Green light for Community Ownership!

[comrade powell]

STATEMENT FROM BATH CITY SUPPORTERS SOCIETY COMMUNITY OWNERSHIP ACTION GROUP

The Bath City Supporters Society Community Ownership Action Group is delighted to announce that the Board of Bath City FC has agreed to co-operate with and hopes for a successful outcome to the Bath City FC Supporters Society community fundraising and ownership bid.

We welcome the Board’s view that successful community ownership would be a positive and beneficial development for Bath City FC.

The Action Group has set a target figure of raising £1.4 million to complete the purchase, satisfy creditors and provide enough working capital for the 2015/16 season. It will raise this sum through a Community Share Offer to be launched in early April, a process which it expects to run for several months.

The Supporters Society Action Group is mindful that Bath City FC faces pressing debt obligations in April. While all parties recognise that these are for now the responsibility of the present board, the Action Group commits itself to working constructively with the Board to help address this pressing issue satisfactorily.

With the Board’s consent, the Action Group will continue negotiations with individual shareholders and creditors during the fundraising process. A binding offer will be made as the fundraising nears completion.

All shareholders will have the opportunity to convert their existing shares into new Community Shares, and we hope that a sizeable number of shareholders will choose to support community ownership in this way. Where shares are purchased our offer will be based paying the face value of £1 per share.

The Action Group will engage the services of Supporters Direct to support the development and launch of the share prospectus.

9 March 2015


Martin Powell - Chair, Supporters Society / Member of Community Ownership Action Group

[BenE]

Well done to all involved to get to this position.

[Steve Whites Missus]

Maybe this isn't the thread to have this conversation, and not meant to detract from the good work already done, but I was sadly working away when the society ran the meeting at the club, so....

provide enough working capital for the 2015/16 season

I assume the club runs at a loss at the moment. Surely we would need capital for at least 18 months. Turning the club from a loss making business to one which, at a minimum, breaks even will be quite a task in one season.

Any thoughts?

[SteveBradley]

Well done to the Society Working Group and the Board for taking this brave (but in my view necessary) step.

We have the opportunity to create something unique here at Bath City now. A club which fully immerses itself in and supports the local community, and which derives support and benefits for itself in return.

This is a hugely exciting development for Bath City, and I hope everyone will do all they can to help support it. I'll certainly be putting my shoulder to the wheel to help it as much as I can !

Well done again to everyone involved.

[City 'til we're relegated]

My best wishes go to all those involved in getting this initiative moving forwards. I was hoping for £2.50 per share, thinking that was the going rate, but never mind.

'covert their existing shares into new Community shares' I thought that only one community share per person was what happened, irrespective of how much over £500 was invested.

I fear for the large sum of money needed to be raised, clearly some big investors needed. I cannot imagine 500 City fans putting in £3,000 each. Still, I trust in the Trust, for they have clearly done their homework and know more about the chances of success than I do. Everyone connected with Bath City needs to give this their full support now that the Board of Directors are on-side.

[pete mac]

Great news this.

now the hard work begins and we need as many as possible to join in to make it a success

[Roman Mike]

My best wishes go to all those involved in getting this initiative moving forwards. I was hoping for £2.50 per share, thinking that was the going rate, but never mind.

'covert their existing shares into new Community shares' I thought that only one community share per person was what happened, irrespective of how much over £500 was invested.

I fear for the large sum of money needed to be raised, clearly some big investors needed. I cannot imagine 500 City fans putting in £3,000 each. Still, I trust in the Trust, for they have clearly done their homework and know more about the chances of success than I do. Everyone connected with Bath City needs to give this their full support now that the Board of Directors are on-side.

Apologies for those who know this already but the Society facebook page https://www.facebook.com/BathCitySupportersSociety has invited questions

[Timbo_b-o-a]

Such good news. Well done to everyone involved.

[City 'til we're relegated]

City 'til we're relegated wrote:
“
My best wishes go to all those involved in getting this initiative moving forwards. I was hoping for £2.50 per share, thinking that was the going rate, but never mind.

'covert their existing shares into new Community shares' I thought that only one community share per person was what happened, irrespective of how much over £500 was invested.

I fear for the large sum of money needed to be raised, clearly some big investors needed. I cannot imagine 500 City fans putting in £3,000 each. Still, I trust in the Trust, for they have clearly done their homework and know more about the chances of success than I do. Everyone connected with Bath City needs to give this their full support now that the Board of Directors are on-side.

”
Apologies for those who know this already but the Society facebook page https://www.facebook.com/BathCitySupportersSociety has invited questions

Thanks Mike, unfortunately I am not a facebooker so cannot go down that avenue.

[Roman Mike]

City 'til we're relegated wrote:
“
My best wishes go to all those involved in getting this initiative moving forwards. I was hoping for £2.50 per share, thinking that was the going rate, but never mind.

'covert their existing shares into new Community shares' I thought that only one community share per person was what happened, irrespective of how much over £500 was invested.

I fear for the large sum of money needed to be raised, clearly some big investors needed. I cannot imagine 500 City fans putting in £3,000 each. Still, I trust in the Trust, for they have clearly done their homework and know more about the chances of success than I do. Everyone connected with Bath City needs to give this their full support now that the Board of Directors are on-side.

”
Apologies for those who know this already but the Society facebook page https://www.facebook.com/BathCitySupportersSociety has invited questions

Thanks Mike, unfortunately I am not a facebooker so cannot go down that avenue.

Twitter?
@BathCitySociety

[OliverH]

No need to venture onto social media, we can answer your questions here!

You can own more than one community share, but you only ever have one vote. Someone with 500 ordinary shares can thus swap them for 500 community shares and still have only one vote. But if and when the club is in a position to let investors 'withdraw' their community shares, that investor could then get money back for each of their 500 shares (which would be £500 if it's at £1 a share).

This will all be explained in much more detail in the community share prospectus, as will the business plan and financial projections. I'd recommend the Community Shares Unit website for those interested in the mechanics of community shares:

http://communityshares.org.uk/

Oliver Holtaway - Society Secretary & Action Group Co-ordinator

[OliverH]

To address the other question - yes, it is unlikely that we will achieve this purely through hardcore supporters dipping into their pockets yet again. We need a mix of big and small investors, old and new faces. If we're not able to engage new people with the club in a big way then we'll just be in the same position in a few years even if we succeed - we have to fully reconnect with the whole city, give people something to believe in. We believe that community ownership is the best way of achieving that.

£1.4m is daunting but if enough people get behind us, we can do it.

[Colin Voutt]

To address the other question - yes, it is unlikely that we will achieve this purely through hardcore supporters dipping into their pockets yet again. We need a mix of big and small investors, old and new faces. If we're not able to engage new people with the club in a big way then we'll just be in the same position in a few years even if we succeed - we have to fully reconnect with the whole city, give people something to believe in. We believe that community ownership is the best way of achieving that.

£1.4m is daunting but if enough people get behind us, we can do it.

Supporters transferring their shares will "eat into" this daunting figure.

[Beau Nash]

To attract many investors they will want to see a return on their money.

Are the shares allowed to be actively traded?  My understanding is not, so there is no capital gain to be realised?

Does the Society expect to pay interest on shares “sufficient to attract and retain the investment” if the club makes a profit?  Is there any limit on this?
I am aware of other schemes with an ethical base where the profits made have allowed "interest" dividends of 7, 8 and 10% per annum for the last three years.

I hope the Community Share Prospectus will answer these questions.

[SteveBradley]

To attract many investors they will want to see a return on their money.

Are the shares allowed to be actively traded?  My understanding is not, so there is no capital gain to be realised?

Does the Society expect to pay interest on shares “sufficient to attract and retain the investment” if the club makes a profit?  Is there any limit on this?
I am aware of other schemes with an ethical base where the profits made have allowed "interest" dividends of 7, 8 and 10% per annum for the last three years.

I hope the Community Share Prospectus will answer these questions.

I can't speak for the Action Group, but I suspect the answer will be no to dividends etc.

Re other schemes you've mentioned - most of them tend to be for enterprises where a profit is very possible (e.g. The Bell) or is guaranteed (e.g. Bath and West Community Energy).

Football is different. It's a sport where it's hard to make a surplus as it is. In my opinion anyone who invests in ANY football club expecting to get a return beyond their original sum is likely to be disappointed. So I would expect that the sell to people won't be about a healthy financial dividend, but instead be about non-monetary benefits for themselves and for the community through having a stable football club which is working hard to improve and develop that community through the power of football.

A lot of the money which The Bell and others attracted wasn't motivated by the desire for a financial return, but the desire to keep a particular type of pub alive in Bath. I personally would rather see the club generate a surplus and reinvest it in its activities than give me a small dividend every year. I appreciate the lack of a dividend may put some potential 'investors' off. But again - in my view, anyone who is putting money into British football in the expectation of a return beyond their original capital sum is likely to face disappointment, no matter what the club.

[bonzodog]

Please tell me you have 'Investors' lined up to put money into this thing. Otherwise it'll be the same old few forking out again.

[SteveS]

There is a large sum of money that needs to be raised and the target obviously cannot be met just through those who turn up regularly for matches, unless some of them are a lot more wealthy than it seems.
I am not sure that everyone appreciates how important it is for this to succeed. If it does not then things will not just continue as before, the club has reached the crossroads. The city of Bath must decide a) if it wants a football club and b) one built on a more sustainable basis. Hopefully the answer to these 2 questions will be yes and this initiative will get city wide backing and be a success.

[OliverH]

Community Shares are "withdrawable share capital", which means that they cannot be actively traded. (This also means that no single shareholder can amass a majority).

Community Shares CAN bear a small, fixed amount of interest "sufficient to attract and retain the investment" - guidelines suggest that this is not normally more than 2% above the Bank of England base rate. Typically this is credited to a shareholder's account each year rather than paid out each year (as a dividend would be).

When the club's board believes that it has a enough surplus to repay investors, it offers this on a first come, first serve basis. Usually the total amount of share capital withdrawable/repayable in any given year is capped at 5 or 10%.

You will not get rich from investing in community shares, that has never been and never will be the point. But it does allow individuals to invest collectively in community-controlled projects they care about while still having the opportunity to withdraw their investment down the track and receive some compensation (in the form of interest). Thus it differs from a charitable donation.

Oliver Holtaway, Society Secretary and Action Group Co-ordinator

[Marc Monitor]

If people are investing as a sort of savings scheme with a heart, what guarantee have they got that they will get their initial investment back if the club goes down the swanee, Oliver, or is there none?

Oliver and Steve are right. No-one person or company is going to invest in Bath City (nor should invest in any football club) to make it rich. The interest is going to be for supporters who want to see the club carrying on and building up, people who are interested enough to put in £500 + as a, as I mention, savings bank with a heart or, crucially, companies who can be attracted by a couple of things. Firstly, some companies still don't mind putting in some money altruistically into local clubs. You would be surprised how easy it was to get kit bought for Under 10s football teams from a Dad's company with nought but a hardly seen shirt sponsorship for their £300+. Also, companies may be very much interested in having "Community Supporters of Bath City" stickers on their windows, logo on their letterhead, name in the programme etc for the feelgood factor locally in Bath and, specifically, amongst Bath City supporters. It serves a bit of a altruism and a bit of publicity for not a great amount of money.

The really big investors are another nut to crack and that is where the genius comes in from a large supporter base with a real pool of talent, ideas, connections, etc.

[Marc Monitor]

Please tell me you have 'Investors' lined up to put money into this thing. Otherwise it'll be the same old few forking out again.

It's hard to have anything "lined up" before the green light but there have been feelers put out and now it is up to everyone to do what they can to attract investors. It can't be left up to Oliver, Martin, Steve, Shane or whoever. That is the community aspect of it. We are literally all in it together.

[OliverH]

Sorry Marc, not sure if you mean what happens to investments if the bid is unsuccessful, or what happens if the bid is successful but the community-owned club goes out of business anyway. I'll try to answer both!

If you hand over money to buy community shares but the target figure isn't reached, you get your money back. So there's no risk that you end up out of pocket while still not getting a community club.

We will be offering a community share prospectus based a sound business plan that aims to return the club to profitability - we are not simply asking more people to continue to subsidise losses. As in any business there is still a chance that a community club could fail to make a profit and become unviable - if it did go bust, your investment would be lost just as it would with shares in any other bankrupted company.

Obviously if a community-owned BCFC went bankrupt Twerton Park would then be sold, which complicates matters - but the core principle is that this is an investment in a social enterprise run according to business principles.

[Marc Monitor]

It was the latter and thanks for the clarification, Oliver.

[comrade powell]

I believe there will be a feature on Radio Bristol in the morning at around 8.

[Major Icewater]

Interesting is that proposal is to buy/transfer  existing shares at nominal £1 value rather than whatever is the true value.
The previous purchase of shares at re-launch time was £2.50 for each £1 share (nominal value).  At that time anyone buying 1000 shares would have paid £2500. Assuming the  £2.50 represented the real value of each share  at that time and despite the additional losses since then surely they still have a value around or perhaps higher than that figure. 
So one assumes the major shareholders are willing to receive the nominal value rather than true value in order for the scheme to succeed. However some others may not be so happy to only get £1 for their £2.50 cost share in which case what happens?

[OliverH]

Major Icewater makes a fair point. However bear in mind that the 'real value' of any share is the price at which a buyer is willing to buy and a seller is willing to sell. You can have a guess at what's worth but until someone is actually offering you a price for it, you don't have a 'real' or 'true' value.

We felt that all shareholders should be offered the same price, and we didn't feel that we could realistically offer £2.50 a share. As our fundraising reaches completion we will make a binding offer based on the face value of £1 a share - the community share offer prospectus will explain the steps in more detail.

Obviously we strongly encourage shareholders to swap their shares for community shares.

Oliver Holtaway, Society Secretary, Action Group co-ordinator

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