[Archived] Rovers Accounts 2015

[VinjayV4]

As of those accounts almost 90 million of the debt (around same percentage too) is owed to the owners. They could be written off at any time (Jack did that of course) but how many people just write off 90 million? They could be taking their time trying to recoup a substantial part of it. For instance gain promotion (which considering the summer fears and Lambert's precarious position isn't exactly looking brilliant) and then sell the club. Of course the issue then would be they could sell it to virtually anyone just looking to reap in the Sky profits. Or of course they could sell it to someone far more trustworthy (like Seneca if they reignited their apparently faded interest) or some billionaire who does mind taking on a big debt and FUP as well. Unless the poison of FUP is eradicated that's hardly gonna be likely is it. I suppose Forest have a considerable debt though (don't know exact figure certain its nowhere near as bad as Rovers debt is) and FUP yet there are takeover rumors there.

We don't even want to think about what the worst outcome would be.

The club, the vast majority of the debt is owed by the club to the owners. They could convert it to equity but I don't think you can convert more that £3m a financial year if you want to meet FUP rules. Would they convert it? doubt it. Why are they here? dunno. Promotion is the obvious solution to all this not only financially but a successful premiership football club could be a very good vehicle for their brand, but that all seems a very distant prospect. Could be tax benefits. How much they are worth varies widely depending on who you talk too; I have been told that the full corporation is huge, a genuine $bn company that is growing fast particularly the vaccine side of things of which they appear to control in the developing world (based in the US I think). On the other hand, my mate Terry reckons they have "f all" and borrow "sh!t loads" to make a small annual profit. Then again, a councillor from Blackburn reckons throwing parties that cost a few hundred k are nothing to them, something like that anyway.

I would like to know how much REAL money they have put in the club and not just put on a balance sheet.

Edit alert: Did Forbes not put them at a personal wealth of £2bn?

What he said...

Indeed there's a difference between "cash rich" and "asset rich". Jack was "cash rich" from the proceeds of the Walkersteel sale (though he retained the aviation business for instance so wasn't exactly short of assets either) so the question is are Venkys cash rich or asset rich? I would say its a combination but probably more cash rich as we haven't seen loans taken out against assets. That's exactly what Holdsworth's Sports Shield have done.

[Exiled in Toronto]

Would I be right in thinking a good reason not to convert the debt to equity is the entity in India owed the money would have to record a write down? Or is the equity assumed to have the value they "paid" for it?

[OscarRaven]

The club, the vast majority of the debt is owed by the club to the owners. They could convert it to equity but I don't think you can convert more that £3m a financial year if you want to meet FFP rules. Would they convert it? doubt it. Why are they here? dunno. Promotion is the obvious solution to all this not only financially but a successful premiership football club could be a very good vehicle for their brand, but that all seems a very distant prospect. Could be tax benefits. How much they are worth varies widely depending on who you talk too; I have been told that the full corporation is huge, a genuine $bn company that is growing fast particularly the vaccine side of things of which they appear to control in the developing world (based in the US I think). On the other hand, my mate Terry reckons they have "f all" and borrow "sh!t loads" to make a small annual profit. Then again, a councillor from Blackburn reckons throwing parties that cost a few hundred k are nothing to them, something like that anyway.

I would like to know how much REAL money they have put in the club and not just put on a balance sheet.

Edit alert: Did Forbes not put them at a personal wealth of £2bn?

The obvious solution to dealing with debt is to stop creating new debt. Trying to reduce debt by buying lottery tickets although sensible to football fans is not obvious to the rest of the world.

Let's be clear, if you think the owners should back Lambert with a war chest in the summer then your advocating more debt for the football club. I know many of you think that football clubs can't go to the wall like normal businesses, but let me assure you from the reading of those accounts all the ingredients are at Rovers.

Even if the owners wrote off the debt, sold the club for quid to the fans and walked away, it would be less than a year before the doors closed.

[SIMON GARNERS 194]

24 Million is owed to the Bank of India...there is NO escaping that fact.

I doubt the whole club,Lock Stock and Barrell is now not worth that amount.

That is our main worry I fear.

[Amo]

The obvious solution to dealing with debt is to stop creating new debt.

How exactly do you stop Rovers running at a loss?

[BlueMonday]

The reality is, regardless of the current debt, continued investment is required.

If you don't invest, unless you are unbelievably lucky, the squad quality drops, and the team slips down the Divisions.

And the further down the leagues we are, the debt will accrue more slowly, but wil be more difficult to service.

It's classic, Stuck between a rock and a hard place.

[Grez]

removed

[TBTF]

As of those accounts almost 90 million of the debt (around same percentage too) is owed to the owners. They could be written off at any time (Jack did that of course) but how many people just write off 90 million? They could be taking their time trying to recoup a substantial part of it. For instance gain promotion (which considering the summer fears and Lambert's precarious position isn't exactly looking brilliant) and then sell the club. Of course the issue then would be they could sell it to virtually anyone just looking to reap in the Sky profits. Or of course they could sell it to someone far more trustworthy (like Seneca if they reignited their apparently faded interest) or some billionaire who does mind taking on a big debt and FUP as well. Unless the poison of FUP is eradicated that's hardly gonna be likely is it. I suppose Forest have a considerable debt though (don't know exact figure certain its nowhere near as bad as Rovers debt is) and FUP yet there are takeover rumors there.

We don't even want to think about what the worst outcome would be.

What he said...

Indeed there's a difference between "cash rich" and "asset rich". Jack was "cash rich" from the proceeds of the Walkersteel sale (though he retained the aviation business for instance so wasn't exactly short of assets either) so the question is are Venkys cash rich or asset rich? I would say its a combination but probably more cash rich as we haven't seen loans taken out against assets. That's exactly what Holdsworth's Sports Shield have done.

Vinjay

Where has the fading interest by Seneca story emerged from? I wouldn't blame them but everybody I speak to about thinks its only faded because Venkys haven't replied to anything they have sent and they haven't actually tried to sell the club. I think that's a big difference from fading interest unless you know otherwise?

I also think Mercerman has called it spot on . These idiots from Pune will probably say right we are selling and its up for sale for at £50 million. At which point the cat is out of the bag about their intentions whilst the rest of the world lies on its back with legs in the air laughing their todgers off at such a stupid value.

Nobody comes forward, and they starve the club of any cash other than basically keeping the lights on and the whole things withers in front of average gates of 4000. Relegation follows and in the absence of any buyers they put it into Administration.

Thank god I have got my positive head on tonight..

[VinjayV4]

Vinjay

Where has the fading interest by Seneca story emerged from? I wouldn't blame them but everybody I speak to about thinks its only faded because Venkys haven't replied to anything they have sent and they haven't actually tried to sell the club. I think that's a big difference from fading interest unless you know otherwise?

I also think Mercerman has called it spot on . These idiots from Pune will probably say right we are selling and its up for sale for at £50 million. At which point the cat is out of the bag about their intentions whilst the rest of the world lies on its back with legs in the air laughing their todgers off at such a stupid value.

Nobody comes forward, and they starve the club of any cash other than basically keeping the lights on and the whole things withers in front of average gates of 4000. Relegation follows and in the absence of any buyers they put it into Administration.

Thank god I have got my positive head on tonight..

Glen Mullan responded to you 4 days ago assuming you didn't see it.

I recall Ian Battersby saying on Radio Lancs that they would struggle to get anyone to take the club for free with its current accounts.

Last time I met with Ian he said the investors he had have long moved on which suggest its dead from Seneca

However thats not to say he couldnt find others if the accounts are more manageable further down the line?

The problem with investors , is they want to see a return, realistically could anyone see a return on a rovers investment now we have lost so many supporters, whilst the squad in its current state is not ripping at the seams with big saleable assets

[scotty_beam_me_up]

Only one way to get that debt back is get promoted. I am a gambler but even to me a 20 million pound stake could recoup the debt they have outstanding. If they do nothing their debt will just rise. I suppose it's up to them.

[awhom111]

Here is my look at the accounts:

I work "in industry" as we say over here, so I focus a lot on the operational details. I know there are other people here involved in other aspects of finance and can better explain the legal and higher level financial implications of all of this.

When I refer to a page in the accounts, it is the page number in the document and not a page number of the file if you are viewing a copy from Companies House.

Accounting information comes in both cash and accrual forms. Cash refers strictly to the movement of cash. The accrual system, which is where terms like profit and loss come in, measures the overall financial picture in a more comprehensive manner. Information about both is necessary to understand the complete picture of how things are operating. I will be as clear as possible about which one I am talking about for each item.

To be clear from the start, there will be no good news here. If you were expecting any, it is not forthcoming. That said, there is plenty of useful information to be gathered from here about things in the past and what we can expect in the near future given what we have now.

Loss:

-The loss was about in the expected range of 15-20 million. We knew that our media revenue would decrease given that we were on the third season of parachute payments. The club also made every effort to make the preceding loss as big as possible, so the expenses were not going to be as bad as they could have been. Losses and profits are not cash. They are accounting calculations meant to more clearly reflect that actual business transacted over the period.

Cash (p11):

-There are a couple of key figures to look at here. Cash flow from operating activities continues to be highly negative, meaning that the club paid 18.5M more than it received. Once you factor in interest payments on bank debt and cash for transfers and other capital expenditures, that jumps to almost 25M. This is pretty much within range of the previous season and slightly less than the first season in the championship.

-If you want to think about what that figure means, use this hypothetical: If Venky's had handed the trust the club on July 1, 2014 and cancelled all of the debt owed to Venky's, that would be the amount of cash that we fans would have needed above all sources of cash from the existing operation of the club just to operate the club in the same manner that we did that season.
-Once you factor in a little extra for repaying bank loans and such, you are looking at more than quadrupling the matchday and commercial income to be in a healthy cash position, which means a lot more fans in the seats and sponsorships would be needed. While maybe that amount would not be needed for every season as unnecessary costs would hopefully be cut and given that we sold players this season, once you account for no parachute payments in the future, we are still looking at needing a lot of cash to run the club even before trying to spend above and beyond for strengthening the team.

Turnover (p15):

-As expected, media income decreased with lower parachute payments.

-Matchday income increased due to the cup run and commercial income decreased. Both were within range of the previous two seasons.

-We should expect the same amount or so for this season so 20-25M, but next season we will have to deal with the absence of parachute payments.

Staff (p15):

-Average staff over the course of the year dropped by 15 to 254, which I know is a favorite topic of ours.

-Staff costs decreased, but this includes expenses charged to the previous year's accounts so the decrease was not quite as big although hopefully this means the true deadwood is almost all gone. Presumably this will continue to decrease.

Transfers:

-We reported making just over 1.6M in purchases (p17), which appears to cover Duffy, Steele, and some other minor ones. There may be some costs related to contract renewals also included in this figure.

-Remember that this figure just reflects the total cost of the transfer, not when the cash for it was actually paid.

-We took a larger amortization charge to player value in the previous to make that loss bigger and this most recent year's loss smaller. Again this is a move for the books and does not affect cash in any way. Expenses will probably continue to be slightly lower than they would otherwise as a result of that move.

-Pages 19 and 20 also give us more information on transfers related to future payments (many of which have happened during the current season).

-As of June 30th, we still owed 5.6M on past transfers for payment this season and after this season owe another 2.5M. While this has been decreasing over time now that have mostly stopped buying players, it does show how long previous decisions still affect the club's obligations going forward.

-We were owed 2.8M this season and another 1.0M in the future. This should include the Cairney sale since it happened before the cutoff date, but nothing after that.

-Page 22 has more detail on cash expended over the course of the season for transfers. We paid 3.4M, spent 4.4M on disposals, and received 3.2M.

-Page 23 has some important information on matters that happen after the date of the accounts. We could owe another 3.4M for transfers based on any add-ons based on performances.

-Sales after the cutoff date were for 7.8M, which presumably covers Gestede and King.

Bank Loans (p19):

-We finished repaying the loan we took secured against parachute payments. 5M during the season and 4.5M this past August as noted in a separate disclosure on the page since it came after the date of the accounts.

-The bank overdraft appears to still be operating under the same conditions as before.

At some point I will probably make some graphs that will show how some of these key figures have changed over the seasons. Hopefully this was helpful. I know that there are other people with expertise who can also offer their perspective.

[McClarky]

I can't see any way out of our current predicament which doesn't mean a spell in the lower leagues. Personally I would rather this happened sooner rather than later while we still have a fan base but as each year goes by the prospects are getting bleaker. Basically our club has been kidnapped and is being systematically destroyed and whether it's now or in 5 years time the outcome is sadly inevitable.

[47er]

The most pertinent figure,in my definitely non-professional opinion, is the ratio between income and wages.

Without the parachute money, which is not available next season of course, wages were 187% higher than income.

That figure comes from Daniel Grabko in his Rovers Trust report.

[den]

It would be interesting if someone could make a forecast of the financial situation and what form the club would take if Venkys left.

[SIMON GARNERS 194]

Doesn't bare thinking about Den!

[yoda]

That would be answers on a postage stamp with room to spare Homers iliad

[47er]

It would be interesting if someone could make a forecast of the financial situation and what form the club would take if Venkys left.

Den, it would be interesting to know what the financial situation would be if Venkys stayed! 100 million new debt in 5 years is good going!

I do recall you saying that Venkys would not cover this sort of loss forever and of course, you were right.

As to the form of club that would/could arise in the event of bankruptcy, it would be the same as Wimbledon, starting in some non-league or other, with a slightly new name eg AFC Rovers Blackburn or some such and playing who knows where? On that point though, hard to see Ewood being any use for anything else. Won't be suitable for luxury flats like Arsenal.

Common sense would see Venkys and every other interested party coming together and trying to work something out.

While I'm not relishing the propect,I don't know how much more I can take of the current situation. You?

[den]

Doesn't bare thinking about Den!

So maybe it's time to stop giving them dogs abuse SG? (I don't mean you personally, I mean all of us).

Apart from some unlikely billionaire coming in, they are our only hope of the club even resembling what it looks like now, a few years down the road.

Look forward to the replies. That's the truth though, isn't it?

[VinjayV4]

Den, it would be interesting to know what the financial situation would be if Venkys stayed! 100 million new debt in 5 years is good going!

I do recall you saying that Venkys would not cover this sort of loss forever and,qof course, you were right.

As to the form of club that would/could arise in the event of bankruptcy, it would be the same as Wimbledon, starting in some non-league or other, with a slightly new name eg AFC Rovers Blackburn or some such and playing who knows where? On that point though, hard to see Ewood being any use for anything else. Won't be suitable for luxury flats like Arsenal.

Common sense would see Venkys and every other interested party coming together and trying to work something out.

While I'm not relishing the propect,I don't know how much more I can take of the current situation. You?

How are Football Club Blackburn and the 10,000 capacity stadium coming along? It wouldn't be the same as Wimbledon this is a far bigger club and a leading symbol of excellence since the foundation of English football. In which case more or less means any football!

So maybe it's time to stop giving them dogs abuse SG? (I don't mean you personally, I mean all of us).

Apart from some unlikely billionaire coming in, they are our only hope of the club even resembling what it looks like now, a few years down the road.

Look forward to the replies. That's the truth though, isn't it?

So kiss ass then? No thank you.

[den]

Den, it would be interesting to know what the financial situation would be if Venkys stayed! 100 million new debt in 5 years is good going!

I do recall you saying that Venkys would not cover this sort of loss forever and,qof course, you were right.

As to the form of club that would/could arise in the event of bankruptcy, it would be the same as Wimbledon, starting in some non-league or other, with a slightly new name eg AFC Rovers Blackburn or some such and playing who knows where? On that point though, hard to see Ewood being any use for anything else. Won't be suitable for luxury flats like Arsenal.

Common sense would see Venkys and every other interested party coming together and trying to work something out.

While I'm not relishing the propect,I don't know how much more I can take of the current situation. You?

Oh I agree. I find it difficult to take the idea that no Ewood, no academy, in fact the remains looking nothing like Blackburn rovers football club, would be preferable to the situation as it is TODAY. Isn't it a fact that while they're here there still is hope and once they're gone there's no hope?

So kiss ass then? No thank you.

Well that's the first one!

[47er]

Ther's no hope now Den. You're a drowning man clinging on to a twig.

Dogs abuse would be kind compared to what I'd give them if I had the chance.

They have pi**ed on my childhood memories.

[VinjayV4]

In this hypothetical worst case scenario its most likely the Ewood land would be available for an exceptionally cheap price. The land could then be purchased by fans (or a reasonably wealthy backer) with a 10 year plan for rebuild. Infact there could even be a case for maintaining the stadium or using it for other events until it becomes feasible for the phoenix club to use it.

Extremely hypothetical though as I say...think there's still some myths about the 80's. Already knew Rovers made a profit in 1985 and the 1986 accounts (posted the link yesterday) stated there was a profit in 1984 (and 1985) so the worst it got was presumably 1983. I've been through press cuttings in the library suppose its a better story to claim Jack "saved the club" but what he did is one of the greatest stories in the history of football regardless!

Ther's no hope now Den. You're a drowning man clinging on to a twig.

Dogs abuse would be kind compared to what I'd give them if I had the chance.

They have pi**ed on my childhood memories.

At least we have some good memories. 97-98 being my first season there were a lot of highlights (aside from last few months) and of course a ton of ambition. My hopes were to win the League (though I wouldn't admit it at the time didn't really think it would happen that season), win something else and to beat Manchester United at Old Trafford (and Ewood) but what will kids memories be now? Seeing the mental effects of a crowd during a prolonged period of misery? Whatever happens I'm sure their memories won't be like that and I feel sorrier for them. Obviously have had to reduce ambitions (regarding the League and to an extent the cups) understandably but kids now might not even see Rovers play likes of United, etc during their childhoods. Never mind beat them!

Got to mention UEFA too as the "furthest and widest" dreamkillers of all.

[tomphil]

As SG194 said previously the bank debt is growing and that's what we need to look at although maybe it's got paid down a bit since the last accounts with all the sales, last parachute etc.

The debt to the owners can go on for ever and a day if they want it to but external debt can't and if or when a chunk of it needs paying down then sales or an instant wad from the owners are the only way to do it.

You'd like to think that it has been paid right down giving us a relatively clean slate going into the next year or so with income set to plummet. Also I hope the tax bill is being paid, not read the full accounts yet but does that show up ? Anyone know if we can find out if we are up to date on that ? I presume we are.

[SIMON GARNERS 194]

They are wholly responsible for the present dire situation Den....I'm not kowtowing to them.They have two options imo:

· Back Lambert with hard cash to gain promotion,start running the club as a proper business and start communicating.

· Quash the debt owed to them..sell to people who want to move this club forward and have its best interests at heart.

Matters need to change very soon as we are in total limbo.

[Stuart]

They are wholly responsible for the present dire situation Den....I'm not kowtowing to them.They have two options imo:

· Back Lambert with hard cash to gain promotion,start running the club as a proper business and start communicating.

· Quash the debt owed to them..sell to people who want to move this club forward and have its best interests at heart.

Matters need to change very soon as we are in total limbo.

Whilst I agree with this, such is their wealth, then they have option 3: Continue to run things their misguided, arrogant way, allow the crisis of mediocrity to continue, and simply keep footing the lessening bills. This isn't their purgatory, it's he fans'.