New Investment Options

[StAndrew7]

3 minutes ago, Ballso said:

You do realise that the board don’t personally make any cash from this don’t you? 

They do if they sell their shareholding to Mr Barmack in a few years...

[Dee]

On 6/17/2024 at 9:05 AM, steelboy said:

 

I'm still hoping for some answers Derek. Cheers. 

 

Hi folks, 

Apologies for the delay in response, it's a busy period at the moment as I'm sure you'd all expect, and this is the first time I've had the chance to log back into this forum. Thanks for your patience. 

As you'll be aware following the club statement on Thursday, there should be further communication coming from the Executive Board very soon. 

On your specific valuation point, though we don't have the snappy, definitive answer you might be looking for, I hope this response details the thinking of the Society Board and shows why this deal is not in the best interests of the fans or the club.

We don't think it is wise to state our valuation of the club for two reasons.

Firstly, given that we remain open to investment, should it be beneficial to the long-term security of the club, 'naming our price' could potentially limit other offers should Well Society members reject this proposal, as we recommend they do. 

Secondly, the club is not for sale. We can say as the elected representatives of the many Motherwell fans who own their club, that we do not want to sell it. That echoes the words of the Chairman at the latest AGM who stressed that the club is not for sale; that's not just the opinion of the Society Board. Putting a price on something you don't want to sell would send the wrong signal.

That said, that does not mean we cannot disagree with the club's valuation. Looking at the Chairman's rationale on the club website, we see a host of problems.

The outgoing chairman's rationale states a £3.7m debt was taken into account in the valuation. The nature of the debt does not appear to have been taken into account. Half of the Well Society loan (£434k) would be written off under the deal. It is questionable whether the other £434k would ever be returned if this deal went through. The Scottish Government loan is an interest-free loan repayable over 20 years which has been used to fund long-term infrastructure projects that will save the club significant maintenance costs over the term of the loan.

The outgoing chairman states that "net assets is only a valid basis to look at the deal if the assets can be sold. Ours can’t be." The club has assets in the playing squad who could potentially be valued at more than the executive board's valuation of the club. 

We are unclear why the outgoing chairman makes the following assertion. "We have operated at around breakeven over the period since we moved into fan ownership." The club has recorded a combined profit of about £2.5million since we moved into fan ownership. Recent losses have come after major one-off spending on facilities, eg a £1.2million pitch plus building work in the East (John Hunter), a new PA system and much improved CCTV systems. 

The Hibs comparison, which we referenced in the initial Society statement, is a highly relevant, very recent and illustrative example that highlights why we believe the executive board is under-selling the club.

Last week Hibs reported a further sale of shares from existing shareholders which followed on from the Black Knights investment. This values the club at £26m. See a report in the Edinburgh Evening News from last week.

https://www.edinburghnews.scotsman.com/sport/football/hibs/hibs-investment-figure-revealed-as-shareholders-pump-in-extra-cash-4663394

Over the past decade, Motherwell have received greater SPFL prize money than Hibs and our transfer income compares well with Hibs. Hibs have made a combined £3.7m loss over the five most recent recorded seasons. Motherwell have made a combined profit of more than £2.5m under fan ownership. Hibernian's outstanding loans stood at £4.9million in their most recent accounts, greater than Motherwell's. Hibs turnover on average over the past six years is about double that of Motherwell's. Yet the valuation of the respective boards is 6.5 times greater/lesser.

I'm aware that this is a pretty lengthy response but I hope that it answers some of what you were looking for. We'll be in a position to give you a lot more fairly soon and I'm confident that 'Well fans will see the potential in those proposals. 

Finally, not quite a Steelboy question, but a few people have asked if it's a case of A or B, so just to clarify that point.

If the vote is no, the Society will continue to seek to put into practice its own plans for the future and continue to seek alternative investment opportunities that align with our values and long-term. I know I keep banging on about it being a busy time, but I've been really enthused and inspired by the work the refreshed board have been doing since the turn of the year (this would have been happening regardless of any other proposals), in terms of developing plans for the future of the Society and the club. We have consulted with a range of experts and we will look to share more information on this in our forthcoming communication to members. If this proposal is rejected, simply put - the Society will work closely with the Chief Executive, refreshed Executive Board, and new Chairman on our shared vision for the club.

 

[Ballso]

22 minutes ago, StAndrew7 said:

They do if they sell their shareholding to Mr Barmack in a few years...

Yeah I do get that, but the insinuation was that they would immediately benefit financially. 

[StAndrew7]

19 minutes ago, Dee said:

If the vote is no, the Society will continue to seek to put into practice its own plans for the future and continue to seek alternative investment opportunities that align with our values and long-term. I know I keep banging on about it being a busy time, but I've been really enthused and inspired by the work the refreshed board have been doing since the turn of the year (this would have been happening regardless of any other proposals), in terms of developing plans for the future of the Society and the club. We have consulted with a range of experts and we will look to share more information on this in our forthcoming communication to members. If this proposal is rejected, simply put - the Society will work closely with the Chief Executive, refreshed Executive Board, and new Chairman on our shared vision for the club.

 

Thanks Dee, appreciate the update.

On this last point; I know the statement mentioned the WS would be sharing these plans soon - do you have a timescale?

It feels like there's a window of opportunity to sell it as an alternative to the next proposal Barmack submits/is announced by the Club; I know you guys are only volunteers and you've already done a phenomenal amount of work on your plans - I wouldn't want that to go to waste if it's overshadowed by anything the Club announce in the next few days, with an attached narrative that could potentially extinguish your own.

[steelboy]

@Dee

Thanks for the answer and I appreciate the argument you are making but I can't really agree with it. 

Under McMahon's valuation and takeover deal the assets of the Society decrease by £2.8 million (and we get nothing at all in return). That's outrageous in itself but the more realistic decrease is £4-5 million obviously including reduced shareholding, cash to be paid as part of the deal and debt write off. Surely communicating the real cost of the deal to Society members is essential. 

Apart from that I don't think there is a better argument against this deal than the ridiculous amount of money ordinary Motherwell fans are expected to write off to benefit an American millionaire who no one had heard of 6 months ago. The clock is ticking now you really need to get the message out about how much of a rip off this deal is. I've heard far more from the Society about Barmack being a nice guy than the millions he's trying to take off us. Time to step up. 

 

[Dee]

3 minutes ago, StAndrew7 said:

Thanks Dee, appreciate the update.

On this last point; I know the statement mentioned the WS would be sharing these plans soon - do you have a timescale?

It feels like there's a window of opportunity to sell it as an alternative to the next proposal Barmack submits/is announced by the Club; I know you guys are only volunteers and you've already done a phenomenal amount of work on your plans - I wouldn't want that to go to waste if it's overshadowed by anything the Club announce in the next few days, with an attached narrative that could potentially extinguish your own.

 

No problem at all. 

We do. Our plan has always been to present these plans in detail before the ballot to provide members with a clear understanding of our vision and strategies. The ballot opens on 1st July so it will be very soon. 

As referenced in that interview with Ben Banks, the aim is also to have surgeries with members before that date - next week most likely - and info on that should be with you in the next few days. 

[Spiderpig]

21 minutes ago, Ballso said:

Yeah I do get that, but the insinuation was that they would immediately benefit financially. 

No the insinuation was that they've made no secret that they want out, so sell their shares now or later it makes no difference they get their cash and no further responsibility as if this shit deal goes through Barmack will have full control.

[steelboy]

6 minutes ago, Spiderpig said:

as if this shit deal goes through Barmack will have full control.

Exactly.

Then he starts signing contracts on behalf of the club with marketing firms and AI developers and before you know it all the money coming from him and the Society as part of the deal is back in sunny California. 

[FirParkCornerExile]

1 hour ago, Dee said:

 

Hi folks, 

Apologies for the delay in response, it's a busy period at the moment as I'm sure you'd all expect, and this is the first time I've had the chance to log back into this forum. Thanks for your patience. 

As you'll be aware following the club statement on Thursday, there should be further communication coming from the Executive Board very soon. 

On your specific valuation point, though we don't have the snappy, definitive answer you might be looking for, I hope this response details the thinking of the Society Board and shows why this deal is not in the best interests of the fans or the club.

We don't think it is wise to state our valuation of the club for two reasons.

Firstly, given that we remain open to investment, should it be beneficial to the long-term security of the club, 'naming our price' could potentially limit other offers should Well Society members reject this proposal, as we recommend they do. 

Secondly, the club is not for sale. We can say as the elected representatives of the many Motherwell fans who own their club, that we do not want to sell it. That echoes the words of the Chairman at the latest AGM who stressed that the club is not for sale; that's not just the opinion of the Society Board. Putting a price on something you don't want to sell would send the wrong signal.

That said, that does not mean we cannot disagree with the club's valuation. Looking at the Chairman's rationale on the club website, we see a host of problems.

The outgoing chairman's rationale states a £3.7m debt was taken into account in the valuation. The nature of the debt does not appear to have been taken into account. Half of the Well Society loan (£434k) would be written off under the deal. It is questionable whether the other £434k would ever be returned if this deal went through. The Scottish Government loan is an interest-free loan repayable over 20 years which has been used to fund long-term infrastructure projects that will save the club significant maintenance costs over the term of the loan.

The outgoing chairman states that "net assets is only a valid basis to look at the deal if the assets can be sold. Ours can’t be." The club has assets in the playing squad who could potentially be valued at more than the executive board's valuation of the club. 

We are unclear why the outgoing chairman makes the following assertion. "We have operated at around breakeven over the period since we moved into fan ownership." The club has recorded a combined profit of about £2.5million since we moved into fan ownership. Recent losses have come after major one-off spending on facilities, eg a £1.2million pitch plus building work in the East (John Hunter), a new PA system and much improved CCTV systems. 

The Hibs comparison, which we referenced in the initial Society statement, is a highly relevant, very recent and illustrative example that highlights why we believe the executive board is under-selling the club.

Last week Hibs reported a further sale of shares from existing shareholders which followed on from the Black Knights investment. This values the club at £26m. See a report in the Edinburgh Evening News from last week.

https://www.edinburghnews.scotsman.com/sport/football/hibs/hibs-investment-figure-revealed-as-shareholders-pump-in-extra-cash-4663394

Over the past decade, Motherwell have received greater SPFL prize money than Hibs and our transfer income compares well with Hibs. Hibs have made a combined £3.7m loss over the five most recent recorded seasons. Motherwell have made a combined profit of more than £2.5m under fan ownership. Hibernian's outstanding loans stood at £4.9million in their most recent accounts, greater than Motherwell's. Hibs turnover on average over the past six years is about double that of Motherwell's. Yet the valuation of the respective boards is 6.5 times greater/lesser.

I'm aware that this is a pretty lengthy response but I hope that it answers some of what you were looking for. We'll be in a position to give you a lot more fairly soon and I'm confident that 'Well fans will see the potential in those proposals. 

Finally, not quite a Steelboy question, but a few people have asked if it's a case of A or B, so just to clarify that point.

If the vote is no, the Society will continue to seek to put into practice its own plans for the future and continue to seek alternative investment opportunities that align with our values and long-term. I know I keep banging on about it being a busy time, but I've been really enthused and inspired by the work the refreshed board have been doing since the turn of the year (this would have been happening regardless of any other proposals), in terms of developing plans for the future of the Society and the club. We have consulted with a range of experts and we will look to share more information on this in our forthcoming communication to members. If this proposal is rejected, simply put - the Society will work closely with the Chief Executive, refreshed Executive Board, and new Chairman on our shared vision for the club.

 

"Recent losses have come after major one-off spending on facilities, eg a £1.2million pitch plus building work in the East (John Hunter), a new PA system and much improved CCTV systems" 

 

Were these improvements not paid from the £3 million 20 year loan the club got from the Scottish Government??  If so the only part of that cost that can be attributable to the losses is the £150,000 annual loan service charge.

[StAndrew7]

9 minutes ago, FirParkCornerExile said:

"Recent losses have come after major one-off spending on facilities, eg a £1.2million pitch plus building work in the East (John Hunter), a new PA system and much improved CCTV systems" 

 

Were these improvements not paid from the £3 million 20 year loan the club got from the Scottish Government??  If so the only part of that cost that can be attributable to the losses is the £150,000 annual loan service charge.

I think the loan was included as a profit in the year in which it was accounted, so therefore any spending as a result has to be recorded as a loss? I'm sure I read on one set of accounts that the record profits we reported in 21/22 were partly because of that income.

[FirParkCornerExile]

24 minutes ago, StAndrew7 said:

I think the loan was included as a profit in the year in which it was accounted, so therefore any spending as a result has to be recorded as a loss? I'm sure I read on one set of accounts that the record profits we reported in 21/22 were partly because of that income.

 so the reality is it was never a true profit, a loan is not profit. How in Gods name they get away with showing a loan as a profit defies belief and by the same token the loss is not a true loss. No wonder accountants are rich , all smoke and bloody mirrors. 

[StAndrew7]

1 minute ago, FirParkCornerExile said:

 so the reality is it was never a true profit, a loan is not profit. How in Gods name they get away with showing a loan as a profit defies belief and by the same token the loss is not a true loss. No wonder accountants are rich , all smoke and bloody mirrors. 

I would need to confirm if that's the case or not (working currently) but there should be something on the club accounts on Companies House if anyone wants to do a quick check!

[FirParkCornerExile]

11 minutes ago, StAndrew7 said:

I would need to confirm if that's the case or not (working currently) but there should be something on the club accounts on Companies House if anyone wants to do a quick check!

The expenditure on pitch and ground improvements need to stop being referred to as a loss and almost certainly take a double take at any profit declared if it includes the £3million quid 20 year loan. Such accounting behaviour , although most certainly not illegal, completely distort peoples understanding of the clubs operating finances. I hate accountants with a passion, no wonder this country is fucked and no bastard knows where all the money has gone. 

 

it begs the question that if the apparent profit Motherwell have made of £2.5 million  over the time of fan ownership includes the £3 million pound Government loan. If it does the position is actually a £500,000 operating loss

[Casagolda]

1 hour ago, Dee said:

 

No problem at all. 

We do. Our plan has always been to present these plans in detail before the ballot to provide members with a clear understanding of our vision and strategies. The ballot opens on 1st July so it will be very soon. 

As referenced in that interview with Ben Banks, the aim is also to have surgeries with members before that date - next week most likely - and info on that should be with you in the next few days. 

Have you had legal advice on the ballot being sufficient for the Well Society to diminish its position within the club?

You can say the club is not for sale but issuing a huge amount of new shares is effectively the same thing? Is there going to be a publication of how and when additional shares will be issued. Communication from the cliub board on this front has been sparse.

[Casagolda]

Derek did the Well Society take the decision to ballot members before or after Erik Barmack agreed his offer  with the club board?

And how much worse would an offer need to be before the Well Society board outright rejected an investment without a ballot?

[dennyc]

7 minutes ago, StAndrew7 said:

I would need to confirm if that's the case or not (working currently) but there should be something on the club accounts on Companies House if anyone wants to do a quick check!

Have a look at Accounts to 31 May 2021. Note 3 as an explanation. Confirms your thoughts I believe.

£4m was included as Other Operating Income which contributed to a profit of £3.5M. A profit seen as outstanding.

That £4m included a Grant (later explained as the Govt Loan) adjusted to £1.8m for accounting purposes. The balance of £2.2m was a Covid Insurance payout. Had the Govt Loan not been recorded as income, the annual profit would have been £1.7m, which more accurately reflects Trading Income, including insurance pay out.

Signed off by Auditors so must be accepted practice. But how exactly you can treat a repayable loan in the same way as a non repayable Insurance pay out beats me. The insurance pay out being fair enough as it replaced potential income lost due to Covid.

Bottom line, the profit quoted was artificially but legally inflated. In my opinion of course.

 

My take on it anyway.

 

[dennyc]

49 minutes ago, FirParkCornerExile said:

The expenditure on pitch and ground improvements need to stop being referred to as a loss and almost certainly take a double take at any profit declared if it includes the £3million quid 20 year loan. Such accounting behaviour , although most certainly not illegal, completely distort peoples understanding of the clubs operating finances. I hate accountants with a passion, no wonder this country is fucked and no bastard knows where all the money has gone. 

 

it begs the question that if the apparent profit Motherwell have made of £2.5 million  over the time of fan ownership includes the £3 million pound Government loan. If it does the position is actually a £500,000 operating loss

I think as the Loan was treated as income, then the improvements must be treated as expenditure. That will feed through future annual results thus affecting profit (or loss) outcomes.

It must be accepted practice and was explained in the notes to the Accounts. But is was not specifically pointed out to the fan base when the results were declared. So I agree the headline profit quoted in press releases was misleading, whether that was intentional or not is up to individuals to decide.

[StAndrew7]

12 minutes ago, Casagolda said:

Derek did the Well Society take the decision to ballot members before or after Erik Barmack agreed his offer  with the club board?

And how much worse would an offer need to be before the Well Society board outright rejected an investment without a ballot?

I think the Executive Board have the influence here as the overall controller of the club (we can debate that later), in as much as they have recommended a vote of all shareholders which has to include the WS, which in turn means the WS Board has to poll its members as everyone has a share in the Society, which is in turn a shareholder in the Club.

[Casagolda]

4 minutes ago, StAndrew7 said:

I think the Executive Board have the influence here as the overall controller of the club (we can debate that later), in as much as they have recommended a vote of all shareholders which has to include the WS, which in turn means the WS Board has to poll its members as everyone has a share in the Society, which is in turn a shareholder in the Club.

The bold is not true.

Read your Well Society rules. The board have the power to decide everything. (not including rule changes)

Tthe elected board have the power to direct the society as they wish. Which is the point of elections. We pick people and they run the society.

So the club board can demand a shareholder vote needed for their propositions like issuing at eyewatering amount of new shares to be sold at rock bottom prices. But the Well Society board can themselves decide how to vote with our 71% of shares without asking members. For example the Well Society members were not balloted every time the club has appointed a new director.

[David]

[StAndrew7]

1 minute ago, Casagolda said:

The bold is not true.

Read your Well Society rules. The board have the power to decide everything. (not including rule changes)

Tthe elected board have the power to direct the society as they wish. Which is the point of elections. We pick people and they run the society.

So the club board can demand a shareholder vote needed for their propositions like issuing at eyewatering amount of new shares to be sold at rock bottom prices. But the Well Society board can themselves decide how to vote with our 71% of shares without asking members. For example the Well Society members were not balloted every time the club has appointed a new director.

I only skimmed the rules so if that's the case fair play. I wasn't sure how governing laws on cooperatives and societys which is mentioned came into things, in terms of rights of its members.

[Spiderpig]

2 minutes ago, Casagolda said:

 

the elected board have the power to direct the society as they wish. Which is the point of elections. We pick people and they run the society.

 

While that may be the case re the rules and ok for the every day trivial stuff, on a decision as major issue this the the WS members need to be consulted, and cannot be left to a random collection of volunteers elected to the WS board.

The members are contributing millions in cash so they should have their say.

[steelboy]

2 minutes ago, Spiderpig said:

While that may be the case re the rules and ok for the every day trivial stuff, on a decision as major issue this the the WS members need to be consulted, and cannot be left to a random collection of volunteers elected to the WS board.

The members are contributing millions in cash so they should have their say.

Five other bids were kicked out without Society members voting.

There is zero justification for bringing this shit show to the members. 

[steelboy]

9 minutes ago, David said:

That's moving in the right direction. 

[texanwellfan]

1 minute ago, Spiderpig said:

While that may be the case re the rules and ok for the every day trivial stuff, on a decision as major issue this the the WS members need to be consulted, and cannot be left to a random collection of volunteers elected to the WS board.

The members are contributing millions in cash so they should have their say.

Sounds like WS rules may need updated to ensure the members have their say on  major decisions so that the board have to vote per the majority wishes of the WS members, and not on what they think is best?