ALK Capital or Farnell/Elkashashy takeover

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Chester Perry
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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Chester Perry » Mon Oct 31, 2022 5:25 pm

Chester Perry wrote:
Mon Oct 31, 2022 5:24 pm
It is a strange one, I agree, but as I have repeatedly pointed out - the place you would expect that information to exist is in the notes to the financial reports for Freight Investor (Holdings) Limited, John B's business that sold £32m+ worth of shares to VSL, there is no mention of it, though this is the source of much of the detail on the payment schedule (number of instalments and completement period - the most recent set of accounts for them published last month makes absolutely no mention of the transaction at all
That doesn't mean that there may be a different agreement in place on the old ownerships remaining shares - we have no detail on that and I just assumed the same price as the initial sale. Which I do not think is unreasonable at this point

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Big Vinny K » Mon Oct 31, 2022 5:26 pm

thehistorylecturer66 wrote:
Mon Oct 31, 2022 4:57 pm
Pure conjecture.
What is pure conjecture ?
He said it was “unlikely” which is a very reasonable and logical assumption to make.

During the last few weeks quite a few posters seems to be conflating the fantastic performances on the pitch with our financial model.
Success on the pitch and getting promotion first time round will of course significantly mitigate a lot of the risk associated with the take over financial structure.
But it does not mean that the take over structure was an acceptable level of risk to many supporters of the club or those who have a good understanding of the risk and what has happened at many other football clubs.

If a few posters thought that we would fail on the pitch then yep as churlish as it is I’m not surprised there’s been some “told you so” posts in the last few weeks (I don’t actually think there are that many on this board who said we were going to fail on the pitch or disagreed with the appointment of VK)

However I’m not sure how you could substantiate at this early point that everything is going as well on the financial front. There are still a number of unknowns and we have never in our history as a club carried the level of debt that we have now.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Duffer_ » Mon Oct 31, 2022 5:27 pm

thehistorylecturer66 wrote:
Mon Oct 31, 2022 5:21 pm
Not really .. I’m of the opinion that they know what they’re doing and you and Chester don’t that’s all 😉😂
It's that kind of enquiring mind and critical curiosity that I so value in an academic ;) :D
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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Chester Perry » Mon Oct 31, 2022 5:28 pm

thehistorylecturer66 wrote:
Mon Oct 31, 2022 5:21 pm
Not really .. I’m of the opinion that they know what they’re doing and you and Chester don’t that’s all 😉😂
Now you are talking much more sense
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Re: ALK Capital or Farnell/Elkashashy takeover

Post by NewClaret » Mon Oct 31, 2022 6:22 pm

Chester Perry wrote:
Mon Oct 31, 2022 5:28 pm
Now you are talking much more sense
:lol: :lol: :lol:

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by ClaretPete001 » Mon Oct 31, 2022 6:30 pm

thehistorylecturer66 wrote:
Mon Oct 31, 2022 5:21 pm
Not really .. I’m of the opinion that they know what they’re doing and you and Chester don’t that’s all 😉😂
Aye and I'm sure at your next UCU meeting you will be suggesting that the community college or University you work at is run by investment bankers?

Not...

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Royboyclaret » Mon Oct 31, 2022 8:51 pm

Really have to admire your patience, Chester Perry.

Reminders for me of how I, so reluctantly, opted to leave your superb Magic Money Tree thread many moons ago.

Keep up the good work, many of us appreciate your efforts.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Chester Perry » Mon Oct 31, 2022 9:21 pm

Royboyclaret wrote:
Mon Oct 31, 2022 8:51 pm
Really have to admire your patience, Chester Perry.

Reminders for me of how I, so reluctantly, opted to leave your superb Magic Money Tree thread many moons ago.

Keep up the good work, many of us appreciate your efforts.
I still miss your input on there, Roy, we had some great discussions, it is much the poorer for the absence of your contributions,

I hope you are keeping well and enjoying our team's performances

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Royboyclaret » Mon Oct 31, 2022 9:37 pm

Chester Perry wrote:
Mon Oct 31, 2022 9:21 pm
I still miss your input on there, Roy, we had some great discussions, it is much the poorer for the absence of your contributions,

I hope you are keeping well and enjoying our team's performances
We did, indeed.....Page 6 still remains a classic for me and I often go back to read again.

So pleased with our on-pitch performances this season, way beyond all expectations.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by claretonthecoast1882 » Tue Nov 01, 2022 8:09 am

Chester Perry wrote:
Mon Oct 31, 2022 4:25 pm
A few might if they are all pulled in January and we have to start bedding other in, just as we had really start to get going - particularly if the Venky's get the bit between their teeth and offer much more to say Southampton for Tella and the rest

not saying that any of this will happen it is just the risk of relying so heavily on loans, as opposed to owning registrations.

your right about enjoying what we are seeing on the pitch, and I haven't seen anybody who says they are not, just some of us have seen the underlying finance issues hurt us before when promise was being shown on the pitch (and that goes back to the 70's)
Some of us ? Everyone who has been involved with the club knows what has happened in the past. Reading a set of accounts from 12 months ago then guessing what might happen for the next few years is both futile and pointless. Nor does it make someone a financial expert.

You only have to read posts on this thread (particular when someone understands the square root of nothing, that isn't aimed at you by the way) someone posts something daft, gets things explained why they don't understand and get all upset.

As for you points about the loan players, there is an agreement in place for Beyer upon promotion, do you think City will recall THB knowing the relationship the club has with Kompany. You could argue Tella is one who has a slight chance of Southampton recalling him but if they did he would be staying there not going somewhere else. What have the Venkys done in the last 6 years that makes you think they will outbid anyone

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by claretonthecoast1882 » Tue Nov 01, 2022 8:11 am

ClaretPete001 wrote:
Mon Oct 31, 2022 4:34 pm
Bless....
That is probably your most sensible post on this whole thread, least you haven't made a clown of yourself posting about something you have no idea at all what you are on about.

The little boy wading around in the shallow end of the baby pool and still miles out of his depth, keep up the good work though your financial posts are only bettered by your football ones.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by claptrappers_union » Tue Nov 01, 2022 8:33 am

claretonthecoast1882 wrote:
Tue Nov 01, 2022 8:09 am

Do you think City will recall THB knowing the relationship the club has with Kompany.
It’s purely business, they sent THB to Burnley to get game time, experience and to put him in the shop window potentially. Vincent Kompany knows this.
claretonthecoast1882 wrote:
Tue Nov 01, 2022 8:09 am

You could argue Tella is one who has a slight chance of Southampton recalling him but if they did he would be staying there not going somewhere else.
If Tella was recalled it would be play for Southampton
claretonthecoast1882 wrote:
Tue Nov 01, 2022 8:09 am

What have the Venkys done in the last 6 years that makes you think they will outbid anyone
Anyone can outbid Burnley really, certainly the Venkys if they really wanted to give promotion a real push.

ALK don’t have a pot to **** in. When we pay off the debts, we’re back to £0 again.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Lancasterclaret » Tue Nov 01, 2022 9:26 am

claptrappers_union wrote:
Tue Nov 01, 2022 8:33 am
It’s purely business, they sent THB to Burnley to get game time, experience and to put him in the shop window potentially. Vincent Kompany knows this.



If Tella was recalled it would be play for Southampton



Anyone can outbid Burnley really, certainly the Venkys if they really wanted to give promotion a real push.

ALK don’t have a pot to **** in. When we pay off the debts, we’re back to £0 again.
If the Venkys were going to really back Rovers, they would have done it last year when they had won the league by Xmas

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by ClaretPete001 » Tue Nov 01, 2022 9:31 am

claretonthecoast1882 wrote:
Tue Nov 01, 2022 8:09 am
Some of us ? Everyone who has been involved with the club knows what has happened in the past. Reading a set of accounts from 12 months ago then guessing what might happen for the next few years is both futile and pointless. Nor does it make someone a financial expert.

You only have to read posts on this thread (particular when someone understands the square root of nothing, that isn't aimed at you by the way) someone posts something daft, gets things explained why they don't understand and get all upset.

As for you points about the loan players, there is an agreement in place for Beyer upon promotion, do you think City will recall THB knowing the relationship the club has with Kompany. You could argue Tella is one who has a slight chance of Southampton recalling him but if they did he would be staying there not going somewhere else. What have the Venkys done in the last 6 years that makes you think they will outbid anyone

This is just pub gossip and irrelevant....!

The point about loans are three fold. Firstly, the club is struggling to be able to afford the kind of talent that appeals to PL clubs. We know that because VK has said it. Owning the asset is fundamental to the business model because there is only a serious market in the PL in terms of players as commodities. If you don't have players in the first team that you own you have nothing to sell because you are not increasing their value.

The second important point is that if we don't own the players then we are not investing in an asset, which diminishes the asset base of the business. And the third point is that if we do get promoted it will be harder to get that many loans, which then has cashflow implications if we have to buy players, which becomes material to the cashflow conversation.

Those are the points being made not conjecture on whether City make their financial decisions on the basis of VK's relationship with THB.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by ClaretPete001 » Tue Nov 01, 2022 9:35 am

Lancasterclaret wrote:
Tue Nov 01, 2022 9:26 am
If the Venkys were going to really back Rovers, they would have done it last year when they had won the league by Xmas
The Venky's have invested heavily in Rovers and continue to do so. The current wage bill at Rovers is maintained by the Venky's.

Like many people before them they have struggled to translate that investment into success on the pitch.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Lancasterclaret » Tue Nov 01, 2022 9:38 am

ClaretPete001 wrote:
Tue Nov 01, 2022 9:35 am
The Venky's have invested heavily in Rovers and continue to do so. The current wage bill at Rovers is maintained by the Venky's.

Like many people before them they have struggled to translate that investment into success on the pitch.
I know that Pete, the Venkys allow Rovers to operate way beyond what they can do with their natural income

Its taken Rovers fans about twenty years to work that out though

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Chester Perry » Tue Nov 01, 2022 1:16 pm

ClaretPete001 wrote:
Mon Oct 31, 2022 3:56 pm
Ok just to make it easier let's forget BFC to all purposes and intents it does not exist anymore other than as a notional trading identity. It has a legal status for as long as the Directors of ALK desire. We all work for companies that change company names, charge huge inter company loans, management fees and consultancy fees etc. It is as it is ...in business.

The ALK group has £54 million worth of visible debt and potentially another £20 million.

It has reduced it's asset base by about £70 million (if you include Chris Wood): as a consequence, it has 5 loanees playing for the first team.

It hasn't made profits for years; and if you are right - the group is going to pay something akin to £90 million out this year there is likely no cash left.

That to me is about where we are at in fag packet terms.
I have been looking at this for an article I am working on for the London Clarets

- Pete, please be aware that I am not digging you out here rather seeking to understand for my benefit and others how this will look in the club's accounts and with cashflow

What is being referred to above, are realised asset values, not the values held in the Accounts under Intangible Assets (which saw the squad collectively valued at £34.33m in the last accounts).

In football the squads 'book' value is determined by the cost of acquisition (including agent fees etc) less applied amortisation, the longer a player remains with the club the lesser the 'book value' the player has to the club. So, even though Chris Wood was our record signing, his length of service (which included a contract extension) actually saw him with an asset value of around £2.5m - £3m in the accounts, even though he was sold for £25m.

When we look at the other players sold over the summer then we can estimate book values of:
- Cornet £8.8m (sold for £17.5m)
- Collins £9.5m (sold for £20.5m)
- Pope £0.2m (sold for £10m)
- McNeil £0.2m (sold for £15m)

So, the combined Intangible Asset Value of the 5 players sold this calendar year is around £22m which would leave a 'book profit on 'disposal' of £66m before other costs such as sell on fees and outstanding transfer payments

*note the conditional payments/'add ons' are not included in these transfer values as the realisation of them is not absolutely certain

This does not necessarily equate into cash for the club in the same way

With Wood, there was a sell on clause to Leeds of around 10% so £1m if we really did pay a full £15m for him which means we will have booked a profit of around £21m or so on his disposal and receive around £23.5m cash after paying the sell-on fee and the cost of the advance on the second instalment from Macquarie.

With Cornet there was around £8m (if the £10m I have for his inward fee is correct) outstanding on his fee and probably a sell on clause of say 10% which would see a book profit of circa £6.8m but a cash gain of £8.75m

With Collins there was £9m outstanding on his fee and a sell on clause thought to be 15% (acquisition price of £12m) leaves a book profit of £10.225m but a cash gain (after factoring with Macquarie) of closer to £9m (There cost of factoring is more expensive here as a result of the timespan and number of payments covered).

With Pope there was no outstanding fee but a hefty sell on clause thought to be around 27.5% (I have his acquisition price as being £1m) so that would see a book profit of £7.325m and a cash gain (after factoring with Macquarie) of closer to £6.5m.

With McNeil there was no inward fee, and his asset value was all down to the cost of his agent. The book profit here would be £14.8m but as the club have not advanced his fee with Macquarie (the potential reasons as to why not are a whole other discussion) the cash gain will only what Everton have paid upfront - it would be a surprise if it is more than £4m

So, if the above is right, that would leave a book profit in the region of £60m and a cash contribution of almost £52m with a further £11m to come over the next 3 years

add in the likely substantial cash generation last season together with the major instalment of the parachute payments and you can begin to see how the summer was carefully negotiated from a cash flow perspective. I would imagine that cashflow is fairly tight at the moment and while we no longer have an overdraft registered as a charge at the club you would think we may have to use one.

Of course, the problem with advancing all the money we have, is that we have taken on future spending commitments with all the incomings over the summer, which means that the residue from these sales will not cover those costs or the outstanding share buying costs we know await. This will likely force the sale of players next summer to raise funds to meet the need of replacing out of contract and loan players in a bid to strengthen the squad, hopefully in the Premier League.

It makes me assume that incomings next summer will reach double figures again as might outgoings. That is a large amount of churn for the manager to negotiate and get mostly right again.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by aggi » Tue Nov 01, 2022 2:39 pm

Chester Perry wrote:
Tue Nov 01, 2022 1:16 pm
...
Of course, the problem with advancing all the money we have, is that we have taken on future spending commitments with all the incomings over the summer, which means that the residue from these sales will not cover those costs or the outstanding share buying costs we know await. This will likely force the sale of players next summer to raise funds to meet the need of replacing out of contract and loan players in a bid to strengthen the squad, hopefully in the Premier League.
...
All looks reasonable. Just on this point, you could argue that this summer was an exceptional summer and the cash that has been advanced is a surplus over the summer's spend (which probably isn't that different than what we got for McNeil) so wouldn't necessarily knock on to future spend.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Chester Perry » Tue Nov 01, 2022 2:57 pm

aggi wrote:
Tue Nov 01, 2022 2:39 pm
All looks reasonable. Just on this point, you could argue that this summer was an exceptional summer and the cash that has been advanced is a surplus over the summer's spend (which probably isn't that different than what we got for McNeil) so wouldn't necessarily knock on to future spend.
I would add that there is also likely to be an expectation from within the club that some will be sold next summer - ideally at a profit, before the next transfer payment instalment

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by ClaretPete001 » Tue Nov 01, 2022 8:44 pm

Chester Perry wrote:
Tue Nov 01, 2022 1:16 pm
I have been looking at this for an article I am working on for the London Clarets

- Pete, please be aware that I am not digging you out here rather seeking to understand for my benefit and others how this will look in the club's accounts and with cashflow

What is being referred to above, are realised asset values, not the values held in the Accounts under Intangible Assets (which saw the squad collectively valued at £34.33m in the last accounts).

In football the squads 'book' value is determined by the cost of acquisition (including agent fees etc) less applied amortisation, the longer a player remains with the club the lesser the 'book value' the player has to the club. So, even though Chris Wood was our record signing, his length of service (which included a contract extension) actually saw him with an asset value of around £2.5m - £3m in the accounts, even though he was sold for £25m.

(edited for brevity)
I don't mind you digging me out as long as you don't do it in a manner that suggest you are a petulant *rsehole, which you don't - so all good.

You've highlighted my point about the £70 million and you are right in terms of book value and accounting convention it is nowhere near that sum.

On the same premise, Harry Kane has a market value of £81 million but would have a book value of zero and likely Chris Wood is more valuable in Newcastle's books that Harry Kane has ever been in Tottenham's.

And you are right the loss in value of an asset is not reflected in a reduction in balance sheet value but an increase in realised profit precisely because the value of a playing asset is only truly reflected when the playing asset is sold.

And my point is not a defensive one but rather to point our why I don't think accounting convention is that relevant because it doesn't offer much clarity and is hard to explain on a football forum how losing £70 million quid's worth of assets valued by the market means nothing in terms of the value in the accounts .

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by ClaretPete001 » Tue Nov 01, 2022 8:51 pm

Chester Perry wrote:
Tue Nov 01, 2022 2:57 pm
I would add that there is also likely to be an expectation from within the club that some will be sold next summer - ideally at a profit, before the next transfer payment instalment
To make a blunt point if we are promoted we would have to replace 7 players who have featured in the first team - six of them key players.

The quality differential between last year and this has not been bridged by inspired signings but by inspired loans.

For that reason alone there is will likely be some churn at the end of the season.

And the complexity of the cash flow situation is such it's hard to know but I think your analysis and good work above is a reasonable interpretation of what we know....!

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Swizzlestick » Tue Nov 01, 2022 9:14 pm

We have five on loan don’t we? Four regular first teamers, one usually a sub. Arguably our star player, Zaroury, is permanent and we’ve barely seen our ‘main’ signing from the summer, Twine due to injury. It could be argued that a couple of those loan signs could viably become permanent, particularly if promoted. Stand to be corrected, but we at least have an option to buy on Beyer.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by ClaretPete001 » Tue Nov 01, 2022 10:28 pm

Swizzlestick wrote:
Tue Nov 01, 2022 9:14 pm
We have five on loan don’t we? Four regular first teamers, one usually a sub. Arguably our star player, Zaroury, is permanent and we’ve barely seen our ‘main’ signing from the summer, Twine due to injury. It could be argued that a couple of those loan signs could viably become permanent, particularly if promoted. Stand to be corrected, but we at least have an option to buy on Beyer.
Fair point but I did say replace. Even buying four PL quality players at PL prices would put some pressure on the cashflow.

Some are out of contract like: JBG, Barnes and Westwood (who probably would be in the first team squad were he fit).

So, that's 7 likely not to be here. And could you go into a PL season without cover for Cork and Jay Rod in the first team squad - both 34 next year?

So, that's 9 of the 16.

And most promoted teams tend to upgrade their squads - so it's not an outlandish argument to suggest that a combination of those factors and pressure on the cashflow could see significant change at the end of the season.

But it may not....!

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Chester Perry » Thu Nov 03, 2022 4:24 pm

Chester Perry wrote:
Tue Nov 01, 2022 1:16 pm
I have been looking at this for an article I am working on for the London Clarets

- Pete, please be aware that I am not digging you out here rather seeking to understand for my benefit and others how this will look in the club's accounts and with cashflow

What is being referred to above, are realised asset values, not the values held in the Accounts under Intangible Assets (which saw the squad collectively valued at £34.33m in the last accounts).

In football the squads 'book' value is determined by the cost of acquisition (including agent fees etc) less applied amortisation, the longer a player remains with the club the lesser the 'book value' the player has to the club. So, even though Chris Wood was our record signing, his length of service (which included a contract extension) actually saw him with an asset value of around £2.5m - £3m in the accounts, even though he was sold for £25m.

When we look at the other players sold over the summer then we can estimate book values of:
- Cornet £8.8m (sold for £17.5m)
- Collins £9.5m (sold for £20.5m)
- Pope £0.2m (sold for £10m)
- McNeil £0.2m (sold for £15m)

So, the combined Intangible Asset Value of the 5 players sold this calendar year is around £22m which would leave a 'book profit on 'disposal' of £66m before other costs such as sell on fees and outstanding transfer payments

*note the conditional payments/'add ons' are not included in these transfer values as the realisation of them is not absolutely certain

This does not necessarily equate into cash for the club in the same way

With Wood, there was a sell on clause to Leeds of around 10% so £1m if we really did pay a full £15m for him which means we will have booked a profit of around £21m or so on his disposal and receive around £23.5m cash after paying the sell-on fee and the cost of the advance on the second instalment from Macquarie.

With Cornet there was around £8m (if the £10m I have for his inward fee is correct) outstanding on his fee and probably a sell on clause of say 10% which would see a book profit of circa £6.8m but a cash gain of £8.75m

With Collins there was £9m outstanding on his fee and a sell on clause thought to be 15% (acquisition price of £12m) leaves a book profit of £10.225m but a cash gain (after factoring with Macquarie) of closer to £9m (There cost of factoring is more expensive here as a result of the timespan and number of payments covered).

With Pope there was no outstanding fee but a hefty sell on clause thought to be around 27.5% (I have his acquisition price as being £1m) so that would see a book profit of £7.325m and a cash gain (after factoring with Macquarie) of closer to £6.5m.

With McNeil there was no inward fee, and his asset value was all down to the cost of his agent. The book profit here would be £14.8m but as the club have not advanced his fee with Macquarie (the potential reasons as to why not are a whole other discussion) the cash gain will only what Everton have paid upfront - it would be a surprise if it is more than £4m

So, if the above is right, that would leave a book profit in the region of £60m and a cash contribution of almost £52m with a further £11m to come over the next 3 years

add in the likely substantial cash generation last season together with the major instalment of the parachute payments and you can begin to see how the summer was carefully negotiated from a cash flow perspective. I would imagine that cashflow is fairly tight at the moment and while we no longer have an overdraft registered as a charge at the club you would think we may have to use one.

Of course, the problem with advancing all the money we have, is that we have taken on future spending commitments with all the incomings over the summer, which means that the residue from these sales will not cover those costs or the outstanding share buying costs we know await. This will likely force the sale of players next summer to raise funds to meet the need of replacing out of contract and loan players in a bid to strengthen the squad, hopefully in the Premier League.

It makes me assume that incomings next summer will reach double figures again as might outgoings. That is a large amount of churn for the manager to negotiate and get mostly right again.
I have been looking into the rules a bit more around outstanding fees to a player's previous club when you are selling then on - Previously I had suggested that my understanding was that domestically we are obliged to pay all the outstanding fee

I can confirm that this is categorically the case as clearly stated in:
- EFL Rules and Regulations Section 6. Players - 52 Transfer/Compensation Fees Method of Payment
https://www.efl.com/-more/governance/ef ... --players/

- Premier League Handbook 2022/23, Players – Contracts, Registrations and Transfers Section V: Players – Transfers of Registrations - Method of Payment V38 -V41
https://resources.premierleague.com/pre ... _18.07.pdf

These payments are made directly into the leagues Transfer Fee (EFL)/Compensation Fee (PL) Account together with a 4% levy on the full value plus VAT at the full rate).

Also, the selling club has to immediately pay any outstanding signing on fee and monies to the players agent agreed as part of the original transaction

Then there is the small matter that it is relatively common for the player being sold (and his agent) being entitled to a share of the transfer fee

That is a lot of additional cash going out the door on the day the agreement is signed

fyi the levy applies to all domestic transfers/compensation agreements and it goes to the Professional Footballers Pension Fund (which is nice) and any surplus goes to the Professional Game Youth Fund

So in the case of Nathan Collins - it appears to my understanding of the situation

that we received a down payment of £5.5m

yet paid to the EFL
- £9m outstanding to Stoke
- £1.71m vat
- £360K transfer levy

there will have likely been outstanding payments to his agent regarding the initial inward deal - possibly to Collins too

then there is the potential issue of Collins/his agent's share of the outgoing fee - and yes this may not be the case given the players desire to play in the Premier League

I would be very grateful if someone could demonstrate to me that I have got this badly wrong - being right on this is quite horrible to contemplate.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by GodIsADeeJay81 » Thu Nov 03, 2022 4:33 pm

So the player and their agent between them get part of the transfer fee, signing on fees, agents fees and the player gets the negotiated wages?

I knew this was common when Raiola pushed transfers through for his big name clients, but I didn't realise it was common for lesser players.

Seems very iffy to me, that a player and agent get cuts of the transfer fee

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Chester Perry » Thu Nov 03, 2022 4:40 pm

GodIsADeeJay81 wrote:
Thu Nov 03, 2022 4:33 pm
So the player and their agent between them get part of the transfer fee, signing on fees, agents fees and the player gets the negotiated wages?

I knew this was common when Raiola pushed transfers through for his big name clients, but I didn't realise it was common for lesser players.

Seems very iffy to me, that a player and agent get cuts of the transfer fee
from what I can deduce the agent fees are spread of the life of the contract rather than paid in a lump sum up front, signing on fees appear to work in the same way too - and it is all part of the acquisition cost that gets amortised over the player's contract lifetime

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by aggi » Thu Nov 03, 2022 5:11 pm

Chester Perry wrote:
Thu Nov 03, 2022 4:40 pm
from what I can deduce the agent fees are spread of the life of the contract rather than paid in a lump sum up front, signing on fees appear to work in the same way too - and it is all part of the acquisition cost that gets amortised over the player's contract lifetime
In the accounts that stuff is all capitalised and thrown in with the transfer fee (even if it is paid upfront).

There is a big push to ensure that agent's fees are all paid by the player rather than the club, it was a bit of a tax dodge previously.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Chester Perry » Thu Nov 03, 2022 5:31 pm

aggi wrote:
Thu Nov 03, 2022 5:11 pm
In the accounts that stuff is all capitalised and thrown in with the transfer fee (even if it is paid upfront).

There is a big push to ensure that agent's fees are all paid by the player rather than the club, it was a bit of a tax dodge previously.
As I understand it - the club pays the agent but the player is taxed for a benefit in kind


Can you help with my post from earlier -please tell me I have got it wrong

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Big Vinny K » Thu Nov 03, 2022 6:47 pm

Chester Perry wrote:
Thu Nov 03, 2022 4:40 pm
from what I can deduce the agent fees are spread of the life of the contract rather than paid in a lump sum up front, signing on fees appear to work in the same way too - and it is all part of the acquisition cost that gets amortised over the player's contract lifetime
My understanding is that current accounting rules do allow you to do this.

In terms of signing on fees that go to the players back in the day it was quoted a bit of a rule of thumb that players would get 10%. I know of an ex Burnley player who went for a fee of around £750k on 3 different occasions I think it was and he said that he received £75k each time. None of these clubs were in the top division and it was more than 20 years ago now so a lot of money back then for these level of players.
I’m guessing now with the astronomical fees players going for that it can’t be 10% on a lot of these ? If it is then it is ridiculous that the clubs rather than players have to pay the agents fees on top of this rather than it coming from the player.

You can see why many managers don’t like agents. It’s the player who decide that they need to employs the agents and not the clubs so it’s crazy that the clubs have to pay this but the players have so much power that we know football no longer works like any other sector !!

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by aggi » Fri Nov 04, 2022 12:12 pm

Chester Perry wrote:
Thu Nov 03, 2022 5:31 pm
As I understand it - the club pays the agent but the player is taxed for a benefit in kind


Can you help with my post from earlier -please tell me I have got it wrong
It looks rightish, although the overall VAT figure looks low (I'd have thought 20% on £20m less the 20% on £5.5m would be £2.9m to pay). Same with the levy, 4% of £20m is £800k. Saying that I read it as the levy being paid by the buying club which I think is correct.

I would doubt that Collins/his agent shared in the outgoing fee given it was a move he was pushing for.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by aggi » Fri Nov 04, 2022 12:13 pm

Chester Perry wrote:
Thu Nov 03, 2022 5:31 pm
As I understand it - the club pays the agent but the player is taxed for a benefit in kind


Can you help with my post from earlier -please tell me I have got it wrong
Yes, that sometimes happens. Effectively the same as the club paying the player and then the player paying the agent in tax terms.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Burnley1989 » Fri Nov 04, 2022 12:24 pm

Chester Perry wrote:
Thu Nov 03, 2022 5:31 pm
As I understand it - the club pays the agent but the player is taxed for a benefit in kind


Can you help with my post from earlier -please tell me I have got it wrong
That’s correct

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Chester Perry » Fri Nov 04, 2022 3:16 pm

So, today Burnley FC Holdings Limited had posted its latest Confirmation Statement at Companies House - it seems not as many small shareholders sold their shares as we supposed would have done - no doubt in the future they are going to benefit from dividend payments or another offer to buy

https://find-and-update.company-informa ... ng-history

today marks exactly 13 months to the day since the offer was made on 7578 shares - less than half of those were actually sold - 3255 to be precise, at a total transaction value of £5,330,245.00 (remember they borrowed £10m from the club which we originally thought was solely for this purpose)

ALK via Calder Vale Holdings now have 106,107 shares (up from 102,852) or 86.63% of the 122,478 allotted shares

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Chester Perry » Fri Nov 04, 2022 3:18 pm

aggi wrote:
Fri Nov 04, 2022 12:12 pm
It looks rightish, although the overall VAT figure looks low (I'd have thought 20% on £20m less the 20% on £5.5m would be £2.9m to pay). Same with the levy, 4% of £20m is £800k. Saying that I read it as the levy being paid by the buying club which I think is correct.

I would doubt that Collins/his agent shared in the outgoing fee given it was a move he was pushing for.
You seem a bit at cross purposes - The Collins numbers related to our clearing of outstanding sums to Stoke and the VAT and Levy due on that

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Chester Perry » Fri Nov 04, 2022 4:20 pm

Chester Perry wrote:
Mon Oct 31, 2022 12:27 pm
From my understanding - the club's non-football outgoings this calendar year will be in the region of £87m - £90m

- £37m in loans to Pace to cover Stage Payments
- £35m+ in debt reduction with MSD when the penalty is included (it could in reality be closer to £38m if MSD applied the full value of lost interest in the penalty charge)
- £10m in loans to Pace to cover the acquisition of shares from the small shareholders (I believe there is some more needed to cover future club credit expense)
- £5m or so in Interest to MSD
...
so, following today's confirmation statement we can probably make a few revisions here

- the club's non-football outgoings this calendar year will be in the region of £82.5m - £85.5m

- £37m in loans to Pace to cover Stage Payments
- £35m+ in debt reduction with MSD when the penalty is included (it could in reality be closer to £38m if MSD applied the full value of lost interest in the penalty charge)
- £5.5m in loans to Pace to cover the acquisition of shares from the small shareholders
- £5m or so in Interest to MSD

and from here
Chester Perry wrote:
Sun Oct 30, 2022 11:10 am
yep, that is the concern I was picking up on

and as we both know there is every chance that they have not yet finished borrowing from the club - I see the potential for around another £43m

- £21m final stage payment
- £20m to buy the ring-fenced shares of the old ownership group
- £2m or so to finalise the club credit obligations on the purchase of shares from the small shareholders assuming as many sold them as we think (that being almost all).

Of course, the current pattern of practice may change, and I think most would be very happy to see that even if they currently believe it to be unlikely.
...there is every chance that they have not yet finished borrowing from the club - I see the potential for around another £41m

- £21m final stage payment
- £20m to buy the ring-fenced shares of the old ownership group

and here
Chester Perry wrote:
Fri Oct 28, 2022 2:57 pm
There is the MSD debt of £32,762,013.75 following the reduction over the summer required as a result of relegation as per the terms of the loan agreement (a penalty payment was almost certainly attached to the debt reduction)

There are outstanding transfer payments of an unknown value and also conditional transfer payments (performance based usually) also of an unknown value

The club is currently a creditor to VSL via its subsidiaries Kettering Capital Limited and Calder Vale Holdings Limited of £143m:
- £23m used for the takeover down payment
- £65m - the MSD money loaned to the club and then advanced to VSL for the takeover down payment
- £51m used for Stage Payments (I believe another £21m will be loaned to cover the outstanding stage payment next year)
- £10m used for buying the shares of the small shareholders (I think £2m - £2.5m) more will be needed in future years on to cover remaining club credit liabilities)

The club is also a creditor to Everton for transfer payments related to Dwight McNeil
There are conditional payments related to the transfers of Dwight McNeil, Nathan Collins, Nick Pope and possibly for Maxwell Cornet, Josh Benson, Jimmy Dunne and maybe some of the younger players that left the club in the summer.
The club is currently a creditor to VSL via its subsidiaries Kettering Capital Limited and Calder Vale Holdings Limited of £145.5m:
- £23m used for the takeover down payment
- £65m - the MSD money loaned to the club and then advanced to VSL for the takeover down payment
- £51m used for Stage Payments (I believe another £21m will be loaned to cover the outstanding stage payment next year)
- £5.5m used for buying the shares of the small shareholders

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Chester Perry » Fri Nov 04, 2022 4:22 pm

Meanwhile Kettering Capital Limited joins Calder Vale Holdings Limited, ALK Capital Limited and Velocity Sports Partners Limited as having their accounts officially listed as being overdue at Companies House

https://find-and-update.company-informa ... y/12975630

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Chester Perry » Fri Nov 04, 2022 4:27 pm

Chester Perry wrote:
Fri Nov 04, 2022 4:20 pm
so, following today's confirmation statement we can probably make a few revisions here

- the club's non-football outgoings this calendar year will be in the region of £82.5m - £85.5m

- £37m in loans to Pace to cover Stage Payments
- £35m+ in debt reduction with MSD when the penalty is included (it could in reality be closer to £38m if MSD applied the full value of lost interest in the penalty charge)
- £5.5m in loans to Pace to cover the acquisition of shares from the small shareholders
- £5m or so in Interest to MSD

and from here



...there is every chance that they have not yet finished borrowing from the club - I see the potential for around another £41m

- £21m final stage payment
- £20m to buy the ring-fenced shares of the old ownership group

and here



The club is currently a creditor to VSL via its subsidiaries Kettering Capital Limited and Calder Vale Holdings Limited of £145.5m:
- £23m used for the takeover down payment
- £65m - the MSD money loaned to the club and then advanced to VSL for the takeover down payment
- £51m used for Stage Payments (I believe another £21m will be loaned to cover the outstanding stage payment next year)
- £5.5m used for buying the shares of the small shareholders
The club is currently a creditor to VSL (it has loaned VSL) via its subsidiaries Kettering Capital Limited and Calder Vale Holdings Limited of £144.5m:

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by aggi » Fri Nov 04, 2022 5:17 pm

Chester Perry wrote:
Fri Nov 04, 2022 3:18 pm
You seem a bit at cross purposes - The Collins numbers related to our clearing of outstanding sums to Stoke and the VAT and Levy due on that
We will have paid that when we signed him. It's at the transaction date, not the cash received date.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Chester Perry » Fri Nov 04, 2022 5:31 pm

aggi wrote:
Fri Nov 04, 2022 5:17 pm
We will have paid that when we signed him. It's at the transaction date, not the cash received date.
Ok, that makes sense, now I have re-read it

I notice that in the EFL regs there is an additional 1% levy on top of the transfer fee for youth development (52.2.13) and a 5% levy from the transfer fee for The Football Foundation (52.2.11) so that has to be taken from the fees we received this summer as well

https://www.efl.com/-more/governance/ef ... --players/

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Chester Perry » Sun Nov 06, 2022 11:09 am

Chester Perry wrote:
Fri Nov 04, 2022 3:16 pm
So, today Burnley FC Holdings Limited has posted its latest Confirmation Statement at Companies House - it seems not as many small shareholders sold their shares as we supposed would have done - no doubt in the future they are going to benefit from dividend payments or another offer to buy

https://find-and-update.company-informa ... ng-history

today marks exactly 13 months to the day since the offer was made on 7578 shares - less than half of those were actually sold - 3255 to be precise, at a total transaction value of £5,330,245.00 (remember they borrowed £10m from the club which we originally thought was solely for this purpose)

ALK via Calder Vale Holdings now have 106,107 shares (up from 102,852) or 86.63% of the 122,478 allotted shares
So, we are 13 months on from the original Offer Letter to the small shareholders - I am just wondering what happened to this - also contained in the same letter.

6. PRIVATE SHARE TRADING FACILITY
Later this month, in October, BHL will be appointing Asset Match (www.assetmatch.com), an online private share trading facility, to offer shareholders going forward an ongoing means to sell or transfer their shares in BHL. Asset Match, a firm authorised and regulated by the Financial Conduct Authority, will operate an electronic off-market dealing facility for shares in BHL. This facility will allow shareholders of BHL to trade shares in BHL by matching buyers and sellers through periodic auctions. Shareholders can register their interest for further information on the Asset Match facility by emailing info@assetmatch.com.


Of course, it may be that there was little, or no, interest registered with Asset Match, but you would expect some sort of statement either way. As it stands there are 4,323 shares still in the possession of the small shareholders (technically enough for a place on the board if they all combined together according to the articles of association - now wouldn't that be interesting) and 12,058 shares in the possession of the former ownership group (though you could now class at least 5 of them small shareholders)

All we are waiting for now is that the company details page on the website to catch-up with what is at Companies House and to represent a true picture of affairs following the conclusion of the transaction in early March this year - as per EFL (and PL) regulations.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by ClaretPete001 » Sun Nov 06, 2022 12:19 pm

Great posts Chester. There isn't a whole lot to say other than the kind of stereotypical sales/investor type business owner I have known always seemed to be in some kind of battle with Companies House and HMRC. I can only assume that there are discussions relating to the presentation of the accounts, which is taking time.

Obviously, reading your interpretation of the the rules relating to the sale and purchase of assets puts clubs benefitting from the sales of players at a disadvantage in terms of cashflow.

I presume the big differential between the two (sales and purchases) means there is a buffer but there can't be much of anything left in the bank.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Chester Perry » Sun Nov 06, 2022 12:37 pm

ClaretPete001 wrote:
Sun Nov 06, 2022 12:19 pm
Great posts Chester. There isn't a whole lot to say other than the kind of stereotypical sales/investor type business owner I have known always seemed to be in some kind of battle with Companies House and HMRC. I can only assume that there are discussions relating to the presentation of the accounts, which is taking time.

Obviously, reading your interpretation of the the rules relating to the sale and purchase of assets puts clubs benefitting from the sales of players at a disadvantage in terms of cashflow.

I presume the big differential between the two (sales and purchases) means there is a buffer but there can't be much of anything left in the bank.
I am trying to work out the financial position at the moment - you do wonder what tricks are still left to play, and I would not be surprised by outgoings in January, particularly the players currently left over from Dyche, though even then you would expect that we would have to let them go for free and/or supplement their wages elsewhere until their contracts expire in June - that could still save us over a £1million but is small beer to what I most would think is required.

we can be sure that the without the parachute payments the picture would have been hellish (not that the takeover deal would have ever happened in this form - or value - without them)

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Chester Perry » Sun Nov 06, 2022 12:51 pm

Chester Perry wrote:
Fri Nov 04, 2022 4:27 pm
The club is currently a creditor to VSL (it has loaned VSL) via its subsidiaries Kettering Capital Limited and Calder Vale Holdings Limited of £144.5m:
I am investigating a theory that VSL rolled up the fee for the MSD loan into the loan value, giving us the £65m total - it would mean that there has been £3m or so extra taken from the cash flow at the club and passed to VSL as a loan, but no difference to what VSL currently owe the club.

The theory is based on what the December 31 2020 Accounts of MSD UK Holdings Limited say they have borrowed in USD and then looking at the USD1m:GBP exchange rates on the days loans were made to Southampton, Derby and Burnley. There appears to be a shortfall of £3m or so. It is possible that it is Derby or Southampton (the least likely option in my eyes) that have done this, but it would certainly not be a surprise if we had done it.

I would be happy to hear from our more learned posters if this would have to be recorded in the accounts in some way - beyond saying that Burnley FC Holdings Limited owes MSD UK Holdings Limited £65m

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Nonayforever » Sun Nov 06, 2022 1:06 pm

Shortly after the takeover our squad was valued at approximately 176m Euro. It is now valued at approximately 56m Euro.
If I was a lender I would be getting itchy feet.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Chester Perry » Sun Nov 06, 2022 1:17 pm

Nonayforever wrote:
Sun Nov 06, 2022 1:06 pm
Shortly after the takeover our squad was valued at approximately 176m Euro. It is now valued at approximately 56m Euro.
If I was a lender I would be getting itchy feet.
Interestingly squad values do not really form part of the equation in the valuing of a club in all the various methods I have seen and reported on

The external debt is currently less than £33m for the club and £54m for the VSL group (notice that transfer commitments in and out are rarely mentioned in that discussion)

There are still two more seasons of Parachute Payments if we do not go up and it is on record that under a second consecutive season in the EFL there is a further debt reduction payment required, before that second season begins - my guess would be the MSD loan would drop to £15m outstanding

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Nonayforever » Sun Nov 06, 2022 1:26 pm

Chester Perry wrote:
Sun Nov 06, 2022 1:17 pm
Interestingly squad values do not really form part of the equation in the valuing of a club in all the various methods I have seen and reported on

The external debt is currently less than £33m for the club and £54m for the VSL group (notice that transfer commitments in and out are rarely mentioned in that discussion)

There are still two more seasons of Parachute Payments if we do not go up and it is on record that under a second consecutive season in the EFL there is a further debt reduction payment required, before that second season begins - my guess would be the MSD loan would drop to £15m outstanding
That is both interesting and surprising.
I would therefore imagine players cannot be used as security.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Chester Perry » Sun Nov 06, 2022 1:31 pm

Nonayforever wrote:
Sun Nov 06, 2022 1:26 pm
That is both interesting and surprising.
I would therefore imagine players cannot be used as security.
no - that falls under the third-party ownership regulations, and I think is categorically stated as such

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Paul Waine » Sun Nov 06, 2022 3:24 pm

Nonayforever wrote:
Sun Nov 06, 2022 1:06 pm
Shortly after the takeover our squad was valued at approximately 176m Euro. It is now valued at approximately 56m Euro.
If I was a lender I would be getting itchy feet.
Nonayforever wrote:
Sun Nov 06, 2022 1:26 pm

That is both interesting and surprising.
I would therefore imagine players cannot be used as security.
Hi nnf, I assume the squad values you quote are the estimates of transfer values, if the club was to sell the players? I believe it's a difficult equation to directly relate squad values at any point in time to a club's value. The club has to pay wages to the players and, generally, the players with higher transfer values will also be receiving higher wages. Secondly, contract periods are finite and, as we have seen with James Tarkowski, players can decline to extend their contract while remaining at a club until the end of their contract and their value runs down to £nil. On the other hand, MSD's loan to BFC has certain covenants, the most important ones being paying the interest due on time and remaining in the Premier League. Failing to remain in the Premier League meant that BFC had to agree to repay a part of the loan. The club has done this by selling players where there was demand for those players - which also gave these players the opportunity to continue their football careers in the Premier League. MSD has the right under the terms of the loan to force the club to sell players to repay (part of) the loan. So, in a sense, the squad does provide security for the loan, though probably difficult to argue any individual player's contract does. I'd expect MSD always to be looking at BFC's total cashflows, including at the current time the guaranteed parachute payments.

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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Chester Perry » Sun Nov 06, 2022 4:01 pm

Paul Waine wrote:
Sun Nov 06, 2022 3:24 pm
Hi nnf, I assume the squad values you quote are the estimates of transfer values, if the club was to sell the players? I believe it's a difficult equation to directly relate squad values at any point in time to a club's value. The club has to pay wages to the players and, generally, the players with higher transfer values will also be receiving higher wages. Secondly, contract periods are finite and, as we have seen with James Tarkowski, players can decline to extend their contract while remaining at a club until the end of their contract and their value runs down to £nil. On the other hand, MSD's loan to BFC has certain covenants, the most important ones being paying the interest due on time and remaining in the Premier League. Failing to remain in the Premier League meant that BFC had to agree to repay a part of the loan. The club has done this by selling players where there was demand for those players - which also gave these players the opportunity to continue their football careers in the Premier League. MSD has the right under the terms of the loan to force the club to sell players to repay (part of) the loan. So, in a sense, the squad does provide security for the loan, though probably difficult to argue any individual player's contract does. I'd expect MSD always to be looking at BFC's total cashflows, including at the current time the guaranteed parachute payments.
just to add the 'charge' for the MSD loan does contain clauses that allow them to force the club into selling assets (including players) and to have first call on any profits from player sales if there is a default on interest or capital payments
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Re: ALK Capital or Farnell/Elkashashy takeover

Post by Paul Waine » Sun Nov 06, 2022 4:12 pm

Chester Perry wrote:
Sun Nov 06, 2022 12:51 pm
I am investigating a theory that VSL rolled up the fee for the MSD loan into the loan value, giving us the £65m total - it would mean that there has been £3m or so extra taken from the cash flow at the club and passed to VSL as a loan, but no difference to what VSL currently owe the club.

The theory is based on what the December 31 2020 Accounts of MSD UK Holdings Limited say they have borrowed in USD and then looking at the USD1m:GBP exchange rates on the days loans were made to Southampton, Derby and Burnley. There appears to be a shortfall of £3m or so. It is possible that it is Derby or Southampton (the least likely option in my eyes) that have done this, but it would certainly not be a surprise if we had done it.

I would be happy to hear from our more learned posters if this would have to be recorded in the accounts in some way - beyond saying that Burnley FC Holdings Limited owes MSD UK Holdings Limited £65m
Hi CP, does MSD charge fees when it makes the loans? I can't see any mention of fee income in MSD a/cs at 31-Dec-2020. If there had been a fee then it would be accounted for as income in MSD's a/cs and would be reported as an expense in BFC's a/cs (assuming a fee was payable by BFC). MSD's a/cs report FX Translation net gain. Note 2 (h) explains that whereas the presentation currency is USD, the functional currency is GBP - and loans are made in GBP and Euro. Funding to MSD from the offshore entity is received in the same currency as the loan. Thus, MSD has nothing to convert between GBP (and Euro, respectively) and USD. Exchange rates on the dates the loans are made are not relevant. GBP loans in MSD's books are translated to USD at the exchange rate applicable on 31st Dec 2020.

EDIT: Key terms are (i) translation and (ii) conversion. Plus (iii) presentation currency and (iv) functional currency.

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