Administration and beyond!

Gentlemen,  I have done more work on this, looking at the 2019/20 report and accounts for FVWL, the Liquidator's reports (all of them) and the Companies House filings.  This is my conclusion. As usual, I stress, I'm not a qualified (or even unqualified) accountant or financial expert, just an enthusiastic amateur and I may have some or even a lot of this wrong.  Obviously, a lot more should be apparent from the 2020/21 report and accounts, but we don't know how long they'll take to be released.  Anyway, here it is:

As far as can be discerned from the 20/21 Report and Accounts, FV and UKFF put a total of £14.5m into FVWL up to February 2021 in a mixture of capital and loan notes.
This is verified (more or less) by the capital statements lodged on the Companies House website pages for FVWL.
Then a further £2m (approx.) in capital at the time the UKFF and other CLN’s and loans were converted to shares in October 2021 – this from the RP04 at Companies House lodged on 17-01-2022.
This has paid for day-to-day running of the club and some administration items.
 
In addition, a further 471,434 shares were issued on 21-01-2022 with 58,929 paid-up and 412,505 not yet paid-up, seemingly at £1/share - in my view, to be confirmed!
 
Debts remaining from the latest liquidator’s report are:
 
Unsecured creditors of £5,562,541 (maximum) at 35p = £1,946,889
HMRC £987,387 payable in full over 24 months
HMRC £2,562,777 at 35p = £896,972 payable over 36 months
PBP £5.5m (possibly plus interest)
Brett Warburton £2.5m (possibly plus interest)
Original administrator’s fee still o/s £200,841
Additional administrators fee £528,463
CCL £132,819
 
Total = £4,693,371 + £8m for the two secured items (without interest)

As far as we know, although we need to wait for the report and accounts to verify this, there is no further or new debt.  Of course, if there were, this would be critical to the numbers!
 
For £16.5m (plus whatever went in in January) plus around £12.5m (maximum) debts still to be paid, FVWL will have purchased BWFC, run it for three years and satisfied creditors.
 
So, is £28.5m (plus the January 2022 money) a fair price to pay to own a mid-table, debt-free (as far as we know), L1 club with Bolton’s heritage, a 28,000 seater stadium, a training ground and some other land (against which Brett Warburton’s debt is secured – see Liquidator’s statement) with a team that now has some saleable assets?  Your guess is as good as, or maybe better, than mine.

Excellent work Barry, well done and thank you.

There is nothing new in there that is new to me but it is welcoming that you are on the same page as I am (Bob is several pages in front of me though!).

The thing that you've not really mentioned is what have FV got out all of this???

What I mean is if your summary is correct (and I'm not saying it isn't) then in simple terms they bought the club and assets for £28.5m, run it for three years and might reasonably expect to get their money back but if I had £28.5m I'd expect some sort of return on it over three years and certainly not be hoping just to break even.

And as far as I can understand things it certain looked to me that they paid over the book value of the assets when they bought the business.  

I know something is only worth what someone will pay for it but I will be a little surprised if and when they look for a buyer that they will end up turning much of a profit, if any at all, certainly in the short to medium term.

Delving a bit deeper, where has this £28.5m come from?

We know PBP and Warburton in theory are charging interest on their outstanding loans which were carried across from Burnden Leisure to FV but is the balance the personal monies of Sharon, James and Luckock or is some or all of it borrowed by any or all of the three of them personally, which need repaying at a certain point in the future?

What I'm trying to say I guess is that I've never seen the business plan behind the FV purchase from the Administrator and three years on I'm still non the wiser.

You've got the sums to stack up quite nicely in your post, and I don't disagree with what you've said, it is more what you've not discussed is where my concerns lie namely why us, why pay over the odds, and is spending almost £30m to play real life Football Manager is really all it has been about for them assuming they do breakeven on a future sale?

Maybe it really is because I can't see what else all this can be about - if there's a deep financial strategy underlying all that they've done and are doing, it is certainly too clever for me to work out.

Oh and finally the club ran up a trading debt of £3.5m (iirc) in their first year of trading and I assume racked up further debt in the accounting year we are waiting (let's for arguments sake say it was £1.5m - making a nice round amount of £5m debt in trading over their first two years), so if FV have put in £28.5m which seems to be the case (unless Bob corrects us), then why should anyone pay the same amount (or more) knowing that the book assets would value the company at some £5m less?

Please don't think I'm intending to be critical of you in any way, shape or form, it is just me trying to make sense of it all - where I can't see any sense at all!

Ten Bobsworth wrote:A friend of mine once bought a moated castle in 28 acres of stunning scenery and with stables for 12 horses. It was in excellent condition and he bought it for a song.

He didn't own it for long though. He couldn't afford the mortgage, the heating bills or the maintenance costs.

Ah, living the dream then facing reality.

Tbh and although it seems the only (semi)rational explanation that I can come up with as to why FV are here, I still don't buy it because if that's all they wanted there were plenty of other teams better suited to their dreams for them to purchase than our financial basket case of a club at that time.

Why didn't they just walk away when the negotiations got so tough - as they clearly did at the time, as another club would be coming along shortly to buy if playing Football Manager was all they wanted to do?

Why pay millions over the odds to buy a club you had no connection to (Mike James apart), miles away from where you live, when better deals at clubs much closer to you could be had???

I just don't get it?

Isn't that what a lot of football club owners are doing, Sluffy? Several seem to be having a punt they can afford to lose but the numbers are too big for FV to lose imo.

FV are very near the end of their third season in control and I'd be surprised if they had come close to breaking even in any of them. They have prioritised rebuilding and can't be blamed for that but the delay in publishing the accounts is a warning sign that they may not presently be able to sign them off.

In effect they will need to confirm, to their own satisfaction and to the satisfaction of the auditors, that they have sufficient funds to pay their way for another twelve months. Can they say that without finding next season's funding plus the other debts that are due within the next twelve months?

Selling season tickets earlier than usual will help a bit but won't solve the underlying problem.

All true what you say Bob but I keep coming back to why FV went through the ringer and paid well over the odds to get their hands on us when there must surely have been much better deals for them to be had elsewhere?

Anyway they are here now and we wait to see what kind of a hand they are holding.

Let's hope it is a strong one!

Sluffy wrote:All true what you say Bob but I keep coming back to why FV went through the ringer and paid well over the odds to get their hands on us when there must surely have been much better deals for them to be had elsewhere?

Anyway they are here now and we wait to see what kind of a hand they are holding.

Let's hope it is a strong one!

I think a lot of it was down to Sharon. I feel sure that she fancied having a crack at owning and running a football club. It didn't have to be Bolton but Bolton was available and at first sight must have looked attractive for the reasons Barry has outlined.

When you started drilling down into the numbers though you can quickly see why others would be put off. That's probably the main reason it took so long to get the deal over the line. You had to accept legacy debt, substantial admin costs and the expectation of losses.

Why do it? Why do people do lots of things that involve all manner of risk? Being bold is a part of human nature, isn't it, as well as the desire to achieve something where others have failed?

You may well be right Bob, and as a person who is naturally inclined to limit or avoid risk wherever possible, perhaps that's why I don't really 'get' what most likely has happened?

I'm still inclined to think there's a more reasoned and material reason behind all this but if there is, I'm certainly not seeing it!

Of course, owning a football club isn’t something most people do to make money. Looking at the three top divisions, quite a number of the Premier League clubs do actually make a profit, but in the last pre-covid year (2018/19) it looks to me that only one Championship Club made money prior to player trading. A number, four out of 24, in L1 made money (I can only find numbers after player trading) with a few more breaking even. 
I don’t reckon there’s much to be made graduating from L1 to the Championship, but the big rewards are the next step, which is why a club like Aston Villa gambled and made a loss of £84m in 2018/19. 
So, I can’t help feeling that the FVWL plan isn’t to make a pile, but to enjoy it while it lasts and try not to lose too much. 
By the way, although I don’t feel there’s much more money to be made in the Championship than L1, I still think it’s the case that a Championship club is worth more than a L1 club even though it’ll probably lose more money, just for the bragging rights. But that depends on the owner being wealthy enough not to care.

You may well be right Barry.

Doesn't make any sense to me but if you have the money to burn then why not waste it on a football club.

The thing is though, what happens to the football club once the owner/s decide they don't want to spend anymore on their little hobby!

I don't suppose FV could pay off the debts in non-fungible tokens. The new owners of Crawley are big into that kind of thing, allegedly.

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Funnily enough, I think football is missing a trick here. See what basketball in the US has done:

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A nice little earner!

I'm not so sure we are ready for it yet Barry!

REVEALED: Liverpool's NFT range flops with just 10,000 sold out of 171,000 available... but auction still raises over £1m for club and its charity in their much-maligned foray into the cryptocurrency market
Liverpool's venture into cryptocurrencies has had a very mixed start
The Reds sold only 10,000 of a potential 171,000 NFTs put up for sale last week
But total sales reached £1.125m, with over £280,000 going to LFC Foundation
If all the possible NFTs were sold it could have raised around £8.5m
Fans were not happy with the move, accusing the club of trying to exploit them.

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FV agreed to pay ten million quid for BWFC's 'intellectual property'. Well that's what the last audited accounts say they agreed to pay.

Don't ask me where that figure came from but, when we eventually get to see the next audited accounts, I'll be interested in getting some idea of how much FV still owes and what value they placed on intellectual property at the second time of asking.

Liverpool’s foray into NFTs was for digital artworks. The NBA’s is actually gameplay. Here is an example of the prices commanded:

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One question is, would fans pay to own a unique digital goal - I imagine the goal would be available for others to view, but not to own (as I understand is the case with other NFT, especially in the art world). 

Another question relates to the image rights, so maybe the players and not just the club would get a share of proceeds. 

Regarding intellectual property, I wonder if this simply means the value of the franchise - membership and the right to play in the EFL. I have no idea what that’s worth, but it might be possible to calculate it by considering what it would cost to start from nothing and get into L1. I guess you’d probably buy a club in the lower leagues and pump money into it. Of course, you would not have the heritage or fan base, which must be worth quite a bit.

BarrygoestoBolton wrote:which must be worth quite a bit.

What something is worth is a matter of opinion, Barry. What something costs is a matter of fact and, if you have paid too much for something, you cannot pretend that that is what its worth.

The directors of Burnden Leisure had to face this issue in 2013 after relegation from the Premiership in the previous season. The playing staff had cost £39million in transfer fees and agents costs but the contracts weren't worth anywhere near that.

So they had to bite the bullet and write down the value to what they thought they were worth. Don't ask me how they came up with a figure of £14.1million but it did seem to me to be a bit on the optimistic side at the time.

I thought this was an interesting statement from Evatt - of course it could just be empty words to big up a transfer fee - but if it happens to be true (I question it is) then where is all the money underpinning the club coming from (and presumably got into the clubs accounts?).

"But the Bolton boss says his recruitment is not contingent on any incoming funds from sales – Santos, Afoalyan or otherwise.

“We don’t have to sell – and it doesn’t matter how much money clubs come to offer us, I will make the decision based on what is best for Bolton Wanderers,” he told The Bolton News. “I am under no pressure from Sharon or the board to sell players to get money back in. We don’t need it and we’re in a great financial position now, that pressure has gone away".

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Still no sign of the 2020/21 accounts, Sluffy, and we were made to wait too long for a list of FV shareholders which was outdated before it was filed.

Much of the financing remains unclear and there has still been no sign of any sensible enquiry by the local media or the wannabe guardians of Bolton fans.

'Football clubs are at the heart of communities. We need to urgently bring in new laws to stop any more clubs going bust or being used as a plaything for the wealthy,"  says Lucy Powell.

Yeah right!

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Bob, I trust you've sent Vince a congratulatory message on FG's promotion.