[Archived] Rovers Takeover Thread

[BlueMonday]

Rovers figure is taken straight from the bottom line of the 2007 financial statements. You aren't allowed to value players at "market value" which is why other clubs numbers look bad plus thay all have HUGE debts.

So does that mean our figures look better because we have less debt, or is it we just don't spend as much?

[Jan]

So does that mean our figures look better because we have less debt, or is it we just don't spend as much?

Both

Debt means you owe money which reduces your balance sheet. Spending money means you reduce your cash, which reduces the balance sheet. Saving more than you're spending = good (for the balance sheet). The other way = bad.

[BlueMonday]

Both

Debt means you owe money which reduces your balance sheet. Spending money means you reduce your cash, which reduces the balance sheet. Saving more than you're spending = good (for the balance sheet). The other way = bad.

Thanks.

That means the figures are good. Encouraging anyway, and with investment give us a good foundation.

[broadsword]

The problem is attracting investment, as we've seen.

Football clubs aren't especially profiotable unless you buy a publically-listed one with loan capital, de-list it then saddle it with mega-millions of debt.

Or you buy it with loan capital, struggle to make the repayments, then wait for someone else to come along who's even stupider than you.

Or you have more money than you know what to do with and fancy having something to do on a Saturday afternoon.

We're outperforming bigger-spenders in the league (and hence getting a bigger share of the placings money) ... don't know how much longer we can keep on making a silk purse out of a sow's ear.

[AussieinUk]

The problem is attracting investment, as we've seen.

Football clubs aren't especially profiotable unless you buy a publically-listed one with loan capital, de-list it then saddle it with mega-millions of debt.

Or you buy it with loan capital, struggle to make the repayments, then wait for someone else to come along who's even stupider than you.

Or you have more money than you know what to do with and fancy having something to do on a Saturday afternoon.

We're outperforming bigger-spenders in the league (and hence getting a bigger share of the placings money) ... don't know how much longer we can keep on making a silk purse out of a sow's ear.

Totally spot on.. This year will be interesting for Rovers, both on and off the field.

[malk]

I'm just holding out hope that we can stay in the premiership long enough for the bubble to burst. I'm quite confident that with prudent management we should be able to keep pretty stable around at least the mid table range.

I am counting on impatience from 'big' clubs who seem intent on hitting home runs rather than building up a solid base.

Fortunately for us only 4 clubs can make real money from the champions league and then another 2 or 3 can maybe get by in Europe. There are more than 7 clubs who pumping in silly money and after some get their fingers burnt a bit of normality might ensue.

[Mr Creosote]

I'm just holding out hope that we can stay in the premiership long enough for the bubble to burst. I'm quite confident that with prudent management we should be able to keep pretty stable around at least the mid table range.

I am counting on impatience from 'big' clubs who seem intent on hitting home runs rather than building up a solid base.

Fortunately for us only 4 clubs can make real money from the champions league and then another 2 or 3 can maybe get by in Europe. There are more than 7 clubs who pumping in silly money and after some get their fingers burnt a bit of normality might ensue.

Well, that would be putting a positve spin on it. Just as likely is that we are being left behind and will, eventually, inevitably fall out the top flight. When we are being comfortably outspent by Bolton it's pretty serious and the ramifications of such unrealistic prudence are clear. Paul Ince requires serious funding provided this summer.

The trust should either s**** or get off the pot.

[misterbigalow]

Well, that would be putting a positve spin on it. Just as likely is that we are being left behind and will, eventually, inevitably fall out the top flight. When we are being comfortably outspent by Bolton it's pretty serious and the ramifications of such unrealistic prudence are clear. Paul Ince requires serious funding provided this summer.

The trust should either s**** or get off the pot.

But we've already got a vastly superior squad to Bolton's, plus they can only spend more than us this season because of the Anelka money, and this is before the likely selling of Bentley. It was shown quite clearly that when Anelka left Bolton they were rubbish without him, and would need to buy more this summer to stay in the league, as they were close to being relegated, so are using the money they got from the Anelka sale to do so. Thats why they'll probably spend more money than us, because they probably need to, and are desperate to do so to stay in the premier league.

[BrianPotter]

The figure of £21m must surely be the net figure derived from assets against liabilities on the balance sheet.

I don't have the accounts to hand at the moment, but under normal circumstances that would be the surplus (or shortfall if its negative) should the club ever be liquidated.

On the subject of assets, one thing that has crossed my mind is as to who actually owns the land etc at Ewood and Brockhall. I would be pretty sure that club owns Ewood, but considering the Walkers previous dealings, it would not surprise me if Brockhall and the land around it is still owned by the Trust. Looking back to when Walkersteel was sold to Britsh Steel, The Walkers retained all the land and buildings at Guide after the sale - then rented it back to British Steel (a shrewd move). In relation to Brockhall, this would obviously be a big consideration for any would be buyer, should the land at Brockhall remain with the trust after any sale, it signifcantly devalues the value of BRFC as a single entity in terms of assets. If the Trust does own the land (as I suspect they do), I honestly cant see them selling it as part of the sale of the club.

[PAFELL]

The figure of £21m must surely be the net figure derived from assets against liabilities on the balance sheet.

I don't have the accounts to hand at the moment, but under normal circumstances that would be the surplus (or shortfall if its negative) should the club ever be liquidated.

On the subject of assets, one thing that has crossed my mind is as to who actually owns the land etc at Ewood and Brockhall. I would be pretty sure that club owns Ewood, but considering the Walkers previous dealings, it would not surprise me if Brockhall and the land around it is still owned by the Trust. Looking back to when Walkersteel was sold to Britsh Steel, The Walkers retained all the land and buildings at Guide after the sale - then rented it back to British Steel (a shrewd move). In relation to Brockhall, this would obviously be a big consideration for any would be buyer, should the land at Brockhall remain with the trust after any sale, it signifcantly devalues the value of BRFC as a single entity in terms of assets. If the Trust does own the land (as I suspect they do), I honestly cant see them selling it as part of the sale of the club.

That is an interesting post - do Rovers own ewood park or do the trust?

Do Rovers own Brockhall - or do the trust.

I believe, as well as hope that the club owns them both. Not being an accountant - nor seen the Rovers accounts - but is there anything on the accounts that says Rovers pay rent for either Ewood or Brockhall?

I thought it was mentioned on this board once that laons were made to Rovers for both. Were not loans turned into shares or something, whatever that means.

[philipl]

Phew- a lot of stuff here.

1) The GBP21m has nothing to do with current profitability or otherwise. The Trust as you will all remember converted over GBP80m of loans into shares and the GBP21m simply represents the positive difference between assets and liabilities or looking it another way, the difference between all the money the shareholders have put in and all the losses Rovers have made down the year.

So there is GBP21m left to be lost if you look at it that way.

2) The reason Rovers' owners converted debt (or debt instruments- they were convertible preference shares as well as straight loans) into ordinary shares was to enable Rovers to go and borrow money of their own at very good commercial terms.

3) Some misleading stuff has been written about Rovers' debt and wage ratios. The board explained that the club DELIBERATELY increased transfer and wages spending AHEAD of the new Sky deal when they believed better value would be available. Therefore the GBP21m bank debt and 80something% wage ratio were deliberate moves knowing that the 07/8 season media income would rebalance it.

I think the Rovers have been proved spectacularly right- sustained two top ten finishes and avoided getting involved in buying dross at ridiculous prices last year.

4) Jan is absolutely right that the assessed MARKET value of players is not in the accounts. Rovers conservatively estimated the value of their squad at GBP60m last summer but that number was a note, not added into the club's assets in the balance sheet.

5) Brian, I might be wrong but I have a recollection that Rovers are the owners of the Ewood land and Brockhall land as well. Land and buildings are over GBP40m at historic value in the Rovers' accounts.

Two things at the back of my mind support this- I think Jack said that if Brockhall was meant for the Rovers it should be owned by the Rovers and recently Nicko reported that a hold-up on a possible sale was the Trust were quite rightly not going to sell the Rovers and let a new owner raise money from the club's land to pay them for it.

6) The trust within the Trust was a nominal GBP20m which Jack set to one side from within the Trust's assets (outside of the Rovers) to generate income for the Rovers to bridge the gap between what Rovers earn at Ewood from ticket sales and what other clubs earn being in larger and wealthier areas. The payment and distribution of that income is at the discretion of the Trustees.

The issue now is that GBP3m (which is what the Trustees were giving and very much on the generous side for making payments from a GBP20m capital base) makes next to no difference these days between Rovers' matchday income of GBP6m a year and Arsenal's matchday income of GBP70m a year. So the purpose and effect of the trust within the Trust is far less clear because it cannot do what it was intended to.

The other point is that Rovers are in the best financial health in their history with the new media deal- I have speculated that a profit close to GBP10m might be reported for the year that ends next Monday. Irrespective of the Trustees seeking a buyer, they have to plan long term on the basis of Rovers being part of the JWT and therefore conserving their resources in good times makes a huge amount of sense.

7) There are very different reasons for clubs having negative balance sheets

- Healthy reason: the owner pumped in a huge amount of his own resources, the club does not need external borrowings, so the money is shown as a loan for very good tax reasons and flexibility going forwards. Step forwards Chelsea and Middlesbrough.

- Healthy reason: the owner structured their borrowings to match future income in building a massive new asset which has transformed the earning potential of the club. Arsenal.

- Unhealthy reason: new owners dumped the debt incurred in buying the club from previous owners onto the balance sheet and the club is paying 5% pa more in interest charges than Arsenal are. Unpaid interest and other borrowings are getting added onto the club's balance sheet making it look worse every year. Manchester United and Liverpool.

[den]

As far as who owns the land, - the trust owns the club, hence the trust owns the land. Yes?

[Whyoy]

According to the 2007 Accounts - "Included within Freehold Land and Buildings is land at a value of £3,495,000 which has not been depreciated",

So BRF&A PLC own the land. The trust could effectively "buy"/transfer the land out of the PLC before a sale to a third party as they presently own the PLC. At 30th June 2007 the land was owned by the PLC

[bob fleming]

PLC??

[Jan]

PLC??

Public Limited Company.

I believe Jack made the club a PLC in case it was ever listed. You can be a PLC without being listed on the Stock Exchange, but you can only be listed on the Stock Exchange IF you are a PLC.

[S15]

Thanks for clearing that one up. I assumed the land was owned by Philips' Love Child.

[PAFELL]

Phew- a lot of stuff here.

1) The GBP21m has nothing to do with current profitability or otherwise. The Trust as you will all remember converted over GBP80m of loans into shares and the GBP21m simply represents the positive difference between assets and liabilities or looking it another way, the difference between all the money the shareholders have put in and all the losses Rovers have made down the year. Not being an accountant - I am still lost as to what it means converting loans into shares - can you try to explain it a bit more simpler for none accountant types.

So there is GBP21m left to be lost if you look at it that way.

2) The reason Rovers' owners converted debt (or debt instruments- they were convertible preference shares as well as straight loans) into ordinary shares was to enable Rovers to go and borrow money of their own at very good commercial terms. would this be where any transfer money would come from?

3) Some misleading stuff has been written about Rovers' debt and wage ratios. The board explained that the club DELIBERATELY increased transfer and wages spending AHEAD of the new Sky deal when they believed better value would be available. Therefore the GBP21m bank debt and 80something% wage ratio were deliberate moves knowing that the 07/8 season media income would rebalance it. I remember that bit

I think the Rovers have been proved spectacularly right- sustained two top ten finishes and avoided getting involved in buying dross at ridiculous prices last year.

4) Jan is absolutely right that the assessed MARKET value of players is not in the accounts. Rovers conservatively estimated the value of their squad at GBP60m last summer but that number was a note, not added into the club's assets in the balance sheet.

5) Brian, I might be wrong but I have a recollection that Rovers are the owners of the Ewood land and Brockhall land as well. Land and buildings are over GBP40m at historic value in the Rovers' accounts. So any new buyer of Rovers would be buying the ground, Brockhall, land and any other buildings on this land and the team

Two things at the back of my mind support this- I think Jack said that if Brockhall was meant for the Rovers it should be owned by the Rovers and recently Nicko reported that a hold-up on a possible sale was the Trust were quite rightly not going to sell the Rovers and let a new owner raise money from the club's land to pay them for it.

6) The trust within the Trust was a nominal GBP20m which Jack set to one side from within the Trust's assets (outside of the Rovers) to generate income for the Rovers to bridge the gap between what Rovers earn at Ewood from ticket sales and what other clubs earn being in larger and wealthier areas. The payment and distribution of that income is at the discretion of the Trustees.

The issue now is that GBP3m (which is what the Trustees were giving and very much on the generous side for making payments from a GBP20m capital base) makes next to no difference these days between Rovers' matchday income of GBP6m a year and Arsenal's matchday income of GBP70m a year. So the purpose and effect of the trust within the Trust is far less clear because it cannot do what it was intended to.

The other point is that Rovers are in the best financial health in their history with the new media deal- I have speculated that a profit close to GBP10m might be reported for the year that ends next Monday. Irrespective of the Trustees seeking a buyer, they have to plan long term on the basis of Rovers being part of the JWT and therefore conserving their resources in good times makes a huge amount of sense.

7) There are very different reasons for clubs having negative balance sheets

- Healthy reason: the owner pumped in a huge amount of his own resources, the club does not need external borrowings, so the money is shown as a loan for very good tax reasons and flexibility going forwards. Step forwards Chelsea and Middlesbrough.

- Healthy reason: the owner structured their borrowings to match future income in building a massive new asset which has transformed the earning potential of the club. Arsenal.

- Unhealthy reason: new owners dumped the debt incurred in buying the club from previous owners onto the balance sheet and the club is paying 5% pa more in interest charges than Arsenal are. Unpaid interest and other borrowings are getting added onto the club's balance sheet making it look worse every year. Manchester United and Liverpool.

Basically we could do with Bill Gates to catch up with the top 4

[den]

Public Limited Company.

I believe Jack made the club a PLC in case it was ever listed. You can be a PLC without being listed on the Stock Exchange, but you can only be listed on the Stock Exchange IF you are a PLC.

Are you sure about that Jan? I certainly remember Jack saying that at some time it would be right to move the club to a PLC, but then wasn't the right time.

I suppose that if it is indeed a PLC now, that the shareholders of the PLC are the trustees, - meaning that they still own the land.

[PAFELL]

Phew- a lot of stuff here.

1) The GBP21m has nothing to do with current profitability or otherwise. The Trust as you will all remember converted over GBP80m of loans into shares and the GBP21m simply represents the positive difference between assets and liabilities or looking it another way, the difference between all the money the shareholders have put in and all the losses Rovers have made down the year.

So there is GBP21m left to be lost if you look at it that way.

2) The reason Rovers' owners converted debt (or debt instruments- they were convertible preference shares as well as straight loans) into ordinary shares was to enable Rovers to go and borrow money of their own at very good commercial terms.

3) Some misleading stuff has been written about Rovers' debt and wage ratios. The board explained that the club DELIBERATELY increased transfer and wages spending AHEAD of the new Sky deal when they believed better value would be available. Therefore the GBP21m bank debt and 80something% wage ratio were deliberate moves knowing that the 07/8 season media income would rebalance it.

I think the Rovers have been proved spectacularly right- sustained two top ten finishes and avoided getting involved in buying dross at ridiculous prices last year.

4) Jan is absolutely right that the assessed MARKET value of players is not in the accounts. Rovers conservatively estimated the value of their squad at GBP60m last summer but that number was a note, not added into the club's assets in the balance sheet.

5) Brian, I might be wrong but I have a recollection that Rovers are the owners of the Ewood land and Brockhall land as well. Land and buildings are over GBP40m at historic value in the Rovers' accounts.

Two things at the back of my mind support this- I think Jack said that if Brockhall was meant for the Rovers it should be owned by the Rovers and recently Nicko reported that a hold-up on a possible sale was the Trust were quite rightly not going to sell the Rovers and let a new owner raise money from the club's land to pay them for it.

6) The trust within the Trust was a nominal GBP20m which Jack set to one side from within the Trust's assets (outside of the Rovers) to generate income for the Rovers to bridge the gap between what Rovers earn at Ewood from ticket sales and what other clubs earn being in larger and wealthier areas. The payment and distribution of that income is at the discretion of the Trustees.

The issue now is that GBP3m (which is what the Trustees were giving and very much on the generous side for making payments from a GBP20m capital base) makes next to no difference these days between Rovers' matchday income of GBP6m a year and Arsenal's matchday income of GBP70m a year. So the purpose and effect of the trust within the Trust is far less clear because it cannot do what it was intended to.

The other point is that Rovers are in the best financial health in their history with the new media deal- I have speculated that a profit close to GBP10m might be reported for the year that ends next Monday. Irrespective of the Trustees seeking a buyer, they have to plan long term on the basis of Rovers being part of the JWT and therefore conserving their resources in good times makes a huge amount of sense.

7) There are very different reasons for clubs having negative balance sheets

- Healthy reason: the owner pumped in a huge amount of his own resources, the club does not need external borrowings, so the money is shown as a loan for very good tax reasons and flexibility going forwards. Step forwards Chelsea and Middlesbrough.

- Healthy reason: the owner structured their borrowings to match future income in building a massive new asset which has transformed the earning potential of the club. Arsenal.

- Unhealthy reason: new owners dumped the debt incurred in buying the club from previous owners onto the balance sheet and the club is paying 5% pa more in interest charges than Arsenal are. Unpaid interest and other borrowings are getting added onto the club's balance sheet making it look worse every year. Manchester United and Liverpool.

The trust, registered in Jersey, is run by a board of trustees. They, too, have rarely spoken publicly, but when Walker died the trust chairman, the Jersey solicitor Paul Egerton-Vernon, did make a statement: "The club is provided for for the foreseeable future." The terms of the instructions Walker left the trustees have never been disclosed, but Egerton-Vernon explained that Rovers would be subsidised by other assets in the Walker portfolio, which included property and the Jersey-based airline, Flybe. "There seems to be a misunderstanding that there is an ever-shrinking pot of money available," he said. "That is not the case. There are other businesses apart from the club which generate profits which are available."

This was taken from the guardian article - the last part 'there are other buisnesses apart from the club which generate profits which are available.'

Available to whom? Rovers?

[bob fleming]

Public Limited Company.

I believe Jack made the club a PLC in case it was ever listed. You can be a PLC without being listed on the Stock Exchange, but you can only be listed on the Stock Exchange IF you are a PLC.

Thanks Jan. And Ltd? Is that short for Limited?

I always presumed that if "you" are a PLC then you have to be listed on the S.E. or a similar variant - it would appear not? As Rovers are owned by a Trust I always thought it to be a Limited company?

If a Public LC then can't anyone buy shares? If so couldn't Chris Whatshisface and his Merry Band of Incredibly Rich Investors Who Want To Give Their Money Away For The Love of Football presumably just go out and buy out the Trust, regardless of whether they like it or not, if Rovers are a PLC? In a similar fashion to what occured at Manchester United PLC?

No doubt i've gone too far, over stepped the mark and I'm let myself down. Dabbling in the murky world of "The Takeover Thread" is dangerous stuff.

I expect and hope that philip will step in and explain everything any minute!

Laters etc

[Craigman]

I believe that Blackburn Rovers are a PLC and the shareholders are The Trust, they own a huge percentage of the company. (99.9%) There are a certain amount of shares and new ones would not be for sale, so someone has to buy The Trust's shares.

[Jan]

Thanks Jan. And Ltd? Is that short for Limited?

I always presumed that if "you" are a PLC then you have to be listed on the S.E. or a similar variant - it would appear not? As Rovers are owned by a Trust I always thought it to be a Limited company? Nope- No requirement to list if a PLC. Lots of unlisted PLCs around. Mostly because their owners expected them to list in the future. NO rules as the type of company in a trust.

If a Public LC then can't anyone buy shares? NO- ONLY IF LISTED.

If so couldn't Chris Whatshisface and his Merry Band of Incredibly Rich Investors Who Want To Give Their Money Away For The Love of Football presumably just go out and buy out the Trust, regardless of whether they like it or not, if Rovers are a PLC? In a similar fashion to what occured at Manchester United PLC? They were listed.

No doubt i've gone too far, over stepped the mark and I'm let myself down. Dabbling in the murky world of "The Takeover Thread" is dangerous stuff.

I expect and hope that philip will step in and explain everything any minute!

Laters etc

And from Philip's post

7) There are very different reasons for clubs having negative balance sheets

- Healthy reason: the owner pumped in a huge amount of his own resources, the club does not need external borrowings, so the money is shown as a loan for very good tax reasons and flexibility going forwards. Step forwards Chelsea and Middlesbrough

Not necessarily. If Abramovich/Gibson got run over by a bus tomorrow and hadn't made the correct provision in their wills, the loans would have to be repaid. That would close the clubs down unless someone else wanted to take on the debt.

ALSO

2) The reason Rovers' owners converted debt (or debt instruments- they were convertible preference shares as well as straight loans) into ordinary shares was to enable Rovers to go and borrow money of their own at very good commercial terms

That is true. Paradoxically, though, while the loans were non-interest bearing and non-repayable, the share capital converted IS the type to attract a dividend if one is ever paid. Actually, if that £10m does materialise- and I suspect a good proportion will have gone on wages, I wouldn't be surprised if the shareholders, ie the trustees, took money out of the football club in the form of a dividend this year.

And from PAFELL

This was taken from the guardian article - the last part 'there are other buisnesses apart from the club which generate profits which are available.'

Available to whom? Rovers?

Available to the beneficiaries of the trust. Principally these are the remaining members of the Walker Family. Rovers is a beneficiary as well. There is, however, obviously no rule in the Trust Deed as to how income from the trust should be distributed, as I suspect the Walker family will still be getting payouts even though the club is not.

[gumboots]

Basically we could do with Bill Gates to catch up with the top 4

ah, but he's not what he was since he's retired and is giving half his cash to charity!

[den]

So:

There is NO "Blackburn Rovers" or "the club" that COULD own the land, - yes?

and - the trustees own the land, - yes?

so, the trustees ARE Blackburn Rovers, - yes?

[rovers1993]

i believe blackburn is a PLC but it is a Private Limited Company which means that it still does have shares but it is not on the stock exchange so to buy shares of the company an individual will have to contact the company itself to buy. it operates the same as a public except they can be no hostile takeover, to buy you need permission.