Next time we go up (money where the mouth.is)

[littleyellowbirdie 2,597]

Mulling over the thread on seeking a super-buyer to inject capital to take the club to the next level, I had an idea inspired by the golf club up the road. 

A golf club near us has a members equity system where membership is purchased at a fixed rate and that becomes a permanent stake in the club. There are no dividends, but (I believe) its value is reflected in the capital value of the club. This is how they paid for the building of the club in the first place. 

In the golf club system, you have your stake, but you still pay to go for a round.

It occurs to me that the club has over 20,000 season ticket holders, so what about a new form of season ticket with extra special privileges, including possibly even some voting rights regarding the make up of the board? 

I'd propose that these 'super season tickets' would still have the normal season ticket on top of the price to be paid each season. I'd also suggest that people would need to be a past ordinary season ticket holder to be eligible, but they'd have special privileges and access at the club as part of it, including possibly rights to have a look at training? All open to discussion. 

Obviously value would have to be reflective of how much people think would be needed to have a fighting chance of competing, but if, for the sake of argument, people wanted to see a £200m injection, then 2,000 super season tickets would need to be sold at £100,000 each. Important to stress that these would be a transferrable capital stake in the club that maintains capital value according to the value of the club, incurs special rights, but has no dividends. In effect, this creates 2,000 mini angel investors that would have the same effect as one mega-owner buyout, but in a more collegiate form. 

Just thought I'd put that out there and let people bat it around. 

[Branston Pickle 3,690]

Nah, not for me - I already spend over £500 on a s/t and at least £20 per match on travel just to get to home games. 

[Norfolk Dan 308]

I will say I like this..... 

How do you get the Angel investors to go again and again when we p1ss the cash up the wall again and again. Where all the risk sits with our Angels and our darling buds in the directors box can take a dividend with less investment? 

Room for this to grow.... Maybe the old debentures system could be modernised? 

[Capt. Pants 4,278]

I would reverse that and suggest a certain amount of equity guarantees you a season ticket as well as voting rights.

Trouble is the ground isn't big enough to prevent some existing ST holders being kicked out.

We just need a rich Saudi/US investor to come along and be done with it.

[littleyellowbirdie 2,597]

28 minutes ago, Capt. Pants said:

I would reverse that and suggest a certain amount of equity guarantees you a season ticket as well as voting rights.

Trouble is the ground isn't big enough to prevent some existing ST holders being kicked out.

We just need a rich Saudi/US investor to come along and be done with it.

This is a good point; my response would be that safe standing will likely be an option in the next year or two, which will offer the opportunity for a big expansion, creating an opportunity to do this without disenfranchising existing ST holders. 

[BigFish 1,988]

1 hour ago, Branston Pickle said:

Nah, not for me - I already spend over £500 on a s/t and at least £20 per match on travel just to get to home games. 

No offense @Branston Pickle because this is true of most fans but this is exactly the kind of fundamentals that mean we will always remain a medium size club.

[Monty13 2,252]

Why not just sell a whole bunch of new shares?

Huge potential for investment from small holdings by supporters to larger investments by equity groups and wealthy individuals.

Like any “self sufficient” business would. 

[shefcanary 2,465]

6 hours ago, littleyellowbirdie said:

Mulling over the thread on seeking a super-buyer to inject capital to take the club to the next level, I had an idea inspired by the golf club up the road. 

A golf club near us has a members equity system where membership is purchased at a fixed rate and that becomes a permanent stake in the club. There are no dividends, but (I believe) its value is reflected in the capital value of the club. This is how they paid for the building of the club in the first place. 

In the golf club system, you have your stake, but you still pay to go for a round.

It occurs to me that the club has over 20,000 season ticket holders, so what about a new form of season ticket with extra special privileges, including possibly even some voting rights regarding the make up of the board? 

I'd propose that these 'super season tickets' would still have the normal season ticket on top of the price to be paid each season. I'd also suggest that people would need to be a past ordinary season ticket holder to be eligible, but they'd have special privileges and access at the club as part of it, including possibly rights to have a look at training? All open to discussion. 

Obviously value would have to be reflective of how much people think would be needed to have a fighting chance of competing, but if, for the sake of argument, people wanted to see a £200m injection, then 2,000 super season tickets would need to be sold at £100,000 each. Important to stress that these would be a transferrable capital stake in the club that maintains capital value according to the value of the club, incurs special rights, but has no dividends. In effect, this creates 2,000 mini angel investors that would have the same effect as one mega-owner buyout, but in a more collegiate form. 

Just thought I'd put that out there and let people bat it around. 

Isn't this like the debenture system they have at Wimbledon tennis club?  You pay for 20 years or more for entitlement to a seat throughout Wimbledon fortnight (which I think you pay for) as well as enjoy some form of coupon rate on the investment;  you can let them know in advance what days you are in attendance and if you can't make it, your seat is re-sold on the day, the income goes to Wimbledon.  I believe the recent capital improvements were funded in part by a special call on these debentures.  The only issue here being it is rather elitist in that the cost of the investment is a bit mind boggling considering what you receive in return, the market place for it being also restrictive, but that is the nature of the All England Tennis Association - no reason why a less elitist model could not be developed for Norwich.  

[BigFish 1,988]

3 hours ago, Monty13 said:

Why not just sell a whole bunch of new shares?

Huge potential for investment from small holdings by supporters to larger investments by equity groups and wealthy individuals.

Like any “self sufficient” business would. 

Eh? No, not really.

Yes, selling new shares increases the size of the club in financial terms. But only when that cash is in the bank, the moment you start spending the cash is dilutes the value of the shares. For example, say the share issue values the club at £150 million & we raise £50 million through a rights issue. Then the club is worth £200 million. If we spend that on the team over a few seasons e.g, run at a loss at the end of that period the club is probably worth the equivalent of £150m but the shareholders have lost 25% of value of their shares value and the club doesn't have the money. It works in business because it makes the business bigger if successful, spending on the team doesn't change the fundamentals of the club.

[Commonsense 650]

4 hours ago, littleyellowbirdie said:

This is a good point; my response would be that safe standing will likely be an option in the next year or two, which will offer the opportunity for a big expansion, creating an opportunity to do this without disenfranchising existing ST holders. 

This is untrue. If you look at safe standing it requires a seat per person( which in some cases is bolted upwards). As you know it has already been installed in some grounds. However it does not lead to any increase in capacity. It is not the cram as many people as possible onto a terrace system we used to have in the past.

[sgncfc 1,259]

Innovative cash and investment ideas are not, apparently, something the Board have yet considered. I don't know why. The Academy Bond was a great success on a smaller scale. We discovered that it didn't need to be so generous in investment terms, so something bigger and more long term makes a lot of sense.

Just giving every season ticket holder the chance to purchase some of the unissued shares would be a start. The failure to expand the ground over the last two promotions is now looking like a very poor position for the Board to have held onto.

[Monty13 2,252]

53 minutes ago, BigFish said:

Eh? No, not really.

Yes, selling new shares increases the size of the club in financial terms. But only when that cash is in the bank, the moment you start spending the cash is dilutes the value of the shares. For example, say the share issue values the club at £150 million & we raise £50 million through a rights issue. Then the club is worth £200 million. If we spend that on the team over a few seasons e.g, run at a loss at the end of that period the club is probably worth the equivalent of £150m but the shareholders have lost 25% of value of their shares value and the club doesn't have the money. It works in business because it makes the business bigger if successful, spending on the team doesn't change the fundamentals of the club.

Well technically that’s not true if the investment provides a return which I’d argue a prolonged stay in the PL would represent.

Regardless ignore that and my position is yes, it would dilute the value of the current shareholders. So? 

If you’re a shareholder who actually wants to see the club kick on you’ve got two options, buy more shares to maintain your value or don’t and your value diminishes.

Like you said the club isn’t a normal business so I fail to see why it should be held back by the desire of the current shareholders to maintain their value when further investment is an option if they sacrifice some of that? 

[essex canary 506]

6 hours ago, Capt. Pants said:

I would reverse that and suggest a certain amount of equity guarantees you a season ticket as well as voting rights.

Trouble is the ground isn't big enough to prevent some existing ST holders being kicked out.

 

Such a season ticket was given 20 years ago when I purchased my 1,000 shares. When a colleague who did likewise passed away, the inheritor then picked up the shares whilst being denied the season ticket. Moreover at the same time the Club is rewarding others, including non-shareholders some of whom are executive members or directors with only token short term shares, very very handsomely for short term infrastructure investment.

I wonder whether the Golf Club would operate like that?

It may be reasonable to ask such investors to pay for their season ticket regardless or for non-shareholders to consider a voluntary double payment for their season ticket but perhaps a more polite and consistent approach displaying goodwill all round would be necessary to get there?

Edited April 27, 2022 by essex canary

[essex canary 506]

11 hours ago, littleyellowbirdie said:

Mulling over the thread on seeking a super-buyer to inject capital to take the club to the next level, I had an idea inspired by the golf club up the road. 

A golf club near us has a members equity system where membership is purchased at a fixed rate and that becomes a permanent stake in the club. There are no dividends, but (I believe) its value is reflected in the capital value of the club. This is how they paid for the building of the club in the first place. 

In the golf club system, you have your stake, but you still pay to go for a round.

It occurs to me that the club has over 20,000 season ticket holders, so what about a new form of season ticket with extra special privileges, including possibly even some voting rights regarding the make up of the board? 

I'd propose that these 'super season tickets' would still have the normal season ticket on top of the price to be paid each season. I'd also suggest that people would need to be a past ordinary season ticket holder to be eligible, but they'd have special privileges and access at the club as part of it, including possibly rights to have a look at training? 

See my previous response to Captain Pants.

[BigFish 1,988]

53 minutes ago, Monty13 said:

Well technically that’s not true if the investment provides a return which I’d argue a prolonged stay in the PL would represent.

This is the key, a prolonged stay in the PL isn't an investment that provides a return, except in the obvious sporting terms and perhaps good will. Higher wages and amortisation eats up all the extra cash from EPL and the club is no bigger, e.g. one bad season from the Chumps.

[Monty13 2,252]

5 minutes ago, BigFish said:

This is the key, a prolonged stay in the PL isn't an investment that provides a return, except in the obvious sporting terms and perhaps good will. Higher wages and amortisation eats up all the extra cash from EPL and the club is no bigger, e.g. one bad season from the Chumps.

But the club is more valuable while it maintains that position because of the extra revenue, that’s undeniable otherwise a club in League 2 is worth the same if you dropped it in the PL.

Regardless it’s a semantic argument that ignores my point.

The clubs current shareholders shouldn’t be allowed to hold the club to ransom and deny revenue through a share option to hold onto their value IMO.

This isn’t a normal business and if you care about the club clinging onto your value shouldn’t be your priority as a shareholder otherwise why are you one?

[essex canary 506]

1 hour ago, Monty13 said:

But the club is more valuable while it maintains that position because of the extra revenue, that’s undeniable otherwise a club in League 2 is worth the same if you dropped it in the PL.

Regardless it’s a semantic argument that ignores my point.

The clubs current shareholders shouldn’t be allowed to hold the club to ransom and deny revenue through a share option to hold onto their value IMO.

This isn’t a normal business and if you care about the club clinging onto your value shouldn’t be your priority as a shareholder otherwise why are you one?

In other words holding a smaller proportion of a larger or higher esteem business may well be preferable than a larger proportion of a smaller or lower esteem business. Seems quite sensible. A rational thinker wedded to the 'human solution' ought to be able to understand.

[BigFish 1,988]

1 hour ago, Monty13 said:

But the club is more valuable while it maintains that position because of the extra revenue, that’s undeniable otherwise a club in League 2 is worth the same if you dropped it in the PL.

Regardless it’s a semantic argument that ignores my point.

The clubs current shareholders shouldn’t be allowed to hold the club to ransom and deny revenue through a share option to hold onto their value IMO.

This isn’t a normal business and if you care about the club clinging onto your value shouldn’t be your priority as a shareholder otherwise why are you one?

Except it is not really semantics, is it? A rights issue to fund a loss making enterprise without changing the fundamentals of a business makes no sense at all. You could justify it for building infrastructure e.g. a new City Stand or even a completly new stadium, but for underwriting operational expenditure it is clearly not normal business practice. It is just another attempt to find a magic money tree.

[Monty13 2,252]

20 minutes ago, BigFish said:

Except it is not really semantics, is it? A rights issue to fund a loss making enterprise without changing the fundamentals of a business makes no sense at all. You could justify it for building infrastructure e.g. a new City Stand or even a completly new stadium, but for underwriting operational expenditure it is clearly not normal business practice. It is just another attempt to find a magic money tree.

It’s not a magic money tree is it? It’s a perfectly feasible and usual way of generating capital, the difference being here it requires the current ownership to do so with little chance of them recovering their loss in share value.

That doesn’t make sense for a normal investor, are shareholders in NCFC primarily investors looking for a return? If so they have picked an extremely poor investment or are playing an extremely long game that would have seen a much better return elsewhere.

That said if that’s your fundamental argument why not use it to generate the funds for the new stand that’s so obviously needed.
 

 

 

[Badger 2,412]

7 hours ago, shefcanary said:

Isn't this like the debenture system they have at Wimbledon tennis club?  You pay for 20 years or more for entitlement to a seat throughout Wimbledon fortnight (which I think you pay for) as well as enjoy some form of coupon rate on the investment;  you can let them know in advance what days you are in attendance and if you can't make it, your seat is re-sold on the day, the income goes to Wimbledon.  I believe the recent capital improvements were funded in part by a special call on these debentures.  The only issue here being it is rather elitist in that the cost of the investment is a bit mind boggling considering what you receive in return, the market place for it being also restrictive, but that is the nature of the All England Tennis Association - no reason why a less elitist model could not be developed for Norwich.  

Something like this could be used to partially fund any new stand. Yo could for example have a ten or twenty year season ticket (or other specified period) at a guaranteed rate (therefore the potential saving from ticket price rises could replace interest on the "loan.") Future cash inflows would be reduced but still significantly cheaper than paying a loan back + interest. Even if only a 1,000 took up the offer it would raise £5 million interest free. 

[essex canary 506]

27 minutes ago, BigFish said:

Except it is not really semantics, is it? A rights issue to fund a loss making enterprise without changing the fundamentals of a business makes no sense at all. You could justify it for building infrastructure e.g. a new City Stand or even a completly new stadium, but for underwriting operational expenditure it is clearly not normal business practice. It is just another attempt to find a magic money tree.

The Clubs accounts suggest that the infrastructure value is around £60 per share issued. The valuations quoted in relation to other clubs in the top 2 divisions suggest that, rightly or wrongly, there must be a kudos element to the valuation of a football club well beyond the infrastructure assets. 

Edited April 27, 2022 by essex canary

[Badger 2,412]

Re whether buying a football club is "a good investment" proposed changes make it likely that it would be. If, as is very likely, wages and amortisation is capped at 70% of turnover, football clubs could become something of a cash cow for owners. It also means that they would be unable to make extra investment on the playing side, so would not have to put in more than their initial investment.

It could be a game changer and all our debate about the need for a rich owner would seem terribly out-of-date. 😀 What would we talk about 🤯

Edited April 27, 2022 by Badger

[sgncfc 1,259]

Turnover would include player sales. Does the amortisation apply to player values across the length of their contract or just physical assets? It would make budgeting extremely difficult if you suddenly found you had a £50m player asset who was written down to £5m the year before!

[nutty nigel 7,639]

These investment ideas are all very well but if I gave our club 2 of my millions this summer someone else would have to do it next summer then the next summer for a minimum of three years. Just like the parachute payments that some people seem to misunderstand.

Funding a new stand would be better because it could provide extra income every season. But that's still only a could with no guarantees.

 

 

[essex canary 506]

1 hour ago, Badger said:

Re whether buying a football club is "a good investment" proposed changes make it likely that it would be. If, as is very likely, wages and amortisation is capped at 70% of turnover, football clubs could become something of a cash cow for owners. It also means that they would be unable to make extra investment on the playing side, so would not have to put in more than their initial investment.

It could be a game changer and all our debate about the need for a rich owner would seem terribly out-of-date. 😀 What would we talk about 🤯

Would there be anything to prevent owners or anybody else increasing Turnover by putting donations through the Income and Expenditure Account?  Such an act would increase transparency but why would it prevent it?

[essex canary 506]

1 hour ago, sgncfc said:

Turnover would include player sales. Does the amortisation apply to player values across the length of their contract or just physical assets? It would make budgeting extremely difficult if you suddenly found you had a £50m player asset who was written down to £5m the year before!

'Amortisation' refers to the allocation of player transfer fees over the seasons to which their contracts relate. It is separate from Depreciation of physical assets which would not be an issue.

In your example upward valuation wouldn't be relevant. You raise an interesting question though about "write down' which is known as "impairment' but is effectively enhanced 'amortisation' which is required by accounting standards in appropriate circumstances. Therefore this isn't simple and the precise drafting of the rules is very important.

[glory.win or die. 270]

Robert Chase used to offer a super season ticket which I think was available along with a standard one.

The super season ticket was more expensive but covered you for any and every cup home match so some years it could be great value with 4 or 5 Cup matches

Maybe something similar with an extra £30 on the season ticket cld earn extra funds

[glory.win or die. 270]

I also wonder why clubs don't just set up a 'Club transfer fund account'. Similar to a charity were fans can just donate money anytime they want.

Over time I'm sure we wld all ve stupid enough to donate a few £s during good times to make it worthwhile 

 

[essex canary 506]

22 minutes ago, glory.win or die. said:

Robert Chase used to offer a super season ticket which I think was available along with a standard one.

The super season ticket was more expensive but covered you for any and every cup home match so some years it could be great value with 4 or 5 Cup matches

Maybe something similar with an extra £30 on the season ticket cld earn extra funds

It wouldn't help on the new proposed rules re player 'investment' as the Turnover credit can only be made when the service is provided rather than cash paid. The only real value would be to raise cash ahead of time for ground improvements.

Edited April 27, 2022 by essex canary

[essex canary 506]

16 minutes ago, glory.win or die. said:

I also wonder why clubs don't just set up a 'Club transfer fund account'. Similar to a charity were fans can just donate money anytime they want.

Over time I'm sure we wld all ve stupid enough to donate a few £s during good times to make it worthwhile 

 

Perhaps potentially a good idea. Then again what is the difference between a supporter paying in £1,000  and an owner paying in £10 million. Could mean very different results for different clubs in terms of number of contributors and overall funds raised.