Venkys London Ltd accounts

[Exiled in Toronto]

The shares/debt issue is really very clear. 

Debt is money owed to the lender, but that doesn’t mean to say is recoverable as it is now far greater than the breakup value of the club. Nor does it follow that any future buyer has to pay all of it, or even any of it - it’s a matter for negotiation.

Share capital is the cumulative amount paid by the owners for their shares in the club. As every investment advertisement tells us, the value of shares can go up or down, driven by the competing forces of supply and demand, so the amount paid by Veny’s has no bearing on their value. In our case, the supply has Sky-rocketed up as new shares keep being created and bought by Venkys at their face value - which drives down their intrinsic value - while demand will be determined by whatever amount any future buyer(s) is/are willing to pay for them.

Normally, a rule of thumb on share value is tangible assets plus present-day value of future cash flows. A buyer would have to take a very rosy-eyed view of our promotion prospects plus likelihood of staying up for many years to get anywhere near a share valuation equal to what Venkys paid for them.

[Kamy100]

If only they had tuned up on day one and told John Williams and Tom Finn that they were going to invest £250 million pounds over the next 7 years (in addition to all the TV income) and charged them with planning that expenditure.  I am confident that they wouldn't find themselves in the situation that they are us are currently in.  What a waste.

[tomphil]

Basically we are now worth again about what they paid for us taking everything into account plus the overdraft will be at a similar level probably.  Not an unreasonable punt for someone with cash and ambition.

They'll never sell though and even if so they'd never write of all that debt Eddie Davies / Uncle Jack style 

[Herbie6590]

42 minutes ago, tomphil said:

Player sales form part of the overall income as you say and that reduces debt and there was a large cashing in of assets a few years ago that no doubt helped massively to reduce that.

Theoretically at any point in time say preseason for arguments sake they could pay off the overdraft or other external debts to give us a clean slate but they don't because that would cock up the accounting process.  Probably standard practise at many clubs but imo next time that overdraft is stretching to the limit and the bank are getting tetchy players will be sold to reduce it in the short term and Venkys won't plug in say 5 million as a one of to cover it.

People seem to portray it as if the club has no income of its own and they just pay for everything - I say that every season. We are reliant on them but that's mainly because of the model they run i.e run it cack handed run up continuing losses on one hand whilst trying to reduce them with the other, the club is stuck inbetween this scenario and has to pay a slice of it itself whilst yes the owners cover the rest but it doesn't make it right.

The overdraft is just £11m & that will largely be to ensure payments go through the bank a/c smoothly.

The rest of the debt is intra-Group so there’s nothing to pay off. They borrow it from themselves. The club runs at a loss. Unless someone covers those losses we go bust. Venky’s are subsidising Blackburn Rovers to the tune of £336k net per week.

A new owner would have to cut costs by that amount, stump up the same subsidy or increase turnover by that amount to keep us in business. 

 

[Herbie6590]

46 minutes ago, JHRover said:

I noticed this when flicking through the shareholder accounts the other day. Can someone explain what this is? It seems to read to me in the accounts as though Cheston says this £3 million was largely down to payments to the parent company (or something of the sort). Certainly seems like a massive increase and reads as though that cash has gone to VLL or the owners in some form.

I’m not recognising the numbers that are quoted....if someone can point me to the section in the accounts I’ll have a go...

[Herbie6590]

1 hour ago, jim mk2 said:

To sum up, cost of promotion black to Championship has been high.

 

Figures from Club’s Director’s Report filed at Companies House for the year ending June 2018 show :

Turnover has reduced by nearly 6 million pounds, from £14.9 Million in 2017, to £9.0 Million in 2018.

Match day income reduced by £0.5 Million (2017 was £3.3M, 2018 was £2.8M).

Media income reduced by £4.8 Million (2017 - £6.7M, 2018 - £1.9M).

Commercial and other income reduced by £0.6 Million (2017 - £4.9M, 2018 - £4.3 M).

Operating expenses increased to £8.9 million, up from £5.9 million in 2017. 

However, there was a reduction in wages and salaries of £5.2 million (2017 - £22M, 2018 - £16.8M).

This has resulted in a pre tax loss of £16.8 Million, compared to just £3.8 Million the previous year, with the wage turnover ratio now 186.7%.

The club’s net liabilities are now just under £125 million, up from just under £109 million the previous year, with the amount due to the parent company (Venky’s) at a massive £108.76 million. 

 

 

Jim - where are those Op Ex numbers from....struggling to find them if you can help....??

[Herbie6590]

Just now, Herbie6590 said:

Jim - where are those Op Ex numbers from....struggling to find them if you can help....??

Forget it....found ‘em ?

[Herbie6590]

Looks like some kind of “management fee” or similar...nothing sinister IMHO 

[JHRover]

Just now, Herbie6590 said:

Looks like some kind of “management fee” or similar...nothing sinister IMHO 

That's what I was referring to. A £3 million increase in 'one off charges' to Venkys London Limited. I think the question needs raising with Cheston at the shareholders meeting in July.

[Rogerb]

Just now, Herbie6590 said:

Looks like some kind of “management fee” or similar...nothing sinister IMHO 

Coyle's payoff?

 

[Herbie6590]

Just now, JHRover said:

That's what I was referring to. A £3 million increase in 'one off charges' to Venkys London Limited. I think the question needs raising with Cheston at the shareholders meeting in July.

Why ? Group companies move around cash all the time & charge inter company fees for services provided. It’s really not at all unusual. Ultimately Venky’s own both companies, they’re just moving money around their own business ?‍♂️

[Bigdoggsteel]

Would the 3 million be for the 2 auditors they got in? 

[SIMON GARNERS 194]

2 hours ago, Sparks Rover said:

Jerome Anderson came along and got Balaji foaming at the mouth at the thought of beckham , ronaldinho,  etc....literally sold them a pup and then conspired to make millions in transfee fees, advice fees, etc....

 

Never,Ever forget.

[Herbie6590]

47 minutes ago, Bigdoggsteel said:

Would the 3 million be for the 2 auditors they got in? 

It’s not inconceivable; it’s often used when a parent company buys a service on behalf of the group & cross charges the subsidiary. It’s not material in the great scheme of things. 

[tomphil]

1 hour ago, Herbie6590 said:

The overdraft is just £11m & that will largely be to ensure payments go through the bank a/c smoothly.

The rest of the debt is intra-Group so there’s nothing to pay off. They borrow it from themselves. The club runs at a loss. Unless someone covers those losses we go bust. Venky’s are subsidising Blackburn Rovers to the tune of £336k net per week.

A new owner would have to cut costs by that amount, stump up the same subsidy or increase turnover by that amount to keep us in business. 

 

And it would all depend on the wealth and ambition of a new owner as the model Venkys fund is the one they've created. Someone with clout might pay off any external debt then pay off and cut away a lot of deadwood as there is still plenty around wasting resources.  Then we'd be starting off in better shape than right now and ongoing costs would've been reduced.  We are reliant on Venkys funding their model at this level but that doesn't mean there isn't better out there who has to come in and just chuck money into the mess they've created and carry on the same.

Chances of finding them are slim and chances of these lot doing a generous deal even slimmer but in an ideal world it would be doable.

It all gets a bit like the May brexit deal at times, Venkys way or no way at all and bust instead, not true but for now we are stuck with them and their death grip on the club until they jack it in.

Edited March 21, 2019 by tomphil

[JHRover]

I pointed out earlier that even Preston, held up as an example of a well run 'locally owned' club doing quite well on a limited budget, still managed to lose £7 million last year in the Championship despite not really spending much on transfers.

So this is where we are at. Ideas of self-sustainability are pipe dream stuff. Even the so-called well run clubs with minimal spending are still running up big losses.

 

[Bigdoggsteel]

13 minutes ago, JHRover said:

I pointed out earlier that even Preston, held up as an example of a well run 'locally owned' club doing quite well on a limited budget, still managed to lose £7 million last year in the Championship despite not really spending much on transfers.

So this is where we are at. Ideas of self-sustainability are pipe dream stuff. Even the so-called well run clubs with minimal spending are still running up big losses.

 

Wow, would not have thought Preston were in that situation 

[RoverCanada]

2 hours ago, JHRover said:

That's what I was referring to. A £3 million increase in 'one off charges' to Venkys London Limited. I think the question needs raising with Cheston at the shareholders meeting in July.

 

2 hours ago, Herbie6590 said:

Why ? Group companies move around cash all the time & charge inter company fees for services provided. It’s really not at all unusual. Ultimately Venky’s own both companies, they’re just moving money around their own business ?‍♂️

Seems the lower other operating expenses charge in 16/17 was a one-off, as it was £10.7m in 15/16, £11.6m in 14/15, and £19.8m in 13/14. £8.9m last year was more 'back to normal' as part of a long-term downward trend (still rather high for a 2nd-3rd tier club, but that probably reflects the academy and the standard of our facilities). The 16-17 decline was already identified in last year's accounts as 'one-off charges to Venky's London Limited'. Seems just to be how they shuffled expenses between the two companies, for whatever reason. I suppose it would be half interesting to find out why.

[tomphil]

1 hour ago, JHRover said:

I pointed out earlier that even Preston, held up as an example of a well run 'locally owned' club doing quite well on a limited budget, still managed to lose £7 million last year in the Championship despite not really spending much on transfers.

So this is where we are at. Ideas of self-sustainability are pipe dream stuff. Even the so-called well run clubs with minimal spending are still running up big losses.

 

Which is why squeezing a few extra quid out of visiting fans and moving kick offs to accommodate this is pretty pointless in the grand scheme of things. Especially when it's pissing off your own supporters a bit like closing sections of the ground.

Chicken feed.

[tomphil]

Didn't V's pay off about 3 million quids worth of debt at some point in the recent past to help navigate around FFP ?

Probably just that going back to the parent company.

[Bigdoggsteel]

At the end of the day, they are footing everything now. Bolton shows worst case scenario for new owners. Ours have made enormous mistakes, but the reality is that we need people with such money behind the club. The days of local men buying their boyhood club are over. 

[Mattyblue]

Does still happen, Mel Morris at Derby has only owned them 3 years, but he’s obviously releasing how you just lose money hand over fist in this league.

[Stuart]

10 hours ago, pk1875 said:

The Club as we know it, will die at some point and it will be down to Venky's and their corrupt cohorts, make no mistake. The figures have been unbelievable for a good few years now. They set the rot into the club and it's now beyond repair. It is a case of when not if.

I just can’t see any other way out Paul.

[Stuart]

6 hours ago, JHRover said:

I noticed this when flicking through the shareholder accounts the other day. Can someone explain what this is? It seems to read to me in the accounts as though Cheston says this £3 million was largely down to payments to the parent company (or something of the sort). Certainly seems like a massive increase and reads as though that cash has gone to VLL or the owners in some form.

How can they take money out and add it to the debt? It’s like they are robbing Peter to pay Peter!

[Bigdoggsteel]

Lads 3M one way or another doesn't matter when they are the ones paying for everything