BFC Investment Company

They were and as long as we were in the Championship that thought had to be in their minds.
In reality our serious bids for promotion to the Prem are so rare in our history that it's still a pretty forlorn hope. And, at the minute, we're a long way from the Championship let alone the Prem. Hopefully the ones who are after a quick buck will now lose interest and equally hopefully Parekh retains his fondness for the club and fills the gap.

 

We've had 5 years of these owners and there has been plenty of time to try and work out just what their personal ambitions are for the actions they are taking. The obvious ones have been exhausted and no longer seem plausible. The tricks of the trade that VC's use to extract multiple streams of revenue and return, especially in distressed turnarounds, haven't been applied (unless they were last season and we've yet to see the accounts to verify it).

So we're left with only a handful of possible avenues. I won't outline all of them, but the three that have most credence at this stage, are;

1. Chancers who don't know what they are doing and hoping they hit upon success.

2. They acquire a range of clubs at very low levels of investment and skim fees/charges/salaries from them. If they can own say 10 clubs and each filter (say) £40k a year off each club, you have £400k a year each. Say you hold each club for 5 years, you net yourself £2m for doing the square root of nothing. Throw in a few temporary CEO stints, a bonus here or there, maybe even a bit of cross company "consultancy" and you top that up further still.

3. What you touched on yourself. There's no evidence (and I suspect if there was, whistles may well be blown in at least one of their entities) and I don't think this would be the case. Maybe worth throwing out there, in a completely unrelated way, one of their early acquisitions was to acquire a swiss club.

My perception is it's likely the second option. We've never had anyone delve into why the directors salaries disclosure has jumped so much and what is accounting for it. It happened from day 1 of this ownership and has been increasing ever since. Just a shame we've not had anyone with business acumen or with a forensic understanding of finance to be able to delve more on this point. But the national media have largely given them a wide berth and we're all the worse for it.

The next stages where we should get insight that is in the public domain (or at least can be found, mainly thanks to Exile) are when/if the £1m equity injection is revealed and any changes to equity split emerge. If Lee and Conways holdings are diluted, I think we can start to summise the current directorship have the ascendency and any comeback from Lee and Conway is unlikely.

It's going to be a long way off, but the accounts for 22/23 will outline director salaries. If they come down, and indeed, if the disclosure shows highest paid director, we may glean that former directors were taking money out. Of course, they could remain constant, and, disclosures may no longer be required following our relegation and drop in turnover (it's been a long time I worked in accountancy, so I'm certainly out of date with small and medium company accounting disclosures).

And finally, we may get voluntary disclosures after a court case is settled or concluded, though personally, I don't think we'd hear a great deal about it unless again, accounts showed something which hit one of the multiple companies involved.

I think we can all largely look on all this as a bit of an opaque mess, one that distracts from the simple thing we look for from our club. To put the best possible team on the pitch and try and win as many points in a season as possible while playing a style that the majority of fans enjoy.

If over the next few years, this current board can switch our focus back to that and we forget about off the field activities, I'd personally take that as one of the biggest signals that they've succeeded.

 

Basically most of those people invest in a hedge fund and haven’t a clue they own a stake in BFC

 

Prior to the most recent one in which the hedge fund bods are additionally separated out, the shareholdings have always been listed under the following 'names':-

Pacific Media Group Limited
Chien Lee
Abhajay Trade and Commerce Private Limited
Billy Beane (whilst he held shares)
Oakwell Holdings Limited

 

but could they sell their shares individually ? If they didn’t want to be a part of it anymore? Do they have to give first refusal to the rest of the block ie is that block tied in together? or, could they, if Lee for example, offered over the odds sell them directly to him?

I guess all the above are unanswerable questions as it will be detailed in a shareholder agreement that only they will be privy to.

 

Exile posted the shareholder agreement recently. So it is in the public domain.

 

This is the obvious route by which their investment generates a return (and essentially the same one that Patrick Cryne identified as appropriate for his loans to be repaid if he still owned the company at that time).

The less obvious one touches on a little of what DWLC refers to. Conway talked about an expectation that TV revenue deals would grow further across Europe, so by having a portfolio of clubs across the European leagues they'd be well placed to accumulate value from this (effectively in the same way as Premier League clubs get very rich in just one season from TV monies).

The obvious flaw in this plan, which he seems to have been oblivious to, is that this only applies to the highest division in each country, so you need a team in that division to benefit from it. Buying lower league clubs and trying to get them up there is potentially the cheapest way to do this, but all they've succeeded in (with the exception of our season under Val) is mis-running most of these clubs to a point of relegation, not promotion.

Still, you can imagine how convincing a pitch might sound to potential investors with the right spin applied to it, and US-based investors in particular will always have a reference point of how lucrative it is to be an owner of an NFL, or NBA, or MLB franchise, none of which have the jeopardy of relegation within their structures.

 

Doubt very much the group made the changes just cos there didn’t like Conway etc.
Almost certainly would have been the damage they perceive he was doing to their investment.
Would expect if they were to sell they would sell to whoever would pay.

 

I've been trying to fathom this as to me it's more of a concern if there's any more outstanding Neerav to Chien transfers to make than whether anyone will jump back to the 'dark side' from the JAQ group (maybe naively, I don't see the latter happening). Unfortunately I haven't really got anywhere.

Without any concrete evidence at all I do think there could be a link to the Billy Beane share transfers if only due to the close proximity of timing. Neerav got all Beane's 10% on 18th November 2020. The first Neerav to Chien transfer, 2.25%, followed shortly after on 11th January 2021. The second transfer, 1.5%, occurred on 3rd September 2021.

I'm trying to re-assure myself that there won't be another transfer as (a) it's now a good while since the second transfer; and (b) if the transfers were related to Beane's shares then at 3.75% of the 10% Chien has roughly (but annoyingly not exactly) had his cut.

Is there a game of football on Saturday?

 

It’s in the 83rd post on 31st May of a thread started on 30th May titled ‘Reasons for Renewing v Reasons for Not Renewing’ - apologies, I admit my inability/ignorance/ineptitude at linking!

 

Yes, I think we are 'safe' with the input of the block being covered by JAQ's nominee status (length of such being the question).

The problem could come if one of the block decided to sell as Chien and PMG would then be entitled to buy their percentage of that shareholding. (I can't see why they would sell all things being equal - after going all in to wrestle control off Lee and Conway it would be a bit odd to then sell up and give the 'dark side' the chance to come back!)

 

Those transfers are just odd. You'd have to think that at the time, bad blood was at least starting to manifest between the parties, so there had to be some pre existing arrangement that had to be honoured, and as you suggest, the sale of Beanes shares is most likely, but then the amounts don't seem to correlate with what Lee would be allowed, even if all other parties waived their rights. Not to mention why Lee couldn't have found the money at the time for such a nominal transaction.

It's all very bizarre and could be a plot line in Billions, until you remember it's a small, now third tier club in England that has a modest turnover.

 

The route I thought they might take was a threefold approach that is common in VC and turnaround. You generate your standard fees (consultancy/management fees/directorships or whatever you're able to do within the agreement), you introduce a credit line/funding stream and take your cut, and in the meanwhile, you look to develop the asset you have so it derives a return on investment on disposal. And of course, US buyouts often leverage the debt so any sale proceeds are clear water.

Unless we get to the bottom of the increase in directors fees, it would seem they've not done that to the degrees they could.

 

My own thoughts on this differ somewhat in terms of what their motive is.

I believe that the prospectus for Conway’s Counter Press Spac clearly sets out his vision which he sold to Lee, Parekh and his band of New York investors.

His basic premise is that the use of data is nowhere near as common in Europe as in the US and they can take advantage of the use of this to unearth talent and trade at a profit. At no point is the success of individual clubs the key consideration but the success of trading. A few investment banks have produced papers showing the robustness of sport as a sector and the increase in revenue from broadcast/image rights. Put all this together and you can see why investors like a dabble in Football or soccer as some may call it.

My thought is that this is the story he has sold to investors and is why we have a disparate group of shareholders who few people can work out what connects them.

 

Maybe we should rewrite their prospectus for them, based on how it's actually panned out.

We'll be so successful after 5 years, we'll be getting sued, have p***ed off the council to the point we have threatened to leave our long term home, have got relegated needing large scale sales to keep our heads above water and seen an exodus of fans, many of those retained, who couldn't even be bothered to attend games the season before in the worst season in decades. Oh, and can we have another £1m off you... just to stay afloat and so you don't completely lose your existing investment. Yours muchly.