Is this the solution, or is this just fantasy?
It seems fairly likely that there are individuals and organisations throughout the world that have an eye on NUFC with a view to purchasing the club. The group represented by Amanda Staveley last year is one recent example. As we all know, the Staveley ‘bid’ never came to anything, and neither did the interest of other groups who were allegedly waiting in the wings at that time.
Assuming that the club was genuinely on the market, it seems likely that the stumbling block was simply the price Mike Ashley expected, compared to the offer that the Staveley group were prepared to make. The Staveley group would doubtless have sought external advice as to the value of the club, as well as forming their own opinion. What seems certain is that MA would expect a financial premium to be paid on the top of any reasonable commercial valuation. There are a number of reasons for this premium, particularly the benefit to the Sports Direct brand.
The Mike Ashley Premium
It is this premium that is likely to be the deal-breaker. If a buyer is expected to pay say £50m too much for the club, they are unlikely to ever recoup their investment in the short to medium term. In those circumstances, they would not proceed with a purchase. A White Knight oligarch with unlimited funds, who is buying the club as a ‘hobby’, would be less concerned about the premium, but there does not appear to be one of these on the horizon at present.
The solution to this problem would seem to be for an entirely separate body to raise the premium of £50m, and for that entity to form an alliance with any potential buyer. That entity would not care whether it was a wise investment or not, and would not expect an annual financial dividend. They would make their investment because of their love for their club and their desire to remove Mike Ashley as soon as possible. I am of course talking about the fans.
But how would the fans raise £50m? One way to do it is set out briefly below. There are a number of local individuals behind the development of this draft scheme.
Synopsis of the NUFAN Scheme
The fans have a target of raising £50m. To do this, 50,000 fans would each purchase a £1,000 share in a business entity, to which we will give a working name of NUFAN. There are about 40,000 season ticket holders at NUFC. NUFC has 1.26 million followers on Twitter and 2.1 million Likes on Facebook. There are over 500,000 employed adults living in the immediate ‘Fan Catchment Area’. There are 10s of thousands of NUFC fans throughout the world.
Fans raise the money to buy their £1,000 share by taking out a very long-term, low interest loan of 15, or 20 years duration. We arrange a choice of lenders who will provide this facility for the fans. With a loan spread over such a long period, the monthly cost will be low, in the order of £7-8 per month. As an alternative, if this loan was added to a new, or existing mortgage, the loan could cost fans as little as £5 per month.
Although this will technically and legally be a loan agreement subject to FCA Regulation, it will have more of a feel of a monthly membership fee for an exclusive club. Ideally, the loan agreement would be a simple one-page document with near automatic acceptance for employed applicants. It would have a built-in life policy to pay-off the loan in the event of the early death of the member.
If deemed necessary, we also implement a scheme whereby the annual cost-burden of the fans’ share-purchase loan, is completely offset each year by genuine Cash-Back deals. Chosen Retailers would offer this Cash-Back exclusively to NUFAN shareholders. Cash-Back deals worth say £80-90 per year to the fan, would completely offset their annual expenditure on their NUFAN share loan.
By Retailers we mean those organisations from which fans already buy expensive ‘essential’ items for which they pay every month, often by Standing Order, or Direct Debit. This includes: rent, mortgage, insurance, Credit Cards, Pay TV, broadband, electricity, gas, mobile phones, petrol, car HP, other loans, food, and perhaps even Council Tax. We negotiate the Cash-Back deals with those Retailers on the fans’ behalf.
The fans’ annual Cash-Back saving could come from Tesco, or Virgin, or Sky, or Newcastle Building Society or one of dozens of other Retailers. The Retailers will offer fans Cash-Back deals in return for fans’ loyalty to their product for an agreed period of time. The incentive for the Retailers to offer Cash-Back to NUFAN shareholders is that they have the opportunity to gain 50,000 captive customers.
In this way, although the risk and responsibility of the £1,000 loan remains with the individual fan, the actual annual cost of the loan, and hence the cost of raising £50m, is borne by a number of multibillion-pound turnover Retailers through Cash-Back.
The structure of NUFAN might be a charity, or a Community Interest Company, or a co-operative, or a hybrid of several structures. It might have the ability to pay dividends on the shares, but this might not be necessary if the benefits of share-ownership can be seen on the pitch, or by some other ‘benefit’.
If NUFAN could be a charity, it could qualify for the government Gift Aid Scheme. This could mean that for every £1,000 ‘donated’ by an employed fan, NUFAN could claim a further £250 from the government. If it did qualify for Gift Aid, we would need less fans to join the scheme.
If the fans could raise £50m, and a sale did proceed, NUFAN would expect a seat(s) on the board of the new NUFC , along with significant voting rights.
We have considerable documentation expanding upon every aspect of the brief synopsis above.
The question arises, if we were going to do this, when should we do it? Even if enough fans were interested, it would take many months for any scheme to be developed, and for the fans to have their £50m in the bank. If we leave it until there are press reports of another buyer in the offing, it will probably be too late to assist that buyer. Bear in mind if we do nothing, we may still be where we are today 5 or 10 years from now; perpetually suffering low-table or relegation misery. It needs to be done now.
If we do it now, it may attract a suitable buyer out of the woodwork. We could even have the luxury of being in a position to veto an unsuitable buyer! If that buyer doesn’t materialise immediately, the £50m could be put to good use for many years to come. We could:
- Simply invest it, so that we have £60m or £80m available in years to come, to take a significant stake in any future purchase; or
- If possible, we pay fans an annual dividend to offset the cost of their loan; or
- Support local charities or youth football; or even
- With suitable terms and conditions, offer low-cost or even no-cost loans to the club to buy players of our (Rafa’s) choice, and on our terms.
What could the next steps be?
- Through The Mag, other fanzines, the press, and social media, we launch the draft scheme to the fans, and the wider public. We need to be on the local, the national and the world-wide stage. We then gauge reaction and assess the feedback from the fans.
- We raise a Fighting Fund of £150,000 by asking 75,000 fans world-wide to contribute £2 each via the NUFAN website, (To be constructed) via their mobile phone, or via a crowd funding site such as Kickstarter or GoFundMe
- With the Fighting Fund raised, we then fund the website, and form the Launch Panel. We need to engage and pay experts in: legal and financial services, retail, media and PR, the formation of charities and co-operatives etc. Fans would be on the Launch Panel too.
- The Launch Panel will work on the detail of the draft scheme. They will consult with fans, The Newcastle United Supporters Trust, fanzines such as The Mag, the Retailers, the Lenders and of course any potential buyer. They will amend and develop the scheme, with the remit to produce and present a final workable scheme to the fans.
- Whenever necessary, the fans will be directly consulted via voting buttons on the website. Clearly a question for the fans at an early stage will need to be: ‘In principle, would you buy a £1,000 share as part of this scheme?’
- A final scheme is presented to the fans and the wider stage, and we move forward from that point.
Phase One would be raising the £150,000 for the fighting fund, with fans contributing £2 each. Phase Two would be launching the final scheme. I am presenting the whole scheme to The Mag readers as a starting point to gauge interest. I invite your thoughts and input on Phase One and Phase Two. Should we proceed with Phase One?