Resolution F
Members of the society cannot support any proposal to separate our club from its ownership of the Racecourse Ground and the Colliers Park training facility and call upon the Board of the Society to set up a sub-committee, drawn from the membership, to explore alternatives to this scenario.
If you look at a list of clubs that have lost ownership of their grounds it doesn’t fill you with much optimism.
Oxford United
Cambridge United
Chester City
York City
Brentford
Wimbledon
Boston United
None of these clubs could currently be described as a raging success and it may be harsh, but fair, to state that they all have uncertain futures.
The WST has had two formal meetings with the club this year.
The first meeting was on Feb 7th and the second was in early April. At each of these meetings the subject of splitting the ground from the club has been broached by the owners of the club.In the first meeting attended by Rob Griffiths, Lindsay Jones & Bruce Clapton the matter was raised by Mr Dickens.
Neville Dickens What if we offered you the club. After the deal went through and all the property side was sorted.
Lindsay Jones; What would the club own?
Neville Dickens; The players contracts
Lindsay Jones; Where would we play?
Neville Dickens; We could sort out a good lease.
Mr Dickens did not state who would own the ground although it is implied in his statement that Dickens & Moss would. However it is fair to say that the ground owner would definitely not be the club which would hold a lease granted by Messrs Dickens & Moss, the freeholders.
In the second meeting, attended by Peter Jones, Wyn Griffiths & Kevin Baugh, the possibility broached by Mr Dickens was followed up by Mr Moss. In fact he ventured a reason why, in his opinion, it would be a good thing for the ground to be separate from the club.
Geoff Moss suggested that in the long term it would be advisable to separate the ownership of the club and stadium, as this is advisable so that the ground could not be claimed against as an asset of the club in case of future problems. WST Minutes
We feel that this is a bizarre reason for taking a £9.5m asset out of a business. The loss of the clubs only real asset would actually make the club even more vulnerable to these “financial problems”.
The main issues we see are as follows.
- A business with a short trading record and without any assets would be seen as a high risk proposition and would therefore be unlikely to attract substantial investment. The investors we are hoping to attract would be more willing to put money into a club that owned its own ground than one that didn’t.
- A business without any assets on which to secure an advance would be unlikely to obtain credit on favourable terms, if at all. A lenders first consideration is always the borrowers ability to repay the loan.
- A business without assets or access to affordable finance would need to be run in an excessively cautious manner to ensure that it did not exceed its overdraft.
- In effect the club would be “living out of the till” and vulnerable to fluctuations in day-to-day trading.
- Furthermore, if one day the club needed to move there would be nothing to sell to fund our new Stadium. Consider Shrewsbury Town who have just sold the Meadow and used the proceeds of the sale to build a new ground. By losing the ground we would no longer have that option.
- We would become a tenant, probably paying rent, on a ground that we now own.
- It is unlikely that the club would receive the full market value for the ground. Who would write a cheque for £9.5m? The council definitely wouldn’t and neither would the current owners. After all they already own the land.
Our concerns are also shared by the WST Treasurer Mark Williams. At the WST members meeting on 30/4/2007 he commented on the suggestion as follows.
Mark Williams advised that if the club did not own the ground, it would not be able to use it to secure any borrowing to fund any expansion plans in the future. Provided the share issue was set up correctly, the ground would be protected from selling outside the club. WST Website
Bruce Clapton , Chairman of the WST, also outlined retaining control of the ground as a key element of the WST bid when he told the same meeting that a key element of the Trust investment plan would be.
“The future ownership of the Racecourse to be protected and to remain within the full control of the club.”
He then went on to state that, all investors regardless of location would have to agree to all the principles of the investment plan.
The WST is actually asking investors to sign up to the principle that the club should retain control of its ground. It is difficult to see how this can be achieved without retaining ownership.
In light of these comments it is a bit disappointing that the Board of the WST is now actually opposing this resolution.
It is easy to see the dangers in following such a strategy but not so easy to see the benefits to the club. In fact, like Mark and Bruce, we think that taking ownership of the ground out of the club will have serious consequences for the clubs financial situation and future prospects.
Consider this as a possible scenario.
- The squad is cut to the bone because the wages to turnover has to be kept to less than, for example, 45% because we need to create a financial reserve against any potential fall in revenue.
- Several injuries reduce the squad further but the manager is not able to bring in loan signings or permanent signings to make good the shortfall because of the financial restraints.
- With a weakened team the results deteriorate and so do the gate receipts leading the club to the limits of its overdraft.
- A spell of bad weather over the Christmas period leads to a cash flow crisis at the club which may lead to wages and other bills not being paid. This may be an overly pessimistic view of what might happen but it all could happen. How would an asset-less club deal with the situation?
After planning for the development has been approved the land that the Racecourse Stadium occupies will still be worth in the region of an estimated £9.5m. That is a lot of money and would explain why the clubs owners are loathe to sell any of their shares in the club and thus dilute the value of their asset.
By splitting the ground from the club the owners are able to protect the value of their holding and would then be free to offer shares in the club or in fact to sell it.
Resolution F calls for a sub-committee to be set up to explore alternatives to the ground splitting scenario. We would hope that this sub committee would be able to find a solution that met the financial needs of both the club and its owners.
WST board position
This resolution has been opposed by the board of the WST as follows.
“The board cannot support this resolution in this form due to the potential restrictions it may place on the Trusts stated constitutional aims regarding the achieving of the best long term security for the club and its ground, as stated in resolution A.”
In responding to this we are going to quote ex WST board member Simon Johnson;
“Without wishing to understate the importance of WST, we haven’t got any input into whether the club sells its assets or not. We have no options to keep open and nothing to be prepared for because we are not involved. All we can do at present is be a watchdog for fans’ interests and that means telling the club’s owners what we think is best for the long-term future of the club.The only reasons I have heard in favour of selling the ground (from a fan’s perspective) is that it might protect it from an asset-stripper. That implies a scenario in which an asset-stripper has been allowed to take over the club. Surely we should be trying to stop that rather than trying to mitigate it? I thought D&M wouldn’t allow that to happen.”
We agree, the decision to split off the ground from the club is entirely one for the owners of the club and that we as fans can only hope to influence that decision by using our collective voice.
Please support Resolution F.
Read Resolution F: Our reasoning at A fresh approach
