Could Tony Bloom sell the club

[dwayne]

Wise worms Tom!

Yes but are you saying that companies are never bought when they are in debt? .... Of course not...I know the debt is Tony's personally but I'm sure that can be changed.

I just don't understand football finance in general. Couldn't someone just do what the glazers did at Man U. Highly leveraged takeover then dump the debt back on the club?

 

[Tom Hark Preston Park]

Go find me a stranger -- preferably a foreigner -- with no connections to the team and the community at once to do precisely this. Dodginess no issue.

The fans demand it!

Yuo don't get to be as rich as Tony Bloom by being a mug. Once the hotel is built and the infrastructure is complete, he'll either invest heavily on the playing side or flog the club on to somebody with deeper pockets that will. Same as he did to Dick Knight.

 

[Ernest]

The question is SHOULD Tony Bloom sell the Albion

 

[Gwylan]

Tony Bloom has said several times that his aim is to pass the club on to his kids. Given that the Blooms have been involved in the club for about 50 years, I see no reason to disbelieve him. Of course, circumstances could change but my gut feeling is that he's in it for the long haul. We're looking to get losses down to about £6m a year, when the academy and hotel are on stream, I'm sure that could be reduced further. A couple of million a year hobby to someone of Tony's wealth is nothing

 

[Creaky]

Tony Bloom has said several times that his aim is to pass the club on to his kids. Given that the Blooms have been involved in the club for about 50 years, I see no reason to disbelieve him. Of course, circumstances could change but my gut feeling is that he's in it for the long haul. We're looking to get losses down to about £6m a year, when the academy and hotel are on stream, I'm sure that could be reduced further. A couple of million a year hobby to someone of Tony's wealth is nothing

If/when the club passes to the children then this will be the 'danger' time - a bit of a poisoned chalice of an inheritance - would they be willing to continue to fund losses on an asset they have not personally invested in or would at least one of them want to realise the cash value of the shares.

As for the existing losses being 'nothing' for TB in comparison to his current wealth - how do we know - his net worth seems to be a closely guarded secret.

 

[beorhthelm]

Can't help but feel that TB will flog the club on to somebody willing to throw big bucks (for better or worse) at the playing side once all the real estate is in place. As a successful businessman, its one thing being a fan and quite another thing looking at year-on-year operational losses until at least 2027. Bit of a commercial no-brainer really.

and who is going to come along and service this operational loss instead? the current strategy for many clubs is spend big to get in the Premiership and the reveunes there pay for the largesse. but the revenues there flow outward for the higher priced players needed to stay competitive there... i dont really see how anyone can do anything other than cover those loses.

Tony Bloom has spent £200 million on the Albion, the club is worth at most £12 million.

im curious where the £12m valuation comes from.

 

[Tom Hark Preston Park]

and who is going to come along and service this operational loss instead? the current strategy for many clubs is spend big to get in the Premiership and the reveunes there pay for the largesse. but the revenues there flow outward for the higher priced players needed to stay competitive there... i dont really see how anyone can do anything other than cover those loses.

Plenty of overseas investors with dodgy revenue streams waiting in the wings. Obviously.

 

[El Presidente]

im curious where the £12m valuation comes from.

I did an article a couple of months ago, by all means dismiss it as complete bollocks though!

Valuing a business is as much art as it is science, however, companies are being bid for all the time (just look at AstraZeneca in the national news recently), and there must be some methods used by the bankers and accountants to arrive at the figures they quote to their clients.
The two most common methods for share valuation are:
(a) A net asset value
Here we take the value of the assets (things owned by the club) of the business, and subtract the liabilities (things the club owes to its creditors and lenders). Then divide this figure by the number of shares.
In respect of the Albion, for the accounts to the end of June 2013, the assets in the accounts are worth £133 million, and the liabilities are £122 million (mainly loans to Tony Bloom of £102 million), giving a net figure of £11 million. If this is divided by the number of shares is gives a value of 17 pence per share. However, this ignores the losses made in the most recent season. If these losses, as predicted, are close to the Financial Fair Play (FFP) limit of £8 million, then the net assets would fall to £3 million, and the share price (in theory) to 5.2 pence per share.
(b) Earnings value
Here we would look at the cash generated by the club for the next few years, and work out how much that cash would be worth today. With the Albion losing money every year (the club has only made a profit once in the last 40 years), this would suggest the shares are worthless.
However football is not like any other business, and therefore perhaps usual rules don't apply. I have looked at a research paper by Dr Tom Markham, who is a bit of a genius, and he uses the following geeky formula
Club value = (Revenue + Net Assets) x (Net Profit + Revenue)/Revenue x (Stadium Capacity %)/(Wages/Revenue)
Applying this to the Albion gives a value of £11.88 million in total, and values each share at 18.4 pence.

 

[beorhthelm]

I did an article a couple of months ago, by all means dismiss it as complete bollocks though!

if you were to apply the same analysis to a couple of other clubs recently purchased, what would be their valuations, and what would be the premium or discount to their purchase price?

 

[Gwylan]

If/when the club passes to the children then this will be the 'danger' time - a bit of a poisoned chalice of an inheritance - would they be willing to continue to fund losses on an asset they have not personally invested in or would at least one of them want to realise the cash value of the shares.

As for the existing losses being 'nothing' for TB in comparison to his current wealth - how do we know - his net worth seems to be a closely guarded secret.

But we do know he's pumped £200m into the club. I doubt he put more than half his money in so he must have at least£200m in assets, that must net him about £10m a year, so £2m is not a high loss.I heard last week that sailing a yacht round the Med for a week burned £200k in fuel, so football is a cheap hobby!

But I agree that the crunch could come when he dies, let's hope it's not for many years

 

[El Presidente]

if you were to apply the same analysis to a couple of other clubs recently purchased, what would be their valuations, and what would be the premium or discount to their purchase price?

I'm a bit snowed under at work at present, but it is a project I am working on. The Tom Markham formula has proven to be fairly accurate though. Will post up my findings once I've been through all the accounts for the PL and Championship clubs, will take a bit of time though!

 

[knocky1]

I did an article a couple of months ago, by all means dismiss it as complete bollocks though!

I can see your valuation but a sale at this would give TB £113m as he would not wish to pass on the interest free loan to the buyers. he may at some time decide to take this.

the market for buying the club would also dictate the price.

 

[Kevlar]

Stoke, Swansea, Palace

With the massive increase of television money for last seasons teams, becoming one will be even harder now

well none of the above
try the top 7
at the moment

 

[El Presidente]

I can see your valuation but a sale at this would give TB £113m as he would not wish to pass on the interest free loan to the buyers. he may at some time decide to take this.

the market for buying the club would also dictate the price.

There is no market for buying the club though.

 

[Chicken Runner61]

If I were Tony Bloom or any other Chairman putting so much money in an English club I'd be getting a little concerned at where things are going right now.

The clubs that spend the most on players and wages usually end up with some success, that normally means the clubs with the most supporters have the success but getting lucky and having a rich owner sometimes can push a smaller club up there.

FFP may change that but thats not good for Albion and the smaller clubs because FFP makes it harder for a rich chairman to invest and all it does is give the power back to the clubs with the most fans which give it the revenue to balance the books.

Sure there seem to be ways round FFP and if you can get up to the prem the TV and sponsorship money takes you on another level but at some point the EPL is going to lose its appeal and its even possible that the USA may take revenue from the EPL leaving a few chairmen with clubs that are not worth the financial prizes they are trying to win.

Ok its a few years off yet but FFP is likely to stop everyone but the top 6 clubs from getting the money to compete. The newly promoted clubs have hardly spent much this year, look at leicester for example, they have massively overspent on one signing and with only a few others don't look as though they have a team that can survive. I suspect they will try to stay up (obviously) but are looking to use parachute payments over several seasons to keep challenging in the hope that eventually they can buy a squad that can stay up. even clubs who manage to stay up need to stay up at least 3 seasons to start to compete.

I'm guessing thats why TB even said that we would be relegated if we went up. The problem for TB is that I suspect that unless we go up this coming season the Amex revenue stream won't allow another push.

 

[Herr Tubthumper]

Tony Bloom has spent £200 million on the Albion, the club is worth at most £12 million. Selling would be a fairly dumb thing to do.

How do you come to this valuation? The whole club ie players and infrastructure must be worth more than 12m as a going concern to someone surely?

 

[knocky1]

There is no market for buying the club though.

There is a market but possibly no demand. I am sure there would be at £12 million.

 

[Chicken Runner61]

There is a market but possibly no demand. I am sure there would be at £12 million.

It would be £12M plus what TB wants back from his loan - The question should be what would someone be prepared to offer TB to go

 

[Herr Tubthumper]

There is no market for buying the club though.

How do you know this? I bet if it was put on the market then there would be offers.

 

[RexCathedra]

How do you know this? I bet if it was put on the market then there would be offers.

They talk about that in business school: The Greater Fool Theory.