Blackburn Rovers football club accounts

[chaddyrovers]

application-pdf

The LT take on the accounts

https://www.lancashiretelegraph.co.uk/sport/20040308.blackburn-rovers-accounts-losses-fall-due-17-3m-training-ground-sale/

[bluebruce]

They add: ‘In June 2021 the company sold the Senior training ground and related property for £17.3m to Venkateshwara London Limited, a subsidiary of the ultimate parent company, Venkateshwara Hatcheries Pvt. Lrd. The proceeds are due for settlement by June 2023 and carry interest at four per cent above the State Bank of India base rate and interest arising on the loan in the periods was £13,603.

“The company has entered into a lease to continue to use the Senior training ground and rent of £6,827 arose for the periods to June 30 2021.”

Am I understanding this correctly? That sounds to me like we have to pay back the 17.3 million by June 2023 (impossible with our financial situation, and means nothing was achieved for us other than kicking the can down the road a bit), AND that there is interest on it at State Bank of India base rate PLUS another 4 percent, and that we are also paying rent (lease) in the meantime?!? Because that sounds a whole lot like this exercise will shaft us and give Venkys a tidy profit.

That said, the figures for interest and rent don't seem to add up (the rent, maybe, as it's hardly sky high so it could be a token gesture to make it pass FFP scrutiny). Just 4% (ignoring the SBOI interest on top) comes to £692,000 a year. I'm assuming from the wording of it in the bit after, that 'the interest arising on the loan in the periods was £13,603' means the loan for the first month since the sale, which I extrapolate to around 163k per year. That's a serious discrepancy even before we add the SBOI base rate (which appears to be a whopping 7.2% for a 2 year loan, though my quick google result may be wrong). Even if the rent was considered part of the figure it's a huge void.

Perhaps 'the proceeds are due for settlement by June 2023' means that's when all of the funds will arrive with us from Venkys? The rent and interest figures concern me though. Adding the 7.2% base rate if that's the right figure means another 1.245 million, for a total of about 1.408 million a year in interest, and another £81,924 in rent per year. Meaning it would cost us just under 3 million in the two years, and then we need to find another 17.3 million from the back of the sofa by June 2023 to get our ground back?

I'm not a financial expert, so I'm hoping someone will tell me what I'm misunderstanding here. Because if I'm getting it right, that's concerning business IMO. Maybe it means Venkys will pay that interest on the money they've borrowed to give us these funds for the ground, and maybe the June 2023 remark is about when they get their funds to us, or when they have to repay the lender.

(Apologies if I did any of the sums wrong, I'm pretty tired)

Edited April 2, 2022 by bluebruce

[bluebruce]

'The accounts state: “Since the balance sheet date the company has entered into transfer agreements amounting to net transfer fees receivable of £9.2m.” '

It also looks like 9.2 million is the up-front fee we received for Armstrong (hopefully that's after Newcastle got their chunk). But again I'm not sure if this is inclusive of fees received from old transfer deals (I'm guessing not since it describes them as transfer agreements 'since' the balance sheet date) or of fees paid out this summer (Edun, loan fees etc). I'm sure someone can clarify though.

[Darrenbot]

Looking at how he's played for Southampton this year thats a good fee.

Edited April 2, 2022 by Darrenbot

[Upside Down]

So there are discrepancies in the accounts of Blackburn Rovers, who'd have thought that 🤔

It looks like the asset stripping has begun. 

[Herbie6590]

3 hours ago, bluebruce said:

They add: ‘In June 2021 the company sold the Senior training ground and related property for £17.3m to Venkateshwara London Limited, a subsidiary of the ultimate parent company, Venkateshwara Hatcheries Pvt. Lrd. The proceeds are due for settlement by June 2023 and carry interest at four per cent above the State Bank of India base rate and interest arising on the loan in the periods was £13,603.

“The company has entered into a lease to continue to use the Senior training ground and rent of £6,827 arose for the periods to June 30 2021.”

Am I understanding this correctly? That sounds to me like we have to pay back the 17.3 million by June 2023 (impossible with our financial situation, and means nothing was achieved for us other than kicking the can down the road a bit), AND that there is interest on it at State Bank of India base rate PLUS another 4 percent, and that we are also paying rent (lease) in the meantime?!? Because that sounds a whole lot like this exercise will shaft us and give Venkys a tidy profit.

That said, the figures for interest and rent don't seem to add up (the rent, maybe, as it's hardly sky high so it could be a token gesture to make it pass FFP scrutiny). Just 4% (ignoring the SBOI interest on top) comes to £692,000 a year. I'm assuming from the wording of it in the bit after, that 'the interest arising on the loan in the periods was £13,603' means the loan for the first month since the sale, which I extrapolate to around 163k per year. That's a serious discrepancy even before we add the SBOI base rate (which appears to be a whopping 7.2% for a 2 year loan, though my quick google result may be wrong). Even if the rent was considered part of the figure it's a huge void.

Perhaps 'the proceeds are due for settlement by June 2023' means that's when all of the funds will arrive with us from Venkys? The rent and interest figures concern me though. Adding the 7.2% base rate if that's the right figure means another 1.245 million, for a total of about 1.408 million a year in interest, and another £81,924 in rent per year. Meaning it would cost us just under 3 million in the two years, and then we need to find another 17.3 million from the back of the sofa by June 2023 to get our ground back?

I'm not a financial expert, so I'm hoping someone will tell me what I'm misunderstanding here. Because if I'm getting it right, that's concerning business IMO. Maybe it means Venkys will pay that interest on the money they've borrowed to give us these funds for the ground, and maybe the June 2023 remark is about when they get their funds to us, or when they have to repay the lender.

(Apologies if I did any of the sums wrong, I'm pretty tired)

A lot to unpack here…in the nicest possible way, I think you are worrying unnecessarily about a lot of this. It’s window-dressing in the main to address FFP.
Not all the pertinent info is available at Companies House yet (e.g. Venkateshwara London Ltd is a new company, almost certainly a special purpose vehicle set up specifically to conduct this transaction - so no accounts yet filed).

1. My take is that the sale is agreed and contracts for the sale exchanged at some point in June 2021, with all monies owed to the vendor (BRFC) to be settled by 30/6/23. In other words, BRFC can account for the profit straight away to help with FFP but the cash will follow in due course.

 

2. Venkateshwara is a Newco & the share capital of the business isn’t currently sufficient to produce £17.3m to enable them to pay the cash over; so instead they have arranged to borrow the £17.3m at 4% over base…akin to borrowing money to buy a house, exchanging contracts with completion (Funds transfer) to follow. The party buying the property borrows the funds, the seller gets the sale proceeds at completion.

3. I am deducing therefore that the loan is in the books of Venkateshwara & the interest liability is theirs to service - NOT BRFC.

4. As BRFC is now a tenant at the STC, it pays rent. The £6,827 rent must therefore be for the period in June 2021 following sale, up to the company year end (30/6/21) - so this means it’s for 1,2,3 or 4 weeks - I can’t seem to see the precise sale date. Let’s say it covers 2 weeks, so £3k per week or £150k per annum that BRFC now has to find from cash flow. This is an additional liability on the club, but it’s coffers will get £17.3m in to ease the pain at completion.

5. Venky’s are at both sides of this transaction so accusing them of making a tidy profit simply doesn’t add up. If I own my house in a company name (that I own) & sell it to another company that I own; I would be at both sides of the transaction so it all nets out in my bank account ultimately.

Hope that helps…

[Herbie6590]

35 minutes ago, Upside Down said:

So there are discrepancies in the accounts of Blackburn Rovers, who'd have thought that 🤔

It looks like the asset stripping has begun. 

NO. Please read my post above.

[bluebruce]

10 minutes ago, Herbie6590 said:

A lot to unpack here…in the nicest possible way, I think you are worrying unnecessarily about a lot of this. It’s window-dressing in the main to address FFP.
Not all the pertinent info is available at Companies House yet (e.g. Venkateshwara London Ltd is a new company, almost certainly a special purpose vehicle set up specifically to conduct this transaction - so no accounts yet filed).

1. My take is that the sale is agreed and contracts for the sale exchanged at some point in June 2021, with all monies owed to the vendor (BRFC) to be settled by 30/6/23. In other words, BRFC can account for the profit straight away to help with FFP but the cash will follow in due course.

 

2. Venkateshwara is a Newco & the share capital of the business isn’t currently sufficient to produce £17.3m to enable them to pay the cash over; so instead they have arranged to borrow the £17.3m at 4% over base…akin to borrowing money to buy a house, exchanging contracts with completion (Funds transfer) to follow. The party buying the property borrows the funds, the seller gets the sale proceeds at completion.

3. I am deducing therefore that the loan is in the books of Venkateshwara & the interest liability is theirs to service - NOT BRFC.

4. As BRFC is now a tenant at the STC, it pays rent. The £6,827 rent must therefore be for the period in June 2021 following sale, up to the company year end (30/6/21) - so this means it’s for 1,2,3 or 4 weeks - I can’t seem to see the precise sale date. Let’s say it covers 2 weeks, so £3k per week or £150k per annum that BRFC now has to find from cash flow. This is an additional liability on the club, but it’s coffers will get £17.3m in to ease the pain at completion.

5. Venky’s are at both sides of this transaction so accusing them of making a tidy profit simply doesn’t add up. If I own my house in a company name (that I own) & sell it to another company that I own; I would be at both sides of the transaction so it all nets out in my bank account ultimately.

Hope that helps…

Thanks. 1-4 are all possibilities I acknowledged in my post (perhaps I wasn't clear enough), so it's reassuring we seem to be looking at the best case rather than the worst case.

If it had been the worst case scenario though (which it seems it wasn't and I've misunderstood) then it would surely have been possible for them to make a tidy profit, on this transaction anyway, as they would have been the lender using money they already had, whereas it seems they are in fact a borrower, who then pass the borrowed funds on to us and deal with the interest themselves. It doesn't matter that they own both companies if they jettison us soon (other than that another 3 mill might have reduced appeal to buyers of course), and meanwhile a loss of about 3 million would have been added to the books over a 2 year period, which they would have hoovered back out to their own pockets directly (although if they keep covering the debts there wouldn't be much point). Thankfully it seems my fear was misplaced and it's the perfectly fine option that is correct, but for a heartbeat I worried asset stripping and dumping us on the first probably dodgy buyer they could find might be on the way.

[Upside Down]

2 hours ago, Herbie6590 said:

NO. Please read my post above.

That's better. Thanks.

 

It is still extremely concerning that the training facilities are no longer a part of BRFC.

[Herbie6590]

6 hours ago, Upside Down said:

That's better. Thanks.

 

It is still extremely concerning that the training facilities are no longer a part of BRFC.

Less than ideal but in reality, it makes little practical difference. If the STC was owned by BRFC it could have been sold at any time…

[1864roverite]

6 hours ago, Upside Down said:

That's better. Thanks.

 

It is still extremely concerning that the training facilities are no longer a part of BRFC.

It’s a paper exercise look at it more closely

[OldEwoodBlue]

We will never see any cash Herbie.

It will be netted off against any profits.

Two fat cheques called Arma and Dack.

Meanwhile we now have to lease back that which was once ours (and for how long?).

May seem fine whilst Venkys own all but how about after a club sale or administratiion. One of the two is inevitable at some point.

[tomphil]

Maybe they'll sell it back to the club when we've sold the next raft of players ?

Otherwise what is next to transfer ownership after this ?  

I notice in there they've written off nearly 30 million of loans so that can't be a bad thing, credit where it is due. The only thing that really eases all this though is a season in the Prem.

 

Edited April 3, 2022 by tomphil

[Herbie6590]

34 minutes ago, OldEwoodBlue said:

We will never see any cash Herbie.

It will be netted off against any profits.

Two fat cheques called Arma and Dack.

Meanwhile we now have to lease back that which was once ours (and for how long?).

May seem fine whilst Venkys own all but how about after a club sale or administratiion. One of the two is inevitable at some point.

Well BRFC has to see *some* cash....from somewhere...cash comes from 3 sources; shares, loans or trading.

BRFC needs cash from somewhere to pay the bills. Trading doesn't generate enough. Currently, Venky's make up the shortfall in working capital. How they do it is accounting detail (loans, share issue...etc). When they stop providing the cash that plugs the gap, the lights go out.

Leasing is an additional revenue burden on the club, far from ideal.

What happens after a sale ? Well, that depends - a bit like when you buy & house & negotiate on the fixtures & fittings. "How much rent for us to continue to use the STC then ?"

What happens after an administration ? Assuming only BRFC is placed in admin, the STC would not be included. If someone buys BRFC from the admin, the purchaser would have to separately negotiate the rent on the STC if they wanted continued use, far from ideal.

 

 

[Crimpshrine]

So, without the financial chicanery regarding the training ground we would have posted a loss of £23.9 million. 

While the debts mount and assets change hands and the revenue burden increases, the playing squad is being allowed to fall apart and the ground is becoming dilapidated. We are truly kicking the can down a dead end road. 

The fans care, the owners obviously don't. It may be their money that is being wasted but it's our club that will pay the price.

Venky's out

[tomphil]

If the football wage bill is around 10 million as was mentioned on here recently but the losses are usually around double that something still doesn't add up.

I know there are other costs but we aren't buying players for installments of millions either so where is the rest going or a chunk of it at least.

Just who is on that wage bill and how much are some of this lot really on.

[arbitro]

50 minutes ago, tomphil said:

If the football wage bill is around 10 million as was mentioned on here recently but the losses are usually around double that something still doesn't add up.

I know there are other costs but we aren't buying players for installments of millions either so where is the rest going or a chunk of it at least.

Just who is on that wage bill and how much are some of this lot really on.

Not the answer to your question but from Feb 21 to Jan 22 we spent £1m on agents.

[tomphil]

8 minutes ago, arbitro said:

Not the answer to your question but from Feb 21 to Jan 22 we spent £1m on agents.

I presume the bulk of that was on an outgoing because there wasn't much else to involve big agents fees.

[Herbie6590]

1 hour ago, tomphil said:

If the football wage bill is around 10 million as was mentioned on here recently but the losses are usually around double that something still doesn't add up.

I know there are other costs but we aren't buying players for installments of millions either so where is the rest going or a chunk of it at least.

Just who is on that wage bill and how much are some of this lot really on.

The wage bill isn’t £10m…

[tomphil]

2 minutes ago, Herbie6590 said:

The wage bill isn’t £10m…

1st team squad wage bill as opposed to overall one.

I'm sure it was on here recently it was around 10 mill. When we were in league 1 didn't Mowbray himself say it was around 5 million they'd allowed for that season ?

[Herbie6590]

8 minutes ago, tomphil said:

1st team squad wage bill as opposed to overall one.

I'm sure it was on here recently it was around 10 mill. When we were in league 1 didn't Mowbray himself say it was around 5 million they'd allowed for that season ?

Well the directors are paid c.£0.5m so I think it’s safe to say the 1st team wage bill accounts for more than £10m…or the folks in the ticket office are on £10k per week…😉

[tomphil]

10 minutes ago, Herbie6590 said:

Well the directors are paid c.£0.5m so I think it’s safe to say the 1st team wage bill accounts for more than £10m…or the folks in the ticket office are on £10k per week…😉

Well if they are supplied by agents....😄

[aletheia]

The pdf link in the first post doesn't work for me.

 

[arbitro]

2 hours ago, tomphil said:

I presume the bulk of that was on an outgoing because there wasn't much else to involve big agents fees.

Agents charge for new contracts that existing players sign too.

[Herbie6590]

3 hours ago, aletheia said:

The pdf link in the first post doesn't work for me.

 

It times out…but links to this

companies_house_document.pdf