aggi wrote: ↑Tue Mar 22, 2022 4:30 pm
I think ultimately it's unknown so we can only work with what is out there.
My gut is that such a highly leveraged takeover would have rung too many alarm bells with the previous owners (they still want to get their money) and lenders.
There is no chance I can see that you'd be able to load £200m onto the club. MSD surely aren't going to leave themselves so highly exposed and it's incredibly unlikely that they would give permission for the assets to be used as guarantee for someone else's loan. I can't imagine anyone lending an assetless company £100m with no guarantees or charges on assets.
Personally, and it's only my opinion, but I don't buy the idea that VSL is going to load the club up with tens of millions of interest and management fees and squeeze until the pips squeak.
There isn't enough money in Burnley to do that, you're not going to make serious profits by running the club into the ground. The route to serious profit is selling it in 5 years or 10 years for a hefty premium. (That's not to say I don't think there won't be anything, just that it won't be loading everything that people have suggested onto the club).
Agreed It is unknown, I suppose it is a question of which hypothesis best fits the evidence. The problem we seem to be coming up against is the difference between the club as a legal entity and the club as an ongoing concern.
Most of the points on here address the former and not the latter. VSL has probably already loaded £170 million onto the club. £60 million to MSD, £68 million to the former owners and £30 or £40 million from operating cash. The rest could come from personal loans or loans from private investors that VSL intend to re-pay out of the operating profits of Burnley Football Club.
MSD would have no say on any of those matters. There are many ways to skin a financial cat but the basic point is that while some of it may not affect the legal entity Burnley Football Club it would certainly affect the ongoing business proposition. In other words the only debt landing on the clubs balance sheet is £60 million but the rest would affect it's ability to invest in the product.
The only viable alternative hypothesis is there is a mystery benefactor who is seriously rich but I see no evidence for that hypothesis.
Chester posits the view that the former owners offer a benevolent role overseeing the club. I can see they want to remain involved but point to the evidence and ask the question where is the benefit of this deal to the club? Is it not more likely he remains involved precisely because this is a risky deal. What does the evidence suggest? The latter not the former.
Another argument against the above is that this portrays the deal as very stupid and risky and everyone involved is too clever to be this stupid.
Fine I agree but as yet, 15 months in, no one has yet been able to enunciate a coherent strategy moving forward.
The difference between a Newcastle United and a Burnley is that Burnley's matchday revenue would be mid table in the championship whereas Newcastle's is double that of most of the others in the Championship. That is why relegation is nowhere near the risk for Newcastle as it is for Burnley. The difference between the two is £30 million, which is more than Burnley's current revenue from football related activities.
The evidence that best fits the hypothesis points to the fact that this was a deal of convenience between two parties. One who wanted what they felt was the club was worth and could not find a buyer willing to pay it and another who was prepared to meet that price to secure an asset they did not have the money to buy outright.
In the Premiership all this would probably just about work and that is the central gamble implicit to the deal.
If VSL come out and say something sensible, as opposed to alluding to companies they don't own, then all this would go away. As yet no one has been able to say anything sensible as to how they are going to transition this club into one that can limit its risk of relegation.