FOH Updated Q&A

[hughesie27]

Think this is fairly new.

 

http://www.foundatio...earts.org/news/

 

 

Foundation of Hearts Q&A

 

 

Posted by admin on June 13, 2014

 

The following contains a summary of certain provisions of the Repayment and Funding Support Agreement entered into by Bidco (1874) Limited (?Bidco?) and Foundation of Hearts Limited (?FoH?) on 9 May 2014. It is not intended to be a comprehensive summary of all of the material provisions of that agreement. It should be read in conjunction with the full document, a copy of which is available on the club website (www.heartsfc.co.uk).

What is the purpose of the agreement?

 

The agreement sets out the arrangements under which, provided it meets the various conditions in the agreement, FoH will in due course acquire certain shares in Heart of Midlothian plc (?HoM?) from Bidco.

How long does the agreement between Bidco and FoH run for?

 

The agreement has a long-stop date of 9 May 2019 (the fifth anniversary of the date of the agreement), although if FoH has not ?participated? (in effect, bought) Bidco?s rights to the ?2.4m loan made by Bidco to HoM by that date, then there is an automatic extension for a further three-month period to allow FoH to raise the amount of any shortfall and to contribute that to Bidco.

Following discussions with Bidco, it was agreed that a five-year period was an appropriate length of time to allow FoH to satisfy the conditions required by Bidco.

To put the duration in context, if the monthly contributions received by FoH continue at the levels recorded in April and May 2014, FoH will satisfy its financial obligations under the agreement within the five year period.

What are the conditions that FoH must satisfy before Bidco transfers HoM shares to FoH?

The principal conditions relate to FoH?s financial obligations to Bidco and to HoM.

FoH has already satisfied the first condition by transferring ?1m to Bidco/HoM in May in accordance with the agreement.

The remaining financial conditions are that:

FoH is obliged to transfer pledgers? contributions of ?1.4m to HoM during each of the first two years of the agreement (i.e. in aggregate ?2.8m over years 1 and 2). These sums will be used by HoM for working capital purposes in the usual course of its business. It is a further stipulation of Bidco that not less than ?300k per quarter will be advanced by FoH to HoM to make sure that a consistent and predictable amount of working capital is provided by FoH to HoM on a regular basis. The working capital will be provided by FoH to HoM as a loan.

Following the end of the second year of the agreement, FoH is then obliged to use pledgers? contributions to participate (in effect, buy) Bidco?s rights to the loan Bidco made to HoM. The amount of the Bidco loan that requires to be participated is ?2.4m. It is a condition of the agreement that FoH participates a minimum of ?200k of Bidco?s loan per quarter.

FoH is also obliged to ensure that it receives the consent of Bidco to any changes to FoH?s corporate structure, constitution, board membership or management team.

The HoM shares that Bidco will transfer to FoH are those that Bidco acquired from UBIG. If those shares do not comprise 75.1% or more of HoM?s share capital and Bidco has acquired additional HoM shares through the general offer being made to the HoM shareholders, then Bidco must transfer additional HoM shares to FoH so that the shares transferred to FoH comprise 75.1% of HoM?s share capital.

In addition to the transfer of the HoM shares, Bidco will also transfer to FoH the ?2.4m loan due by HoM, along with the related security (which will include a fixed charge over Tynecastle Stadium). At that point, FoH will own the relevant shares in HoM and will also be a secured creditor of HoM (e.g. HoM will owe it cash) in respect of (i) the ?2.4m loan advanced by Bidco to HoM, and (ii) the sums advanced directly by FoH to HoM (being the ?1m advanced in May 2014 and the aggregate amount of the working capital loan).

 

How much will FoH need to pay to Bidco for its HoM shares?

FoH will pay Bidco the same amount that Bidco paid to acquire its HoM shares from UBIG (?100,000). Bidco will not make any profit on the sale of its HoM shares to FoH.

This sum is in addition to the amounts contributed by FoH to HoM for working capital and to Bidco to participate the Bidco loan.

What happens if FoH does not satisfy the conditions of the agreement?

If the conditions are not fulfilled, then Bidco can terminate the agreement. That means that FoH would no longer be entitled to acquire the HoM shares from Bidco.

FoH would remain a secured creditor of HoM in respect of the working capital loans made, along with the ?1m payment made in May 2014. It would also ?own? that part of the Bidco loan that it had participated. FoH?s security for its loans to HoM comprises a floating charge and a standard security over Tynecastle Stadium.

FoH?s ability to enforce those loans will be severely restricted for so long as Bidco remains the senior secured creditor of HoM, although FoH will retain some influence as a subordinated secured creditor.

The FoH Board understands Bidco?s requirement for these conditions and the ability to terminate the agreement, principally in circumstances where it looks like FoH is going to be unable to meet its payment obligations.

The FoH Board believes that the incentive of FoH owning a significant majority stake in HoM is the main driver behind maintaining and, hopefully, increasing the number of pledgers and sums pledged, but pledgers and HoM supporters do need to be aware that if sums pledged reduce over time, that may result in FoH no longer having the right to acquire the HoM shares from Bidco.

It should, however, be stressed that if the monthly contributions received by FoH continue at the levels recorded in April and May 2014, FoH will satisfy its financial obligations under the agreement both as regards the provision of working capital to HoM during the first two years and as regards the participation of the Bidco loan within the five year period.

As such, a clear pathway to supporter ownership of HoM exists and has been facilitated by Bidco. It is for FoH, its members and pledgers to ensure that the conditions to supporter ownership are satisfied.

What influence does FoH have in relation to HoM before it acquires the HoM shares from Bidco?

The Chairman of FoH (currently Ian Murray MP) is entitled to be appointed to the HoM Board. In addition, from the first anniversary of the date of the agreement, FoH can nominate a further director to the HoM Board.

The FoH appointees to the HoM Board will have influence at HoM Board level and will have access to the same information as the other HoM directors. Subject to their legal duties as HoM directors and to requirements of commercial confidentiality, they may share that information with the FoH Board.

FoH is entitled to receive a copy of the HoM annual business plan (which will have been considered by the HoM Board (including the FoH representatives) and FoH will also receive a quarterly update from Ann Budge on progress against the Business Plan.

It is acknowledged by both Bidco and the FoH Board that it is important to maintain a regular dialogue with FoH members and pledgers to ensure the continued financial support required. It is anticipated that an arrangement will be reached with Bidco as to what information can be provided on a regular basis to FoH members and pledgers to ensure proper transparency.

If FoH has satisfied the condition regarding the provision of working capital to HoM during the first two years, Bidco will also allow FoH to exercise the voting rights that attach to any HoM shares that it holds in excess of those required to give Bidco 75.1% of total voting rights.

How will FoH meet its running costs?

It has been agreed with Bidco that FoH can retain ?50k per annum from the sums received by it from members/pledgers to fund FoH?s annual running costs.

Bidco has agreed, given the limited budget available to FoH, that it will, and that it will procure that HoM will, provide FoH with ?in kind? assistance to support FoH?s activities.

This is a small budget for FoH, so we are reliant on the goodwill of Bidco, HoM and our members and pledgers to make sure our budget goes as far as it can.

Do the FoH Board receive any payment for their services?

No.

[PTBCAL]

Where's FF when you need him.

 

One thing springs out to me....if we sell ?2.5m worth of season tickets/match walk ups coupled with additional revenue of ?0.75m through TV monies, corporate, merchandising etc.... Then would we not be self succifient under the new regime?

[Guest GhostHunter]

I've stickied this so that it doesn't get lost in the forum.

[WorldChampions1902]

Nice one! This should answer a few questions raised on various threads recently..............only to spawn yet more questions!

[Don Dan]

The biggie is missing though, voting of FoH office bearers/directors???

[hughesie27]

I've stickied this so that it doesn't get lost in the forum.

 

[Footballfirst]

I've just had a quick scan through the document. It covers a lot of the areas where there there were questions previously. Some questions have been answered adequately, but a number remained unanswered, are partially answered, or require to be answered by Ann Budge on behalf of Bidco.

 

"Following discussions with Bidco, it was agreed that a five-year period was an appropriate length of time to allow FoH to satisfy the conditions required by Bidco."

 

No explanation of the need for a five year deal. Why the need for two years stabilisation at a cost of ?2.8M? What are these "conditions" required be Bidco, and why are they required? Does Bidco have any means of taking and answering questions from fans? I know, that as a shareholder in HMFC, I should get the opportunity to ask questions at the HMFC AGM, but I would have liked some means of asking questions of Bidco and Ann before then. It's an odd state of affairs that I currently own more shares in HMFC than FoH, yet FoH has already handed over ?1M, with ?1.4M, ?1.4M, ?2.4M + interest and fees and another ?100k to follow over the next five years before they take ownership of any shares.

 

"These sums will be used by HoM for working capital purposes in the usual course of its business."

 

That answers one of my questions directly, but I'm not exactly happy about it. I pledged to FoH in order to a) save the club, b.) enable FoH to own a majority shareholding, and c) operate the club on behalf of the fans. I did not envisage contributing to the costs of running the club for two years while Bidco remain as owners. I want the club to be running on a sustainable basis asap, i.e. only spending what we earn. Spending ?1.4M extra for two years sounds very much like the "speculate to accumulate" mantra that was adopted, and failed, by Robinson and Romanov. What is the plan if we don't get into the premiership within two seasons, austerity?

 

FoH is also obliged to ensure that it receives the consent of Bidco to any changes to FoH?s corporate structure, constitution, board membership or management team.

 

Why? Bidco and FoH are both listed at Companies House as independent organisations, so I see no reason why one company should be able to exercise such a level of control over the other, particularly at board level, and potentially ignore the wishes of one company's membership (pledgers).

 

The HoM shares that Bidco will transfer to FoH are those that Bidco acquired from UBIG.

 

I take it that this should read UBIG & UKIO. That being the case then the shareholding is 78.97%, but the pledge is only to ensure that 75.1% is handed over. Are there any plans to issue more shares that would dilute the 78.97% obtained from UBIG/Ukio, so that those shares would have to be topped up? What are the plans for the shares obtained via the share offer. Is it intended that Bidco will retain a substantial shareholding in the medium to long term? If that is the case then Bidco could own up to 20% of the club for an investment of around ?30K while FoH will own 75%-79% for around ?6.5M. It doesn't seem a particularly equitable arrangement.

 

It is anticipated that an arrangement will be reached with Bidco as to what information can be provided on a regular basis to FoH members and pledgers to ensure proper transparency.

 

So we have Bidco controlling what information is provided to FoH and their members. It seems a pretty undemocratic arrangement. Give me your money and I'll run your club for you, but I will only tell you what I think you need to know.

 

I am prepared to give Ann and Bidco the benefit of the doubt, at least until she is freed of any restrictions to communicate in an open, honest and transparent fashion, but I must say that the proposed governance of the club under Bidco is not what I expected from what was sold as "fan ownership".

 

On other issues, FoH have failed to answer any of the outstanding points on the reasons for the changes in governance.

[Geoff Kilpatrick]

Pretty much agree with FF although I have no issue with the working capital question. We are in a lower division and we need to get back up and re-establish ourselves in the top flight.

[Francis Albert]

Agree with ff including the working capital point. We will be the third or fourth biggest revenue club in the country without the extra 1.4 m a year. What is the extra for? I think stickying it or pinning it is a bad idea - no surer way to kill a thread.

By the way those who criticise some of us with obsesssion with detail should count the ways in which ann protects her investment. This is not a criticism but what i'd expect from a good business person. We are in good hands for a few years. The balance of the agreement however suggests where the balance of business brains between ann and foh lies.

[Mikey1874]

Would quite like to see the Q&A in simpler language. Kind of follow it and share others concerns. But its hardly accessible or plain.

 

Still onus now on Ann Budge etc to answer the key points.

[Francis Albert]

 

Nice one! This should answer a few questions raised on various threads recently..............only to spawn yet more questions!

No - most of the old questions are not addressed.

[JamboGraham]

I think the detail Ann has provided on our credit rating and negotiating position with card processing providers gives an insight into some of her thinking.

 

I am in no doubt that Ann is here for the long term benefit of the club and nothing else. She has taken steps to protect her capital in the club, and why not, this does not seem to be an investment or gift from her. It is a corporate lifeline.

 

Ann has said many times that she wishes to leave the club in the best possible position when it is transferred to the fans.

 

I think the five year period seems sensible to rebuild credit ratings and financial security. I also suspect that the reason for insistence on input into any changes to the FOH governance will be connected to the overall financial stability of the club. There would be no point in developing all of the corporate elements of the club if credit partners were to remain spooked by the impending ownership structure.

 

To put it another way, it is exactly what I would have insisted upon in her position.

 

 

[Geoff Kilpatrick]

I think the detail Ann has provided on our credit rating and negotiating position with card processing providers gives an insight into some of her thinking.

 

I am in no doubt that Ann is here for the long term benefit of the club and nothing else. She has taken steps to protect her capital in the club, and why not, this does not seem to be an investment or gift from her. It is a corporate lifeline.

 

Ann has said many times that she wishes to leave the club in the best possible position when it is transferred to the fans.

 

I think the five year period seems sensible to rebuild credit ratings and financial security. I also suspect that the reason for insistence on input into any changes to the FOH governance will be connected to the overall financial stability of the club. There would be no point in developing all of the corporate elements of the club if credit partners were to remain spooked by the impending ownership structure.

 

To put it another way, it is exactly what I would have insisted upon in her position.

I have no doubt that she has two goals - to stabilise the club and protect her investment, which no one has any issue with. However, by interfering in the processes of FANCO, which by its name is the fans body, that will be counter-productive IMO.

[JamboGraham]

 

 

I have no doubt that she has two goals - to stabilise the club and protect her investment, which no one has any issue with. However, by interfering in the processes of FANCO, which by its name is the fans body, that will be counter-productive IMO.

 

It doesn't have to be counter-productive. It would appear that Ann has retained a veto on the actions of FOH/Fanco rather having any direct interference. I suspect that could help us supporters save us from ourselves as we spend the next five years planning our 30k capacity stadiums, recruitment of the special one as manager and re-signing every past hero to have played for the club...

 

 

[Geoff Kilpatrick]

 

 

 

It doesn't have to be counter-productive. It would appear that Ann has retained a veto on the actions of FOH/Fanco rather having any direct interference. I suspect that could help us supporters save us from ourselves as we spend the next five years planning our 30k capacity stadiums, recruitment of the special one as manager and re-signing every past hero to have played for the club...

I'm sorry but I find that patronising in the extreme. We should take responsibility for our own actions.

[Footballfirst]

It doesn't have to be counter-productive. It would appear that Ann has retained a veto on the actions of FOH/Fanco rather having any direct interference. I suspect that could help us supporters save us from ourselves as we spend the next five years planning our 30k capacity stadiums, recruitment of the special one as manager and re-signing every past hero to have played for the club...

 

There is no reason why Ann could not have structured the deal around FoH having ownership from day 1 rather than Bidco and still had the same protection over her investment through a fixed security and floating charge in addition to a legally binding loan agreement with FoH. Had that been the arrangement, then I'm sure that FoH could still have invited Ann to form the club board, leaving FoH to manage the membership's aspirations and any issues that could be devolved, like ticketing arrangements, loyalty points, catering options, stewarding, parking, fundraising etc.

[JamboGraham]

 

 

I'm sorry but I find that patronising in the extreme. We should take responsibility for our own actions.

 

I apologise if you find that patronising, it was intended to be somewhat tongue in cheek. However, there is a huge flaw in a collective taking responsibility for our own actions, quite simply it is a contradiction. That has always been my concern over a truly fan owned model and as such I would be happy to delegate the corporate responsibility to a proven, and visible, candidate more in line with a trustee model.

 

Heading off topic I fear though...

 

 

 

[JamboGraham]

 

 

 

There is no reason why Ann could not have structured the deal around FoH having ownership from day 1 rather than Bidco and still had the same protection over her investment through a fixed security and floating charge in addition to a legally binding loan agreement with FoH. Had that been the arrangement, then I'm sure that FoH could still have invited Ann to form the club board, leaving FoH to manage the membership's aspirations and any issues that could be devolved, like ticketing arrangements, loyalty points, catering options, stewarding, parking, fundraising etc.

 

Of course, I don't disagree that this could have been a perfectly acceptable model. It would not be my preference though as I believe that all strategy and operations needs to be controlled by the board, at least in the first season, to allow the club to stabilise across all departments.

[Geoff Kilpatrick]

 

 

 

I apologise if you find that patronising, it was intended to be somewhat tongue in cheek. However, there is a huge flaw in a collective taking responsibility for our own actions, quite simply it is a contradiction. That has always been my concern over a truly fan owned model and as such I would be happy to delegate the corporate responsibility to a proven, and visible, candidate more in line with a trustee model.

 

Heading off topic I fear though...

Fair enough. One of the joys of message boards is mistaking tonality!

 

I have no problem in delegating responsibility. I just want to be empowered to do so. At the moment the FANCO board are accountable to Ann Budge and not the membership. That is wrong.

[ToYouToMe]

I've just had a quick scan through the document. It covers a lot of the areas where there there were questions previously. Some questions have been answered adequately, but a number remained unanswered, are partially answered, or require to be answered by Ann Budge on behalf of Bidco.

 

"Following discussions with Bidco, it was agreed that a five-year period was an appropriate length of time to allow FoH to satisfy the conditions required by Bidco."

 

No explanation of the need for a five year deal. Why the need for two years stabilisation at a cost of ?2.8M? What are these "conditions" required be Bidco, and why are they required? Does Bidco have any means of taking and answering questions from fans? I know, that as a shareholder in HMFC, I should get the opportunity to ask questions at the HMFC AGM, but I would have liked some means of asking questions of Bidco and Ann before then. It's an odd state of affairs that I currently own more shares in HMFC than FoH, yet FoH has already handed over ?1M, with ?1.4M, ?1.4M, ?2.4M + interest and fees and another ?100k to follow over the next five years before they take ownership of any shares.

 

"These sums will be used by HoM for working capital purposes in the usual course of its business."

 

That answers one of my questions directly, but I'm not exactly happy about it. I pledged to FoH in order to a) save the club, b.) enable FoH to own a majority shareholding, and c) operate the club on behalf of the fans. I did not envisage contributing to the costs of running the club for two years while Bidco remain as owners. I want the club to be running on a sustainable basis asap, i.e. only spending what we earn. Spending ?1.4M extra for two years sounds very much like the "speculate to accumulate" mantra that was adopted, and failed, by Robinson and Romanov. What is the plan if we don't get into the premiership within two seasons, austerity?

 

FoH is also obliged to ensure that it receives the consent of Bidco to any changes to FoH?s corporate structure, constitution, board membership or management team.

 

Why? Bidco and FoH are both listed at Companies House as independent organisations, so I see no reason why one company should be able to exercise such a level of control over the other, particularly at board level, and potentially ignore the wishes of one company's membership (pledgers).

 

The HoM shares that Bidco will transfer to FoH are those that Bidco acquired from UBIG.

 

I take it that this should read UBIG & UKIO. That being the case then the shareholding is 78.97%, but the pledge is only to ensure that 75.1% is handed over. Are there any plans to issue more shares that would dilute the 78.97% obtained from UBIG/Ukio, so that those shares would have to be topped up? What are the plans for the shares obtained via the share offer. Is it intended that Bidco will retain a substantial shareholding in the medium to long term? If that is the case then Bidco could own up to 20% of the club for an investment of around ?30K while FoH will own 75%-79% for around ?6.5M. It doesn't seem a particularly equitable arrangement.

 

It is anticipated that an arrangement will be reached with Bidco as to what information can be provided on a regular basis to FoH members and pledgers to ensure proper transparency.

 

So we have Bidco controlling what information is provided to FoH and their members. It seems a pretty undemocratic arrangement. Give me your money and I'll run your club for you, but I will only tell you what I think you need to know.

 

I am prepared to give Ann and Bidco the benefit of the doubt, at least until she is freed of any restrictions to communicate in an open, honest and transparent fashion, but I must say that the proposed governance of the club under Bidco is not what I expected from what was sold as "fan ownership".

 

On other issues, FoH have failed to answer any of the outstanding points on the reasons for the changes in governance.

 

Sorry but this is just nit picking.

 

If I were handing over millions of my cash as Bidco, I would include these conditions too re governance and communication.

 

As for the ?1.4 m per year, we have a squad in desperate need of bolstering and a dilapidated ground.

 

 

 

Sent from my GT-I9300 using Tapatalk

 

 

[Geoff Kilpatrick]

 

 

Sorry but this is just nit picking.

 

If I were handing over millions of my cash as Bidco, I would include these conditions too re governance and communication.

 

As for the ?1.4 m per year, we have a squad in desperate need of bolstering and a dilapidated ground.

 

 

 

Sent from my GT-I9300 using Tapatalk

Sorry, you would demand a veto over a company supplying you working capital and to whom you planned to sell to? Good luck with that one.

[Francis Albert]

 

 

Sorry but this is just nit picking.

 

If I were handing over millions of my cash as Bidco, I would include these conditions too re governance and communication.

 

As for the ?1.4 m per year, we have a squad in desperate need of bolstering and a dilapidated ground.

 

 

 

Sent from my GT-I9300 using Tapatalk

the old nitpicking line. Why don't you write to ann or ian to follow no doubt. There is no sign of paying much in transfer fees so are you are saying the 1.4m is in part to pay players wages we can't afford from normal income

?. And how much more dilapidat

ed is tynie compare

D to many ground?

[Dazo]

 

the old nitpicking line. Why don't you write to ann or ian to follow no doubt. There is no sign of paying much in transfer fees so are you are saying the 1.4m is in part to pay players wages we can't afford from normal income

?. And how much more dilapidat

ed is tynie compare

D to many ground?

 

The club has a negative bank balance and the card handling company is drip feeding money into the club throughout the season. I would imagine we are going to have a huge amount of outlays from the outset as the club is rebuilt, how will this be paid for ? I am not saying that the ?1.4m is what is required but we definitely need money put into the club. Also no one has said that every penny of that money will be spent and when the fans take over we may have a healthy bank balance and credit rating.

[Footballfirst]

The club has a negative bank balance and the card handling company is drip feeding money into the club throughout the season. I would imagine we are going to have a huge amount of outlays from the outset as the club is rebuilt, how will this be paid for ? I am not saying that the ?1.4m is what is required but we definitely need money put into the club. Also no one has said that every penny of that money will be spent and when the fans take over we may have a healthy bank balance and credit rating.

 

The club had a negative bank balance, estimated at ?99K once all the forecast bills from the administration period had come in and been paid. That ?99K did not include donations of (IIRC) ?58K. The estimated ?99K also included provision for a ?15K win bonus in either of the last two league games that never materialised, so the opening negative balance may be as low as ?26K.

 

The club's finances are in the best state they have been in decades. Rebuilding the credit rating will need time, and that is the same whether it is Bidco or Fanco that owns the club.

 

There has been no indication that substantial sums needed to be spent on the ground. If it needs ?100K spent on getting a safety certificate for the main stand, then that will be in the budget. However if it needed ?1M spent, then the decision may well have been to close it. Replacing the main stand is something that needs addressed going forward, but I suspect that it will only be looked at once the CVA loan is paid off, which is in five years time and not two as might have been the case if the deal and the funding had been structured differently.

 

As an example, it may cost ?100K a year in maintenance for the next five years. Had FoH been in a position in two years to have paid off the Bidco loan, they could have asked the pledgers to help fund a new stand at that point, thus saving ?300K in maintenance costs.

[Dazo]

So the club started with a negative balance. It isn't just stadium costs the whole infrastructure will have costs not to mention salaries and player investment. Tv money, sponsorship money, gate money all looking like it will be down add drip fed season ticket money makes things trickier than it normally would be. I am not saying the ?1.4m is what's required but ffs can we stop pretending the club doesn't need working capital.

[Footballfirst]

So the club started with a negative balance. It isn't just stadium costs the whole infrastructure will have costs not to mention salaries and player investment. Tv money, sponsorship money, gate money all looking like it will be down add drip fed season ticket money makes things trickier than it normally would be. I am not saying the ?1.4m is what's required but ffs can we stop pretending the club doesn't need working capital.

 

I've never said that the club doesn't require working capital. My argument is that it doesn't need ?3.8M. Yes it will be able to spend it, but it doesn't need it unless a decision has already been made between Ann Budge and Craig Levein to spend more on player wages than we can otherwise afford.

 

The club has already received ?1M which was always going to be required. Half of that will probably be earmarked to pay off football creditors, although I don't believe that those will need paid off on day one. The club's total wage bill will be around ?200K a month so the cash injection from FoH will cover the summer salaries.

 

The ST income will be received partly in cash and partly in staged payments. I actually think that is a good position to be in as it gives you a boost at the start of the season and evens out the cash flow over the rest of the season.

[Geoff Kilpatrick]

FF, I respect what are you saying but you sound like you would be content to be a second tier club provided the books balance, even if it meant closing sections of the ground to reduce fixed costs. That's fair enough but I think you are in a minority of one on that one.

[Dazo]

 

 

 

I've never said that the club doesn't require working capital. My argument is that it doesn't need ?3.8M. Yes it will be able to spend it, but it doesn't need it unless a decision has already been made between Ann Budge and Craig Levein to spend more on player wages than we can otherwise afford.

 

The club has already received ?1M which was always going to be required. Half of that will probably be earmarked to pay off football creditors, although I don't believe that those will need paid off on day one. The club's total wage bill will be around ?200K a month so the cash injection from FoH will cover the summer salaries.

 

The ST income will be received partly in cash and partly in staged payments. I actually think that is a good position to be in as it gives you a boost at the start of the season and evens out the cash flow over the rest of the season.

 

We don't know how much the club needs but you have assume some calculations were made and that's the figure they came to, maybe the at most amount. I doubt the club is about to start living out with it means so the unspent money will still be there when the fans take over.

 

Under normally circumstances I would agree with your last sentence but right now I don't think it helps and without the cash input from the fans I think we would struggle.

[Footballfirst]

FF, I respect what are you saying but you sound like you would be content to be a second tier club provided the books balance, even if it meant closing sections of the ground to reduce fixed costs. That's fair enough but I think you are in a minority of one on that one.

 

Geoff - we are where we are for a reason - i.e. we spent significantly more than we earned from income since Chris Robinson and Leslie Deans started speculating in the mid to late 90s, something that continued through the noughties and the early years of the current decade That overspending means that we are in the second tier next season. I interpret from what you are saying that we should overspend again to gain promotion.

 

Let's say all clubs in the championship adopted the same approach and overspent in order to get a promotion. There is only one guaranteed place, so that means that nine clubs got it wrong and will suffer the consequences.

 

I'm sure that my aspirations for the club match yours, but I disagree with the premise of spending more than we can afford to get back to the top tier. You could use the same argument about TRFC's overspending and you see where it has taken them (albeit on a different scale). Should Dunfermline be spending more than they can generate from their income in order to get out of the third tier? We will have the second biggest income and budget in the division next season. If we can't get back to the top tier using that alone, it says more about the lack of quality of the players, coaching and recruitment, than it does about the club's income.

 

I agree with Uly that pledges going into working capital are simply a top-up on ticket prices. Football at the top level in Scotland is way overpriced already without adding to it.

[Geoff Kilpatrick]

Geoff - we are where we are for a reason - i.e. we spent significantly more than we earned from income since Chris Robinson and Leslie Deans started speculating in the mid to late 90s, something that continued through the noughties and the early years of the current decade That overspending means that we are in the second tier next season. I interpret from what you are saying that we should overspend again to gain promotion.

 

Let's say all clubs in the championship adopted the same approach and overspent in order to get a promotion. There is only one guaranteed place, so that means that nine clubs got it wrong and will suffer the consequences.

 

I'm sure that my aspirations for the club match yours, but I disagree with the premise of spending more than we can afford to get back to the top tier. You could use the same argument about TRFC's overspending and you see where it has taken them (albeit on a different scale). Should Dunfermline be spending more than they can generate from their income in order to get out of the third tier? We will have the second biggest income and budget in the division next season. If we can't get back to the top tier using that alone, it says more about the lack of quality of the players, coaching and recruitment, than it does about the club's income.

 

I agree with Uly that pledges going into working capital are simply a top-up on ticket prices. Football at the top level in Scotland is way overpriced already without adding to it.

 

I've no problem with overspending as you put it because, to be frank, we need a bigger squad. Last season showed that. Investment now can be repaid from the bigger revenues available in the top flight from prize money and TV.

 

In addition, if we stay down for any length of time, we will become another Dundee

[Dazo]

 

I agree with Uly that pledges going into working capital are simply a top-up on ticket prices. Football at the top level in Scotland is way overpriced already without adding to it.

 

And what about those that don't go to games or buy season tickets ? What is getting topped up for them ?

[Footballfirst]

We don't know how much the club needs but you have assume some calculations were made and that's the figure they came to, maybe the at most amount. I doubt the club is about to start living out with it means so the unspent money will still be there when the fans take over.

 

I'm certain that detailed financial planning has taken place and a budget set. My only issue is that the budget includes what I consider to be an undue reliance on income from pledges for the next two years. The initial message we received from FoH was that the club would build a cash reserve from the pledge income. That seems to have morphed into a requirement for general working capital to fund the business on a day to day basis.

 

I really hope that the initial message was accurate and that there will be cash in the bank when the club's ownership is transferred to FoH, but until Bidco reveal more of their plans, or information can be gleaned from the accounts, then we just don't know.

[Footballfirst]

And what about those that don't go to games or buy season tickets ? What is getting topped up for them ?

 

Absolutely nothing. You can always ask why they pledged. Was their intention to save the club or to provide a top up for the club's spending for a couple of years? Maybe it is both. Well that is fine by me if that is what they want to do and they are happy with the plans as they stand. I happen to have a different view.

[Dazo]

 

 

 

I'm certain that detailed financial planning has taken place and a budget set. My only issue is that the budget includes what I consider to be an undue reliance on income from pledges for the next two years. The initial message we received from FoH was that the club would build a cash reserve from the pledge income. That seems to have morphed into a requirement for general working capital to fund the business on a day to day basis.

 

I really hope that the initial message was accurate and that there will be cash in the bank when the club's ownership is transferred to FoH, but until Bidco reveal more of their plans, or information can be gleaned from the accounts, then we just don't know.

 

I assume they have based the funding on an maximum 2 years in the championship when our income will rise but I hope and expect there will be a cash reserve also.

[Dazo]

 

 

 

Absolutely nothing. You can always ask why they pledged. Was their intention to save the club or to provide a top up for the club's spending for a couple of years? Maybe it is both. Well that is fine by me if that is what they want to do and they are happy with the plans as they stand. I happen to have a different view.

 

So it is a top up for some but not all ? I completely disagree with that and nothing suggests otherwise since the ticket prices and FOH contributions are completely independent. There is no top up. Irrespective of that issue IMO providing funding to the club comes under the umbrella of "saving" the club. I appreciate we didn't know about working capital input from FOH but we will never know everything and the nature of what we were trying to do meant that we have accept change in order to get things done.

[Ulysses]

 

 

And what about those that don't go to games or buy season tickets ? What is getting topped up for them ?

 

And what about those who have posted on another thread suggesting that because we're not in the top flight they won't bother getting a season ticket this season but will contribute (probably less) to FoH?

 

See, we can all play this game of skill and fun.

 

FoH are bringing more money to the table than Bidco. But Bidco are calling the shots.

 

Whatever happened to the notion that who pays the piper calls the tune?

 

FoH will get all that money from one source and from one source only - its paying members. But the paying members don't get the slightest input into who calls the shots?

 

Whatever happened to the notion that who pays the piper calls the tune?

 

 

Jaysus, did I just ask the same question twice in the same post? Old age, eh?

[Footballfirst]

I assume they have based the funding on an maximum 2 years in the championship when our income will rise but I hope and expect there will be a cash reserve also.

 

It has been said previously that they have indeed budgeted for two years in the championship (Normal income with a 20%-25% boost from pledges?). What happens after that is anyone's guess if we haven't gained promotion by then. My guess would be that there will be calls for the heads of Budge, Levein and Neilson, a drop off in pledges, then emotional blackmail to keep the pledges going to actually purchase the club.

 

I'm in danger of getting into a cycle of repeating arguments I've already made so I'll drop of the thread for a while.

[Geoff Kilpatrick]

So it is a top up for some but not all ? I completely disagree with that and nothing suggests otherwise since the ticket prices and FOH contributions are completely independent. There is no top up. Irrespective of that issue IMO providing funding to the club comes under the umbrella of "saving" the club. I appreciate we didn't know about working capital input from FOH but we will never know everything and the nature of what we were trying to do meant that we have accept change in order to get things done.

 

It can be regarded as a top-up in the sense that it 'tops up' the club's income but I don't regard my contributions, as a non-ticket holder, as a price increase. Rather I see it as my contribution to get us out of Division 1 initially and then focus on paying Ann Budge back.

[Ulysses]

 

Well that is fine by me if that is what they want to do and they are happy with the plans as they stand.

 

Who knows? It's not like they were asked - or will be asked.

[Geoff Kilpatrick]

And what about those who have posted on another thread suggesting that because we're not in the top flight they won't bother getting a season ticket this season but will contribute (probably less) to FoH?

 

See, we can all play this game of skill and fun.

 

FoH are bringing more money to the table than Bidco. But Bidco are calling the shots.

 

Whatever happened to the notion that who pays the piper calls the tune?

 

FoH will get all that money from one source and from one source only - its paying members. But the paying members don't get the slightest input into who calls the shots?

 

Whatever happened to the notion that who pays the piper calls the tune?

 

 

Jaysus, did I just ask the same question twice in the same post? Old age, eh?

 

Not in Year 1 they aren't. BIDCO funded the CVA and share purchase. Rightly, BIDCO are in control.

[Dazo]

 

 

And what about those who have posted on another thread suggesting that because we're not in the top flight they won't bother getting a season ticket this season but will contribute (probably less) to FoH?

 

See, we can all play this game of skill and fun.

 

FoH are bringing more money to the table than Bidco. But Bidco are calling the shots.

 

Whatever happened to the notion that who pays the piper calls the tune?

 

FoH will get all that money from one source and from one source only - its paying members. But the paying members don't get the slightest input into who calls the shots?

 

Whatever happened to the notion that who pays the piper calls the tune?

 

 

Jaysus, did I just ask the same question twice in the same post? Old age, eh?

 

Bidco stepped up to the plate and initially we need bidco far more than they need us so we have to play their tunes. When FOH finally takes ownership the paying members will get to have their say. It isn't ideal but we appeared to have no other options if we wanted to save the club.

 

Really no idea the point your trying to make in your first sentence. If someone wants to contribute to the FOH rather than buy a season ticket then that's a choice made by them not a forced top up.

[Geoff Kilpatrick]

Initially we need bidco far more than they need us so we have to play their tunes. When FOH finally takes ownership the paying members will get to have their say. It isn't ideal but we appeared to have no other options if we wanted to save the club.

 

Really no idea the point your trying to make in your first sentence. If someone wants to contribute to the FOH rather than buy a season ticket then that's a choice made by them not a forced top up.

 

So in other words, give us your money and we will run the club for you.

 

The problem is that the governance documents do not specify when we get a say at all on how FANCO is structured. Why FoH is reluctant to comment on the FANCO board change makes me suspicious.

[Dazo]

 

 

 

It can be regarded as a top-up in the sense that it 'tops up' the club's income but I don't regard my contributions, as a non-ticket holder, as a price increase. Rather I see it as my contribution to get us out of Division 1 initially and then focus on paying Ann Budge back.

 

I agree it does top up the clubs income but it is the ticket top up accusations I have a problem.

[Dazo]

 

 

 

So in other words, give us your money and we will run the club for you.

 

The problem is that the governance documents do not specify when we get a say at all on how FANCO is structured. Why FoH is reluctant to comment on the FANCO board change makes me suspicious.

 

Pretty much how every football fan is perceived at every club all over the world.

[Geoff Kilpatrick]

Pretty much how every football fan is perceived at every club all over the world.

 

Yes, but the difference is that there is a set agreement in place for us to buy the club over a 5 year period. Why the seller gets to say how the buyer is set up is bizarre.

[Ulysses]

 

It isn't ideal but we appeared to have no other options if we wanted to save the club.

 

Nah, I'm not buying that. Don't forget that the FoH leading lights have shown a consistent aversion to democratic governance since they first appeared on the scene. It would have been very easy for Bidco to protect its investment and security without the need for any restraint of sound governance within FoH - but given their track record I'd imagine the FoH boys won't be unhappy at keeping governance out of the hands of members while having someone else to blame.

 

Really no idea the point your trying to make in your first sentence. If someone wants to contribute to the FOH rather than buy a season ticket then that's a choice made by them not a forced top up.

 

It's not a forced price hike. If it was it would fail because we would lose a lot of ticket sales. Like I said, it's a voluntary price hike. You think differently, I think you're wrong.

[Dazo]

 

 

 

Yes, but the difference is that there is a set agreement in place for us to buy the club over a 5 year period. Why the seller gets to say how the buyer is set up is bizarre.

 

It is bizarre and I doubt we will every know what fully went on that lead us to this agreement. I am sure the FOH did whatever they could and felt it was better to get the deal done on those terms rather than walk away. I wonder how we would feel if they did walk away because of how the deal was structured ? Saying that we maybe should have been told of the changes as soon as they were aware of how this was going to happen.

[Geoff Kilpatrick]

 

 

 

It is bizarre and I doubt we will every know what fully went on that lead us to this agreement. I am sure the FOH did whatever they could and felt it was better to get the deal done on those terms rather than walk away. I wonder how we would feel if they did walk away because of how the deal was structured ? Saying that we maybe should have been told of the changes as soon as they were aware of how this was going to happen.

It is the lack of comment and scrutiny that concerns me.

[Mikey1874]

 

 

... I appreciate we didn't know about working capital input from FOH...

 

I may be picking up your meaning incorrectly but I've been well aware of the "working capital" requirement since discussions around what sum would be needed to buy the club from UKIO / UBIG. ?5.5 million or therabouts was widely discussed but it was also said incl I understand by BDO that there was a need for any new owner to spend money as part of the bid for the club so we ended up with "only" having to offer ?2.5 million.

 

I'm very relaxed about the "working capital" but I agree with the need to be open about what that it is being spent on and well as being transparent about everything about the club and its running.

[Mikey1874]

 

 

 

Nah, I'm not buying that. Don't forget that the FoH leading lights have shown a consistent aversion to democratic governance since they first appeared on the scene. It would have been very easy for Bidco to protect its investment and security without the need for any restraint of sound governance within FoH - but given their track record I'd imagine the FoH boys won't be unhappy at keeping governance out of the hands of members while having someone else to blame.

 

 

 

It's not a forced price hike. If it was it would fail because we would lose a lot of ticket sales. Like I said, it's a voluntary price hike. You think differently, I think you're wrong.

 

My experience humbly offered is the payments I am making to HMFC are all different for me. I accept that HMFC doesn't see these payments differently and so anything over my season ticket could be called a "voluntary price hike" by HMFC or by any other observor.

 

But me its like this

 

Season Ticket - lets me see the home games

 

Other tickets - support the club in cup games and gets me loyalty points to get big game tickets

 

FoH Direct debits - to help out but also feel more part of a community; and although I see supporter ownership as fraught with difficulty and incredibly hard to deliver I believe it is possible to create a new model for professional football in Scotland and which will involve and engage people in a most positive way.

 

Other contributions - my donated season tickets run by Dagger is Back was more about giving opportunites for those unable to afford to see games and I'll carry on doing this. Other donations and puchases helped get the money to see off liquidation thanks to the guidance and good judgement of BDO and the JKB community.

 

Home strip, first in 30 years. Hard to say. I'll wear it with pride a little for the 1914 team and mostly pride at all the above and where we are now as a club.

 

Anyway none of that is a "price hike" to me voluntary or otherwise.

 

No-one tells me what to do or think about my own experience.