Blog: What if Randy Lerner sells Aston Villa?
With Aston Villa rumoured to be up for sale with current owner Randy Lerner, blogger Matt Turvey looks at the hypothetical impact selling the club could have.
In recent months, much has been written about the possibility of current owner Randy Lerner selling Aston Villa as a going concern. Whether there is a shred of truth in such reports is, as ever, purely conjecture.
What I wanted to cover in this week’s piece was a look at how the club might be if Villa’s quiet owner decides he has finally had enough of life in B6.
I should stress now that I’m not writing this piece with the inference of some kind of insider knowledge of a sale, but rather to look at how things might pan out if, as some fans seem to desire, Lerner sells up.
All in all, Lerner’s ownership of Villa has had a fair share of ups and downs. From the peak of three sixth placed finishes, the club are arguably at their lowest ebb of the American’s ownership with survival in the Premier League far from a certainty.
So, with the trajectory of the club being downward in recent times, it may seem wholly logical and feasible that selling the club is the best thing to do for the fans. After all, who wouldn’t want a return to spending and success?
The reality of a sale offers far less clear cut answers though. Without even getting into whether the hypothetical new owner would be more or less rich of outspoken - insert trait here - there’s enough on the page already to know that Lerner might get the last laugh.
Why? Should Lerner choose to sell the club he will, in all reality, take a short term hit on the sale value of the club, magnified somewhat if the club do tumble into the Championship.
However, as the club’s current debt situation reflects, Villa are up to their neck in Lerner’s money.
So the most likely possibility would be that Lerner would sell the club at a cheaper rate, take the hit, but still own the debt.
In this instance, those free loans he has been providing to the club may well become shackles that cripple the club. This is because the debt, as it currently stands, is wholly in-house.
Villa are, as we all know, in debt though that is with the owner so it;s fairly low risk, substantially lower than if Villa were out of pocket by£125million to a bank or other financial institution.
Should Lerner sell the club but keep the debt, the same amount of debt could become a serious millstone.
Not only would the new owners have to have paid out a sum to buy the club as it stands, they would also have debt to contend with.
Some may suggest that any prospective owner could pay off the debt as part of a purchase, but the reality is that Villa are simply not good value as a purchase for this to make sense.
Paying off the debt of the club and buying Villa would set back any investor £200million or more. Ask yourself this, is that good value for a club that could potentially be in the Championship next season?
The answer is obviously no because there are other clubs who offer better value - Everton for example - which would cost far less than Villa and would be better in footballing and financial terms.
What may be best for Villa, contrary to some of the current angry fan feeling is for Lerner to stick around, get the club back to an even keel and then sell.
It may not be ideal, and fans may be upset with the current board, but selling could bring even darker days to Villa Park.
Selling, especially if the club descend into the Championship, could be the worst thing to happen to the club.
Next time you consider that Lerner may not be the right man for the role at present, remember removing him may make things far worse.
You can follow Matt Turvey’s regular opinions at his own site, Aston Villa Life at www.astonvillalife.com, via the site’s Twitter account @astonvillalife, or via his own Twitter account @MatthewSTurvey.
Comments for: "Blog: What if Randy Lerner sells Aston Villa?"
Mick
I have to disagree with some of what you have said.
How many clubs that owners have sold, have been bought with and continued to have a debt?
I think you would be hard pressed to name even 1.
As to Everton being a better club to buy? Really? I mean their 1st 20,000 season ticket sales Everton don't even see the cash as that money is secured on their debt.
Their ground is a complete joke, its falling apart and they STILL have wooden seats on some of their stands!
If Villa were to go down, that would be the only time Laerner would make a loss as next year is the biggest year money wise to be in the Prem League with tv rights supposed to be worth an est £62,000,000 to EACH & EVERY club.
astonmilan
Extra £20m mate.
Baggyjon
Hypothetical.. Utter tosh and not worth the time it took to read.
Jon
If Randy Lerner was selling Villa, he would have done what Mike Ashley did at Newcastle and invested in January to ensure the Club stayed up, to reap the dividends of the new TV Deal next season and maximise his return.
As it stands, if we win tomorrow (and it's a big IF because man-for-man QPR are the better side) we have a good opportunity to pull away from the bottom 3.
Ryan
Personally I dont think this is how it would play out if the club was sold. It is far more likely that an agreement would be reached with Lerner so that the loans are paid back to him at a favorable rate, say 4% above base rate, as part of the sale, this in effect would just move the debt from one owner to another. Meaning that Randy makes a bit of of money and the debt stays as it is, with the owner and its favorable rate.
Furthermore I'm not sure I agree about Everton being more attractive, certainly if we remain a prem outfit. Kenwright was on the radio earlier this week and said that the starting price for Everton is 125 million!! That's a staggering amount for a club that doesn't own its own ground or training ground, and needing significant investment in both. We've already had that investment, the only real investment we need is in the team.
Pughie
I totally agree with your over view, the current debt is in house and Randy needs some of it back, a least its not a bank, Just look at who has brought other clubs and the position they are now in. But the real shocker is some Villa fans a willing to camble on villa future in having the club sold, with out knowing who the oner would be and there finacil osition, all in the hope they could be another owner of onther mini mini country. I do not hear them saying put up the season tickets. They just keep asking the owner to put his money into the club
Matt Turvey
Thanks for the comments.
Mick,
Lerner has made a loss continually for the past three or so years hence the need to cut costs and save cash. If he sells the club and the new buyers write off the debt, who in their right mind is going to pay roughly £225m for Villa (£100m for the club and £125m to write off the debt) as it currently stands.
Premier League club or not, £225m (a fair price in terms of getting a return for the owner) is nowhere near value for a club that has been in trouble for years.
Jon,
Lerner doesn't need to have the club in the Premier League to sell, all he needs it to be able to make some form of return on his income.
Sure, he could have invested in January to improve the team, but that doesn't guarantee survival - if it did everyone would do it which would, ironically, then make it no guarantee at all as all the absolute figures would increase meaning no relative benefit.
Anyway, it is all hypothetical and a response to the ongoing statements fans make about wanting Lerner to sell. Whether he will sell is another story entirely.
Matt Turvey
Pughie,
Interesting that you bring up the season ticket prices. Villa have some of the best value tickets in the league and could, in all honesty, jack them up significantly to improve turnover.
The issue is that fans would then be outraged and the team would end up with smaller gates again, and possibly less money.
I think there is a strong "Anyone but Lerner" feeling amongst fans as though Lerner is the worst person ever to own a club. Sure, Villa are in a bad position, but why would a sale be a great move? There's no guarantee it would.
Ryan,
You say Everton are bad value at £125m but Villa would be marketed around the £225m figure (£100m "value" and the cost of buying the debt either immediately or over a term).
Looking at where Everton are, where their team is, and how their squad is made up, would you really suggest that a young team currently near the relegation zone are worth a potential £100m more than a club that have been competing in the top half on a shoestring budget for numerous years?
That is the reality of a Villa sale - they are bad value. Yes, TV money will improve the turnover of Villa if they stay up, but it also increases the turnover of every team in the league meaning that a) player wages/fees are likely to go up and b) that clubs with less debt are still better value than Villa.
Peter Coates bought Stoke for £3.5m and they have slowly (but surely) progressed up the table. Lerner paid £65m, punted a lot at Martin O'Neill, and is now the other side of that expenditure needing to cut back.
Coates could, in theory, sell Stoke and make a profit. Can Lerner convince a business man that £225m is good value for a club that has, in all honesty, been going in the wrong direction for several years.
If Villa survive, Lambert's philosophy - cheap players - will need to be adhered to. If it isn't, then the TV money will just be wasted on overpriced players again, something that sounds familiar when one looks back at the O'Neill era.
Matt Turvey
Pughie,
Precisely re: the bank statement but, if Lerner sells only the club component but retains the debt (to facilitate a quicker, cheaper sale), then Villa's current debt would be akin to a bank loan and Lerner would, in all honesty, be expected to make a return based on selling Villa at a discount.
The alternative is the buyer buys the job lot but, as stated above, is £225m a realistic and sensible figure for a club in Villa's position? I hate to say it but, on current value choice, a buyer would be more likely to get good value buying the Baggies than Villa at present simply because they would be both cheaper and would have the same TV money as well as not (currently) being threatened by relegation.
pughie
i feel we have no alternative but to get the debt down, bring players in with potencial, to add to the good youth system we have, and not panick. give PL time he has not done to bad at all in the tranfer market and developing the youger players coming through,
some clubs higher up the premier league than Villa are in a much more over all dificult finacial position than Villa, because there infrostucture needs re building Grounds need rebuilding or modified, training grounds out of date, gounds not being big enough to hold fans when the oppontunity comes, Gound that do not bring in money by having facilities that can be rented out or supply food and drinks on match days, Land around the ground to enlarge their current stadiums, and a good infurstructure to get fans to stadiums.
We are quick to look at the negative points, and to quick to think a change will bring in better, But big investors have in the main put their money into clubs that are in capital cities. and these people have had more than their own money backing them,
let us not jump until we know want we are jumping into. I dare say that the people who are chantting the mantra of Lenner out, are not the people who think of the long term but pend todat pay tomorrow
Randy Lerner came to B6 wanting to take Aston Villa to the Champions League. We can all debate whether an outlay of around £130m for players on top of what he paid out for the club was going to be enough. The truth is with O'Neill he very nearly achieved his goal. Sure, in this era Randy Lerner wasted money on the likes of Shorey, Harewood, Knight and Curtis Davies but name me a football club that aspires to greatness that hasn't at one time drops clangers in the transfer market.
The fustration for Aston Villa supporters is that the very man seen as its sugardaddy stopped investing at the most critical point and then went on to sell his best players, waste millions in compensation for two particularly dreadful managerial appointments whilst at the same time pointing the finger at O'Niell for his own mistakes