Re: BFC TRANSFER NEWS SUMMER/AUTUMN 2020 (MUST CONTAIN LINK)
Posted: Tue Oct 06, 2020 6:23 pm
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We “were’ in a reasonably strong financial position pre Covid....but our last reported accounts for June 2019 illustrated that we were already approaching break even point with the increase in our wage bill and reducing amounts coming in from player sales. This is all before the impact of Covid.NewClaret wrote: ↑Tue Oct 06, 2020 6:43 pmI wrote a massive reply to CP’s post earlier, that then disappeared when I tried to post. Probably for the best
The gist of it was that, whilst I appreciate the sensible and reasoned debate, and recognise the need to look at this from a different perspective, I respectfully disagree.
What our Board have done very well is make hay while the sun shone. They developed a cash pile whilst investing in some infrastructure (Barnfield = good, I’m not so mad keen on the quadrants). They’ve also reduced our future liabilities on player sales. We’re in good shape financially. Sean Dyche has said so. Credit to the Chairman and the Board for that.
You do have to ask why though? Is limited outstanding debt on players a good thing, or a sign we’ve turned the investment taps off? Ditto the cash pile? You could argue that has not motivated by a desire to do right by the club and ensure it’s sustainability, more to prep the club for takeover so they can all sell up and profit.
Will we really be thanking and lauding their prudence in a few seasons if they sell out, leave us short and we’re back in the Championship next year with an inexperienced leadership structure trying to grapple with the loss of key players/manager?
Yes, Covid has hit our numbers, the cash has probably eroded. Yes, there will be some short-term decline in revenue from all sources. But the long term structural direction for the PL (best managers, players, most entertaining and unpredictable league in the world) is very strong. Revenues could increase from a whole variety of opportunities post-covid.
It’s therefore imperative we stay in the PL and invest to do so, even if that means taking on some short term debt. If we continue to plan and prepare for doomsday it will eventually be self fulfilling.
Final point is that I’m prepared to give the Chairman and Board the benefit of the doubt. My key targets for this summer are all in the Championship and still available, so let’s see what happens, but in my mind it will be gross mismanagement if they don’t find a way to strengthen this year, Covid or not.
Well, of course ideally we wouldn’t need to raise debt. And to an extent I’d imagine that the way deals are structured this year should mean there’s a way to spread the cost such that that’s not necessary.Paul Waine wrote: ↑Tue Oct 06, 2020 6:54 pmNewClaret: "It’s therefore imperative we stay in the PL and invest to do so, even if that means taking on some short term debt. If we continue to plan and prepare for doomsday it will eventually be self fulfilling."
You don't mention who should provide this debt. Do you want the directors to lend the club money? banks? other financial institutions (hedge funds, perhaps)? What terms should apply?
UTC
I am with you NC. The Championship has provided our best buys-Heaton, Wood,Tarks,Arfield,Barton,Gray,Westwood,Barnes,Rodriguez,Brownhill. I am certain there is a great ,up and coming CH in the Division. Is Webster of Brighton not one of them. The thought of Kevin Long starting v Spurs and Chelsea is frightening. Bear in mind Ben will need several 90 minutes of friendlies before he can play. Sadly I feel you are being optimistic. If the Board did not shop in this area pre to the window closure, I cant see it happening in the next 9 days They are lucky in that we have an international break taking the focus off the PL. When the break is over the last window will almost have closed. I hope I am wrong.NewClaret wrote: ↑Tue Oct 06, 2020 6:43 pmI wrote a massive reply to CP’s post earlier, that then disappeared when I tried to post. Probably for the best
The gist of it was that, whilst I appreciate the sensible and reasoned debate, and recognise the need to look at this from a different perspective, I respectfully disagree.
What our Board have done very well is make hay while the sun shone. They developed a cash pile whilst investing in some infrastructure (Barnfield = good, I’m not so mad keen on the quadrants). They’ve also reduced our future liabilities on player sales. We’re in good shape financially. Sean Dyche has said so. Credit to the Chairman and the Board for that.
You do have to ask why though? Is limited outstanding debt on players a good thing, or a sign we’ve turned the investment taps off? Ditto the cash pile? You could argue that has not motivated by a desire to do right by the club and ensure it’s sustainability, more to prep the club for takeover so they can all sell up and profit.
Will we really be thanking and lauding their prudence in a few seasons if they sell out, leave us short and we’re back in the Championship next year with an inexperienced leadership structure trying to grapple with the loss of key players/manager?
Yes, Covid has hit our numbers, the cash has probably eroded. Yes, there will be some short-term decline in revenue from all sources. But the long term structural direction for the PL (best managers, players, most entertaining and unpredictable league in the world) is very strong. Revenues could increase from a whole variety of opportunities post-covid.
It’s therefore imperative we stay in the PL and invest to do so, even if that means taking on some short term debt. If we continue to plan and prepare for doomsday it will eventually be self fulfilling.
Final point is that I’m prepared to give the Chairman and Board the benefit of the doubt. My key targets for this summer are all in the Championship and still available, so let’s see what happens, but in my mind it will be gross mismanagement if they don’t find a way to strengthen this year, Covid or not.
Nothing well without it being guaranteedrandomclaret2 wrote: ↑Tue Oct 06, 2020 9:01 pm"Our board don’t want to or can’t put anymore money into the club or subsidise losses"
This is a genuine question...how much have each of our directors put into the club ?
How’s it “guaranteed” ?Wokingclaret wrote: ↑Tue Oct 06, 2020 9:25 pmNothing well without it being guaranteed
Give their time
Bought shares, some from other people.
Mandzukic is more a Dyche kind of player. 34 but still a better signing that Peter Crouch
I fear you are making the mistake of looking at last year's accounts rather than thinking about the club's current financial prospects. The £41m cash balance was there on 30-June-2019 - a lot of things have gone on since then.NewClaret wrote: ↑Tue Oct 06, 2020 8:59 pmWell, of course ideally we wouldn’t need to raise debt. And to an extent I’d imagine that the way deals are structured this year should mean there’s a way to spread the cost such that that’s not necessary.
But, if it were, options would be:
1. Govt Covid Fund. I understand Spurs rapped that for £175m of govt secured low cost debt. Why not us? It may be closed now, in which case we should’ve been faster to assess and utilise - especially if our financial modelling showed we would not be able to buy players this summer without. Look at Spurs; taking on massive chunks of cheap govt-backed debt, then investing it in the team this summer. Why not us?
2. Banks. To accumulate £40m of cash in the bank with no debt means we must be cash generative. Accepting others think that this would be unnatractive to banks, I see no reason whatsoever why a prudent, cash generative, debt free PL team would not be offered a decent working capital facility by a bank.
3. Bonds. Potential issuance of bonds on the bond markets. Not ideal, but better than.
4. Other capital raising - hedge funds, PE houses, etc. Debt with the ability to transfer to equity if not repaid, thus decent terms.
There’s no shortage of options. Other clubs spent £1.25bn - equivalent to £62m each while we spent -£1m. I can’t believe that the £1.25bn has all been spent from wealthy owners picking up the tabs - it will be from their clubs credit facilities and on a tab (future payments). What I’m saying is we should have access to a suitable debt facility that we drawn on when needed (like now).
Bought the shares to join the board.randomclaret2 wrote: ↑Tue Oct 06, 2020 9:01 pm"Our board don’t want to or can’t put anymore money into the club or subsidise losses"
This is a genuine question...how much have each of our directors put into the club ?
Are you making this stuff up ?
Spurs: https://www.theguardian.com/football/20 ... rus-impactPaul Waine wrote: ↑Tue Oct 06, 2020 9:41 pmI fear you are making the mistake of looking at last year's accounts rather than thinking about the club's current financial prospects. The £41m cash balance was there on 30-June-2019 - a lot of things have gone on since then.
I don't understand how Spurs have accessed the Gov't Covid Funds. I imagine it's got something to do with their brand new, multi-event stadium. I'm sure there's some security for the borrowings there. What would you think we could raise if it was possible to borrow money against the security of Turf Moor?
Banks - assuming we were generating cash in 2018/19, I don't expect we were in 2019/20 - and looking forward we will be even less so. You could describe Burnley as prudent if we don't spend money on bringing one or two new first teamers into the club - but spending money like that doesn't suggest the club is being prudence. Banks would not rely on last year's accounts (2018/19) or 2019/20 that we haven't seen, yet. They will want to know what things look like in 2020/21 and beyond. The important question is "how will any borrowings be repaid."
Bond market - it's a total non-starter for all but the largest football clubs. What credit rating do you think Burnley would get?
I think the ALK Capital/SPAC deal fits into the space of hedge funds/PE - though it would be equity from day 1. Maybe a new investor, with some diversified risks could also add some debt, but I don't see this being off the back of Burnley's balance sheet.
Chelsea, City and Leeds appear to be the biggest spenders - subject to final figures from the late night rush. Burnley's net £1m spend is above the net negatives of West Ham, Palace and Brighton.
"Spreading the cost" as you describe it, btw, means going into debt. If we agree to buy a player for £10 million, pay £4m on signing, then we also have debt of £6m. This will be shown as creditors in the accounts - money owed to other football clubs. If there are also add-ons, subject to performance/other events, the add-ons will be shown as contingent commitments - effectively, additional debt that is due if and when these performance events have occurred.
I’m not comparing us to Spurs. I’m using them
Cascarino in The Times:lakedistrictclaret wrote: ↑Wed Oct 07, 2020 8:26 amThere is an article by Tony Cascarino in today's "Times " discussing the winners and losers in the transfer window.
Unsurprisingly, we're one of the three losers, along with Wolves and Brighton. He's scratching his head looking at our transfer policy.
That fine but you do accept that their ability to raise finance is completely different to ours? So much so that it is incomparable.NewClaret wrote: ↑Wed Oct 07, 2020 9:14 amI’m not comparing us to Spurs. I’m using them
as an example of a club, already heavily indebted, that has raised further debt during covid as I was asked how I would raise funds. The exact avenue we chose is a bit irrelevant though, I just don’t believe there are none open to us - it’s a case of which is best.
I also can’t reconcile why Dyche, who presumably is closer to the club finances than anyone on here, says we’re in great shape yet others suggest we’re so cash strapped we can’t make signings?
The frustrating thing for me is that we’re (in my opinion) a creative midfielder, right winger and attacking right back away from the best BFC team I’ve ever seen and probably ever will. Experienced CH cover would be nice too.
I don’t expect to address all of those positions in one window (although you could argue some should have been addressed last 2-3). Maybe one or two this window, one next, one next summer. It’d be nice to think that the Board had a plan to do so...
Why would you think that someone who has worked in football all his life understands our accounts and financial position better some people on here who have spent their life working in finance ‘ banking etc ?NewClaret wrote: ↑Wed Oct 07, 2020 9:14 amI’m not comparing us to Spurs. I’m using them
as an example of a club, already heavily indebted, that has raised further debt during covid as I was asked how I would raise funds. The exact avenue we chose is a bit irrelevant though, I just don’t believe there are none open to us - it’s a case of which is best.
I also can’t reconcile why Dyche, who presumably is closer to the club finances than anyone on here, says we’re in great shape yet others suggest we’re so cash strapped we can’t make signings?
The frustrating thing for me is that we’re (in my opinion) a creative midfielder, right winger and attacking right back away from the best BFC team I’ve ever seen and probably ever will. Experienced CH cover would be nice too.
I don’t expect to address all of those positions in one window (although you could argue some should have been addressed last 2-3). Maybe one or two this window, one next, one next summer. It’d be nice to think that the Board had a plan to do so...
Spurs match day income is 29% of their total revenue. That’s the 2nd highest in the league with Arsenal top at 30%.kentonclaret wrote: ↑Wed Oct 07, 2020 10:12 amNow settled in at their new home it was reported a few days ago that Spurs are losing out on match day income of £800k generated just by Stadium catering.
Of course. They have £1bn debt or something ridiculous. A lot anyway. I’m not talking about raising anywhere near that - a very small figure relative to revenue, which should be entirely possible - to support squad strengthening and improve our chances of staying in the league.Burnley Ace wrote: ↑Wed Oct 07, 2020 10:01 amThat fine but you do accept that their ability to raise finance is completely different to ours? So much so that it is incomparable.
A lot of posters have pointed out why it’s not possible. What are you proposing to secure these debts against?NewClaret wrote: ↑Wed Oct 07, 2020 10:22 amOf course. They have £1bn debt or something ridiculous. A lot anyway. I’m not talking about raising anywhere near that - a very small figure relative to revenue, which should be entirely possible - to support squad strengthening and improve our chances of staying in the league.
Why does debt need to be secured?? Millions of companies across the world hold unsecured debts. Why should we be any different?Burnley Ace wrote: ↑Wed Oct 07, 2020 10:34 amA lot of posters have pointed out why it’s not possible. What are you proposing to secure these debts against?
Is that a serious question ?
Hi Paul it has everything to do with the new Stadium - The loan is granted to those ostensibly profitable businesses that can demonstrate sizeable cash generation losses that would lead to significant job losses, businesses can borrow a large percentage of that but no all of it, there is also a minimum amount you can borrow which I think is £50m. It is designed to support a large number of jobs - multiple hundreds not tens. Another critical factor is that the bond (which is what it really is) is due to be repaid in full next JulyPaul Waine wrote: ↑Tue Oct 06, 2020 9:41 pm
I don't understand how Spurs have accessed the Gov't Covid Funds. I imagine it's got something to do with their brand new, multi-event stadium. I'm sure there's some security for the borrowings there. What would you think we could raise if it was possible to borrow money against the security of Turf Moor?
That’s like me asking you if you know how a loan or credit card works??Burnley Ace wrote: ↑Wed Oct 07, 2020 12:03 pmOk, so you are expecting a bank to lend us say £30m without wanting any security on the loan? Do you know how a mortgage works?
Are you suggesting we buy players on the clubs Tesco Credit Card ?
Of course I’m not, equally the example of mortgage is a similarly irrelevant exampleTVC15 wrote: ↑Wed Oct 07, 2020 1:32 pmAre you suggesting we buy players on the clubs Tesco Credit Card ?
In all seriousness it’s not really very clear what you are talking about.
You seem to be saying that for a multi million pound loan or credit facility the club would not be asked to provide security.
That is just simply not true.
In fact not only is if not true the security we would be requested to provide would in no way on its own guarantee we could obtain the facilities being requested. In this environment of uncertainty as to future revenue streams the ability to repay any loan is more important. The PRA (sector regulator) highlighted the amount of irresponsible lending to football clubs more than 10 years ago and many of the main lenders to the sector subsequently pulled out. That was in a world without Covid.
Now even if you did find a bank prepared to support you (big IF) there is absolutely no way they would do this without taking a debenture and / or charge over the clubs land / property.
ExactlyRileybobs wrote: ↑Wed Oct 07, 2020 1:48 pmWhat Mike Garlick should have done is to switch BFC’s current account to another bank and set up at least 5 direct debits to go out of the new account. Think of the cash back offers he could have tapped into. That’s our problem, we just don’t think outside the box.
You do know that a ‘mortgage’ is not just a term used to a domestic house loan ? I guess you don’t as you would not be saying what you have !!NewClaret wrote: ↑Wed Oct 07, 2020 2:15 pmOf course I’m not, equally the example of mortgage is a similarly irrelevant example
What I am saying is that I don’t believe that it is beyond the wit of man for a £130m turnover business to raise a sixth of its income in debt.
You seem fixated on whether that needs to be secured. Whether it does or not is irrelevant (I happen to think it could be raised without securitisation, partly because Spurs *appear* to have done so via the BoE for a sum 10x larger than the small sum I am proposing despite already carrying £500m debts, and partly due my knowledge of my organisations working capital facility which is unsecured) but acknowledge you may have greater experience in corporate banking than I. And I’m not just talking about banks, as discussed there are alternative ways to raise finances, if needed.
I think what you are saying is that it’s impossible for BFC to raise a sixth of its turnover in debt? I don’t really care how it does it, secured/unsecured, bank, bonds, PE investment, equity issue, whatever. I just do not believe it’s impossible for BFC to raise reasonable funding when it’s starting point is a cash generative business, with no debt, at least historically sat on a cash pile most businesses would give their right arm for.
So are you seriously saying we couldn’t?
Yes that is exactly what people are telling you. A mortgage is a loan that is secured on the property, a credit card is unsecured. Why would anyone lend money to Burnley without some security on the loan? Especially ow that expenditure is greater than income.NewClaret wrote: ↑Wed Oct 07, 2020 2:15 pmOf course I’m not, equally the example of mortgage is a similarly irrelevant example
What I am saying is that I don’t believe that it is beyond the wit of man for a £130m turnover business to raise a sixth of its income in debt.
You seem fixated on whether that needs to be secured. Whether it does or not is irrelevant (I happen to think it could be raised without securitisation, partly because Spurs *appear* to have done so via the BoE for a sum 10x larger than the small sum I am proposing despite already carrying £500m debts, and partly due my knowledge of my organisations working capital facility which is unsecured) but acknowledge you may have greater experience in corporate banking than I. And I’m not just talking about banks, as discussed there are alternative ways to raise finances, if needed.
I think what you are saying is that it’s impossible for BFC to raise a sixth of its turnover in debt? I don’t really care how it does it, secured/unsecured, bank, bonds, PE investment, equity issue, whatever. I just do not believe it’s impossible for BFC to raise reasonable funding when it’s starting point is a cash generative business, with no debt, at least historically sat on a cash pile most businesses would give their right arm for.
So are you seriously saying we couldn’t?
Okay, well we’ll have to agree to disagree then. I think they could, you think they couldn’t.TVC15 wrote: ↑Wed Oct 07, 2020 2:47 pmYou do know that a ‘mortgage’ is not just a term used to a domestic house loan ? I guess you don’t as you would not be saying what you have !!
I’m not fixated on whether it would secured or not - I’m telling you that it would.
I’m not sure why you keep on referencing Spurs and the B of E loan - that is a government backed scheme and guaranteed. You realise the B of E is the lender of last resort ? Why on earth would they need to take security - they are not a normal bank and are hardly going to go bust.
Oh btw you might want to look up the meaning of securitisation !!
And to answer your last question yes I am saying they would find it very difficult (or nigh on impossible) for the club to raise the levels you are talking about from any financial institution. If you seriously think a historic ‘cash pile’ is something that a lender would take into consideration you really have not got a clue how it works.
Eh oh if you think it’s as easy as you are suggesting that’s fine. Ask yourself why they haven’t gone down this route though and ask yourself why so few football clubs in our league have loans with UK Banks.
As in all forms of business there is no right or wrong way to approach the club's financial issue, it comes down to what deep down is most important to those who are making the decisions. At times such as these there tends to be two distinct courses of actions for business retract, bunker down and hope to ride out the storm, attack, risk a lot and play to win.NewClaret wrote: ↑Tue Oct 06, 2020 6:43 pmI wrote a massive reply to CP’s post earlier, that then disappeared when I tried to post. Probably for the best
The gist of it was that, whilst I appreciate the sensible and reasoned debate, and recognise the need to look at this from a different perspective, I respectfully disagree.
What our Board have done very well is make hay while the sun shone. They developed a cash pile whilst investing in some infrastructure (Barnfield = good, I’m not so mad keen on the quadrants). They’ve also reduced our future liabilities on player sales. We’re in good shape financially. Sean Dyche has said so. Credit to the Chairman and the Board for that.
You do have to ask why though? Is limited outstanding debt on players a good thing, or a sign we’ve turned the investment taps off? Ditto the cash pile? You could argue that has not motivated by a desire to do right by the club and ensure it’s sustainability, more to prep the club for takeover so they can all sell up and profit.
Will we really be thanking and lauding their prudence in a few seasons if they sell out, leave us short and we’re back in the Championship next year with an inexperienced leadership structure trying to grapple with the loss of key players/manager?
Yes, Covid has hit our numbers, the cash has probably eroded. Yes, there will be some short-term decline in revenue from all sources. But the long term structural direction for the PL (best managers, players, most entertaining and unpredictable league in the world) is very strong. Revenues could increase from a whole variety of opportunities post-covid.
It’s therefore imperative we stay in the PL and invest to do so, even if that means taking on some short term debt. If we continue to plan and prepare for doomsday it will eventually be self fulfilling.
Final point is that I’m prepared to give the Chairman and Board the benefit of the doubt. My key targets for this summer are all in the Championship and still available, so let’s see what happens, but in my mind it will be gross mismanagement if they don’t find a way to strengthen this year, Covid or not.
Spurs owe £1billion, we owe nothing.NewClaret wrote: ↑Wed Oct 07, 2020 10:22 amOf course. They have £1bn debt or something ridiculous. A lot anyway. I’m not talking about raising anywhere near that - a very small figure relative to revenue, which should be entirely possible - to support squad strengthening and improve our chances of staying in the league.
One other point related to this the Football League (and I suspect the PL, although it has yet to be tested) don't care too much if you don't pay/pay only fractions of non-footballing debt but if you don't pay footballing debt in full you don't get to take part in the league.Chester Perry wrote: ↑Tue Oct 06, 2020 2:53 am...
There is another issue which is going to come to the fore if the current situation prolongs (and no one really knows when it will end) and that is clubs not being able to service their transfer debt - on Monday @SwissRamble did a long and detailed thread on debt - the scale of transfer debt is huge and has grown significantly this window with many small upfront payments and agreements in place for sizeable scheduled payments. It benefits a selling clubs accounts as they book the full transfer price but does little to help immediate cash flow. It will only take one or two significant clubs to fail to make their scheduled payments to create a sizable domino effect which would have a dramatic impact on cash flow across the game.
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