Burnley Football Club - first accounts under ALK

[BurnleyFC]

Note 6: Employees. "None of the directors received remuneration from the group during the current or previous year."

So, all the work that Alan Pace is doing he's not taken a wage from Burnley - at least not for his first 7 months work.

UTC

How very noble of them

[Chester Perry]

Note 6: Employees. "None of the directors received remuneration from the group during the current or previous year."

So, all the work that Alan Pace is doing he's not taken a wage from Burnley - at least not for his first 7 months work.

UTC

at least not from the holding company

there is a sound argument that says if someone is doing a job they should be paid for it, particularly if it is their primary role.

[Paul Waine]

I will speculate differently Paul

- my view is that was primarily used for staged payments to the Sellers possibly the small shareholders
- I will also suggest that the £37m related company loan is made up of the original sum borrowed for the initial payment and a subsequent borrowing for a staged payment

note that VSL have now confirmed they have borrowed £47m from the club and placed the £65m MSD loan on the club with its interest payments being met by the club

elsewhere I note:
- we have only paid around £3m of the £12m for Collins
- cost of football (wages + amortisation/revenue) is over 93%

I am a little surprised at just how much I have been in the ball park in terms of the financial performance, and the takeover costs including size of MSD loan and the associated interest rate

Hi CP, where do you see VSL confirming £47 million? The accounts say £65m + £37m owed by Calder Vale at b/s date. The post-b/s events says another £10m advanced. This will make £112m in total.

[CrosspoolClarets]

Only had time for a 5 minute skim but I’ve read to me the most important bits - cash flow, going concern elements, loans and balance sheet.

My instinct at this point is survival would mean a decent chance of plodding on, albeit with a bit less cash for investment. Relegation would be a disaster, with sale of players coupled with wage cuts and players choosing to move on due to this. Highly unlikely we would bounce back, especially with a new manager.

So basically, get behind the team on Saturday, give it all we have.

Let’s not forget when talking about money taken out of the club, that also includes the Dell loan, it is just that will be taken out at a later date (compared to what was the status quo). It basically means there won’t be any significant dosh to do major things with for quite some time - unless it is through even more debt. The £200m+ going to the original shareholders, that is all going to come from somewhere. Every debit has to have a credit etc etc. I don’t think of it as what has been taken out “so far”.

[Chester Perry]

Hi CP, where do you see VSL confirming £47 million? The accounts say £65m + £37m owed by Calder Vale at b/s date. The post-b/s events says another £10m advanced. This will make £112m in total.

and that is what I saw

[RVclaret]

I’m far from an expert, but those accounts make frightening reading to me.

They are certainly a lot worse looking than before the takeover, that’s for sure.

[Paul Waine]

at least not from the holding company

there is a sound argument that says if someone is doing a job they should be paid for it, particularly if it is their primary role.

Not from any company in the BFC group.

I've always puzzled whether directors acting in an executive role are required to be paid minimum wage.

It wouldn't surprise me if Alan Pace isn't receiving remuneration at the ALK/Velocity Sports level. It may also be that, depending on how things develop, AP may receive remuneration in future years.

[arise_sir_charge]

Only had time for a 5 minute skim but I’ve read to me the most important bits - cash flow, going concern elements, loans and balance sheet.

My instinct at this point is survival would mean a decent chance of plodding on, albeit with a bit less cash for investment. Relegation would be a disaster, with sale of players coupled with wage cuts and players choosing to move on due to this. Highly unlikely we would bounce back, especially with a new manager.

So basically, get behind the team on Saturday, give it all we have.

Let’s not forget when talking about money taken out of the club, that also includes the Dell loan, it is just that will be taken out at a later date (compared to what was the status quo). It basically means there won’t be any significant dosh to do major things with for quite some time - unless it is through even more debt. The £200m+ going to the original shareholders, that is all going to come from somewhere. Every debit has to have a credit etc etc. I don’t think of it as what has been taken out “so far”.

Where does it say that the original shareholders benefit to the tune of £200m+

[GodIsADeeJay81]

How very noble of them

When you see what some directors are taking out in wages at other clubs..

Plus one of the big concerns was how much these new owners/directors were going to be paying themselves.

[BurnleyFC]

When you see what some directors are taking out in wages at other clubs..

Plus one of the big concerns was how much these new owners/directors were going to be paying themselves.

They basically got given a Premier League football club so forgive me for not getting the party poppers out if they’re not taking a wage just yet.

[Paul Waine]

Where does it say that the original shareholders benefit to the tune of £200m+

The accounts don't. Of course, there is stuff in the accounts about the change of ownership/change of control. And, there's stuff about £102 million plus a further £10 million.

There's nothing mentioned about instalments to be paid to the previous directors/major shareholders.

Of course, these things were reported in the Letter to Small Shareholders with the offer to acquire their shares.

[Chester Perry]

The accounts don't. Of course, there is stuff in the accounts about the change of ownership/change of control. And, there's stuff about £102 million plus a further £10 million.

There's nothing mentioned about instalments to be paid to the previous directors/major shareholders.

Of course, these things were reported in the Letter to Small Shareholders with the offer to acquire their shares.

all of which asc knows given his professional life and the fact he sold his share(s)

[NewClaret]

Yes, that is stated on the cash flow statement. 37m used for ‘financing’.

Wowsers.

And to think where we might be if we’d spent that on strengthening the team. Some said we couldn’t afford £20m players in the prior summer and it turns out we could’ve had two, paid up front for them & not had a £65m loan we have now!

[KRBFC]

Nothing I didn't already know, £37m of the clubs own money used and the £65M MSD loan. Plus we still owe £50m+ to the departing shareholders.

Now we know a significant amount of the MSD loan is due upon relegation.

So for the wise ones who were predicting we would be in a healthy financial position to replace the 10 out of contract and rebuild in the Championship, please explain where that money is coming from with £115m of debt hanging over our heads.

[taio]

I was just wondering that too.

If so, some large slices of humble pie need to be ordered.

Can't see much humble pie being consumed. It appears people's concerns were valid and in some instances remarkably accurate.

[Newcastleclaret93]

Can't see much humble pie being consumed. It appears people's concerns were valid and in some instances remarkably accurate.

I think the accounts are pretty much exactly how everyone predicted. Can’t see any humble pie

[jdrobbo]

I will speculate differently Paul

- my view is that was primarily used for staged payments to the Sellers possibly the small shareholders
- I will also suggest that the £37m related company loan is made up of the original sum borrowed for the initial payment and a subsequent borrowing for a staged payment

note that VSL have now confirmed they have borrowed £47m from the club and placed the £65m MSD loan on the club with its interest payments being met by the club

elsewhere I note:
- we have only paid around £3m of the £12m for Collins
- cost of football (wages + amortisation/revenue) is over 93%

I am a little surprised at just how much I have been in the ball park in terms of the financial performance, and the takeover costs including size of MSD loan and the associated interest rate

I might be wrong, but aren’t we paying £3 million for Collins because we weren’t paid for Sam Vokes up front….hence the missing 8 or 9 million?

[ClaretTony]

I was just wondering that too.

If so, some large slices of humble pie need to be ordered.

How big a slice should we be ordering?

[KRBFC]

It's actually incredible how somebody with no money can effectively become an owner of a PL club, using nothing but the clubs own money to pay for their shares. How this deal was allowed by the PL i'll never know, Gary Neville did question Scudamore about how this deal was allowed, can't remember his response.

£5.5m interest coming off the clubs income yearly.
£47m straight from the clubs bank account.
No doubt the club needing to fund departing shareholders (£50mish) and the £65m to MSD.

It's almost as if we weren't financially unable to compete prior to ALK, now we looked absolutely cash strapped regardless of the division we're gonna be playing in.

[RVclaret]

It’s quite sickening knowing near enough £40m of the clubs money was used just for the takeover. Imagine if this was put towards transfers. For me, the worst new discovery is that a significant portion of the £67m loan is payable immediately upon relegation. I’d imagine that will basically mean the likes of Cornet, Pope and McNeil sold purely to pay off the loan, rather than any sort of reinvestment.

[KRBFC]

It’s quite sickening knowing near enough £40m of the clubs money was used just for the takeover. Imagine if this was put towards transfers. For me, the worst new discovery is that a significant portion of the £67m loan is payable immediately upon relegation. I’d imagine that will basically mean the likes of Cornet, Pope and McNeil sold purely to pay off the loan, rather than any sort of reinvestment.

and that's before you mention we still owe Garlick £50m.

[BurnleyFC]

Still waiting on Alan to outline how unbelievable this deal is for the football club.

Perhaps he mistook football club for himself.

[RVclaret]

and that's before you mention we still owe Garlick £50m.

Yeah, that bit I don’t really understand. Is it the club who owe him or ALK / one of their other names.

[taio]

It’s quite sickening knowing near enough £40m of the clubs money was used just for the takeover. Imagine if this was put towards transfers. For me, the worst new discovery is that a significant portion of the £67m loan is payable immediately upon relegation. I’d imagine that will basically mean the likes of Cornet, Pope and McNeil sold purely to pay off the loan, rather than any sort of reinvestment.

People were trying to highlight such concerns to those backing Pace prior to the accounts being published. We are a basket case if we go down, which again many people warned about.

[aggi]

Got it. So cash balance is ‘actually’ much less at around 15m.

So it seems to me, then, that relegation means player sales + cash balance to pay off a big chunk of the 65m loan. Is that your understanding?

You'd assume so. Obviously what is meant by "significant" is very open to interpretation, it could be £20m or it could be £60m. My gut (and it's entirely a wild guess) would be maybe ~ £40m to be repaid.

Relegation would always mean player sales (just from those who are good enough to stay in the Premier League or equivalent wanting to stay there and earn that level of wage), it's how much it would impact on replacements.

Of course there may be some money somewhere else in the group that could be used to repay some of the loan but that is the great unknown (and obviously people aren't too confident about it).

[Lancasterclaret]

Is this an "exciting times" moment?

[Steve-Harpers-perm]

Presume any possible investors will be watching with some keen interest over the new few weeks?! We did have the story of possible investment which cooled after the Norwich defeat.

[ClaretTony]

Presume any possible investors will be watching with some keen interest over the new few weeks?! We did have the story of possible investment which cooled after the Norwich defeat.

Wonderful isn’t it that an investor cools after one performance. We’re we seriously expected to believe that?

[Lancasterclaret]

Presume any possible investors will be watching with some keen interest over the new few weeks?! We did have the story of possible investment which cooled after the Norwich defeat.

Not sure people are going to invest if there is a whopping huge payment due on relegation

I mean, we are relegation candidates every season, and I don't see that changing

Doesn't mean we will go down, but you are going to struggle to attract investment when you are odds on to go down every season

[elwaclaret]

Is this an "exciting times" moment?

Certainly “exciting times” - as you know ‘exciting’ applies to both good and bad news; almost as ambiguous as the Chinese ‘interesting times’.

[Steve-Harpers-perm]

I’d more assumed it had cooled with us to be fair at that point to looking very likely to be relegated.

Suppose they are constantly in contact with people trying to secure further investment into the club.

[JR1882]

As the accounts don’t include the Wood sale - does this soften the blow upon relegation? Ie - that cash is there to pay off some of the burden?

[BurnleyFC]

Wonderful isn’t it that an investor cools after one performance. We’re we seriously expected to believe that?

Walter Mitty springs to mind.

I cannot fathom what supposed fans Garlick and John B were contemplating selling the club to these.

[Newcastleclaret93]

As the accounts don’t include the Wood sale - does this soften the blow upon relegation? Ie - that cash is there to pay off some of the burden?

I assume that just covers some of the outstanding transfers from last summer.

[Chester Perry]

You'd assume so. Obviously what is meant by "significant" is very open to interpretation, it could be £20m or it could be £60m. My gut (and it's entirely a wild guess) would be maybe ~ £40m to be repaid.

Relegation would always mean player sales (just from those who are good enough to stay in the Premier League or equivalent wanting to stay there and earn that level of wage), it's how much it would impact on replacements.

Of course there may be some money somewhere else in the group that could be used to repay some of the loan but that is the great unknown (and obviously people aren't too confident about it).

the repayment of the MSD loan on relegation seems stepped so there is a further reduction required on the 2nd year of a stay in the Championship in case we fail to make an immediate return- which seems to align itself to falling parachute payment levels in my way of thinking,

I had suggested the reduction scenario a little while back based on the West Ham accounts - our own report offers a little more detail but certainly not as much as we would ideally like to see

given the squeeze this would put on us, you can imagine that VSL may go back to MSD to increase the loan if we were to have an immediate promotion as the associated costs and strengthening would be beyond the cash flow and factoring from another source would be impossible as a result of the existing charge

[taio]

Presume any possible investors will be watching with some keen interest over the new few weeks?! We did have the story of possible investment which cooled after the Norwich defeat.

Based on the structure of the takeover and the liabilities against the club, I would be equally sceptical about the terms and conditions of any further investment.

[ClaretTony]

Walter Mitty springs to mind.

I cannot fathom what supposed fans Garlick and John B were contemplating selling the club to these.

I don’t know how much involvement John had. I think he was always in a difficult position at the club prior to all this. Has to be a problem when you own just short of 30% of a company but someone else has virtually total control.

[Chester Perry]

Given all the talk has been about people leaving the club there were an awful lot of new faces on the non football side in these accounts

[Lancasterclaret]

So if we survive to 2025, the big chunk of loan repayable to MSD then becomes repayable when?

Essentially, if we survive in the prem till 2025, then relegation won't result in a us having to repay that straight away?

is that right?

[mybloodisclaret]

Walter Mitty springs to mind.

I cannot fathom what supposed fans Garlick and John B were contemplating selling the club to these.

They seemed to be enjoying their VIP day out at Watford in the directors box!!

So can someone tell me how ALK / Velocity sports or whoever provided proof of funds to the Premier League?? I am confused? The whole deal has been shrouded in mystery but from what I am reading doesn't seem too healthy.

[Chester Perry]

I don’t know how much involvement John had. I think he was always in a difficult position at the club prior to all this. Has to be a problem when you own just short of 30% of a company but someone else has virtually total control.

there are suggestions he needed the money for his other commitments

[RVclaret]

As the accounts don’t include the Wood sale - does this soften the blow upon relegation? Ie - that cash is there to pay off some of the burden?

It says in the notes that taking into account the Wood sale plus transfers of Cornet, Weghorst, Roberts the total net transfer dealings for the year is -1.3m.

[NewClaret]

Mike Garlick, outgoing chairman and director of Burnley FC said:

“This investment represents a natural progression for Burnley Football Club. In Alan Pace and his team, we are welcoming committed investors to Turf Moor who will be living here in the local community and investing in the club, both on and off the football pitch, for many years to come. My tenure as chairman has always been about ensuring Burnley is a sustainable football club, and this investment provides a long-term plan to maintain that philosophy, whilst driving evolution and innovation.”

!!!

[gawthorpe_view]

Based on the structure of the takeover and the liabilities against the club, I would be equally sceptical about the terms and conditions of any further investment.

The liabilities payable in the event of relegation feel like the Sword of Damocles hanging over the club.

[Billy Balfour]

Should never have been sold using a leveraged buyout. So much for our previous 'custodians'.

[ClaretTony]

Should never have been sold using a leveraged buyout. So much for our previous 'custodians'.

I was getting info from a couple of people prior to the sale and both were positive about it. Neither of them knew it was going to be a leveraged buyout at the time. Neither are positive now.

The Premier League should have stopped such sales after Man U & Liverpool.

[Lancasterclaret]

Very important that we don't let this distract us for the remaining four games

[Chester Perry]

Mike Garlick, outgoing chairman and director of Burnley FC said:

“This investment represents a natural progression for Burnley Football Club. In Alan Pace and his team, we are welcoming committed investors to Turf Moor who will be living here in the local community and investing in the club, both on and off the football pitch, for many years to come. My tenure as chairman has always been about ensuring Burnley is a sustainable football club, and this investment provides a long-term plan to maintain that philosophy, whilst driving evolution and innovation.”

!!!

There was a belief at the time that VSL would flip shares quickly and repay the related company loan - remember they tried in Feb 2021 at a time when Wall st was handing money out for sports/sports tech/sports media investments by the tanker load - VSL could not persuade anyone to bite and that is where we are, still with no one in their right mind investing in VSL/BFC (at least with a significant sum)

[elwaclaret]

Of course the problem we have is that Burnley’s accounts are just one business in a web of other businesses like smaller webs in Shalob Dells great web. I’m guessing but it would not surprise me if accounts start to make less and less sense as things like shirt sponsorships are picked up within the system. I suspect the doors the club opens (e.g. Saudi Royal family etc. etc.) to exploit for all sorts of other interests has a $ value way in excess of any Burnley debt. For that reason, I can see why Burnley’s debt would be causing few sleepless nights in the boardroom.

[Chester Perry]

So can someone tell me how ALK / Velocity sports or whoever provided proof of funds to the Premier League?? I am confused? The whole deal has been shrouded in mystery but from what I am reading doesn't seem too healthy.

That was the easy bit - the club's track record of generating operational profit - you see it again in these accounts and healthy cash balance and cash flow