The NUST Newcastle United fans 1892 Pledge – Great Idea but needs to step up to this
The Newcastle United fans NUST 1892 Pledge was announced last Thursday (8 April 2021).
The Wednesday evening before the announcement, I had various messages from some ‘In the Know’ types saying, as a long time advocate of fan ownership, how pleased I was going to be.
I have been critical of the NUST for not creating a vehicle for fan ownership, as I understood it was NUST’s raison d’etre for 12-13 years.
From back when The Mag started out in 1988, we as fans have were talked of fan ownership. The terrace chants were “Sack the board” as all the talk of the time was John Hall’s Magpie Group was looking to takeover at St James Park and in turn, Hall would sell shares to fans and have a real say in things.
By 1990/91 Hall et al had wrestled control of the shares and therefore the club, it was now the fans turn to put their hands in their pockets to take a cut of the club. The share issue was well publicised, the Ronnie had updates on how to apply for shares and deadline dates, but not enough Newcastle fans were prepared cough up and put some money in. Those of us who sent in our cheques had them returned. Here was a real chance of true fan ownership but too many fans had let the club down.
“Sack the board” seemed a little hollow when fans weren’t prepared to do their bit.
Hall and his team were left carrying all the financial burden and to their credit, pressed on in rejuvenating the club and stadium, moreover, we got a team led by Kevin Keegan that entertained wherever it went.
Time has passed, ownership has moved to Mike Ashley and the popular view is that he needs to move on and sell up. I’ve long argued that if you want Ashley to move on, you must have a buyer and why not put our money where our mouths are?
So, for me, last Thursday’s announcement sounded exciting. Fans actually taking responsibility and putting their money where their mouth has been for many years. I was genuinely pleased until I read a little to become a little disappointed to find that, the Pledge is not aimed at real fan ownership in the usual sense.
The problem for me is threefold:
First, the pledge not only sets its sights a little too low at just 1% ownership.
Secondly, it fundamentally misses the link between the amount pledged and the amount of influence. Under the Pledge’s proposal as I understand it, if I put £2,000 in the pot, I get the same influence as someone who put in £200,000 and again, the same as someone putting £200 in the pot. This is unlike any other shareholder arrangement, usually the person who risks the most gets the biggest say and rightly so.
Finally, the charity aspect, I’d like to put £2,000 – £5,000 into shares, that’s a fair amount for me and not an amount I can just write off to charity and it’s the main reservation for many I’ve spoken to.
In fairness, it has been stated that the 1892 Pledge is not a takeover bid by the Trust so they don’t pertain it to be but this is the issue where it is just playing at the idea of fan involvement. We should as fans acquire a stake, so that the supporters can justifiably ask for a say in the club’s decisions and secure a seat at the decision making table.
It’s not too late to change things, but we do need to be quick, as this would require those who had already pledged to accept small changes or accept their money back.
In my opinion, the structure should be as an investment trust. In an investment trust, the shareholders buy shares in the trust and have voting rights in line with their investment. The investment trust will then buy shares in Newcastle United when those shares become available.
The aim needs to be to acquire enough money to buy all the shares, or if we fall short, we partner a lead investor. This may seem a lot of money, the asking price is £300m, but that includes a loan owed to Mike Ashley which at the time of the last accounts was £106m based on £111m loan and £5m in debtors to be set off. So, to acquire the shares, Mike Ashley needs £194m to walk away and £106m for his loan.
That £106m can be borrowed by the club in it’s own name from another lender so a fan’s investment trust would need £194m either entirely from fans, partnering a lead investor, or even borrow the shortfall (admittedly, the last option is unlikely unless they later secured on club assets).
The trust needs to invite subscriptions for shares, much like the pledge, but the trust issues say 2m shares and subscribers apply for a share at £100 a share. Like any company, one ordinary share, one vote means that the more shares a shareholder owns, the greater the say. To get to the takeover figure we need 100,000 fans to put in an average of £2,000 each. Although it’s a significant sum for a lot of people, it’s affordable in non-covid times. For many, £2,000 forgoing a summer holiday, it’s not changing the car for a couple of extra years, it’s the same as not paying for a season ticket for three seasons, it’s saving a little on beer at the match.
As the trust collects money it can get closer to a position to make an offer to buy the football club from Mike Ashley or actively seek an investment partner.
At the time of writing, NUST have indicated they have now raised over £50k from 4,000 fans in the 1892 Pledge Scheme.
4,000 contributors is the great part of the story as it means 4,000 people are prepared to put in but it amounts to £12.50 on average per contributor so far. If we could get that average £2,000 per person, we’d be at £8m (from 4,000) which would really indicate momentum and encourage the hundreds of thousands of fans shape the future of Newcastle United for generations to come.
To get backing from ordinary fans, it has to be a potentially profitable proposal. We will not raise enough money on the idea that the club will be successful, people will just freeload and leave it to others. Furthermore, we aren’t going to get serious investors if the money is going to be handed to charity if an investment cannot be found. This does not have to be a proposal out of philanthropy or altruism. It can be a serious investment.
Even post-Covid, the media deals will improve and with the cost base at NUFC under control, the profits should be around the £30m a year mark and that alone makes the club pretty reasonable at £300m, where else can you return on the investment at 10% a year all the while being involved in something you love?
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