Blumarble Capital Ltd.

wanderlust wrote:

rammywhite wrote:

Breadman wrote:The plot thickens.....

None of this makes any sense to me.

How on earth can a third tier football club be viewed as an attractive investment opportunity?

Short of picking it up cheap, investing nowt and then selling anything that wasn't nailed down.

Odd....

Bredders, I won't blind you with science but the most attractive thing about the business are the tax losses.
If you own 75%+1 of the Ordinary shares you are a group for tax purposes and can transfer trading losses ( which are very substantial in BWFC) to other parts of the group (which are profitable) provided the tax loss making company continues to trade in the same business.
Tax law is seriously complicated but that is more often than not the reason for buying a business as apparently nonsensical as a football club

Am I not right in thinking that the principle behind group taxation is to fully utilise the tax allowances of the entire group?

If so, does that imply that Blumarble companies are not already fully utilising every bit of their allowance? That would be worrying in itself.

I suppose if you have a load of consultancy companies that work on high margins due to their relatively low cost base there would be room to pile some cost in, but is it really the case that trading losses in a football club can be ascribed to e.g. a tax consultancy? Wouldn't the tax consultancy have to demonstrate that they bought the crap players and therefore incurred the loss?

Or is it assumed that "the group" trades in everything and therefore can lose money wherever and however it likes?

Lusty-you're quite correct that any company will attempt to utilise any tax allowances they can to reduce their  current tax liability-. But the tax rules are that it doesn't matter where the tax losses arose- if you are part of a group for tax purposes then losses in one group company can be offset against tax liabilities in other parts of the group. So - in your example as long as they are all corporate entities and there  is a parent (or holding) company that owns at least 75% of the voting ordinary shares in any other company ( and is therefore part of the group) then losses on any group company can be offset against any the profits. So a corporate tax consultancy making profits should buy a loss making football club, and offset its trading losses against the tax consultancies profits. As long as HMRC can be persuaded/convinced that its a  bona fide transparent transaction and the losses are not fictitious.
But of course you've got to shell out the money to buy the loss making football club initially- and you've got to get it on the cheap.
Sound familiar?

This tax loss working is all new to me. I was aware of it, but not the details. Thanks Rammy.

Does this mean that to optimise there profit from the tax loss aspect, investment in the club will remain minimal, i.e. enough to keep it alive, but not much more ?

gloswhite wrote:This tax loss working is all new to me. I was aware of it, but not the details. Thanks Rammy.

Does this mean that to optimise there profit from the tax loss aspect, investment in the club will remain minimal, i.e. enough to keep it alive, but not much more ?

That's about right Glos. From a purely mercenary perspective keep the old dog alive and trading but don't waste money trying to improve it, if the tax angle is the one driving the transaction.
In BWFC's case I don't think that's the overriding reason. I think it will be to improve the fortunes of the club- basically to get it to the fringes of the Championship playoffs  (which is where I think we historically should be) and then sell it off as a going concern to the highest bidder as ,if we can achieve that ,we're not a bad prospect.
The tax issues will not be ignored, but they might be on the back burner for a while.
But they would be attractive to a seriously profit making company that wants a football club as an executive toy- like so many other loss making football clubs ( i.e.virtually all of them! ) in the UK at the moment.

You have to laugh.

Hipster_Nebula wrote:You have to laugh.

Sorry Hipster...

...at what?

At thinking a takeover by dean holdsworth and Ken Anderson would be anything other than farcical.

Hipster_Nebula wrote:At thinking a takeover by dean holdsworth and Ken Anderson would be anything other than farcical.

We all know you'd love it to fail. Disgraceful.

There is no proof that this takeover has been "farcical". In fact I'd say it's going as planned so far.

We have a club to support, they're getting rid of the high earning ponces, and looking for a manager who can work wonders on no budget.

Stop fucking sniping and get behind the club.

How exactly are they "getting rid of the high earning ponces", as you suggest?

Because as far as I'm aware, binning some kids on minimum wage from the club shop and telling the milkman that it's one pint a day now, rather than the two they previously ordered, isn't exactly going to address the issue of having to pay Pratley his 16 grand a week that they haven't got.

Do tell because, like Dumbo, I'm all ears......

rammywhite wrote:

wanderlust wrote:

rammywhite wrote:

Breadman wrote:The plot thickens.....

None of this makes any sense to me.

How on earth can a third tier football club be viewed as an attractive investment opportunity?

Short of picking it up cheap, investing nowt and then selling anything that wasn't nailed down.

Odd....

Bredders, I won't blind you with science but the most attractive thing about the business are the tax losses.
If you own 75%+1 of the Ordinary shares you are a group for tax purposes and can transfer trading losses ( which are very substantial in BWFC) to other parts of the group (which are profitable) provided the tax loss making company continues to trade in the same business.
Tax law is seriously complicated but that is more often than not the reason for buying a business as apparently nonsensical as a football club

Am I not right in thinking that the principle behind group taxation is to fully utilise the tax allowances of the entire group?

If so, does that imply that Blumarble companies are not already fully utilising every bit of their allowance? That would be worrying in itself.

I suppose if you have a load of consultancy companies that work on high margins due to their relatively low cost base there would be room to pile some cost in, but is it really the case that trading losses in a football club can be ascribed to e.g. a tax consultancy? Wouldn't the tax consultancy have to demonstrate that they bought the crap players and therefore incurred the loss?

Or is it assumed that "the group" trades in everything and therefore can lose money wherever and however it likes?

Lusty-you're quite correct that any company will attempt to utilise any tax allowances they can to reduce their  current tax liability-. But the tax rules are that it doesn't matter where the tax losses arose- if you are part of a group for tax purposes then losses in one group company can be offset against tax liabilities in other parts of the group. So - in your example as long as they are all corporate entities and there  is a parent (or holding) company that owns at least 75% of the voting ordinary shares in any other company ( and is therefore part of the group) then losses on any group company can be offset against any the profits. So a corporate tax consultancy making profits should buy a loss making football club, and offset its trading losses against the tax consultancies profits. As long as HMRC can be persuaded/convinced that its a  bona fide transparent transaction and the losses are not fictitious.
But of course you've got to shell out the money to buy the loss making football club initially- and you've got to get it on the cheap.
Sound familiar?

Cheers Rammy - corporate taxation not an area of expertise for me but I've got the gist. 

If what you're saying is right it could work in a positive way for BWFC e.g. if the investment can be found for growth, tax could be minimised. Unfortunately we're already in HMRCs bad books and they certainly wouldn't like having that shoved down their throats. 

Let's hope that the group element is used as a tool for growth and moreover that the new team are more switched on that the last lot.

While I am the first to admit I'm not all that thrilled by what's going on at the club (What? Really? I hear you cry ) even I find it well nigh impossible to believe that Ken and Dean would be stupid enough to either fail or be late to make the very first payment on a loan, especially not when you consider how closely the League is watching every single thing we do. I imagine HMRC is looking at us just as closely if not more so and to invite the kind of trouble both those bodies could cause us borders on the insane if not the criminally negligent. 

Whether or not Ken and Dean have fallen out is speculation at this moment in my opinion. I suspect they may have somewhat differing views of how to move the club forward but I seriously doubt their working relationship is in complete disarray the way some people are suggesting. I think that may be about differing viewpoints rather than actual arguments. Ken is likely to look at this purely on a numbers basis, he sees the books and thinks about how to balance them and nothing else while Dean is thinking in footballing terms and is prepared to take some risks and gamble on gaining football success (eg getting back to the Championship at the first attempt even if it means spending more money than Ken wants to in the short term.)

Both viewpoints have merit but if I had to put my own money on it I'd bet Ken would win if that's the real situation because the League and HMRC are hovering over us like hawks over a crippled rabbit and they will drop down on us hard if they don't like what they see.

If Ken & Deano balance the books and we remain in league 1 for a year or two ...... then we are more attractive to potential new buyers...... let's say for 10 million or some other number much higher than they paid for us.  Two years work and away with xx millions of pounds in pocket...not bad for two years work wouldn't you say. And before that the losses are tax write-offs to boot. Ken & Deano might not be a daft as we first thought. 

terenceanne wrote:If Ken & Deano balance the books and we remain in league 1 for a year or two ...... then we are more attractive to potential new buyers...... let's say for 10 million or some other number much higher than they paid for us.  Two years work and away with xx millions of pounds in pocket...not bad for two years work wouldn't you say. And before that the losses are tax write-offs to boot. Ken & Deano might not be a daft as we first thought. 

 People don't go in for these multi-million pound financial transactions with their eyes closed. They will have taken very good and probably very expensive financial advice before diving in. It won't be buying a football club because of their dedication to the game or because  they've always wanted to own one.
They will probably come up smelling of roses.

rammywhite wrote:

Sluffy wrote:

rammywhite wrote:

Breadman wrote:The plot thickens.....

None of this makes any sense to me.

How on earth can a third tier football club be viewed as an attractive investment opportunity?

Short of picking it up cheap, investing nowt and then selling anything that wasn't nailed down.

Odd....

Bredders, I won't blind you with science but the most attractive thing about the business are the tax losses.
If you own 75%+1 of the Ordinary shares you are a group for tax purposes and can transfer trading losses ( which are very substantial in BWFC) to other parts of the group (which are profitable) provided the tax loss making company continues to trade in the same business.
Tax law is seriously complicated but that is more often than not the reason for buying a business as apparently nonsensical as a football club

Yes, I can understand that but is Anderson's businesses paying what, say £6 million in a tax per year, to make his acquisition of Bolton worthwhile to do this?

A rhetorical question as I don't expect anyone to know his financial position.

Anderson has had a ban stopping him being a company director which has only recently been served and the only businesses he is listed as a director are the five linked BWFC businesses.

I know he has his own company Inner Circle and perhaps others too.

We know the club is making roughly £1 million per month loss until the end of June and let's say half a million per month for the next year (hence £6 million) so I don't know if or how he can transfer the loss to other parts of his 'group' and even if he could are they paying £6 million or more per year in tax to make everything worth his while?

He also resides in Switerland so I guess he does that for tax reasons more than liking of toblerone and would have thought he was already minimising his company tax liability as much as he could already.

I somehow can't believe he is already paying HMRC £6 million plus p.a. thus requiring him to take on a tax write off business such as our club.

You may well be right but it seems there most be easier controlled businesses to take over to do such a strategy than taking a punt on the car crash of a club such as we currently are.

Just my line of thinking.

There are substantial tax losses at BWFC which have accumulated over many years and these are available for group relief now and also into the future. They're only ever lost if a business is wound up, ceases to exist so you can perhaps see why the club was 'rescued' an hour before it was declared dead in the High Court.. These tax losses could well prove to be the biggest asset the club has. Andersen's  personal position is actually irrelevant- the tax losses will go to any company which is part of a tax group- essentially the 75% rule. Andersen's group (or any group that he may in future sell to) don't have to use the losses immediately- they can be carried forward indefinitely  as long as the originator of the losses (that's BWFC) stays n the same trade. As long as they are a football club the losses can be used at any time. There is a flourishing market in loss making companies being sold for their accumulated trading losses which can be group relieved against the future profits of any corporate owner. So even if Andersen can't use them this year ,they can be used at any stage in the future but the rules indicate that you should use them as soon as possible, and it makes commercial sense to do so.
Sorry to be boring- but that's a major part of the financial jiggery-pokery that's others on here have alluded to in the past

Thanks Rammy you've given the most plausible and realistic reasons I've found anywhere as to the thinking behind the investment of Anderson into the ownership of the club but even now I still can't see it being the exact fit for the following reasons.

I presume a group of companies have to be some how inter connected for the 75% tax loss transfer to be transferable but where are these other companies?

As far as I can understand it Holdsworth bought Burnden Leisure with its four off-shoot business by his Sport Shield business (of which Holdsworth holds all the shares) which in turn seems to be a very new company that has even filed its first accounts yet - so can't be paying any substantial tax to HMRC.

Even if Sports Shield was part of a larger umbrella company owned by Holdsworth I still can't see him being so successful in business to have his companies already paying millions in tax per year already.

As far as I can understand the situation Anderson was brought in as the financing partner to the purchase of the club at the last minute - wasn't the clubs purchase going to be bought in partnership with some hedge fund investment company until the last moments of the deal when they were replaced by Andersons Inner Circle.

I'm not sure how the Holdsworth/Anderson tie-up was done but it does seem we have 'joint-owners' right now.

If that really is the case Anderson would not have 75% of the shares and thus not be able to transfer the tax loss elsewhere.

Maybe the partnership is 75%/25% to Anderson (in which case shouldn't that be reported to Companies House?) and he can have access to the tax loss via Inner Circle but then the question is (rhetorically) what other group of companies does he have that he can set the tax loss against?

He is not registered at Companies House of being a Director anywhere else but at Burnden Leisure etc, but maybe Inner Circle (which I assume is privately owned by Anderson and his wife Patricia and doesn't seem to be listed in companies house nor Patricia as a director) may have business registered abroad?

If so would HMRC allow the tax loss to be set off against profits of business registered and taxed abroad?

I don't doubt you are on the right track to the understand the thinking of the take over (at least from Andersons involvement) but I still can't see the clear picture yet - maybe I never will - but thank you for fantastic efforts in trying to enlighten me and the rest of our fellow Nutters.

^ This.

What he said.

Sluffy,
Whether Andersen is a director or not isn't the main issue- its who owns the shares. The fact that he isn't a director of a company doesn't really matter. He's probably a shareholder in some companies where the directors are associates, or his wife, or even another company can be a director - it's an evil and complicated mess. A body corporate (to use the legal terms) is a person in law and can act as a person.
Being a bit imaginative I can see BWFC being sold on in the not too distant future to another body corporate (a company) when the Andersen/Holdsworth axis have stabilised the business and added value to it in the process. That new owner will itself have access to group relief of tax losses provided it owns 75% of the shares and BWFC is still in the same trade-that of a  professional football club.. Those tax losses go with the business and whoever has 75% of the ordinary equity gets access to the losses provided that its an arms length transaction which is not just hobby farming and approved by HMRC.
Whether tax losses can be relieved against overseas gains depends on the UK double tax treaties, but generally the answer is no, although EU rules do allow it for EU companies. Switzerland is not an EU member but I suspect that the UK/Switzerland double tax treaty would probably disallow it.
 The possibilities are endless- but you can bet that those advising the Axis are well aware of what they are doing.
No foreign owner ,apart perhaps from Abramovich will own football clubs in their own right- it will all be done through personal companies to harvest any benefits going and also to protect individuals against legal and bankruptcy proceedings. Look at United and the Glazers as a  prime example of how to leverage massive financial advantage from ownership- although we, of course are in a different league both metaphorically and factually.

rammywhite wrote:Sluffy,
Whether Andersen is a director or not isn't the main issue- its who owns the shares. The fact that he isn't a director of a company doesn't really matter. He's probably a shareholder in some companies where the directors are associates, or his wife, or even another company can be a director - it's an evil and complicated mess. A body corporate (to use the legal terms) is a person in law and can act as a person.
Being a bit imaginative I can see BWFC being sold on in the not too distant future to another body corporate (a company) when the Andersen/Holdsworth axis have stabilised the business and added value to it in the process. That new owner will itself have access to group relief of tax losses provided it owns 75% of the shares and BWFC is still in the same trade-that of a  professional football club.. Those tax losses go with the business and whoever has 75% of the ordinary equity gets access to the losses provided that its an arms length transaction which is not just hobby farming and approved by HMRC.
Whether tax losses can be relieved against overseas gains depends on the UK double tax treaties, but generally the answer is no, although EU rules do allow it for EU companies. Switzerland is not an EU member but I suspect that the UK/Switzerland double tax treaty would probably disallow it.
 The possibilities are endless- but you can bet that those advising the Axis are well aware of what they are doing.
No foreign owner ,apart perhaps from Abramovich will own football clubs in their own right- it will all be done through personal companies to harvest any benefits going and also to protect individuals against legal and bankruptcy proceedings. Look at United and the Glazers as a  prime example of how to leverage massive financial advantage from ownership- although we, of course are in a different league both metaphorically and factually.

Thanks Rammy, very helpful information as usual.

I did understand that it was the share ownership and not being a director that was key in transferring a tax loss but I was trying to say in my cack-handed way that as far as I can understand things Holdsworth has bought Burnden Leisure from Davies via his Sport Shield business of which he remains the only shareholder.

Interestingly Holdsworth has registered Sports Shield as a DORMANT company on the 12th April 2016?

[You must be registered and logged in to see this link.]

He is also the only share holder of Sport Shield BWFC too (as per Companies House).

I couldn't therefore square the circle as to Anderson's involvement on the basis of the tax transfer benefit (which I totally agree is almost certainly the reason for his involvement into the club) and mused (rhetorically) further as to even if he was able to apply the tax loss transfer himself, where would he apply it too, on the basis that he doesn't seem to have any obvious UK based companies to apply it to and that he is a resident of Switzerland and probably his base for his financial dealings is linked to there also.

His wife not seemingly having any company director positions also closes down another obvious lead that I had.

I've no doubt Anderson knows what he is doing and will not be losing any of his money in this venture and that it would seem completely against his best interests to let BWFC go to the wall - which is good for us (and bad for those in the ST dreaming about club ownership any time soon!) - but as of yet I can't see clearly how he can achieve this unless it is a short term venture of his to stabilise the club until someone buys out Holdsworth for the tax loss transfer rather than him himself being the user of the facility (unless of course he buys out Holdsworth himself).

Obviously I will never know Anderson's business details (they are not my business to know anyway) but I just can't see individuals who are paying millions in tax not having taken tax avoidance measures already and thus my speculation would be they are doing this in the expectation of some major company or someone super wealthy with many millions tax exposure looking for a business like BWFC to benefit from the transferable tax loss.

Hope they find them too!

It's all very murky and has an unpleasant aroma around it. They're welcome to it.
I'll stick to a simpler life.

Wow. Does anyone else have a headache after reading all that? Far too complex for me to get my tiny mind around.

Bwfc1958 wrote:Wow. Does anyone else have a headache after reading all that? Far too complex for me to get my tiny mind around.

I think you need to have an interest in this sort of thing to follow it more than claiming your mind isn't big enough - I can tell from the many posts that you have made on Nuts that you are plenty smart.

To me the vast majority of people don't seem to grasp that the owner of a football club and it fans don't necessarily want the same thing out of it.

A fan wants success, the owner wants to make money - and the two aims are not always compatible.

As a fan I want the new owner to spend a fortune and give us a team of players that will take us back to the top so I couldn't get my head around what is was that made the likes of Holdsworth want to buy the club so eagerly from Davies and how he could possibly improve us once he bought us.

To be honest I still can't get it fully but Rammy has put forward the best explanation yet that as odd as it may seem the 'debt' of the club is the bit that actually makes it attractive to some people and that was why Davies knew that no matter what he did and asked for, that the club was always going to be bought from him because going into Administration would have wiped that debt clean.

The debt can be used to offset the tax amount to be paid by other companies also owned by the owner of BWFC.

I guess in some ways you can call it as a sort of corporate tax dodge.

How that can be applied by Holdsworth and/or Anderson is really what much of the discussion above was on about as I can see the attractiveness for the deal but I can't see how the current owners can actually apply it to themselves and thus our speculation that they really are not here to asset strip the club (which for a long time seemed to be their only possible way to survive long term) but more likely keep the club afloat and sell it on again in the short term, is a more likely option.

If we can understand how the owners are thinking we can then more likely understand what is going to happen to the team itself.

That's the idea of all our financial speculation anyway!

Bwfc1958 wrote:Wow. Does anyone else have a headache after reading all that? Far too complex for me to get my tiny mind around.

Apologies 1958-it's a very complex subject but its at the heart of a lot of financial shenanigans in business and its where financial advisers and canny business people can make a lot of money.Imagine working for the Fraud Office and trying to unravel this across countries!!
To me the real question is why others weren't interested in the club from a financial angle and there must have been something else happening in the background (like Eddie asking too much initially) that frightened others off.