ALK Capital or Farnell/Elkashashy takeover

[dsr]

ALK paid £180m for a club in the PL with £80m of net liquid assets (cash + debtors less all creditors and loans).

Anyone paying for the club now would get a club that's not in the PL and has net current liabilities. The liquidity position is £100m worse now than it was then, quite apart from the loss of PL status.

I think you're being optimistic.

[Newcastleclaret93]

Closer to £100 million

I have no idea how you have got to that figure. It’s almost fantasy land stuff

[Quickenthetempo]

Closer to £100 million

Break it down what you think it's worth?

15m for the stadium?
12m for the training ground?
30m for the players?
1m for the fan base access/ social media sites.

The business never makes profits (unless in the prem) but has a huge income 15m a year?

[GodIsADeeJay81]

I have no idea how you have got to that figure. It’s almost fantasy land stuff

You think the club has dropped in value by 3/4's yet I'm the one in fantasy land...

[dsr]

You think the club has dropped in value by 3/4's yet I'm the one in fantasy land...

ALK have taken £112m+ out of the club. Don't you think that has made a significant difference?

[Newcastleclaret93]

You think the club has dropped in value by 3/4's yet I'm the one in fantasy land...

Yes because we are losing 70% of our revenue over the next three seasons and the club has sold all there high value assets.

Baffled to how you got 100m based on our current situation. You think our club is worth 3 times more than Hull city in the championship?

[GodIsADeeJay81]

Break it down what you think it's worth?

15m for the stadium?
12m for the training ground?
30m for the players?
1m for the fan base access/ social media sites.

The business never makes profits (unless in the prem) but has a huge income 15m a year?

Our income is higher than £15 million a year, we have parachute payments.

A clubs value is generally based on the income, with other factors then taken into consideration

[GodIsADeeJay81]

Yes because we are losing 70% of our revenue over the next three seasons and the club has sold all there high value assets.

Baffled to how you got 100m based on our current situation. You think our club is worth 3 times more than Hull city in the championship?

It's based on our income which at present will be around the £50 million plus a year, this isn't including player transfers

[Newcastleclaret93]

It's based on our income which at present will be around the £50 million plus a year, this isn't including player transfers

It’s that high for a few seasons but drops considerably from there.

[GodIsADeeJay81]

It’s that high for a few seasons but drops considerably from there.

That's when the valuation of the club would drop down, but even then it would still be worth more than your initial guesstimation.

Football clubs are valued differently to the average business, hence why some go for stupid money

[dsr]

That's when the valuation of the club would drop down, but even then it would still be worth more than your initial guesstimation.

Football clubs are valued differently to the average business, hence why some go for stupid money

But what about the £112m that ALK has taken out of the club? Hasn't that reduced the value?

[RVclaret]

But what about the £112m that ALK has taken out of the club? Hasn't that reduced the value?

No that gets added onto the value so a realistic valuation now would be what they paid + this, so around 300m

[dsr]

No that gets added onto the value so a realistic valuation now would be what they paid + this, so around 300m

Then it's a shame we didn't get a £650m loan rather than a £65m loan, isn't it. We'd have been bigger than Manchester United then.

[Tall Paul]

But what about the £112m that ALK has taken out of the club? Hasn't that reduced the value?

It hasn't been taken out yet, it's there as an asset on the balance sheet and would presumably be repayable when ALK sell the club. So no it hasn't reduced the value.

Relegation will have though.

[dsr]

It hasn't been taken out yet, it's there as an asset on the balance sheet and would presumably be repayable when ALK sell the club. So no it hasn't reduced the value.

Relegation will have though.

When a man with no money promises to pay you £112m, it doesn't make you a millionaire. ALK haven't got any money and they won't be able to pay the loan back unless they sell the club for more than they paid for it.

If you genuinely think paying £112m to a company that is skint doesn't reduce the value, then please may I borrow £112m from you? you might have to take out a loan to pay me in full, but I'll give you an IOU. (But I won't pay you any interest.)

[Tall Paul]

When a man with no money promises to pay you £112m, it doesn't make you a millionaire. ALK haven't got any money and they won't be able to pay the loan back unless they sell the club for more than they paid for it.

If you genuinely think paying £112m to a company that is skint doesn't reduce the value, then please may I borrow £112m from you? you might have to take out a loan to pay me in full, but I'll give you an IOU. (But I won't pay you any interest.)

I'm not going to engage in your strawmanning tactics.

The fact is that the independent auditors were satisfied that the balance is recoverable and therefore it doesn't reduce the value of the company.

[Big Vinny K]

Our income is higher than £15 million a year, we have parachute payments.

A clubs value is generally based on the income, with other factors then taken into consideration

Income is just one factor.
Contractual costs (mostly players salaries) is just as key.

Football clubs are notoriously very difficult to value in a consistent way….and they don’t follow the normal valuation methods when looking at other businesses. This is mainly because the income and expenditure is so volatile because of the impact of moving between the Premier League and Championship.

But our valuation is now very very different due to relegation and our post take over balance sheet

[dsr]

I'm not going to engage in your strawmanning tactics.

The fact is that the independent auditors were satisfied that the balance is recoverable and therefore it doesn't reduce the value of the company.

Can you really not see? There is more to "value of the company" than what the balance sheet says.

Even if we forget the cash, before the takeover we had no loan creditors and no loan debtors.

After the takeover we had a £65m loan creditor on which interest of 10% is payable every year, and a £65m loan debtor that is earning us nothing.

Do you really, truly, believe that the club is no worse off for that? That paying £7m per year in interest does not make the club any worse off?

[Paul Waine]

You're doing it again Paul. Ignoring everything I said, I even said 'the owners' and that I was using 'ALK capital' as a catchall to describe what I meant. You switch the definition back to the company only. Or are you honestly tryng to tell me that Alan Pace no longer does anything excpt work as Burnley chairman?

Just this bit. What is that you think Alan Pace is doing other than being full time chairman of Burnley Football Club? Yes, he's managing partner of ALK Capital. ALK Capital describes itself (my words, without checking their website) is set up by Alan Pace (the initials come from the names of his 3 daughters) to manage investments in sport/football. The only sports club that ALK owns is Burnley Football Club. Yes, there's an entity alongside ALK Capital called Velocity Sports Partners (US entity) is the investment arm of ALK Capital. That's the entity that has bought Burnley Football Club, via a standard chain of subsidiaries, Velocity Sports (Jersey), Kettering Capital and Calder Vale.

Have I missed something? is there anything else that Alan Pace and Velocity Sports (US) are doing that isn't Burnley Football Club?

Are there other posters on here that believe ALK/Velocity Sports have got any other activities? (Their investments in AI Scout etc are tiny - and just get them access to the scouting data, alongside many other English football clubs. ALK/VS aren't running those AI/data entities).

For the sake of clarity, yes, I am saying that Alan Pace does nothing else other than being Chairman of Burnley Football Club and the other stuff associated with being the managing partner of ALK Capital. Being Chairman of Burnley Football Club means seeking investors into Velocity Sports (US) and that investment is for the benefit of Burnley Football Club. Yes, there is nothing else.

[Big Vinny K]

I'm not going to engage in your strawmanning tactics.

The fact is that the independent auditors were satisfied that the balance is recoverable and therefore it doesn't reduce the value of the company.

Do you seriously believe that to be the case ?
How on gods earth can the club not be significantly less given the reduction in revenue (obviously not part of any takeover audit) and the significant increase in short and long term creditors (ie the debt and it’s double figure annual interest rate) ?

[GodIsADeeJay81]

Income is just one factor.
Contractual costs (mostly players salaries) is just as key.

Football clubs are notoriously very difficult to value in a consistent way….and they don’t follow the normal valuation methods when looking at other businesses. This is mainly because the income and expenditure is so volatile because of the impact of moving between the Premier League and Championship.

But our valuation is now very very different due to relegation and our post take over balance sheet

So we agree it's income plus other factors, that's a start.

I agree our valuation won't be the same as when we were sold, but there's no way it's now £30-40 million as guesstimated earlier.

Our revenues are going to be parachute payments plus normal EFL monies for the next couple of years at most.

[Newcastleclaret93]

So we agree it's income plus other factors, that's a start.

I agree our valuation won't be the same as when we were sold, but there's no way it's now £30-40 million as guesstimated earlier.

Our revenues are going to be parachute payments plus normal EFL monies for the next couple of years at most.

No one will pay more than that

[Big Vinny K]

So we agree it's income plus other factors, that's a start.

I agree our valuation won't be the same as when we were sold, but there's no way it's now £30-40 million as guesstimated earlier.

Our revenues are going to be parachute payments plus normal EFL monies for the next couple of years at most.

Of course income is a factor - it is in any business valuation.
But nope I don’t think we do agree…..it’s a bit more than income plus ‘other factors”
Expenditure / costs are every bit as important…..and especially those ‘fixed’ costs which any buyer of the business would be burdened with. So the level of players and other staff contractual commitments and any loan commitments are just as important / if not more important than revenue.

I’m stating the obvious here but if when you are buying a business you are going to inherit a certain level of expenditure that you can do nothing about and on the other side your revenue is extremely volatile and dependent on a whole range of risks then that business is going to valued very differently to a football club without those commitments.

[GodIsADeeJay81]

Of course income is a factor - it is in any business valuation.
But nope I don’t think we do agree…..it’s a bit more than income plus ‘other factors”
Expenditure / costs are every bit as important…..and especially those ‘fixed’ costs which any buyer of the business would be burdened with. So the level of players and other staff contractual commitments and any loan commitments are just as important / if not more important than revenue.

I’m stating the obvious here but if when you are buying a business you are going to inherit a certain level of expenditure that you can do nothing about and on the other side your revenue is extremely volatile and dependent on a whole range of risks then that business is going to valued very differently to a football club without those commitments.

Football club valuations start with income first and foremost.
That's why I've based mine on revenue.

[GodIsADeeJay81]

No one will pay more than that

It isn't for sale so it's fairly moot, but for someone to buy the club they'd have to pay a damn site more than £30-40 million

[taio]

Football club valuations start with income first and foremost.
That's why I've based mine on revenue.

Debt/creditors would be a huge factor.

[Paul Waine]

Simple question, but might be difficult to answer.

So, if ALK put the club up for sale now, how much would they get for it?

Hi Loup, it's a great question. How is any football club valued playing in the English Premier League or the English Football League? How did Mike Garlick and his fellow directors arrive at the value for Burnley FC (including the shares held by the small investors)? How did the sanctioned owner of Chelsea Football Club arrive at a value of above £2.5 billion, plus other commitments including £1 billion on building a new stadium and (roughly) £1 billion on future player investments?

Is the break up value of the assets and the liabilities the right model to value a football club? £X million for the stadium and the training centre, £Y million for the transfer of player contracts, £Z for the collecting in of all receivables and the settlement of all liabilities?

Or, do we take future potential into account? What is the future potential of a football club? If it's got a good manager and an exciting group of players that make a successful team, how long do those things last? What if the majority of the team are over 30 and most have only got 1 season left on their contracts? Or, what if there are several players with long contracts and high wages (and bonus commitments)?

Businesses are bought and sold based on future potential, what are the future expected cashflows of the business? And, discount rates are chosen to present value forecasts of future earnings/future value? The discount rates chosen may vary from one buyer's perspective to another.

As a "sense check" the proposed value of one business may be compared with the prices paid for comparable businesses (if any exist).

ALK bought Burnley FC from Mike Garlick and co while the club was in the Premier League and with the risk of relegation. As a Premier League club, BFC was guaranteed Premier League tv money, plus parachute payments (subject to current rules and the possibility that these may be changed). As a Premier League club the club paid Premier League wages to its players, including relegation clauses in those contracts. The relegation clauses assist in matching player costs to reduced revenues in the Championship. Relegation clauses also appear to tilt the balance towards the experienced players seeking transfers away from the club, so there's a re-building exercise, as we are seeing.

BFC is now a Championship club and, this time, the aim is to gain promotion back to the Premier League. This will be reflected in the valuation if ALK were to seek a sale. But, it's the wrong time to attempt to place a value on the club. A new manager, a new squad, maybe we'll all have an idea of how Vincent Kompany and his squad will perform as the season progresses. If things are going well and BFC are in contention for promotion, maybe in a second season rather than this one, the value will be approaching the value of BFC as a Premier League club. If things aren't going so well values will be lower.

Most on this mb speak of £170m paid for 84% shares, or roughly £200m for the whole club (including small shareholders). I think there has to be an element of the price that was contingent on remaining in the Premier League. Whether this reduction in purchase price gets into the public domain I don't know.

Alan Pace's objective in buying Burnley Football Club is to make money from the rising values of all Premier League clubs - based on a comparable to US sports franchise values. I don't know if some of these rising values will also be reflected in rising values amongst the top clubs in the Championship.

Now is not the time to offer the club for sale. So long as the obligations to MSD are being met - and it appears that the amount outstanding has already fallen to £45m - no one will be exploring sales values.

UTC

[Big Vinny K]

Football club valuations start with income first and foremost.
That's why I've based mine on revenue.

You are saying this like it’s a fact.
What you are saying is illogical
Football club revenue is volatile and not guaranteed. Amongst other things it’s dependent on the performance of the team.
Why do you think anyone would value any business based on a number that is volatile, uncertain and laden with risk ?

If a football club had a current revenue stream of say £120m per annum but had a wage bill of £90m per annum and a £400m loan with annual interest of £40m do you still think that the valuation ‘starts with income first and foremost” ?

[Quickenthetempo]

How much was the ground sold for a few years ago?

Was it 6 to 8m and rented back for 500k a year?

Will give us an idea to start from.

[gawthorpe_view]

How much was the ground sold for a few years ago?

Was it 6 to 8m and rented back for 500k a year?

Will give us an idea to start from.

Seem to remember it to have been around £3,000,000 and an annual rent of £300,000.

[Big Vinny K]

How much was the ground sold for a few years ago?

Was it 6 to 8m and rented back for 500k a year?

Will give us an idea to start from.

£6m does ring a bell.
At this time Barry K moved it to the holding company to protect it - a really honourable thing to do from a very honourable guy who always put the clubs interest first in everything he did.
Since then we invested another £10m or so at our training ground so I suppose you could say between the Turf Moor and Gawthorpe they are worth about £20m ?

But when you are valuing things like training grounds or football stadiums then the true valuation is partly dependent on potential alternatives development opportunities. I doubt Turf Moor is worth much based on this and Gawthorpe who knows ?
Arsenal’s was in Islington wasn’t it I think ?…..but we know land round there has had ridiculous increases in value in last 20 years.

Then you have Real Madrids training ground which somehow the council / city valued and bought for several gagillions so they could get their team back up to the richest in the world !!

[GodIsADeeJay81]

You are saying this like it’s a fact.
What you are saying is illogical
Football club revenue is volatile and not guaranteed. Amongst other things it’s dependent on the performance of the team.
Why do you think anyone would value any business based on a number that is volatile, uncertain and laden with risk ?

If a football club had a current revenue stream of say £120m per annum but had a wage bill of £90m per annum and a £400m loan with annual interest of £40m do you still think that the valuation ‘starts with income first and foremost” ?

Yes because the income determines what's affordable.

If we were operating with a £90 million wage bill but income was only £45 million then the club is clearly at massive risk, bigger risk than if it had £120 million income.

Burnley is ran within its means, at present our income should cover all the outgoings.

[GodIsADeeJay81]

If Burnley had spent the last 6 yrs in the PL growing all potential revenue streams so that the TV money wasn't the main income then it would be viewed differently and less of a risk financially than it is now.

The bigger clubs grow their revenue streams, so they far surpass the TV monies, this is all used to calculate the value of the club's.
That's one of the reasons why a club like Chelsea went for billions and one like Newcastle went for hundreds of millions.

[Big Vinny K]

Yes because the income determines what's affordable.

If we were operating with a £90 million wage bill but income was only £45 million then the club is clearly at massive risk, bigger risk than if it had £120 million income.

Burnley is ran within its means, at present our income should cover all the outgoings.

Semantics - affordability is obviously determined by both income and costs.
Valuations are a much more complex formula based around the risks and volatility of income and costs.

As for our present position if you believe our current income covers all our outgoings then i’m not sure you understand what is currently happening at the club.

[Tall Paul]

Can you really not see? There is more to "value of the company" than what the balance sheet says.

Even if we forget the cash, before the takeover we had no loan creditors and no loan debtors.

After the takeover we had a £65m loan creditor on which interest of 10% is payable every year, and a £65m loan debtor that is earning us nothing.

Do you really, truly, believe that the club is no worse off for that? That paying £7m per year in interest does not make the club any worse off?

More strawman arguments. Try arguing against what I actually said instead of the imaginary things you think I said.

Do you seriously believe that to be the case ?
How on gods earth can the club not be significantly less given the reduction in revenue (obviously not part of any takeover audit) and the significant increase in short and long term creditors (ie the debt and it’s double figure annual interest rate) ?

I have acknowledged that relegation and reduction in income will have reduced the value of the club, as will the interest on creditors.

What doesn't significantly reduce the valuation is the money ALK have borrowed from the club unless and until that money becomes irrecoverable.

[Jakubclaret]

You could echo - we are in bad hands through a very very loud tannoy system copious decibels certain people will have their ear defenders clamped on, it will run it’s course with whatever’s left.

[ClaretPete001]

I see that you were arguing that someone can use the term "fire sale" to mean anything they want on another post and the rest of us can accept what has been said even though we know it's wrong. I'm undecided whether you are arguing against yourself this time or you are just not understanding what you are typing. I know I don't understand why you and other posters keep insisting on arguing that "red is blue" (or any other opposites).

The point is the same. Language is understood in context. When someone uses the term fire sale on a football forum it isn’t intended to mean it’s literal interpretation as defined by a dictionary: a sale brought on by financial straits or bankruptcy. That is not what is meant.


In this thread the term investment is meant to denote inward investment in the club in terms of financial backing. An investor can be someone who buys a few shares in the stock market or takes a big chunk of a business or puts money into a business.

I think it is you and others who who engages in endless semantics to obfuscate the point.

Aggi and dst were clearly not talking about investment in the same sense as you. And you know it!

They aren’t stupid and neither are you!

[Paul Waine]

The point is the same. Language is understood in context. When someone uses the term fire sale on a football forum it isn’t intended to mean it’s literal interpretation as defined by a dictionary: a sale brought on by financial straits or bankruptcy. That is not what is meant.


In this thread the term investment is meant to denote inward investment in the club in terms of financial backing. An investor can be someone who buys a few shares in the stock market or takes a big chunk of a business or puts money into a business.

I think it is you and others who who engages in endless semantics to obfuscate the point.

Aggi and dst were clearly not talking about investment in the same sense as you. And you know it!

They aren’t stupid and neither are you!

How's anyone to know, Pete, if every time a poster types something that they aren't using the words in the way that other people understand them, but are using them in their own select meaning? I've not brought semantics into any thread and I'm not seeking to obfuscate anything. I like simple, straightforward facts.

[GodIsADeeJay81]

Semantics - affordability is obviously determined by both income and costs.
Valuations are a much more complex formula based around the risks and volatility of income and costs.

As for our present position if you believe our current income covers all our outgoings then i’m not sure you understand what is currently happening at the club.

Our £80-90 million wage bill and £120 million income are no more.
We've shifted off a large amount of higher earning players, we have relegation clauses for the remaining ones and the new players are on wages appropriate to the league we're in and the revenue.

We have parachute payments and normal EFL income to supplement it so yes I'd be fairly confident in saying our outgoings are covered, but of course we won't know until 2024 when the accounts for the new season are released.

I'm aware of the valuation of clubs, I've read enough articles about it these last couple of years because I don't feel the need to sit here asking how the club was valued as such when sold to ALK.

[ClaretPete001]

Chelsea is worth 2.5 billion because of its West London location and global brand.

You can’t compare the rental yield of a terrace in Hampstead with one in Accrington Road or Stoneyholme just because they are terraced houses.

And you can’t compare the revenue generation of clubs like Newcastle or Chelsea with Burnley. The previous owners generated more from matchday revenue than Rovers entire turnover but it’s still less than half that of Newcastle because we don’t have 50,000 fans buying shirts and tickets and we don’t live in a city with a recognisable brand.

We are a community club that has punched above our weight for well over a 100 years. We are what we are...!

[Big Vinny K]

Our £80-90 million wage bill and £120 million income are no more.
We've shifted off a large amount of higher earning players, we have relegation clauses for the remaining ones and the new players are on wages appropriate to the league we're in and the revenue.

We have parachute payments and normal EFL income to supplement it so yes I'd be fairly confident in saying our outgoings are covered, but of course we won't know until 2024 when the accounts for the new season are released.

I'm aware of the valuation of clubs, I've read enough articles about it these last couple of years because I don't feel the need to sit here asking how the club was valued as such when sold to ALK.

I agree that we won’t know for sure until the accounts are published.
However, we do know that this year we have to service interest on the debt for the first time and we have the one off exceptional costs of paying off SD and his coaching team - the total of which for both of these we can estimate are going to be significant (at least £20m ?)
The other big clues we are seeing which point to our parachute payment revenue and match day and sponsorship revenue not being enough to cover our expenditure is of course the fact that we are not only selling most of our players but also the fact that we are entering into very expensive financial arrangements like invoice discounting deals to bring money in quicker than the structure of those sales we have agreed.
Have you any idea at the cost of invoice discounting ? I do….and it’s an extreme measure for us to take to say the least and a very strong pointer at the present state of our finances.

[ClaretPete001]

How's anyone to know, Pete, if every time a poster types something that they aren't using the words in the way that other people understand them, but are using them in their own select meaning? I've not brought semantics into any thread and I'm not seeking to obfuscate anything. I like simple, straightforward facts.

Well philosophers have spent millennia trying to unpick the secrets of language: Sausserre, Derrida etc and in the end none have been able to fix it’s meaning.

Derrida famously argued for deconstructionism and the view that language is only understood because it’s meaning is like no other. In other words, we understand that a dog is a dog because it is not a cat. There was is no discernible reason for a dog to be described as such.

But I think it is safe to assume that when the person on here used the term fire sale he did not intend to get into a semantical discussion based on whether the club was going bankrupt or otherwise.

Of course, someone who puts 10-15 million into a club and then takes out £50 million and borrows another £65 million leveraged against its assets is an investor who has made an investment: like ALK

So, is someone who buys the club and then invests £200 million of their, or their companies money into it, as the Venky’s have done.

Same words very different outcomes. I can’t make the meaning of language simple for you but in truth I don’t think I need to.

[Paul Waine]

Well philosophers have spent millennia trying to unpick the secrets of language: Sausserre, Derrida etc and in the end none have been able to fix it’s meaning.

Derrida famously argued for deconstructionism and the view that language is only understood because it’s meaning is like no other. In other words, we understand that a dog is a dog because it is not a cat. There was is no discernible reason for a dog to be described as such.

But I think it is safe to assume that when the person on here used the term fire sale he did not intend to get into a semantical discussion based on whether the club was going bankrupt or otherwise.

Of course, someone who puts 10-15 million into a club and then takes out £50 million and borrows another £65 million leveraged against its assets is an investor who has made an investment: like ALK

So, is someone who buys the club and then invests £200 million of their, or their companies money into it, as the Venky’s have done.

Same words very different outcomes. I can’t make the meaning of language simple for you but in truth I don’t think I need to.

It's always great when you are quoting philosophy, Pete. However, how you can decide that someone said "fire sale" but didn't mean "fire sale, because the club was going bankrupt" I've no idea. There are a number on here who are claiming that the club is going bankrupt. Can you confirm that you aren't one of those and that you don't feel the club is going bankrupt? I'm still inclined to believe that if a football result is announced as 1-0 it means the first team named scored one goal and won the game by that score. I you going to tell me that that is being semantic and I should consider if it meant something else?

[aggi]

I'm not going to engage in your strawmanning tactics.

The fact is that the independent auditors were satisfied that the balance is recoverable and therefore it doesn't reduce the value of the company.

The note on the recoverability is interestingly circular. It's basically stating that the club has enough assets to pay up to the owners for them to pay off the loan.

It's technically correct from an accounting viewpoint but it's not going to be valued at 100% when you're considering it as an asset in DD.

[aggi]

How's anyone to know, Pete, if every time a poster types something that they aren't using the words in the way that other people understand them, but are using them in their own select meaning? I've not brought semantics into any thread and I'm not seeking to obfuscate anything. I like simple, straightforward facts.

As I said, it was very specific phrasing that was commented on

[that money] flows through to meet the investment needs of the club, in exactly the same way as the original equity that ALK put into the deal when they bought the club

[dsr]

What doesn't significantly reduce the valuation is the money ALK have borrowed from the club unless and until that money becomes irrecoverable.

There, you are flat out wrong. Sorry to be so abrupt, but there it is.

You can't claim you're talking about the balance sheet figure as a valuation, because the balance sheet records historic cost, not the valuation. What we are talking about as valuation is what someone would think the club was worth - the sales value, if you like.

And let this not be in doubt. A cash balance of £37m is worth £37m. When someone is factoring in what that cash balance is worth, it's £37m. no discount.

And if we have an IOU for £102m and a loan creditor of £65m, it's different. The loan creditor is worth negative £65m, that's not in doubt. It's as certain (in its negative way) as cash. But when the valuer is assessing what the IOU for £102m is worth, he's not going to say "well, ALK haven't gone bust yet, and there's a chance that lightning might strike 3 times and Burnley get back in the Pl again, so the debt's as certain as cash". The valuer is going to discount that IOU because it's more likely than not that it won't be received. So the IOU plus loan creditor has less value than the cash.

[GodIsADeeJay81]

Chelsea is worth 2.5 billion because of its West London location and global brand.

You can’t compare the rental yield of a terrace in Hampstead with one in Accrington Road or Stoneyholme just because they are terraced houses.

And you can’t compare the revenue generation of clubs like Newcastle or Chelsea with Burnley. The previous owners generated more from matchday revenue than Rovers entire turnover but it’s still less than half that of Newcastle because we don’t have 50,000 fans buying shirts and tickets and we don’t live in a city with a recognisable brand.

We are a community club that has punched above our weight for well over a 100 years. We are what we are...!

Chelsea is worth £2.5 billion because of the amount of revenue they generate
That would apply if they were in London, Manchester, Liverpool or Newcastle.

[GodIsADeeJay81]

I agree that we won’t know for sure until the accounts are published.
However, we do know that this year we have to service interest on the debt for the first time and we have the one off exceptional costs of paying off SD and his coaching team - the total of which for both of these we can estimate are going to be significant (at least £20m ?)
The other big clues we are seeing which point to our parachute payment revenue and match day and sponsorship revenue not being enough to cover our expenditure is of course the fact that we are not only selling most of our players but also the fact that we are entering into very expensive financial arrangements like invoice discounting deals to bring money in quicker than the structure of those sales we have agreed.
Have you any idea at the cost of invoice discounting ? I do….and it’s an extreme measure for us to take to say the least and a very strong pointer at the present state of our finances.

Cost of sacking Dyche and co - depends entirely on the terms of the sacking.
We could be paying them for the duration of their previous contracts,
, but with a clause that we stop paying them when they get a new job, which is actually quite common.

Those sackings could cost £20 million, or they could cost less than half of that, you just don't know.

[Big Vinny K]

Cost of sacking Dyche and co - depends entirely on the terms of the sacking.
We could be paying them for the duration of their previous contracts,
, but with a clause that we stop paying them when they get a new job, which is actually quite common.

Those sackings could cost £20 million, or they could cost less than half of that, you just don't know.

Half of the £20m I referred to is the double figure interest rates we are now paying on the debt we have to service.
The other £10m is a guess - and you are correct I don’t know for sure. It could very easily be a lot more than £10m too given SD was on a widely reported £3.5m a year.

But we will probably have to budget and account for paying for paying out the whole of the contract terms as it’s a kind of contingent liability type cost.

But it all comes back to the same point we don’t know whether our expenditure is covered by our revenue but there are many pointers that we are not - maybe have a look in the players car park now compared to last season !!

[GodIsADeeJay81]

Half of the £20m I referred to is the double figure interest rates we are now paying on the debt we have to service.
The other £10m is a guess - and you are correct I don’t know for sure. It could very easily be a lot more than £10m too given SD was on a widely reported £3.5m a year.

But we will probably have to budget and account for paying for paying out the whole of the contract terms as it’s a kind of contingent liability type cost.

But it all comes back to the same point we don’t know whether our expenditure is covered by our revenue but there are many pointers that we are not - maybe have a look in the players car park now compared to last season !!

Why?
Does the type of car purchased by players, usually on finance, dictate the club's revenues and affordability?
When Chris eagles was driving around in his Lamborghini or BMW X6 was that a reflection of the club's finances?