[Archived] New Mortgage

[dave birch]

Of course some business use these facilities all the time but as highlighted by John normally they have these for a reason. But we will never know why Rovers now have this debt saddled to them. On the other side of the coin, we both know that is Rovers will currently sitting pretty in the top 10 this would not be news at all.

But with Kean in charge I fear the only way is down. Even if we stay up this season he has lost the faith of the fans. BUT this thread is not about Kean its about Venkys and their financial management of Rovers

You are 100% correct in saying most of these things have review or end dates. It was Venkys who forgot/did not know that their last arrangement ran out that lead to Barclay's freezing the Phil Jones money.

I can't disagree with anything you've said, apart from the fact that the Rovers probably did have a similar facility prior to the Venky's takeover.

The difference is, the faith we have in the owners to run the club in a capable manner. That is the main thing that has changed, and I can't find anything to make me feel confident that things are back on track.

[Grez]

Two questions:

1. Prior to the venkys, did rovers have a mortgage? I know they had a loan and an overdraft if I'm not mistaken.

2. has the world gone through the worst credit crisis it's ever known? I think just about every business has had the bank manager calling as they need their money back.

The reason for the hysteria is probably because everyone assumed that the walkers would support us if we got relegated - it seems that faith in venkys is missing

[BangkokRover]

The reason for the hysteria is probably because everyone assumed that the walkers would support us if we got relegated - it seems that faith in venkys is missing

If Venkys will not remove a manager who as things currently stand will take us down why should anyone have any faith in Venkys

[Sparky Marky]

Trying to do everything on the cheap... We can't even afford to sack him...i can see mis-accounting, points deductions and eventually the end.

[Kamy100]

I can't disagree with anything you've said, apart from the fact that the Rovers probably did have a similar facility prior to the Venky's takeover.

The difference is, the faith we have in the owners to run the club in a capable manner. That is the main thing that has changed, and I can't find anything to make me feel confident that things are back on track.

Thanks for the comments Dave. I will admit straight away that I am no finance expert.

The people who I have shown it to have said the following:

* Very wierd that Barclays have asked for the level of gurantees which suggests that they don't either trust them or that the amount asked for is signficantly more than the previous amount

* The loan coming through corrolates with spending, ie we were after George John and suddenly we switched to Scott Dann

* One of the people who I havew talked to has said that this kind of business model is a huge risk for a club like Blackburn Rovers, big clubs can do something similar because they have a world wide income whereas Rovers don't.

Without knowing exactly what the figures are it is hard to judge exactly what is going on but I will repeat that it is highly unusual according to people who know about this kinda stuff for a bank to ask for the level of guarantees that Barclays have asked for.

Like I said in my initial post I am sure the likes of Philip when they get time to go through this document will be able to give a more informed analysis.

[BangkokRover]

* Very wierd that Barclays have asked for the level of gurantees which suggests that they don't either trust them or that the amount asked for is signficantly more than the previous amount

Of course nothing to do with the lapse of the last overdraft and thus Barclay's freezing the first payment from Man U for Jones.

[Kamy100]

Two questions:

1. Prior to the venkys, did rovers have a mortgage? I know they had a loan and an overdraft if I'm not mistaken.

They had a overdraft facility that went upto £18 million. The Trust/JW were very careful with the level of debt and would only spend what the club could afford, for example big sales such as Roque Santa Cruz, some of the money went to reduce the debt.

As you say, fans could always be assured with the Trust that if Rovers got relegated they would ensure that the club survived, at the momnent that level of trust does not exist with the Venky's. I have seen documents over the last month or so which prove that Venky's do have a significant fortune but at the moment it does not appear that they are willing to spend that on the club, of course it is entirely possible that if Rovers got relegated that the owners would dip into their own money to finance the club, but would you trust them to do that?

[broadsword]

Kamy said that there's a new mortgage, no details attached. That's WHY I asked for more info.

However, facilities such as this do have a time limit, ie, they have to be renegotiated every x number of years.

If I were (still) a banker then I'd make certain that the facility had to be renewed every year, and it's significant that it appears to coincide with the commencement of the football season in England.

Couldn't disagree with you more strongly.

If a business is taking a loan out to finance a new project which will reap future income, that's fine. That's what debt finance is there for.

However, I fear this mortgage is being taken out to plug a hole in the balance sheet. That is very uncool, and makes me fearful. The club do not have sufficient assets provided for by Venky's to be self-sufficient. You cannot run any business on credit in perpetuity, the debt just gets bigger and bigger until the bailiffs are called in.

[BangkokRover]

They had a overdraft facility that went upto £18 million.

The same overdraft that we have been told time and time again it has been paid off but all they did was transfer it from the Trust to the Venkys London Ltd.

The whole thing is a joke and the sooner this fan is brought on the board the better. Sorry I don't know his name Ian but he is also supposed to have a financial back ground. I hope he will be able to explain to fellow board members what is going on.

[AllRoverAsia]

Got access to documents last night which confirm that Venky's took out a new mortgage on 25th August 2011 with Barclays. In order to get this mortgage they gave ALL income for the foreseeable future as guarantee. This now explains the spending at the end of the transfer window. The big problem is that if Rovers are relegated then that income will not be as high as being in the Premier League so I presume Barclays would call in the mortgage. Also possibly explains why they are not sacking Kean as that would cost money.

It does appear on the face of things that Venky's are not putting in their own money and are instead using credit to finance spending.

Document is with the likes of Philip so hopefully they can give more informed analysis soon.

They need to fund their chicken shops in UK or am I being naive

[glen9mullan]

Got access to documents last night which confirm that Venky's took out a new mortgage on 25th August 2011 with Barclays. In order to get this mortgage they gave ALL income for the foreseeable future as guarantee. This now explains the spending at the end of the transfer window. The big problem is that if Rovers are relegated then that income will not be as high as being in the Premier League so I presume Barclays would call in the mortgage. Also possibly explains why they are not sacking Kean as that would cost money.

It does appear on the face of things that Venky's are not putting in their own money and are instead using credit to finance spending.

Document is with the likes of Philip so hopefully they can give more informed analysis soon.

Which is the point I raised with you a few weeks ago Kamy RE the level of debt and no direct cash from Venkys. The debt Level has almost doubled in 12 months, They can run but they can't hide

[Stuart]

They had a overdraft facility that went upto £18 million. The Trust/JW were very careful with the level of debt and would only spend what the club could afford, for example big sales such as Roque Santa Cruz, some of the money went to reduce the debt.

As you say, fans could always be assured with the Trust that if Rovers got relegated they would ensure that the club survived, at the momnent that level of trust does not exist with the Venky's. I have seen documents over the last month or so which prove that Venky's do have a significant fortune but at the moment it does not appear that they are willing to spend that on the club, of course it is entirely possible that if Rovers got relegated that the owners would dip into their own money to finance the club, but would you trust them to do that?

It's a lot easier to stay in this League than get promoted into it, and arguably a lot cheaper. So I'd say - no.

[dave birch]

Couldn't disagree with you more strongly.

If a business is taking a loan out to finance a new project which will reap future income, that's fine. That's what debt finance is there for.

However, I fear this mortgage is being taken out to plug a hole in the balance sheet. That is very uncool, and makes me fearful. The club do not have sufficient assets provided for by Venky's to be self-sufficient. You cannot run any business on credit in perpetuity, the debt just gets bigger and bigger until the bailiffs are called in.

Bryan, any hole plugged by this loan would be "unplugged" as it would also have to be shown on any balance sheet.

Managing debt is a different thing altogether.

Consider this: if you were a bank, would you lend to an organisation that was considered to be a poor bet?

Lenders don't want to lend to poor prospects, they'd rather get their money each month and not have to bother with litigation to get their money back.

That leads me to the conclusion that the bankers think that the Rovers are a safe bet (at the interest rate they are being charged) otherwise they wouldn't have handed out the facility.

[BangkokRover]

It's a lot easier to stay in this League than get promoted into it, and arguably a lot cheaper. So I'd say - no.

I personally remember last time Rovers were in the Chumpionship with my gf and her son at the time we went to to see Rovers play Port Vale at Ewood. I was confident that Rovers would win and by a few goals. But Vale turned up parked the bus and it was a shocking game. Later in the season I saw Rovers away at Barnsley although their fans chant and sing that watching Barnsley is like watching Brazil. It was more like Wimbledon than the Samaba boys

Bryan, any hole plugged by this loan would be "unplugged" as it would also have to be shown on any balance sheet.

Managing debt is a different thing altogether.

Consider this: if you were a bank, would you lend to an organisation that was considered to be a poor bet?

Lenders don't want to lend to poor prospects, they'd rather get their money each month and not have to bother with litigation to get their money back.

That leads me to the conclusion that the bankers think that the Rovers are a safe bet (at the interest rate they are being charged) otherwise they wouldn't have handed out the facility.

Or the bank have taken control of all income of the club. So in effect as soon as the payments are not met the bank takes control of the club. Which as I understand is what happened at Liverpool. Gillet and Hicks failed to meet payment deadlines and RBS sold the club.

[den]

That leads me to the conclusion that the bankers think that the Rovers are a safe bet (at the interest rate they are being charged) otherwise they wouldn't have handed out the facility.

Doesn't it simply mean that the banks think rovers income is a safe bet Dave? They wouldn't give two hoots how the clubs fortunes were to pan out, outside their income.

[broadsword]

Bryan, any hole plugged by this loan would be "unplugged" as it would also have to be shown on any balance sheet.

Managing debt is a different thing altogether.

Consider this: if you were a bank, would you lend to an organisation that was considered to be a poor bet?

Lenders don't want to lend to poor prospects, they'd rather get their money each month and not have to bother with litigation to get their money back.

That leads me to the conclusion that the bankers think that the Rovers are a safe bet (at the interest rate they are being charged) otherwise they wouldn't have handed out the facility.

We're reliant on debt for our income, that's what I mean by plugging a hole. It might be shown on the balance sheet, but that isn't the point.

We're not regarded as a safe bet because the terms (against all future foreseeable income) are quite onerous.

[perthblue02]

I just don't buy this they can't afford to sack kean argument ,

If rovers are relegated they will get a 12 million a year parachute payment for four years , compare this to a 17th place finish = 3.2 million prize money, 14.6 million share tv money + 499,000 per game facility (live tv game fees, of which each team gets at least x 10)+ 10.1m from overseas television rights plus another £2m from sponsorship and licensing deals.

so unless Kean's payoff is in the region of 20 million , what is the reason they are gambling losing at least 20 million next season on just premier league + TV fees alone

[BangkokRover]

Doesn't it simply mean that the banks think rovers income is a safe bet Dave? They wouldn't give two hoots how the clubs fortunes were to pan out, outside their income.

100% correct

[Hughesy]

Its normal business practice for a football club to have this facility....I would imagine only Man City dont have one.

The last one was set up as a short term agreement when Venkys took over, that expired so they took out a new one.

Banks/ and specifically Barclays would not give out finance facilities in todays climate if they didnt have confidence in who they were lending too. Didnt Everton fail to get a new deal with them?

Send me a copy of the docs Kamy and il get a financial expert to look over them, he will give me a non biased view of it. Also where did you get the copies of this document from, isnt it confidential?

[dave birch]

Doesn't it simply mean that the banks think rovers income is a safe bet Dave? They wouldn't give two hoots how the clubs fortunes were to pan out, outside their income.

Den, the bank wants to remain a banker, it doesn't want to own or run a football club. It's main interest would be to be able to get its money back as quickly as possible.

It's simply not in their interests to lend money only to see it tied up for a long period with a possibility of a reduced return of capital should the club go into receivership.

Remember, I'm not one that wants Kean, or the Venkys, to stay a day longer that they should, but this mortgage is not unusual. It's how it's managed that concerns me, and how open our owners are about things surrounding it. Remember, previous owners have had such facilities, but we were doing alright then, we had less worries about performance etc. it's down to not knowing our owners or their motives.

[philipl]

I have a copy of the document if anyone wants one. It is 13 pages almost deliberatetly designed to confuse the reader with no specific numbers. there is a vast list of exceptions which currently are meaningless because all broadcast revenues come through the central agreement with the Premier League.

Having slept on it- my reading is that effectively the Premier League income for 2011/2 and all the Parachute payments are pledged to Barclays as security.

This does not mean that Rovers have a £100m overdraft (the size of the mortgage security).

There are rumours that Rovers owe over £40m now but I find that number all but incredible.

The transfer fees ghave been a net zero, the club used to lose just £5m on an operating basis (make that £9m because of loss of League position prize money) and on 19 November 2010 Venky's contracted to remove the existing debts and inject a new £15m into the club.

If we are £40m in the red with the bank, Venky's have somehow managed to turn annual running costs of £60m into something around £110m in 12 short months.

Not even they could do that could they?

[Majiball]

If all our agents fees are at the rate of four times the fee ala Rochina then 40M debt is surely achievable. Were we also not told Formica's agent fee was a figure that we wouldn't believe.

[BangkokRover]

I have a copy of the document if anyone wants one. It is 13 pages almost deliberatetly designed to confuse the reader with no specific numbers. there is a vast list of exceptions which currently are meaningless because all broadcast revenues come through the central agreement with the Premier League.

Having slept on it- my reading is that effectively the Premier League income for 2011/2 and all the Parachute payments are pledged to Barclays as security.

This does not mean that Rovers have a £100m overdraft (the size of the mortgage security).

There are rumours that Rovers owe over £40m now but I find that number all but incredible.

The transfer fees ghave been a net zero, the club used to lose just £5m on an operating basis (make that £9m because of loss of League position prize money) and on 19 November 2010 Venky's contracted to remove the existing debts and inject a new £15m into the club.

If we are £40m in the red with the bank, Venky's have somehow managed to turn annual running costs of £60m into something around £110m in 12 short months.

Not even they could do that could they?

Never attribute to malice that which is adequately explained by stupidity.

[RibbleValleyRover]

They can't afford to sack Kean? Surely the cost of relegation will cost a hell of a lot more, especially with this new mortgage requiring premier league money to pay for it?

[BangkokRover]

They can't afford to sack Kean? Surely the cost of relegation will cost a hell of a lot more, especially with this new mortgage requiring premier league money to pay for it?

The mortgage requires future income not EPL money.