ClaretPete001 wrote: ↑Tue Jun 21, 2022 10:57 pm
The TV money is 85 per cent of the income the rest is yadda yadda. If the TV money does not change then everything else is pretty much irrelevant because the owners of the business have struck deals with PL broadcast revenue in mind.
This is not a complex business because 85% of the revenue is guaranteed and
paid in advance. Either you are suggesting the former owners of the business are utterly incompetent or they knew exactly the position of the cash at any given point.
They knew the nature of the deal - they knew the TV revenue - give them some credit Paul it's embarrassing to think they could not do a simple cash flow forecast to ascertain that at least £37 million was spare to spend on shares and probably more.
Good morning, Pete. in one of your earlier posts you listed the tv rights revenue for 4 seasons. The amounts varied, some earlier seasons the club received more than in later seasons. The reason for this is that an element of the tv rights that each club receives is determined by the position the club achieves at the end of the season: 7th, 10th, 16th, 17th - and last season, 18th. The old board led by Mike Garlick were very competent, we've seen it posted on this mb many times that they budgeted on the tv rights the club would receive on the basis that every season the club finished 17th. When the club finished higher than that, some of the extra revenue would be paid in bigger player bonuses, some was put aside as, let's call it "rainy day" money. The rest would be in the pot for other necessary expenditure, maybe a little "wriggle room" in contract discussions with existing players, maybe a little more room to manoeuvre in the transfer market - though rarely sufficient, especially as more billionaires upped their spending at other clubs.
The tv rights money is paid out in stages over the season. Obviously, as an element depends on where each club finishes the season that final payment isn't received until the season is completed. The first instalment is paid in July, before the season starts. Receipt of that first instalment is shown on the balance sheet of the accounts when the period end is 31st July - and, offset by an equal entry for deferred income in those accounts, so that it's not counted as revenue for the previous season. Similarly, when the accounting period end was 30th June the period end cash balance won't show the receipt of money that hadn't been received on or before that date. Can I assume that you now understand this point? I notice that you haven't mentioned the period end cash balances in the post above.
Yes, the previous owners were competent. Yes, the previous owners were capable of knowing exactly how much money the club had at any point in time. Yes, the previous owners were capable of preparing cash flow forecasts. And, the previous owners will have understood that an element of the tv rights money is dependent on where the club finished the season - and that the higher the club finishes player bonuses increase, so there's extra incoming revenue and extra outgoing payments. I'll go further, Mike Garlick was smart enough to know that he didn't have the finances to keep the club competing at the top level. It's reasonable to assume that this was discussed with all the other directors and all of them also concluded that they didn't have the money needed to put more into the club. So, the decision was made to sell to new owners.
Yes, Mike Garlick and all the other directors were competent to know what the club had to sell, the club's status as a Premier League team, the rules that the bottom three teams were relegated at the end of every season, the players contracted to the club, the terms of those contracts/wages and bonuses, their length of contract, their ages and that every year the players would be a year older... The directors would also have known the club's land and building assets, Turf Moor, the condition of the stands, Barnfield training centre. They would also know the cash in the bank, including that they had built this up, "rainy day" money or, as some have termed it, "dry powder store."
Prospective new owners would also look at all these things about the club. The selling and buying process is about laying everything out so that the sellers achieve the deal that meets their aims and that the prospective buyers are prepared to and capable of completing the deal that they intend.
I find it odd that you want to attribute to Mike Garlick the decision that the club had a lot of spare cash that a new owner could use to buy Mike Garlick's (and the other directors) shares. A new owner will make their own decisions about these things. A new owner is capable of making their own decisions about how they wish to finance the purchase. We've seen, through the public domain filings how Alan Pace/ALK have financed the deal up to this stage: a loan from MSD, originally believed to be £60m, the BFC accounts have shown us it is £65m, with a "significant amount" "to be agreed" between ALK and MSD, to be repaid early on relegation, documents filed with TISE, Guernsey, reveal this is £15m; BFC accounts also report £37m and after the year end £10m. There's also the Macquarie loan, which confirms that NUFC owes BFC £12.5m for the transfer of Chris Wood. We've also recently seen Peter Crouch report that his contract with Stoke included 45% wage cut on relegation and his suggestion that that 45% is pretty much standard these days. There are other things we don't know and cannot see in public domain documents. We don't, for example, know the terms of the instalments due from ALK to the former directors. Have the timing of these instalments been renegotiated, as some have claimed? Was any element of these instalments subject to the club remaining in the Premier League for X seasons, is the amount due on the instalments now reduced because the club is no longer in the Premier League? Competent business people will be familiar with the frequency of "earn outs" in takeover activities. It would be surprising if the sellers and purchasers of a smaller club that has been in the bottom half of the Premier League had not considered the possibility of relegation and reflected this in the terms of the deal. Some might say it shows incompetence not to include a relegation adjustment in such a deal.
Alan Pace is, like Mike Garlick, a competent business person. He's also capable of preparing cashflow projections and making his business plans accordingly. If Alan Pace has decided that there was surplus cash in the club's bank account at the time the purchase was closed and that it would assist his plans for the acquisition of the club to use that surplus cash, along with the loan from MSD, to make the first instalments to buy the former directors' shares, then he's competent to do that.
