What sort of investment?

[Quickenthetempo]

I keep hearing Alan Pace is looking for investment to take the club forward.
So what type of investment is he looking for?

I know clubs are always wanting sponsors etc..

But this doesn't seem as straight forward with his actions so far.

He bought all the remaining shares he could at a high price. So it wouldn't seem he wants to sell shares?

He has borrowed plenty from banks at high interest rates but any investor would want similar returns?

Is it just a simple case of getting a new credit card to pay off the old credit card scenario?

[dsr]

Technically, Alan Pace has borrowed plenty £112m that we know about) from Burnley FC at no interest whatsoever. It's Burnley FC who have borrowed the money at high interest rates to fund Alan Pace.

I suspect he was looking to sell the club based on the hope that we might stop up. Now, he's scratching round for cash that means delaying paying his debts and allowing the club one last chance, promotion or bust.

[aggi]

I keep hearing Alan Pace is looking for investment to take the club forward.
So what type of investment is he looking for?

I know clubs are always wanting sponsors etc..

But this doesn't seem as straight forward with his actions so far.

He bought all the remaining shares he could at a high price. So it wouldn't seem he wants to sell shares?

He has borrowed plenty from banks at high interest rates but any investor would want similar returns?

Is it just a simple case of getting a new credit card to pay off the old credit card scenario?

Investment into the top entities, e.g. VSL or ALK. I'd imagine that they would be suggesting returns of 50-100%.

[ClaretTony]

I keep hearing Alan Pace is looking for investment to take the club forward.
So what type of investment is he looking for?

I know clubs are always wanting sponsors etc..

But this doesn't seem as straight forward with his actions so far.

He bought all the remaining shares he could at a high price. So it wouldn't seem he wants to sell shares?

He has borrowed plenty from banks at high interest rates but any investor would want similar returns?

Is it just a simple case of getting a new credit card to pay off the old credit card scenario?

They had to make that offer to minority shareholders

[Buxtonclaret]

Investment into the top entities, e.g. VSL or ALK. I'd imagine that they would be suggesting returns of 50-100%.

They're all lining up . . .but they no money of their own and rooting around looking for a bloke called Mr Garlick.


Sorry aggi.
Couldn't resist.

[aggi]

They had to make that offer to minority shareholders

They didn't. The threshold is 90% to trigger a forced offer. They didn't buy that many.

[ClaretTony]

They didn't. The threshold is 90% to trigger a forced offer. They didn't buy that many.

Take my word - they were obliged to make that offer and it didn’t relate to 90%.

[Paul Waine]

Take my word - they were obliged to make that offer and it didn’t relate to 90%.

Hi CT, interesting. Where did the obligation to make the offer to the small shareholders come from? I don't think it's company law that a (very large) new shareholder has to offer to buy all of the shares in a private company.

[aggi]

Take my word - they were obliged to make that offer and it didn’t relate to 90%.

Very mysterious.

[ClaretTony]

Hi CT, interesting. Where did the obligation to make the offer to the small shareholders come from? I don't think it's company law that a (very large) new shareholder has to offer to buy all of the shares in a private company.

I’m not able to expand on it but believe me when I say they had to do it

[dsr]

Sell the club?

What do you think ALK's ambition is, if it isn't to sell the club?

[Blakesboots]

What do you think ALK's ambition is, if it isn't to sell the club?

After 1 season? That’s a bold claim!

The aim isn’t to sell the club in the immediate future.

[Quickenthetempo]

After 1 season? That’s a bold claim!

The aim isn’t to sell the club in the immediate future.

I don't think it would have been the initial plan but they have had a difficult time so far in football ownership.

[Blakesboots]

I don't think it would have been the initial plan but they have had a difficult time so far in football ownership.

There have been steep learning curves.

[Rileybobs]

I’m not able to expand on it but believe me when I say they had to do it

Does that suggest that the previous owners insisted upon this as a term of the sale?

[Paul Waine]

I keep hearing Alan Pace is looking for investment to take the club forward.
So what type of investment is he looking for?

I know clubs are always wanting sponsors etc..

But this doesn't seem as straight forward with his actions so far.

He bought all the remaining shares he could at a high price. So it wouldn't seem he wants to sell shares?

He has borrowed plenty from banks at high interest rates but any investor would want similar returns?

Is it just a simple case of getting a new credit card to pay off the old credit card scenario?

Hi Quicken, I'm pretty sure Alan Pace/ALK is looking to add new equity investors in Velocity Sports Partners (VSP), the US entity at the top of the group. The target investor will be people of "some wealth" but not so much wealth that they could consider "going it alone" and being a very large/the major owner of a sports club. I'd make a guess at the minimum size investment would be $10 million. Of course, if someone wants to subscribe more than that, probably in multiples of $10m, then that would be great. Maybe now the club has been relegated, the minimum size may be reduced to $5 million, though that shouldn't be seen as suggesting the value of each share has been halved by relegation, not least because for a large part of the past season that risk has been there.
I'd expect the investors would be putting no more than a small percentage of their wealth into VSL. It won't be their only investment, though may be their only one in sports.

The £65 million loan from MSD (which now sits with the club) is charged interest of (most likely, 3 months) Libor + 8%. This reflects the credit risk that MSD - and the people that invest in MSD loan notes - require to lend to a football club in England (including a lot of security for their loan). Equity investors in VSP will be looking for a lot more than the MSD loan - but, this is equity risk and won't be guaranteed or certain to be achieved. It may be that something around 20% would be a good return, but there is no ceiling to equity returns if they investment is extremely successful. Similarly, it is possible to lose it all, as equity always takes the losses first.

The short term loan of £12.5 million from Macquarie is charged at somewhere around 4%. There is much less credit risk for Macquarie on this loan. Not only is it only for (less than) 9 months, but it is also secured by payment due from Newcastle United. Regardless of who owns NUFC, the combination of both NUFC and BFC being the source of repayment to Macquarie is not high risk.

The club, led by Alan Pace as Chairman, will be looking for new and better sponsors deals, because the commercial side of the club has scope to "do better."

Of course, whatever new investment is achieved, there is also the possibility of re-structuring the term loan with MSD. This will only happen, except for the "significant amount" to be repaid on relegation, if it is advantageous to both ALK and MSD.

[ClaretTony]

Does that suggest that the previous owners insisted upon this as a term of the sale?

Not as far as I know

[Paul Waine]

Not as far as I know

CT, we know company law didn't require it and you say the previous owners didn't require it, so who or what else is there that could have required it?

Would the Premier League have required it?

[ClaretTony]

CT, we know company law didn't require it and you say the previous owners didn't require it, so who or what else is there that could have required it?

Would the Premier League have required it?

I've already said I can't expand on it. You either believe me or you don't, but I know it is fact.

[Paul Waine]

I've already said I can't expand on it. You either believe me or you don't, but I know it is fact.

No worries.

[ClaretPete001]

The idea is to own the shares of an asset and then sell chunks of it to other investors with a view to using that money to increase the value of the asset such the dilution in shareholding is offset by an increase in the value of the business.

So, for example let's take a fictional club Palace FC. The board of directors identify that the capacity of the stadium is not meeting the demand to the extent of 15,000 fans.

The additional £15,000 fans generate £10 million revenue per year. The cost of building is £50 million so the board decide to sell shares for £100 million. The club can build the new stadium and the additional £50 million is spent on increasing playing assets.

The dilution of the shareholding is offset by the fact that the club is worth more. It's a much more investable proposition and the average gates increase to 35 - 40,000. And it creates a stir in the community. New corporate boxes can be built and possibly a hotel. And you have another wealthy investor to share the load.

The increase in attendances, investment in the players and revenue generated from non-football activities all insulate the club from relegation

All of a sudden Palace FC becomes The Palace Group Ltd and so on and so forth

In addition, all the shareholders are appointed in executive roles and charge handsome management fees etc to the club.

The problem is where we are concerned is that it is hard to see where the value in the business now lies.

The club:

(1) has not been undervalued at the point of sale
(2) the new owners have no demonstrable record of achievement in English football that could be leveraged and investable
(3) there is little capacity for organic or infrastructural growth
(4) there seems to be no portfolio of products the club can integrate into (i.e. a sports AI app)

So, the conundrum remains as to where is the value why anyone would invest?

Answers on a post card ....

[dsr]

After 1 season? That’s a bold claim!

The aim isn’t to sell the club in the immediate future.

It was a suggestion, not a claim.

I believe the intention was always to sell the club as soon as they got a viable offer. They're an investment business, in it to make money not to be sentimental / benevolent owners. There's only two ways to make money, either to take profits from the club as salaries/fees/dividends, or to sell the club for a profit.

[FCBurnley]

Who in there right mind would invest 10 million plus in Burnley FC without any control over its future !!!

[Paul Waine]

It was a suggestion, not a claim.

I believe the intention was always to sell the club as soon as they got a viable offer. They're an investment business, in it to make money not to be sentimental / benevolent owners. There's only two ways to make money, either to take profits from the club as salaries/fees/dividends, or to sell the club for a profit.

Alan Pace and ALK have always spoken of being Burnley's owners for the long term. Based on the first set of accounts (yes, these things can change) the new owners haven't taken any salaries/fees/dividends out of the club. Any profit on sale can only come, based on buying a Premier League club, by returning the club to the Premier League and being successful as a football club, such that the value of the club increases, probably alongside the increased value of all Premier League clubs.

UTC

[ClaretPete001]

Alan Pace and ALK have always spoken of being Burnley's owners for the long term. Based on the first set of accounts (yes, these things can change) the new owners haven't taken any salaries/fees/dividends out of the club. Any profit on sale can only come, based on buying a Premier League club, by returning the club to the Premier League and being successful as a football club, such that the value of the club increases, probably alongside the increased value of all Premier League clubs.

UTC

Do we actually know the new owners have not taken any fees from the club? Very large sums were transferred out of the club after the year end.

[randomclaret2]

There have been steep learning curves.

Brilliant

[dsr]

Alan Pace and ALK have always spoken of being Burnley's owners for the long term. Based on the first set of accounts (yes, these things can change) the new owners haven't taken any salaries/fees/dividends out of the club. Any profit on sale can only come, based on buying a Premier League club, by returning the club to the Premier League and being successful as a football club, such that the value of the club increases, probably alongside the increased value of all Premier League clubs.

UTC

Exactly. I doubt their initial plan was based on relegation, simply a matter of waiting in the PL until PL values as a whole increase and selling for the profit.

Now,, of course, they can get no profit at all except by getting BFC back into the PL. Which is why I think they are going to bet the ranch, promotion or bust ("bust" being a literal possibility) if they can cobble together enough loans to fund it. I think new investment is a no-no because investment in sufficient quantities to make a difference, would severely dent ALK's holding.

[ClaretPete001]

Exactly. I doubt their initial plan was based on relegation, simply a matter of waiting in the PL until PL values as a whole increase and selling for the profit.

Now,, of course, they can get no profit at all except by getting BFC back into the PL. Which is why I think they are going to bet the ranch, promotion or bust ("bust" being a literal possibility) if they can cobble together enough loans to fund it. I think new investment is a no-no because investment in sufficient quantities to make a difference, would severely dent ALK's holding.

Of course, the problem was always going to be that the nature of the deal threatened the amount of investment the club could secure.

I think some are hoping for a streaming broadcast war with Amazon and others involved. I'm not sure how much and how quickly the growth of TV revenue will be.

Chester probably has loads on this..

While overall income is rising, the value of domestic rights for the upcoming three EPL seasons has dropped from GBP 5.4 billion to 5 billion, despite 32 more matches being sold than in the previous period (200 vs 168). According to analysts, the decrease is rather a correction in the market, due to an inflated growth in the past several years. On the other hand, international broadcasting revenues for the 2019-2022 cycle should see an almost 35% growth (from GBP 3.1 billion in the previous broadcasting period to 4.2 billion).

In the new 3-year domestic TV deal Sky Sports will broadcast 128 live matches and BT Sport will show the rest: 52 matches. For the first time, an internet streaming service will also be joining in – Amazon Prime will live-stream two full rounds of fixtures (20 matches a season) in December online. Also, this will be the first season in England, when an entire round of matches will be broadcast live domestically. Amazon’s move is considered a major step in transforming the broadcasting landscape – it broke the traditional duopoly of Sky and BT on EPL rights.

https://www.footballbenchmark.com/libra ... %20matches.

[Chester Perry]

This discussion has been had a number of times including why the offer to small shareholders was made - that information has been previously shared by CT the last time was in the last couple of months I recall - though it now seems he has been advised not to repeat it, which is fair enough.

it is not difficult to work out from all the interested parties - particularly when you consider the now decreased asset value of the club as a whole - I am sure I have even posted about it recently too on this particular basis

[claretspice]

There have been steep learning curves.

From someone who appears to have some connections to the club and the owners, I find this in equal measure, intriguing, revealing, alarming and infuriating.

Another way of putting it would be that the owners, having funded their purchase in a way which has been widely questioned, did so without really knowing what they were getting themselves into, either at Burnley, as football club owners generally, or both. If that is the case, then given the importance of Burnley, or for that matter any football club, to its community, I'm not sure that scale of naivety would be defendable.

[elwaclaret]

From someone who appears to have some connections to the club and the owners, I find this in equal measure, intriguing, revealing, alarming and infuriating.

Another way of putting it would be that the owners, having funded their purchase in a way which has been widely questioned, did so without really knowing what they were getting themselves into, either at Burnley, as football club owners generally, or both. If that is the case, then given the importance of Burnley, or for that matter any football club, to its community, I'm not sure that scale of naivety would be defendable.

TBH Spice, I think had there not been lessons that could only be learned in the hot seat, I’d be a lot more worried. I never see ‘learning’ as a problem, only denial that any lessons had been learned, would overly worry me.

[claretspice]

TBH Spice, I think had there not been lessons that could only be learned in the hot seat, I’d be a lot more worried. I never see ‘learning’ as a problem, only denial that any lessons had been learned, would overly worry me.

That's fair. You always can learn and do better and acknowledging that is a good trait. But for the owners to have had "steep learning curves" suggests it's rather more than the sort of general lessons learned stuff. I may be over-extrapolating, but it struck me as revealing. I'm not saying that the owners were or are naive - just that that is the obvious implication of the comment that I quoted.

[Blakesboots]

TBH Spice, I think had there not been lessons that could only be learned in the hot seat, I’d be a lot more worried. I never see ‘learning’ as a problem, only denial that any lessons had been learned, would overly worry me.

Absolutely agree. No one makes mistakes intentionally, if there’s learning and actions to take then they should and I am sure will be taken.

[ksrclaret]

There have been steep curves, that's for sure.

Where's the evidence of learning, though?

[Paul Waine]

Do we actually know the new owners have not taken any fees from the club? Very large sums were transferred out of the club after the year end.

Hi Pete, we know that the amount reported in the club's accounts as being transferred from the club to one of the other group entities were not fees. If they had been fees they would have been described as such.

Any other items will need to wait until the next set of accounts.

[Paul Waine]

Exactly. I doubt their initial plan was based on relegation, simply a matter of waiting in the PL until PL values as a whole increase and selling for the profit.

Now,, of course, they can get no profit at all except by getting BFC back into the PL. Which is why I think they are going to bet the ranch, promotion or bust ("bust" being a literal possibility) if they can cobble together enough loans to fund it. I think new investment is a no-no because investment in sufficient quantities to make a difference, would severely dent ALK's holding.

I don't see any possibility of new loans, except for the short term Macquarie loans against transfer fees, unless the MSD loan is repaid in full, first. This is because MSD will have had - as any major lender will have - clauses that prevent any other loans being placed in priority to the obligation to MSD. And, no other lender would want to lend unless their new loan ranked at least equal to MSD. So, no additional loans will be possible.

ALK's plans have always been to bring in investors at VSP level. They will have no problem adding new investors there. They won't see that as diluting their holding.

Just my opinion, of course.

[jedi_master]

Blakesboots - Could I ask to what end you are posting on a fans message board? Is Alan Pace aware you are on here, indeed, is this something he has specifically tasked you with? What is the aim of the game, as you don’t appear to be willing (or able) to placate any of the concerns raised at any juncture, so it seems more arbitrary and almost observatory in your being here.

I apologise for referring to you as a fantasist previously, if you are indeed involved with ALK.

[ksrclaret]

If this Blakesboots fella is linked with the owners or the club in some way, he's done a shocking job of blending in.

If he's not, then a lot of people owe him a sincere apology because he's been treated really disrespectfully.

Intriguing

[dandeclaret]

As a wee fella once said……

[GodIsADeeJay81]

Blakesboots - Could I ask to what end you are posting on a fans message board? Is Alan Pace aware you are on here, indeed, is this something he has specifically tasked you with? What is the aim of the game, as you don’t appear to be willing (or able) to placate any of the concerns raised at any juncture, so it seems more arbitrary and almost observatory in your being here.

I apologise for referring to you as a fantasist previously, if you are indeed involved with ALK.

Does it matter if he is linked with ALK?
A company I used to work for had a social media team who kept an eye on forums to see what bad things were being said about them and they were also registered on the forums so they could deal with the issues etc.

[dsr]

I don't see any possibility of new loans, except for the short term Macquarie loans against transfer fees, unless the MSD loan is repaid in full, first. This is because MSD will have had - as any major lender will have - clauses that prevent any other loans being placed in priority to the obligation to MSD. And, no other lender would want to lend unless their new loan ranked at least equal to MSD. So, no additional loans will be possible.

ALK's plans have always been to bring in investors at VSP level. They will have no problem adding new investors there. They won't see that as diluting their holding.

Just my opinion, of course.

I agree about the new loans. I was thinking more about Pace deferring the old loans, the Macquarie loan and also the amount owed for the balance of the original shares, so they become payable next year rather than this. They could hope to do this either by changing the terms of the existing loans or by borrowing new money to repay the old. Of course, Macquarie has 65 million good reasons for not wanting this to happen. If they allow the parachute money to be spent on football expenses, they are risking their investment.

As for investment at VSP level, do you think VSP would be content to throw more money at BFC? They have already lost £20m or so, the full amount of their initial investment, and putting significant new sums in would be a bit of a long shot in that if it fails, it's good money after bad, and if it succeeds there are still no guarantees of making a profit. The club may still be worth no more than they paid for it.

[randomclaret2]

Does it matter if he is linked with ALK?
A company I used to work for had a social media team who kept an eye on forums to see what bad things were being said about them and they were also registered on the forums so they could deal with the issues etc.

I would say that the issue of someone linked to the owners of a football club , posting on that club's fans forum, whilst claiming to be just a regular fan, would be of interest to the majority of football fans.

[ClaretPete001]

Hi Pete, we know that the amount reported in the club's accounts as being transferred from the club to one of the other group entities were not fees. If they had been fees they would have been described as such.

Any other items will need to wait until the next set of accounts.

It was an inter-company transfer after the year end. Why would it have been flagged up as fees?

[ksrclaret]

Does it matter if he is linked with ALK?
A company I used to work for had a social media team who kept an eye on forums to see what bad things were being said about them and they were also registered on the forums so they could deal with the issues etc.

Did they hide their roles as company employees, whilst making sure to try and close down discussions on things that painted the company in a negative light?

[GodIsADeeJay81]

I would say that the issue of someone linked to the owners of a football club , posting on that club's fans forum, whilst claiming to be just a regular fan, would be of interest to the majority of football fans.

Why?
So he can be targeted for aggro?
So he can be pressured into giving away information?
People believe what they want anyway, so it makes no odds knowing if a poster is here on behalf of the club

[jedi_master]

Does it matter if he is linked with ALK?
A company I used to work for had a social media team who kept an eye on forums to see what bad things were being said about them and they were also registered on the forums so they could deal with the issues etc.

I just find it quite perplexing that they would actively post in an ambiguous manner about subjects fans are discussing. It’s a bit ‘Darragh McAnthony’ to me. I’m sure Kilby, Garlick et al had eyes on Up The Clarets (or Clarets Mad, as it was) but I doubt they were ever getting involved with the debates and speaking from the clubs mouth on them. It’s not something I’ve seen before, so I personally find it interesting.

[GodIsADeeJay81]

Did they hide their roles as company employees, whilst making sure to try and close down discussions on things that painted the company in a negative light?

Nah, they dished out money off deals and resolved refund problems etc, all to ensure the company image wasn't tarnished.

It was Euro car parts, so they needed to do as much as possible

[ksrclaret]

Nah, they dished out money off deals and resolved refund problems etc, all to ensure the company image wasn't tarnished.

It was Euro car parts, so they needed to do as much as possible

Sounds good to me!

If we see vouchers for the club shop being given away, we'll know we've definitely been infiltrated.

[jedi_master]

Why?
So he can be targeted for aggro?
So he can be pressured into giving away information?
People believe what they want anyway, so it makes no odds knowing if a poster is here on behalf of the club

Well I’d agree, he doesn’t deserve aggro as such at all - but as he’s not hidden that he’s posting from a position of (possibly) power within the club - if he’s to be believed - he will inevitably get questioned by people because he’s actively participating in the dialogue on here.

[ksrclaret]

Well I’d agree, he doesn’t deserve aggro as such at all - but as he’s not hidden that he’s posting from a position of (possibly) power within the club - if he’s to be believed - he will inevitably get questioned by people because he’s actively participating in the dialogue on here.

The other day he remarked that's he's a fan of the club - "no more, no less".

Who knows what's going on here, but if he is linked to the club, he's definitely been trying to hide it.