New Investment Options

[Jay]

1 hour ago, dennyc said:

Thanks for the update Jay. And for highlighting that the potential funding gap in October is a worst case scenario, but something that has to be planned for. Makes perfect sense.

But as for the other point, and acknowledging that the bucket collection is a relatively minor matter, can you clarify whether Society monies have been/are being utilsed to support worthy causes such as the Trust or have been/are being provided for projects that the Football Club wished carried out?  And if so, to what extent and who authorises that expenditure? There is a sizeable gap between the Balance you quote above and the total received from Members to date. 

I keep coming back to the reason the Society was established in the first place (as a safety net) and to the fairly narrow purposes any funds ingathered were to be used. I appreciate that may be looked upon as history, but as fans and Members are being asked to dig deeper, then I believe they are entitled to know where their contributions are likely to end up. It is one thing providing security for our football Club  (a Contingency Fund for emergency use only), but an entirely different thing supporting charitable causes or funding what might be looked upon by some as non essential projects. Have the lines between Club and Society Funds become blurred?

I just wrote a rather large reply to this & then lost it so hopefully I manage to remember everything again...

This is absolutely the kind of thing that should be accessible & transparent though.

I can only really speak for the time I've been involved in the Society, since early 2017, but when I joined the board, the club was still very early on in the "repay Les Hutchison's loans" journey. You may remember that, at the time, there was the Double Your Money campaign, where every penny raised by the Society would see Les cut his loan by the same amount. However, also part of the loan agreement, was that the Society would put - if memory serves - around £130,000 into the club on an annual basis (in the form of loans).

This effectively meant that, as a result of the Les Hutchison loans to the club, the model of the Well Society changed from being that contingency fund to investing in the club on a yearly basis.

Alongside that, there is also the reality that, albeit infrequently, there may be the odd situation where the majority shareholder is asked to invest a sum in the club for a genuinely important reason. The example I'd maybe use to flesh that out a little would be if there was an injury crisis in January & the playing budget was already maxed out, would an owner elsewhere be able to reduce the chances of relegation by increasing that budget slightly to cover a target? And if so, should the Society do likewise? As I say though, very much not a regular occurrence by any means.

Beyond that, in more recent years, there has been a process in place to allow parts of the club to apply to the Society for a sum of funding. The funding is capped & an application has to be submitted that details what the funding is for, what the benefit is, and why the funding can't be sourced elsewhere. The Society Board has to agree as a majority to accept any of those applications, and a number have been rejected during my time. Those that have been accepted are usually publicised at the time, the defibrillator outside the ground & a couple of youth teams travelling to Ireland to take part (and win) a cup competition spring to mind. The sums spent on successful applications are small in relation to the kinds of big sums we're talking about and even then, the Society Board would point blank refuse any application if the club itself was in any sort of financial trouble or it just wasn't viable or deemed as worthwhile.

And then there's the usual admin fees, other expenses, and the staff salary that the Society pays on an annual basis. I am not aware of any ongoing funding of or donations to the likes of the Community Trust, outwith any requests they've had regarding funding in the past that we've possibly agreed to.

That for me is a - albeit second attempt - rough outline of the Society's financial approach as I understand it. There's no doubt that the model of the Society switched during those years following Les Hutchison but, in more recent years, there's been a conscious effort to switch back to the original model, hence the ability to build up £750,000.

All that said, if you're looking for more specific figures, I would absolutely contact the Well Society by e-mail. None of this should be a secret.

[dennyc]

54 minutes ago, Jay said:

I just wrote a rather large reply to this & then lost it so hopefully I manage to remember everything again...

This is absolutely the kind of thing that should be accessible & transparent though.

I can only really speak for the time I've been involved in the Society, since early 2017, but when I joined the board, the club was still very early on in the "repay Les Hutchison's loans" journey. You may remember that, at the time, there was the Double Your Money campaign, where every penny raised by the Society would see Les cut his loan by the same amount. However, also part of the loan agreement, was that the Society would put - if memory serves - around £130,000 into the club on an annual basis (in the form of loans).

This effectively meant that, as a result of the Les Hutchison loans to the club, the model of the Well Society changed from being that contingency fund to investing in the club on a yearly basis.

Alongside that, there is also the reality that, albeit infrequently, there may be the odd situation where the majority shareholder is asked to invest a sum in the club for a genuinely important reason. The example I'd maybe use to flesh that out a little would be if there was an injury crisis in January & the playing budget was already maxed out, would an owner elsewhere be able to reduce the chances of relegation by increasing that budget slightly to cover a target? And if so, should the Society do likewise? As I say though, very much not a regular occurrence by any means.

Beyond that, in more recent years, there has been a process in place to allow parts of the club to apply to the Society for a sum of funding. The funding is capped & an application has to be submitted that details what the funding is for, what the benefit is, and why the funding can't be sourced elsewhere. The Society Board has to agree as a majority to accept any of those applications, and a number have been rejected during my time. Those that have been accepted are usually publicised at the time, the defibrillator outside the ground & a couple of youth teams travelling to Ireland to take part (and win) a cup competition spring to mind. The sums spent on successful applications are small in relation to the kinds of big sums we're talking about and even then, the Society Board would point blank refuse any application if the club itself was in any sort of financial trouble or it just wasn't viable or deemed as worthwhile.

And then there's the usual admin fees, other expenses, and the staff salary that the Society pays on an annual basis. I am not aware of any ongoing funding of or donations to the likes of the Community Trust, outwith any requests they've had regarding funding in the past that we've possibly agreed to.

That for me is a - albeit second attempt - rough outline of the Society's financial approach as I understand it. There's no doubt that the model of the Society switched during those years following Les Hutchison but, in more recent years, there's been a conscious effort to switch back to the original model, hence the ability to build up £750,000.

All that said, if you're looking for more specific figures, I would absolutely contact the Well Society by e-mail. None of this should be a secret.

Thanks Jay. I appreciate the prompt and comprehensive response. You more or less confirm what I thought might have been the case over the years, although until now any approach for clarification had little success. The transparency and communication now being shown is a much needed, refreshing step forward.

The news of an agreement to provide Motherwell FC with £130k on an annual basis is a surprise however and I suspect not many Members were aware that such an arrangement existed? My comment on the history of it all is that at no time do I recall Members being asked to support the operating change which you confirm took place or of being advised of the annual £130k arrangement, both of which combined considerably deplete Society Funds. 

Looking forward, it is good to hear there is an effort being made to revert to something approaching the original model. The growth of a Reserve Fund to assist the Club in time of need, preferably on a Loan basis, being the intent. With that in mind, is the annual £130k provision to continue and has any of the original funding been repaid or possibly written off? That is something Members should be aware of when considering whether to dig deep.......or deeper.

Personally, I have no real objection to limited funds being made available to assist with one off projects that benefit the Club or football development. That said,  I don't think that any such funding should be allowed to get out of hand and quite honestly the Club needs ASAP to return to the situation where those projects can be completed without the aid of the Society. It cannot be the case that the Football Club come to rely on that annual input from the WS. And the blurring of lines between Society, Trust, Football Club priorities and finances needs looking at.

Thanks

[Jay]

34 minutes ago, dennyc said:

Thanks Jay. I appreciate the prompt and comprehensive response. You more or less confirm what I thought might have been the case over the years, although until now any approach for clarification had little success. The transparency and communication now being shown is a much needed, refreshing step forward.

The news of an agreement to provide Motherwell FC with £130k on an annual basis is a surprise however and I suspect not many Members were aware that such an arrangement existed? My comment on the history of it all is that at no time do I recall Members being asked to support the operating change which you confirm took place or of being advised of the annual £130k arrangement, both of which combined considerably deplete Society Funds. 

Looking forward, it is good to hear there is an effort being made to revert to something approaching the original model. The growth of a Reserve Fund to assist the Club in time of need, preferably on a Loan basis, being the intent. With that in mind, is the annual £130k provision to continue and has any of the original funding been repaid or possibly written off? That is something Members should be aware of when considering whether to dig deep.......or deeper.

Personally, I have no real objection to limited funds being made available to assist with one off projects that benefit the Club or football development. That said,  I don't think that any such funding should be allowed to get out of hand and quite honestly the Club needs ASAP to return to the situation where those projects can be completed without the aid of the Society. It cannot be the case that the Football Club come to rely on that annual input from the WS. And the blurring of lines between Society, Trust, Football Club priorities and finances needs looking at.

Thanks

In terms of the precise annual figure, it was roughly in that ballpark. It may have been close to £120,000, but essentially the majority of the funds raised on an annual basis went into the club as a loan. The loan to the club remains & hasn't been written off.

Just also to clarify, the Society putting cash into the club on that annual basis ended when Les was paid off. It no longer happens. Instead, the majority of members pledges remain within the Society finances, which thankfully allows us to now be in a position to highlight that £750,000 we have. I imagine things would be a lot more negative regarding the Society's ability to be the majority shareholder going forward if there was the prospect of a £750,000 gap in 18 months, and we had a few quid.

And on the point around whether the arrangement with Les was communicated to members or not, I can only play the massive cop-out card & say that was before my time, so I genuinely have no idea how members were informed about that, if at all (I say that as someone who was a member at the time but has obviously forgotten).

[dennyc]

5 minutes ago, Jay said:

In terms of the precise annual figure, it was roughly in that ballpark. It may have been close to £120,000, but essentially the majority of the funds raised on an annual basis went into the club as a loan. The loan to the club remains & hasn't been written off.

Just also to clarify, the Society putting cash into the club on that annual basis ended when Les was paid off. It no longer happens. Instead, the majority of members pledges remain within the Society finances, which thankfully allows us to now be in a position to highlight that £750,000 we have. I imagine things would be a lot more negative regarding the Society's ability to be the majority shareholder going forward if there was the prospect of a £750,000 gap in 18 months, and we had a few quid.

And on the point around whether the arrangement with Les was communicated to members or not, I can only play the massive cop-out card & say that was before my time, so I genuinely have no idea how members were informed about that, if at all (I say that as someone who was a member at the time but has obviously forgotten).

Thanks Jay. Good news that the annual funding agreement ran out when Les was repaid. Hopefully when we sell Theo for £10m, the Club will be in a position to repay their debt to the Society. Making that a priority would certainly boost the Society bank balance. Onwards and upwards.

Appreciate your openness throughout this thread

[steelboy]

I just had a look at the SWPL table and it's noticeable that three of the clubs we are chasing for the top 6 don't have a top division women's team. That's surely handing St Mirren, Dundee and Kilmarnock a financial advantage over us?

If the Society is going to be asking the support to dig deeper then they have to make sure we aren't throwing money away. There's been a lot of talk about Kilmarnock getting KVV but when you consider how much more we spend on the pitch plus training facilities over them then it's obvious how they can afford it. It gives them a clear competitive and financial advantage and it would cost us nothing to try and get the rules changed to even that out. 

To actually have any say on these issues the society would need to have the majority on the club board. It's not feasible to be asking members to put in money to be effective junior partners to people who are putting in nothing. 

[steelman1991]

2 hours ago, steelboy said:

I just had a look at the SWPL table and it's noticeable that three of the clubs we are chasing for the top 6 don't have a top division women's team. That's surely handing St Mirren, Dundee and Kilmarnock a financial advantage over us?

If the Society is going to be asking the support to dig deeper then they have to make sure we aren't throwing money away. There's been a lot of talk about Kilmarnock getting KVV but when you consider how much more we spend on the pitch plus training facilities over them then it's obvious how they can afford it. It gives them a clear competitive and financial advantage and it would cost us nothing to try and get the rules changed to even that out. 

To actually have any say on these issues the society would need to have the majority on the club board. It's not feasible to be asking members to put in money to be effective junior partners to people who are putting in nothing. 

Kilmarnock have a Women's team, but they are currently in SWPL2. Not sure why being in SWPL has any bearing on their expenditure on that front. St MIrren are in SWPL1.

[steelboy]

21 minutes ago, steelman1991 said:

Kilmarnock have a Women's team, but they are currently in SWPL2. Not sure why being in SWPL has any bearing on their expenditure on that front. St MIrren are in SWPL1.

Usually in fitba you get what you pay for. It's been said that the women's team costs the club £250,000 a year. It's not sustainable to be aiming to have a first team breaking even and an academy running at profit while carrying a women's team that is always going to be loss making. The tail is wagging the dug. 

[steelman1991]

I doubt its anywhere close to that figure, but happy to stand corrected. Will that cost figure not be available from the club accounts?

Point I was making is that St Mirren and Kilmarnock's expenditure for Women's teams isn't likely to be any less than ours and isn't necessarily equated to the division they are in. So I would doubt there is any financial advantage.

[santheman]

Maybe one of the first things the new board and CEO in conjunction with the rest of the organisations within the club need to do is have a root and branch audit on everything within the club to see if any savings can be made in terms of staffing and efficiency.

We are a fan owned Community club at the end of the day and that will mean money will have to be spent on community projects like the walking football team the power chair football team and like it or not Steelboy the Ladies set up which has the same right to be part of the club as the numerous boys teams.

The alternative is we stop doing all the Community based activities, and channel all the money into the first team squad which might suit some but not others.

[dennyc]

Whatever happens investment wise, one good thing that must come out of this entire exercise is that all Club expenditure should be assessed to see if it is essential and relates to core business. There seems to be little sense in the WS ingathering funds only for the Club to continue to operate at a loss. If that situation continues then eventually funds will run out. That's not being dramatic and I'm not saying we are anywhere that situation at present but surely the sensible approach is to start that exercise immediately. Any questionable expenditure needs to be addressed as soon as possible.

As the majority Shareholder, the WS is in a position of power and should insist that a full review is undertaken with appropriate action taken if needs be. Society and Club need to work together admittedly, but the Society needs to stand up.  I think it is fair to say that, if the WS were to vote to reduce their holding, any new majority owner would immediately undertake such a review as a matter of urgency. From what we have been told, both potential incomers have already drawn up Business Plans.

Personally I think this model of having to sell at least one player for a sizeable fee per season is flawed and is like operating on a wing and a prayer. And despite several decent sales in recent years, we are still in the position that significant investment is required. How long can that continue? We know that the Club Board is about to change substantially (having run out of ideas????) so hopefully that change will bring about a fresh approach that eventually returns the Business to operating on at least a break even basis. Whoever the major shareholder is.

 

[weeyin]

There's no money to be made operating a football team in the Premiership. That's why the majority of them run at much bigger losses than us.

For me, that's why having an investor take control is a risk. They need to be a philanthropist with a passion for the game and the club, with no aspirations of making a profit. Even then, the club can be left in a major hole if they decide to walk away for any reason.

A secondary question is why would I (or any Society member) want donate money every month for the new owner's benefit so they can cash in a few years down the line?

I understand the current financial pressures too, but any new investment needs to be nailed down with multiple guarantees to safeguard the club - and I'm not sure any investor would be willing to meet those conditions.

I'm open to being persuaded, as I would love to see someone with the right intentions invest in us. I'm just not sure who that would be.

 

[steelboy]

13 minutes ago, weeyin said:

 

A secondary question is why would I (or any Society member) want donate money every month for the new owner's benefit so they can cash in a few years down the line?

 

That's a very good point that no one in the Society has addressed. The suggestions about a takeover from various places involving new shares effectively amounts to giving over a controlling interest for free. That might not be the case but it's went very quiet on the takeover front. 

[dennyc]

3 minutes ago, weeyin said:

There's no money to be made operating a football team in the Premiership. That's why the majority of them run at much bigger losses than us.

For me, that's why having an investor take control is a risk. They need to be a philanthropist with a passion for the game and the club, with no aspirations of making a profit. Even then, the club can be left in a major hole if they decide to walk away for any reason.

A secondary question is why would I (or any Society member) want donate money every month for the new owner's benefit so they can cash in a few years down the line?

I understand the current financial pressures too, but any new investment needs to be nailed down with multiple guarantees to safeguard the club - and I'm not sure any investor would be willing to meet those conditions.

I'm open to being persuaded, as I would love to see someone with the right intentions invest in us. I'm just not sure who that would be.

 

Looking at our recent financial results and the resultant year on year reduction in on field quality, is carrying on like we are not also a risk? Yes, other Club's incur losses but few try to operate as a fan owned business. Or where fans do represent a major shareholding there is also external funding prepared to cover losses. Hearts being a classic example where even a huge fan membership is insufficient to sustain the football club at the level they wish to operate.  How long can the WS continue to subsidise the football Club? Because that is what is currently happening. if the football Club cannot operate on a break even basis, which you appear to believe will be the case, funds will run out eventually. Just like any other business. Tough decisions need to be made.

I do agree that Guarantees need to be inbuilt if outside investment is secured. And folk are right to be cautious. The Club and its assets must be protected whatever happens. But, if the WS is to continue as "owner", then a fundamental look at how the Club operates is essential. The bottom line is that the WS can only generate so much finance. Therefore the Club, in whatever guise, needs to play its part. The current situation is really no surprise, setting aside the 'feel good' factor of being fan owned and the plaudits that attracts. The changes to the Club Board which are about to take will hopefully bring about fresh ideas and a huge step forward.

[weeyin]

I completely agree there needs to be a proper financial assessment and plan in place. Like all businesses that should start with an annual forecast and reviewed monthly to see what's working, what's not working and if anything needs to be changed.

Then it needs a proper review at the end of the year and fed back into the next year's planning.

That also feeds into my concerns about a new investor. As a fan owned club, a plan to break even every year is ideal as it gives us the maximum amount of cash flow to run the club without having to worry about dividends or profits for shareholders.

If an investor is expecting a financial returns then decisions could be made that are in the best interests of them rather than the club. There will be some overlap, but not always.

The biggest challenge with a football club is that in many ways it's not like a regular business. It's obviously a lot more difficult to attract customers from a rival product regardless of how attractive you make yours, so expanding your reach in the market is very difficult.

Likewise, you can't really introduce a new product line because football isn't working.

I also doubt there are many, if any, new ideas available as it's difficult to innovate for the same reasons. There are quite a few successful businessmen who have failed at football club ownership because of these built-in restrictions.

As I said, however, I am open to persuasion by a new owner, but I'll want to see all the details of the plan.

 

[steelboy]

It's worth remembering that the club has turned a profit overall since it became fan owned. It's also been less than 2 years since we were in a strong enough position to undertake a large infrastructure project. 

I can't help but feel that the We're Skint video and the talk of a black hole and SPFL deadline are designed to deflect from that. 

 

 

[dennyc]

1 hour ago, weeyin said:

I completely agree there needs to be a proper financial assessment and plan in place. Like all businesses that should start with an annual forecast and reviewed monthly to see what's working, what's not working and if anything needs to be changed.

Then it needs a proper review at the end of the year and fed back into the next year's planning.

That also feeds into my concerns about a new investor. As a fan owned club, a plan to break even every year is ideal as it gives us the maximum amount of cash flow to run the club without having to worry about dividends or profits for shareholders.

If an investor is expecting a financial returns then decisions could be made that are in the best interests of them rather than the club. There will be some overlap, but not always.

The biggest challenge with a football club is that in many ways it's not like a regular business. It's obviously a lot more difficult to attract customers from a rival product regardless of how attractive you make yours, so expanding your reach in the market is very difficult.

Likewise, you can't really introduce a new product line because football isn't working.

I also doubt there are many, if any, new ideas available as it's difficult to innovate for the same reasons. There are quite a few successful businessmen who have failed at football club ownership because of these built-in restrictions.

As I said, however, I am open to persuasion by a new owner, but I'll want to see all the details of the plan.

 

All valid points and in truth I think we agree on several points.

Regards any investor having a conflict of interest on occasion, I think that is where safeguards are essential. Examples such as ....

No Security granted over assets such as Fir Park as a protection against knee jerk overreaction/asset stripping, a timescale for any outstanding Loans to the investor being repaid upon departure, a limit on remuneration to an investor (and dependant upon year end financial results), a proviso that the WS would be given a realistic price and timetable to be in a position to repurchase shares from any departing investor, an binding agreement that a % of any profits must remain within the Club.

I accept that many investors would be put off by such conditions. But Hibs appear to have successfully negotiated similar terms and without even having to give up majority ownership. Not an easy task, but it can be done.

25 minutes ago, steelboy said:

It's worth remembering that the club has turned a profit overall since it became fan owned. It's also been less than 2 years since we were in a strong enough position to undertake a large infrastructure project. 

I can't help but feel that the We're Skint video and the talk of a black hole and SPFL deadline are designed to deflect from that. 

 

 

And without the Turnbull monies that picture would be entirely different. Relying on the sale of a player for millions every other season is not realistic nor sensible. It certainly hasn't worked of late. As the quality on the pitch declines year upon year and investment in youth is reduced through necessity, it becomes less advisable as a strategy. Contract situations are another barrier that is not going away. Blair Spittal apparently joining others that have departed in their prime with no return. So again, for how long can the WS continue to subsidise  the football club to the degree it has of late?

[Mintymac]

As he stated Derek Weir finishing up in a fortnights time as is his wish . 
Is there likely to be another interim CEO or is it likely he’ll extend beyond that .

Im more inclined to think the later will be the option . 
Maybe a short update would be appropriate ?

[Kmcalpin]

1 hour ago, Mintymac said:

As he stated Derek Weir finishing up in a fortnights time as is his wish . 
Is there likely to be another interim CEO or is it likely he’ll extend beyond that .

Im more inclined to think the later will be the option . 
Maybe a short update would be appropriate ?

Absolutely. As a fan owned club, its not unreasonable for members to be told if we have a CEO and if so, who it is.  

[weeyin]

Well Society Board meeting is on Monday. Might be a good question to submit to them.

You can email questions to the same address that you receive the weekly emails from.

[steelboy]

3 hours ago, Mintymac said:

As he stated Derek Weir finishing up in a fortnights time as is his wish . 
Is there likely to be another interim CEO or is it likely he’ll extend beyond that .

Im more inclined to think the later will be the option . 
Maybe a short update would be appropriate ?

If he stays on after both setting a deadline to leave and refusing to look for a full time CEO it will be utterly absurd. 

We really need a Q&A Society meeting to find out exactly what is going on.

[Mad Dog]

36 minutes ago, steelboy said:

If he stays on after both setting a deadline to leave and refusing to look for a full time CEO it will be utterly absurd. 

We really need a Q&A Society meeting to find out exactly what is going on.

What do you mean by "refusing to look for a fulltime CEO"? My understanding is that interviews have taken place and that there is now a shortlist for the role. Please correct me if I'm wrong.

[weeyin]

50 minutes ago, steelboy said:

If he stays on after both setting a deadline to leave and refusing to look for a full time CEO it will be utterly absurd. 

We really need a Q&A Society meeting to find out exactly what is going on.

He said he wouldn't "walk away and abandon the club" if CEO wasn't' in place before the end of March.

More importantly, we'd be crazy to appoint a new CEO before a new investor comes in as they will want to impose their own structure and staff on the board. We don't want their first piece of business to be paying off the new CEO.

[steelboy]

1 hour ago, Mad Dog said:

What do you mean by "refusing to look for a fulltime CEO"? My understanding is that interviews have taken place and that there is now a shortlist for the role. Please correct me if I'm wrong.

As I understand it they stopped looking for a new CEO when they started talking to potential new owners. 

[Mad Dog]

2 hours ago, steelboy said:

As I understand it they stopped looking for a new CEO when they started talking to potential new owners. 

Right, so they actually were looking then.

[Yabba's Turd]

What is anything at Motherwell without steelboy's unique 'everything and everyone at the club is a dick/pish/out of their depth'?