Fans owned club

[Trashbat]

The club is on the doorstep of London, it’s in a deprived part of Kent and has a history of supporter apathy. GFC isn’t an attractive proposition for an investor.

The SOB want Scally to exit the club but they haven’t got a clue how that would be achieved. Their stupid 10 man protests are pointless and counter-productive. They need to stop contributing to the problem and come up with real roadmap if they want to achieve their goal.

One potentially feasible solution is leveraged finance. I wondered what the opinions on here would be about it.

I’m not an expert in leveraged finance but in layman’s terms, it involves borrowing a shit load of money from a bank to buy Scally out. Profits are used to service the debt and pay off some of the principal.

Let’s talk numbers (based on last published accounts)...

The balance sheet shows approx £1m of net assets. Suppose PS was happy to sell his shares for £1m. On top of that, Three Directors Ltd is owed £2m which would need to be repaid. So £3m would need to be raised to complete the transaction.

£600k (20%) might be raised from sale of shares to fans. That equate to 600 fans forking our £1k on average.
£2.4m (80%) would be raised by a loan secured against the club’s assets.

It might cost £120k per year in interest payments to the bank each year (btw - the club is paying £60k interest today in interest to Three Directors Ltd).

I’m sure that overhead costs could be cut further, marketing could be improved to bolster the top line (and of course thousands of fans would return because they’re all staying away because of PS’s ownership... ...ahem bullshit!). Probably need to cut back on squad budget.

What we’d end up with is:
- genuinely fan owned club
- no cash to invest in the squad
- a new CEO
- a load of debt and be at the mercy of the banks

Just waiting for Tarian to rip this to shreds :-)

 

[Tarian]

The club is on the doorstep of London, it’s in a deprived part of Kent and has a history of supporter apathy. GFC isn’t an attractive proposition for an investor.

The SOB want Scally to exit the club but they haven’t got a clue how that would be achieved. Their stupid 10 man protests are pointless and counter-productive. They need to stop contributing to the problem and come up with real roadmap if they want to achieve their goal.

One potentially feasible solution is leveraged finance. I wondered what the opinions on here would be about it.

I’m not an expert in leveraged finance but in layman’s terms, it involves borrowing a shit load of money from a bank to buy Scally out. Profits are used to service the debt and pay off some of the principal.

Let’s talk numbers (based on last published accounts)...

The balance sheet shows approx £1m of net assets. Suppose PS was happy to sell his shares for £1m. On top of that, Three Directors Ltd is owed £2m which would need to be repaid. So £3m would need to be raised to complete the transaction.

£600k (20%) might be raised from sale of shares to fans. That equate to 600 fans forking our £1k on average.
£2.4m (80%) would be raised by a loan secured against the club’s assets.

It might cost £120k per year in interest payments to the bank each year (btw - the club is paying £60k interest today in interest to Three Directors Ltd).

I’m sure that overhead costs could be cut further, marketing could be improved to bolster the top line (and of course thousands of fans would return because they’re all staying away because of PS’s ownership... ...ahem bullshit!). Probably need to cut back on squad budget.

What we’d end up with is:
- genuinely fan owned club
- no cash to invest in the squad
- a new CEO
- a load of debt and be at the mercy of the banks

Just waiting for Tarian to rip this to shreds :-)

Why would I rip this to shreds ?
This is a well thought out, comprehensive post.

There may be factors missing.....
...that only a forensic examination of the various connected Companies would reveal.

But the biggest obstacle (IMO) is that assumption that PS would sell his shares for £1,000,000.

IIRC I posted a few weeks ago that GFC's net assets were £1.4m.
I added that, usually both buyer and seller adds a present value for future income.
(That's one of the factors Pension funds use to decide which shares to buy.)

Someone else posted that he thought Scally wanted £15m.

All we know is that Scally says he has received no "credible" offers.....
...which some have construed as "not offered what Scally wants".
This remains the great unknown.
(Unless anyone knows better.)

And another thing....
Would Three Directors "need" to be repaid ?
For the right deal they might keep their loan to GFC.
(But unless anyone here knows what motivates them, repayment should probably be the assumption.)

 

[Tarian]

The club is on the doorstep of London, it’s in a deprived part of Kent and has a history of supporter apathy. GFC isn’t an attractive proposition for an investor.

The SOB want Scally to exit the club but they haven’t got a clue how that would be achieved. Their stupid 10 man protests are pointless and counter-productive. They need to stop contributing to the problem and come up with real roadmap if they want to achieve their goal.

One potentially feasible solution is leveraged finance. I wondered what the opinions on here would be about it.

I’m not an expert in leveraged finance but in layman’s terms, it involves borrowing a shit load of money from a bank to buy Scally out. Profits are used to service the debt and pay off some of the principal.

Let’s talk numbers (based on last published accounts)...

The balance sheet shows approx £1m of net assets. Suppose PS was happy to sell his shares for £1m. On top of that, Three Directors Ltd is owed £2m which would need to be repaid. So £3m would need to be raised to complete the transaction.

£600k (20%) might be raised from sale of shares to fans. That equate to 600 fans forking our £1k on average.
£2.4m (80%) would be raised by a loan secured against the club’s assets.

It might cost £120k per year in interest payments to the bank each year (btw - the club is paying £60k interest today in interest to Three Directors Ltd).

I’m sure that overhead costs could be cut further, marketing could be improved to bolster the top line (and of course thousands of fans would return because they’re all staying away because of PS’s ownership... ...ahem bullshit!). Probably need to cut back on squad budget.

What we’d end up with is:
- genuinely fan owned club
- no cash to invest in the squad
- a new CEO
- a load of debt and be at the mercy of the banks

Just waiting for Tarian to rip this to shreds :-)

And another thing....
Persuading fans to buy shares ought to be tried.....

But fans with memories of the last share issue may want a guarantee that no single shareholder has control....
...as GFC shareholders learnt to their cost last time.

IIRC, after the share issue. Scally had around 70% of the 42,000,000(?) shares.
He bought another 10% from disillusioned shareholders at a discount.

Also, at every AGM he passed a motion that would allow him to issue another 60,000,000 shares (note the number) - at any price he chose....
...which if he ever implemented could have wiped out what little value was left.

 

[Lark]

And another thing....
Persuading fans to buy shares ought to be tried.....

But fans with memories of the last share issue may want a guarantee that no single shareholder has control....
...as GFC shareholders learnt to their cost last time.

IIRC, after the share issue. Scally had around 70% of the 42,000,000(?) shares.
He bought another 10% from disillusioned shareholders at a discount.

Also, at every AGM he passed a motion that would allow him to issue another 60,000,000 shares (note the number) - at any price he chose....
...which if he ever implemented could have wiped out what little value was left.

And at another AGM he passed a motion that meant he didn’t have to hold any more AGMs!

 

[Trashbat]

And another thing....
Persuading fans to buy shares ought to be tried.....

But fans with memories of the last share issue may want a guarantee that no single shareholder has control....
...as GFC shareholders learnt to their cost last time.

IIRC, after the share issue. Scally had around 70% of the 42,000,000(?) shares.
He bought another 10% from disillusioned shareholders at a discount.

Also, at every AGM he passed a motion that would allow him to issue another 60,000,000 shares (note the number) - at any price he chose....
...which if he ever implemented could have wiped out what little value was left.

Yep - would need some careful thought to persuade people to part with their money. I wonder whether 600 fans would contribute £1k each on average?!?

 

[Trashbat]

Why would I rip this to shreds ?
This is a well thought out, comprehensive post.

There may be factors missing.....
...that only a forensic examination of the various connected Companies would reveal.

But the biggest obstacle (IMO) is that assumption that PS would sell his shares for £1,000,000.

IIRC I posted a few weeks ago that GFC's net assets were £1.4m.
I added that, usually both buyer and seller adds a present value for future income.
(That's one of the factors Pension funds use to decide which shares to buy.)

Someone else posted that he thought Scally wanted £15m.

All we know is that Scally says he has received no "credible" offers.....
...which some have construed as "not offered what Scally wants.
This remains the great unknown.
(Unless anyone knows better.)

And another thing....
Would Three Directors "need" to be repaid ?
For the right deal they might keep their loan to GFC.
(But unless anyone here knows what motivates them, repayment should probably be the assumption.)

There definitely will be missing factors!

Net assets in the last accounts were a little more than £800k which was pre-COVID. I suspect that net assets are lower now.

I agree that discounted cash flow is, ordinarily, a more suitable model to value a club. But, people on here seem to think Scally would not hesitate to put the club in to administration. If that were the case, and assuming nobody is interested in buying the club, then it is only really worth it’s balance sheet value.

 

[markinkent]

The club is on the doorstep of London, it’s in a deprived part of Kent and has a history of supporter apathy. GFC isn’t an attractive proposition

Are there not similar arguments for any lower league club?

Surely places like Blackpool are more deprived than Kent?

I actually struggle with the argument that medway is deprived. Some parts might be but there is plenty of money in other parts. Every town has deprived parts.

We'd be better focused on the untapped potential. Wembley visits draw tens of thousands. How do we turn them into regulars?

I don't see a fan owned approach working. That's for phoenix clubs in my view. Let's hope it doesn't come to that.

We need a benefactor/consortium to buy potential.

The new ground is key. Need to raise the profile of the club so that it is exciting and visible to the local community.

It's neither today.

 

[LSB2]

No way would Scally accept £1M! He owns the ground, and I think he wants what he thinks that is worth, as well as any other assets.
I think a way of raising money, would be to be the council onside, and for a developer to build our stadium, including housing and other amenities, like shops and a hotel. Similar to what Southend are doing, albeit a few years too late. I know that is what Scally trying to do, but he also still wants to have control over everything to do with the development. Then we can sell off our ground for Priestfield Park or whatever the flats that were to be called, and then Scally can have his share money. How much will Scally sell his shares for..?

 

[Trashbat]

No way would Scally accept £1M! He owns the ground, and I think he wants what he thinks that is worth, as well as any other assets.

If the club was liquidated (i.e. ground and all other assets sold/collected; and all outstanding creditors settled) then there would be £1m left over.

That’s what PS would get if the club went in to administration and no buyer materialised.

 

[LSB2]

If the club was liquidated (i.e. ground and all other assets sold/collected; and all outstanding creditors settled) then there would be £1m left over.

That’s what PS would get if the club went in to administration and no buyer materialised.

But I don't think Scally will let the club go into administration, sorry to the SOB!

 

[Trashbat]

Are there not similar arguments for any lower league club?

Surely places like Blackpool are more deprived than Kent?

I actually struggle with the argument that medway is deprived. Some parts might be but there is plenty of money in other parts. Every town has deprived parts.

We'd be better focused on the untapped potential. Wembley visits draw tens of thousands. How do we turn them into regulars?

I don't see a fan owned approach working. That's for phoenix clubs in my view. Let's hope it doesn't come to that.

We need a benefactor/consortium to buy potential.

The new ground is key. Need to raise the profile of the club so that it is exciting and visible to the local community.

It's neither today.

Medway Towns are properly deprived and on par with Blackpool. There’s no money. It’s shithole.



You constantly talk about attracting new fans and tapping in to the Wembley potential. There’s only one thing that will attract fans - winning week-in-week-out.


A message on a 61 year old plane, a stupid banner, some tweets from and ugly bald bloke and a protest where the police outnumber the protesters isn’t going to achieve the SOB’s stated objectives. If they truly want to affect change, they’ve got to come up with practical solutions.

They’re fucking idiots if they think that someone will just buy the club from PS tomorrow. They’re not fans if they’d prefer for the club to fold.

In the absence of any practical solutions coming from the SOB, I am offering the only slightly realistic option.

 

[Trashbat]

But I don't think Scally will let the club go into administration, sorry to the SOB!

I concur. But apparently, according to the SOB and some others on this site, the current losses are not sustainable and the club is on the verge of administration.

 

[jogills]

I agree with markinkent that fan ownership would only be likely in the event of administration followed by a phoenix club. Even then I feel that form of ownership would be short-lived. It's an emergency measure that allows fans to keep the club alive on life support.

I think the associated development model is a ship that has sailed. There are more than enough of the projected facilities in the intended area already and retail outlets nearby are struggling to fill units. We talk of council involvement and support but what this means practically is the council handing valuable planning opportunities to a minority interest with little gain for them.

 

[LSB2]

I concur. But apparently, according to the SOB and some others on this site, the current losses are not sustainable and the club is on the verge of administration.

Only one person really knows that. He might mention it in his next chat...

 

[markinkent]

Medway Towns are properly deprived and on par with Blackpool. There’s no money. It’s shithole.

.

Wow you snob.

As someone who lives in Medway I think your comments are very offensive.

Next time I walk through Rochester hight Street and pass the cathedral I'll have to remind myself of your words.

Like every urban conurbation there are areas that are tired and need money. The area around the ground fits that description.

It's why I agree with scally a new ground is essential

Back to your comments on Medway though - There is no money? Who is paying for all the building development then ? Why are the restaurants busy on a weekdays night ?



Median salaries are shockingly poor in this deprived area- oh hang on no they are not.

 

[LSB2]

I agree with markinkent that fan ownership would only be likely in the event of administration followed by a phoenix club. Even then I feel that form of ownership would be short-lived. It's an emergency measure that allows fans to keep the club alive on life support.

I think the associated development model is a ship that has sailed. There are more than enough of the projected facilities in the intended area already and retail outlets nearby are struggling to fill units. We talk of council involvement and support but what this means practically is the council handing valuable planning opportunities to a minority interest with little gain for them.

Depends where the new ground goes. Doesn't have to be where it's currently planned for. What it does need is for the club, council and developer to all coke to an agreement of where the new ground goes. And it might even include a club name change to Medway United...

 

[Gills 58]

Wow you snob.

As someone who lives in Medway I think your comments are very offensive.

Next time I walk through Rochester hight Street and pass the cathedral I'll have to remind myself of your words.

There is no money? Who is paying for all the building development then ? Why are the restaurants busy on a weekdays night ?

View attachment 53673

Median salaries are shockingly poor in this deprived area- oh hang on no they are not.

How about the high salaries of the commuters who have moved down from London and continue to support London teams being responsible for that Medway figure? Plus the high cost of housing/travel that many incur compared to national average.
:-)

Ps, yes I know what Median means.

 

[Trashbat]

Wow you snob.

As someone who lives in Medway I think your comments are very offensive.

Next time I walk through Rochester hight Street and pass the cathedral I'll have to remind myself of your words.

There is no money? Who is paying for all the building development then ? Why are the restaurants busy on a weekdays night ?

View attachment 53673

Median salaries are shockingly poor in this deprived area- oh hang on no they are not.

It’s a dive Mark. There are small pockets of areas that are nice - the top end of Rochester High Street being one of those exceptions.

The data you posted is only part of the picture. It is only the average salary for people that are in work and it does not reflect the higher cost of living in the SouthEast. I pulled data from the same source as you for Kent and it shows a very different picture.

 

[markinkent]

How about the high salaries of the commuters who have moved down from London and continue to support London teams being responsible for that Medway figure? Plus the high cost of housing/travel that many incur compared to national average.
:-)

Ps, yes I know what Median means.

Like my neighbour whose a spurs season ticket holder ? Absolutely there are people like him.

Thing is if spurs are away he often comes to the Gills with me. We can tap into these people as well even if only on an occasional basis

 

[markinkent]

I find your comments offensive trashbat but that's OK we'll leave it there.

I like medway and it reminds me of so many urban conurbations in the UK.