we would have ended up if MG/JB hadn't sold the club or maybe where BFC would have ended up if any other owner had come in.

Exciting times.

UTC

While I respect your knowledge and the patient way you engage Paul I find your rationale bizarre to say the least. I also know much of this is speculative but no doubt there is much truth in it as well

Basically you are saying if ALK default it is possible that MG / JB could pay back the 60 million plus presumably an unsubstantiated component of the 42 million (102 million) and, in addition, lose the 68 million that ALK would inexorably not be able to pay.

In other words for MG / JB to get the shares back they would probably have to pay back between 60 and 102 million by which time the club would be in a mess probably back in the Championship because of the lack of investment and MG / JB would likely not see 170 million again for some time.

Of course, ALK won't default because they are using to clubs own money to pay the debt and MG / JB are unlikely to want the club back in exchange for the best part of a 100 million quid.

If ALK doesn't default Burnley FC gets a, relatively speaking, unknown former employee of Citibank who is using the clubs own money to pay back some unsubstantiated amount in excess of 60 million quid up to 102 million at 9 per cent , which could be anything between 5 - 10 million per year with a further liability for 68 million quid down the line.

I'm sure senior Citibank employees get paid handsomely but he is no Kroenke, John Henry or Malcolm Glazer. or even a Venky or Mike Ashley

I'm going to have to lie down in a dark room and ponder the existential meaning of a life where someone uses your own money to run up huge debts to American venture capitalists and somehow find it exciting.

I guess we will just have to agree to disagree and see what happens.

[Rileybobs]

The John B=good/Mike G=evil angle is a little cringy.

[ClaretTony]

The John B=good/Mike G=evil angle is a little cringy.

Not sure what you mean with that but the deal was done by Garlick. The other directors had no option but to follow.

It doesn’t make one good and/or one bad but they played very different roles.

[Rileybobs]

Not sure what you mean with that but the deal was done by Garlick. The other directors had no option but to follow.

It doesn’t make one good and/or one bad but they played very different roles.

But Garlick wasn’t responsible for hiring Dyche?

[fatboy47]

What claretpete001 said.

Succinct and realistic amidst all the nonsense.

Great Post.

[ClaretPete001]

For a start I recommend you take a look at all the entities that own each of the 20 Premier League clubs. So, not the clubs themselves, but the entities that own them.

The point is that you don't have to look them up. Only Norwich and Watford are not owned by well known billionaire business people.

[Steve-Harpers-perm]

Not sure what you mean with that but the deal was done by Garlick. The other directors had no option but to follow.

It doesn’t make one good and/or one bad but they played very different roles.

I assume even as the majority shareholder he at least discussed the pro’s and con’s of this deal with the rest of the directors? Maybe they all thought it was a good sale?

[ClaretTony]

But Garlick wasn’t responsible for hiring Dyche?

When Dyche was appointed the two of them were joint chairmen and worked alongside CEO Lee Hoos and other directors in making the appointment.

When the club was sold, Garlick was the major shareholder by some considerable distance, was running the club the way he wanted to and making all the decisions. He decided to sell to ALK, the other directors were not in a position to challenge that.

So I think that answers your question, two different times, some years apart, and two very different circumstances.

[ClaretTony]

I assume even as the majority shareholder he at least discussed the pro’s and con’s of this deal with the rest of the directors? Maybe they all thought it was a good sale?

I believe you are assuming far too much

[Steve-Harpers-perm]

I believe you are assuming far too much

So a number of supposed die hard clarets who have been sat on a board for a long time didn’t have any input with the majority shareholder?? That sounds like it wasn’t just Dyche who Garlick fell out with?

[ClaretTony]

So a number of supposed die hard clarets who have been sat on a board for a long time didn’t have any input with the majority shareholder?? That sounds like it wasn’t just Dyche who Garlick fell out with?

I can confidently assure you that Dyche wasn’t the only one with issues with the chairman