Burnley

[Baggeridgebaggy]

There’s lots online, but Sunderland takeover was leveraged on parachute payments

The vilified Ellis Short, despite spending tens of millions & writing off millions of debt was seen as the villain and the new owners, the saviours. But if you do the research all is not what it seems

Football finance is more complex than lots appreciate. This owner needs to sell, but things could be worse.

This owner although following the same principles of self sufficiency, has allowed much more spent by a promoted regime than Peace

http://www.true-faith.co.uk/sunderland-p...d-to-ruin/

[coxy134]

Always remember a guy I worked with 20 years ago an that when an American company takes over it only works on a 4 year term. If you company cannot make a continual improved profit within 4-5 years your history. Worked at 4 companies since and thats exactly what happened all ended up being asset stripped or closed.

[Squid]

Just read about it on the Athletic. Sounds very, very dodgy. Swansea fan pointing out that it sounds exactly like what happened to them.

I honestly fear who our next owners will be. At least with Lai, you know what you're getting.

[Kit Kat Chunky]

Re the OP. How would we fund our own take over when didn't have sufficient funds to build a functioning Premier League squad?

That’s the point.  We shouldn’t “fund our own takeover”.  Buyer should buy shares from seller and pay seller, and the price based on value takes the net assets into account.  Buyer then puts in funding (loans or extra equity) to provide any additional funding.

The sort of deal done by Burnley is extremely high risk - but not risk for the new buyer.  The club is being put at risk.

if I'm right, Prag, the Companies Act (s151) used to prevent you from doing this, hence the need for a "whitewash procedure", but this was abolished in 2008, so you can now use the acquired assets to fund the takeover.

To my mind this is one step worse than when JRP sold us. At least he left some cash in the club - and Lai took on his loan liabilities, according to S4A.

---

Re the OP. How would we fund our own take over when didn't have sufficient funds to build a functioning Premier League squad?

That’s the point.  We shouldn’t “fund our own takeover”.  Buyer should buy shares from seller and pay seller, and the price based on value takes the net assets into account.  Buyer then puts in funding (loans or extra equity) to provide any additional funding.

The sort of deal done by Burnley is extremely high risk - but not risk for the new buyer.  The club is being put at risk.

I know what your point was, I was asking how it would come about given we don't have their cash reserves.

Discard cash, just gear up the assets... ground, training ground, cashflow, goodwill, the melted down bronze of Bomber's statue, etc...


Shudder at the thought.

It's almost a reverse takeover. I saw plenty of it in the 90's. The prize is the £55M cash. I'm surprised they've found bankers to take it on. I'm guessing the banks will have a charge on the parachutes to accelerate the loan repayment in the event of relegation.

If they go down, they are in serious trouble.

[Hopalong]

All hail Mr Lai!!

[Birdman1811]

Be careful what you wish for.

Burnley fans were sure the takeover would give Dyche millions and millions to spend in the market. Instead they are at more risk than they've ever been.

[MancBaggie]

Re the OP. How would we fund our own take over when didn't have sufficient funds to build a functioning Premier League squad?

That’s the point.  We shouldn’t “fund our own takeover”.  Buyer should buy shares from seller and pay seller, and the price based on value takes the net assets into account.  Buyer then puts in funding (loans or extra equity) to provide any additional funding.

The sort of deal done by Burnley is extremely high risk - but not risk for the new buyer.  The club is being put at risk.

if I'm right, Prag, the Companies Act (s151) used to prevent you from doing this, hence the need for a "whitewash procedure", but this was abolished in 2008, so you can now use the acquired assets to fund the takeover.

To my mind this is one step worse than when JRP sold us. At least he left some cash in the club - and Lai took on his loan liabilities, according to S4A.

---

Re the OP. How would we fund our own take over when didn't have sufficient funds to build a functioning Premier League squad?

That’s the point.  We shouldn’t “fund our own takeover”.  Buyer should buy shares from seller and pay seller, and the price based on value takes the net assets into account.  Buyer then puts in funding (loans or extra equity) to provide any additional funding.

The sort of deal done by Burnley is extremely high risk - but not risk for the new buyer.  The club is being put at risk.

I know what your point was, I was asking how it would come about given we don't have their cash reserves.

Discard cash, just gear up the assets... ground, training ground, cashflow, goodwill, the melted down bronze of Bomber's statue, etc...


Shudder at the thought.

It's almost a reverse takeover. I saw plenty of it in the 90's. The prize is the £55M cash. I'm surprised they've found bankers to take it on. I'm guessing the banks will have a charge on the parachutes to accelerate the loan repayment in the event of relegation.

If they go down, they are in serious trouble.

The substantive financial assistance prohibition was indeed repealed in 2008 - under the Companies Act 2006 (which came into force in phases).  

Using a target's assets as security for the purchase of it is now generally permitted, subject to what are fairly minimal safeguards.  These are simple enough to satisfy and include consideration of the solvency of the target, is the transaction for the benefit of the target and whether the Articles of the target prohibits the giving of financial assistance.

[baggie_ray]

Be careful what you wish for.

You're not wrong. I once had a genie grant me one wish. I wished for a large dick. The next thing I know, Richard Osman is standing next to me....

[Tom Joad]

Has anybody seen the terms of the Burnley deal?

The new US owners have apparently bought an 84% stake for £150m, but that £150m includes £55m of the club’s own existing cash, which goes to the seller.  So all net cash is stripped out, leaving Burnley with no money to fund new players. 

The new owners have only put in £15m of their own money.  The remaining £80m has been borrowed at a high rate of interest, secured against the club’s assets under a fixed and floating charge. 

This is very unlikely to end well for Burnley. 

If Lai does sell, then let’s hope he doesn’t sell under that sort of deal.

This will, sooner or later, come back to bite them. Lai isn't an ideal owner (and we won't know exactly how bad/indifferent he is  until this years accounts eventually come out), but being self sustaining is a good thing. We all get peeved Lai isn't chucking cash at us but there are very few that actually do and many that leave their clubs in a sorry state.

[Kit Kat Chunky]

Re the OP. How would we fund our own take over when didn't have sufficient funds to build a functioning Premier League squad?

That’s the point.  We shouldn’t “fund our own takeover”.  Buyer should buy shares from seller and pay seller, and the price based on value takes the net assets into account.  Buyer then puts in funding (loans or extra equity) to provide any additional funding.

The sort of deal done by Burnley is extremely high risk - but not risk for the new buyer.  The club is being put at risk.

if I'm right, Prag, the Companies Act (s151) used to prevent you from doing this, hence the need for a "whitewash procedure", but this was abolished in 2008, so you can now use the acquired assets to fund the takeover.

To my mind this is one step worse than when JRP sold us. At least he left some cash in the club - and Lai took on his loan liabilities, according to S4A.

---

That’s the point.  We shouldn’t “fund our own takeover”.  Buyer should buy shares from seller and pay seller, and the price based on value takes the net assets into account.  Buyer then puts in funding (loans or extra equity) to provide any additional funding.

The sort of deal done by Burnley is extremely high risk - but not risk for the new buyer.  The club is being put at risk.

I know what your point was, I was asking how it would come about given we don't have their cash reserves.

Discard cash, just gear up the assets... ground, training ground, cashflow, goodwill, the melted down bronze of Bomber's statue, etc...


Shudder at the thought.

It's almost a reverse takeover. I saw plenty of it in the 90's. The prize is the £55M cash. I'm surprised they've found bankers to take it on. I'm guessing the banks will have a charge on the parachutes to accelerate the loan repayment in the event of relegation.

If they go down, they are in serious trouble.

The substantive financial assistance prohibition was indeed repealed in 2008 - under the Companies Act 2006 (which came into force in phases).  

Using a target's assets as security for the purchase of it is now generally permitted, subject to what are fairly minimal safeguards.  These are simple enough to satisfy and include consideration of the solvency of the target, is the transaction for the benefit of the target and whether the Articles of the target prohibits the giving of financial assistance.

I knew a lawyer would be able to put into English what I was trying to say