[Archived] Venky's willing to sell?

[den]

Have you ever dealt with a CEO at a large company in a professional setting? They listen, but I have never known them to be dictated to and if they want to do something their way they will do it, every time.

Who said it's the fans' fault for saying so? I'm not even sure what you're referring to?

She isn't dealing with a large company here Miker, she's dealing with the fans of a football club. Fans who she needs if she wants to succeed. Ignore them and continue doing things the current way in spite of all advice - not just from fans - will see those fans leaving in droves. To support her in those situations is just plain arguing for the sake of it. It's a no brainer for me. The club should always communicate with the supporters. Running away because she's been told a few home truths is pathetic.

[Exiled in Toronto]

She isn't dealing with a large company here Miker, she's dealing with the fans of a football club. Fans who she needs if she wants to succeed. Ignore them and continue doing things the current way in spite of all advice - not just from fans - will see those fans leaving in droves. To support her in those situations is just plain arguing for the sake of it. It's a no brainer for me. The club should always communicate with the supporters. Running away because she's been told a few home truths is pathetic.

She's not dealing with the fans and never will. All well and good making values judgements in the context of what we consider to be normal people, but this one is a) very wealthy, from a different culture, c) runs a huge business and d)lived her life in gilded palaces, so she's probably not going to see the world like the chaps in the snug at The Brown Cow do.

[Mattyblue]

Then we have a problem EiT.

[OJRovers]

Exactly. Presenting them with ideas is one thing, but following it with a list of their mistakes, criticisms and swearing at them will achieve absolutely nothing. If I had been called some of the names being banded about I wouldn't even bother to listen. Definitely not the way to go.

Den's last remark is tongue in cheek, Miker

Agreed about them not listening to the abuse.

But i'm sure that Ian/Ian have been making their points in a professional way, with the aim to help not critisise, yet they are now being met with silence.

The Raos/Desai's have been shown up for what they are; fortunate heirs to their family business who have very little idea how to set-up and run a company for themselves.

[EgyptianPete]

Agreed about them not listening to the abuse.

But i'm sure that Ian/Ian have been making their points in a professional way, with the aim to help not critisise, yet they are now being met with silence.

The Raos/Desai's have been shown up for what they are; fortunate heirs to their family business who have very little idea how to set-up and run a company for themselves.

That could be said for some of the Walkers, very fortunate that Jack was very very savvy and a good eye for business, in the real world they would have nothing, it was/has been given to them on a plate, much like the Rao's

[LeChuck]

I've always wondered if there is room for attracting outside investment purely for the purchasing of players, without treading on the "3rd party ownership rule".

For example...let's say Ian Battersby was able to take over the club, and had business friends that had significant money to invest, but didn't want to have it tied up in the running of a football club. Excluding transfer fees, could the club be run without any outside investment? You would hope so.

So what would we do about buying players? Well let's say we had a strong management and scouting network in place, like under Hughes. Could we approach these people with money to invest and say "we've scouted a great young talent. We need £4 million to bring him here, but we expect he will quickly increase in value. If you finance the deal, we will give you 50% of any profit made selling him".

So the player would be entirely contracted to Blackburn Rovers, but with a separate contract in place that entitles the investor to £4 million + 50% of anything over when they are sold. If someone had done this during the Hughes era, with the likes of Santa Cruz, Bentley, Samba, Bellamy, Warnock etc., they would have made a lot of money in a relatively short period of time.

Obviously there would be scope outside of this for the club to bring in loans/free transfers to supplement these "investment" signings, providing the club was within its trading budget. Perhaps more every so often when a Damien Duff/Phil Jones comes through the academy and gives the club an unexpected windfall.

Would it be possible to have investors that way? With the right management they could stand to make a fair bit of money, without being tied to the club and it's expenditure and all the risks that are involved. Nobody will ever make money from investments in football clubs in terms of overall profits, but it's definitely possible to make profits in the buying and selling of individual players.

Obviously there is still a risk in hoping you will get the money back for players after you have bought them, but we have shown time and again that you are likely to make money than you spend if you choose players wisely.

[OJRovers]

That could be said for some of the Walkers, very fortunate that Jack was very very savvy and a good eye for business, in the real world they would have nothing, it was/has been given to them on a plate, much like the Rao's

The difference with the Walkers is that the family knew they couldn't do it themselves so brought in the other Trustees with lots of experience and also had the sense to let JW/TF etc run the club.

[EgyptianPete]

The difference with the Walkers is that the family knew they couldn't do it themselves so brought in the other Trustees with lots of experience and also had the sense to let JW/TF etc run the club.

Yes I know that, I was just making the comparison of the two families in the context of the previous post, i.e. both sets of children given wealth they would not probably have had.

No slight on the senior walkers.

[Exiled in Toronto]

Yes I know that, I was just making the comparison of the two families in the context of the previous post, i.e. both sets of children given wealth they would not probably have had.

No slight on the senior walkers.

Maybe I'm mis-remembering, but hasn't the Venky business epxanded greatly under the children? The father died quite some time ago. To suggest they are playboys/girls running their father's business into the ground is wide of the mark.

[Steve Moss]

Venkys culture in my opinion means they will not allow themselves to be dictated to. Which is why they have not and will not take any notice of any protests. As an example, one aim of the protests were communication form venkys.

For awhile, venkys were communicating - ok coming out with stupid comments, but communicating all the same. Then when the protest organisors mentioned they wanted communication from venkys. Venkys stopped all together.

They will do things their way, it is their nature. This is obvious for awhile. Another reason why this proposal from Daniel, Wild and BRAG will fall down. If venkys wanted to sell the club. The last people they would consider selling too, is anybody, group or individual who has protested against them. Again their nature.

The idiotic policies of the Venkys pre-dated the protests. By a considerable margin to. Linking Venkys latest round of stupidity with the protests is wrong, IMO.

The protests are possibly the reasons they no longer attend matches. But they were only occasional attendees anyway.

And while she refuses to do the things that will gain her respect, like hire a decent CEO and let him and the board get on with running things here, appoint a decent manager and let him run the team answering to the board, etc then she will get nothing but contempt from fans. So we are at stand off and I don't see fans gving in either - they'll just not bother to attend.

+1

Then they are in the wrong business. English football fans/media and Indian business culture are polar opposites, and if Desai is after deference, she won't find it.

+1

The Raos/Desai's have been shown up for what they are; fortunate heirs to their family business who have very little idea how to set-up and run a company for themselves.

+1

[LeChuck]

+1

+1

+1

Thanks for highlighting the need for the +/- system to return.

[bob fleming]

Thanks for highlighting the need for the +/- system to return.

+1

[Steve Moss]

Thanks for highlighting the need for the +/- system to return.

+1

[den]

Then we have a problem EiT.

+1

[PAFELL]

The idiotic policies of the Venkys pre-dated the protests. By a considerable margin to. Linking Venkys latest round of stupidity with the protests is wrong, IMO.

The protests are possibly the reasons they no longer attend matches. But they were only occasional attendees anyway.

+1

+1

+1

No doubt the daft policies did happen before protests. But much of that I put down to a certain agent and advisors at the time. But the sad reality is venkys have dug their heals in. They will not be dictated to by anybody.

[yoda]

No doubt the daft policies did happen before protests. But much of that I put down to a certain agent and advisors at the time. But the sad reality is venkys have dug their heals in. They will not be dictated to by anybody.

I think Barclays would disagree with that

[Fife Rover]

+1

+1

[beatrix]

No doubt the daft policies did happen before protests. But much of that I put down to a certain agent and advisors at the time. But the sad reality is venkys have dug their heals in. They will not be dictated to by anybody.

Nobody including the Raos can control public opinion, if the paying public ie the fans decide to protest that is their right ( free speech )

If and when we are relegated or produce another poor performance at home for example, then like the reaction at the bolton game some of the crowd

will vent their feelings. There is nothing anybody can do to control it, the raos might not like it but they never attend anyway! They could however

ban fans from the games in case they protest but it wouldnt be much of a spectacle with only away fans present, they also might start chanting who knows.

[Baz]

Have you ever dealt with a CEO at a large company in a professional setting? They listen, but I have never known them to be dictated to and if they want to do something their way they will do it, every time.

Who said it's the fans' fault for saying so? I'm not even sure what you're referring to?

I think you are mistaking fans for employees and not customers.

Would a competent CEO react and maintain dialogue if a large % of their customers were very upset at the product on offer, and are likely to go spend their money elsewhere?

[Daniel Louis Grabko (Dan)]

1329305619[/url]' post='1226026']

Dan - to help clarify, if you look at business related organisations in India eg, Economic Times, Equity Bulls, Hindu Business Line, they all report financials, including those for Venky's, in Rs crores. There is no way three 'distinguished' bodies would get it wrong. The only explanation I can offer is the the audited accounts have been labelled incorrectly as Lacs when in fact they are Lakhs. I know that fact is quite startling but I believe it's correct !

You are a 'Finance man' and will know that the credibility of any piece of work is dependent upon getting the 'basics' right.

If you look at their Adjusted PAT for (Rs crores) over the last 5 years it goes 70, 52, 18, 24 & 10. As Philipl said, their share of this is 52% which means they have broadly 'earned' £11m over 5 years. This is why, IMO, they are not going to walk away from £23m+, come hell or high water, they will want that back.

Yeah, and it seems that the credibility of VH Group's audited financial statements is not to be counted on which is not only startling, but appalling. They present the P&L in Lacs and the Balance Sheet in Lakhs, which as I have stated is the main reason I was convinced that there mist have been that difference. If there is that basic an oversight in the published audited accounts, that is scandalous from my perspective as a CFO. However, I want to thank you for being patient with me on this little side excursion. You planted enough doubt in me now that I don't know what to think, but I am certainly not impressed. Why did the Economic Times quote the £1 billion turnover and £100m profit number themselves then? Very suspect. It is the only source I've seen from within India though that shows the number in £'s wothut having to do the conversion yourself though. See? Conflicting evidence everywhere - How the hell could an investor get reliable info there? I guess it may also be a cultural thing as well.

I appreciate the point being made about the 52% but they are not using their own private money or identities as the legal owners of the Club. Rovers officially and legally are part of the VH Group 'empire' so the 52% doesn't really have any relevance. But I see your point anyway. If anything it just shows that they really do have to appease their shareholders and pressue from them must be a real consideration.

However, ironically, the numbers you highlighted have shown the amazing growth that Venkys have experienced in a very short time period of time. The only reason I bring this up is because there have been people slating the Rao's for just having inherited their empire and not have the ability to run and grow a business themselves. These numbers do seem to contradict that view, and in my opinion show that at least one of them understands business, and for that reason would not do a cut and run asset strip - a much more likely reaction would be to stick it out in an attempt to get that back rather than sell cheaply. That doesn't seem to support my view that the Clib could be had on the cheap, but it also depends a lot on demand, and of course if Venkys are looking for an exit strategy. I of course admit no one knows anything!

1329327735[/url]' post='1226139']

I think you are mistaking fans for employees and not customers.

Would a competent CEO react and maintain dialogue if a large % of their customers were very upset at the product on offer, and are likely to go spend their money elsewhere?

Post of the day at least in this thread! Spot on Baz!

[darrenrover]

Yeah, and it seems that the credibility of VH Group's audited financial statements is not to be counted on which is not only startling, but appalling. They present the P&L in Lacs and the Balance Sheet in Lakhs, which as I have stated is the main reason I was convinced that there mist have been that difference. If there is that basic an oversight in the published audited accounts, that is scandalous from my perspective as a CFO. However, I want to thank you for being patient with me on this little side excursion. You planted enough doubt in me now that I don't know what to think, but I am certainly not impressed. Why did the Economic Times quote the £1 billion turnover and £100m profit number themselves then? Very suspect. It is the only source I've seen from within India though that shows the number in £'s wothut having to do the conversion yourself though. See? Conflicting evidence everywhere - How the hell could an investor get reliable info there? I guess it may also be a cultural thing as well.

I appreciate the point being made about the 52% but they are not using their own private money or identities as the legal owners of the Club. Rovers officially and legally are part of the VH Group 'empire' so the 52% doesn't really have any relevance. But I see your point anyway. If anything it just shows that they really do have to appease their shareholders and pressue from them must be a real consideration.

However, ironically, the numbers you highlighted have shown the amazing growth that Venkys have experienced in a very short time period of time. The only reason I bring this up is because there have been people slating the Rao's for just having inherited their empire and not have the ability to run and grow a business themselves. These numbers do seem to contradict that view, and in my opinion show that at least one of them understands business, and for that reason would not do a cut and run asset strip - a much more likely reaction would be to stick it out in an attempt to get that back rather than sell cheaply. That doesn't seem to support my view that the Clib could be had on the cheap, but it also depends a lot on demand, and of course if Venkys are looking for an exit strategy. I of course admit no one knows anything!

Post of the day at least in this thread! Spot on Baz!

Pafell and Glen not Glen

Having read through this thread in its entirity and others, I would like to say I am with you both and endorse most of your comments for what it's worth.

That said, I also believe that Daniel and Wayne are acting in best intentions but being realistic it ain't going to happen IMO.

I cannot really understand the lengthy debates regarding the status of The Venky organisation, its worth, value in rupees, US dollars, £ sterling or whatever currency's relevance. What is relevant is for whatever reason(and I do not think we have helped our own cause)little money has been forthcoming to BRFC.

I also think that we all need to take a reality check regarding the paying customer scenario and it's influence. It's not right I know and truly should have a massive influence but unfortunately in the great scheme of things it doesn't.

If we have 15,000 season ticket holders paying an average assumed price of £500 per ticket (I think this is top side) generates an annual income of £7.5 million against a current annual wage bill of £43 million plus.

Its a big ask of any benefactor, never mind a woman scorned. IMO food for thought.

[SIMON GARNERS 194]

Will someone be good enough to wake everyone up when the Rao's finally decide to get down from their high horse, which is hidden in a deep dark cave in darkest Pune and actually commmunicate via speech...

[roversmum]

I think you are mistaking fans for employees and not customers.

Would a competent CEO react and maintain dialogue if a large % of their customers were very upset at the product on offer, and are likely to go spend their money elsewhere?

Perhaps that's part of the trouble, Baz. Have they ever had to deal with a large group of dissatisfied customers?

I cannot really understand the lengthy debates regarding the status of The Venky organisation, its worth, value in rupees, US dollars, £ sterling or whatever currency's relevance. What is relevant is for whatever reason(and I do not think we have helped our own cause)little money has been forthcoming to BRFC.

I also think that we all need to take a reality check regarding the paying customer scenario and it's influence. It's not right I know and truly should have a massive influence but unfortunately in the great scheme of things it doesn't.

If we have 15,000 season ticket holders paying an average assumed price of £500 per ticket (I think this is top side) generates an annual income of £7.5 million against a current annual wage bill of £43 million plus.

Its a big ask of any benefactor, never mind a woman scorned. IMO food for thought.

I was just about to post something similar.

[darrenrover]

Perhaps that's part of the trouble, Baz. Have they ever had to deal with a large group of dissatisfied customers?

I was just about to post something similar.

Rovers Mum

Thanks.

Although my posts are always well informed and with best intentions, I usually get derided for whatever reason. As a consequence I shake my head and then don't bother for a while because life's generally stressful enough without making matters worse.

But the bug as is Rovers always gets the better of me. I'm sure you know how I feel.

[Daniel Louis Grabko (Dan)]

1329270916[/url]' post='1225967']

Daniel, according to your research what would you expect our operating loss to be by the end of the season (before and after player trading) and what figures would you expect our debt to be at?

Wow, that really puts me on the spot, making predictions now, am I?

In reality there is a lot to consider. Here's my take:

Before player trading:

Turnover:

We are going to have less revenue in every major category. Unless by some miracle we finish 15th this year, we will lose anywhere from £700k to £3.5m due loss of league position merit pay income. We will most certainly have lesser income in commercial areas due to a lack of a paying shirt sponsor, and less corporate catering and merchandising sales, but putting an exact value on that is difficult at the moment with no inside information. Matchday attendances are down over 10% (22,000 this year compared to 25,000 in 2011) which translates to at least a loss of £500k if not a bit more. So we are looking at ordinary turnover that is anywhere from £1.5 - £5m less than 2011, which was £57.5m.

Expenses:

First the wage bill - During the year we have signed Anderson, Ribiero, Goodwillie, Yakubu, Dann, Vukevic, Petrovic, Slew, Orr, Modeste and Payne to add to the wage bill. We have sold or paid off Roberts, Andrews, Emerton, Nelsen, Kalinic, Jones. (Did I miss anyone??) So 10 players in, and 6 out. Removing commentary about the quality in and out, we probably have 2 players who came in on more than £25k/wk or more and 5 who left. This would equate to over £3-5m saved, roughly speaking. Add back the 7 net player gain and if they are on an average £10k/wk then you add back £3.5m and have maybe saved £1m. I may be being a little generous here as well. The rest of the other operating expenses are depreciation, audit and tax services fees, amd lease payments. These we can assume to be essentially consistent year to year for the purposes of this exercise.

Interest & Debt

Now it is important to remember that only interest payments make it to the P&L statement. Capital balance payments are balance sheet items, decreasing cash and debt balances, and can be more easily talked about on a cash flow statement. We have reason to believe that the bank debt will be decreased this year significantly, due to reports that Barclays payment covenants have already been broken and they want that money. The £2m payment allegedly made already would be to the capital balance, as interest payments are ongoing. According to the accounts last year, Barclays loan is broken up into an overdraft facility (read line of credit attached to their bank account) and and actual loan, but these two pieces appear to have the same interest rates, which is reported to be LIBOR plus 3.25% or about 4.25% on average. This can be checked by dividing last year's interest expense by the ending debt balance (£635k/£21m) which turns out to be 3.04% - so it looks like the debt wasn't £21m the whole year, but increased, which is true. At 2010-06-30, the bank debt was only £14.2m. So a straight average debt balance is around £17m and interest on that at the reported rate gets you right in the ballpark there, within £50k of the recorded £635k. Now, with the £2m already paid and a further £8m expected to be paid before the end of the fiscal year, or season, you would be left with a capital balance £11m by the end of the year. If that is the case, and the payment is made relatively quickly from today, the Club could save up to £150k in interest by the end of the year.

Taking this stuff into consideration, I think a good estimate is as follows before player trading:

Turnover - -£3m

Expenses - -1.1m

Change in net loss from prior year - -£2.9m

Prior year's loss - -£4.9m

Loss 2012 - -£7.8m

Player trading

We made £22m on Kalinic and Jones, but the others we got rid of actually cost us money - let's be generous and say that it only cost £1m total. So £21m to work with. Our purchases had 5 players coming in for free or nominal amounts, either permanently or in Modeste's case on loan, and for the other 5 I think of Goodwillie, Yakubu, Dann, Vukevic, and Petrovic, only Dann cost us a lot, a reported £6.5m, the others cost us on average £1.5m each, so £6m altogether, so a grand total of £12.5m in transfer fees for incoming players. Add to that agents fees for all the ins, plus all renewed contracts during the year (Kean, Dunn, etc) - you have to add that in this category as well, because it is put here for accounting purposes. If Venkys learned their lesson with agents' fees and they were normal this year, add to that about £2m. Now all these cost will be amortized over the lives of the players contracts according to accounting rules in the industry, so this £14.5m will be recognized over probably on average 2 years, so about £7m of it will show up on the player amortization line, and the other £7.5m will be capitalized and shown on the assets accounts under intangible fixed assets. So on the face of it, you have player trading netting aout £14m (£21m minus £7m), minus the existing player amortization from the rest of the squad (£5m, estimated) and you have a total net profit on player trading of possibly as high as £9m. That may be being generous, and as the rest of this whole thing, is a ball park figure.

Where does that leave us? A total net profit of £1-2m for the year and a bank debt of £11m. Not too bad, really...if you just look at the face of it. However, the operating loss before player trading is trending towards getting out of control. We have a bloated wage structure that gives us much less value for money than we had even 12 months ago, let alone 24 months ago, and failing revenues in areas that were promised to be developed and expanded upon. It almost seems as though Venkys mixed up the definitions of turnover and expenditure.

The biggest problem is, it appears that Mrs. D is dead set on finding the money to pay off the debt within the Club. How she plans on managing this on what, on the face of it at least, appears a pretty damned cash strapped operation, is beyond me. I think it more likely that the debt will remain around £15-17m and Barclays will start to lose patience, especially when they see the operating loss before player trading getting worse and worse. If Venkys decide to hold onto the Club I would envision them having to sell off more players to satisfy Barclays payment demands, or face it actually being called in.