After months of waiting, the era of joint majority shareholders is about to be superseded by a period of joint minority shareholders, at least for the best part of another three years – maybe longer.
So, does a single word change – from majority to minority – make any difference?
The thing about change is that it’s supposed to come in a flurry of excitement with grandiose announcements.
If it doesn’t, fans either don’t notice or harbour a degree of suspicion about whether it really changes anything at all. And that might explain, in part, the feeling of anti-climax among many City fans following the recent shareholders’ approval to allot 195,012 new shares to Mark Attanasio.
Of course, matters aren’t assisted by the requirements for final approvals from both the Takeover Panel and the EFL, given their need for a further sign-off in relation to their Owners and Directors Test. Both are, apparently, a formality, but still likely to take several weeks.
So, while we await further announcements, one of the frequently made observations across social media and also within the MFW comments is that when the confirmation finally arrives there’s likely to be little difference – we’re just entering an American version of self-funding.
So, is that observation fair?
Time will be the ultimate arbiter but the initial evidence suggests maybe not, as a deep dive into the recent waiver circular and supporting documentation is actually quite revealing.
Aside from the initial £3.3m purchase of shares from existing shareholders (which is of no direct benefit to the Club) Attanasio also acquired C-preference shares costing £10m back in September 2022. The latter has been known about for some time – as has the option to convert the C-preference shares into a 10 per cent stake of new ordinary shares – but the disclosure that it is considered highly unlikely that a ‘trigger event’ will ever occur, was new.
Why is that important?
Well, without going into too much detail on the actual trigger events, they are a mechanism to facilitate the conversion of the C-preference shares into ordinary shares and, effectively, are change of control clauses – something to protect the owner of the C-preference shares in the event that Delia and Michael decided to sell their shares (hence the unlikely event reference) to someone else other than Mark Attanasio.
It might be oversimplistic but think of the trigger events as the equivalent of an insurance policy in his favour.
Nevertheless, the C-preference shares also represented a significant and up-front long-term loan commitment to the Club, not repayable until September 2029.
But, before anyone gets too dismissive of an initial £10m loan, there’s more – in fact, a lot more.
Further debt financing in excess of £33m, which included the relevant loan of approximately £4.8m, is to be converted into new ordinary shares. But it’s still a significant up-front commitment, totalling the best part of £30m additional debt financing, and, in my opinion, quite a sea-change from the historic approach of being debt-free.
The attitude towards debt will vary from person to person but from a corporate perspective, the critical factor is the ability to repay or, more frequently, the ability to refinance loans when they become due for repayment.
If a significant proportion of the outstanding debt is due to a director of the Club, in theory, those pressures should be reduced, certainly in comparison to debt previously obtained from external sources, as long as the appetite, or ability, to keep financing the business remains.
In the absence of any subsequent dialogue from Attanasio, that’s one to keep an eye on.
One question still to be answered, which will probably have to wait until the Club’s annual accounts are published in the next couple of weeks, is how much of the debt financing is additional debt and how much, if any, is simply the refinancing of previous debt (on hopefully more favourable terms)?
It seems highly likely that the accounts will reveal a further trading loss, which is hardly surprising given they will cover City’s first season back in the Championship following relegation the previous summer in 2022. Irrespective of the financial model operating at the time, relegated clubs – even with the benefit of parachute payments – always see their media revenues fall at a faster rate than wages.
But City’s position was also influenced by having just two senior players, Lukas Rupp and Josip Drmic, out-of-contract, back in 2022, with Pierre Lees-Melou being the only significant player sale that summer.
The subsequent January departures of Todd Cantwell, Jordan Hugill and Danel Sinani all would have helped reduce the wage bill further, but the latest summer sales all occurred after the financial year-end.
All of these factors combined would have contributed a a significant cash burn and would not have eased the financial position. And all would have probably contributed to the need for additional debt financing.
The forthcoming accounts should provide a greater degree of clarity. However, only time will tell what view City fans will take on this position.
I’d hazard a guess that if your glass is half empty, the increased debt will be a cause for concern as the Club’s level of indebtedness will have increased. If your glass is half full, however, maybe we are now entering a period of increased owner investment.
Personally, I’m drifting towards the latter but, as always in football, it’s not about how much you spend that’s critical but how you spend it. That impacts directly where it matters most – on the pitch.
That was a great read, Gary. I’m a glass half empty bloke so I found it not only sombre but disturbing, mainly because I’ve feared much of it for most of Attanasio’s involvement and not much to look forward to. I also think Attanasio is not here for a long time either.
Interesting view point. I personally think that he’s more likely to stay at least until he’s also acquired D&M’s shares, simply because an 80% holding is more likely to be attractive to an outsider than a 40% holding.
I think also he will want a stable premiership club before selling as that will increase his holding X 10 at least
Interesting read Gary.
Had this all happened after Farke’s first promotion I could understand the Attanasio interest.
The current situation appears to me to be Delia desperately hanging onto to ownership through clenched teeth due to our dire financial position and in that case I’d agree with your statement above that an 80% stake would be the smarter move for Attanasio before any other action.
I’m worried that to turn City around will require a Nottingham Forest investor and I don’t think Attanasio is that type.
In the meantime if we end up mid-table, what happens during the three-year wait?
Hi JohnF, Delia’s comments during yesterday’s High Performance podcast were very revealing. For the first time ever, there’s an admission of an intention to sell, albeit after 7 years. I suspect that it’s more than likely to be sooner than that.
We sell every thing that can kick a ball in a straight line .Rowe , Sara to start with.
Hi Gary that’s a good read this morning. My glass is half full and I think Attanasio will bring a level of business acumen to the club that has been needed for sometime. The stewardship of the club by Delia and Michael is drawing towards the end, their age alone dictates that fact and they look to be doing the right and very generous thing for the club.
In the past as supporters we wouldn’t have had much to do with all the corporate goings on and so enjoyed the football or not, for the sport and entertainment alone.
Better days methinks.
Seven years was the original time line given yesterday. I suspect that it might be sooner.
Excellent piece, Gary.
Delia’s feelings about control of the club are pretty clearly articulated in her ‘High Performance’ podcast interview:
“We [she and Michael] feel very strongly that we’ve got to give it up now because of our age. Therefore it’s our passion now to get the right people to take over. So far, it looks good”.
But it’s still a gradual process, as both sides seem to want.
That’s the first time they’ve ever said that.
The succession plan is dead, long live the succession plan!
I think it can reasonably be said that they’ve given us mixed messages in the past. Tom Smith was asked about the succession plan a few years ago, in an interview for the match programme. His answer – “We need to look at any option that could help the club succeed in future, though not at the expense of our identity and the things that make us special” – doesn’t seem inconsistent with what Delia’s now saying.
Thank you. Enlightening and helpful.
Due to my own limitations, I think I understand about 40% of what’s going on. Hopefully, with a helping hand (such as yours), I can accumulate another 40% over the next three years.
Don’t do yourself down, Trev. Hopefully, what happens next will be the most interesting part!
Good read Gary.
I’m glad we have someone who is willing to carry some of the burden of ownership, so I welcome the Attanasios involvement.
However, the club, at its most lean in The Championship runs at about 50-60M and Champ revenues are usually around 30M. The Attanasios may be willing to finance that gap for a while, but sooner or later we need Prem money. The question is are they willing to fund a promotion challenging squad. That remains to be seen.
You bring up the High Performance podcast. It’s interesting that we’ve been told for years by people “in the know” that no one would be interested in buying Norwich, yet Delia states:
“we went out and found a broker to see who would want to be interested in investing in a football club and they found 4 different Americans.”
They’re like busses these investors, you wait a decade, then four come along at once.
All that’s required is a willing buyer, a willing seller and a sensible price, for a deal to be struck. Oh, and there’s definitely a recent emergence of US buyers in the game.
I’m not sure it’s that recent. The Glazers bought Man U 20 years ago. Fenway Group bought Liverpool 13 years ago. Even my second team (Oxford United) were bought by US based investors 17 years ago and they were in the process of being relegated out of the football league, without a physical asset to their name.
But you are correct, clearly the difference is we now have a willing seller (Foulger).
No one interested? Do you buy that one David, because I don’t.
Delia and Michael must be aware that many other clubs have found new investment – even those down the road. The guy in charge at Coventry is a Norwich fan, but he was ignored. I just don’t buy this no one was interested line. I wonder just how many do. Is it just me who doesn’t fall for the line from the boardroom?
The truth is Delia and Michael have only just realised they have to sell/or at least publically admit to it. We’ve been at much higher points in recent years, with better management and players, yet nothing was done.
I hope Attanasio comes in and shakes the whole place up. The whole place needs it. Why it has to take three years for them to sell/handover/supervise or whatever beats me. They just can’t let go.
This all came to a head a few years ago Jane.
Me and my mate Marty took differing views on whether there were investors out there interested in NCFC. Marty thought yes and I wasn’t so sure.
Then at an AGM a few years ago a NCFC employee admitted that offers to buy the club that were not taken seriously were dealt with by him and his colleagues and any serious offers were sent to straight up to Delia and Michael.
I was dumbfounded, we had all been led to believe by the club that there had been no serious offers for the club.
I was totally wrong and Marty was spot on. Especially as the guy used offers, plural in his statement, so I am now convinced there have been some very good and decent offers to buy the club.
I must admit I am sceptical when it comes to the line taken re our majority shareholders. I can’t remember which gave it was v Coventry but the guy said he’d made an offer to buy into NCFC as he was a fan from Lowestoft and he was turned away. Why would he admit it? If it was made up he’d be in trouble.
Over the years I’ve been so angry about this. NCFC is our club. So we’re told. But only if you’re the ‘right’ kind of supporter.
If Delia was really truthfully only there for the good of the football club, she would have given up years ago and let someone else try and make the club a Premier League club for more than 1 season.
Her age has nothing to do with her lack of investment.
Unfortunately, as majority shareholders, it’s their view of what’s good for the football club that counts, not yours, or mine. By implication, it’s also their decision on the future direction of travel for the club, although it is also fair to recognise the role played by Michael Foulger in getting to this current position.
Good stuff, Gary. It’s always been my understanding that Delia would want to watch Attanasio in action over a medium-term period before committing to any next step. That seems eminently sensible and in the best interests of the club.
My longer term concern is that, throughout the game, when a long-standing owner sells, the new owner frequently (for a variety of reasons) subsequently sells up within the next decade (often much sooner).
However diligently Delia approaches the eventual sale to Attanasio (I’d say 3 years is more likely than 7 btw) he is very unlikely to remain owner into the 2040s and none of us can have any idea who comes next.
Personally, I never expected anything less from D&M, in terms of the slowly, as you go approach. They’ve seen it going badly wrong elsewhere before, so a cautious approach was always the most likely outcome.
As for Mark Attanasio, I’m sure you’re right, he’s the obvious purchaser for D&M’s shares, and an 80% shareholding is likely to be far more attractive to a potential buyer, even if it is a few years down the line.
“However diligently Delia approaches the eventual sale to Attanasio (I’d say 3 years is more likely than 7 btw) he is very unlikely to remain owner into the 2040s and none of us can have any idea who comes next.”
What a ludicrous fearmongering argument. Clubs change hands. That’s how Chase purchased the club, how Watling purchased the club, and how Delia purchased the club. They’re businesses and that’s what happens.
What you don’t want is an owner that’s unwilling or unable to help the club where it needs it most. Which is exactly what we have.
Attanasio has already proven far more useful to the club through cash injection, financial savvy, and sporting experience than Delia has for the last decade.
Fair comment, Mick, but does it not appear a tad overly cautious that, after spending 18 months working closely with Attanasio, Delia still feels the need to watch him in action for a further ‘medium term’ period?
Even from afar he appears a decent type and not the ‘wrong’un’ that we’re (rightly) so desperate to avoid.
Given the stricken state of the club’s finances, is a 3-7 year holding pattern really in the club’s best interests?
And I take your point re the first ‘new’ owner being statistically likely to sell in the short-to-medium term but, of course, there has to be a first 🙂
Can they be completely sure that Attanasio would make more of a hash of it than them? Perhaps they do. There’s diligent and then there’s hesitant to the point of being pedantic and just playing a waiting game no one wants or needs, except them of course. They don’t want to let go. I can’t buy into this ‘good for the club/custodians’ stuff that gets churned out ad nauseam.
They don’t have the money and haven’t for a long time. All the money we’ve accumulated now results in one of the worst squads in living memory (I’ve been going to CR since 1971),
We must move on. We’re currently at a very low ebb due to how the club has been run for the past decades under Smith and Jones. Attanasio isn’t exactly new to business, so why the wait? We can’t look into the future and know who Attanasio might sell to in the future, we don’t know how much football might change. What we can do is move on now and start living in football as it is now.
I completely agree Jane.
Here’s my thought exercise I perform when I try to estimate their value to the club:
If Delia and Michael were no longer owners, how much would you pay them per year as consultants for their “expertise”?
Not a chance and not a penny.
The only observation I’d make (please don’t presume it’s any kind of defence, as it’s not) but it’s far easier as an outsider to say what Delia should/should not do, when it’s not actually our personal decision to make.
They only have one chance to get it right and would be mortified to get it wrong. Hence, it’s probably been easier to do nothing.
Hi Gary, but we’re not outsiders, are we? That’s the thing, we are the supporters, many of us have been going for years, and spent an awful lot of our time and money. Delia and Michael may be the ones with the most shares, but they’ve learned enough to bring in the Webbers to run the club for them. Fair enough, but the lack of anyone independent of both the Webbers and Smith and Jones is (in my opinion) the reason why this sorry state of affairs is ‘allowed’ to carry on. If Attanasio is truly the only credible investor to have come calling in 20 years then they need to ask themselves why that is.
From what I can see from the info available, Mr Attanasio and his entourage already run a successful business and do not need to be ‘supervised’ by Delia and Michael. This is both laughable and I’m surprised Attanasio is happy to go along with it.
We are going nowhere, we can’t change past mistakes (whatever everyone might think they are), but we can change now. Sadly the decision to do nothing is negligent. They have spent enough on the Webbers over the years as their ‘advisors’ if you like.
IF we are to have any chance of ever being more than a mid-table Champ outfit we need Delia and Michael to hurry up the process of this takeover. They’ll still be on the board I presume in some capacity won’t they (they will keep some shares or be made Life Presidents or something), but right now all they are doing is devaluing and deflating the chances of anything positive happening this season and reducing the chances of anything happening in the short term by clinging on.
We’re outsiders in the context that it’s not our decision to make. That’s their prerogative, ultimately.
It is all up in the air at the moment Gary, and I really like to hear what you have to say as I don’t totally understand it all😂
But I do think the club has spent a lot of money over the period we are talking about, losing EPL status and ending up 13th in the championship. And it seems MA is bailing us out on that, correct ? or have I got it wrong?
Now I am not for one minute wanting people to lose their jobs but Daniel Farke did and it was subsequently proven that he wasn’t the problem. As many of us here on MFW thought and said at the time that it was absolutely dreadful recruitment that was the main cause of our ills.
I realise no one did that on purpose but other than the club blaming the fans there has been absolutely no responsibility taken by anyone at the club for this parlous situation.
Finally to Mick. I agree that any new owner who will come in and takeover the club will carry with it big risks attached, it worries me to be honest, but surely we can all agree now that our present system will just not work in the EPL.
Two dreadful EPL’s seasons have seen us amass a paltry 43 points. That makes us a laughing stock.
Other teams of a similar size to us, and some even smaller are making a go of it in the Premier League. The truth is that for all the good that Delia and Michael have done for the club they can no longer compete in the highest league of the land.
That isn’t their fault it is just the way football is going.
Delia’s seven years reference surprised me, and I personally think that it will be much sooner than that. Just a hunch, nothing more than that.
Ultimately, D&M have put a lot of faith in their executive team, some of whom have done better than others, over the years. The executive team sets the budgets, and it’s they who ultimately decide how it’s spent.
Throwing money at football is only any good if those doing the spending get it right, a difficult enough task in itself.
That’s the beauty of football…
An extremely interesting and in depth read. As good an explanation as we are likely to get in the carefully constructed veil of secrecy surrounding the long drawn out events.
What is obvious, or at least should be obvious is that whatever financial input attanasio has made was (a) desperately necessary due to the dire straits we have been allowed to get into and (b) far more than the square route of bugger all that the current incumbents offer.
However, the initial excitement and hope for the future has been dissipated by the unsatisfactory spectacle we now witness, with the self styled ‘custodians’ apparently keeping custody for however many years and possibly beyond if the whim takes them.
Its clear that the webbers have worked to persuade Smith that the status quo will end in disaster and that the foulger sale has hastened things along.g otherwise we would still be shuddering at the thought of the nephew taking over the job, a job he is only qualified to do because he shares some dna with auntie. How egalitarian.
Once more her majesty has waded in to the fray with her size 5s. The interview with Humphreys starting in familiar fashion with love, community, fluffy pink cushions and unicorns before true colours emerge again with the little barbed comments which serve to give a more honest picture of how the powers that be in the boardroom hold 10 percent (her figure) and clearly inaccurate) in total contempt.
Right back at ya baby.