Liverpool FC's financial future

These are from an investment report set out by Liverpool as part of their plan to 'sell' the club.

Does anyone on here have enough financial understanding to explain these figures? I don't know where they come from, buts hats off to the man or woman who dared leak them!

I have to say I was struggling to follow a lot of that, except for glaring details like 2010/11 average ticket price increase of 8%, and the assumptions that we'll have no stadium in the near future.

Overall - does this mean they're really trying to sell?

Interesting stuff.

I'm no financial guru, I understand about half of it but I don't get the gist of most of it either.

Looks like theres no stadium in the near future, 8% increase in ticket prices, and the rising amounts of revenue and costs to run the club per annum. Net bank debt to 124m by 2012, is it? Enterprise value, I'll make it as its the selling price of the club if the yanks are gonna sell up or something.

Looks like we were negotiating with Carlsberg to increase the sponsorship to 14.2 million, then StanChart came calling and we took them for 20 million. That's 6 million more in our pockets each year.

That's as much as I can manage to make out of it, any financial expert would be welcome on here to analyse this for us!

Does anyone on here have enough financial understanding to explain these figures? I don't know where they come from, buts hats off to the man or woman who dared leak them!

I have to say I was struggling to follow a lot of that, except for glaring details like 2010/11 average ticket price increase of 8%, and the assumptions that we'll have no stadium in the near future.

Overall - does this mean they're really trying to sell?

^^

What he said.

Enterprise value, I'll make it as its the selling price of the club if the yanks are gonna sell up or something.

Enterprise value is estimated at £447.3 million in July 2012, whilst the debt at the same period is estimated to be £225.2 million.

If that's their selling price then they'll be pocketing over £100 million each, surely?

Enterprise value is estimated at £447.3 million in July 2012, whilst the debt at the same period is estimated to be £225.2 million.

If that's their selling price then they'll be pocketing over £100 million each, surely?

Yeah, I think its 100 million each, around there. But didn't DIC came in with an offer of around that sum, but the yanks didn't sell up?

Where did you see the debt at that same period anyway, I thought it was 124.0 million.

EDIT: Saw it, yes its 225.2 million. Slowly if the figures are to be believed then its going to decrease. But shaving just a couple tens of million a year isn't good enough, IMO. When are we gonna clear that 199 mil of debt by, and that's in mind that we haven't built the stadium!

What is about the 3 year exit plan by 2012, the yanks being shown the door?

Where did you see the debt at that same period anyway, I thought it was 124.0 million.

Second image down, on the line 'Total debt', but I could be wrong.

Yeah, I think its 100 million each, around there. But didn't DIC came in with an offer of around that sum, but the yanks didn't sell up?

Where did you see the debt at that same period anyway, I thought it was 124.0 million.

Look at the second photo mate. Under Jul-12.

Things I can see is that net spending on players is forecast to be w*nk for the next 5 years.

It looks like instead of paying debt at 4% above base rate the club are being forced to move their loans to debt at 15% interest.

It looks like the club values themselves at around £300M which suggests that is the kind of figure the Yanks are after?

The net spending on players is a speculated forecast in the region of 20 million but it does state it will grow together with rises in media broadcasting revenues so that could be open to fluctuation.

300 million sounds about right for a three year exit strategy, can they not just F**k off now ?, and save us all the sh*t they bring with them.

On the bright side we are only going to be 200 million in debt in 2014

The net spending on players is a speculated forecast in the region of 20 million but it does state it will grow together with rises in media broadcasting revenues so that could be open to fluctuation.

300 million sounds about right for a three year exit strategy, can they not just f**k off now ?, and save us all the sh*t they bring with them.

So they want out by 2012?

It does state 3 year exit strategy so it looks to me that their main focus is in offloading the club within 3 years.

Liverpool private bank Coutts warns entrepreneurs to carefully plan exit strategy

NEW research shows that many entrepreneurs underestimate the effort involved in trying to exit their businesses through a sale – but conditions are expected to improve.

A report by private bank Coutts claims that while 46% of business owners believe selling up will take less than one year, in reality it can take up to two.

David Molian, of Coutts, writes in the report: “Only 7% of businesses offered for sale attract a buyer – partly because they’re marketed really badly and partly because there is no value in the business.”

On a financial level, 59% of entrepreneurs overlooked their financial planning until the last minute, despite 79% agreeing that it is an important part of the process.

Andrew Haigh, managing partner for the entrepreneurs client group at Coutts added: “This report has shown that alarmingly two-thirds of entrepreneurs are risking long-term business success by not giving proper thought to their exit strategies.”

However, the report acknowledges that while there are few opportunities to sell now, things will change and could change fast.

Andrew Haigh said: “The buyout industry will eventually open up, merger and acquisition activity will increase, as will private equity investment, therefore it is essential that entrepreneurs and businesses start planning if they’re looking to take advantage of an economic upturn in the future.”

Dylan Williams, managing partner for Coutts in Liverpool, revealed more than 70% of its clients are entrepreneurs.

He said: “This is perhaps unsurprising when you consider that last year, in Liverpool, there were over 13,930 registered businesses and 5.5% of the adult population were partaking in entrepreneurial activity. This is a significant change from 2004, when activity in the north west was just 4% – the lowest rate in the country and well below the national average of 6.3%. There has been growth over the past four years which I hope will continue.”

Exit strategy to me suggests they want out and are looking for buyers.....

Is this from 2008 when Gillet & Hicks were at logger heads or is it recent ?

Not really a clue what all that means but hopefully it is something to entice the sale of the club.

Not really a clue what all that means but hopefully it is something to entice the sale of the club.

I'm sure in 2008 when Hicks & Gillet were at logger heads with each other, they were talking about exit strategies in the press thats what has got me thinking it may be old news..... Just have to wait for JD to clear this up I suppose.

Rothschild were appointed by the club in 2008 to try and arrange a sale of the club.

As far as I am aware the club is still up for sale at the right price.

This is something I have found relating to the very same documents.....

The_Cheesehead

Just a note on what some of the abbrevitations mean:

EBITDA - Earnings Before Interest, Taxes, Depreciation and Amortisation. This is often used by companies who are assessing possible private buyouts (which, in my opinion, is what this report reads as, essentially a valuation report drawn up for possible club sale).
Loan rates - L + (value) bps - loan plus basis points. 100 basis points = 1%, therefore 400 basis points = 4%.
PIK (Payment-in-Kind) facility - a loan where the borrower doesn't return any cash borrowed to the lender over term (inclouding interest). This makes refinancing incredibly expensive as the interest has accrued by the term of maturity - and as the loans are often unsecured, the rates are high. PIKs are used where more traditional forms of finance aren't available and financiers are unwilling to leverage their debt beyond what they deem reasonable risk.
Enterprise value - market value of the whole business
Net Bank debt - borrowings minus cash/deposits
PIK Security Value - See warrant value beloe, as it's a similar type of security
Equity value - Simply the enterprise value (above), plus all cash/investments, minus all debt and minority interests.
Warrant value - Often used with PIKs, it's a security that allows the issuer to buy shares in the company at a specified price.

Obviously one of the figures is incorrect already if the press is to be believed, better sponsorship deal with Standard Chartered will see us add on approximately £24 million over four seasons.

This is a (reasonably standard, I think) report drawn up taking into account some assumptions about the financial status of the club and its performance with a view to exiting from ownership in July 2012. Am not actually going to go into some considerations they've made - I'd be interested to see what a a friend of mine has to say about this, so I'll come back with details of what these (perhaps selectively photographed pages) may mean.

If this is to be believed, the figure that concerns me (and doubtless anyone else) is £20 million normalised net spending (although, to note, normalised avoids cyclical economic factors like inflation, if I remember rightly). That's pretty much one established or two young players per year in a normal market (as opposed to this year), with any other transfers funded through player sales.

They're forecasting the EBITDA to increase from £42(.3?) million financial year end 2009 to 46.5 million financial year end 2010, and then from £46.5 million financial year end 2010 to £54.3 million financial year end 2011, and this was assuming that the Carlsberg sponsorship was renwed rather than a new sponsor brought in. (I would assume, accordingly, that this report is fairly old).

So they're forecasting a 25% increase in earnings by end financial year 2011, and that excludes the possible £10 million brought in from the Standard Chartered deal. If that is given consideration (and excluding some underlying financial calculations too complex for my little brain), the £10 million plus the £54.3 million is £64.3 million, an increase in EBITDA of £22 million, and hence a 50% increase in earnings before interest, taxes, etc.

While the transfer figures are hugely disappointing - and I believe that £20 million figure was something Purlsow hinted at in an interview - the actual prospective earnings are fairly impressive. (Speaking as a fan, I obviously want the money going on players)

Gimme5

These are long term forecasts put together to try and obtain finance.

The first page is showing that LFC will be spending less on player transfers - prudent given the lack of finance the owners had at the time.

The second page is an assessment of how much 'bunce' the board have with their projections. EBITDA is one of the key drivers when obtaining finance and it shows healthy profits - mainly due to the lack of transfer activity that the plan shows.

The EBITDA bridge on page 3 is a clever tool - it shows how the 2009 EBITDA is going to rise - it builds in the additional income from various revenue streams and savings then it deducts the additional costs the club will incur and it ends up with the 2010 EBITDA. These are forecasts and show the main differences between each year.

There is a similar bridge showing the differences between 2010 and 2011. Here is a clue that the forecasts are old as they assume we will continue with Carlsberg which we all know is no longer the case.

The next page is the exit strategy and this is probably worst case scenario - in 2012 the club will need to start with the stadium so the owners will have a few options:-
1 - sell up to a party who can build the stadium (and this slide shows the level of debt and what equity G&H will have at this point)
2 - take on more debt to build the stadium (again they need to reduce the debt and increase equity prior to this to encourage a bank to lend them the sums involved)
3 - take on additional investment to build the stadium

What does this say to me?

Well it is clear that the club will be cutting costs and trying to boost revenue in order to reduce the debt. There will be little investment in the playing squad as the 2006-2008 outlay was done to increase the squad - Rafa will have to wheel and deal with this squad. The plan is to spend net £20m a year so they have made some big savings already in year one - personally I think this was done with an eye on the other big 4 - as they never spent heavily we followed.

Reducing debt is key but the plan is to remain in the champions league otherwise the revenue increases year on year would not make sense. Failure to make champions league will blow a major hole in their plans and the risk in the strategy is clubs outside the big 4 investing more in their squads and overtaking us. But I also think management believe we are in a stronger position than Arsenal so they feel they have an extra level of comfort.

As a fan I would want them to invest more and try to win the league as this would create create more revenue but they are happy with champions league qualification and bumbling along. We are in a sad state when we have owners content to settle for second best - the long term outlook is G&H will milk this cash cow and we will be paying for it...bad times.

Player transfer payments states that we have spent about 20m this season for transfers. Really?
 
EDIT:Ok I get it.I guess that figure isn't the net money spent on transfers.Assuming that income from player sales goes directly towards transfer funds.

NO NEW STADIUM!! THESE YANKS ARE BEYOND BELIEF!!

i dont know is that good or bad !!!!