Burnley takeover

Discussion in 'Bulletin Board' started by the quiet one, Feb 2, 2021.

  1. the

    the quiet one Well-Known Member

    Joined:
    Aug 23, 2011
    Messages:
    339
    Likes Received:
    295
    Trophy Points:
    63
    Style:
    Barnsley (full width)
    Redhelen likes this.
  2. nezbfc

    nezbfc Well-Known Member

    Joined:
    Sep 13, 2005
    Messages:
    10,990
    Likes Received:
    6,664
    Trophy Points:
    113
    Style:
    Barnsley (full width)
    I thought the Man utd case was well known tbh
     
    Redhelen and fitzytyke like this.
  3. Old

    Old Gimmer Well-Known Member

    Joined:
    Aug 17, 2011
    Messages:
    4,644
    Likes Received:
    5,177
    Trophy Points:
    113
    Style:
    Barnsley (full width)
    It’s known as a ‘leveraged buyout’. In any other walk of life it would be called fraud.
     
    Farnham_Red and Redhelen like this.
  4. wak

    wakeyred Well-Known Member

    Joined:
    Jul 9, 2008
    Messages:
    9,831
    Likes Received:
    8,595
    Trophy Points:
    113
    Location:
    the clues in my imaginative online moniker
    Home Page:
    Style:
    Barnsley (full width)
    Its like me going to buy a house but rather then me borrow the money I make the current home owner borrow the money for me, utterly bizarre.
     
    pompey_red, Old Gimmer and Redhelen like this.
  5. Micky Finn

    Micky Finn Well-Known Member

    Joined:
    Nov 2, 2005
    Messages:
    16,305
    Likes Received:
    13,092
    Trophy Points:
    113
    Occupation:
    Light bender
    Location:
    It depends who's asking...
    Style:
    Barnsley (full width)
    Happy place.
     
    Stephen Dawson and Redhelen like this.
  6. Farnham_Red

    Farnham_Red Administrator Staff Member Admin

    Joined:
    Jul 18, 2005
    Messages:
    34,391
    Likes Received:
    23,828
    Trophy Points:
    113
    Location:
    Farnham
    Style:
    Barnsley
    No really - It only works with clubs that had real value at the time - Man U and Burnely both debt free with cash reserves makes raiding the cash and mortgaging the business viable.
    Barnsley have no assets to mortgage against.
    For Burnley basically the existing shareholders have the cash that the business is worth - the new shareholders are running a club which is basically owned by the bank. Though if it all goes t!ts up they walk away and leave the bank with the losses - so its unlikely the interest rate they are paying is going to be low. If Burnley get relegated now they are likely to do a Wigan or Bolton. If they had gone down last season they would be coming straight back up with no financial problems. Bad news for their fans
     
  7. Arc

    Archerfield Well-Known Member

    Joined:
    Jan 9, 2013
    Messages:
    2,500
    Likes Received:
    6,498
    Trophy Points:
    113
    Location:
    Archerfield, Scotland
    Style:
    Barnsley (full width)
    It may seem like the new owner has used the club’s money to purchase it but that is illegal. The purchaser has to fund the transaction with cash, either their own or borrowed, but these initial borrowings cannot be secured against the target. An example of this was Craig White with Rangers, he claimed to have the funds to undertake the purchase but was actually generating the funds by securing a loan against future season ticket sales. That is illegal.

    What is perfectly legal and in many ways isn’t that dissimilar is purchasing a business but then putting debt in to the business to recover your purchase price. This is how many private equity firms work, leveraged buy-outs, with the business servicing the debt and repaying the loan. This is exactly the approach adopted by the Glaziers with Man Utd.
     
    DannyWilsonLovechild likes this.
  8. Dep

    Deputy Dawg Well-Known Member

    Joined:
    Oct 4, 2017
    Messages:
    612
    Likes Received:
    560
    Trophy Points:
    93
    Gender:
    Male
    Style:
    Barnsley (full width)
    They purchased the club using loans and hedge fund money
    then when the deal went through they moved that debt onto the club against the clubs assets and income
    they pay themselves /receive 50 % dividend of the net income of the club every year
    when they sell for billions
    they turned down a offer of over 4 billion + other year
    they will get that money and any of there unpaid debt will be left with the club.
     
    Redhelen likes this.
  9. the

    the quiet one Well-Known Member

    Joined:
    Aug 23, 2011
    Messages:
    339
    Likes Received:
    295
    Trophy Points:
    63
    Style:
    Barnsley (full width)
    Thanks for your explanation Farnham. That's clearer.
     

Share This Page