ALK Capital or Farnell/Elkashashy takeover

[Chester Perry]

I agree. No-one would agree to sell £100m of assets without knowing that the money was available. Whether it was an agreed and documented loan, or cash in the bank, or cash placed with a solicitor as a secure third party, the money source would have been known to the seller. Just like if any of us were to sell a house - we wouldn't sign the sale contract unless we had assurance from the buyer's solicitor that funding was in place.

Besides, Garlick and John B were both still on the board when the cash was removed and when the new loan was taken out, and they didn't resign - so they supported the decision then, even if they had forgotten to ask about it earlier.

This is a response to the discussion not the specific post or poster

I did say it was not a popular or widely held view and I understand why given so little about the transaction is definitively known. My own view has adapted as I have learnt more about the events and the people involved, some of which I am unable to share. For now, I am keen to examine scenario possibilities and not directly apportion blame/co-conspiracy/responsibility to anything that is not definitively factual.

The only question about monies being available that I originally had in my mind were the charges placed on Calder Vale Holdings and Kettering Capital before Christmas 2020 - before I received my information I have wondered if ALK simply showed the £65m cash in an escrow account. Since I have received my information it looks a reasonable possibility, given what was presented to the then board - though nothing is certain.

There was also the plan to expand the ALK/VSL ownership group with additional investors, this was presented to the then board as part of the pitch for the takeover, though as we have seen it only garnered success belatedly, Tariq Panja reported that ALK were trying to flip shares in Jan/Feb 2021 on Wall Street without any takers - this was the time of the sports SPAC boom when billions of dollars were being chucked at new start-ups without any assets, consider this - In the first 50 days of 2021, sports-related SPACs (Special Purpose Acquisition Companies) raised $9.1 billion in the US. Similar SPACs had raised over $20 billion in 2020. Panja reported that ALK were looking for a mere (in comparison) £30m for a share in a group with an actual tangible asset.

I have also considered that it is not above ALK to make questionable statements about their capabilities and operations - at the time of the takeover their website claimed (and this was repeated in media far and wide) they were “the leading US management firm specialising in investments, acquisitions and operations in sports and media.” Taken at face value, that claim places them ahead of Liberty Media, Silver Lake, Bruin Capital, Red Bird Capital, Two Circles, Arctos Sport Partners and many others. Even a small amount of research online showed that was definitely not the case. The website has been refreshed recently and it is still making overreaching statements about who and what they are. known ALK Capital investments in Jan 2021 likely totalled less than £11m of their own funds, though the club deal for their stake was up to £190m depending on certain performance criteria (which was met),

Garlick and Banaszkiewicz were indeed on the board following the takeover, but always in a minority position, It is significant that in April 2022, with a stage payment so late that it was possible to end the sale agreement, those two chose not to exercise the option, We do not know why, but we do know it would have meant having to work under ALK/VSP. Pace and Co having a majority shareholding already paid for. Was this too distasteful a prospect for them given what they had witnessed? Hard to say definitively, but I do know that rather than exercise that option they chose to effectively walk away from their ringfence share agreement and hand over their ringfenced shares (valued at over £17m in that agreement) later that year for a very nominal fee, just so the original transaction could proceed on an again revised basis.

As with most things these, many opinions are formed without understanding and appreciation of nuance. There is no definitive answer at this time just opinions, some of which are formed on differing interpretations and levels of knowledge of events and/or general business practice, others are formed on long held biases.

[NewClaret]

I agree. No-one would agree to sell £100m of assets without knowing that the money was available. Whether it was an agreed and documented loan, or cash in the bank, or cash placed with a solicitor as a secure third party, the money source would have been known to the seller. Just like if any of us were to sell a house - we wouldn't sign the sale contract unless we had assurance from the buyer's solicitor that funding was in place.

Besides, Garlick and John B were both still on the board when the cash was removed and when the new loan was taken out, and they didn't resign - so they supported the decision then, even if they had forgotten to ask about it earlier.

We’re in violent agreement here and an excellent point about them remaining on the board as the debt burden grew and they got richer (we assume).

[ClaretPete001]

This is a response to the discussion not the specific post or poster

I did say it was not a popular or widely held view and I understand why given so little about the transaction is definitively known. My own view has adapted as I have learnt more about the events and the people involved, some of which I am unable to share. For now, I am keen to examine scenario possibilities and not directly apportion blame/co-conspiracy/responsibility to anything that is not definitively factual.

The only question about monies being available that I originally had in my mind were the charges placed on Calder Vale Holdings and Kettering Capital before Christmas 2020 - before I received my information I have wondered if ALK simply showed the £65m cash in an escrow account. Since I have received my information it looks a reasonable possibility, given what was presented to the then board - though nothing is certain.

There was also the plan to expand the ALK/VSL ownership group with additional investors, this was presented to the then board as part of the pitch for the takeover, though as we have seen it only garnered success belatedly, Tariq Panja reported that ALK were trying to flip shares in Jan/Feb 2021 on Wall Street without any takers - this was the time of the sports SPAC boom when billions of dollars were being chucked at new start-ups without any assets, consider this - In the first 50 days of 2021, sports-related SPACs (Special Purpose Acquisition Companies) raised $9.1 billion in the US. Similar SPACs had raised over $20 billion in 2020. Panja reported that ALK were looking for a mere (in comparison) £30m for a share in a group with an actual tangible asset.

I have also considered that it is not above ALK to make questionable statements about their capabilities and operations - at the time of the takeover their website claimed (and this was repeated in media far and wide) they were “the leading US management firm specialising in investments, acquisitions and operations in sports and media.” Taken at face value, that claim places them ahead of Liberty Media, Silver Lake, Bruin Capital, Red Bird Capital, Two Circles, Arctos Sport Partners and many others. Even a small amount of research online showed that was definitely not the case. The website has been refreshed recently and it is still making overreaching statements about who and what they are. known ALK Capital investments in Jan 2021 likely totalled less than £11m of their own funds, though the club deal for their stake was up to £190m depending on certain performance criteria (which was met),

Garlick and Banaszkiewicz were indeed on the board following the takeover, but always in a minority position, It is significant that in April 2022, with a stage payment so late that it was possible to end the sale agreement, those two chose not to exercise the option, We do not know why, but we do know it would have meant having to work under ALK/VSP. Pace and Co having a majority shareholding already paid for. Was this too distasteful a prospect for them given what they had witnessed? Hard to say definitively, but I do know that rather than exercise that option they chose to effectively walk away from their ringfence share agreement and hand over their ringfenced shares (valued at over £17m in that agreement) later that year for a very nominal fee, just so the original transaction could proceed on an again revised basis.

As with most things these, many opinions are formed without understanding and appreciation of nuance. There is no definitive answer at this time just opinions, some of which are formed on differing interpretations and levels of knowledge of events and/or general business practice, others are formed on long held biases.

I think faced with the facts, I'm not sure you offer optimal explanations CP.

I think it highly unlikely the former owners were shown £65 million in an escrow account but then accepted scheduled payments for a further £68 million. Clearly they could have borrowed it because they did borrow £65 million in the end.

You argue that external finance was readily available and yet the former owners struggled to sell the club. They aren't entirely dim having taken £170 million out of the club for themselves they must have realised that would affect any financing and investment moving forward.

Either they sold the club through a leveraging deal because no one else wanted it or because it was the best way for them to maximise the money they could take from the deal.

You argue that the former owners could have been duped by a divisional Sales Director in an investment bank making over reaching claims on a web site? Seems unlikely...

It is possible they walked away from the ring fenced share agreement because the reality of ALKs financial situation was worse than they had hoped for and there was nothing more to gain from hanging around.

I think your explanation paints a picture of two very naive people who were somewhat duped by ALK. I think the facts are that these two ran the club brilliantly for a decade and then designed a leveraged buyout that maximised their return.

If it were not so clearly to the detriment of Burnley FC, I would appreciate their business acumen.

[ClaretPete001]

Spot on.

Per my post above, It’s such an unbelievable departure from what appeared to be a risk averse, true custodian of the club, that I still hold out a sinew of hope he didn’t shaft us in the way it looks. But whatever he did, he did it knowingly.

Indeed, I also think that is a factor that undermines any contra argument.

They ran the club brilliantly for a decade - quite possibly the most astute, conservative and financially savvy management of a small football club this country has ever seen and then they were duped by Alan Pace?

I think not....!

[Big Vinny K]

Completely agree that Garlick and the previous owners knew exactly what they were doing and the position this would leave the club.
I seem to remember that there were reports that Garlick’s business had been badly hit by COVID so if this was true this could have been a factor in his decision.

They were hardly queuing round the block to buy Burnley either. There was one other reported bid from someone with a dodgy background.

Garlick did run the club very well for many years - of that there is no doubt. He needs to take some credit for appointing Dyche but what Dyche achieved was beyond our wildest dreams and that includes the owners and every board member. So there is undoubtedly and element of fortune here that we got someone like Dyche and this completely transformed our financial position with the sustained period in the EPL.

During this period Garlick decided to run the club without burdening us with debt and on the basis that we were not running up any losses. He did not take any money out of the club either during this period for himself or fellow directors. But he did of course take out a significant return on his investment and the time he had put into running the club when he sold it. There’s a very big argument to say he deserved it - he was ultimately the person who appointed Dyche and he is also the person who controllled our finances as he did. If there had been other offers on the table similar in value to that of ALK’s but which would have left the club without any debt I am sure he would have done the right thing and chosen a different offer. But these other offers were not there and I am not sure how many other people in the position Garlick was would have done anything different.

[claretonthecoast1882]

And that is where we differ, because I'm only a Kn*bhead 'sometimes'!

That may well be the case weird though that it must be that when you aren't being one you don't log in.

I know nothing about the medical profession so wouldn't dream about joining say a forum for surgeons and contributing, I have enough awareness I would look pretty dumb.

Fair play to you though this doesn't stop you with regards football or finance. Finance in particular, you have people explaining things to you over and over and still you're like a goldfish.

[ClaretPete001]

That may well be the case weird though that it must be that when you aren't being one you don't log in.

I know nothing about the medical profession so wouldn't dream about joining say a forum for surgeons and contributing, I have enough awareness I would look pretty dumb.

Fair play to you though this doesn't stop you with regards football or finance. Finance in particular, you have people explaining things to you over and over and still you're like a goldfish.

You don't understand the points well enough to pass comment and frankly I don't know why you care. I am more than comfortable to look stupid if I believe this thread is misrepresenting the reality of the situation.

As far as I am aware DSR is an accountant and he corroborates what I have said the auditors do not have sight of the intercompany loan as a debt. I don't think I could have made it any clearer. The Creditors are over £230 million while the debtors largely consist of the inter company debt meaning there is a lot to pay out but little to collect in. it matters because the auditors have written a warning on cash.

This is what I am trying to get across to the forum - my opinion is the issues are quite pressing after relegation. What the auditors are referring to, as far as I understand it, is the ability of ALK to write off the debt based upon distributed profits. I have no idea what Tall Paul and Aggi are referring to and as they haven't responded to DSRs points so I still don't know.

The points on distributed profits are irrelevant to the current cash situation. I have said a number of times the thread is very strong on compliance and I'm not always sure that helps clarity.

[Paul Waine]

As far as I am aware DSR is an accountant and he corroborates what I have said the auditors do not have sight of the intercompany loan as a debt. I don't think I could have made it any clearer. The Creditors are over £230 million while the debtors largely consist of the inter company debt meaning there is a lot to pay out but little to collect in. it matters because the auditors have written a warning on cash.

Hi Pete, what makes you think dsr is an accountant? I've read through dsr's last few posts on here. It doesn't suggest to me dsr is an accountant.

What do you mean by ""the auditors do not have sight of the inter company loan as a debt?" It is a debt owed by Calder Vale (at 31st July 2023) to BFCHL (and BF&A). Auditors will know about the £124m. They couldn't sign-off the accounts as "true and fair" without knowing about the debt.

Going concern is not about how much is owed to creditors and how much is due from debtors. There's a lot more to it than that.

[aggi]

Do we know if anyone is behind ALK and Pace and Co are just effectively running the show for a much larger group ?

We're pretty certain that Pace is in charge and has the votes and ALK aren't owned by a larger group as that is what Companies House says and lying to them is a bit of an issue (unless you're Michelle Mone).

[aggi]

You don't understand the points well enough to pass comment and frankly I don't know why you care. I am more than comfortable to look stupid if I believe this thread is misrepresenting the reality of the situation.

As far as I am aware DSR is an accountant and he corroborates what I have said the auditors do not have sight of the intercompany loan as a debt. I don't think I could have made it any clearer. The Creditors are over £230 million while the debtors largely consist of the inter company debt meaning there is a lot to pay out but little to collect in. it matters because the auditors have written a warning on cash.

This is what I am trying to get across to the forum - my opinion is the issues are quite pressing after relegation. What the auditors are referring to, as far as I understand it, is the ability of ALK to write off the debt based upon distributed profits. I have no idea what Tall Paul and Aggi are referring to and as they haven't responded to DSRs points so I still don't know.

The points on distributed profits are irrelevant to the current cash situation. I have said a number of times the thread is very strong on compliance and I'm not always sure that helps clarity.

I don't know which points I haven't responded to but your issue is you wanted an answer to a question that you weren't asking.

For the purposes of the accounts and assessing the recoveraiblity of the debt then it doesn't matter to the auditors how it is "paid off", whether through a bag of cash from ALK or Burnley Football Club paying a dividend to ALK which they then pay back to Burnley FC. You might want the accounts to just deal with the bag of cash part but that isn't how it works.

I did make the point a while back that the interaction between on one hand a suggestion that the debt could be repaid via dividends and on the other hand the note on material uncertainty relating to going concern seemed a little contradictory but the note on recoverability does make a reference to that.

[ClaretPete001]

Hi Pete, what makes you think dsr is an accountant? I've read through dsr's last few posts on here. It doesn't suggest to me dsr is an accountant.

What do you mean by ""the auditors do not have sight of the inter company loan as a debt?" It is a debt owed by Calder Vale (at 31st July 2023) to BFCHL (and BF&A). Auditors will know about the £124m. They couldn't sign-off the accounts as "true and fair" without knowing about the debt.

Going concern is not about how much is owed to creditors and how much is due from debtors. There's a lot more to it than that.

Paul, appreciate your response. I've tried to be as plain as possible and I'm not sure how we've got to this point tbh.

My point was not about Going Concern or auditing compliance or accountancy rules. It is about how much risk there is in relation to the cash situation as we consider how many players we may have to sell in the summer.

I am a Burnley fan and not an accountant (albeit it would be untruthful to say I don't know anything about accounts - clearly lots of non accountants have to use financial information).

Somewhere along the way Tall Paul seemed to suggest that the auditors had sight of the cash reserves, which were sufficient to meet the Inter Company debt as required. Aggi then pointed to the statement by the auditors.

DSR seemed to think, as I do, the auditors are not referring to cash but the ability of the company to issue dividends to write off the debt against distributed profits.

It seems self evident the group does not have the cash to meet the Inter Company debt or why issue a warning?

That was my simple point that sparked all this debate...! It's quite possible wires have got crossed but I've made the same point all along.

[Vegas Claret]

We're pretty certain that Pace is in charge and has the votes and ALK aren't owned by a larger group as that is what Companies House says and lying to them is a bit of an issue (unless you're Michelle Mone).

Cheers Aggi

[ClaretPete001]

Cheers Aggi

At the risk of being called stupid....! It is something CP sometimes refers to, but I'm not clear on the scope of the audit and whether it includes the offshore companies and the Delaware ones.

[aggi]

Paul, appreciate your response. I've tried to be as plain as possible and I'm not sure how we've got to this point tbh.

My point was not about Going Concern or auditing compliance or accountancy rules. It is about how much risk there is in relation to the cash situation as we consider how many players we may have to sell in the summer.

I am a Burnley fan and not an accountant (albeit it would be untruthful to say I don't know anything about accounts - clearly lots of non accountants have to use financial information).

Somewhere along the way Tall Paul seemed to suggest that the auditors had sight of the cash reserves, which were sufficient to meet the Inter Company debt as required. Aggi then pointed to the statement by the auditors.

DSR seemed to think, as I do, the auditors are not referring to cash but the ability of the company to issue dividends to write off the debt against distributed profits.

It seems self evident the group does not have the cash to meet the Inter Company debt or why issue a warning?

That was my simple point that sparked all this debate...! It's quite possible wires have got crossed but I've made the same point all along.

I'm pretty sure you've misunderstood what Tall Paul meant. Unless I've missed something when he's talking about it being repaid he isn't talking specifically about cash. And the auditors certainly aren't talking about it solely being recoverable on a cash basis when doing their impairment review.

[Vegas Claret]

At the risk of being called stupid....! It is something CP sometimes refers to, but I'm not clear on the scope of the audit and whether it includes the offshore companies and the Delaware ones.

yeah that's why I asked, it seems the web that is weaved is a complicated one - for people like me who take a very casual interest with zero knowledge of accounting it's sometimes good to ask a direct question and see what comes back. We all appreciate the debates you all have in trying to get to the bottom of it all.

[aggi]

At the risk of being called stupid....! It is something CP sometimes refers to, but I'm not clear on the scope of the audit and whether it includes the offshore companies and the Delaware ones.

In the first instance it is self-reporting by the company, it is the directors' responsibility to get it right and a criminal offence to provide incorrect information. This includes going up through overseas entities, etc

Professional advisers will also need to verify it as part of anti-money laundering regulations which is where the auditors will have their information from. It's a high risk, hot topic at the moment, my place recently turned down a £500k piece of work because we couldn't get comfort on the ownership structure.

[ClaretPete001]

I'm pretty sure you've misunderstood what Tall Paul meant. Unless I've missed something when he's talking about it being repaid he isn't talking specifically about cash. And the auditors certainly aren't talking about it solely being recoverable on a cash basis when doing their impairment review.

Quite possibly. Anyway it's done now. As far as I am concerned what I originally wrote was correct in the context I wrote it. And it's quite possible others were too in the context they wrote it.

[dsr]

Hi Pete, what makes you think dsr is an accountant? I've read through dsr's last few posts on here. It doesn't suggest to me dsr is an accountant.

What do you mean by ""the auditors do not have sight of the inter company loan as a debt?" It is a debt owed by Calder Vale (at 31st July 2023) to BFCHL (and BF&A). Auditors will know about the £124m. They couldn't sign-off the accounts as "true and fair" without knowing about the debt.

Going concern is not about how much is owed to creditors and how much is due from debtors. There's a lot more to it than that.

Yes I am an accountant, and as I think Pete has grasped, my point is that the auditors agree with you the loan can (more than likely) be legally repaid one way or another, they need to have no opinion as to whether that repayment will be in cash.

Furthermore, they reckon that going concern basis is OK as long as the club can sell enough players for enough money. If the club doesn't raise enough from player sales, then there is a going concern issue to be solved. This means they are not expecting the debtor to be repaid in cash, or there would be no going concern issue at all.

[Paul Waine]

Yes I am an accountant, and as I think Pete has grasped, my point is that the auditors agree with you the loan can (more than likely) be legally repaid one way or another, they need to have no opinion as to whether that repayment will be in cash.

Furthermore, they reckon that going concern basis is OK as long as the club can sell enough players for enough money. If the club doesn't raise enough from player sales, then there is a going concern issue to be solved. This means they are not expecting the debtor to be repaid in cash, or there would be no going concern issue at all.

Hi dsr, sorry for getting it wrong. It was when you spoke of Alan Pace owing the £124m rather than ALK/VSP that led me to my wrong conclusion. Of course, you modify that at the end of your post. However, I wouldn't have expected an accountant to suggest that an international group of private companies was "secretive." Very much standard in my accounting experience.

[dsr]

Hi dsr, sorry for getting it wrong. It was when you spoke of Alan Pace owing the £124m rather than ALK/VSP that led me to my wrong conclusion. Of course, you modify that at the end of your post. However, I wouldn't have expected an accountant to suggest that an international group of private companies was "secretive." Very much standard in my accounting experience.

Yes, it's standard for finance houses to be secretive. That's why most US companies are registered in Delaware, where they don't have to file accounts.

But Pace's companies won't even file accounts where they are legally obliged to. How long overdue are Kettering's accounts now? And in spite of the lie a couple of years back about it being an administrative issue, there is little doubt that he has no intention of filing them.

[dsr]

The PL ought to insist on transparency, at least among themselves and the administrators, not necessarily made public. They should insist on knowing the human being(s) that are ultimately in control of each club (Alan Pace as per the accounts, for us) AND have a full paper trail of all the intervening companies that take us from football club to ultimate owner. With full accounts for each company.

That's surely essential to test fit and proper persons anyway.

[aggi]

The PL ought to insist on transparency, at least among themselves and the administrators, not necessarily made public. They should insist on knowing the human being(s) that are ultimately in control of each club (Alan Pace as per the accounts, for us) AND have a full paper trail of all the intervening companies that take us from football club to ultimate owner. With full accounts for each company.

That's surely essential to test fit and proper persons anyway.

They do don't they?

It's like when we do AML KYC, you get a lot more info than is publicly disclosed.

[dsr]

They do don't they?

It's like when we do AML KYC, you get a lot more info than is publicly disclosed.

If the PL do have the info, why don't they insist that the UK companies' accounts are filed? For that matter, if the UK companies' accounts are completed, why doesn't Companies House insist they are filed?

[Chester Perry]

If the PL do have the info, why don't they insist that the UK companies' accounts are filed? For that matter, if the UK companies' accounts are completed, why doesn't Companies House insist they are filed?

aggi is correct

this point you are asking ins one I have asked previously - and then found the answer which is somewhere up the thread - essentially the Premier League rules requires that the all legal obligations inclusive of the group entity in which the club operates and for us that is Burnley FC Holdings Limited - I do not like or agree with it but that is what the rule is and as we have seen owners can manipulate that to their advantage.

[ClaretPete001]

Yes I am an accountant, and as I think Pete has grasped, my point is that the auditors agree with you the loan can (more than likely) be legally repaid one way or another, they need to have no opinion as to whether that repayment will be in cash.

Furthermore, they reckon that going concern basis is OK as long as the club can sell enough players for enough money. If the club doesn't raise enough from player sales, then there is a going concern issue to be solved. This means they are not expecting the debtor to be repaid in cash, or there would be no going concern issue at all.

To be fair, I never thought for a nano second ALK had £124 million or would ever repay anything. I don't know how I ended up in debate other than I don't agree the £124 million will ever be repaid - it will be written off.

For the purposes of a football forum the issue is not the legality of whether something is going to be repaid in accounting terms but the fact that it won't be in repaid in terms anyone other than accountant would understand it.

And I guess that is my point about compliance discourse detracting from clarity because you can't buy a decent left back using anything that will be legally repaid in this instance.

But I am relieved you made it clear.

[ClaretPete001]

aggi is correct

this point you are asking ins one I have asked previously - and then found the answer which is somewhere up the thread - essentially the Premier League rules requires that the all legal obligations inclusive of the group entity in which the club operates and for us that is Burnley FC Holdings Limited - I do not like or agree with it but that is what the rule is and as we have seen owners can manipulate that to their advantage.

At the risk of being called stupid, Aggi seems to be suggesting that the PL insist on a full paper trail but you seem to be suggesting that they only require a paper trail for Burnley Holding Ltd, which is also as far as I recall the same as the EFL.

But that is not a full paper trail in any meaningful sense of how this company is structured.

[aggi]

At the risk of being called stupid, Aggi seems to be suggesting that the PL insist on a full paper trail but you seem to be suggesting that they only require a paper trail for Burnley Holding Ltd, which is also as far as I recall the same as the EFL.

But that is not a full paper trail in any meaningful sense of how this company is structured.

I was talking about establishing ownership. Sight of all accounts isn't necessarily required for that.

What the premier league defines as the relevant group for accounts seems a bit arbitrary as the recent dodgy dealings at Chelsea have shown.

[Chester Perry]

I was talking about establishing ownership. Sight of all accounts isn't necessarily required for that.

What the premier league defines as the relevant group for accounts seems a bit arbitrary as the recent dodgy dealings at Chelsea have shown.

It is at what group level that the club reports to that reports to Companies House in a Group report

[ClaretPete001]

It is at what group level that the club reports to that reports to Companies House in a Group report

And I guess that is why the PL would have little interest in the companies that are no being filed and why Burnley Holdings has....!

Regardless, in a group of companies any definition that is not the whole group is arbitrary, however specifically the PL or Companies House defines it.

[Orangebernard]

As always I'm following the discussions on this thread with interest but I'd like to get people's view on the £124.1m debt owed to BF&A and Burnley FC Holdings by who knows which of the ALK group companies. The accounts and above comments discuss the possibility of the debt being paid back by means of a dividend paid out by BF&A which would then be paid back by ALK thereby 'clearing' the debt. I get the mechanism for doing this and that the club will not suddenly receive £124.1m in cash or even a penny in cash but in order for BF&A to issues a dividend to ALL shareholders not just ALK companies surely the club would have to make a profit in excess of the total sum, is that correct? Of course that profit could be spread over several years but at the moment i'm struggling to see how we make a profit at all unless VK is right and we have several £100m players hiding away in the squad. I think the auditors are basing their assessment of the debt on the payment of a dividend as a viable means of recovering that debt but are we realistically saying that the debt will never be repaid in useable cash unless ALK decide to repay it when they sell up assuming that they feel a moral obligation to do so? As i understand it there is no legal obligation for ALK to repay the £124.1m, is that also correct?

[Chester Perry]

As always I'm following the discussions on this thread with interest but I'd like to get people's view on the £124.1m debt owed to BF&A and Burnley FC Holdings by who knows which of the ALK group companies. The accounts and above comments discuss the possibility of the debt being paid back by means of a dividend paid out by BF&A which would then be paid back by ALK thereby 'clearing' the debt. I get the mechanism for doing this and that the club will not suddenly receive £124.1m in cash or even a penny in cash but in order for BF&A to issues a dividend to ALL shareholders not just ALK companies surely the club would have to make a profit in excess of the total sum, is that correct? Of course that profit could be spread over several years but at the moment i'm struggling to see how we make a profit at all unless VK is right and we have several £100m players hiding away in the squad. I think the auditors are basing their assessment of the debt on the payment of a dividend as a viable means of recovering that debt but are we realistically saying that the debt will never be repaid in useable cash unless ALK decide to repay it when they sell up assuming that they feel a moral obligation to do so? As i understand it there is no legal obligation for ALK to repay the £124.1m, is that also correct?

There are 122,478 shares that have been allotted in Burnley FC Holdings Limited

According to the most recent Confirmation Statement ALK/VSL held 101,302 via Calder Vale Holdings Limited and 9,019 via Velocity Capital (UK) Holdings Ltd giving them a total of 110,321 shares.

To absolve the debt of £124,076,000.00 according to the latest BFCHL accounts that would require a dividend of £1,124.68(1610935361) per share or a total dividend pot of £137, 748,754.34

Vlad Torgovnik could, as a member of the ownership group that would possibly see a longer term benefit in doing so in asset value growth, waive the right to a dividend on his 6,128 shares, thereby saving £6,892,048.91 but it still leaves a dividend pot of £130,856,705.43, though only £6,780,705.43, for the remaining small shareholders actually needs to be paid in cash, the rest would be a paper exercise.

this is the statement in the latest accounts

The balance can potentially be settled by various means, and the Group's reserves are sufficient to
enable the balance to be settled by way of dividends if required. In such case the financial performance of The Burnley Football & Athletic Company Limited may impact the extent to which, and the timing in which, the balance is recoverable in this manner, as this could affect the likelihood of future dividends
taking place. With this in mind the balance will be periodically reviewed for indicators of impairment
going forward, with adjustments made in respect of any impairment indicators should they arise.

When we look at the value of the reserves in the accounts we can see just how quickly they can fluctuate - in July 2023 they were £78.535m the previous year they were £106.478m - the difference being the post tax loss posted in the 2023 Accounts. There has only been one Premier League season where the club did not post a profit and that was a full season of lockdown, so it may well go up in the next accounts and again in any subsequent seasons spent in the top flight, which is what appears to be the medium to long term plan. It is also not be necessary to pay it down in one go.

For now the debt held by ALK/VSL is helping the balance sheet of BFCHL and allowing the club to borrow funds externally while factoring transfers and TV revenues.

[ClaretPete001]

As always I'm following the discussions on this thread with interest but I'd like to get people's view on the £124.1m debt owed to BF&A and Burnley FC Holdings by who knows which of the ALK group companies. The accounts and above comments discuss the possibility of the debt being paid back by means of a dividend paid out by BF&A which would then be paid back by ALK thereby 'clearing' the debt. I get the mechanism for doing this and that the club will not suddenly receive £124.1m in cash or even a penny in cash but in order for BF&A to issues a dividend to ALL shareholders not just ALK companies surely the club would have to make a profit in excess of the total sum, is that correct? Of course that profit could be spread over several years but at the moment i'm struggling to see how we make a profit at all unless VK is right and we have several £100m players hiding away in the squad. I think the auditors are basing their assessment of the debt on the payment of a dividend as a viable means of recovering that debt but are we realistically saying that the debt will never be repaid in useable cash unless ALK decide to repay it when they sell up assuming that they feel a moral obligation to do so? As i understand it there is no legal obligation for ALK to repay the £124.1m, is that also correct?

Good questions...! I was wondering about that myself.

To start, ALK are not going to pay back £124 million. It's really an accounting move to write off the debt. Clearly, that is not accounting speak but as far as I understand it - it better reflects the reality of what is happening than saying it will be paid back

Again, as far as I understand it - it is retained profits and we have some. However, the auditors will review this and must have some way of determining at what point it becomes a problem. These are points that as a user of accounts to understand a business you rarely concern yourself with....!

The sale of players is more complex because the value of football players are based upon amortised intangible assets.

And yes, there is no conditions attached to the loan - I guess the jeopardy for ALK is as you state above the extent of the distributable profits.

I don't know enough to say more than that but no doubt there are those who will...

[ClaretPete001]

There are 122,478 shares that have been allotted in Burnley FC Holdings Limited

According to the most recent Confirmation Statement ALK/VSL held 101,302 via Calder Vale Holdings Limited and 9,019 via Velocity Capital (UK) Holdings Ltd giving them a total of 110,321 shares.

To absolve the debt of £124,076,000.00 according to the latest BFCHL accounts that would require a dividend of £1,124.68(1610935361) per share or a total dividend pot of £137, 748,754.34

Vlad Torgovnik could, as a member of the ownership group that would possibly see a longer term benefit in doing so in asset value growth, waive the right to a dividend on his 6,128 shares, thereby saving £6,892,048.91 but it still leaves a dividend pot of £130,856,705.43, though only £6,780,705.43, for the remaining small shareholders actually needs to be paid in cash, the rest would be a paper exercise.

this is the statement in the latest accounts

The balance can potentially be settled by various means, and the Group's reserves are sufficient to
enable the balance to be settled by way of dividends if required. In such case the financial performance of The Burnley Football & Athletic Company Limited may impact the extent to which, and the timing in which, the balance is recoverable in this manner, as this could affect the likelihood of future dividends
taking place. With this in mind the balance will be periodically reviewed for indicators of impairment
going forward, with adjustments made in respect of any impairment indicators should they arise.

When we look at the value of the reserves in the accounts we can see just how quickly they can fluctuate - in July 2023 they were £78.535m the previous year they were £106.478m - the difference being the post tax loss posted in the 2023 Accounts. There has only been one Premier League season where the club did not post a profit and that was a full season of lockdown, so it may well go up in the next accounts and again in any subsequent seasons spent in the top flight, which is what appears to be the medium to long term plan. It is also not be necessary to pay it down in one go.

For now the debt held by ALK/VSL is helping the balance sheet of BFCHL and allowing the club to borrow funds externally while factoring transfers and TV revenues.

Are the retained profits that high or it is that the value of the assets?

[Chester Perry]

Are the retained profits that high or it is that the value of the assets?

It is the total Equity

There is:
Merger reserve £11.22m
Profit and loss account £62.517m

to play with in what you are talking about

I do wonder if there is a paper exercise that could see Longside Properties "sold", for enough to make up the balance, to ALK/VSL somehow. that could also come into play, just not for FFP/PSR purposes where it is no longer allowed.

[Chester Perry]

and we should not forget that any enforced capital repayment on the MGG loan as a result of relegation will see that net asset value change in a positive way. as it did in the 2022 accounts where Pace was lauding the net asset value in his Director's notes

[Orangebernard]

Thanks CP and ClaretPete, it is much clearer to me now, although you've just confirmed that it is highly unlikely that the club will see a single penny returned and all the intercompany debt will be squared away as a paper exercise. It is worrying that ALK are playing financial roulette with our club especially as we have seen this season, if we get it wrong again on the pitch we could be headlining for months on 'The Price of Football' podcast.

I do feel like there should be a fan group of knowledgeable and responsible individuals that closely monitors the financial situation of our club, albeit from publicly available information as so often happens these groups tend to form at the 11th hour when clubs very existence is threatened. CP and several others do a fantastic job of keeping us all informed but a group that is known to ALK and can keep them 'honest' would make me feel a little easier about our ownership group. It does feel at the moment, whilst i am not suggesting that ALK are doing anything underhand or dishonest, that as the 'From The Bee Hole End' podcast guys suggest it does feel like ALK are running their own private country club that is restricted to a group of their choosing and fans are to be tolerated and only there to be rinsed for every last penny.

[aggi]

and we should not forget that any enforced capital repayment on the MGG loan as a result of relegation will see that net asset value change in a positive way. as it did in the 2022 accounts where Pace was lauding the net asset value in his Director's notes

This isn't the case assuming you are talking about the club repaying the loan rather than some mechanism of outside money. If we repay the loan there needs to be an equivalent transaction of cash (bank loan goes down, cash goes down) so net assets stays the same. Best case scenario the net assets stay the same, if there are penalties then net assets could actually drop.

[aggi]

It is the total Equity

There is:
Merger reserve £11.22m
Profit and loss account £62.517m

to play with in what you are talking about

I do wonder if there is a paper exercise that could see Longside Properties "sold", for enough to make up the balance, to ALK/VSL somehow. that could also come into play, just not for FFP/PSR purposes where it is no longer allowed.

There is also a Share Premium account of ~ £5m. There are some hoops to jump through to release the Merger reserve and Share Premium account for distribution though.

[aggi]

It is at what group level that the club reports to that reports to Companies House in a Group report

Cheers, it seem the obvious way to do it but can obviously be open to abuse.

As I've said before though, this isn't where the Premier League will stop when ascertaining control. They will continue up through the structure.

[ClaretPete001]

Cheers, it seem the obvious way to do it but can obviously be open to abuse.

As I've said before though, this isn't where the Premier League will stop when ascertaining control. They will continue up through the structure.

But then you wonder why ALK are filing those accounts within the Holding company and not the others...!

And then it goes back to dsr's point is that if how can a person be deemed fit and appropriate if they are not complying with UK law? And why does the PL involve themselves at that point. How can ALK be sharing accounts with the PL but not companies house?

[ClaretPete001]

Thanks CP and ClaretPete, it is much clearer to me now, although you've just confirmed that it is highly unlikely that the club will see a single penny returned and all the intercompany debt will be squared away as a paper exercise. It is worrying that ALK are playing financial roulette with our club especially as we have seen this season, if we get it wrong again on the pitch we could be headlining for months on 'The Price of Football' podcast.

I do feel like there should be a fan group of knowledgeable and responsible individuals that closely monitors the financial situation of our club, albeit from publicly available information as so often happens these groups tend to form at the 11th hour when clubs very existence is threatened. CP and several others do a fantastic job of keeping us all informed but a group that is known to ALK and can keep them 'honest' would make me feel a little easier about our ownership group. It does feel at the moment, whilst i am not suggesting that ALK are doing anything underhand or dishonest, that as the 'From The Bee Hole End' podcast guys suggest it does feel like ALK are running their own private country club that is restricted to a group of their choosing and fans are to be tolerated and only there to be rinsed for every last penny.

ALK are behaving as you would expect investor owners to do but I think most of us feel that a football club is something more than a normal business. And as such you would expect greater transparency.

Perhaps naively....!

[steve1264b]

One area that has puzzled me is the lack of a sponsor. I would have thought we could have snagged a big blue chip company from USA.

Lots of big names based in Salt Lake, and people lile JJ, do bring a lot of publicity.

I did expect to see a big jump in commercial earnings.

[Chester Perry]

Thanks CP and ClaretPete, it is much clearer to me now, although you've just confirmed that it is highly unlikely that the club will see a single penny returned and all the intercompany debt will be squared away as a paper exercise. It is worrying that ALK are playing financial roulette with our club especially as we have seen this season, if we get it wrong again on the pitch we could be headlining for months on 'The Price of Football' podcast.

I do feel like there should be a fan group of knowledgeable and responsible individuals that closely monitors the financial situation of our club, albeit from publicly available information as so often happens these groups tend to form at the 11th hour when clubs very existence is threatened. CP and several others do a fantastic job of keeping us all informed but a group that is known to ALK and can keep them 'honest' would make me feel a little easier about our ownership group. It does feel at the moment, whilst i am not suggesting that ALK are doing anything underhand or dishonest, that as the 'From The Bee Hole End' podcast guys suggest it does feel like ALK are running their own private country club that is restricted to a group of their choosing and fans are to be tolerated and only there to be rinsed for every last penny.

The best placed people to hold ALK/VSL to account are the remaining shareholders, though I am aware of only 1 that really does that, Of course, the Clarets Trust holds one of the larger remaining shareholdings, but I do not know if they investigate, enquire and challenge ALK/VSL, that said the Chair of the Clarets Trust is also a member of the Fan Advisory Board, so there is at least some contact with the club. He was one of the signatories to the recent tweet about the challenges of being a member of the FAB.

Shareholders should not forget that they can seek dialogue with the auditors, as well, on specific issues, particularly as no AGM is held by BFCHL.

[Chester Perry]

I originally posted this on the MMT, but upon reflection I feel it needs to be here as well, more people read this thread - note the familiar tropes from the club we have come to know so well

I should also point out that the previous ownership were engaged in similarly dodgy partnerships and that they were also highlighted by myself at the time that they came to light.

Philippe Auclair with another expose on BK8 the white label betting operation that sponsors Aston Villa and Burnley FC

- previous ones can be found here
search.php?keywords=BK8&t=20891&sf=msgonly

from Josimar Football

Another day in paradise
Evidence suggests that Aston Villa and Burnley FC’s official Asian betting partner operates from one of the most notorious cyber slavery compounds in Cambodia.
https://josimarfootball.com/2024/05/15/ ... -paradise/
https://archive.ph/Lt0Ih

[aggi]

The best placed people to hold ALK/VSL to account are the remaining shareholders, though I am aware of only 1 that really does that, Of course, the Clarets Trust holds one of the larger remaining shareholdings, but I do not know if they investigate, enquire and challenge ALK/VSL, that said the Chair of the Clarets Trust is also a member of the Fan Advisory Board, so there is at least some contact with the club. He was one of the signatories to the recent tweet about the challenges of being a member of the FAB.

Shareholders should not forget that they can seek dialogue with the auditors, as well, on specific issues, particularly as no AGM is held by BFCHL.

Realistically you're not going to get much out of the auditors beyond the audited financial statements. There is a reasonable argument that they have made their opinion clear there, they are under no obligation to show their workings.

One avenue would be Directors' service contracts. They are legally obligated to disclose these to members. Of course there is a possibility that such contracts aren't in place given that none of the directors are remunerated through BFC Holdings but you never know.

https://www.legislation.gov.uk/ukpga/20 ... /chapter/5

[aggi]

But then you wonder why ALK are filing those accounts within the Holding company and not the others...!

And then it goes back to dsr's point is that if how can a person be deemed fit and appropriate if they are not complying with UK law? And why does the PL involve themselves at that point. How can ALK be sharing accounts with the PL but not companies house?

I would assume that PL don't need sight of those accounts as they are outside of what is deemed the football club. If they weren't filing the club accounts then that would be a different matter.

Companies House haven't imposed any penalites that can be seen so it isn't really the PL's place to take action (obviously some may disagree with that).

[Chester Perry]

I believe there would still be a lot of hoops for ALK/VSL to jump through to be part of this, and it has already been going on at Dundee for most of this year in regards to Creditors converting monies owed into shares (including Gordon Strachan doing so with monies owed to him for consultancy work). It fits with the known ambitions of ALK/VSL, reiterated recently by Stuart Hunt

from The Dundee Courier

Dundee FC set to wipe out debt with £9 million shares plan that could open door for Burnley investment
The Dark Blues will hold an emergency general meeting (EGM) of shareholders in early June.
https://archive.ph/xNOl7

[aggi]

Kettering Capital has its statement of solvency up.

Unsurprisingly no assets or liabilities.

[Chester Perry]

Back to understanding who the ownership group are

there is a lot of dubious and outdated information in this article from Football League World, including the use of the club's own grossly out of date Company Details webpage that I have criticised repeatedly, though I have always assumed that Alan Pace had a reasonable level of wealth, there is no qualified source for the number given here.

Burnley FC ownership: A look at Pace, JJ Watt, Dude Perfect source of Wealth and net worth
https://footballleagueworld.co.uk/burnl ... net-worth/
https://archive.ph/6vDhQ

the thing about it that interests me are the photos of the directors box

who is sat behind Alan Pace in this photo? because that is likely to be another member of the ownership group



and while a lot of the faces in this are recognisable, there are plenty who are not

[Big Vinny K]

Back to understanding who the ownership group are

there is a lot of dubious and outdated information in this article from Football League World, including the use of the club's own grossly out of date Company Details webpage that I have criticised repeatedly, though I have always assumed that Alan Pace had a reasonable level of wealth, there is no qualified source for the number given here.

Burnley FC ownership: A look at Pace, JJ Watt, Dude Perfect source of Wealth and net worth
https://footballleagueworld.co.uk/burnl ... net-worth/
https://archive.ph/6vDhQ

the thing about it that interests me are the photos of the directors box

who is sat behind Alan Pace in this photo? because that is likely to be another member of the ownership group



and while a lot of the faces in this are recognisable, there are plenty who are not

That is such a poor article.
I think that figure for Pace is completely fabricated and unsubstantiated. Even if by some chance there was a grain of truth in that number it’s immaterial to what he has invested into the club and how he has structured the finances with very little or no personal investment or risk.