Update on Burnley's Finances.

[RVclaret]

Pre the takeover
We had 72mil in the bank and were in the Premier League
Were likely about to go down with 72 mil in the bank and saleable players with a fairly solid squad besides the players that would want to leave
Now
We are in high interest debt of over 100m and are in the Premier League are likely to go back down with some saleable players and an oversized squad with some quality and some excess

So we are where we were, or maybe a tad in a less good position
But 200mil poorer plus the interest
All secured on land and property of Burnley FC

Owners that are so committed they’ve gone to buy a club in a big city in a warm country which could possibly support the growth they crave and better to attract the investors that they crave

It’s Burnley not Barcelona

We had 4 saleable players out of a squad of 25+ after 7 seasons in the Prem. 2 of them signed by the new owners that season. I find that quite poor to be honest.

We aren’t in over 100m debt, the accounts you refer to are old and the latest is estimated around 70m. The interest payments are costly, but its money that’s gone towards being ambitious and backing the manager(s), firstly, with several significant profits already realised and another one soon to be.

None of that really captures how we’ve, in your words, bet the ranch. Surely this phrase suggests the entire club is on the line from a decision made? From what I can see, the owners have shown they can manage the debt, and have done so twice on relegation, while still being promoted - what’s to say they wouldn’t continue to manage it if not promoted, when the evidence so far suggests they would? They’ve been able to refinance with 3 different lenders since the first MSD loan, with sizeable companies, do you think each of these lenders would feel comfortable continuing lending to guys who were ‘betting the ranch’?

[BleedingClaret]

We had 4 saleable players out of a squad of 25+ after 7 seasons in the Prem. 2 of them signed by the new owners that season. I find that quite poor to be honest.

We aren’t in over 100m debt, the accounts you refer to are old and the latest is estimated around 70m. The interest payments are costly, but its money that’s gone towards being ambitious and backing the manager(s), firstly, with several significant profits already realised and another one soon to be.

None of that really captures how we’ve, in your words, bet the ranch. Surely this phrase suggests the entire club is on the line from a decision made? From what I can see, the owners have shown they can manage the debt, and have done so twice on relegation, while still being promoted - what’s to say they wouldn’t continue to manage it if not promoted, when the evidence so far suggests they would? They’ve been able to refinance with 3 different lenders since the first MSD loan, with sizeable companies, do you think each of these lenders would feel comfortable continuing lending to guys who were ‘betting the ranch’?

Er yeah
Cos they get the interest or they get the ranch
Cos the their loans are secured on the ranch

[aggi]

We had 4 saleable players out of a squad of 25+ after 7 seasons in the Prem. 2 of them signed by the new owners that season. I find that quite poor to be honest.

We aren’t in over 100m debt, the accounts you refer to are old and the latest is estimated around 70m. The interest payments are costly, but its money that’s gone towards being ambitious and backing the manager(s), firstly, with several significant profits already realised and another one soon to be.

None of that really captures how we’ve, in your words, bet the ranch. Surely this phrase suggests the entire club is on the line from a decision made? From what I can see, the owners have shown they can manage the debt, and have done so twice on relegation, while still being promoted - what’s to say they wouldn’t continue to manage it if not promoted, when the evidence so far suggests they would? They’ve been able to refinance with 3 different lenders since the first MSD loan, with sizeable companies, do you think each of these lenders would feel comfortable continuing lending to guys who were ‘betting the ranch’?

What's the £70m based on?

Our interest costs least year were higher than the fee for our record signing. It really does rely, at the moment, on the conveyor belt continuing indefinitely which other clubs have certainly struggled with.

[RVclaret]

What's the £70m based on?

Our interest costs least year were higher than the fee for our record signing. It really does rely, at the moment, on the conveyor belt continuing indefinitely which other clubs have certainly struggled with.

Was just going off what Chester replied to me earlier, after I’d said the £40m was a new charge, possibly replacing the previous (see below). And yeah, agree there, like you said before even Championship clubs who try and adopt that type of model are still losing money.

You do realise we have only been paying down debt when forced to by relegation as for current debt we can assume (yes I know) that £112m - £82m + £40m = £70m and all that is before we look at transfer debt.

[Wokingclaret]

........but our last Chairman wanted out, with a sale.

[ClaretPete001]

What would you rate the current team at in terms of value for us to see though? On the face of it maybe it seems high. But out current side could be worth 150-200? And is 250m a net spend taking sales into account?

I would have thought the 7 following would attract around 150m Trafford, Esteve, Edwards, Anthony, Hartman, Tchouna and Koleosho.

With the likes of Tresor, Amdouni, Ramsey, Flemming Hannibal pushing another 50m.

That's 12 players with a total around 200m. Maybe we havnt done that badly after all?

Transfermarket values the squad at Eur227 million. The problem is that a widget factory that isn't making a profit on widgets can't sell its widget machine and hope to increase profits.

You need a squad, and players have contracts. I'm guessing it's not that easy to sell them otherwise we likely wouldn't have a squad of nigh on 40.

I'm expecting we will sell some big assets and quite a number of squad player to generate funds to re-balance the squad.

Achieving that is a short term measure of whether ALK are succeeding or otherwise. We'll soon know one way or the other so lets hang fire and judge when the new season starts based upon more evidence.

Personally, I think we are in a better place than the last time we got promoted with the proviso we do a small amount of wise business in the next few weeks. And that in its own way is a good indicator of how much investment money we have and how easy it is to the right players when you need them.

[Conroy92]

Transfermarket values the squad at Eur227 million. The problem is that a widget factory that isn't making a profit on widgets can't sell its widget machine and hope to increase profits.

You need a squad, and players have contracts. I'm guessing it's not that easy to sell them otherwise we likely wouldn't have a squad of nigh on 40.

I'm expecting we will sell some big assets and quite a number of squad player to generate funds to re-balance the squad.

Achieving that is a short term measure of whether ALK are succeeding or otherwise. We'll soon know one way or the other so lets hang fire and judge when the new season starts based upon more evidence.

Personally, I think we are in a better place than the last time we got promoted with the proviso we do a small amount of wise business in the next few weeks. And that in its own way is a good indicator of how much investment money we have and how easy it is to the right players when you need them.

While I agree with most of what you've put. I don't think this is a shirt term tactic or measure for ALK. I expect the debt to rise along with the squad value.

While I agree with your analysis about the widget machine to some extent it's only relevant in the world of having one widget machine and not 11 of them. Or 40 for that matter.

What seems closer to the reality to me is investing in multiple widget machines many of which can run better as they get older. To the point where you look at the 40 widget machines as a whole and think they've improved to a point where I can afford to sell a few of these and re invest again. We won't ever see the debt decrease. It will increase. But providing the value of the squad and assets at the club continue to rise inline with this I think it will be a long term strategy.

[Goody1975]

I don't want to contribute to this any further but sometimes something is so far removed from the truth you feel inclined to respond despite yourself.

ALK spent £124 million on shares after they bought the club - out of club money. They spent almost £50 million almost straight away. Alan Pace was able to buy the club because the previous owners had a big wedge in the bank.

How do you square those facts with your view that we required outside investment?

Good chat, thanks for putting me in my place.

[Spike]

It doesn’t make common sense to me to “buy” another club until your first club is returned to a debt free position
Would you land something you “supposedly “ love with this level of interest payments ?
If there was money to be raised then why not free Burnley from these interest payments?

[beeholeclaret]

This is a response from google using their AI module which briefly explains how companies can run a successful business by use of debt.

“Businesses find it advantageous to carry debt because it can offer a cost-effective way to finance growth, maintain ownership, and potentially reduce tax burdens through tax-deductible interest payments. Debt financing also allows for predictable repayment schedules and can improve a company's credit rating when managed responsibly. “

I remember speaking to accountants during my working days and they always encouraged people to maintain mortgages and loans so that interest charges can be set against profits which may otherwise be heavily taxed.


I’m Not saying this applies to BFC but these guys seem to know a hell of a lot more than me about running a business and using the money markets. The key thing is being able to maintain payments and fund the debts without default which would have a negative effect on confidence and credit ratings. In those circumstances the next time they apply for credit it will either be declined or charged at extortionate rates.

I’ve said before a lot of these transactions are done using ‘smoke and mirrors’ and it is difficult to see who is lending what and to who. Hopefully they have a lot more investors on board having been involved with BFC for over 4 years now?

[Clive 1960]

Worries me they are investing in another club when we need a new stand in the Cricket field instead of changing seats and putting a lick of paint on walls for new season ...

[ClaretPete001]

Good chat, thanks for putting me in my place.

I'm sorry Goody, but when the 'external investment takes £124 million out of our of the club it is a bit galling but apologies if I went OTT.

Sometimes you forget there is a person at the other end of the comment.

[Orangebernard]

I think what this thread, the takeover thread and the many others that have appeared over the tenure of ALK, shows is that we as ‘stakeholders’ in our club are left guessing as to the actual finances, the strategies and the motivations of our current major shareholders. The lack of information and the bits that are publicly available, albeit usually a year out of date, leads to us all making educated guesses. I wouldn’t expect them to share confidential business information with us but I do think they have a responsibility to explain the thinking behind their strategies especially in matters such as MCO’s etc. we are not customers of a shop or engineering firm we are passionate supporters of an historic football club that forms a part of peoples lives in the local area, across the country and beyond. I think a little more understanding from them and appreciation of our perspective would go a long way.

[GetIntoEm]

Worries me they are investing in another club when we need a new stand in the Cricket field instead of changing seats and putting a lick of paint on walls for new season ...

They are not using Burnley FC money to fund Espanyol. It has no financial link like that

[Chester Perry]

They are not using Burnley FC money to fund Espanyol. It has no financial link like that

I suppose the question is:

Do you think that, if Velocity didn't owe Burnley FC circa £97m interest free with no pressure to repay, that they would have the funds to stump up EUR 65m for the Espanyol deal, plus other costs?

which ever way you answer, it is still apparent that Burnley FC is enabling these activities

[Paul Waine]

I suppose the question is:

Do you think that, if Velocity didn't owe Burnley FC circa £97m interest free with no pressure to repay, that they would have the funds to stump up EUR 65m for the Espanyol deal, plus other costs?

which ever way you answer, it is still apparent that Burnley FC is enabling these activities

I'm pretty sure it's the wrong question, CP. The question should be what is it that makes people with money want to invest in Velocity Sports (managed by Alan Pace/ALK) providing the funds so that Velocity Sports can buy a second "historic football club that forms a part of passionate supporters lives in the local area, across the country and beyond?" (The second historic football club is, of course, Espanyol).

The answer has got to be that (1) they are happy with how Velocity Sports has performed, so far; (2) they judge that Velocity Sports will perform better as a multi club operation with both Burnley and Espanyol in the portfolio than they would if Burnley FC was the only club in the group.

Don't forget that investors in Velocity Sports (the US entity) will receive all the financial information they require to make their initial investments and to continue to support their investments, including adding to their investments.

So, yes, Alan Pace/ALK/Velocity Sports track record in their ownership of Burnley FC is enabling the same team's investment in Espanyol. For me, that's good news for Burnley FC and BFC fans.

As for paying off BFC debts before any further investments? I don't think that's how it works. I suggest we should think of someone building a buy-to-let property portfolio. (This is not personal experience, I'm not interested in owning any buy-to-lets, myself). If the first buy-to-let has been bought on a mortgage, the investor won't wait until they've first paid off that mortgage before buying a second buy-to-let property on a second mortgage - and the same with the third, and so on... Of course, multiple buy-to-let properties provide more certainty of income, so that a void in the rental of one property can be covered by the rental income from other properties without the risk of falling into arrears on any of the mortgages.

[willsclarets]

I suppose the question is:

Do you think that, if Velocity didn't owe Burnley FC circa £97m interest free with no pressure to repay, that they would have the funds to stump up EUR 65m for the Espanyol deal, plus other costs?

which ever way you answer, it is still apparent that Burnley FC is enabling these activities

This is what bothers me. Making any investment should carry risk to your own capital, and they haven't risked a sausage to buy Burnley FC. Whatever you think of how they run the football club, this is an underlying fact that is unacceptable. Buying Espanyol while owing us £97 million makes this all the more so.

[willsclarets]

I'm pretty sure it's the wrong question, CP. The question should be what is it that makes people with money want to invest in Velocity Sports (managed by Alan Pace/ALK) providing the funds so that Velocity Sports can buy a second "historic football club that forms a part of passionate supporters lives in the local area, across the country and beyond?" (The second historic football club is, of course, Espanyol).

The answer has got to be that (1) they are happy with how Velocity Sports has performed, so far; (2) they judge that Velocity Sports will perform better as a multi club operation with both Burnley and Espanyol in the portfolio than they would if Burnley FC was the only club in the group.

Don't forget that investors in Velocity Sports (the US entity) will receive all the financial information they require to make their initial investments and to continue to support their investments, including adding to their investments.

So, yes, Alan Pace/ALK/Velocity Sports track record in their ownership of Burnley FC is enabling the same team's investment in Espanyol. For me, that's good news for Burnley FC and BFC fans.

As for paying off BFC debts before any further investments? I don't think that's how it works. I suggest we should think of someone building a buy-to-let property portfolio. (This is not personal experience, I'm not interested in owning any buy-to-lets, myself). If the first buy-to-let has been bought on a mortgage, the investor won't wait until they've first paid off that mortgage before buying a second buy-to-let property on a second mortgage - and the same with the third, and so on... Of course, multiple buy-to-let properties provide more certainty of income, so that a void in the rental of one property can be covered by the rental income from other properties without the risk of falling into arrears on any of the mortgages.

In your analogy, ownership cannot become a reality before the owner receives money from the mortgage provider on behalf of the buyer. And the mortgage provider is not going to be happy until it's pretty sure monies are going to be paid with interest. In our case, as "the property owner", we aren't getting paid by "the mortgage provider". The investors get their property, the mortgage provider/lenders get their money with interest, and we're hoping at some point we get some money. I don't see how it's the same, but happy to admit you're more of an expert here!

[aggi]

I'm pretty sure it's the wrong question, CP. The question should be what is it that makes people with money want to invest in Velocity Sports (managed by Alan Pace/ALK) providing the funds so that Velocity Sports can buy a second "historic football club that forms a part of passionate supporters lives in the local area, across the country and beyond?" (The second historic football club is, of course, Espanyol).

The answer has got to be that (1) they are happy with how Velocity Sports has performed, so far; (2) they judge that Velocity Sports will perform better as a multi club operation with both Burnley and Espanyol in the portfolio than they would if Burnley FC was the only club in the group.

Don't forget that investors in Velocity Sports (the US entity) will receive all the financial information they require to make their initial investments and to continue to support their investments, including adding to their investments.

So, yes, Alan Pace/ALK/Velocity Sports track record in their ownership of Burnley FC is enabling the same team's investment in Espanyol. For me, that's good news for Burnley FC and BFC fans.

As for paying off BFC debts before any further investments? I don't think that's how it works. I suggest we should think of someone building a buy-to-let property portfolio. (This is not personal experience, I'm not interested in owning any buy-to-lets, myself). If the first buy-to-let has been bought on a mortgage, the investor won't wait until they've first paid off that mortgage before buying a second buy-to-let property on a second mortgage - and the same with the third, and so on... Of course, multiple buy-to-let properties provide more certainty of income, so that a void in the rental of one property can be covered by the rental income from other properties without the risk of falling into arrears on any of the mortgages.

So I'm guessing in this analogy the fans are the tenants hoping they don't have a rogue landlord or one who has over-leveraged and will need to sell up.

I would agree though that I don't expect Burnley under ALK to become debt-free. There are probably always going to be loans, the question is what they'll be used for and whether they are servicable.

[Claretnick]

So I'm guessing in this analogy the fans are the tenants hoping they don't have a rogue landlord or one who has over-leveraged and will need to sell up.

I would agree though that I don't expect Burnley under ALK to become debt-free. There are probably always going to be loans, the question is what they'll be used for and whether they are servicable.

Surely if the lenders were not happy with the financial information supplied to support a lending request they would decline the facility.
In my old NatWest days it was the Canons of Lending that we were supposed to follow. Then credit scoring took over and made the decisions. Presumably AI plays a role in the decision making now.

[aggi]

Surely if the lenders were not happy with the financial information supplied to support a lending request they would decline the facility.
In my old NatWest days it was the Canons of Lending that we were supposed to follow. Then credit scoring took over and made the decisions. Presumably AI plays a role in the decision making now.

Things change (we only need to look at previous director Brendan Flood for an illustration).

The lenders are obviously aware that there is an element of risk which is why the loans have hefty interest rates attached to them.

[Big Vinny K]

Surely if the lenders were not happy with the financial information supplied to support a lending request they would decline the facility.
In my old NatWest days it was the Canons of Lending that we were supposed to follow. Then credit scoring took over and made the decisions. Presumably AI plays a role in the decision making now.

It’s changed a lot since your NatWest days !!
Banks rarely lend to football clubs these days - they do not like the sector as a whole.
But there are also many many more sources of finance than back in the day and a lot of specialist finance companies for football clubs too

As said the interest rates reflect the risk but also reflect that these companies are not your traditional type lenders. 20 years ago banks would be lending to football clubs at nearer to 1% over the old LIBOR rates (which were not far off base rates)

[Paul Waine]

In your analogy, ownership cannot become a reality before the owner receives money from the mortgage provider on behalf of the buyer. And the mortgage provider is not going to be happy until it's pretty sure monies are going to be paid with interest. In our case, as "the property owner", we aren't getting paid by "the mortgage provider". The investors get their property, the mortgage provider/lenders get their money with interest, and we're hoping at some point we get some money. I don't see how it's the same, but happy to admit you're more of an expert here!

I think we know that the previous shareholders in BFC, Mike Garlick, John B, Barry Kilby et al all got paid in full - according to the terms of the sale agreement they entered into (I acknowledge that CP has reported delays in some of the payments). I think we also know that the new owners borrowed funds, some from the club's resources and some from MSD, to make some (all?) of these payments. If we continue the buy-to-let analogy the cash in BFC's bank account is comparable to the buy-to-let property having some spare land, not needed for the buy-to-let, that can be sold off and converted to cash to pay the previous shareholders.

Yes, I know that you are referring to the football club itself (with a link to Burnley fans) when you mention "the property owner" not "getting paid by the mortgage provider." We can all understand the "passion of the fans" - but there's a bit more than passion required to make the fans "BFC owners."

[Paul Waine]

So I'm guessing in this analogy the fans are the tenants hoping they don't have a rogue landlord or one who has over-leveraged and will need to sell up.

I would agree though that I don't expect Burnley under ALK to become debt-free. There are probably always going to be loans, the question is what they'll be used for and whether they are servicable.

That's stretching things quite a lot to make the fans the tenants of the buy-to-let. Maybe some of them live in the same street. Maybe some of them look over the fence. Maybe some of them welcome their new neighbours. Maybe others have views on who should and who shouldn't be the tenants of the buy-to-let... (based on transfer threads, etc, etc).

In another post I propose that Velocity has raised money from Velocity investors (possibly a combination of additional money from from existing investors and new money from new investors) because they have seen how Alan Pace et al have managed BFC for 4.5 years and are happy to back Velocity in buying Espanyol. I think we should take that as good sound indication that BFC debts are serviceable at the present time.

[Rileybobs]

That's stretching things quite a lot to make the fans the tenants of the buy-to-let. Maybe some of them live in the same street. Maybe some of them look over the fence. Maybe some of them welcome their new neighbours. Maybe others have views on who should and who shouldn't be the tenants of the buy-to-let... (based on transfer threads, etc, etc).

In another post I propose that Velocity has raised money from Velocity investors (possibly a combination of additional money from from existing investors and new money from new investors) because they have seen how Alan Pace et al have managed BFC for 4.5 years and are happy to back Velocity in buying Espanyol. I think we should take that as good sound indication that BFC debts are serviceable at the present time.

To be fair, it’s a bit of a stretch to compare our ownership structure to that of a buy-to-let landlord.

[Claretnick]

It’s changed a lot since your NatWest days !!
Banks rarely lend to football clubs these days - they do not like the sector as a whole.
But there are also many many more sources of finance than back in the day and a lot of specialist finance companies for football clubs too

As said the interest rates reflect the risk but also reflect that these companies are not your traditional type lenders. 20 years ago banks would be lending to football clubs at nearer to 1% over the old LIBOR rates (which were not far off base rates)

Yeah I know things have changed, it's 30 years since I left them after being with them for 20 years!!
It was a clearing bank when I joined, maintaining current accounts and savings accounts, taking deposits and lending mainly overdrafts for working capital and short term loans. Oh simple times back then before they expanded into mortgages and insurance sales etc.
I remember having fraught morning conversations with a football club secretary deciding which cheques had to be bounced that day so I understand now why the main high street banks won't touch a football club...

[ClaretPete001]

Not sure it's anything like a buy to let ownership. I think it's clearer how they intend to proceed.

It will become more like, a standard Private Equity ownership where distressed ownerships/ companies are bought that add value to the group. Ostensibly costs are cut by sharing functions like Finance and Marketing or more likely, initially, functions like data science and player acquisitions are held in non-club related structures like Velocity. The group is not mature enough yet to share functions. And I guess investment can be geared where it's perceived to be most needed albeit that is unlikely to be a footballing decision.

The group is sold on its expertise at managing football clubs. ALK will disappear off to the holding companies and scour the world looking for investment opportunities with their mergers and acquisitions teams and leave management teams in place looking after the clubs.

ALK think like investors and not like owners or business people. Will it work? Well if you think about it the club now has another 3 years of PL money and the group now has Chinese investors with big money so that is game changing. Of course, it's more likely than not that the Chinese want to transition out rather than invest in the group

But we'll soon see. If we set off this season with an uncompetitive squad because of a lack of investment having sold our better players then it's not a good sign. Somewhere along the line we have to have a PL competitive squad. Unlike last time we ended last season only two or three players short. Another PL season short on investment with a squad that is uncompetitive will no doubt raise questions.

Let's wait and see.

[Paul Waine]

To be fair, it’s a bit of a stretch to compare our ownership structure to that of a buy-to-let landlord.

I didn't say anything about BFC's ownership structure or about landlords. I just used buy-to-let properties to illustrate that debt on one property doesn't have to be repaid before buying a second property. Hope some find my analogy helpful.

[Goody1975]

I'm sorry Goody, but when the 'external investment takes £124 million out of our of the club it is a bit galling but apologies if I went OTT.

Sometimes you forget there is a person at the other end of the comment.

No problem.

The previous ownership model was reliant on having a freak of a manager who could get the maximum out of not very much, I feel that started to change when players wages moved on from the usual Burnley levels.

We have a pot of money to play with for the playing squad, that is mainly split between transfers fees and wages, once the wages rose, the amount of cash available for transfers decreased and we could only continue to move forward with outside investment, that is where Alan Pace and ALK come into the story.

This is where we are now.

I think you are getting too hung up on the 'outside investment' phrase I used. My original post was in relation to the club having a pot of money in the accounts because they were able to run a Premier League football club at a profit year on year. I was intimating that the reason the mindset changed was the increase in wages we were paying the players to remain in the top flight. The board decided to look for 'outside investment' or to sell, that leads us to Alan Pace and ALK.

Not at any stage did I evaluate the takeover by ALK or give a glowing report into the state of our finances, I think you just filled in the gaps and assumed what was meant by the post is what you thought.

So in short, the previous board thought they had done what they could and wanted out, they decided to look for investment/interested parties ------------>>> they sold to ALK. My post is as simple as that.

[Paul Waine]

Not sure it's anything like a buy to let ownership. I think it's clearer how they intend to proceed.

It will become more like, a standard Private Equity ownership where distressed ownerships/ companies are bought that add value to the group. Ostensibly costs are cut by sharing functions like Finance and Marketing or more likely, initially, functions like data science and player acquisitions are held in non-club related structures like Velocity. The group is not mature enough yet to share functions. And I guess investment can be geared where it's perceived to be most needed albeit that is unlikely to be a footballing decision.

The group is sold on its expertise at managing football clubs. ALK will disappear off to the holding companies and scour the world looking for investment opportunities with their mergers and acquisitions teams and leave management teams in place looking after the clubs.

ALK think like investors and not like owners or business people. Will it work? Well if you think about it the club now has another 3 years of PL money and the group now has Chinese investors with big money so that is game changing. Of course, it's more likely than not that the Chinese want to transition out rather than invest in the group

But we'll soon see. If we set off this season with an uncompetitive squad because of a lack of investment having sold our better players then it's not a good sign. Somewhere along the line we have to have a PL competitive squad. Unlike last time we ended last season only two or three players short. Another PL season short on investment with a squad that is uncompetitive will no doubt raise questions.

Let's wait and see.

Hi Pete,

Have you had bad experience of private equity sometime? Aren't you speaking of "vulture funds" when you speak of buying distressed ownerships/companies? Private equity will be happy to acquire companies in good shape with good prospects rather than ones that are failing.

What is the distinction you are making between (i) "investors," (ii) "owners" and (iii) "business people?

I think we can be pretty certain that Espanyol's previous owners, the Chinese toy company, will exit Velocity at the agreed time. Milestones will be Alan Pace et al establishing themselves in Espanyol, earn out periods completed and final payment to the exiting owners. There will be little difference between Espanyol's previous owner's exit as there was to Mike Garlick and John B exiting BFC.

[claret wizard]

So in short, the previous board thought they had done what they could and wanted out, they decided to look for investment/interested parties ------------>>> they sold to ALK. My post is as simple as that.

Exactly. Garlick wanted out and managed the cash available to a size that meant it was attractive to sell to a leveraged buy out. It was his to make that call and he’s happily buying other football clubs with that money.

At the time everyone could see what was going on, with no new players coming in and no other obvious expenditure we knew cash in the bank must have been growing, even with a 18 month lag on financial statements. Now, no one has a clue how we’re being run or what money is where. With 18 month old accounts across multiple operating companies with some that we can’t even see their numbers it’s hard to untwist the finances. It’s like a blind man in a dark cellar being shouted instructions of how to get out by someone who was in there 18 months ago.

2 things we know, 1. someone is still throwing the money in, albeit with massive interest payments. They can see all the data we can’t so there must be a somewhat viable model in place. If we go bust they see their money go. 2. If we stay in the championship for 2 years we’ll be facing serious questions (but of course that hasn’t been the case for a decade.

Hats off to those trying to untangle the finances, but I doubt we’ll ever see what is going on.

[ClaretPete001]

Hi Pete,

Have you had bad experience of private equity sometime? Aren't you speaking of "vulture funds" when you speak of buying distressed ownerships/companies? Private equity will be happy to acquire companies in good shape with good prospects rather than ones that are failing.

What is the distinction you are making between (i) "investors," (ii) "owners" and (iii) "business people?

I think we can be pretty certain that Espanyol's previous owners, the Chinese toy company, will exit Velocity at the agreed time. Milestones will be Alan Pace et al establishing themselves in Espanyol, earn out periods completed and final payment to the exiting owners. There will be little difference between Espanyol's previous owner's exit as there was to Mike Garlick and John B exiting BFC.

No, I haven't had a bad experience. Of course, private equity companies will buy good companies but ALK seem to be under capitalised to be able to do that at this moment in time. It appears that in both purchases they have not brought a great deal of money to the table. So, in that instance I was referring to ALK as opposed to Private Equity investors but not quite as negatively as it may have sounded.

I think that companies run by passionate product people and engineers like Bill Gates, Steve Jobs, Steve Wozniak, Linus Torvalds create great product and companies.

Private equity people stink the place out with KPIs and HR.

[ClaretPete001]

No problem.



I think you are getting too hung up on the 'outside investment' phrase I used. My original post was in relation to the club having a pot of money in the accounts because they were able to run a Premier League football club at a profit year on year. I was intimating that the reason the mindset changed was the increase in wages we were paying the players to remain in the top flight. The board decided to look for 'outside investment' or to sell, that leads us to Alan Pace and ALK.

Not at any stage did I evaluate the takeover by ALK or give a glowing report into the state of our finances, I think you just filled in the gaps and assumed what was meant by the post is what you thought.

So in short, the previous board thought they had done what they could and wanted out, they decided to look for investment/interested parties ------------>>> they sold to ALK. My post is as simple as that.

Ok fair enough. To be fair to me, which I think is only reasonable - it could easily have been construed as I construed it as much as me filling in gaps.

But I agree. I think the previous owners got the club into Europe and still couldn't see a viable business model so they decided to sell.

[Goody1975]

Ok fair enough. To be fair to me, which I think is only reasonable - it could easily have been construed as I construed it as much as me filling in gaps.

But I agree. I think the previous owners got the club into Europe and still couldn't see a viable business model so they decided to sell.

Glad to get it sorted.

One thing I won't do is get involved in the finer details of balance sheets or annual accounts. I have little to no knowledge about how they work, especially in the football environment.

[ClaretPete001]

Just one question Paul, do you not think it is reasonable to expect that we have a squad capable of mounting a serious campaign in the PL this time?

We had a 100 point season in the Championship with I think a better squad going forward (not as many loanees or ageing PL players) than last time and the experience of having done it before.

Surely, three relegations after a PL season in succession would warrant some discussion as to whether the model is going to work.

The likes of Forest and Brighton invested serious amounts of money at key times to make the transition. I think a £100 million investment plus whatever we make on any sales that are forced upon us to give us a platform for success is required.

If we can't do that and we have to sell key players when we get relegated then at what point do we break the cycle before it breaks us?

[Paul Waine]

Just one question Paul, do you not think it is reasonable to expect that we have a squad capable of mounting a serious campaign in the PL this time?

We had a 100 point season in the Championship with I think a better squad going forward (not as many loanees or ageing PL players) than last time and the experience of having done it before.

Surely, three relegations after a PL season in succession would warrant some discussion as to whether the model is going to work.

The likes of Forest and Brighton invested serious amounts of money at key times to make the transition. I think a £100 million investment plus whatever we make on any sales that are forced upon us to give us a platform for success is required.

If we can't do that and we have to sell key players when we get relegated then at what point do we break the cycle before it breaks us?

I hope Burnley have a capable squad this season, one that is capable of competing and starting the 2026/27 in the Premier League.

At what point do BFC break the cycle before the cycle breaks BFC? I don't know the answer to that. I'll still be a supporter. I expect many will be. Perhaps Alan Pace will stay with BFC, perhaps he won't. That's for Alan Pace to decide.

UTC

[ClaretPete001]

I hope Burnley have a capable squad this season, one that is capable of competing and starting the 2026/27 in the Premier League.

At what point do BFC break the cycle before the cycle breaks BFC? I don't know the answer to that. I'll still be a supporter. I expect many will be. Perhaps Alan Pace will stay with BFC, perhaps he won't. That's for Alan Pace to decide.

UTC

To be fair Paul for someone who has been such an advocate for ALK/Pace that is a somewhat surprising response.

I think with a squad of nearly 40 and a Eur70 million summer spend so far we should be edging towards a squad that is good enough for the PL. And yet I doubt there is a single person on here who thinks we are there yet.

So, why don't we give them 3 KPIs seeing as people like these are so found of these things:

1) Reduce the squad to 30 (ish) players.
2) Make a profit on the players sold
3) Have a PL competitive squad by the end of summer
4) Retain the top talent
5) The achievement of a minimum of 35 points in the PL

Should they fail then I think we should organise a UTC HR department and put Mr Pace on a PIP pending the 35 point target. I can assure you no senior employee of a company run by PE suits would be allowed 3 relegations following a year in the PL. I fear were he not the owner, Mr Pace would be experiencing his own revolving door.

[Paul Waine]

To be fair Paul for someone who has been such an advocate for ALK/Pace that is a somewhat surprising response.

I think with a squad of nearly 40 and a Eur70 million summer spend so far we should be edging towards a squad that is good enough for the PL. And yet I doubt there is a single person on here who thinks we are there yet.

So, why don't we give them 3 KPIs seeing as people like these are so found of these things:

1) Reduce the squad to 30 (ish) players.
2) Make a profit on the players sold
3) Have a PL competitive squad by the end of summer
4) Retain the top talent
5) The achievement of a minimum of 35 points in the PL

Should they fail then I think we should organise a UTC HR department and put Mr Pace on a PIP pending the 35 point target. I can assure you no senior employee of a company run by PE suits would be allowed 3 relegations following a year in the PL. I fear were he not the owner, Mr Pace would be experiencing his own revolving door.

You really have had a bad time with PE, Pete.

Why, btw, have you said "3 KPIs" but then listed 5?

As it's the investors in Velocity that are the ultimate judge of Alan Pace's success the only KPI that matters for Velocity this coming year is integrate and build the two club model. Stretch target, both Burnley and Espanyol having good seasons and both maintaining their respective positions in the Premier League and La Liga.

As I said, I'll still be a Burnley supporter whatever the coming season brings. What's surprising about that?

[Cooclaret]

Worries me they are investing in another club when we need a new stand in the Cricket field instead of changing seats and putting a lick of paint on walls for new season ...

If BFC want to move forward, they need a new stadium, that’s not happening at Turf Moor, and the cricket club’s shortsightedness.

[GetIntoEm]

If BFC want to move forward, they need a new stadium, that’s not happening at Turf Moor, and the cricket club’s shortsightedness.

If we want to be serious, the CC really don't have a choice.

[ClaretPete001]

You really have had a bad time with PE, Pete.

Why, btw, have you said "3 KPIs" but then listed 5?

As it's the investors in Velocity that are the ultimate judge of Alan Pace's success the only KPI that matters for Velocity this coming year is integrate and build the two club model. Stretch target, both Burnley and Espanyol having good seasons and both maintaining their respective positions in the Premier League and La Liga.

As I said, I'll still be a Burnley supporter whatever the coming season brings. What's surprising about that?

I can assure you Paul, I'm technical and they don't bother us. It's the middle managers who tend to end up on the Merry Go Round of Redundancy/PIP etc. Or the code monkeys who get outsourced to Romania and Bulgaria. I can feel aggrieved on behalf of others.

I have never questioned your status as a Burnley fan - I'm not sure where you get that from....! I question your sanity but not that you are a Burnley fan - that would be rude.

Maintaining a place in the PL is a stretch target? Hmmm interesting but not that exciting.

[Cooclaret]

If we want to be serious, the CC really don't have a choice.

I think they have all the choice and have at times chosen to vote against the football club.

We need to move away from them.

[BigGaz]

........but our last Chairman wanted out, with a sale.

I am still dubious about the overall aims, ambitions and authenticity of our owners but this isn't talked about enough.

We had a lot of money in the bank, and financially it looked great. What is forgotten though is that we went out of our way to not spend money.

It wasn't 'we're running a tight ship and this money in the bank is evidence of our mastery' it was 'we're fattening the goose to sell the club and letting everything else wither'

Dyche and a few other players since this all happened.have come out and said it was going stale, the group needed refreshing and it needed investment.

Never forget that. It's not Pace and co's fault, someone else would've bought it if not them like that El-Kashashy (sp?)chancer for example..

[Big Vinny K]

I am still dubious about the overall aims, ambitions and authenticity of our owners but this isn't talked about enough.

We had a lot of money in the bank, and financially it looked great. What is forgotten though is that we went out of our way to not spend money.

It wasn't 'we're running a tight ship and this money in the bank is evidence of our mastery' it was 'we're fattening the goose to sell the club and letting everything else wither'

Dyche and a few other players since this all happened.have come out and said it was going stale, the group needed refreshing and it needed investment.

Never forget that. It's not Pace and co's fault, someone else would've bought it if not them like that El-Kashashy (sp?)chancer for example..

Whilst clearly transfer funds were withheld in the last 12 or 18 months under Garlick which did boost the cash we held then you only need to look at our accounts to evidence that the majority of the cash was built up over a number of years.

To say that Garlick was not running a tight ship and ‘fattening the goose” over all his years as owner just sounds daft to me. The cash and profit reserves were built up gradually over several years and as an owner who we knew could not afford to subsidise big losses out of his own money like many other owners do then he had basically 2 options.

One is to run the club like he did without any debt and put as much money as we could afford into transfers but ensuring we at either break even or post profits (which went back into the clubs reserves)

Second option was to burden the club with debt and spend more on transfers and wages…..which essentially means we need to rely even more on making money from selling players at profits in order to service that debt.

He chose the first one and we managed to enjoy what I think is the longest sustained period in premier league history by any club operating with the budgets and net transfer spend we did whilst he was owner.

Current owners have a different model and hopefully we have as much success or even more than under Garlick

[boyyanno]

I'm pretty sure it's the wrong question, CP. The question should be what is it that makes people with money want to invest in Velocity Sports (managed by Alan Pace/ALK) providing the funds so that Velocity Sports can buy a second "historic football club that forms a part of passionate supporters lives in the local area, across the country and beyond?" (The second historic football club is, of course, Espanyol).

The answer has got to be that (1) they are happy with how Velocity Sports has performed, so far; (2) they judge that Velocity Sports will perform better as a multi club operation with both Burnley and Espanyol in the portfolio than they would if Burnley FC was the only club in the group.

Don't forget that investors in Velocity Sports (the US entity) will receive all the financial information they require to make their initial investments and to continue to support their investments, including adding to their investments.

So, yes, Alan Pace/ALK/Velocity Sports track record in their ownership of Burnley FC is enabling the same team's investment in Espanyol. For me, that's good news for Burnley FC and BFC fans.

As for paying off BFC debts before any further investments? I don't think that's how it works. I suggest we should think of someone building a buy-to-let property portfolio. (This is not personal experience, I'm not interested in owning any buy-to-lets, myself). If the first buy-to-let has been bought on a mortgage, the investor won't wait until they've first paid off that mortgage before buying a second buy-to-let property on a second mortgage - and the same with the third, and so on... Of course, multiple buy-to-let properties provide more certainty of income, so that a void in the rental of one property can be covered by the rental income from other properties without the risk of falling into arrears on any of the mortgages.

How can it be the wrong question?

Chesters question is a fair one, if you need to write a massive paragraph to skirt around it and not answer it then I think he's made his point.

[dsr]

This is a response from google using their AI module which briefly explains how companies can run a successful business by use of debt.

“Businesses find it advantageous to carry debt because it can offer a cost-effective way to finance growth, maintain ownership, and potentially reduce tax burdens through tax-deductible interest payments. Debt financing also allows for predictable repayment schedules and can improve a company's credit rating when managed responsibly. “

I remember speaking to accountants during my working days and they always encouraged people to maintain mortgages and loans so that interest charges can be set against profits which may otherwise be heavily taxed.


I’m Not saying this applies to BFC but these guys seem to know a hell of a lot more than me about running a business and using the money markets. The key thing is being able to maintain payments and fund the debts without default which would have a negative effect on confidence and credit ratings. In those circumstances the next time they apply for credit it will either be declined or charged at extortionate rates.

I’ve said before a lot of these transactions are done using ‘smoke and mirrors’ and it is difficult to see who is lending what and to who. Hopefully they have a lot more investors on board having been involved with BFC for over 4 years now?

I bet those accountants didn't tell any business "you haven't enough debt, you need to borrow some money at high rates and lend it to someone interest free".

The £20m we spent last year on interest payments can indeed be offset against tax. It could also have been offset against tax if we had spent it on players. No accountant would tell a business that spending on interest is better than spending on fixed assets.

[dsr]

We have a pot of money to play with for the playing squad, that is mainly split between transfers fees and wages, once the wages rose, the amount of cash available for transfers decreased and we could only continue to move forward with outside investment, that is where Alan Pace and ALK come into the story.

Except that Alan Pace and ALK have not invested in Burnley FC. Burnley FC has received nothing from Alan Pace or ALK, or for that matter from JJ Watt or any other supposed investor.

ALK have taken £100m out of Burnley FC. They have put no money in.

[Orangebernard]

Except that Alan Pace and ALK have not invested in Burnley FC. Burnley FC has received nothing from Alan Pace or ALK, or for that matter from JJ Watt or any other supposed investor.

ALK have taken £100m out of Burnley FC. They have put no money in.

This is how I understand it too which is why I become a little exasperated with people who continue to make out that ALK are ‘investors’ in BFC or state ‘it’s their money to spend how they see fit’ (paraphrasing), I don’t believe they are and it’s certainly not their money.

[CoolClaret]

I am still dubious about the overall aims, ambitions and authenticity of our owners but this isn't talked about enough.

We had a lot of money in the bank, and financially it looked great. What is forgotten though is that we went out of our way to not spend money.

It wasn't 'we're running a tight ship and this money in the bank is evidence of our mastery' it was 'we're fattening the goose to sell the club and letting everything else wither'

Dyche and a few other players since this all happened.have come out and said it was going stale, the group needed refreshing and it needed investment.

Never forget that. It's not Pace and co's fault, someone else would've bought it if not them like that El-Kashashy (sp?)chancer for example..

What isn't talked about enough when people push back with this 'fattening the goose' narrative is the state of the club pre and post Mike Garlick. It's literally chalk and cheese.

Under MG's reign, Burnley FC were completely transformed on and off the pitch. Of course we all know that funds began to be withdrawn for 18-24 months before the sale, then significantly in the 12 months before, but...

MG did have a right to sell (the blurred line is for how much), but if he wanted out and the only way to do so was what he did, then I guess the logical answer is I'd prefer that than an owner/director not having the drive to actually run BFC and half-arsing it. Of course he could have appointed someone to run it and stayed as owner, but he had a right to get out when he did.

Now on to ALK - other than investing in young players for a decent return on their sale, I've seen little to no evidence of their investment into what will help the long-term health of BFC.

Things that won't show up immediately on the balance sheet as a return but are absolutely needed. Whereas things like leaning out departments, bringing in 3rd parties for catering, outsourcing to Ticketmaster etc do show up as short-term gains, but in the long run you start paying more and more for their services whilst employing fewer people directly (less locals getting the £££). And who ends up paying those extra costs? It's reflected in an increase in ticketing/merch/catering prices - paying more money for worse service, a recurring theme in modern times.

It's typical of this type of investment strategy - a very American financier approach. Heavy on marketing and big promises, whilst shifting all the financial risk onto the club itself through leveraging it's assets (such as the training ground as collateral)...

Of course, we all want ALK to be successful, but like most modern-day discourse, this has almost split into two binary camps, losing any/all nuance.

One side paints MG as the perfect local owner with the club's best interests at heart whilst ALK are money-grabbing monsters. The other dismisses MG as a dinosaur whilst praising ALK for bringing the club into the 21st century, when in reality it's aspects of both.

[Cooclaret]

Whilst clearly transfer funds were withheld in the last 12 or 18 months under Garlick which did boost the cash we held then you only need to look at our accounts to evidence that the majority of the cash was built up over a number of years.

To say that Garlick was not running a tight ship and ‘fattening the goose” over all his years as owner just sounds daft to me. The cash and profit reserves were built up gradually over several years and as an owner who we knew could not afford to subsidise big losses out of his own money like many other owners do then he had basically 2 options.

One is to run the club like he did without any debt and put as much money as we could afford into transfers but ensuring we at either break even or post profits (which went back into the clubs reserves)

Second option was to burden the club with debt and spend more on transfers and wages…..which essentially means we need to rely even more on making money from selling players at profits in order to service that debt.

He chose the first one and we managed to enjoy what I think is the longest sustained period in premier league history by any club operating with the budgets and net transfer spend we did whilst he was owner.

Current owners have a different model and hopefully we have as much success or even more than under Garlick

ALK were not the first people at the table to buy or invest in the club.

There were Chinese, Americans, and I believe an English group all there before ALK.

The ‘investment’ brochure was touted on here at one point before being deleted.