THE FINAL ROUND
(Wednesday 28th July 2004)
In a not entirely unpredictable sequence of events, the final week leading up to the EGM relating to the reconstructure of Wycombe Wanderers Football Club, has seen both sides of the arguement re-stated through various forms of media. Chairboys on the Net looks at many of the mains points in favour of the proposed change and the related concern expressed by a variety of sources.
The EGM takes place on Thursday 29th July in the Vere Suite at Adams Park. For the proposal to be carried it requires 75% of members voting to vote in favour.
- For: The proposed change will allow an injection of capital in the form of shareholdings not possible under a Limited by Guarantee set-up. The money will help pay off creditors, help clear or reduce the interest bearing overdrafts and go towards team rebuilding.
Against: The Directors say they are targetting £1.5m of new investment but are indicating financial support of only £600,000 and mention a minimum figure of £750,000. There is no indication that more than this minimum will be reached, which would see the overdrafts remain in full and the risks related to fluctuations in interest rates also remain. There 'Financial Promotion' issued to potential investors indicates no additional money for team rebuilding and actually cuts the playing budget by close to £1m compared to the 2003/4 season.
- For: There is a cash 'black-hole' of between £500,000 and £600,000 needed before the start of the 2004/5 season. If this is not paid then there is a threat that the Club will be forced into administration.
Against: The 'black-hole' has never been justified. The only clarified major creditor before the start of the 2004/4 season is a wage deferal payment of £126,000. The alleged cash short-fall comes at a time when money from advanced season ticket sales, sponsorship and executive box renewals is in excess of £600,000.
- For: "Manager Tony Adams is very much in tune with the Board's philosophy and all those associated with the Club must surely welcome the prospect of additional resources becoming available to support the core business of the Club, as it seeks to regain its former status within the Football League and even surpass it."
Against: Whilst it is encouraging to hear that the Manager is "in tune with the Board's philosophy", it's been proved time and time again that Manager's are short term acquisitions at a Football Club. Attitudes between the Board Room and the Management can seemingly change overnight depending on results. Using the lever of the Management in the debate is in essence irrelevant and time would have been better spent addressing the concerns of the membership.
- For: Members have been consulted over the proposals and provided with enough information to enable an informed decision to be made. The Chairman stated as recently as July 2004"We have taken careful note of your feedback and tried hard to ensure that the issues and concerns you have raised have been taken fully into account."
Against: There has been no consulation or debate following the release of the final proposals. Crucial financial information has been refused or portrayed in a manner inconsistent with the audited accounts. The Business Plan has not been distributed to members. The concerns raised by members at the meeting on 18th May have not been fielded in any manner. The consultation has just paid lip service to the members.
- For: The capital reconstruction proposed has been described as "of a pioneering nature because it links together the views of the Government, the findings of the recent Independent Football Commission review and also the FA and The Football League." In another Board statement it was described as "pioneering in the sense that it responds to ideals promoted by the football authorities and the Independent Football Commission."
Against: The references used are misleading to the layman. The 'views of the Government' are contained in an 'All-Party' report issued in February 2004. It contains no reference to specific structures of Football Clubs. The IFC report issued at a similar time is similarly open on what may be the 'ideal' structure. The 'Football Authorities' have issued no recent reports that even come close to this topic.
- For: This is the only way forward. There is no 'Plan B' as such.
Against: It's a sad reflection on the Board that they have not attempted to engage the membership in looking for alternatives or a fallback scheme should the vote go against them. The tunnel vision attitude of the Board is high risk, costing in the region of £120,000 of legal fees. The Board's failure to back the plans with any real conviction in the final stages leads to thoughts that they lack confidence in their own proposals.
- For: The existing loan note holders (worth £492,000) will have the chance to convert their loan notes to shares.
Against: There has been no indication on what value of loan notes are likely to be converted. Any loan note not converted will become an immediate debt of the new company rather than one payable back in five annual installments starting in November 2006.
- For: The Directors say that "with operational and adminstrative changes within its business, (we) believe a better than break even position is achievable over the next three years and beyond."
Against: These changes could be applied (and should have been) applied under the current constitution. There is little justification that these changes should be related to an injection of cash or conversion to a PLC.
- For: "Catalyst for a change is designed simply to identify the fact that there is a key opportunity here, with the changes we are recommending, to go beyond constitutional reform to introduce changes in other aspects of the way the business operates and I think this could be a very good trigger point for some of those changes to come about."
Against: Change of some sort maybe necessary but conversion to a PLC will allow Directors to draw uncontrolled executive salaries and expensives. If the company makes a profit this could be legally paid to shareholders in the form of dividends rather than go to football side.
- For: The interest of the existing members are protected by the formation of a Founder Shareholders Trust. They will have the capability of blocking attempts to sell the ground or other 'ring fenced' matters relating to the 'heritage' of the Club.
Against: The workings of the FST has never been explained in detail. The special rights relate only to situations that would arise on a financial breakdown of the new company and even then would only require a 'simple majority' approval rather than 75% as with a special resolution. The membership of the FST is limited to 500 and will gradually reduce due to non-qualification or death. This issue was raised at the 18th May meeting and has not been clarified in any way.
- For: The new company is protected from individuals taking control by a 25% maximum shareholding limit. This prevents 'connected' individuals from holding more than 25% of the share capital at any one time.
Against: The 25% maximum is probably unworkable in practice as the term 'connected' is open to legal interpretation. The 25% figure will be policed by the Directors themselves and could be changed by a special resolution WITHOUT reference to the Founder Shareholders Trust.
- For: The members have very little power or say in the day to day running of the Club under the current constitution, so conversion to a PLC will make little difference.
Against: More accurately the current membership has yet to engage the responsibilty that they hold. Some say the Directors have rarely encouraged involvement from the membership, resulting in an ever increasing 'them and us' situation. Conversion to a PLC will worsen this at a time when membership has reached a maximum due to the interest in the future of the Club. Conversion to a PLC will absolve any real responsibility from the membership.
- For: The proposal will give a guarantee of Board representation from the Founder Shareholders Trust and on the purchase of £100,000 worth of shares, a further representative from the proposed Supporters' Trust.
Against: The current constitution allows unlimited Board representation from the membership through a democratic vote rather a contrived situation that could lead to conflict. The FST running alongside a regular Supporters' Trust is impractical and could lead to further divisions amongst the support as those outside of the FST see those in at as the 'elite'. A regular Supporters' Trust is unlikely to gain widespread support following conversion to a PLC because Trusts tend to only thrive under the perception of financial difficulty.
- For: The target principles of the new company will follow those of the Limited by Guarantee set-up.
Against: Conversion to a PLC will remove any notion that the Club is a community facility. The perception from the outside is likely to be that a 'large cash injection' has saved the Club and they do not need help or support from the local community. Success will only be measured by results on the pitch and the sympathy factor apparent in a 'not for profit' club will be diminished. The case will be "it's your problem now, not ours".
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