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New Football Bond

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The latest fund raising bond being issued by Tifosy is for Peterborough Utd, paying 9% interest per annum over 5 years, with a 15% bonus if they get promoted back to the Championship within that time. Although an initial target of £1.5m, there seems to be no limit on the amount to be raised, so it will be interesting to see what they get to. 

This one is bit risky as the owners are not wealthy, so the club will have to fund both the interest and the repayment from turnover. However, there is a good chance that they would be able to challenge for promotion.

In terms of potential further fund raising options for NCFC, worth keeping an eye on.

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Posted (edited)

https://www.peterboroughtoday.co.uk/sport/football/peterborough-united/peterborough-united-look-to-raise-millions-with-a-bond-scheme-3682943

It’s a fund-raising initiative to help finance key club infrastructure projects while allowing supporters to get a return on their investment. A safe standing area within the London Road End of the ground is a priority as the club would not be able to use a terrace if they return to the Championship. A modern sports bar open seven days a week is also a target.

 

Funds raised over the initial target of £1.5million will be allocated to the first phase of work towards a new stadium for the city, namely the architectural, surveying and engineering work required to submit a formal planning application.

The bond is effectively a loan to the club. The Posh Bond will pay a fixed rate of interest over its five-year term, after which the amount invested will be repaid to the Bondholder. The key terms of the Bond are as follows: 1) 9% interest per annum, 2) 15% cash bonus if Posh are promoted to the Championship by 2026/27; 3) Eligible for tax-free returns through an Innovative Finance ISA; 4) Minimum investment £500.

Edited by Greavsy
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Maybe Delia and Michael could invest to raise some funds for us in 5 years time?

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Just now, king canary said:

Don't claim to be an expert on this sort of thing but 9% sounds very high?

I thought that. I guess that it's a potentially risky investment and inflation is likely to be above 9% for some of the fixed-term, so they've wagered that they need to offer a high return to attract sufficient interest?

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1 hour ago, shefcanary said:

Pileon that - 9%!  Although risk of failure is very high!

Yes I registered when I saw this yesterday on Price of Football's twitter. It's not only the 9% there is also a 15% promotion bonus. If new FFP rules come in as expected, I would have thought that the risks aren't that bad?

Obviously I shall wait until I get the full details but very tempted.

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6 minutes ago, canarydan23 said:

I thought that. I guess that it's a potentially risky investment and inflation is likely to be above 9% for some of the fixed-term, so they've wagered that they need to offer a high return to attract sufficient interest?

B of E suggested that inflation could reach 10%. I thinks it's reasonable to expect regular quarter point rises for the foreseeable future - but won't necessarily be pass on by banks etc.

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49 minutes ago, Badger said:

B of E suggested that inflation could reach 10%.

Yep, and they've been steadily upping the forecast. It was, "inflation could exceed 5%", then "inflation could exceed 7.5%", then "inflation could exceed 8%".

Now we're at "inflation could exceed 10%".

Give it a month and it'll be, "inflation could exceed 12%". The idiots in charge can't get a grip on it. Well, they can, but the required measures would mean upsetting their paymasters, so it won't happen.

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9 minutes ago, canarydan23 said:

Yep, and they've been steadily upping the forecast. It was, "inflation could exceed 5%", then "inflation could exceed 7.5%", then "inflation could exceed 8%".

Now we're at "inflation could exceed 10%".

Give it a month and it'll be, "inflation could exceed 12%". The idiots in charge can't get a grip on it. Well, they can, but the required measures would mean upsetting their paymasters, so it won't happen.

Another motive called be to reduce the real terms National debt.

Since the Tories and the Lib Dems decided to reduce national debt it has more than doubled (and most of this was before the pandemic, before someone chips in). It was mainly due to the economic incompetence of the Coalition.

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Our academy bond was 8% (albeit 3% in club shop credit) plus 25% on promotion, when interest rates were at 0.25%....

I believe the "going rate" from Macquaries and others for loans to football clubs was around 9% while base rate was around 0.25% so the Peterborough rate is, if anything, slightly more favourable to them - which is presumably why they are doing it.

I'm pretty sure if NCFC did another one at a similar level, lots of people would pile on.

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2 hours ago, Badger said:

Yes I registered when I saw this yesterday on Price of Football's twitter. It's not only the 9% there is also a 15% promotion bonus. If new FFP rules come in as expected, I would have thought that the risks aren't that bad?

Obviously I shall wait until I get the full details but very tempted.

How can the risks be that bad when it is a preferential creditor relative to equity and preference shares?

Clearly current economic circumstances drive up the rate relative to our bond in 2018 but then ours was significantly higher in relation to the promotion bonus.

AFC Wimbledon seemed more in keeping with reality. Agree that I would be tempted at these rates.

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10 minutes ago, essex canary said:

How can the risks be that bad when it is a preferential creditor relative to equity and preference shares?

 

Yes but if they did go into administration bondholders would be one of the last to be paid out. Those with loans secured against assets, football debt + HMRC and then presumably bondholders left scrabbling with other people the club owes money to?

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Well it's probably very unlikely they'll ever be promoted to EPL so that restricts their risk.    😆

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15 hours ago, Badger said:

Another motive called be to reduce the real terms National debt.

Since the Tories and the Lib Dems decided to reduce national debt it has more than doubled (and most of this was before the pandemic, before someone chips in). It was mainly due to the economic incompetence of the Coalition.

It beggars belief doesn't it? 10 years of austerity during which time they almost tripled the national debt! But obviously we can't have Labour in control because they would destroy the country's finances.....

As regards Peterborough, excuse me for being cynical but I suspect they already had takers for the offer before they went public.

9% sounds generous but if a business like Peterborough tried to borrow from a financial institution I suspect they would get a negative response. 

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1 hour ago, dylanisabaddog said:

It beggars belief doesn't it? 10 years of austerity during which time they almost tripled the national debt! But obviously we can't have Labour in control because they would destroy the country's finances.....

As regards Peterborough, excuse me for being cynical but I suspect they already had takers for the offer before they went public.

9% sounds generous but if a business like Peterborough tried to borrow from a financial institution I suspect they would get a negative response. 

It was good politics Dylan but bad economics. Pretending that the problem was one of sovereign debt and not a financial crisis gave the Tories a good attack line and "cover for reducing the size of the state." It made the destruction of state services, something that they wanted to do, seem like a virtuous and necessary activity. I believe the target for "eliminating the deficit" (a nonsense term in its own right anyway) was 2014 but is nowhere in sight now! Yet our supine Press and media never even mention it now.

Of course, the economic illiteracy of making spending cuts during a time of low demand was recognised throughout the world, but ideologically it was a price worth paying. You can't blame Cameron and Osborne for this: they were brought up believing this nonsense. 

My real ire is with the Lib Dems who supported this nonsense and betrayed most of the people who voted for them for the price of a ministerial car. 

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1 hour ago, Badger said:

 

My real ire is with the Lib Dems who supported this nonsense and betrayed most of the people who voted for them for the price of a ministerial car. 

Three huge decisions that ruined this country.

The Unions picked the wrong Milliband. 

Clegg picked the wrong bedfellows because he didn't like Brown. 

Cameron didn't listen to Osborne on the EU/Farage issue. 

Get any of those 3 right and things would be so much better. It will probably be 50 years before we recover. 

Nothing to do with Peterborough but at least I've got to have a rant

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21 hours ago, Mr Angry said:

Maybe Delia and Michael could invest to raise some funds for us in 5 years time?

Not another "5 year plan"  lol 

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15 minutes ago, The Real Buh said:

image.thumb.jpeg.73d10ce2606aaf9b3be929699059eb43.jpeg
 

For reference, here’s the current football bond

Second worst Bond after Lazenby.

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5 hours ago, dylanisabaddog said:

Clegg picked the wrong bedfellows because he didn't like Brown. 

 

Clegg was always going to pick the Tories - his brand of liberalism is just as right wing as the Tory right. Have a look at the Orange Book.

You might want to add to that list Jo Swinson's decision to "cut and run" because she thought the Lib Dems would gain seats in 2019. With no majority in the Commons and several Tories hostile, the opposition had Johnson over a barrel but the chance of a few extra seats was too good to miss.

+ the collective failure of all our political leaders to resolve the split Brexit vote in some form of compromise way - honouring the referendum by leaving the EU but staying in their single market and customs union.

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5 hours ago, canarydan23 said:

Second worst Bond after Lazenby.

[cough] Roger Moore??? [splutter]

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43 minutes ago, Badger said:

Clegg was always going to pick the Tories - his brand of liberalism is just as right wing as the Tory right. Have a look at the Orange Book.

I thought something similar when I saw Dylan’s comments about the wrong Milliband. David Milliband was Tony Blair-lite at best.

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