Blackburn report £36.5m loss

[seagullmouse]

I don't want us to get promoted just to get hammered every week or starting paying over the odds for chamakh types.

Both are embarrassing.

Invest loads in youth and get promoted in 10 years instead please.

 

[El Presidente]

All very well but all that ignores further development of Falmer.

Without the club there would have been zero chance of any property development in that area - as it is we already see outline plans being prepared for commercial development in the form of a hotel.

TB's money is in property and that is where I see the future for him with the club which has been kept as a separate company from the stadium and any other development.

It doesn't make commercial sense to sink £150 million into a venture on the off change you might make some ancillary money from operating a hotel. Hotels are not particularly profit making, and realistically nothing is going to open before 2017/18 by which time we could have been in and out of the PL.

 

[Bwian]

They get fined, and he money the that they are fined get's spread among the clubs in the championship. That managed to stay within the ffp rules!

So, if a club is 'fined' by the FL do those fines get included in that club's P&L statement for the following season/financial year?

 

[father_and_son]

I don't want to be rude, but you are talking nonsense.

Let's look at the Albion dispassionately and purely as a financial opportunity.

The business has only made a profit once in 40 years.

The owner has invested £150 million into the business and has not taken anything out.

There is a one in eight chance that the business could increase its revenues from £22 million to about £80 million a year. If revenues do rise, then operating costs are likely to rise from £31.5 million to at least £70 million.

Total losses in the industry in which the business operate were last year £98 million.

There is a one in three chance that the increase in revenue might only last one year. A one in two chance that the increase will last only two years.

All your figures relate to turnover and I wouldn't dispute any of them, however the specific point I made is about capital appreciation. The value of "BHAFC" as a sum of its assets has increased and continues to increase under the stewardship of TB.
There is a big difference between an annual profit and capital appreciation. Business are bought and sold based on the value of assets and "potential" earnings as well as their previous track record. Our holding company will be the beneficial owners of the Amex, the training ground, the player's contracts and the goodwill of the club through the various subsidiaries. Whilst Tony builds the value of each of these through investment now, the total value of the package that he could sell has the potential to be greater than the money invested, even if we have lost money each and every season.

A future potential buyer will see a club with a first class stadium, a class A training facility and a league record STH fanbase as a potential investment and buy that as a complete package for considerably more than Tony has put in.

In a future of regulated financial limits, TB will be laughing all the way to the bank because the asset-value of what he has created will give a good return on investment for the money he has put in. In a unregulated marketplace, football clubs will continue to be playthings for the super-rich, a situation which benefits very few clubs in the long run.

 

[father_and_son]

All very well but all that ignores further development of Falmer.

Without the club there would have been zero chance of any property development in that area - as it is we already see outline plans being prepared for commercial development in the form of a hotel.

TB's money is in property and that is where I see the future for him with the club which has been kept as a separate company from the stadium and any other development.

TB's money is in property so he is used to playing the long game with his investments. Owning commercial and residential property is rarely solely about income vs costs. It is about buying and selling property and reaping the rewards of the increase in value.

 

[El Presidente]

A future potential buyer will see a club with a first class stadium, a class A training facility and a league record STH fanbase as a potential investment and buy that as a complete package for considerably more than Tony has put in.

In a future of regulated financial limits, TB will be laughing all the way to the bank because the asset-value of what he has created will give a good return on investment for the money he has put in. In a unregulated marketplace, football clubs will continue to be playthings for the super-rich, a situation which benefits very few clubs in the long run.

No it won't

a) The fanbase, whilst superb this season, will taper off from next season onwards if we are not promoted. However, matchday income of having an extra few thousand bums on seats is not significant compared to parachute payments
b) What is a 'good return'? An investor would be looking for 15-20% given the risk associated with the Albion. For TB to make the profits you allude to, he would sell out for about £200 million, so an investor would be looking to make £30-40 million a year profit, on a business which last year had turnover of £22 million. Even if we reduced the return to 10%, the numbers do not stack up.
c) As far as regulated financial limits, all they represent is a commitment to reduce losses, not to make profits.

 

[El Presidente]

TB's money is in property so he is used to playing the long game with his investments. Owning commercial and residential property is rarely solely about income vs costs. It is about buying and selling property and reaping the rewards of the increase in value.

Why would the Amex increase in value, it makes losses each year.

 

[Creaky]

It doesn't make commercial sense to sink £150 million into a venture on the off change you might make some ancillary money from operating a hotel. Hotels are not particularly profit making, and realistically nothing is going to open before 2017/18 by which time we could have been in and out of the PL.

Who's to say it will end with just an hotel?

Ask yourself why the stadium and any other property developed on the site is owned by a separate company to the football club?

 

[El Presidente]

Who's to say it will end with just an hotel?

Ask yourself why the stadium and any other property developed on the site is owned by a separate company to the football club?

Because for FFP purposes the accounts just deal with the football side of things, so it is easier to have the club as a separate entity.

 

[Creaky]

Because for FFP purposes the accounts just deal with the football side of things, so it is easier to have the club as a separate entity.

It also means there are two separate legal entities - one the club, a loss making setup the other a profitable property development company. Either one can be sold, (or in the case of the club 'given' away together with its losses.), without affecting the standing of the other. If I were in TB's shoes it is exactly how I would have set it up. It offers security for the loans made, in case of disaster, whilst at the same time enabling him to be a fan and subsidise the club. The bottom line though is that the club doesn't have as much security in 'owning' their own stadium as many think, because they don't.

 

[father_and_son]

No it won't

a) The fanbase, whilst superb this season, will taper off from next season onwards if we are not promoted. However, matchday income of having an extra few thousand bums on seats is not significant compared to parachute payments
b) What is a 'good return'? An investor would be looking for 15-20% given the risk associated with the Albion. For TB to make the profits you allude to, he would sell out for about £200 million, so an investor would be looking to make £30-40 million a year profit, on a business which last year had turnover of £22 million. Even if we reduced the return to 10%, the numbers do not stack up.
c) As far as regulated financial limits, all they represent is a commitment to reduce losses, not to make profits.

Again... your comment is all about turnover. Its the difference between an investor wanting a short term return and one wanting a long term one. As you can't separate the two I can only assume that all your investments are about what interest rate you get for your money, not about how the capital will increase over time. Fortunately there are sufficient investors in the world (including TB) who do play the long game and can see why losing money every year is not necessarily a bad thing if the capital gain covers it and more.

 

[El Presidente]

Again... your comment is all about turnover. Its the difference between an investor wanting a short term return and one wanting a long term one. As you can't separate the two I can only assume that all your investments are about what interest rate you get for your money, not about how the capital will increase over time. Fortunately there are sufficient investors in the world (including TB) who do play the long game and can see why losing money every year is not necessarily a bad thing if the capital gain covers it and more.

There is no evidence to suggest there will be any significant capital gain at the Amex though. It is a single purpose asset, and generates negative cash flows as well as profit.

Brighton is littered with projects that have gone tits up, and I can't see why a hotel and cinema, bowling alley, Nandos, Frankie & Benny's complex would

(a) Get planning permission for the whole complex
(b) Have punters flocking to the site given the parking restrictions and less than brilliant transport links.

TB has put his money into the Albion because he loves the club, if he wanted to make money from property there are dozens more lucrative projects that he could make far more out of, far quicker, and with far less risk.

 

[Creaky]

There is no evidence to suggest there will be any significant capital gain at the Amex though. It is a single purpose asset, and generates negative cash flows as well as profit.

Brighton is littered with projects that have gone tits up, and I can't see why a hotel and cinema, bowling alley, Nandos, Frankie & Benny's complex would

(a) Get planning permission for the whole complex
(b) Have punters flocking to the site given the parking restrictions and less than brilliant transport links.

TB has put his money into the Albion because he loves the club, if he wanted to make money from property there are dozens more lucrative projects that he could make far more out of, far quicker, and with far less risk.

I agree - at the same time he is a shrewd business man who has left himself an 'out' in case of emergencies.

 

[KZNSeagull]

Difficult to say with confidence, and the wage bill ranges from Swansea (£35 million) to Citeh (£202 million).

But if we say that 80% of the wage bill goes on first team squad players, and assuming a first team squad of 25, this would work out at £2.66 million per player per year, or £51,000 a week.

So, at todays wages, we can safely assume an average of 20 to 25k per player to match the lowest wages in the PL (in 2011). Bloody Hell!

 

[father_and_son]

There is no evidence to suggest there will be any significant capital gain at the Amex though. It is a single purpose asset, and generates negative cash flows as well as profit.

Brighton is littered with projects that have gone tits up, and I can't see why a hotel and cinema, bowling alley, Nandos, Frankie & Benny's complex would

(a) Get planning permission for the whole complex
(b) Have punters flocking to the site given the parking restrictions and less than brilliant transport links.

TB has put his money into the Albion because he loves the club, if he wanted to make money from property there are dozens more lucrative projects that he could make far more out of, far quicker, and with far less risk.

We clearly aren't going to agree on this so happy to agree to disagree but I'd add one final comment. To my mind any real estate in the immediate area around Brighton is a solid, long term investment. Its a city that nearly matches London for land value and is growing in both size and affluence. Therefore, even if you assume no long term value to the stadium itself, the real-estate its built on will continue to appreciate in value for anyone looking at the long term.

 

[supaseagull]

Invest loads in youth and get promoted in 10 years instead please.

You are very very naive

 

[KJP]

Don't forget we will get a cut of the fine as long as we meet FFP, the way things are going the money from the fines can be our transfer budget each season

 

[sully]

We clearly aren't going to agree on this so happy to agree to disagree but I'd add one final comment. To my mind any real estate in the immediate area around Brighton is a solid, long term investment. Its a city that nearly matches London for land value and is growing in both size and affluence. Therefore, even if you assume no long term value to the stadium itself, the real-estate its built on will continue to appreciate in value for anyone looking at the long term.

The simple analogy that most will understand, surely, is your own house.

It costs me money every year to own my own house. Therefore, my P&L accounts will show a loss.

However, over the longer term, the value of that property increases. How can that be?

 

[seagullmouse]

You are very very naive

I would sooner invest in youth and fail than spend our way to the PL just to get immediately relegated and thrashed every week.

What's there to love about that outcome? And in what sense is that 'our club' anymore if its funded by PL TV money rather than gate receipts and we field a bunch of mercenaries. Sounds like a very sad outcome to be hoping for.

 

[Thunder Bolt]

We clearly aren't going to agree on this so happy to agree to disagree but I'd add one final comment. To my mind any real estate in the immediate area around Brighton is a solid, long term investment. Its a city that nearly matches London for land value and is growing in both size and affluence. Therefore, even if you assume no long term value to the stadium itself, the real-estate its built on will continue to appreciate in value for anyone looking at the long term.

The land is on a long lease from Brighton council.