[Archived] Barclays Mortgage or Charge

[PAFELL]

I agree that in theory this puts the club at greater risk, in theory. So using basic risk management you would normally rate a risk by comparing the impact and the likelihood. Has the impact of the risk should it occur increased, yes, has the likelihood increased or decreased, we aren't in a position to comment.

Given the need to establish a short-term funding facility I fail to see how this necessarily equates to structural debt. If you have an overdraft facility that doesn't mean that you are going to use it as basic funding for the business, i.e. as a permanent overdraft. I agree of course that it may mean that.

We don't know.

My view is that we have to wait to judge this, of course the world may be ending but I guess I am not as pessimistic as you Philip. I need some more facts. However, given the opportunity, I would advise the owners that sometimes silence is best or if there is a statement in the press in respect of how the club is funded that there should be an expansion to cover the issues of long-term and short-term debt.

Your concerns are understandable and have been stated many times.

Not being involved in business, all this goes over my head. But could this mortgage thing just be back up in case of money coming out from india is delayed. I thought somebody on here said there were various rules (india) on the amount of money can come out of india - or transfering it is not as quick. Something like this was said during the takeover itself.

[Roversider]

Not being involved in business, all this goes over my head. But could this mortgage thing just be back up in case of money coming out from india is delayed. I thought somebody on here said there were various rules (india) on the amount of money can come out of india - or transfering it is not as quick. Something like this was said during the takeover itself.

Thats the point I was trying to make, although not specific to the circumstance you describe. Using short term debt which is paid off quickly is used to balance your inflows and outflows of cash, so that you don't get payments 'bouncing'. However it can also be used on a long-term basis but that is nearly always more expensive than taking out a long-term loan. The only thing to remember is that banks may be a bit averse to the latter but willing to give a secured overdraft, less risk to them.

The reality is we don't know but an overdraft facility is a basic requirement for most businesses so whilst it might be sinister it is also likely to be good business practice. No evidence that it is sinister to me yet.

[yeti-dog]

I agree that in theory this puts the club at greater risk, in theory. So using basic risk management you would normally rate a risk by comparing the impact and the likelihood. Has the impact of the risk should it occur increased, yes, has the likelihood increased or decreased, we aren't in a position to comment.

Given the need to establish a short-term funding facility I fail to see how this necessarily equates to structural debt. If you have an overdraft facility that doesn't mean that you are going to use it as basic funding for the business, i.e. as a permanent overdraft. I agree of course that it may mean that.

We don't know.

My view is that we have to wait to judge this, of course the world may be ending but I guess I am not as pessimistic as you Philip. I need some more facts. However, given the opportunity, I would advise the owners that sometimes silence is best or if there is a statement in the press in respect of how the club is funded that there should be an expansion to cover the issues of long-term and short-term debt.

Your concerns are understandable and have been stated many times.

...and your posts read all the better for the above fact.

You also say "I need more facts" which is a perfectly reasonable position.

I'm truly getting sick of all this 'the sky is falling in' nonsense.

I'm starting to believe that within a certain group on here we can lay claim to having the most embittered,pessimistic and parsimonious fans in the league.

[PAFELL]

...and your posts read all the better for the above fact.

You also say "I need more facts" which is a perfectly reasonable position.

I'm truly getting sick of all this 'the sky is falling in' nonsense.

I'm starting to believe that within a certain group on here we can lay claim to having the most embittered,pessimistic and parsimonious fans in the league.

I do not think that on this particular subject people are dooming and glooming. They are asking / debating something that is in offical records. I can understand your annoyance with regards the undisgussable subjects on this board. But this subject is totally different. It is also right to wonder what is happening, even if it is just for curiosity sakes.

[John]

Venky’s have hardly helped themselves so far with some disastrous PR and making us, in many people’s eyes, a complete laughing stock.

Difficult to take them seriously.

[deftangel]

I think it is safe to say that for the first time, the bank can go to the Premier League and tell them to send the money direct to them and not to the club.

Hitherto they could require assets to be sold to repay the loan but now it appears they can still do that but they can also take 70% of the club's income away as well.

That puts the Rovers at a new level of risk.

Thankfully this new situation "only" covers this season.

But this raises all kinds of new questions about the nature of the new ownership.

Remember the Daily Mail report where they say they do not use debt?

You were very sceptical of that Daily Mail report if I recall correctly, you can't have it both ways!

We've no idea if they've used it yet. I guess a pertinent question would be, at what point would they need to make the same arrangements for next season if that were to be an option they pursued?

And I guess that would be next seasons revenue, which may or may not map directly to the actual season (i.e. August to May) so the final payment of TV revenue doesn't arrive in the bank until a later date. Presumably with the prize money based on our league placing.

[BiggusLaddus]

I think it is safe to say that for the first time, the bank can go to the Premier League and tell them to send the money direct to them and not to the club.

Hitherto they could require assets to be sold to repay the loan but now it appears they can still do that but they can also take 70% of the club's income away as well.

That puts the Rovers at a new level of risk.

Thankfully this new situation "only" covers this season.

But this raises all kinds of new questions about the nature of the new ownership.

Remember the Daily Mail report where they say they do not use debt?

Total guesswork on your part, so it is not "safe to say" at all.

Venky's have set up the facility to borrow against this season's Sky money, the season that is almost three quarters done. You have no idea what this was set up for and also have no idea if any money has actually been borrowed. You have stated yourself on this very thread that the hard, bricks and mortar assets of the club are already being used as security in debts that were set up by the Trust - I don't remember you raising "all kinds of new questions" about their ownership.

We could all come out with idle speculation, but unless someone has explicit knowledge of; what this facility was set up for, has it actually been used and will it be extended into next season and beyond, then idle speculation is all it can be.

To counter your chicken licken doomsaying, an equally valid bit of speculation would be that perhaps this was for our proposed 'marquee signing'. Perhaps, just perhaps, Venky's were concerned that if a player was identified towards the end of the transfer window there may not have been time for the funds to be transferred before the window closed. So by having this facility to borrow in place, we could complete the transfer and then pay it off when the money came through.

Just because you proclaim something doesn't make it so, else the club would never have been sold due to the covenants in Jack's will and Tugay would have been replaced with a cut price Xabi Alonso.

[TimmyJimmy]

In my experience as a Company Secretary it is common practice for a bank to have a fixed and floating charge over the assets of a company as security against an overdraft facility, whether it is used or not. I see nothing cynical in this. It is standard practice.

Totally correct Al, whatever the company a bank will always seek to secure all of the company debts against all available security, the mechanism you describe is known as a debenture and is made up a fixed part e.g. a legal charge on property and a floating part e.g. a charge against future stocks, cashflows etc. that can be crystalised at any particular moment. All firms do this, all banks do this so in of itself I see nothing strange about this transaction.

That said if it is taken together with other observations then I understand that some may be take it as evidence of the club treading a risky path. I offer no opinion on that. However if I was involved in brainstorming a new model to finance a football club then I could imagine a strategy that looked a little like the following.

The problem - I have limited funds yet football demands high levels of spending.

A possible solution (if I cared nothing about risk) - liquidate as many assets as I could as soon as I could and then bring forward all future cashflows. In the Rovers context you would need to start by looking up the players value on the Balance Sheet and then deduct what you paid for the club, I think Philip has those figures.

A possible mechanism - securitise all future gate receipts (I know of at least one club that has already done this) and all TV receipts and all advertising receipts (securitising an asset effectively means selling it today for some fraction of it’s lifetime value). When players are sold hold on to the transfers funds. Take all new players into the club on loan with only wages to pay. ‘Lease’ other players where available e.g. there are many mechanisms available but let’s just consider ‘buying’ a player and contracting a fixed price to sell the player back to the same club at some point in the future. The profit contracted to be received for that deal could then also be securitised.

The result - I get potentially good young players who hopefully play well and keep the fans are happy. This situation continues in perpetuity. The player value on the Balance Sheet dwindles towards zero. I become reliant on TV money and keeping a high success profile that will ensure the continuation of that flow. With a following wind I also get players through from the academy who I can sell to generate a bit extra cash.

Analysis - the club becomes an empty shell, it has no player asset value so nothing to sell in case of a breakup. All other trading cash inflows have already been sold so effectively there is no income. All the money pulled forward in this manner is spent on player wages and agents fees so no reserves are accumulated.

Risks - Should Sky go the same way as other subscription broadcasters or they lose broadcasting rights, should the owners hit hard times and need their money back, should sh!t happen then there is nothing to fall back on except the physical assets of the club e.g. in our Rovers context that would mean say Brockhall and Ewood. Then again these could already have been leveraged against a bank debenture.

I guess I might also have to replace some staff who might diagree with my strategy, but then I own the company right so I could do what I want.

For these reasons I personally would quickly dismiss this strategy but if you fancied taking a risk with a club then I suppose this could be one way of dragging all future monies onto the table to spend today. Spending it would look great to the supporters.

I think it’s scenarios like this that scare people and put them on watch to identify clues when/if they turn up in the public domain.

I’m not suggesting that this is happening at the Rovers of course, but if it did I would be very uneasy and may even be minded to post the odd warning on this board. There again we’d all have to contend with those who would accuse the poster of some sustained attack intended to undermine the club.

I hope Paul, Philip et al continue to investigate these things and are not put off posting items of interest.

[yeti-dog]

Totally correct Al, whatever the company a bank will always seek to secure all of the company debts against all available security, the mechanism you describe is known as a debenture and is made up a fixed part e.g. a legal charge on property and a floating part e.g. a charge against future stocks, cashflows etc. that can be crystalised at any particular moment. All firms do this, all banks do this so in of itself I see nothing strange about this transaction.

That said if it is taken together with other observations then I understand that some may be take it as evidence of the club treading a risky path. I offer no opinion on that. However if I was involved in brainstorming a new model to finance a football club then I could imagine a strategy that looked a little like the following.

The problem - I have limited funds yet football demands high levels of spending.

A possible solution (if I cared nothing about risk) - liquidate as many assets as I could as soon as I could and then bring forward all future cashflows. In the Rovers context you would need to start by looking up the players value on the Balance Sheet and then deduct what you paid for the club, I think Philip has those figures.

A possible mechanism - securitise all future gate receipts (I know of at least one club that has already done this) and all TV receipts and all advertising receipts (securitising an asset effectively means selling it today for some fraction of it’s lifetime value). When players are sold hold on to the transfers funds. Take all new players into the club on loan with only wages to pay. ‘Lease’ other players where available e.g. there are many mechanisms available but let’s just consider ‘buying’ a player and contracting a fixed price to sell the player back to the same club at some point in the future. The profit contracted to be received for that deal could then also be securitised.

The result - I get potentially good young players who hopefully play well and keep the fans are happy. This situation continues in perpetuity. The player value on the Balance Sheet dwindles towards zero. I become reliant on TV money and keeping a high success profile that will ensure the continuation of that flow. With a following wind I also get players through from the academy who I can sell to generate a bit extra cash.

Analysis - the club becomes an empty shell, it has no player asset value so nothing to sell in case of a breakup. All other trading cash inflows have already been sold so effectively there is no income. All the money pulled forward in this manner is spent on player wages and agents fees so no reserves are accumulated.

Risks - Should Sky go the same way as other subscription broadcasters or they lose broadcasting rights, should the owners hit hard times and need their money back, should sh!t happen then there is nothing to fall back on except the physical assets of the club e.g. in our Rovers context that would mean say Brockhall and Ewood. Then again these could already have been leveraged against a bank debenture.

I guess I might also have to replace some staff who might diagree with my strategy, but then I own the company right so I could do what I want.

For these reasons I personally would quickly dismiss this strategy but if you fancied taking a risk with a club then I suppose this could be one way of dragging all future monies onto the table to spend today. Spending it would look great to the supporters.

I think it’s scenarios like this that scare people and put them on watch to identify clues when/if they turn up in the public domain.

I’m not suggesting that this is happening at the Rovers of course, but if it did I would be very uneasy and may even be minded to post the odd warning on this board. There again we’d all have to contend with those who would accuse the poster of some sustained attack intended to undermine the club.

I hope Paul, Philip et al continue to investigate these things and are not put off posting items of interest.

Fair point,as long as it is presented as such rather than scientific fact or incontrovertible proof..

[deftangel]

I’m not suggesting that this is happening at the Rovers of course, but if it did I would be very uneasy and may even be minded to post the odd warning on this board. There again we’d all have to contend with those who would accuse the poster of some sustained attack intended to undermine the club.

I hope Paul, Philip et al continue to investigate these things and are not put off posting items of interest.

^^^ This was a great contribution to the thread, especially for the financial laymen among us so thanks for being perfectly clear about what you do and do not know, and what is speculation. I think I'm right in saying Mrs D has mentioned "leasing" at least once? In which case, the mechanics of how that might work is pretty useful; although buy-back clauses aren't particularly anything new I suppose.

If you came across anything in the future that was in the interests of the club (and supporters) to be tipped off about, I'm quite sure you wouldn't have to contend with any accusations of note were you do so in a similar manner.

There's another chap on Twitter who has a number of local business connections and a financial head who I asked about this and he intimated he might blog about it soon. I don't know if he posts here, but if/when he has anything to say about the mortgage stuff I'll link it here.

Still nothing from the two chaps at the LET though which is a bit of a let down if they don't ask Venky's about it (no pun intended).

[Paul]

Fair point,as long as it is presented as such rather than scientific fact or incontrovertible proof..

I think the only points I have made on the subject of our new owners are either my own opinion or fact. I hope I presented this new mortgage or charge as fact - it is - without speculating excessively to the reasons.

However I have one point to emphasise, and I have said this twice already, this appears to be a NEW borrowing facility. As far as I can tell all previous borrowings have been secured on tangible assets, the ground, Brockhall etc. This new charge raises questions for me:

1. We never needed it before but within weeks of Venky's, who promised investment, we create a new facility which may or may not have been used. If Venky's are investing why would we need a new facility. I do accept it could just be to aid all sorts of day to day issues such as money transfers.

2. My other concern is TV income owing to Portsmouth was paid directly to the creditors. It appears Barclays may have the option to go straight to Sky et al and ask for the cash? I would not advocate the club trying to hold out on repaying debts but if times were hard and this cash simply went to Barclays without first going to BRFC it severly limits the club's ability to decide which creditors are paid and when.

3. If Barclays felt uncomfortable with the club, when in reality there may be no issue at all, perhaps Barclays could again simply call in the debt direct from the broadcasters?

This is not speculation it's thinking out loud and I hope people appreciate the difference.

[Exiled in Toronto]

One thought that occurs to me is that, with all these new contracts being issued like confetti, cash outflows go up immediately with no change to inflows. Am I right in thinking that next years Sky money is going up quite considerably due to the new foriegn rights deal? If so, then I would borrow in the short term to cover the extra wages if I knew next season's money was going to cover them.

Or it could be JimmyTimmy's scenario.

Either way, there was always going to be a new, riskier model of financing because no-one was going to pay 40 or 50 million for the priviledge of pumping in 5-10 million a year. If a Trust dedicated solely to carrying out our benefactor's wishes bales out, then summat is clearly wrong with the financial model already.

[TimmyJimmy]

fyi an example of securitising gate receipts can be seen on http://www.euromoney.com/Article/1050208/BackIssue/50151/Football-Securitization-Arsenal-kicks-off-public-ticket-receivables-deals.html

[Mercer]

People should be rightly concerned about this and as a Barclays' shareholder, I am only too delighted that this seems to be a 'belt and braces job'.

Alarmist certainly not, for those old enough, I would simply say remember Polly Peck (Asil Nadir) which collapsed with debts of around £1.3billion some 20 years ago. It was a bombshell - Nadir went from a City darling to a villain in almost the blink of an eye with all sorts of shenanigans going on.

In business and commerce (and Rovers is a business), anything can happen.

Like others on this MB, I flagged concerns about liquidity several weeks ago. Everyone knows that finances have been tight for years, however, in 3 months, we've seen some £6 or 7m commiited in loan fees and transfer fees, several new contracts put in place, millions spent on agents' fees (if today's article on this MB is correct) and Big Sam, Macca & JW paid-off at a cost that's unlikely to leave much change out of £2.5m or so.

It's simple really - who will pay the ferryman!?!?

[Balwer]

Totally correct Al, whatever the company a bank will always seek to secure all of the company debts against all available security, the mechanism you describe is known as a debenture and is made up a fixed part e.g. a legal charge on property and a floating part e.g. a charge against future stocks, cashflows etc. that can be crystalised at any particular moment. All firms do this, all banks do this so in of itself I see nothing strange about this transaction.

That said if it is taken together with other observations then I understand that some may be take it as evidence of the club treading a risky path. I offer no opinion on that. However if I was involved in brainstorming a new model to finance a football club then I could imagine a strategy that looked a little like the following.

The problem - I have limited funds yet football demands high levels of spending.

A possible solution (if I cared nothing about risk) - liquidate as many assets as I could as soon as I could and then bring forward all future cashflows. In the Rovers context you would need to start by looking up the players value on the Balance Sheet and then deduct what you paid for the club, I think Philip has those figures.

A possible mechanism - securitise all future gate receipts (I know of at least one club that has already done this) and all TV receipts and all advertising receipts (securitising an asset effectively means selling it today for some fraction of it’s lifetime value). When players are sold hold on to the transfers funds. Take all new players into the club on loan with only wages to pay. ‘Lease’ other players where available e.g. there are many mechanisms available but let’s just consider ‘buying’ a player and contracting a fixed price to sell the player back to the same club at some point in the future. The profit contracted to be received for that deal could then also be securitised.

The result - I get potentially good young players who hopefully play well and keep the fans are happy. This situation continues in perpetuity. The player value on the Balance Sheet dwindles towards zero. I become reliant on TV money and keeping a high success profile that will ensure the continuation of that flow. With a following wind I also get players through from the academy who I can sell to generate a bit extra cash.

Analysis - the club becomes an empty shell, it has no player asset value so nothing to sell in case of a breakup. All other trading cash inflows have already been sold so effectively there is no income. All the money pulled forward in this manner is spent on player wages and agents fees so no reserves are accumulated.

Risks - Should Sky go the same way as other subscription broadcasters or they lose broadcasting rights, should the owners hit hard times and need their money back, should sh!t happen then there is nothing to fall back on except the physical assets of the club e.g. in our Rovers context that would mean say Brockhall and Ewood. Then again these could already have been leveraged against a bank debenture.

I guess I might also have to replace some staff who might diagree with my strategy, but then I own the company right so I could do what I want.

For these reasons I personally would quickly dismiss this strategy but if you fancied taking a risk with a club then I suppose this could be one way of dragging all future monies onto the table to spend today. Spending it would look great to the supporters.

I think it’s scenarios like this that scare people and put them on watch to identify clues when/if they turn up in the public domain.

I’m not suggesting that this is happening at the Rovers of course, but if it did I would be very uneasy and may even be minded to post the odd warning on this board. There again we’d all have to contend with those who would accuse the poster of some sustained attack intended to undermine the club.

I hope Paul, Philip et al continue to investigate these things and are not put off posting items of interest.

Just a point, securitisation is not, effectively, selling an asset today. Securitisation is effectively the taking out of a loan by party A (Rovers), from party B (investors/lenders), whose repayments are generated by the future cash flows of an underlying asset via party C (in this case the ticket sales from we the fans). This is not what is happening with the Barclays Mortgage, which appears to be a common, garden variety debenture as you stated earlier. What it was taken for is something we can debate for eternity, but in my experience. companies don't willing give up a charge on any assets to a bank without getting something in return

Without going into the specifics of Asset Back Securitisation, the main thrust is that a Special Purpose Vehicle would need to be set up, to which the assets would be transferred. This then limits the recourse of the lenders to the original asset holder, in this case ourselves, in the event of a default.

The key to securitisation is the interest rates at which the repayments are made. Without going into the specifics of various tranches of debt, what would separate the Arsenal situation and our own would be the certainty of the cashflow backing the repayments. For a club like Arsenal which has a long waiting list on season tickets, there would be a high level of certainty I imagine, thus the likelihood of default is lower and consequently the interest rates would be reduced. For a club like ourselves it would be a lot harder to securitise the ticket revenue, as we do not even fill our ground and the certainty of future existence in the Premier League is not assured.

In my opinion it is highly unlikely that Rovers would be able to securitise any of it's assets. We do not have the volume, nor do we have the certainty of future cashflows that would make the deal financially viable.

[otto man]

fyi an example of securitising gate receipts can be seen on http://www.euromoney.com/Article/1050208/BackIssue/50151/Football-Securitization-Arsenal-kicks-off-public-ticket-receivables-deals.html

Did you just make that word up?

Edit. Just looked it up. Christ, the yanks are messing up our language!

It sounds lke something Cartman would say......"I'm gonna securitise these cheesy poofs"

[47er]

Did you just make that word up?

Edit. Just looked it up. Christ, the yanks are messing up our language!

It sounds lke something Cartman would say......"I'm gonna securitise these cheesy poofs"

Sounds like George Bush! Or have I misunderestimated him?

[TimmyJimmy]

Just a point, securitisation is not, effectively, selling an asset today. Securitisation is effectively the taking out of a loan by party A (Rovers), from party B (investors/lenders), whose repayments are generated by the future cash flows of an underlying asset via party C (in this case the ticket sales from we the fans). This is not what is happening with the Barclays Mortgage, which appears to be a common, garden variety debenture as you stated earlier. What it was taken for is something we can debate for eternity, but in my experience. companies don't willing give up a charge on any assets to a bank without getting something in return

Without going into the specifics of Asset Back Securitisation, the main thrust is that a Special Purpose Vehicle would need to be set up, to which the assets would be transferred. This then limits the recourse of the lenders to the original asset holder, in this case ourselves, in the event of a default.

The key to securitisation is the interest rates at which the repayments are made. Without going into the specifics of various tranches of debt, what would separate the Arsenal situation and our own would be the certainty of the cashflow backing the repayments. For a club like Arsenal which has a long waiting list on season tickets, there would be a high level of certainty I imagine, thus the likelihood of default is lower and consequently the interest rates would be reduced. For a club like ourselves it would be a lot harder to securitise the ticket revenue, as we do not even fill our ground and the certainty of future existence in the Premier League is not assured.

In my opinion it is highly unlikely that Rovers would be able to securitise any of it's assets. We do not have the volume, nor do we have the certainty of future cashflows that would make the deal financially viable.

Thanks for putting a little more flesh on the bone Balwer, good commentary.

Naturally I agree that securitisation and the Barclays mortgage are completely different things. I was just highlighting some of the tools of financial engineering available these days that can keep deals invisible and off the balance sheet. I used the word 'effectively' as I didn't want to bore people stiff with a bunch of unnecessary mechanics. More than happy to bore people of course, I've just finished stress testing the world's biggest CDO zzzzzzzzzzzzzzzzzzzzzzzzzzz generally though I'm with ottoman on this, I'd rather we'd been securitising cheesy poofs.

The Arsenal clip was just to show an example of it happening in football and not with some obscure credit card/mortgage/loan assets, it wasn't intended to say that this is what Rovers were doing right now, just a relevant example.

The thrust of the post was that just because you see cash on the table doesn't mean that it necessarily had to come from someones private wealth, it may be that someone is hocking the future. If Philip or Paul or others spot things that cause them to worry in this regard, or hear things from behind the scenes I'd rather that they post what they can on here and not be driven into silence because they cannot disclose their sources.

[thenodrog]

The thrust of the post was that just because you see cash on the table doesn't mean that it necessarily had to come from someones private wealth, it may be that someone is hocking the future. If Philip or Paul or others spot things that cause them to worry in this regard, or hear things from behind the scenes I'd rather that they post what they can on here and not be driven into silence because they cannot disclose their sources.

Exactly.

[philipl]

Huge thanks to timmyjimmy and balwer for explaining the mechanism which Mrs Desai might well have had in mind when she talked of leasing players in future.

Timmyjimmy mentioned using the value of the players on the balance sheet but this is unreliable because it is based on the historical cost accounting convention. To make reading the accounts more meaningful a recent International Accounting Standard FRS10 requires the directors to assess the market value of the players in their notes to the accounts and at Rovers the assessed value of players at 30 June was £49.5m compared with the balance sheet value of £16.3m. Commercial Banks don't lend generously against security valued on the strength of a "how long is a piece of string" kind of answer.

If the financing model timmyjimmy describes is the one to be adopted we can already see the burning car crash at the end of it- Sky's business model is likely to change beyond recognition through internet piracy and the landlady ruling at the ECJ, Venky's are a high growth, leveraged group trading on relatively small margins with a highly volatile share price for the publicly traded part so are vulnerable to adverse trading performance particularly as they discuss the Rovers every morning and not the chickens, whilst the spectre of relegation from the PL will never go away- when I ran the BBC predictor on this season, Everton went down!

The information is neither in the public domain nor circulating in private within my earshot to be able to answer timmyjimmy's question about what exactly is going on. I suspect that as in much else during the past three months, there has been a lot of changing of minds in Pune and differences of approach being advocated over the financing of the Rovers venture.

Answering two specific points raised- I haven't gone back to all annual reports since 2001 but I will say I am extremely confident that Rovers income from the media rights has never previously been put at risk of bank siezure.

- the person calling me out for (in)consistency on the Daily Mail article either didn't read or didn't understand what I wrote. I said the Daily Mail article was flat out wrong when it said Venky's don't use debt and flat out wrong when they said they don't use third party equity involvement and posted a link to the relevant page of their of the Venky's India published accounts which completely contradicted that Daily Mail report. The "we don't use debt" statement is further undermined by Rovers taking about bank security and Venky's London taking out bank security.

[deftangel]

- the person calling me out for (in)consistency on the Daily Mail article either didn't read or didn't understand what I wrote. I said the Daily Mail article was flat out wrong when it said Venky's don't use debt and flat out wrong when they said they don't use third party equity involvement and posted a link to the relevant page of their of the Venky's India published accounts which completely contradicted that Daily Mail report. The "we don't use debt" statement is further undermined by Rovers taking about bank security and Venky's London taking out bank security.

I understood it perfectly. The exclamation mark & smiley at the end would have indicated the mischievous nature of the statement but you appear to have missed that along with my name

It would seem to me that establishing whether this charge is temporary or more likely to be re-established for future revenue will be instructive. We can at least verify that publicly at some point in the future but it would help if some wag could at least ask the question of Venky's to see what they say.

[Exiled in Toronto]

So, we have established that there is a way the club might be run that might be risky. Really? I thought running an indebted company that loses money was completely risk free. Well that's that then, they must be doing it. But what's wrong with the tried and trusted old risky ways of, say, burning down the stand and claiming the insurance a la Donacster Rovers? Have the Venky's come out and denied that yet? I think we should be told.

And no, I don't have my head in the sand. I just don't know why those in the know hinting and insinuating stuff on here is in anyway helpful. Persuading me and others to join in the moaning on a messageboard, just talking to each other, isn't the kind of stuff that brought down Mubarak really.

[OJRovers]

I'm glad that Venky's are looking at ways to raise finance for the club

Its healthy for businesses to run with a certain level of debt, for tax and especially given that we have assets (the future income) on which to add security, making the debt cheaper.

Maybe if the Walker Trust had thought to be more innovative with the club back when they refused more funding to Hughes, we could've gone on to greater things with that team.

[patrickvalery]

At great risk of exposing myself as an uneducated buffoon i am going to post on this subject. All this financal talk goes straight over my head. I saw the thread pop up days ago and simply thought someone was having a moan about the repayments on their home! That gives you an insight as to my financial credentials!

I really need this stuff put into infant like language for me to grasp it. Example being, if Peter lends Paul 3 apples and Peter keeps 4 of Paul's Tonka Trucks as a deposit, how many sherbet dips will Paul's mum have to buy Peter before she can expect a slice of apple pie? Or something like that.

Are we saying, in simplest terms, that Rovers have borrowed next years TV money early? The security being Ewood, Brockhall etc...? Are we also saying that due to our poor showing in attendance records and numerical fan support, the interest rate will likely be pretty hefty? Are we also saying what has been lent has already been spent on RSC, JJ, Rochina, Formica and new contracts? Are we also saying that large amounts of this borrowed cash has been spent on agents fees?

Does this mean we are essentially in a situation where, like many people, after all our expenses (bills) have been paid, we are approaching our limits of debt (overdraft in everyday terms)? When pay day comes along (sky money) it clears the debt and we are back to square one. No money in the bank and further expenses mean we eat back into our debt?

Doesn't this mean we rely heavily on the team performing well and gaining prize money to earn more than we have borrowed? If we somehow pull off a miracle next year and make CL, UEFA would not allow us to participate due to levels of debt. Is this right?

Also, loaning players and paying them extortionate sums in wages is surely counter productive. If we are going to be indebted to Barcalys to the tune of say £50m, surely its better to actually purchase something. Something with a sell on value.

My apologies again for the level this post is pitched at. I struggle with this side of life immensley. If someone would be so kind as to break this don for me i'd very much appreciate it.

[67splitscreen]

Paul has ten apples which usually sees him through to the new harvest.

A few of those apples have already been bitten into so he may need more, Paul knows his mum has a big stash but she does not want to use them as she has other commitments.

Now Peter has a sack full, he's prepared to lend Paul more than enough to see him threw to the harvest but in return he wants all of the next harvest and his Tonka toys and Corgi collection as security.

As yet Paul may well be able to survive, Mummy is taking no chances and keeping the stash safe, while Peter as an agreement with Paul but nothing borrowed from him yet means it's a worthless piece of paper until he does.

Don't sweat the bells will ring loud and clear if Paul runs out of apples.