It’s all about timing. In my case, almost always of the bad kind.
The ink had barely dried on my Friday piece, in which I expressed my ongoing fear over our club’s financial future if promotion is not achieved this season, when they go and announce an Extraordinary General Meeting for 13th February.
The purpose of said EGM is, and I quote: “… to allot a number of shares, as the club seeks to strengthen its financial sustainability by reducing the need for borrowings.
“Shareholders are welcome to attend the meeting, but given its anticipated short length are also encouraged to vote via proxy.
“Further information will follow once the formal business of the meeting has concluded.”
Make of that what you will.
The juicy bit will come, I guess, when the ‘futher information’ is revealed but essentially, according to the letter sent to shareholders, the plan is to allot an additional 194,512 ordinary shares on top of the existing number of 616,913, taking the total to 811,425 – an increase of nearly 24 per cent.
The big question is who will be taking up these additional shares.
The obvious answer is the Attansaios, and it may be that simple but, equally, maybe there could be a further twist to an already interesting situation.
What we do know, is that unless Michael and Delia have plans to take on those additional shares (surely not) this will serve to dilute their shareholding in the club to around 40 per cent from its existing 53. While they will jointly remain the largest shareholder, they will crucially no longer be the majority shareholder.
If, and it’s a big if, the Attanasios were to take on the new share allocation in its entirety, they would – based on them currently owning 16 per cent of the club – take their stake in it up to around 36 per cent.
Just four per cent shy of Delia and Michael. And that’s without the Americans hoovering up a few smaller share purchases, which they are believed to have done.
Clearly, this is all speculation and the machinations around the hows and whys are yet to be revealed, but it will be very interesting, if it isn’t purely a mechanism for permitting the Attansios and greater share and greater say, to find out exactly what is meant by “to strengthen its [the club’s] financial sustainability by reducing the need for borrowings.”
Given that we’ve already borrowed £66million this season, which is charged against two seasons’ worth of parachute payments, it does appear a little unnerving that, as they suggest, without the new share allocation there would be a need to borrow again.
What was the £66million borrowed for? If it was to, ultimately, assist with day-to-day running costs and help pay a big wage bill, then the need for even more cash to be injected into the club is curious, to say the least.
Hopefully, those with more knowledge than I of the club’s current financials will be able to enlighten us in the comments below.
Should we be worried?
In addition to the £66 million, the Attanasions have, of course, already lent the club £10million this season, in the form of some ‘C preference’ shares.
The original agreement was that upon certain triggers that £10million can be converted into either 10 per cent of ordinary shares or, in seven years, can be repaid, plus interest, at a cost to the club of around £17million.
Fortunately for us all, the noises that have emanated from the other side of the Pond since the original deal in September suggest the Attanasios are looking to become more rather than less involved, hopefully negating the need for that sum to be repaid in that particular form.
Either way, February could be interesting. It appears, one way or another, the vice-like grip that Michael and Delia have had over this club since the mid-1990s appears to be waning. Whether it’s by choice I’m not so sure, but it’s happening.
‘Be careful what you wish for’ is a phrase I’ve had thrown at me numerous times when I’ve questioned the direction in which Michael and Delia are taking the club, but even the fine lady’s loyalists may now have to concede that it’s time for the reins to be handed over.
Or just wishful thinking on my part?
Let us know what you think.
michael joseph says
Our balance sheet is very weak. Without an injection of capital severe cuts in expenditure are needed unless we go up. As a public company it will be disappointing if all shareholders aren’t given the opportunity to invest rather than just offer them to one party.
Gary Gowers says
Thanks, Michael. Very good point.
I saw for the first time the other day when the news broke of this, that should The stowmarket two sell of not one penny goes to the club all in their bank account. now not saying they are not entitled to it Despite the way they were gained to strengthen their position, ie Loans paid back in shares. If will be a big ask of anyone to buy them out acquiring the shares, but then to add the needed finance, that is clearly needed.
Time to forget about nephew taking the reins Auntie Dee. pass it all over to those that know how to run. a club of this size.
Tim Ball says
If this is an attempt by Delia and Michael to buy more shares Gary this would indeed be extremely worrying.
With the clubs lets be honest, dishonesty in the recent past, like there being no serious offers for the club, saying we are financially sound as a self-funding club and then borrow £66 million and little things like the extent of Isaac Hayden’s injury and no fan seemingly able to vote for last seasons Player of the Year.
These things all add to the mistrust among us supporters.
The problem is if you are a supporter or not of the present board you must agree the club have not been totally honest with us recently.
So asking shareholders not to come to the actual meeting is another red flag.
This may well be all above board and I am not for one minute trying to say that there is any financially impropriety going on.
Delia and Michael do love the club of that I am sure but I feel they have been in charge for so long that they cannot see that it just might be possible for someone to run the club better.
But as my old boss Colin said once ” none of us are irreplaceable” when I was worried about him leaving. And so it proved.
No guarantees of that of course, but we have seen what happens with the status quo as regards EPL survival.
Ray Clarke says
Even though we have borrowed £66m we are still self funding those parachute payments were earned by us it’s part of our revenue so because it is guaranteed it’s not a debt it’s covered. I would think a lot of that money sits in the bank paying wages etc
Tony Brown says
What ‘serious offers’ have there been? You appear to know something…
Tim Ball says
It was at an AGM a few years back when one of the executive said something to the effect Tony “any silly offers for the club are dealt with by us and any serious offers go to Delia and Michael”
Now time can pay tricks on memory but I am sure it was plural.
I am sure the said gentleman has been ” RE-EDUCATED” by others in Gilead.
The problem is the club had steadfastly said that no serious offers had been ever made for the club.
I do admire a lot of what Delia and Michael have done for the club but not being honest with the fan base leads to deep mistrust.
MYSTIC KEV says
Well it’s not all Been bad under them there’s many a club that has gone season after season with nothing going on look at the binners down the road how boring has their last 45 yrs been so stale can’t be said about us whether it’s been good or bad . I do think it’s time for a change but only what’s good for club not themselves.
Roger Cole says
Everything is being done cloak and dagger which makes me feel it ‘s a done deal. No need to attend the meeting?! I wonder if the nephew of the current majority shareholders is a player going forward. Doubt it. Another done deal. I’m less sure about the other couple in power i.e. the Webbers. Better the devil you know I suppose with both married couples? Hmmm. For sure new money from the US will not be forthcoming without them aware the £66m loan & why it was so needed. And surely heads will roll over the Hayden contract but hopefully we will escape from that via the playoffs lottery. Boro look to have taken off since that awful day. Shame we didn’t sack S&S there and then, Wagner gone to Florida and started fitness training two months earlier. We would maybe be 7 or 8 points better off and still in with a sniff at the automatic places. Ah well such are dreams.
It would appear the ultimate failure of the self funding model in the higher divisions of football is far worse than the most pessimistic of us thought.
If we’ve borrowed £66 million I presume this is on top of the £38 million we received for Emi!
Safe hands indeed.
Gary Field says
A couple of observations, primarily linked to the C-preference shares.
The first relates to what seems to be the widely held presumption that the 7% annual dividend will be rolled up. I’m not sure where this presumption originates, or, indeed, if it’s actually true? But that’s probably a discussion for another day.
The second point, presuming all the proposed shares to be allotted end up with MA following the forthcoming General meeting, as rightly pointed out above, his shareholding will increase to a minimum of 36% of the revised shareholding – almost certainly higher, as he’s already acquired a number of so far undisclosed minority shareholdings.
However, there’s still the proposed conversion of the C-preference shares, which, because they have to be done to be 10% on a fully diluted basis, would mean the addition of a further 90,158 ordinary shares to MA. At this point he would become the largest shareholder, his stake increasing to at least 382,670 shares, or 42.44% of the revised total.
Assuming no change to D&M’s shareholding in the interim period, their holding would diminish to 36.29% in overall terms.
Or, to put it another way, if MA had already, or intended at any point in the future, acquired D&M’s shares, the combined holding would be 78.74%.
Gary Gowers says
Tim Ball says
Yes many thanks Gary because I was lost at 7% annual dividend 🟡🟢😂
Roger Cole says
Good shareholding maths work there Gary. If true does anyone know / can it be found out who owns the other approx 21.26% by value? For if D&M retain their 36.29% and MA holds 42.44% the minor shareholders hold a balance of power (assuming board matters are decided on a simply majority by value or number.) However, as with all deals being done behind closed doors I would assume the major players i.e. MA and D&M already have things stitched up. I still fail to see how Carrow Road car park can be monetised for baseball style weekend barbeque parties etc and in winter. The pot of gold here is broadcasting rights not ticket sales or merchandise. Which has to mean Premier League membership and in the end football success.
Gary Field says
The answer is approximately 6,800 minority shareholders
A good article and some excellent replies.
One thing is patently obvious. Something has to change between now and the summer. The impending Armageddon courtesy of self bloody funding has to be avoided and this has undoubtedly forced the hands of the architects of the mess to reluctantly relinquish their grip.
Roger Cole says
I can’t help but think that ‘self funding’ was another way of saying ‘no need for prudent financial control’ i.e. Premier League success would take care of everything. Whereas in the real world several poor spending decisions blew the Emi Buendia windfall money leaving I think only Sargent as good value and even then only when an astute manager can work out how he fits in. With Emi and Todd we had a few complementary players such as Marco Stiepermann. Mind you, saying that perhaps Wagner can get a song out of Placheta, Rashica and Tsolis yet.
Agreed. The way self funding clearly depends upon parachute payments meant it was always open to catastrophe. The ownership of a modern professional football club is the domain of the mega wealthy. Non contributing ownership places the club in jeopardy in the long term.
All things come to an end this has taken 26years if it happens.
I did read that one share holder was allowed more than 49% of the club and Delia and Michael got round this by spliting then 50/50 so stayed in control with a family majority.
In the breaking news on Valentine days is Smith and Jones leaving I suppose they will be life president’s and still run her kitchens at the club so no clean break
Gary Field says
Sorry, Alex, but your second paragraph is factually incorrect.
Following D&M’s acquisition of the ex-Chase shareholding, from GW (which was circa 34% at the time) they have always held jointly – it was a minority interest at that time.
The 50% rule (you’ve alluded to on more than one occasion) is mythical, it never existed. The shares have always been held jointly – they weren’t switched to a joint ownership, even when it became a majority interest.
“Following D&M’s acquisition of the ex-Chase shareholding, from GW”
Or as we should call it, the Geoffrey Watling shareholding.
Mic Corbs says
D and M were asked to help out, and they did, and have; inevitably as custodians they have to plan ahead, and now its time for others to gradually step up and take on the mantle. I was tempted to attend as I’m off work that week and in king Lynn.
If the allotment of shares to the Attanasios takes their holding above 30%, are they required to make an offer for the rest?
Another possibility for maybe part of the new shares is y to issue as an employment “perk” or handcuff for senior employees maybe.
The assumption has to be the bulk will go to major shareholders but it doesn’t have to be all and if the current shareholders want to tie in the Webbers it may be on the agenda.
It’s worth remembering that the purpose of parachute payments is to enable a club to taper down its operating costs from Premier League levels back to Championship levels – not just players wages, but also back room staff, analysts and the like. The key point is, that like all Premier League money, the payments are staged.
By borrowing the £66m, the club are really taking out an advance on these staged payments. Whilst players contracts are believed to include relegation clauses to reduce the wages, have the club in effect gambled on an immediate promotion and retained the other trappings of Premier League football?
And, oft forgotten, if we were to be promoted, we wouldn’t then get the second tranche of parachute payments. In effect the loan repayment is then taken out of the Premier League TV money. One to remember for the ‘where has the £XXXm for winning the play-off final gone’ brigade!
What it all boils down to is the fact that football is increasingly becoming a billionaires plaything. Whilst 10 years ago, there may have been a glimmer of hope that a plucky upstart could make a breakthrough, since then the sums involved have gone through the roof.
The Attanasio’s seem to be the ‘right sort’ of rich owner in terms of their approach to the game and the club, but this means that their approach is likely to be self funding, but just with larger numbers than Delia and Michael could ever afford.
We have an interesting 2 weeks ahead, both on and off the pitch!
Roger Cole says
Handcuffs – not a very good idea. All depends Webber or not those with this perk have the key 😉