Long Time Lurker wrote: ↑Fri Oct 02, 2020 4:15 pm
If we stay up then we could go on making a small profit each year, after we have paid wages and other running costs. In the past that has been boosted by money coming in from the players we have sold.
However, if we happen to get relegated then all the older players looking for new contracts will get reduced deals or they will be cut loose. Our best players will leave, lowering the wage bill again and bringing in money from their transfer fees. Everyone else will receive a relegation wage reduction if that is in their contract.
All of that will reduce the salary part of our running costs. Falling down a level would probably also trigger the " cut our cloth " proclamation and a lot of people associated with the club might be let go, possibly with Covid in the excuse picture.
The new owners use the parachute payments and money received from selling off our most valuable players to pay themselves back the money they bought the club with. After that whoever is in charge of our recruitment would be given the opportunity to preside over a complete squad overhaul and possibly pick a new manager for us. The incoming players would be on lower wages.
Club bought, the money used to buy the club paid back in full with a nice profit attached, running costs reduced, a complete change in how the club is run and who is running it. No new investment is made. If the club is prosperous after that then great, but if it isn't the investors won't lose out because they will have already got all their money back and a profit - anything more is a bonus.
It's called asset stripping. As a quick return investment opportunity we are probably worth more dead ( or at least dying ) than alive.
Hi LTL, that's not a great investment proposition. I think you've got things very wrong. If we are correct in identifying ALK Capital as a SPAC - Special-Purpose Acquisition Corporation, then their plan is most likely along the following lines: buy a Premier League club - there are only very few of these available - Burnley is one; aim to keep the club in the Premier League - but, if relegated, aim to get promoted and return to the Premier League very quickly; Burnley is a great choice for this "safety" option, with 3 promotions in 11 seasons. Why is Premier League ownership important? because the proposition is that "high profile sports franchises" have significantly risen in value over recent years - it's already been done in US sports, American football, baseball, basketball, ice hockey and there are opportunities with American soccer - But, "soccer" is dominated by Premier League - plus some other European clubs - so, ownership of a Premier League club is where the big opportunities are - but, all the "big" Premier League clubs are already owned by others - and a seller will want "big" money - for example, Ambromovich quoted as wanting £3bn for Chelsea (ref Jim Ratcliffe - he walked away and bought Nice for a lot less) - so, buy a smaller cheaper club and see how far you can develop it - Burnley fits the profile for "that club."
ALK Capital is not an "asset stripping" operation. They will list their shares on an US stock exchange - because that's how SPACs raise their money. There will be lots of individual investors, quite easily 10s of thousands - a small part of their individual investment portfolios - and not for anyone's "pension security" money - high(er) risk category.
The guys behind ALK Capital, Alan Pace and others, will make their money by getting their investment "free" from having created and sponsored the SPAC opportunity. They gain nothing/very little from "asset stripping" - they make a lot of money, over a few years, if the SPAC is successful - let's say, for example, that ALK buys Burnley for £100 million (I've just made this number up, it could be any number), they would be aiming to exit when the investment in Burnley is a significant multiple of £100m - let's say, £200m or £300m or even £500m. They will do this by being part of the rising value of all Premier League clubs. Maybe, if ALK can get Burnley value to £500m then Alan Pace and friends will receive £50m - and all they have risked is their time, work and brain power.
Of course, there's no guarantee with any investment. Burnley could get relegated - and struggle to win promotion again. Burnley could miss out on growth in value of Premier League clubs - but, that's the investment risk that the investors will be taking.
Exciting times for everyone.
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