A Fan Owned CIC as a route for High Net worth investment

Where I show using the example of what we think we know about Dave King and Rangers that there is a sensible way for Big Business and Fanownership to work together.

Why do rich folk buy football clubs?

The age old adage of how do you turn a large fortune into a small fortune....is of course...buy a Football Club!

The reality is there is myriad reasons that folk used to buy into football clubs, too many regrettably revolved not around what was best for the Club, Fans and local Community but the ego and other interests of the owner(s)

Fans the world over have a similar reaction when they are taken over by a Sugar Daddy and just like sugar itself  it is to crave more and more from them, this diabetic addition to the financial input is IMHO always doomed.....it make take decades for its realisation or just a couple of years but like Death and Taxes the other certainly of life is that when your Sugar Daddy departs, either directly from this mortal coil or via the bankruptcy or divorce courts it will be bad news for the Football Club.

This has both fortunately and unfortunately led to a reluctance of those wealthy supporters that are known to support the club from an altruistic point of view to actually step up to the mark when they are called to serve.

They want to help the Club and they know they have the financial ability to do so but they do not want it to become a millstone, they still want to enjoy going to the football!

As can be seen most recently at Rangers this reluctance led to people who had no historical connection with the Club being the ones to step forward when all others faded into the back ground.

Now i can completely understand why this happened and certainly blame no one for reticence to pump masses of personal wealth into a football club that they just want to do the best for.....and this is where the massive Catch 22 comes in.

What Rangers have ended up with IMHO is a situation where there are genuine wealthy people who would like to help out financially with the Club, but that for a change the their business brain and their PR radar is working properly..........this has made them rightly cautious about getting involved because their prime motivation is not making money out of the Club...........

...but this caution opened the door to those who were quite happy take the Club for a spin and try to maximise their personal return from any involvement.

So how does the fanownership route help in this regard.

Here is how

One of the main modern concerns of someone investing so much of their own money into a football club these days is that the Fans think the money will just keep flowing. A billionaire coming to a Scottish Club in this climate will quite easily become the focus of the Sugar Daddy culture, with Fans demanding more and more when the owner themselves knows that this is not the best thing and sees their resources deplete.

As we know Football Fans are at the least prone to fickleness. Many a money bags owner has witnessed just how quickly the Fans can turn from providing a Guard of honour and rolling out the welcome mat to protesting outside the front door of the stadium that he has done wrong by the club while they mix up the tar and gather the feathers

So how does someone who wants to do the best by the club actually facilitate his involvement without becoming the sole focus of the fans for the club's future...how does he share the burden with the fans...and provide not just a current future but a succession plan that will out last both himself and this current generation of fans?

Simply put he invests with the fans.

This is what is happening at Hearts.

Private people with significant wealth are backing the 8000 fans who are putting in their £15 per month.

An exchange is happening which puts the rich people's business acumen into that club when it needs it the most but with the eye on the succession plan of returning the club to its original caretakers the Fans.

So why should this be any different at Ranges, or anywhere else for that matter.

Why should these wealthy "Rangers men" not make the best deal ever and work in concert with the Fans to produce the best outcome for that which both claim to be the most important THE CLUB.

A Coop CIC owned by Fan members is legally allowed to do just the same sort of deals as a normal Ltd company.

The Hearts model see the High Net Worth Individuals (HNWI) people front fund the CVA in the case of Hearts but this could just as easily be Front funding the purchase of a quantity of shares in Rangers.

The Fans then both pay the Wealthy backer back as well as using any excess funding to buy even more shares.

The wealthy backer can of course chose to write off over time his original purchase cost, and in doing this they know exactly what their liability is, it could also take the club in the direction of the German 50Plus1 model where the HNWI own 49% and the Fans 51%

The key however is that for the Rich guys the focus does not turn solely to them from the Fans, but in fact it turns to the Fans to back the Rich guys, back the club by buying new season tickets etc etc.

Everyone is a winner, most importantly the Club

Surely this working group of High Net Worth Individuals and the ranked mass of the Rangers Support would be the best way forward to combine the strength of both and leave a legacy that will out last any HNWI person and this generation of Fans.

So if Mr King is interested in  Financially backing the team he loves could there be a better way of doing it than Backing the Fans who love the club also?

@rchrdtknsn

A big welcome to the New Institutional Investors...........the Fans

A post in which i show that if a Club needs new investment it should come from a Fan owned vehicle

The one thing we know for sure is that the Fans will always remain, the problem is that the owners of Clubs know this to.

As has been reported in several quarters there is a belief that Rangers FC will at some point soon need a capital injection.

I do not want to comment on the truth or otherwise of this i merely want to suggest a way, if it is true, that this should be handled.

When a Club has Cash Flow problems there are generally Three ways of dealing with it.

1. borrow money from a Bank

2. Borrow money from a Director/senior associate

3. issue new shares

Option 1.To virtually all Clubs in Scottish Football option 1 is no longer available.

Option 2. requires generally the directors on the board of the company to be wealthy enough to do this. You need to be really careful that this is not a back route to Directors taking Security on Club assets knowing that the Club is going to fail and as a route to keep those assets either out of an Administrative process or as a way of wiping out the other shareholders and taking full control of the Club without an Administration process.

Please do not make an assumption that I am suggesting a second Admin for Rangers, i do not think this is very likely at all....really really unlikely in fact.

Option 3. Issue new shares, this is by far the easiest way to raise capital. The failure of your clubs current board to pass a resolution that allows them to issue new shares but limit who they are issued to at the recent AGM means that if this route is both necessary and chosen that everyone should be on an equal footing to buy shares.

I am sure another appeal will be made to buy shares, just like happened at Hearts and the fans will check their collective brains in at the door and spend more money again on the club they love, but that is what happens when you are devoted to someone or something like your Team.

The current shareholders that control the current board will seek to buy some more shares themselves, i am sure, and sell enough to the Fans to raise whatever cash they need, but this will likely just produce the Status Quo (not that there is anything wrong with Three Chord Rock and Roll) and nothing will change except the same board will continue to spend the money you have raised for them

The individual fans will all own a bit more but still have naff all influence on what is going on.

Simple solution.....if the Club needs Investment let the Fans Invest Collectively for New Shares and get a proper transparent say on what is going on.

Simple, a Fan CIC can either buy Existing Shares or if offered it can by New Shares all goes to bringing OMOV transparent Coop Fanownership to your Club.

So what you waiting for the Fans can be the solution no matter what the question is.....you are all going to end up paying the bill somehow no matter what happens why not get some bona fide authority while you are at it.

@rchrdtknsn

What institutional investors want and how #fanownership could give them it Football Investment PART 2

A post in Which i show an approach engaging the Institutional investors that gets the Fans Control

I hope I established some ground rules in Part 1 regarding the following Facts.

• not all institutional investors are the same
• Rangers is a really quite a small business
• the money involved from these investors is minuscule in the grand scheme of things
• they are in it for money
• there are basically 4 ways to make money, Share value Growth, Dividend payment, related company Trading, PR gains for separate companies owned by same shareholders 
• there is always the "just fancy it factor"

So with the above in mind how does Fanownership fit into all this?

IMHO the institutional investors involved are there for the first two ways of making money from there shareholding.

The do not need to make money from owning the pie selling company or getting good PR (because right now they are not)

So for a Fanowned CIC to get hold of any shares it has go to scratch these guys where they itch.

Now bear with me this is where it gets a bit complex hopefully my limited writing skills will communicate this well enough but apologies in advance if I edit again later for clarity

1. Share value

Now each investor will have bought their shares at a set value. There are two ways to then get these shares. The first is to offer more money than they paid for them, the second is for the shares to be so obviously on the way to very little value that they cut losses and sell to exit there position.

This is where you have to bear in mind just how little money these guys have spent in the grand scheme of things becomes important.

2. Dividend payment

The only way that shareholder would under normal circumstances get a dividend payment is for the board to approve one and then it is payable to all the shareholder, everyone from the largest to the smallest.  In other words it is a really expensive way for Large shareholder to extract money as they need to pay the same pro-rata to everyone else

First Rubicon 5%

Now as I noted in this blog post the first point which it would be important for a Fanownership vehicle to cross is 5%  (though worth noting the 100 person option which should be a doddle) this means that the Fans can call a general meeting an impel the board to answer questions.

So for as little as 5% or 100 Rangers fans owning £100 of share you can immediately get action....re read that and let it sink in.

Now the one thing Institutional investors don't like is hassle, not bad PR they IMHO mostly could not care about that. Remember it is not their own money they are investing it is part of a diversified client fund of some description so they have to respond with their investment algorithms as to what is happening, and hassle will almost certainly keep the share price low.

While a normal completely fluid market would normally mean that demand increase price it is IMHO that for initially only trying to by 5% and the PR knowledge of why it is being done that for this first small lump the price would not increase much if at all.

You can witness during today that 2.3million (4% of the Club) shares have been sold, which means they have also been bought and the share price is still bumping along the bottom, so why fans going after 5% would have some dramatic impact i am unsure of.

The fundamentals of the business are not changing as an example the recent transaction of 3%  a week or so ago also has had no impact on what the shares are currently worth.

So it appears that those that bought in at the top of the market are not going to earn money from share growth, i suspect those share being sold today are from pre IPO stock, and they cannot get a dividend from them so how can they make some sort of return from them..........

The CIC can sort this out.

Just as various parties gathered proxies for the Clubs recent AGM a fans group with significant monthly income can do better than that and do it more permanently.

The CIC can in fact offer directly a return to these investors in exchange not initially for the shares but for the proxies on a permanent and binding basis.

Contracted in such a way that the shares after a period are then sold to the CIC.

regrettably the reality is that to dispose of their shareholding these institutions will need to get a return, now that may not be that they need to make a profit it could just be less of a loss, but the Fanowned CIC can negotiate this and so not only can the income from the Fans buy Shares Directly it can also buy the proxies of the Institutions and so the Fans Can take back their Club

@rchrdtknsn

One "Fan Group" to rule them all????? YES and NO!!

A post where I show that A Single Issue New group may be the way to go.

A few folk have commented on the issue Rangers appear to have with loads of Fans groups all fighting and disagreeing with each other and have asked how with such a divided support they could ever "get it together" to mount a serious Fanownership bid.

Well the good news is your internal and sometimes very public external arguments are nothing new, it is the same at the vast majority of Clubs, the main difference at Rangers is just one of Scale and the fishbowl media coverage that the Club gets, which makes it seem much worse than it is.

The behind the scenes fights at other Club are just a fierce but get very little other than local media coverage.

So this apparent division should not put anyone off.

It is important to consider that most Fans of any Club are a member of No Group.

Hearts Fans have managed to form a group  nearly 8000 strong in their Fan Ownership model using a brand new company that only exists for the purpose of Fanownership.

This has allowed the rest of the Hearts Fans groups all of whom have their own history and tradition to keep that going.

That includes the Hearts Supporters Trust.

History and Tradition is important to Fans (the modern owner witness Hull and Cardiff dont seem to appreciate this) and so in no way should a Fanownership bid seek to remove, ask or force other groups to disband or merge, but group leaders and group members should also recognise that justified or not some people just will not engage with some groups.

IMHO if there is a single person that is put off engaging with a Fanownership bid just because of the identity or historical legacy of that group then it is one too many, it is just too important to let that happen and for this reason just as at Hearts, Ayr, Motherwell and Dunfermline a new group dedicated to Fanownership has been the way to go.

So my gut feeling is that if Rangers Fans want to go for what is probably a final chance to take the Club back to the ownership model of its original 4 founders then a New group solely dedicated to the task is the way to go.

As a CIC Coop then just like the IPS that is the RST which is also a Coop there is a rule that applies to all Coops regarding them working together where appropriate as part of their Coop principals see Coop Rules blog post and rule 6.

So there is no problem with even a few different organisations who have Fanownership as part of their agenda working together with one whose sole purpose it is

So Should there be One New Fan group to do this...Yes i think so, but should it be RULING others or absorbing them, absolutely not


@rchrdtknsn

What actually is a Coop CIC?

A post where I show that a Coop is not just for keeping Chickens in

A few folk have contacted me asking me about the use of the word Coop within this Blog.

A few have certainly expressed the opinion that they do not like it because it sounds like "Left Wing Nonsense"

A distinction needs to be made from the Cooperative Movement which is a political one.

(When you vote you will often see the Labour Party Candidate listed as the Labour and Cooperative Party Candidate)

and Cooperative principals which are rules that you put into the Rules of the Company.

These are all quite straight forward and certainly not political.

In Fact the one thing that a Community Interest Company is not allowed to do is; from the regulators website is

"A CIC cannot be formed to support political activities"

So what are the Coop principals: see the list below


1. Open membership

 2. Democratic control

3. Common ownership

4. Autonomy and Independence

5. Education, Training and Information

6. Co-operation among Co-operatives

7. Social aims alongside economic aims


@rchrdtknsn

Blog of Blogs....Rangers and Community Ownership

A very quick link to Paul Goodwins post from last night on Rangers and Fanownership.

Have a read and make your comments

You will be able to hear more about this and the earlier blog on the Green Party proposals on TV and radio tomorrow

BBC Radio Scotland 7.50am for starters


Rangers and Community ownership

Putting the Fans in Control.....who owns your Stadium....

Who owns your Stadium

Just a wee aside to the more focused Fanownership blog.

If you are in any way interested in Fanownership or concerned about what your Club might do with its assets like the Stadium or who your current owners may sell their shares to you need to read this and back this.


Putting the Fans in Control


@rchrdtknsn