Considering it’s been a week without football in the world of the Canary, there have been no shortage of talking points.
In fact, the pages of MFW have been alive with debate following the announcement that a meeting has been called for October 2 during which shareholders whose names are not Michael Wynn-Jones, Delia Smith, and Mark Attanasio will be asked to vote on something pivotal to the club’s future.
By now most of you will have at least a rough idea of the thrust of said vote but in case you haven’t, basically the plan is that the new share issue, which will be taken up by the Attanasio group, will result in them owning 40 percent of the club – the exact same amount as Delia and Michael once their existing stake has been commensurately diluted.
The tricky bit comes in the shape of the Takeover Code, which is designed to (and I quote), ‘ensure fair disclosure about the change in shareholding and control in a company’. When it refers to a company it means a PLC, of which Norwich City is one.
The code dictates that because Attansio is going to be acquiring more than 30 per cent of Norwich City he is duty-bound to offer to buy out the remaining 20 percent of shares at the same rate he has purchased the magic 195,012 – i.e. £25 a pop.
And so when the club and those in the know were telling us that we needed to be patient and that transactions of this ilk take lots of time, due diligence, and bureaucracy to complete, they were it seems attempting to cut a deal with the Takeover Panel that would preclude the need for the 20 per cent to be given that option.
As it transpired, the Panel’s offered solution was for the 20 per cent to be asked to vote on waiving their legal right, which is tricky because, let’s face it, in these daunting financial times it’s only natural that some may be tempted.
And before someone reminds me, I suspect that 99 percent of those who have bought small shareholdings have done so out of love for their football club rather than the desire to make a quick buck, but times change and for some of us right now they are hellishly difficult.
For the record, I don’t own any shares.
I do however suspect the club’s whips will be in action and those tempted to vote against the waiver will be reminded of the consequences for the club, which is fair enough. That part of the equation needs to be understood by those being asked to vote, which doesn’t, of course, include Delia, Michael, and Mark.
The fact they are excluded from the vote, for obvious reasons, is clearly what makes it a little precarious.
But it’s the club’s perilous financial position that makes all of the above quite so pressing and is why it all has to happen sooner rather than later.
To put it into context, in addition to the ongoing debts that the club is incurring as it wrestles with the lingering financial effects of the pandemic and struggles to meet day-to-day costs, around a year ago it took out two loans.
One was for £22.6 million and was leveraged against transfer funds that the club was due from players sold – like Emi Buendia – where fees are paid in instalments over an agreed period of time. City needed the money upfront and so this was seen as a way to achieve that, albeit of course when those sums are received they are already accounted for.
But in the circumstances needs must – and at least that future income was agreed and guaranteed. The original timescale, barring any renegotiations that have occurred since, was for the £22.6 million to be repaid in full by September 2024.
The other loan taken out over the summer of 2023 was for £43.9 million and appears less clear-cut and far more of a risk. This one, as I understand it, was leveraged against future parachute payments and forecast TV revenues and is repayable in full by March 2024 – in just six months’ time.
This one is tricky because the suggestion is some of that TV revenue was based on Premier League levels, which as we know is far removed from the Sky Sports and TV income of a Championship club.
And we didn’t get promoted.
All of which is why I read with interest, our Connor’s excellent piece in the week in which he outlines exactly what Attanasio is bringing to the table.
It had already been revealed that he has been able to source some favourable interest rates for City’s borrowing – part of the reason for him acquiring the 195,012 shares for a more advantageous rate per share than originally discussed – but Connor revealed that in addition to paying circa £5 million for the new share allocation, he will also be bringing £28 million to the table for “debt repayment”.
That bit was news to me but perhaps ties in with the repayment of the ‘parachute’ money loan due for repayment next March.
I may be putting two and two together and making five, so I trust that those who have a better grasp of this than I will correct me in the comments below.
But what all of this does spell out is that without some major financial intervention, the brown stuff and the fan are six months at the most away from colliding.
As much as we all wanted it to work, Delia and Michael’s dream of running a self-funded ship has long since smashed into the rocks. I’m not sure it was ever possible, however worthy the ideal.
As supporters, there are generally two things we want from our football club – for it to be secure and for it to be successful. If it can’t be the latter, then at least it can be the former.
And in fairness, in Norwich City terms we’ve had some success over the last decade and a bit. But even under self-funding, we’ve never been secure, and only ever one disastrous season away from the brink.
That things have improved on the pitch is a good thing, and Stuart Webber has proved yet again he’s a more efficient operator in the transfer market when forced to wheel and deal rather than spend tens of millions, but the fact we spent virtually nothing in fees over the summer and raked in sizeable sums for Messrs Rashica, Aarons and Omobamidele was an early sign that all was not well on the balance sheet.
Andy Delf penned a lovely piece in the week, eloquently explaining why he will vote in favour of the waiver while also spelling out the undoubted virtues of being owned by Michael and Delia, but I wonder if sooner rather than later we are going to have to acknowledge that Mark Attanasio is more-than-worthy of the stripes and that a three-year holding pattern, given our perilous financial position, is excessive.
We know he’s not going to spend lavishly but we do know he has financial acumen and access to funds far removed from what we currently recognise as normal.
We’ve teetered along the financial tightrope for long enough now. The time for radical change is already here.
It troubles me that Delia and Michael are too proud to admit that the self sustaining model is tosh, and that we’re expected to fall for this slow transition, while the Americans ‘learn’ about football and the club. What is there to learn? Surely Attanasio is smart enough to read the balance sheet and liabilities and know what it will take to balance the books? Accepting trading law and the PLC issues, surely this whole scenario is to save face for Delia and Michael, and I’m amazed the Americans have gone along with it. Unless of course, he doesn’t have the cash to take the risk knowing football is a bottomless pit!
Thanks for the really useful and intelligent piece. Leaving behind the self funded Delia / MWJ era is always going to be tricky and rich foreigners (the most likely people to invest) don’t always have the best interests of the club at heart.
If we’re in this position – particularly the ‘2+2’ bit something has to give and Mark Attanasio seems as good a fit as we’re likely to get.
Thanks Paul… it’s very rare for anything I’ve written to be described as ‘intelligent’ – quite the opposite in fact – so I’ll take that all day long 😀
Cheers.
Hi Gary
An excellent summary of what’s been discussed this week.
In one article it was stated there are some unsecured loans that are overdue, and then said the club is being run on sound business lines now. Is that on top of the £66m?
I’m not a happy clapper or a doom and gloom merchant. In the past a few of my comments have upset people, but like most my opinions they can differ at times after reading enlightening articles from varying media sources.
Scotcan and myself had a different view the other day but it shows we care about the club no matter what side of the fence you’re on and both only want the best for City.
Freebies are never free – there are agents ,signing fees, higher wages, relocation and assisted rental – fees all to be taken into account but which are hidden costs that also come into play if a transfer fee is paid, so still cheaper in the long run.
Connor’s article was interesting and shed some unknown light on what’s taking place but I just wonder how much is actually known by anyone other than those at the centre of the discussions. There are, again, those that know a little and like to think they are at the heart of the matter and then there’s those that read much more into a document than it actually tells them.
October isn’t that far away – speculation will build but the big question is if the vote goes against the waiver will Attanasio and his Norfolk Group take up that option or put up their shares to the highest bidder?
Great investigative work Gary.
On many occasions Delia has given interviews saying she knows nothing about football and puts faith in those she hires.
We now have a rich successful businessman with a wealth of knowledge in running a sports team ready to buy the club. All of a sudden Delia and Micheal are now experts and must teach the A’s how to run a sports team over a period of half a decade. Because of course they wouldn’t have the common sense of hiring experts to help them (like D&M) if left to run it alone.
All this in the name of of prudence. That prudence being leaving the club in the hands of people who obviously can’t afford to own it.
It’s farcical.
Nail on head.
From those I know that know Delia, the same line is always the same: ‘Nice lady, but from a business point of view, utterly clueless.’ It’s a miracle she’s still here, but who to we blame for allowing that to happen?
Gary, as one of the 20% who owns his four shares as a token of love for the club, I’ve already voted to approve the waiver. As Cornish Paul said above, Attanasio seems about as good a fit as we’re likely to get. I pointed out yesterday in Andrew’s article on here, that previous known offers to buy into the club have come from Tony Fernandez, who has not exactly raised QPR to the dizzying heights since he took them over, and di Stefano, who subsequently turned out to be a fake lawyer and a fraudster. The due diligence obviously worked well in those cases, and in how many others that we don’t know about? Im happy that we’ve taken our time with the Attanasio deal.
As for the “club’s whips”, apart from the official legal documents and voting form, I’ve seen nothing from the club to try to induce me to swing my massive shareholding in their favour. I just hope that we do end up with a genuine business owner, not some human rights abusing country or mega corporation with dodgy motives.
I think that Delia and Michael’s time is gradually coming to an end, and this is an opportunity for them to bow out gracefully.
Financially we are in a buggers muddle. Of course there have been many non core improvements, the pub and special catering events and the swimming pool and so on, but the basic finances are in an awful state. The Yank can keep the wheels on for a bit longer but the only hope remaining seems to be Wagner and his reinvigorated squad, this could be the season our club survives or becomes a total wreck.
Hi Gary,
Most of the twenty percent minority shareholders will I believe only ever have invested in the shares as the opportunity to own a tiny piece of the club they love. If others invested to make a profit then I do have some sympathy for them. If we vote for the waiver then we will have a club that is underpinned by some financial heavyweights. Sure things will be different to the current set up however financially astute businessmen do not invest in football clubs to lose their money. If the vote is in the negative what possible use to the Attanasio team is a minority shareholding in a club they cannot add value to. At that point I would imagine them heading for the exit as fast as they could.
That leaves the big question? “Now what.”
As you rightly say Gary, almost all of the small shareholders hold shares because of their love for the club not for financial gain. That being so, why couldn’t Mr. Attanasio have been allowed to make his £25 offer to them? There would have been few takers and his percentage holding would only have been marginally greater than that of Delia and Michael.
Presumably, the only reason was that Delia and Michael would have, somehow, lost face. Something I can’t see myself. There would have been no need for lengthy negotiations with the Take-over Panel and everything could have been done and dusted months ago.
At the age of 81, many years have passed since I used to write circulars like this but I am surprised that the letter from the “independent” directors (Tom Smith and Zoe Webber!) did not contain much by way of justification for the course of action being taken.
Because it looks as if, were the resolution to fail, the Club would be in an even more messy situation, I have voted my few shares in favour!
Thanks, Gary. Just a few quick points, some of which may help reassure people that what’s happening isn’t as odd or threatening as you’ve implied.
. Yes, a key part of the Takeover Code is to ensure disclosure – but that isn’t the issue here. No-one is suggesting there’s less than proper disclosure in this instance. The issue is that both parties (Delia/Michael and the Attanasios) want a bedding-in period for the new ownership structure; hence they’ve asked for a waiver on the standard requirement for a shareholder reaching 30% to make an immediate offer for the remaining shares.
. A request for such a waiver isn’t unusual. This isn’t a question of “attempting to cut a deal with the Takeover Panel”. As usual when it considers a request reasonable, the Takeover Panel has agreed it subject to shareholder approval.
. Critically, no-one expects the big loan to be called in as it theoretically could be in March 2024.
For shareholders, there’s a useful explanatory booklet with an introduction by the “independent directors” (ie Tom Smith and Zoe Webber) outlining the situation technically and in likely practice. I’m not sure if it’s available for non-shareholders to download; if so, I’d recommend it.
Thanks Stew. So the club’s financial position isn’t as precarious as the evidence suggests?
That’s reassuring.
In the short term, no. But our debt is clearly large, and without Mark Attanasio’s assistance it would be a serious worry.
It will be interesting to see who will take the second seat on the board if the waiver is voted through.
I think we expect it to be Richard Ressler, who owns just over 25%b of “Norfolk” through his investment entity Orchard.
Hi Stewart, if that is the case then Mr Ressler is even richer than MA. Perhaps his brother Robert Ressler may get involved and then we really are in the financial stratosphere
Of course there is little choice in reality. We either approve the purchase or our club is faced with a debt mountain of it’s own creation – incidentally, created almost exclusively after Attanasio first became involved so presumably this, or some similar “plan” has always been the idea.
What no one seems that bothered about is that ultimately, and probably in at most less than 3 years time, Attanasio will be the owner of 80% of our club and will have paid relative peanuts for it, given that Delia and Michael have always stated they would not profit from a sale.
It might be a more palatable solution to suggest that the Attanasio’s will make a sizeable donation to the Community Fund or something similar when they acquire the rest of the shares for £25 a pop. Otherwise, aren’t we just effectively giving the club away to someone who might just sell it straight on for a massive profit? Even with a million shares in play they’re still worth at least £100 each.
At least let’s have an investment statement or some kind of vision. At the moment what we know is what will happen immediately if we approve this motion but we don’t know what will happen if we don’t.
I agree the mountain of debt is of it’s own creation under the virtual ownership of D & M, Delia has run the club her way under this self funding model, and so is solely responsible for the dung hole we find ourselves in. The cost to Attanasio for this share issue goes to the club ( not Delia ) but it has a cost implication to Delia and Michael in that it dilutes the value of her share holding and so it should, I have no sympathy towards her and she doesn’t deserve any, I remember the devious way she went about acquiring that after the initial purchase much to the angst of one Geoffrey Wattling. What Attanasio pays Delia and Michael in the future for their shares ( if that ever eventuates ) is between him and them it shouldn’t concern us at all the money doesn’t go to the club it’s a transaction between them as it was with the Foulger share transfer. I do agree it’s high time for Mark Attanasio to issue a statement as to his vision of the club going forward under his banner, personally I don’t expect much change to the current style other than that he is more astute business wise than Delia and will have his hands on the books, other than that I don’t expect much in the way of player investment judging by the way he runs his baseball franchise. What I’m looking forward to is the next AGM and whether there will be any share holders with the guts to ask the serious questions and whether the press will be allowed in this time.
The Brewers’ payroll is in the region of $200 million annually. For comparison, Liverpool’s is $125 million. No Attatnasio isn’t gulf state rich, but I expect lots of investment from him in the team. He hasn’t dropped the kind of money he has because he loves the club. It’s a business opportunity, and I expect it to work. I have hope we may finally become a PL staple rather than a yo-yo team
I wouldn’t be holding your breath Geoff he doesn’t invest much in his baseball team in the way of player recruitment by all accounts, his clubs supporters are complaining about his financial commitment to Norwich when they are crying out for him to invest in their team. It would be nice to hear from him his plans going forward with the City and for him to show his face a bit more regularly not once a season, the supporters need to see him personally taking an interest if not him at least a close representative, they’re the sort of questions that should be asked of at the AGM.
On the other hand David it might be exciting times ahead. Doom monger or optimist – we all have a choice.
It could be David, that he would see that investing a fraction of thw 200 million dollars to tread water in the US would achieve a much better bang for his buck. That’s what I’m hoping anyway.
Hi Gary
I like all the positivity around but not one person that thinks they are in the know has admitted or suggested there’s a back up plan if the waiver is voted out.
Will Mr Wonder Attanasio walk away after putting so much into it all will he look at it as an opportunity to put pressure on the current owners and take control.
Again it seems all eggs are in one basket and depending on the waiver being a done deal so far no one has admitted they will vote against it, maybe a letter was sent out to those they were certain of backing it previously to make sure it got approved.
Would the club be that devious not even at my most cynical do I believe they would , but it would be nice to hear that a plan B has been put in place.
Hi Gary
I did hear one interesting if truculent view over the weeend that the 20% are likely to vote for the waiver because half will see it as an opportunity to bin off Delia and the other half will see it as an opportunity to sustain her presence in some capacity or other.
Each side will consider not having the waiver going backwards because that way we’d be stuck where we are right now and nobody wants that!
It kind of made sme kind of sense at the time, believe it or not 🙂
Me? I’ve already followed the advice of the Canaries Trust and voted for the waiverbecause anything would be better than an impasse on this particular issue.
Do you know the official legalese term for minority shareholders voting to waive the requirement of the shareholder acquiring over 30% of a PLC. It’s always made me smile because of the meaning of the phrase in general use. It’s a whitewash.