Questions for Mr. Lerner Sir

[Trinitymiddle]

We received about £35,000,000 for 2 alone and have spent about £13,000,000. allegedly we have repaid Randy some £15,000,000 in respect of a loan leaving us with at least £7,000,000 left BUT the manager has no money to spend. Bent and Makoun were purchased with the Milner cash in a moment of panic when things did look bad and relegation was a strong possibility.

So in an age when most mega rich owners are converting their debt in equity (in effect cancelling the money a club owes them), Randy hasn't converted ANY of his debt to equity, and is making AVFC pay him back. Is this right, and if so I guess Randy is either not as rich as we thought, or is losing interest.

Quote from: Daily Telegraph 5th March 2010
The new investment takes Lerner's total investment to £179 million since he bought the club in 2006, with £95 million in equity and a further £84 million in loans. The investment comes on top of the £62 million he paid for the club.
 
Lerner put £70 million into the club during the 2008-09 season, with a further £12.5 million at the start of this campaign. According to the accounts Lerner's loans to the club are unsecured and interest free, and repayable between 2016 and 2019.

[/quote]

Thanks for that. If I read it right (and I'm just a tiler!)  He's paid £62m for the club (a bargain), given the club £95m, and AVFC have to pay him back £84m in the next 5 to 8 years?? Where the hell are we/they gonna get that from?

[robbyfvillain]

We received about £35,000,000 for 2 alone and have spent about £13,000,000. allegedly we have repaid Randy some £15,000,000 in respect of a loan leaving us with at least £7,000,000 left BUT the manager has no money to spend. Bent and Makoun were purchased with the Milner cash in a moment of panic when things did look bad and relegation was a strong possibility.

So in an age when most mega rich owners are converting their debt in equity (in effect cancelling the money a club owes them), Randy hasn't converted ANY of his debt to equity, and is making AVFC pay him back. Is this right, and if so I guess Randy is either not as rich as we thought, or is losing interest.

Quote from: Daily Telegraph 5th March 2010
The new investment takes Lerner's total investment to £179 million since he bought the club in 2006, with £95 million in equity and a further £84 million in loans. The investment comes on top of the £62 million he paid for the club.
 
Lerner put £70 million into the club during the 2008-09 season, with a further £12.5 million at the start of this campaign. According to the accounts Lerner's loans to the club are unsecured and interest free, and repayable between 2016 and 2019.

[/quote]

quote Swiss Ramble April 2010

The interest charged on the debt is at a standard rate of LIBOR plus 2%, which is currently very low at below 3%, but it should be noted that if LIBOR rose to 5%, then the club would have to pay 7%. The accounts report £5.7m interest payable, including £4.5m on the loan notes (which goes to Lerner) and £0.8m on bank loans. This may not seem much, but it does represent about 5% of revenue. If that is added to Reform Acquisition Limited’s £7.7m management fees, then you could argue that Lerner took out nearly 15% of revenue, which would be excessive if repeated every year. So Lerner’s approach is rather more hard-nosed than has been reported in the media.

[Villa'Zawg]

When you consider Nigel Reo Coker cost us at least £15 million for no return, you start to realise.

True, but it's not as if the club had no income.

Yes, but an entire team like that. It's unreal. Then there's the Holte, Bodymoor Heath, the bits & pieces around the ground that we never notice but all add up.

We didn't have an entire team like that though did we? Other players who have left over the last 2 summers have brought in about £60m

[Trinitymiddle]

We received about £35,000,000 for 2 alone and have spent about £13,000,000. allegedly we have repaid Randy some £15,000,000 in respect of a loan leaving us with at least £7,000,000 left BUT the manager has no money to spend. Bent and Makoun were purchased with the Milner cash in a moment of panic when things did look bad and relegation was a strong possibility.

So in an age when most mega rich owners are converting their debt in equity (in effect cancelling the money a club owes them), Randy hasn't converted ANY of his debt to equity, and is making AVFC pay him back. Is this right, and if so I guess Randy is either not as rich as we thought, or is losing interest.

Quote from: Daily Telegraph 5th March 2010
The new investment takes Lerner's total investment to £179 million since he bought the club in 2006, with £95 million in equity and a further £84 million in loans. The investment comes on top of the £62 million he paid for the club.
 
Lerner put £70 million into the club during the 2008-09 season, with a further £12.5 million at the start of this campaign. According to the accounts Lerner's loans to the club are unsecured and interest free, and repayable between 2016 and 2019.

[/quote]

quote Swiss Ramble April 2010

The interest charged on the debt is at a standard rate of LIBOR plus 2%, which is currently very low at below 3%, but it should be noted that if LIBOR rose to 5%, then the club would have to pay 7%. The accounts report £5.7m interest payable, including £4.5m on the loan notes (which goes to Lerner) and £0.8m on bank loans. This may not seem much, but it does represent about 5% of revenue. If that is added to Reform Acquisition Limited’s £7.7m management fees, then you could argue that Lerner took out nearly 15% of revenue, which would be excessive if repeated every year. So Lerner’s approach is rather more hard-nosed than has been reported in the media.


[/quote]

£7.7m in "Management Fees"!!!

[Chris Smith]

A lot of 'ifs' in that Robby.

[Whiney MacWhineface]

Thanks for that. If I read it right (and I'm just a tiler!)  He's paid £62m for the club (a bargain), given the club £95m, and AVFC have to pay him back £84m in the next 5 to 8 years?? Where the hell are we/they gonna get that from?

I think it's a bit worse than that, as those figures came from the 2009 results and we lost £30m in the next year, so presumably Randy pumped in more equity and/or loans.

On the other hand, my understanding is that Villa the club don't owe the money, it's Reform Aquisitions Limited (RAL) that owes the money and that the money came from the Lerner Trust. RAL are paying back the interest from income the club earns. When the principal becomes due (i.e. when the loans have to be paid back) it would be likely that they will be re-negotiated, the alternative being that RAL would have to liquidate assets (sell players or land or whatever) to pay his own Trust back which, given Randy's attitude since he bought the club and despite the shoeing he's been given lately, I'd deem most unlikely.

[TheSandman]

quote Swiss Ramble April 2010

The interest charged on the debt is at a standard rate of LIBOR plus 2%, which is currently very low at below 3%, but it should be noted that if LIBOR rose to 5%, then the club would have to pay 7%. The accounts report £5.7m interest payable, including £4.5m on the loan notes (which goes to Lerner) and £0.8m on bank loans. This may not seem much, but it does represent about 5% of revenue. If that is added to Reform Acquisition Limited’s £7.7m management fees, then you could argue that Lerner took out nearly 15% of revenue, which would be excessive if repeated every year. So Lerner’s approach is rather more hard-nosed than has been reported in the media.

£7.7m in "Management Fees"!!!

Which have never been explained.

[robbyfvillain]

A lot of 'ifs' in that Robby.

There are Chris but if you were offered a variable mortgage at say 3% would you budget for it always being that or would you look at a worse case scenario before deciding whether you could afford it. (Assuming you need a mortgage of course    )

Also it highlights that the loans are not interest free and as others have said what about the management charges.

I do agree that there is a danger in trying to extrapolate too far and financials are way out of date before we ever get to see them. Therefore the management charges for instance could be a one off.

[darren woolley]

It all adds up to a lot of money.

[Whiney MacWhineface]

Also it highlights that the loans are not interest free ...

No it doesn't. The original loans to buy Villa were as you stated, charged an interest rate. As the Telegraph article I posted stated, the 2009 loans were not only interest-free but unsecured.

[eastie]

Well written piece and I doubt we will get the answers to many questions raised- we need new investment if we are to compete at the highest level but multiple billionaire Arabs are in short supply - maybe midtable mediocrity is where the  future  lies - apart from the top 6 clubs I think the rest are sadly just making up the numbers.

Sadly the game is now far too much about money and the game has changed for the worse in so many ways.

[Rudy Can't Fail]

Missing from the outgoings are the multi millions paid to either release or compensate Lerners managerial appointments.
That probably takes up the remainder.

My question would be simple.
How is Randy using his business accumen to increase revenue at the club ?

Agree with the first part. There's been a hell of a lot of compensation paid out which leads me to my question:

How is Randy using his sports management accumen to improve his football decision making at the club?

[cheltenhamlion]

Some points to answer in the original post though aren't there.

How did we offer improved terms to all and sundry if we now have to get people off the wage bill to tie up a free transfer? Particularly as we have knocked 12 players off said wage bill this summer, to include some very high earners?

When did we suddenly become such keen accountants?

And, on The General, Sandie is right. They have dangled the poor sod out to dry. He is a genuine and honest bloke. I get the impression that he isn't really being kept in the loop of what is going on.

God help us if we get a run of injuries again this year.

[Mister E]

£7.7m in "Management Fees"!!!

Alot of the comments here do seem to suggest that everyone would like a benefactor who gives us everything and takes nothing in return. Is that really realistic?
The original post was about a piece written by someone I recall being incredibly opinionated and obdurate ... I struggle to read it without thinking about the author's agenda.

The intesting discussion above simply underlines to me how far away from 'football' the Premiership has moved. I'm quite jaundiced, I'm afraid, about the whole thing, right now.

[Phil from the upper holte]

£7.7m in managment fee's, ridiculous, lets hope he's now Lernerd his lesson