[Archived] Rovers' accounts for 30 June 2016

[Dunnfc]

Just now, AndyNeil said:

Is this the same Venkys that are in effect forcing the club to use non-high street funding streams as working capital?

On paper they could, however in seven years have shown that they won't and I genuinely don't think there is a single supporter out there who thinks that their investment in the team/club is suddenly going to be ramped up after falling two divisions in the space of five years (subject to relegation in a few weeks)

Loans shares not allowed in l1/2 just cold hard capital injections of cash

[Parsonblue]

1 hour ago, Bigdoggsteel said:

How did Leeds and Norwich manage this when they went down? 

They had far greater income streams from the three key areas that count under the FFP in League One, namely Matchday Income, Commercial income and TV income.

[JHRover]

1 hour ago, Dunnfc said:

Academy 2.5 million

intrest on debt 1.8 millions that's before any repayment

and that's before any wages or operating costs are added on a proposed turnover of around 10 million in league one.

 

Academy costs along with facilities are exempt from Ffp calculations so the only reason to do anything on that front is if Venkys can't afford to fund it any more. Expect Cheston to try to blame Ffp but it has nothing to do with how much a club spends on its academy, stadium, training ground etc.

Presumably we will have a couple of years grace period to adjust our finances to meet League One criteria. Clubs coming out of the Premier League have the same.

So if they had any ambition or serious intent to bounce back up immediately of course they could do so just like Bolton have done.

Instead they'll be selling everything they can and expecting people to lay all the blame on Ffp rules.

[Parsonblue]

Just now, JHRover said:

Academy costs along with facilities are exempt from Ffp calculations so the only reason to do anything on that front is if Venkys can't afford to fund it any more. Expect Cheston to try to blame Ffp but it has nothing to do with how much a club spends on its academy, stadium, training ground etc.

Presumably we will have a couple of years grace period to adjust our finances to meet League One criteria. Clubs coming out of the Premier League have the same.

So if they had any ambition or serious intent to bounce back up immediately of course they could do so just like Bolton have done.

Instead they'll be selling everything they can and expecting people to lay all the blame on Ffp rules.

There is no period of adjustment according to the regulations.  Players who were signed prior to September 2016 - presuming we go down - and who have contracts that last for more than three seasons can be excluded.  I don't think we have anyone who fits that description.  Reading the regulations it really does provide a stark and bleak outlook in the short team, let alone the long term. 

[JHRover]

Just now, Parsonblue said:

There is no period of adjustment according to the regulations.  Players who were signed prior to September 2016 - presuming we go down - and who have contracts that last for more than three seasons can be excluded.  I don't think we have anyone who fits that description.  Reading the regulations it really does provide a stark and bleak outlook in the short team, let alone the long term. 

As our time in the Championship has shown, those clubs with serious ambition and nous have successfully navigated their way around Ffp rules, evaded any punishment and continued to invest large amounts into their wage and transfer funds to try and get back up.

When these rules were first introduced there was a lot of publicity about how they would change the landscape of football and prevent rich owners buying promotion. 4 years on and we are one of 4 clubs to have received any sort of punishment from the League, along with fellow disaster clubs Forest, Leeds and briefly Cardiff. I'm absolutely sure that if we had a competent team of people determined to put a promotion capable squad together next season then it could be done. If Fleetwood and Scunthorpe can do it then Blackburn Rovers can. The trouble is we've got people on the board judged only on sales and reducing costs rather than football performance. So we'll get more of the hard luck nothing we can do stories as we've been getting for the last 3 years. 

I agree we'll face more strife and misery from this summer on, but think it's more to do with the course those running the club have set than some daft rules that nobody else seems to be too bothered with.

[Dunnfc]

Just now, Parsonblue said:

There is no period of adjustment according to the regulations.  Players who were signed prior to September 2016 - presuming we go down - and who have contracts that last for more than three seasons can be excluded.  I don't think we have anyone who fits that description.  Reading the regulations it really does provide a stark and bleak outlook in the short team, let alone the long term. 

It does adjustments are relegation season players on 3 years or more  signed in that season. We don't have any although under 21 are exempt if I recall correctly? Emphasising further the Mahoney shambles, you still got my original link PB to the rules?

[Parsonblue]

2 hours ago, Dunnfc said:

It does adjustments are relegation season players on 3 years or more  signed in that season. We don't have any although under 21 are exempt if I recall correctly? Emphasising further the Mahoney shambles, you still got my original link PB to the rules?

I found a site which explained the rules more fully for League One and Two than the EFL site.  This was the site I looked at http://www.financialfairplay.co.uk/scmp.php

[Dunnfc]

Thanks to a brilliant fan in our support, a transcript concerning the finance question is below;

Andy Bayes:  A quick question from the floor.

James: Just some observations I made from the abbreviated club accounts – a series of short-term loans, which suggests working capital issues. We’ve had loans at 14%, 9% before Libor. What’s the added value in those? I notice that the season ticket sales for this year currently were mortgaged for £1.8 million – works out at about what 6000 tickets? Before people have had the chance to go to work and earn their money, you’ve already sold their season tickets for the year. Are we doing that for next season? What’s the plan? Because I do appreciate you can’t take all the credit, as you said earlier, for the increased finance position.

Mike Cheston: Absolutely, we’ve had to from time to time take short-term loans but we are managing that position in terms of managing the cash flow and we’re repaying them.

James:  But it’s 7% of your turnover before it drops next year. So it’s a football club that runs like a business, 7% of your turnover currently is going directly on interest alone. £1.7 million interest in 2016 you've paid out.

Mike Cheston: Yes – including the bank overdraft interest.

James:  Correct. £1.7 Milliion.

Mike Cheston: Yes.

James:  You’ve just mortaged the season tickets for £1.8 milion. It’s like a never-ending cycle; it’s not astute financial management.

Mike Cheston: That was to address a cash flow issue at the time.

James:  So we’ve had cash flow issues?

Mike Cheston: We have to manage the cash flow in order to make our payments as and when they fall due. So, yes, we have had to take short-term loans out.

James:  Are you anticipating this problem continuing in the future? Obviously we’ve seen numerous sales, disposals of players – some high salaries like Jordan Rhodes. If we get relegated at the end of the year, where the FFP rules change for League One and where cash flows are actually submitted more frequently, it’s going to come to light, you know, that we’ve got significant funding issues. It doesn’t make sense to me if we’ve got wealthy owners, owners who pledge their support. You’ve just read a statement earlier today. If we’ve got these fantastic billionaire conglomerate chicken farmer owners, why the need for all these short-term loans? Because £1.8 million season ticket mortgage, £43 119 at 14% short term loan, we’ve borrowed £5M off the FA previously about two years ago. I even think there was another short-term loan about £4.5 million. Who’s lending the money, Mike? Obviously we’ve mentioned the FA but…

Mike Cheston: Various financial institutions that we’ve done these agreements with.

James: The interest isn’t a commercial rate of interest, though, is it?

Mike Cheston: These are all things that any business has to do to manage its cash flow and the owners don’t, can’t, always provide the funds and we shouldn’t rely on the funds – on owners to provide the funds. We’ve got to find ways of managing the cash flow.

James: The ‘Fit and Proper Owners Test’ does state that they’ve got to show their wealth, they’ve got to show their financial ability to continually fund the club, we’re relying on 14% loans, which isn’t a commercial rate of interest on a loan of £5 million, is it? So it’s not come from your Barclays or your TSB. It suggests more like a nucleus finance, a close brother form of finance, someone a bit ‘off stream’? It’s very worrying to see the club in this picture, Mike. You know, you’ve stated improved position but it looks like it’s just been masses of short-term loans, which are a real danger to any financial running of any business.

Mike Cheston: But the extent of the short-term loan is very temporary and very, relatively small.

James: £2.5 million to repay over this season. You’ve got £1.8 million then to repay. You’ve got the other little short of £500 000.

Mike Cheston:  The loans were temporary and short-term and sometimes that’s what you need to do.

James: You’ve just sold a list of players and about £40 million worth over 18 months. That’s not an improved position from where I’m standing, Mike

(Various fans expressed shock and dismay.

Two comments overheard: “It’s like Rangers!”; “It’s terrifying!”)

Andy Bayes:  Ok very quick point before we sadly, folks, have to move on because as I keep saying we don’t have masses of time this evening.

Fan: Mike, can you promise for the next two years that we won’t go into administration – yes or no? 

Mike Cheston: I can’t guarantee things like that. It’s not fair.

(Comments from the audience such as, ‘It’s all coming out now, isn’t it?’)

Mike Cheston: No, it’s not fair. You can never say never. The likelihood is absolutely not but I cannot guarantee anything.

Fan: You should be able to. 

Andy (fan): I thought Paul Senior did, in your first interview you said, ‘There’s no chance we’ll go into administration.’

Paul Senior: in terms of the backing of the owners at this moment in time. The owners – are they going to walk away? The owners are not going to walk away. The owners are committed to the future of the club. If the owners were to walk away, which they have no intention to do so, which was made very clear, then unless we could find a suitable owner, we may be in a compromised position. But at this moment in time, there is no chance of administration. We haven’t got that crystal ball to know what will happen in two, three, four years in time but at this moment in time, this club is doing OK. Yes, there is scope for improvement on and off the pitch - we get that. So let’s not just be obsessed with the finance figures -  but I understand the concerns around that – but at this moment in time for where we are and the short-term future, the club is on the right track in terms of managing our bills and designing out those inefficiencies.

[Mike E]

In other words:

'It's going to he'll in a handcart, but please don't make me say it'.

[blueboy3333]

Genuine questions as I don't know nowt about this stuff.

What does it mean in practise when debt is converted into shares? Does that debt 'disappear'?

Am I right in thinking Venky's have converted a lot of debt into shares (£80m?)?

If Venky's do walk away and we go into Administration do those shares become worthless? Would that also mean the debt would evaporate?

[chaddyrovers]

Genuine questions are

1. What 5 million pounds loan from FA?

2. Have owners turned some of the loans owned to VLL from Rovers into Shares over the past 2 years?