[Archived] Rovers Might Have Been Sold?

[philipl]

Agreed, but in the case of Shah for example the money would be made through cross-promotions in the IPL. For these businessmen it's about the group of companies, not the single entity.

And that costs nothing to do?

And how exactly does he collect any money in India on the back of Rovers?

[philipl]

I'm sorry Phillip, but those tangible benefits you speak of help Rovers on the field how?

I understand your stance towrads a takeover and the Trust, certainly I do although i dont always agree, however what most people on here are crying out for new owners for is because of the lack of interest shown in the playing side.

How many members of this board care that we have Jersey based accountants who charge us very little to go over our plans?

How many more of those members would punch the sky if the board would just for once acknowledge the fact that the Rovers desperatly need some assistance in the transfer market to maintain, not improve on just maintain our Premier League position.

The benefits you speak of are far less visable from the stands, and for an average fan who doesnt really worry to much about who does our accounts, that is what matters most.

Just my view on this matter.

OK ada, take £2m out of the cash Rovers had last year (the amount extra the Trust put in) and take £2m off the club each year for additional admin expenses and Sam would be forced to sell £1.5m of players immediately rather than have £2.5m to spend.

Of course members of the MB wouldn't give a damn if that were the case.... are you smoking wacky baccy or something?

Dave Birch has hit the nail on the head in his post.

[Balwer]

OK ada, take £2m out of the cash Rovers had last year (the amount extra the Trust put in) and take £2m off the club each year for additional admin expenses and Sam would be forced to sell £1.5m of players immediately rather than have £2.5m to spend.

Of course members of the MB wouldn't give a damn if that were the case.... are you smoking wacky baccy or something?

Dave Birch has hit the nail on the head in his post.

Weren't we told that the Trust didn't put any additional cash in last year by Nicko? Also where is this £2m of additional admin expenses coming from, is that what you're saying the Trust saves us each year? What about the fees that being run by a Jersey company costs the club? As someone who works for a company run through a Jersey trust I'm well aware that the Board would be handsomely recompensed for its time.

[ada2020]

OK ada, take £2m out of the cash Rovers had last year (the amount extra the Trust put in) and take £2m off the club each year for additional admin expenses and Sam would be forced to sell £1.5m of players immediately rather than have £2.5m to spend.

Of course members of the MB wouldn't give a damn if that were the case.... are you smoking wacky baccy or something?

Dave Birch has hit the nail on the head in his post.

Right, so we are gratefull for being better off for the sum of £1.5 million?

And of course you dont believe that any other businessman in the world can improve or match this?

Any attepmts to increase revenue are fraught with risks to the football club's existance?

Yeah sure, I'm the one smoking the dodgy stuff..........

Nice reply.

[OJRovers]

There are a lot of people getting confused with the motives of owners of Premier League teams. It is not a business to make money in. Which clubs actually run at a profit?

People invest to boost their public profile, as a 'hobby' away from their main business, to gain exposure for their other business involvements and as an ego thing.

If investors were seriously thinking of the profit, they would buy a big club in the Championship who will have very low costs, and with a little investment could hit the jackpot of promotion.

The reason Rovers could be appealing is that we are already established in the PL and so the owners could instantly look to develop links to other business interests eg with the Indian market we have been hearing about. Its unlikely they would be looking for a straight 'profit' through the club's books.

[Balwer]

FYI the Glazers have doubled the value of their equity holding since they took over, so all this business about not making money is rubbish.

[Steve Moss]

However in the absence of interest from new investors I think that on balance we have to be content with the Trust's running of the club going forward (with all the lack of investment that this entails) as it would turn out to be the least worst option.

I think this is well said. The only "good" option is a Jack Walker Mk II. And how likely is that?

Remember that because of Jack and the Trust, the club is asset rich and as a consequence in the event of an administration, we would be far more likely to be liquidated than normal clubs in trouble that don't have such assets tied in.

The fact that we as a club are asset rich is one of my concerns. We are a prime candidate for being asset stripped by unscrupulous business people. The Trust are not unscrupulous which is why I am happy with their ownership.

And the length of the sale negotiations are encouraging that the Trust is looking hard at potential buyers. I would hate for the Rovers to be subject to a "White Knight" take over ploy, only to be weeping a year or three later.

That is the economics of the casino.

Well put. And the casino always wins, long run.

Den, my thoughts are that Jack wanted:

1. BRFC to continue in the prem. (We all saw Jack's tears on relegation)

2. BRFC be able to stand on it's own.

3. the trust support BRFC so that it may attain point 2.

It looks pretty much like those three points have been achieved. The trust has slowly removed all support, and now BRFC is starting to walk on it's own.

Excellent point, Dave. The Rovers achieve mid-table without millions poured into it. We are the model that other clubs will be following, once the current craziness is over. And from what I've read, Jack Walker would be pleased that we are surviving on our own. From the Trust's perspective, they've done a good job.

Right, so we are gratefull for being better off for the sum of £1.5 million?

And of course you dont believe that any other businessman in the world can improve or match this?

Any attepmts to increase revenue are fraught with risks to the football club's existance?

Yeah sure, I'm the one smoking the dodgy stuff..........

Actually, if you read Philip's figures (which look reasonable), the Rovers are better off to the tune of 4 million a year as a result of the Trust's management style. If we were run as are some clubs, we would be 1.5 million in the hole as opposed to 2.5 million to the good. The not so public benefits of Trust ownership do have a real world (postive) effect on the Rovers' finances.

[philipl]

FYI the Glazers have doubled the value of their equity holding since they took over, so all this business about not making money is rubbish.

Are either Man U or Red Football publicly quoted entities?

Balwer this is getting tedious as you are clearly not reading what is being written on here.

The Trust is picking up the bills, not Rovers- that is the key point.

As for the extent of Rovers' growing indebtedness to the Trust, do you believe the audited published accounts?

At the end of the day, the question is very simple- is there anyone out there with a spare £100m who doesn't want it back who fancies moving Rovers from near the bottom of the transfer spending list to somewhere near the middle and keep us at that level for at most five seasons then get vilified for having done so like the Trust is being vilified now?

[RevidgeBlue]

OK ada, take £2m out of the cash Rovers had last year (the amount extra the Trust put in) and take £2m off the club each year for additional admin expenses and Sam would be forced to sell £1.5m of players immediately rather than have £2.5m to spend.

Of course members of the MB wouldn't give a damn if that were the case.... are you smoking wacky baccy or something?

Dave Birch has hit the nail on the head in his post.

John Williams has repeatedly stated in recent times that the Trust don't see the way forward to giving any further financial support either now or in the forseeable future.

Are you saying that they have in fact put in a one off 2m or a one off 2m plus the 3m they used to?

As regards your 2m admin expenses supposedly saved that is a) a completely guesstimated figure and b ) if there was no Trust those charges wouldn't be applicable anyway.

[Iceman]

Honestly, a partnership between the IPL and Rovers? who gains from it, only Rovers? What would the IPL gain from Rovers? In fact, the IPL generates a crap load of money anyway, so its not like Rovers will further enhance the competition. We stand to gain more from it, than them, so i dont see the logic in it at all.

[philipl]

Note 16 to the latest set of accounts:

Amounts owing to parent undertaking

2009-£5,000,000

2008-£2,000,000

The amounts owing to the parent undertaking are interest free.

As for the point about the costs the Trust does not pass onto the Rovers, go look at the accounts of virtually every other Premier League club and see what they get clobbered with in terms of Directors' fees, Directors' expenses, Board expenses, legal and banking advisors fees and expenses etc etc. None of those items are in the Rovers' accounts apart from some very reasonable payment to the three Exec directors who are running a £50m+ turn over business which is very much in the public eye.

[den]

One hundred and thirty plus years but lets risk it all on the toss of a coin and why? Becuase we are bored of being 10th most successful club in England?

And still we have the argument that we should stay with the trust.

You better have a word with the trustees then Oscar. It's them that are selling.

[Balwer]

[

Are either Man U or Red Football publicly quoted entities?

Balwer this is getting tedious as you are clearly not reading what is being written on here.

The Trust is picking up the bills, not Rovers- that is the key point.

As for the extent of Rovers' growing indebtedness to the Trust, do you believe the audited published accounts?

At the end of the day, the question is very simple- is there anyone out there with a spare £100m who doesn't want it back who fancies moving Rovers from near the bottom of the transfer spending list to somewhere near the middle and keep us at that level for at most five seasons then get vilified for having done so like the Trust is being vilified now?

Manchester United debt trades fairly frequently in the secondaries market. I don't understand what this has to do with publicly quoted entities, if Manchester United were to be sold today the Glazers would make a profit. That is my opinion as a leveraged finance professional and it is shared throughout the market. That comment wasn't in relation to you, but to OJRovers comment about nobody making money from football as it's not always an annual profit and loss game, that was my point.

Regarding your comments, I apologise if my two posts were tedious (although if that were the case then your hundreds of posts throughout the thread taking the opposite viewpoint are a bit hypocritical) but I still fundamentally disagree with you regarding the need for new ownership and surely this forum is the medium for sensible discussions between opposing viewpoints?

In my opinion the current ownership structure has served fantastically well over the past ten years in a stewardship capacity but to suggest that it will survive much longer is putting ones head firmly in the sand. We are entirely dependent on one key revenue stream, the TV rights, as JW himself has said before. Should the club be relegated, which is a distinct possibility given the lack of funding given to improve the squad, then there's every chance we would never make it back to the Premier League as that's not the modus operandi of the Trust. The TV revenue would be gone and we'd be left with very little chance to make it back, removing all sentiment regarding the overachievement of our small club.

I am not saying that Shah is the answer, but surely it's painfully plain to see that something has to change? Yes we finished 10th last year, but we have all seen how volatile our league position can be on a year to year basis, and to simply rest on our laurels and say 'well we finished 10th like this so it's fine' is naive at best.

In reply to smoss and the fact that we're the model to follow for other clubs, you cannot seriously believe that for a moment can you? Our wage to revenue ratio is what, third highest in the league? It's entirely unsustainable, gives no medium or long term security and requires constant asset sales just to break even.

The comments about selling to a new owner being a gamble, casino metaphors etc, that's exactly what we're doing already by paying higher wages than we can afford just to stay afloat and compete. Surely it doesn't take a business degree to see this?

[RevidgeBlue]

Note 16 to the latest set of accounts:

Amounts owing to parent undertaking

2009-£5,000,000

2008-£2,000,000

The amounts owing to the parent undertaking are interest free.

Does that not merely indicate that the last loan of 3m was received sometime in 2008 or 2009 before support was withdrawn?

[Fife Rover]

Yes but he, unlike a lot of people who use the quote, noted that wherefore means why rather than who. The person who originally quoted it I believe was asking where Nicko was, but used wherefore....

Well I might as well join the pedants club:) . In the Shakespeare play Juliet is in despair and on her knees crying out " Romeo, Romeo wherefore art thou Romeo?" Which in modern English translates to "Romeo, Romeo where [the hell] are you [when I need you most]?"

[T4E]

If you lot carry on going off topic you might be Bard.....

[RevidgeBlue]

Well I might as well join the pedants club:) . In the Shakespeare play Juliet is in despair and on her knees crying out " Romeo, Romeo wherefore art thou Romeo?" Which in modern English translates to "Romeo, Romeo where [the hell] are you [when I need you most]?"

If I can be even more pedantic it doesn't mean that.

It means WHY are you Romeo i.e. from a different family to me (Montagues/ Capulets) therefore we can never be together etc

[1864roverite]

Bawler

the Glazers may well make a profit IF they sold manure at this time HOWEVER, their other interests are mortgaged to the hilt and any profit they DID make would be swalled handsomely by their overall debt leaving them penniless.

Manure have so much debt levered around their neck that even they dont provide an attractive option at this time. If the red forums are to be believed they pay a cool £90m a year in payments and interest just to service their current debt.

I wouldnt ever want to see Rovers saddled with any debt because of misconstrued business concepts.

[Iceman]

Rovers Rovers where for art thou take over? C'mon SHAHkspeare, show us the money.

[tomphil]

Does that not merely indicate that the last loan of 3m was received sometime in 2008 or 2009 before support was withdrawn?

Was that the loan to buy the old church and land outside Ewood ?

[BPF]

Saurin Shah does not have the money.

He is backed by some people that have the money but as time goes on, they have started to find out what a long term investment this is. This has inevitably resulted in cold feet. Several of the original backers will now have pulled out and Mr Shah will be desperately trying to persuade others to get involved.

Meanwhile, the club being fully aware of this, will want to keep it all under wraps until the season starts. After all, John Williams & Sam have confirmed that we were holding off signings until the take over was sorted (End of July at the latest!) Because of this decision, we are now entering the new season unbelievably unprepared. The takeover, obviously provides a brilliant excuse for what is a potentially suicidal cock up. A week after transfer deadline, I would not at all be surprised to hear that Mr Shah's takeover has fallen through.

What happens if Kalinic breaks his leg against Everton?

[Steve Moss]

In reply to smoss and the fact that we're the model to follow for other clubs, you cannot seriously believe that for a moment can you? Our wage to revenue ratio is what, third highest in the league? It's entirely unsustainable, gives no medium or long term security and requires constant asset sales just to break even.

The comments about selling to a new owner being a gamble, casino metaphors etc, that's exactly what we're doing already by paying higher wages than we can afford just to stay afloat and compete. Surely it doesn't take a business degree to see this?

I am perfectly serious. The Trust have proven themselves prudent and attentive managers of the club. The fact that they are not pouring the Walker family fortune into the club in no way detracts from that. The Trust has dealt with the club more as a parent dealing with a child than a profit making enterprise, by (as Phillip has correctly pointed out) providing interest free loans and declining to collect millions in annual administrative fees that the Trust would be otherwise entitled.

As to the wages we pay, I'd suggest that John Williams is correct in that our "high" wage bill is one of the reasons we survive in the PL, as we can attract talent that might not otherwise be interested. We can afford the high wage bill, in part, as we don't have the board and director expenses afflicted upon other clubs.

Though I agree that our wage bill is a potential Achilles heel that should be addressed, if and when we are able. I hope we have relegation claused in the players' contracts.

Are our circumstances ideal? No. I would love to see 10-20 million a year invested into the club for the next decade or two. But short of another Jack Walker, it isn't going to happen without resort to debt (which equals long term disaster) or a rich billionaire (who, without a heck of a lot inherent loyalty to the Rovers, may well decide to liquidate the club once his or her interest wanes). All things considered, the safest bet is to stick with the Walkers until they decide that an appropriate buyer has arrived on scene.

[Balwer]

Bawler

the Glazers may well make a profit IF they sold manure at this time HOWEVER, their other interests are mortgaged to the hilt and any profit they DID make would be swalled handsomely by their overall debt leaving them penniless.

Manure have so much debt levered around their neck that even they dont provide an attractive option at this time. If the red forums are to be believed they pay a cool £90m a year in payments and interest just to service their current debt.

I wouldnt ever want to see Rovers saddled with any debt because of misconstrued business concepts.

There is nothing wrong with high levels of debt, providing the equity value is greater. Alliance Boots is a classic example of this, and their debt is more than three times the level of Man U's.

In the case of Manchester United, there are two debt levels, a recently refinanced £500m bond, and a subordinated PIK note (no cash repayment) currently worth about £220m. The total value of the business is anywhere between £1.4bn and £1.6bn, depending on which profit figure is used, implying a signficant equity holding.

In terms of the Glazers, and I can only go on what I have read since I don't have access to any of their other financial information, but I believe their total debt levels are around £1.1bn and total assets are about £2.1bn.

For a comparative assessment the debt levels of Blackburn (£20m) compared to their apparent valuation (£45m according to current speculation) are roughly the same as Man U, so your comments are a bit wide of the mark.

[doctorryan]

People invest to boost their public profile, as a 'hobby' away from their main business, to gain exposure for their other business involvements and as an ego thing.

Correct. There's little value in terms of profit year to year in owning "Major League" sports clubs themselves, with very few exceptions. The value is in the equity. It seems there is an unlimited supply of rich little boys wanting to buy into that most exclusive of clubs, professional sports owner. The prices of these clubs therefore, keep going higher and higher and that's where the real profits are.

It is important to remember the 2 huge advantages US owners have over almost everyone else on the planet:

1 - No relegation. In fact, in US sports the worst clubs are rewarded with the first choice of new amateur talent.

2 - Cities and towns with "Major League civic-envy" offer to build clubs essentially free stadiums in an attempt to lure them from other cities which forces the cities these clubs already inhabit to ante up in some way (which usually means paying for the building of a new stadium) or risk losing them.

This is why banks haven't forced a club in the US/Canada to completely shut down and go out of existence, no matter how bad the books got, since the 70s, when a few WHA & ABA clubs folded before the NHL-WHA & NBA-ABA mergers.

And yet, even with all those advantages, the words sports & business are often still a contradiction in terms, at least when we're talking about sports where the talent gets paid to perform, regardless of how well they do. The reason for this? Winning. It's always the most important thing. If this wasn't the case, there would be no need for salary caps and salary/luxury taxes that are a part of all 4 big-time team sports here. Sports owners, almost unanimously I believe, would rather win the championship and lose $2M than finish fourth and make $3M. I'm paraphrasing a former baseball commissioner with that one, but I include it here because I think it drives home the point.

And this is the world the 5 Walker Trustees (who have all been mentioned by name somewhere on this site this summer ) have found themselves in since Jack passed away, especially since the week Roman Abramovich came over the hill for Duffer. That's the moment that really scared them. If you look at Rovers net-transfer totals from promotion at Deepdale to that Thursday in July '03 when Chelsea lodged their first bid of £13M, you'll see a net-outlay of over £25M not including wages. Up to that point I would argue that the Trustees were doing exactly as they promised after Jack's passing. Since then, we've only Bazza & Niko as examples of spending of any sizable amount and those were both preceded by huge sales (Duff & RSC) where half or less of the proceeds were used in the subsequent purchase. After Chelsea's Roman Revolution, which forced ManU, AC, Real, etc.. to get into an arms race more or less on Chelsea's terms, the Trustees just threw their hands up.

Ok so you sponsor the shirts then.

Advertising budgets for any company must stack up and prove rewarding whatever the business. I've no doubt that if the Marketing execs at Flybe thought it would pay to advertise on BRFC's shirts then they would do.

See, I don't think Gordon is wrong. I think he and I just disagree fundamentally on the primary point of pro sports. I believe winning must be a priority on some level, no matter what. If not, you fall victim to Smallwood's Law (John Smallwood, columnist for the Philadelphia Daily News).

I'm paraphrasing again, but I'll give him the credit:

If fans believe that their team has no chance of winning they eventually will stop paying their hard-earned cash on no-reward situations.

Owning a team can often be a kind of catch-22. You have to spend a ton just to be competitive in most situations, because if you don't you'll be playing in front of an empty stadium with no serious sponsors or licensed sales (merchandise) to speak of.

By the way, as part of backing up OJRovers' point, below are 2 examples of where owning a club/clubs does work:

Comcast-Spectator, owners of the NHL's Flyers & NBA's 76ers in Philadelphia, use the Sixers & Flyers games as content for their regional sports cable channel (Comcast SportsNet).

The New York Yankees also own their own network (the YES Network).

Both of these ownership groups receive so much per subscriber from every television service provider who picks up their signal every month. They also get to keep all the advertising revenue, rather than see that go to a channel that purchased their club's broadcasting rights. These are HUGE revenue generators. And the better the clubs do on the playing surface, the more in TV transmission & advertising fees the owners can charge. If any American ownership group tries to invest in Rovers, pray that it is somebody like Ed Snider & the Roberts (Philadelphia), the Steinbrenners (Yankees) or the Rooney family (NFL's Pittsburgh Steelers). All 3 would attempt to do nothing less than win the European Cup.

Unfortunately, back in the real world...................

[Balwer]

I am perfectly serious. The Trust have proven themselves prudent and attentive managers of the club. The fact that they are not pouring the Walker family fortune into the club in no way detracts from that. The Trust has dealt with the club more as a parent dealing with a child than a profit making enterprise, by (as Phillip has correctly pointed out) providing interest free loans and declining to collect millions in annual administrative fees that the Trust would be otherwise entitled.

As to the wages we pay, I'd suggest that John Williams is correct in that our "high" wage bill is one of the reasons we survive in the PL, as we can attract talent that might not otherwise be interested. We can afford the high wage bill, in part, as we don't have the board and director expenses afflicted upon other clubs.

Though I agree that our wage bill is a potential Achilles heel that should be addressed, if and when we are able. I hope we have relegation claused in the players' contracts.

Are our circumstances ideal? No. I would love to see 10-20 million a year invested into the club for the next decade or two. But short of another Jack Walker, it isn't going to happen without resort to debt (which equals long term disaster) or a rich billionaire (who, without a heck of a lot inherent loyalty to the Rovers, may well decide to liquidate the club once his or her interest wanes). All things considered, the safest bet is to stick with the Walkers until they decide that an appropriate buyer has arrived on scene.

That's the thing though smoss, if and when we are able assumes that the TV money will always be there. The Premier League wages have grown by 55% in the last three years according to Deloitte, to an all time high of 67% of revenue. In fact last year they grew by £132m alone, compared to only £47m additional revenue.

Rovers are playing a dangerous game, but it's the only game available to them and I am grateful for the Trust for all they've done, and for JW's management, but they are and always have been a stop gap measure. If we can find an investor that meets the criteria then we need to take the plunge, because better the devil you know isn't going to cut it much longer.

Just to dispel the interest free loans comment once and for all, all ownership funding is given under these interest free loans/quasi equity instruments. As a reference point Mike Ashley's interest free loans totalled £111m to Newcastle two years ago, and I believe Abromavich's contributions were in the £320m range, so let's not make out like it's an altruistic measure on their behalf, it's simply the most useful instrument to insert money under the circumstances and as Rev pointed out this stopped after the 2009 financial year from the Trustees perspective.