Date post: | 14-Jan-2015 |
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Economy & Finance |
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Football finance FC..ked
Premier League: 5 years from 2003 to 2008
• Matchday income up 53% from £363m to £554m
• Total income up 55% from £1,246m to £1,936m
• Borrowing up 276% from £825m to £3,106m
• Shareholder funds down 248% +£297m to -£442m
WHERE HAS ALL THE MONEY GONE?
Buy buy United Guardian headlines say it all!• Manchester United's sales pitch is far from a premium bond
(13 Jan)
• Success for Manchester United as Glazers raise £504m from bond issue (22 Jan)
• Red Knights confirm plans for Manchester United bid (2 Mar)
• Glazer family reject secret £1.5bn offer for control of Manchester United (6 May)
• Fury of Old Trafford faithful not enough to force boardroom to sell up (20 May)
• Red Knights shelve plans (2 Jun)
Community Shares ProgrammeTwo-year action research programme funded by Office of Civil Society and Department of Communities and Local Government, delivered in partnership by Development Trusts Association and Co-operatives UK
Working with 10 organisations raising community investment:• Ashington Minors – childcare nursery• Cybermoor – rural broadband services• Brixton Green – community land trust and urban regeneration• FC United of Manchester – building new stadium• Hastings Pier & white Rock Trust – development trust • Hurst Green Village Shop & Centre • Oxford Cycle Workshop Training • Sheffield Renewables – urban renewable energy schemes• Slaithwaite Co-operative – community-owned greengrocers• Tutbury Hydro Electric Project
Financing community ventures
• Grants, gifts and donations are best because they are free, but how much free money is (will be) available for community enterprise?
• Loans and bond finance is readily available from institutions and (to a lesser extent) individuals, but commit the venture to generating a fixed amount of profit to pay interest and refund capital, and can be short-term
• Equity investment through community shares, is more flexible, longer term, and connects the investor to the enterprise, sharing in the risks and rewards
Community shares summary• Defined as community enterprises with more than 20
members with combined investment of more than £10,000
• Oldest surviving example is Lincolnshire Co-operative Society est. 1861: 161,000 members £9.6m shares.
• Currently 141 enterprises fit this definition, 40% of which have been established in the last 30 months
• Combined community investment of over £300m and combined membership of nearly 6m.
• In last ten years total community investment of £30.5m from combined membership of 60,000
Community shares by trade activity
Trade activity Number orgns. Share capital Members
Renewable energy 28 32,191,000 11,687
Regeneration, land and buildings 22 13,516,000 2,947
Consumer co-operatives 19 182,455,000 5,843,000
Community retail stores 18 571,000 2,561
Transport (inc historic railways) 18 20,809,000 n/a
Finance and investment 10 7,489,000 1,858
Food production and farming 6 886,000 9,539
Fair trade products 5 33,409,000 18,705
Pubs and breweries 5 575,000 388
Football 4 1,231,000 31,704
Other 6 8,849,000 39,084
Growth in community share offers
2009 IPS community share offersShare
capital £No. of
memberAv. £ per member
The Cochabamba Project 623,003 89 7,000
Sustainable Hockerton 167,550 41 4,100
Ecological Land Co-operative 123,000 38 3,200
Hudswell Community Pub 219,100 151 1,450
Sheffield Renewables 12,050 12 1,000
Go! Co-operative 58,006 70 830
Busy Bee Toyshop Co-operative 32,250 102 300
Fairtraders Co-operative 85,000 370 230
Slaithwaite Co-operative 15,000 121 120
Dunbar Community Bakery 23,000 230 100
Football and community shares
Name Legal format
Share capital
No. of members
Year Est.
AFC Wimbledon plc £1.2m?? 2,500 2003
FC United of Manchester ips £2,093 2,093 2005
My Footballclub Society ips £9,055 9,055 2007
Eastbourne Borough FC cic cls ?? ?? 2008
Stenhousemuir FC cic cls ?? ?? 2009
Why is IPS the preferred format?
Unique attributes of IPS share capital:• Withdrawable share capital• One-member-one-vote• Upper limit on investment• Flexible cap on financial returns• Dividends on transactions, as well as interest on
share capital• Optional statutory asset lock• Exempt from regulation
Community shares: key elements
CommunityShares
Attracting and engaging members
Member
Supporter
Viewer
Audience
Director
Activist
CustomerVolunteer
Investor
Service user
Worker
Supplier???
How members strengthen the business model
Members roles How these roles strengthen the business model
Investor Lower cost of capital; greater acceptance of risk
Customer Greater loyalty; accept higher prices & dividend
Service user Demonstrates support to funders; better feedback
Activist More engagement; better feedback; better targeting
Volunteer Lower labour costs; access to specialist skills
Suppliers Greater loyalty; lower input prices
Workers Greater loyalty; lower input prices; better feedback
Directors Access to specialist skills; lower input prices
ShareLiverpool FC
• IPS established 2008• Aims to lead community buy-out of LFC• 35,000 registered supporters pledged £40m• Shares cost £500 each• Aims to raise
– £11m member share capital– £140m member loans– £100m commercial investors– £100m bank loans
• Website says there are 4m LFC fans in UK & Ireland
Conservative manifesto 2010
“Our new ‘community right to buy’ scheme will give local people the power to protect any community assets that are threatened with closure. In addition, we will:
..reform the governance arrangements in football to enable co-operative ownership models to be established by supporters.”
Further information
Community Shares website: www.communityshares.org.uk Publications• Community Investment using IPS legislation• The Community Shares Programme: One Year On • Guide to governance and offer documents (July 2010)• An investor’s guide to community shares (July 2010)• A practitioner’s guide to community shares (Mar 2011)Further contact:www.bakerbrown.co.uk [email protected]