From Milwaukee to Carrow Road – Happy Days ahead maybe?

Up until Friday’s breaking news, my personal knowledge of the residents of Milwaukee was strictly limited to one Arthur Herbert Fonzarelli, better known as Fonzie, or the Fonz – a fictional character played by Henry Winkler in the 1970s American sitcom, Happy Days.

Now there’s a new name to Google – Mark Attanasio, owner of the Milwaukee Brewers, who’s apparently in talks over an investment in Norwich City Football Club.

Whether anything comes of those talks, only time will tell, but, among all the natural excitement at the breaking news, perhaps it’s worth a ponder as to how this may possibly play out, always assuming that a deal can be struck that’s attractive to both sides.

We are, of course, in completely uncharted territory. At present, aside from a name with an encouraging history in American sport, there’s very little certainty as to what, if anything, may happen from here.

Not that that’s going to stop me from speculating, so, here goes…

The first possibility is obvious. A simple share sale by Delia and Michael of their shares (possibly with Michael Foulger’s shares also included) to the American consortium.

Aside from the obvious financial benefit to the existing majority shareholders – I’m not sure many fans would actually begrudge them that, if it happened – from the Club’s perspective, there would no immediate injection of cash arising directly from the sale.

The existing share capital would remain unchanged, at approximately 617,000 shares, with the purchasers becoming the new majority shareholders with 53 per cent (or, possibly 69 per cent if they also acquired Foulger’s shares) of the existing shareholding.

On the face of it, especially given Delia and Michael’s historical utterances for their preference to see an injection of new share capital, a simple sale would seem highly unlikely, although it shouldn’t be discounted completely.

The second possibility is for the directors to exercise the pre-existing option to increase the Club’s share capital by issuing up to 1,000,000 new ordinary shares.

This option has actually existed since 2010, following the Club’s relegation to League One, with accumulated debts at the time in excess of £23million. The option was passed by way of a special resolution at the AGM, initially granted for a five-year period, and could be exercised at any time by the directors without any further reference to existing shareholders.

The option was renewed, in both 2015 and 2020, again for a further five-year period.

If the option was exercised, the Club’s share capital would increase substantially, from 617,000 to 1,617,000 shares – a positive effect, improving the Club’s balance sheet in the process. Any speculation on the possible option price would be just that… speculation.

Assuming a full allotment of the one million new shares, the purchasers’ shareholding would become 62% of the increased shareholding, with Delia and Michael’s interest reducing to 20 per cent, and Michael Folger’s shares approximately six per cent.

As mentioned previously, the purchasers could also acquire the shares of the existing directors, but, even if they didn’t, (assuming the existing directors stay) the new Board’s combined shareholding would now be equivalent to 88 per cent of the increased total, with all the remaining shareholders’ interests (the fans) being diluted to just the remaining 12 per cent.

Also, by implication, the price of those investments would be diluted, but, for the moment, that’s a discussion for another day.

There’s one remaining nuance to consider. If the share option was actually to be exercised, under UK corporate law, the purchasers would then be within striking distance of a 90 per cent total shareholding – a target requiring their compulsory acquisition of all the remaining 10 per cent of shares.

This would enable them to take the Club private, just as has happened previously at the likes of Manchester United, Manchester City, Arsenal and Liverpool. Not necessarily, in itself a bad thing – you can have both good and bad private owners, just as you can have good and bad owners of public companies.

Ultimately, all of this is just speculation. If nothing comes of the ongoing discussions, the status quo may remain. However, this time it feels different. The direction of travel in club ownership seems to be heading Stateside. Whether that proves a good, or bad thing, only time will tell.

For the moment, given the poor season we’ve all endured, let’s enjoy the positive news and speculate what type of Club City may be morphing into.

OTBC