Just now, McClarky said:

Listening to Radio 5 today about FFP.  If we have a similar season this year to last we’ll be struggling to get under the £39m over 3 years loss target either next year or particularly the year after.  Assuming our income will go up with more TV money but the outgoings will be much more than last year with new signings.  If so we’ll need to make big savings (how?) or sell Bradley Dack to balance the books.  

 

Indeed & this is the conundrum that Waggott & Cheston have to contend with...chase the dream & succeed like Wolves or fail like Sheff Weds/Villa, or accept our place, develop & trade young players, pick up some free transfers & so on...we are back to the standard Rovers 1970’s/80’s business model. 

The added complexity now is that every year 3 clubs come down with parachute payments which dwarfs our income. Andy Holt at Stanley has a similar challenge albeit on a smaller scheme but his view is to build a sustainable business which operates a football club. Rovers effectively need to do something similar as FFP makes cheque book ownership much more difficult/risky.

1 hour ago, The Axe said:

Explaining Venky's motives is always difficult but the best I can come up with is this. Mrs D paid 23 million to keep her brothers away from the main business. She thought that it would cost only 4 million a year to keep going, which would be compensated for savings in their advertising budget. It may be that although the connection is no good for the fried chicken market in the main business, poultry, poultry vaccines owning an English club still has some prestige and hence still reduces the advertising budget. 

For the rest. I've been a chartered accountant for well over fifty years and you get a feel for a business run by an accountant and the Rovers have had all the signs of this for some time. Which leads me to believe its Mr Desai is calling the shots. Now almost certainly he would like to extricate them but he's not going to do an Eddie Davis. I think Brockhall has been preventing them moving on. The covenants are basically not enforceable but it would be a brave planner who stood up in an enquiry and stated why he had ignored them when he gave planning permission. So its an obstacle, just don't know how big. I would forget a real attempt to get back to the Premiership. Too big an investment required and too uncertain, not really how accountants' think. I think they are just waiting for a day when they have several cashable assets which they will then use to pay back some of the loan account and see if anyone is willing to pay for the club.

Just my views. They have no claim to be worth any more than anyone else's.

Nice summary...thanks for picking me up on the India issue, never come across that before TBH but there’s always an exception to prove a rule ??

1 hour ago, darrenrover said:

The VH Group has subsidiaries worldwide, including Switzerland. There's no way that our losses aren't tax beneficial somehow.

Well I thought that & stuck my neck out but it seems I was wrong...?

Just now, The Axe said:

And if you need specific confirmation. "There is no concept of tax grouping rules in Indian Tax Law and therefore there is no relief for losses of overseas subsidiaries."

Then I stand corrected...

Just now, HowieFive0 said:

God I hate international breaks ...

 

(only kidding Herbie ..thank you)

Me too ?

I’ll post this under the heading of “item I never ever thought I’d post on a Blackburn Rovers fan site” ? & I accept that it’s not likely to bring people flooding into the site but regarding the tax benefits of owning multi national corporations...

https://www.bbc.co.uk/news/business-20580545

1 hour ago, blueboy3333 said:

They can sell assets to get the money back if they can find a way to legally flog Brockhall. 

I covered this higher up the thread...the extent of the debt dwarfs what they could ever hope to get from a liquidation.

2 minutes ago, tomphil said:

If they pay the wages etc every month out of their company bank account in India ?

Irrelevant to be blunt...all subsidiaries will be grouped up into the ultimate parent undertaking in India...that’s where the final tax computation will take place.

54 minutes ago, The Axe said:

Absolutely no way can these losses be tax deductible.

You couldn’t be more wrong if you had sat down & tried. Ask yourself why all the major accounting firms have global presences and advise their clients on how to minimise their tax bills across multi national tax regimes. ?‍♂️

1 hour ago, Stuart said:

So why do they keep throwing their money into the pit. As you say, they are never getting that money back.

The only way this works for them, to my mind, is if our losses are tax deductible for the group.

Stuart....I’ve absolutely no idea ?‍♂️ I guess the original intention was to improve brand awareness ahead of a business launch in the UK. They’ve DEFINITELY increased brand awareness globally but I suspect not in the way they intended.

Why do they stay ? That depends on your viewpoint - you could argue a sense of loyalty reflecting the mistakes they made & a sense of duty to put it right; you could argue it’s small change & the brand awareness has been worth the investment; you could argue it’s such a small part of their empire, as long as losses are contained, it’s no big deal.

I’d bet it’s a combination of all three to varying degrees...and yes, the losses can be offset against global profits in other subsidiaries so it doesn’t cost them the full up figures...but it still costs them...

1 hour ago, arbitro said:

Thanks for your input which helps the likes of me who doesn't really understand the finances.

Could they write off the debt, walk away and leave us debt free (albeit with unsustainable overheads)?

Yes

13 minutes ago, McClarky said:

The debt is real, let’s have no doubt about that.  We may not have to pay interest on the majority of our debt but it is debt whichever way you look at it.  

It’s debt to the extent that it demonstrates how much we are overspending compared to income, but it’s not debt like your mortgage or credit card bill. It’s more akin to borrowing off your parents. It’s debt, but all parties accept the reality...they’ll not ask for repayment & you’ll never be able to afford to repay ?

50 minutes ago, Stuart said:

A fan argument being touted about all this is that this is “not real debt”. It’s “only owed to Venkys”. They are “backing the manager and the club” and “we should applaud them”.

If this is the case, surely this means that if they do leave then they will be able to write off the debt and in theory leave only the football creditors as liabilities to pass on to the next owner.

Otherwise the debt is real and we should worry if it continues to grow. At the moment there looks to be no sign of this stopping - particularly when Waggott is at the same time capping our home attendance through a ridiculous pricing strategy. Even the vape company, our most prominent advertising at Ewood, is run by a huge Rovers fan so what else is being done to attract investment.

We are run by a cold, careless dictatorship!

The only way Venky’s debt is repaid is if one of the following happens :-

1. Club income increases to such an extent that expenses are fully covered by income leaving a surplus which can be used to reduce that debt...so realistically PL TV money is probably the only way t/o increases to that extent

2. Venky’s find a buyer who values the club at a price which would cover their debt - so north of £250m. The only way Blackburn Rovers will be worth that sort of money is if diamond mines are discovered in the Riverside and oil deposits are unearthed in the car park behind the Blackburn End

if Venky’s want out, those loans are gone, they ain’t getting it back save for putting the club into liquidation & selling the land at Ewood & Brockhall but even then, this would barely dent the sums owed, they still stand to lose a fortune.

If there is something to worry about, it is them stopping to fund the weekly shortfall of £300k, because then we would have a distress sale of our players and we’d be operating like Accrington Stanley. Now there is a an argument that at least this would be sustainable and “honest” & to be frank, I have a sympathy with that view. But forget ever returning to the PL.

2 hours ago, MCMC1875 said:

You are missing my point Herbie. i am not asking which clubs have bounced back from relegation. i am asking which clubs have managed to cut their cloth to match their reduced income following relegation. Bear in mind there is no guarantee of bouncing back from relegation - plenty of clubs have gambled on this and failed, racking up huge losses.

After relegation in 99, John Williams said Rovers had maintained a Premier League budget but that could not be sustained indefinitely. In other words, it was a gamble.

It can be argued that Blackpool FC is not a basket case financially because it is not a loss maker, nor is Stanley.

OK, I think I get you; the best example must be Burnley then. They didn’t overspend after their 1st promotion, used the parachutes wisely, maintained sensible budgets and won promotion again, didn’t overspend, were relegated once more and repeated the trick  again.

if things go to plan, they might get another chance soon....

4 hours ago, MCMC1875 said:

I'm not aware of any example that has been successful, with the exception of Blackpool FC. The drop in income is just too great.

I’m not sure how you are defining success if you are offering up Blackpool (a basket case club if ever there was, thanks to owners, who ended up in the 4th tier) as an exception; but just considering the last 10 years or so, these clubs have been relegated and bounced back, some more than once, so they must have managed the transition to some extent :-

Newcastle Utd

Middlesbrough

WBA

Hull City

West Ham

Wolves

Fulham

Cardiff

and er....Burnley

19 minutes ago, MCMC1875 said:

I am not aware of any football business model, or indeed any business model, that can reduce costs at short notice to cope with the huge drop in income that relegation brings, the exception being Blackpool FC.

1. Distress sale of the highest wage earners

2. Relegation clauses inserted into contracts to reduce wages/bonuses

3. Redundancies of non-playing staff

4. Sale of fixed assets (ground, training ground) 

5. Securitisation of future season ticket revenue

...all of these have been tried at various times by various clubs...

1 hour ago, JHRover said:

Of course 'big' moves by our standards in recent years have usually come about in the same way - by the manager traipsing out to India to meet with Madame and her husband over a few days and receiving approval for additional expenditure. The sort of things that require cash in the bank and an injection of extra funds from above. The wages and running costs seem to get heaped onto the debt mountain as losses every year and on it seems to go with no end in sight. Of course we've seen it before how when the manager wants some cash to strengthen the team with 'big' signings.

So their investment in the club is usually just to keep the bills being paid and keep the place ticking over - investment to actually improve the club - whether that be on quality players, infrastructure, staffing - appears to be very little and only comes through if the manager they trust goes out there with a request.

Don’t forget FFP rules inhibit what owners can put in. It’s a t/o related formula in the Championship so with low crowds & low sponsorship we are always going to be struggling.

Just now, old darwen blue said:

New owners of course, the venkys aren’t the be all and end all!

They absolutely aren’t, but how many potential suitors with the required financial clout are out there to take this on ? 

2 hours ago, MCMC1875 said:

I'll put this into focus.

Income is one sixth of what it was in 2012. Down from £54m to £9m.

#VenkysOut.

We got relegated & lost TV money. So if Venky’s go, we have to find a new owner willing to cover weekly cash flow deficits or eliminate those deficits. 

Only two ways to eliminate- increase t/o (profit) or reduce costs to make good £300k per week. 

Venkys out means an alternative is required.

6 hours ago, scotchrover said:

No- they tried that at the end of Bowyer’s period, bring in a load of cheap players who must have been on next  nothing. The result? We struggled and Bowyer got sacked.  The only club I’ve heard of making a profit away from the top flight is Walsall- I’ve no doubt there’s a few other tinpot outfits that do too.

Most football clubs will never make a profit outside the top flight, due to wage demands etc.,unless a completely different business model is adopted, meaning the incorporation of something like house rentals is placed under a club’s name, meaning tenants’ rents go directly into the club’s cash flow . I think that’s what Millwall are trying to do with their stadium redevelopment, and maybe Brentford. Don’t quote me on that though!

Would it be such a daft idea for Venky’s to put a couple of million into detached properties around England, and rent them out? They could use the money earnt to begin cutting the club’s debt (if that’s even legal). 

Accrington Stanley make a profit 

6 hours ago, perthblue02 said:

A BRFCS love story in the making, future podcast material @Herbie6590 ?

Aren’t these tailored ads which reflect your search history ? ?

34 minutes ago, perthblue02 said:

That was covered in part of the  MCMC 1875 post that you quoted that said "This is of their own making"

Every decision since November 2010 is on their heads obviously with a little help from their just like a family members. But still they had the final say, apparently. So keeping the mess they created afloat is the least they can do.

 

Nearly a decade later, quarter of a billion for a 3rd division runner up trophy, and some worldwide publicity for being monumental bellends  , Bargain!

I agree totally, it’s of their own making, they are effectively paying a tax on their own naivety but my comment was relating to what we would need from a new owner. A new owner would either have to decide whether to reduce costs to breakeven, fund the difference or somehow persuade fans to contribute £300k per week.

Realistically, the only viable source for £300k per week is Premier League TV money....

1 hour ago, Stuart said:

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

They are not taking money out...they are moving it around their group companies. It’s the corporate equivalent of moving money between a cheque account and a savings account. It’s a transfer.

5 hours ago, tomphil said:

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.

 The only external debt is the overdraft which costs us £400k p.a. - Venky’s don’t charge interest on their debt. The losses that they fund are the running costs of the club (in other words wages). 

Any new owner would still have to decide between funding that £17m gap themselves, reducing costs by that amount or increasing turnover (& profit) sufficient to bring in roughly £17m pa.

4 hours ago, MCMC1875 said:

Someone who can appoint a management team that can sign defenders who can head the ball.

These people are idiots. The club will never be a force under these people because they are clueless about running a football club.

This is of their own making. They got rid of Allardyce and appointed Coco. They got rid of the best Chief Exec in the Premier League.

They've put us in this mess, no one else. Fans should be ashamed of backing them.

#VenkysOut

What about the bit where the new owners put in £17m per annum ?