If Burnley go down they are in big trouble..

[cambridgeshire canary 6,774]

https://www.bbc.co.uk/sport/football/61317194

 

Fair to say they might have already pulled off the great escape but if they do slip up and go down with us.. Boy oh boy they won't be having a fun time

Edited May 4, 2022 by cambridgeshire canary

[Crabbycanary3 994]

Hardly big big trouble Cambridge, or are you just stirring up the headlines? It doesn't seem a significant amount, its not the whole amount is it? It's just a consequence of relegation. Nothing to really see hear I feel, if they went down

[Badger 2,407]

The point here is that none of this debt was used to support Burnley - it was debt that was taken to buy the club. The new owners used Burnley's own cash reserves as well as borrowed against their assets to buy the club.

I have see some posts on here about how Burnley have had an investment of £200 million - this is nonsense all of the £200 went to the previous owners. All Burnley FC have got is the debt. 

In their previous set of accounts they had no debt and £80 million in reserves, so that means that they are £130 million worse off (fag packet stuff - I shall wait for Swiss Ramble) and still some people want us to have owners like Burnley 🤯 🤦‍♂️

[Mr Angry 1,570]

2 minutes ago, Crabbycanary3 said:

Hardly big big trouble Cambridge, or are you just stirring up the headlines? It doesn't seem a significant amount, its not the whole amount is it? It's just a consequence of relegation. Nothing to really see hear I feel, if they went down

I don’t understand that much about football finances but £65 million is more than they have in reserves, so it looks like it could be a big deal to me and it’s the BBC stirring it, not CC!

Perhaps Badger can throw some light on the subject? If it is a big deal, possibly the extra pressure on the players may be too much 🤞

[Mr Angry 1,570]

1 minute ago, Badger said:

The point here is that none of this debt was used to support Burnley - it was debt that was taken to buy the club. The new owners used Burnley's own cash reserves as well as borrowed against their assets to buy the club.

I have see some posts on here about how Burnley have had an investment of £200 million - this is nonsense all of the £200 went to the previous owners. All Burnley FC have got is the debt. 

In their previous set of accounts they had no debt and £80 million in reserves, so that means that they are £130 million worse off (fag packet stuff - I shall wait for Swiss Ramble) and still some people want us to have owners like Burnley 🤯 🤦‍♂️

Leaping to the rescue! The BBC article says that the reserves are now down to £50 million. Can you explain in layman’s terms whether the loan repayment means they are screwed if they go down please?

[cambridgeshire canary 6,774]

14 minutes ago, Crabbycanary3 said:

Hardly big big trouble Cambridge, or are you just stirring up the headlines? It doesn't seem a significant amount, its not the whole amount is it? It's just a consequence of relegation. Nothing to really see hear I feel, if they went down

Having a debt you can't pay off and then you end up in the second divison and have to sell all your best players does tend to end up with you in trouble.. Look at Portsmouth or Sunderland for example. I might have been a tad hyperbolic but this is not a good situation for Burnley despite the club trying to play it cool.

[Chelm Canary 404]

I think Leeds will go down anyway.

[Pyro Pete 1,912]

Can I just say to Hogesar, I read your thread on the same subject you posted 5 hours ago.

[Badger 2,407]

I wouldn't use the phrase "screwed" because the value of their assets + guaranteed cash flows from parachute payments would mean that they are in no danger of administration that I can see. In fact, they are in a better position than Watford. However, having to pay back debt quickly complicates the issue of building a squad capable of doing well in the Championship.

1. Last years accounts showed zero debt and £80 million in reserves. This year's show c£100 debt and only £50 million in reserves, so their financial position has deteriorated by £130 million in a year. (None of this went to the club.) It is further complicated because these accounts cover 20-21 - we don't know what their debt position/ cash reserves are at present.

2. The cost of the debt has to be financed and if relegated some of it (the £65 million) would have to be repaid earlier than the current 2025. We don't know about the other debt, but £65 million is at 8% (lower than I expected). This could require a "fire-sale" but I can't see it's in anyone's interests. The bank (I think its MSD, not actually a bank) will probably renegotiate this and put the interest rate up - and ask for repayments to start straight away from parachute money. I'm sure they already have security (the ground being the obvious asset) but that potentially puts them (MSD) in a difficult position (a la Derby).

I'm sure they will survive, but it makes getting promoted much harder is the bottom line. 

[king canary 7,654]

Leveraged buy outs are absolutely awful and I'm not totally sure how they are a thing.

[cornish sam 960]

42 minutes ago, Badger said:

I wouldn't use the phrase "screwed" because the value of their assets + guaranteed cash flows from parachute payments would mean that they are in no danger of administration that I can see. In fact, they are in a better position than Watford. However, having to pay back debt quickly complicates the issue of building a squad capable of doing well in the Championship.

1. Last years accounts showed zero debt and £80 million in reserves. This year's show c£100 debt and only £50 million in reserves, so their financial position has deteriorated by £130 million in a year. (None of this went to the club.) It is further complicated because these accounts cover 20-21 - we don't know what their debt position/ cash reserves are at present.

2. The cost of the debt has to be financed and if relegated some of it (the £65 million) would have to be repaid earlier than the current 2025. We don't know about the other debt, but £65 million is at 8% (lower than I expected). This could require a "fire-sale" but I can't see it's in anyone's interests. The bank (I think its MSD, not actually a bank) will probably renegotiate this and put the interest rate up - and ask for repayments to start straight away from parachute money. I'm sure they already have security (the ground being the obvious asset) but that potentially puts them (MSD) in a difficult position (a la Derby).

I'm sure they will survive, but it makes getting promoted much harder is the bottom line. 

Just to add (and based purely off the BBC article) if they don't get promoted straight back up that does trigger further loan restructuring increasing the amount they need to pay back quickly. However, the implication is that the majority of their contracts do have relegation clauses so they should be alright, albeit poorer than they should be.

[Badger 2,407]

12 minutes ago, king canary said:

Leveraged buy outs are absolutely awful and I'm not totally sure how they are a thing.

They are profitable - Nuff Said

[Badger 2,407]

2 minutes ago, cornish sam said:

Just to add (and based purely off the BBC article) if they don't get promoted straight back up that does trigger further loan restructuring increasing the amount they need to pay back quickly. However, the implication is that the majority of their contracts do have relegation clauses so they should be alright, albeit poorer than they should be.

Agree - Watford are in a worse position - £134 million net debt and only two years parachute money!

[Crabbycanary3 994]

1 hour ago, cambridgeshire canary said:

Having a debt you can't pay off and then you end up in the second divison and have to sell all your best players does tend to end up with you in trouble.. Look at Portsmouth or Sunderland for example. I might have been a tad hyperbolic but this is not a good situation for Burnley despite the club trying to play it cool.

That's what I was alluding to 🤷‍♂️

I would say that it's pretty standard stuff for the Prem League, and a team with a chance of going down, no matter how 'established' they have been/situation with owners yada yada. It's just a news item that is expected, at this time of the season.

It's not 'great' for Burnley, but it's an example of modern football for you

[hertfordyellow 460]

32 minutes ago, king canary said:

Leveraged buy outs are absolutely awful and I'm not totally sure how they are a thing.

Based on the fan led review proposals being adopted by new regulator, they will be a thing of the past. You will have to have proof of funds before purchase from what I can tell.

[Badger 2,407]

1 hour ago, cambridgeshire canary said:

Having a debt you can't pay off and then you end up in the second divison and have to sell all your best players does tend to end up with you in trouble.. Look at Portsmouth or Sunderland for example. I might have been a tad hyperbolic but this is not a good situation for Burnley despite the club trying to play it cool.

Yes - this is certainly a possibility - it is the problem of having debt, which so many people want us to do. They want to believe that these "nice investor people just want to give us money."

It could happen to Watford too. Like us they only have two years parachute money - they might give it something of a go this year, but after this, they will have to consolidate in anticipation of not having parachute money. Difference is that without parachute payments we will have bigger revenue than either of them (Watford or Burnley) and will not be having to spend a large proportion of the gate money just to pay the interest on loans.

[Badger 2,407]

8 minutes ago, hertfordyellow said:

Based on the fan led review proposals being adopted by new regulator, they will be a thing of the past. You will have to have proof of funds before purchase from what I can tell.

Yes + with the new Profit and Sustainability rules probably coming in as well it will be a very different situation. It amazes me that people - even the Pink Un - haven't taken this on board yet - it has been in the national media and some local papers have covered it.

Given all the talk about the "need" for new money, you'd have thought that at least one of The Pink Un. BBC Norfolk or Michael Bailey would have written something on this by now?

Limiting expenditure on wages and amortisation to 70% of turnover would make the Sugar Mummy owner redundant.

https://www.stokesentinel.co.uk/sport/football/transfer-news/stoke-city-financial-fair-play-6927591

[Indy 3,310]

I thought Everton have debts of 150 million plus, new ground and didn’t they have a Russian owner?

[PurpleCanary 5,578]

I haven’t studied this at all but I suspect relegation would mean serious trouble for which ever one it is out of Leeds, Burnley and Everton.

[duke63 545]

51 minutes ago, Badger said:

They are profitable - Nuff Said

Until the club gets relegated!

[dylanisabaddog 4,969]

16 minutes ago, Badger said:

Yes + with the new Profit and Sustainability rules probably coming in as well it will be a very different situation. It amazes me that people - even the Pink Un - haven't taken this on board yet - it has been in the national media and some local papers have covered it.

Given all the talk about the "need" for new money, you'd have thought that at least one of The Pink Un. BBC Norfolk or Michael Bailey would have written something on this by now?

Limiting expenditure on wages and amortisation to 70% of turnover would make the Sugar Mummy owner redundant.

https://www.stokesentinel.co.uk/sport/football/transfer-news/stoke-city-financial-fair-play-6927591

I'm afraid that the Pink'Un doesn't employ anyone who understands...... 

They haven't come to terms with zonal marking yet and still think we should be leaving one up front when defending corners. And you expect them to understand leveraged buyouts😂

Edited May 4, 2022 by dylanisabaddog

[king canary 7,654]

16 minutes ago, Badger said:

Yes + with the new Profit and Sustainability rules probably coming in as well it will be a very different situation. It amazes me that people - even the Pink Un - haven't taken this on board yet - it has been in the national media and some local papers have covered it.

Given all the talk about the "need" for new money, you'd have thought that at least one of The Pink Un. BBC Norfolk or Michael Bailey would have written something on this by now?

Limiting expenditure on wages and amortisation to 70% of turnover would make the Sugar Mummy owner redundant.

https://www.stokesentinel.co.uk/sport/football/transfer-news/stoke-city-financial-fair-play-6927591

It's just for the EFL though isn't it? So the question of whether we need new ownership to effectively compete in the top division remains unchanged.

[dylanisabaddog 4,969]

1 minute ago, king canary said:

It's just for the EFL though isn't it? So the question of whether we need new ownership to effectively compete in the top division remains unchanged.

Dylan runs screaming from the room. They're not going to sell. 

[shefcanary 2,444]

Ignoring the new FFP rules for now (I have a fear it will not be fully in force until the 2025 at least), by a back of fag packet calculation, assuming they broke even-ish this year leaves Burnley £15m in debt after the first repayment.  The Burnley Board would have to decide whether to gamble and spend relatively big to get back up straight away to avoid further calls of repayment to complement their current squad; sell a crown jewel and muddle through with what they can retain hoping that their EPL players are far and away better than than what they will face in the chumps; or sell more than one crown jewel and completely change the squad to build for the future under a new incoming manager.  Who'd be a Board member?

This of course pre-supposes they get relegated first!  Given current form I think that is 50:50 at best - Leeds look by far the favourites now, so my view is that all this is rather hypothetical.  Dirty's financial position is more obscure however so not sure what kind of trouble they might be in - anyone have a clue - has WACCOE thought about this scenario? 

Finally I just can't see the EPL "allowing" Everton to get relegated. 😲 

[king canary 7,654]

15 minutes ago, dylanisabaddog said:

Dylan runs screaming from the room. They're not going to sell. 

Best let everyone else know the subject is off the table, Dylan the dog has spoken 🙄

[dylanisabaddog 4,969]

13 minutes ago, king canary said:

Best let everyone else know the subject is off the table, Dylan the dog has spoken 🙄

It's not off the table KC but I have a nasty feeling that you're wasting your time even thinking about it ☹️

[Nuff Said 5,157]

1 hour ago, Badger said:

They are profitable - Nuff Said

What??

[cambridgeshire canary 6,774]

1 hour ago, Badger said:

Agree - Watford are in a worse position - £134 million net debt and only two years parachute money!

But don't worry- Watford fans take vegetables to matches and they are backed by Elton John so they'll be fine 😉

Edited May 4, 2022 by cambridgeshire canary

[horsefly 4,310]

1 hour ago, shefcanary said:

Ignoring the new FFP rules for now (I have a fear it will not be fully in force until the 2025 at least), by a back of fag packet calculation, assuming they broke even-ish this year leaves Burnley £15m in debt after the first repayment.  The Burnley Board would have to decide whether to gamble and spend relatively big to get back up straight away to avoid further calls of repayment to complement their current squad; sell a crown jewel and muddle through with what they can retain hoping that their EPL players are far and away better than than what they will face in the chumps; or sell more than one crown jewel and completely change the squad to build for the future under a new incoming manager.  Who'd be a Board member?

This of course pre-supposes they get relegated first!  Given current form I think that is 50:50 at best - Leeds look by far the favourites now, so my view is that all this is rather hypothetical.  Dirty's financial position is more obscure however so not sure what kind of trouble they might be in - anyone have a clue - has WACCOE thought about this scenario? 

Finally I just can't see the EPL "allowing" Everton to get relegated. 😲 

I believe it is Richard Keys who now decides who gets relegated and who promoted.

[DraytonBoy 160]

Leeds are financially secure for the short term but relegation would be a disaster on the playing side, Raphinha is off regardless and probably Philips too, the likes of Rodrigo, Koch and Llorente also won't want to play in the Championship so the U-23's will likely form the core of the side next season along with Bamford, Cooper, Ayling and Dallas should the worst happen. Will that be enough to challenge for the Top 6 who knows but at least there's millions available to spend from the inevitable end of season sales.