There was a meeting between the Trust Board and the Club’s Board of Directors on Tuesday evening, primarily to look at the questions raised by supporters at our recent fan meetings primarily regarding the ownership of the Club and the desire to bring in an outside investor.
Q: At what stage was a share issue planned as part of any strategy, and why was it required if a) the costs were under control and b) a decision had already been made to significantly increase the playing budget?
It was made clear at the EGM in November that as a business the Club will lose a million pounds a year, and this is in line with the last five years of the Club Finances are always helped by Cup Runs and Player trading, neither of which we have benefitted from over the past season. There is a lack of cash coming into the Club needed to run the business. There has been significant additional costs such as sacking of the manager as well as the legal fees as alluded to in the recent Chairman’s statement.
Q: On what date, presumably minuted in any board meeting confirming this, was the decision made to move away from being a ‘fan owned, fan led’ club?
Q: Shareholders were asked to approve the issue of new shares on 17th November having been told that “These new shares are simply designed to create new capital and not provoke any form of takeover of our club.” Why did that change just 43 days later?
A: The Board stated that they haven’t moved away from this model and the share issue in November was evidence of this. However, it became very clear that the shares were not going to be sold. The money from those shares was necessary for the running of the Football Club throughout this season. The Shares remain up for sale and are available to be to be purchased.
Q: Given the Board have been in situ for two years now, what has improved during that time from a financial point of view?
A: The Board stated that the Bars and Events have been the biggest improvement during that time, bringing in an additional £100,000 by the end of this year.
Q: The Trust have spoken about non negotiables regarding investment/takeover. Can this be guaranteed by the Board?
The Club stated that from their point of view the answer would be yes, but ultimately this would come down to the investors. We stated that should that be the case that immediately would set off red flags in our eyes. The Club stated that anyone with any business acumen would appreciate that the supporters are the life blood of the Club, so they’d be foolish not to do that.
Q: Given that 7 out of 8 Directors contributed a collective £500,000 towards the share purchase from Morton House, to what extent does the recoup of this money play a part in attracting an investor?
A: The priority is 100% the Club’s survival, with no Director speaking at any stage to the Chairman about looking to recoup the funds spent acquiring those shares.
Q: There are less than 30% of total shares issued available to buy which will see funds into the club. This is not enough for an investor to achieve control of the club, or to meet EFL OADT requirements. How are you hoping to make any investment attractive, given the prospect of zero dividends?
A: The prospect is the value of the Club should it return to the EFL. Crawley were purchased for £5m last year, and a stable League 1 Club could be worth up to £10m with the new TV deal. People are interested in getting involved in Football for all sorts of reasons and to some, having the minority shareholding would be favourable.
Q: If a new issue of shares is required to enable an investor to gain overall control of club ownership at 51% plus levels, will existing shareholders pre-emptive rights be respected?
A: It was difficult to confirm as much would depend on the investor but from this Board’s point of view, the answer would be yes as it would bring additional revenue into the Club.
Q: How many NDAs with potential investors are currently in place? What are the time limitations on these agreements?
There has been a host of NDA’s signed with conversations still taking place with a number of people. There has been talks with over a hundred parties but to date there has been no concrete offers on the table. These have been local, European and from overseas. Whilst any NDA will be time limited, it doesn’t prevent anyone coming back.
Q: As the Trust have already stated, are the Club willing to speak to former Dale Chairman Chris Dunphy in any way as requested prior to this meeting in a Trust email?
A: This Board would discuss this at their next meeting and would let us know.
We asked about how the work with MRKT will proceed as nobody within the fanbase seems to have any idea of how it operates, though it was reassuring to hear from Jim McNulty that League One Champions Plymouth Argyle. We were given a very thorough explanation as to how it worked that was far too extensive to discuss here. We have requested that the Club put out a video on the official site detailing this could be communicated to the fanbase. The Club were very open to doing such a video.
In terms of the managerial appointment, the Club stated with a list of 36 possibles that were whittled down to a short list of five, with ultimately McNulty ticking all the boxes from those. We asked what had stood out about Jim, and it was the level of preparation and planning, with a high level of clarity, and he came out on top of all the grading systems they had put into place.
Other things that were discussed including the season ticket launched that will happen soon which could be slightly delayed as the Club look at options proposed to them from within the fanbase over the past few days, and plans that the Club already have in place for next season at growing the fanbase that will be discussed further in the next few weeks (some of which has been covered here).
There are further questions that were not covered at the meeting that we will be following up on.