The Randy Lerner thread

[Dodgyknees]

We are a big club, under the right owner we can and will be massive again.

[Panto_Villan]

 

We are a big club based on what? What is a big club? I thought a big club was a club that won stuff recently and challenges regularly to win things.

 

 

That would make you a Sky TV child, a product of the modern day.

 

 

To be fair, the alternative view is a kind of football feudalism where there is never any chance of the big teams losing their status as a "big club" no matter how badly they play, nor the other teams rising up to be "big" clubs themselves despite how well they play. History obviously plays a role in how big a club is but it can't be everything - Britain isn't a bigger country than America because we used to hold more territory and have more influence.

[P3te]

So a big club is one that used to be successful, but a currently successful club is not a big club unless they were successful in the past?

[LondonLax]

So a big club is one that used to be successful, but a currently successful club is not a big club unless they were successful in the past?

Only if you are a fan of a club that used to be successful but is not as successful in the current era

[villan_007]

 

 

We are a big club based on what? What is a big club? I thought a big club was a club that won stuff recently and challenges regularly to win things.

 

 

That would make you a Sky TV child, a product of the modern day.

 

 

To be fair, the alternative view is a kind of football feudalism where there is never any chance of the big teams losing their status as a "big club" no matter how badly they play, nor the other teams rising up to be "big" clubs themselves despite how well they play. History obviously plays a role in how big a club is but it can't be everything - Britain isn't a bigger country than America because we used to hold more territory and have more influence.

 

 

Think the countries comparison is a bit silly - but Sky dictate who they perceive to be a big club. Have you noticed now how they call it the big 6 now in the league instead of the big 4? they simply cannot get enough of spurs right now, but when we finished 6 for 3 seasons and they showed the league table as in the top of it, they would only show the top 5?

 

My wife works at Sky and deals with Soccer Saturday - and Stelling is and arsehole for it, he will pull advertisements off air (which he has no right to do) if it's for a so called smaller club and demand it be replaced with the sky 6! it stinks and makes me hate football.

 

Also yeah we've had a few bad seasons but we get mentioned in the same breath as Norwich and Southampton now, never does anyone say well hold on villa have been in the Prem from day one and have had a few problems over recent seasons, we are simply just discarded.

Edited October 4, 2013 by villan_007

[suttonpaul]

So lets say that people real football memories start when they are say 13 (they can remember everything that happened that year and it really meant something to them.

 

That means for our last major success in 1982 you would have needed to be born in 1969 making you 44 everyone below this age or definitely 40 basically hasn't seen us win a major trophy. Lets pretend the League Cup is of Major significance that means no one under 30 has seen us win anything AT ALL.

 

You can say the big club thing is in the minds of individuals and you are right but I think when it comes to this kind of debate that is important because in the mind of an individual that THINKS AVFC is a massive club they will always be unhappy as the stats very very clearly show we are not and that creates discontent.

[briny_ear]

 

 

 

 

 

 

 

My wife works at Sky and deals with Soccer Saturday - and Stelling is and arsehole for it, he will pull advertisements off air (which he has no right to do) if it's for a so called smaller club and demand it be replaced with the sky 6! it stinks and makes me hate football.

 

 

 

That makes no sense. What sort of "advertisements" are you talking about?

Edited October 4, 2013 by briny_ear

[villan_007]

 

 

 

 

 

 

 

 

My wife works at Sky and deals with Soccer Saturday - and Stelling is and arsehole for it, he will pull advertisements off air (which he has no right to do) if it's for a so called smaller club and demand it be replaced with the sky 6! it stinks and makes me hate football.

 

 

 

That makes no sense. What sort of "advertisements" are you talking about?

 

 

Ok so when they come to a break and they'll be a promo advertising Norwich vs Stoke he'll demand it's changed to a bigger club match, so champs league, or chelsea spurs for example

[Big_John_10]

So we're meant to be happy being a midtable team.

Well the last two years we were a team that barely survived and the year before that we somehow achieved midtable with two great results when the manager, hired by Lerner, was too ill to be near the team.

People say we should be happy like we've been achieving this midtable status.

And if we're meant to be happy with that why were we so desperate to get rid of the last guy?

[TrentVilla]

 

The club will likely turn a profit when the new accounts are released so no, he will not lose more money the longer he owns the club.

 

 The club isn't currently making money, it has lost money year after year so at the moment the value isn't increasing

 

I really haven't assumed financial results magically appear at the end of the year, that is just daft as is the above post.

 

You're contradicting yourself. Either the club is going to make money this year and therefore it is already making money, or the club is going to lose money this year and therefore it is already losing money. Which is it?

 

 

No I'm not. We don't know the figures yet for this year, currently based on the most recent figures we have the club isn't making money but I suspect it probably will turn a profit on the next results. No contradiction in the posts quoted above.

[P3te]

So we're meant to be happy being a midtable team.

Well the last two years we were a team that barely survived and the year before that we somehow achieved midtable with two great results when the manager, hired by Lerner, was too ill to be near the team.

People say we should be happy like we've been achieving this midtable status.

And if we're meant to be happy with that why were we so desperate to get rid of the last guy?

Nobody would be happy with it long term, but short term it's fine. It's called building

[Big_John_10]

So we're meant to be happy being a midtable team.

Well the last two years we were a team that barely survived and the year before that we somehow achieved midtable with two great results when the manager, hired by Lerner, was too ill to be near the team.

People say we should be happy like we've been achieving this midtable status.

And if we're meant to be happy with that why were we so desperate to get rid of the last guy?

Nobody would be happy with it long term, but short term it's fine. It's called building

Suttonpaul certainly seems to be suggesting this is what we should be happy with

[P3te]

I'd be surprised if he meant forever TBH. We all know the financial bubble is going to bust at one stage or another. When it does it'll be ourselves, Spurs and Arsenal as the big 3

Edited October 4, 2013 by P3te

[Panto_Villan]

 

 

The club will likely turn a profit when the new accounts are released so no, he will not lose more money the longer he owns the club.

 

 The club isn't currently making money, it has lost money year after year so at the moment the value isn't increasing

 

I really haven't assumed financial results magically appear at the end of the year, that is just daft as is the above post.

 

You're contradicting yourself. Either the club is going to make money this year and therefore it is already making money, or the club is going to lose money this year and therefore it is already losing money. Which is it?

 

 

No I'm not. We don't know the figures yet for this year, currently based on the most recent figures we have the club isn't making money but I suspect it probably will turn a profit on the next results. No contradiction in the posts quoted above.

 

 

I'm sure this argument is getting tiresome for everyone to read, so I'll make one final point here and then leave it alone. I don't see how you can't see the contradiction? There are two options:

 

1) The club makes a profit this year: If this is the case, the club is already making a profit this year and your second quote is incorrect. You can't argue with this. All the major increases in revenue or cost decreases that affect this year (reduced wage bill, TV rights, etc) are entirely predictable. Basic finance means the revenue accrues evenly through the year no matter when the cash is received or paid. The only possible thing that could throw this out of kilter is player transfers, but your first reply said you didn't think negative net transfer spend would be required. Therefore your second quote is wrong - the club is currently making money.

 

2) The club does not make a profit this year: If the club does not make a profit, then the first quote is wrong. Lerner will lose more money by holding the club longer, because he'll have to put more money in to cover the loss.

 

It might sound like I'm just splitting hairs here, but I'm not. The fact that the club is making a profit is not public domain information does not mean that anyone who was interested in buying the club would not be aware of it. The club will be worth more right now if it's going to make profit this year. The increase in valuation won't have to wait until the end of the financial year. So if your assumptions about the club making profit this year are correct, your second quote and third quotes are incorrect. There's at least one contradiction at work there...but I'll leave it at that.

[NoelVilla]

The debt Aston Villa have to Randy Lerner are matched by an asset on AVFC:s balance sheet. If Randy Lerner are to sell the club he is not selling the debts he is selling the assets and projected incomes(if its not an oil sheik buying breaking all normal rules). So he wont sell if he at least doesn't get his loans back. Dont think the loans are a problem in running the club, Lerner not being rich enough is the problem if we want success.

[Avfc96]

When is it likely the financial results will be released for last year?

 

Im presuming it will be around a 10-15M loss.

[villabromsgrove]

So lets say that people real football memories start when they are say 13 (they can remember everything that happened that year and it really meant something to them.

 

That means for our last major success in 1982 you would have needed to be born in 1969 making you 44 everyone below this age or definitely 40 basically hasn't seen us win a major trophy. Lets pretend the League Cup is of Major significance that means no one under 30 has seen us win anything AT ALL.

 

You can say the big club thing is in the minds of individuals and you are right but I think when it comes to this kind of debate that is important because in the mind of an individual that THINKS AVFC is a massive club they will always be unhappy as the stats very very clearly show we are not and that creates discontent.

I think what you say is valid Paul. I've been supporting Villa for over 50 years and I've seen the many average years, the numbing disasters and the incredible highs. During all this time we've never been a massive club, but we have always been referred to as a club with a massive history due to our status at the beginning of organised football.

 

I'm happy to support Villa as an average club .... when we do well it's really exciting and when we do badly .... well, I've seen it all before.

 

The idea that we should be competing at the top of the league is fine, but imo we have to earn the right to do that by what we do from today onwards, not because we used to be great a long, long time ago. UTV.

[TRO]

What some of us want is an owner that can fund all the poor signings that come our way.

That man will likely be BIll Gates or Carlos Slim.

The way I see it as yes we need money, but the club need to be sure that the signings we are pursuing are bona fide.

not rubbish like in the past.

The truth is we will only succeed on the back of signing good players, not having buckets of money.....albeit there is a correlation.

[Panto_Villan]

I thought I'd make a contribution to the general discussion by providing a guide to "debt". Not all debt is created equal, so being "in debt" is much worse in some situations than others. It's a wall of text, but if you've got concerns about the debt that this or other clubs have then it should be worth reading.

 

I've simplified this where possible, but if I've oversimplified it or just got some things plain wrong then please do correct me. I am a qualified accountant but I've not practiced for a few years and I don't specialise in M&A.

 

 

1) Leveraged Buyout: The type of debt that enrages supporters the most is that caused by a leveraged buyout - this is what the Glazers did to Man United. Basically the owners buy the club, but only put in a small amount of their own cash. The rest of the money is borrowed from a bank or an investment fund, and it usually comes at a very high interest rate and is secured on the club's assets. This is great for the banks lending the money (they make a lot of money from the high interest rates), but it's also great for the owners.

 

The owners love it because they own all the shares and therefore the entire club, but only put in (for example) 10%-20% of the money. If they bought the club for £500m and it increases in value to £600m, the owners receive all of that extra £100m. If the club doubles its profits, the owners receive all of that gain too. The bank don't own the club, they've just lent money against it - like a mortgage on a house.

 

It's rather less great for the club itself. The club has to pay the interest on the money the owners borrowed, which can be crippling - some of the money the Glazers borrowed was at 15%-17% interest rates. A more subtle danger is the fact that the owners are incentivised to maximise profit and club value as much as possible in the short term with no regard at all for the long term sustainability of the club, as they gain all of any value increase.

 

However, if it all goes wrong, the club is left with massive debts at extremely high interest rates. At best, it ends up spending money on paying interest instead of being able to spend it on players. At worst, it ends up having to sell assets like the stadium or even going bankrupt entirely. A leveraged buyout is the owners taking a massive bet on the future of the club mostly using other people's money, so if you're a supporter it should concern you lots.

 

 

2) External Loans: This is any loan taken out by the club from anyone other than the owner. The bank loans in a leveraged buyout would technically fall into this category, but I've mentioned them separately because they are at unusually high interest rates. An external loan is conventionally at normal commercial interest rates and will cost much less each month to service than the loans I was talking about above.

 

There's any number of reasons why a club may want money. They might take out loans to cover a new stadium, buying players or just to cover annual losses that a club is making each year. Whatever the reason, the bank will give the club a loan and it'll be secured against an asset the club owns like the stadium or future revenues such as season ticket sales.

 

Again, if the club has too many loans then the club will be spending money servicing interest instead spending money on players. If a club totally runs out of money, the bank takes control of the asset that the loan is secured against and sells it to try and pay off the loan. If your club has a lot of these, you should worry.

 

 

3) Owner Loans: These are loans made by the club owner to the club. Legally they are identical to the external loans mentioned above, but in practice they are rather different for several reasons. The first reason for this is because the interest is payable to the owner and therefore the money doesn't leave the club and choke cashflow in the same way as normal loans. They reduce the profit the owner receives, but he receives that money in interest instead. If money is tight at the club then owners can just waive the interest payable, or invest the interest received straight back into the club. If the interest was paid to a bank it is gone for good.

 

Secondly, they are secured against assets that the owner already owns. The owner therefore gets no added security for putting the money in as there's nothing extra for them to take control of if the club gets into difficulty. This is much better for the club - if the club goes bankrupt, the stadium and future cash flows of the club are still owned by the same person. There are two possibilities at that point:

• The owner liquidates the club, selling the assets and distributing the money raised to the people owed money (mostly himself).
• The owner sells the club as a going concern. The new owner gets a debt-free club complete with stadium etc, and the old owner gets the money raised from the sale but has to write off all the money he lost on his loans (therefore they lose money).

Generally the second happens, as if a buyer is only paying slightly more than the value of the club assets then they're not taking much risk - they can always sell the assets to get most of the money back. A bankruptcy with bank loans is much more dangerous because the loans are secured against the most valuable assets of the company so they get cherry-picked out and sold, so what's left of the club is the rubbish nobody wants and it's therefore much less appealing for a buyer.

 

Ultimately when the club is sold it does not matter to the previous owner whether money is received for the club purchase or for paying off the loans they put into the club, because both are owned by the same holding company so all the money ends up in exactly the same place.

 

It's better for a club not to have these loans, but if debt is necessary then this is the best type (for the club). In practical terms they are almost interchangeable with the money an owner spent buying the club. It's a bit of an oversimplification, but you could consider Villa a debt-free club that Lerner bought for £190m rather than a club bought for £65m and with £125m of owner debt. 

Edited October 4, 2013 by Panto_Villan

[Panto_Villan]

The debt Aston Villa have to Randy Lerner are matched by an asset on AVFC:s balance sheet. If Randy Lerner are to sell the club he is not selling the debts he is selling the assets and projected incomes(if its not an oil sheik buying breaking all normal rules). So he wont sell if he at least doesn't get his loans back. Dont think the loans are a problem in running the club, Lerner not being rich enough is the problem if we want success.

 

That's not entirely accurate. If Lerner sells Villa he is selling both the assets and the debts. Generally the new owner will work out how much is necessary to clear the debt and deduct that from the price he's paying, so he ends up buying the net assets of the company...but that's not compulsory.

 

Sometimes a company with large debts will be bought for £1 and the new owners then become responsible for the debt - this happened to Rover, for example.