Pros and Cons of a consortium setup

[LeedsSUFC]

Personally, not keen. It'll take some very clear heads for this to work out well I think.

It takes one mis-step somewhere along a very long line for it all to come crashing down.

Whilst I see the comparisons to big companies like Apple - Apple have a ton of money, with successful market share, with large profit margins, putting people with lots of experience in the industry in key positions in the structure.

With all respect to those involved, we are creating a consortium of people who have never ran a football club.

 

[tommy tucker]

Some are members of the southend United fans club .They support the club so I believe they know what running the club intails.

 

[Yorkshire Blue]

Personally, not keen. It'll take some very clear heads for this to work out well I think.

It takes one mis-step somewhere along a very long line for it all to come crashing down.

Whilst I see the comparisons to big companies like Apple - Apple have a ton of money, with successful market share, with large profit margins, putting people with lots of experience in the industry in key positions in the structure.

With all respect to those involved, we are creating a consortium of people who have never ran a football club.

The Consortium will be shareholders of the club.

We have an experienced CEO in situ who will run the club.

 

[meerkat54]

Just what if the consortium are gash and we need them gone in a few years time.
How on earth are we going to picket the homes of the consortium members if maybe there are 7or 8 of them. We struggled to picket the ‘s nest.
Only the thoughts of a bored old shrimper . And consortium don’t drag the alleged purchase out to frecking Xmas .

 

[SS9_Shrimper]

I don’t see any issues for the first couple of years, as they would all have hopefully put aside a certain amount that we are expected to lose. It’s when you get a few years down the line and your expected to keep forking out for potentially the same outcome.

Hopefully there’s enough members that if one or two with a bit more capital want to push on and put a bit of money in for a few luxury signings, then they can do so off of their own back and ask the group to just share wage burden rather than the fee outlay.

Big numbers have been touted for DD fees. If one wants to sell their stake, who is going to fork out that sort of figure (hopefully would be a lot less as the company structure would be more in order) just to own a little sliver of the pie? Or is the pie so diluted that it becomes less of an issue as you wouldn’t be losing that much?

 

[Ron Manager]

Suppose it will all come down to the personalities of those involved and the relationships between them. There probably isn’t an ideal number of people necessarily, or a number that’s too many. It depends on the specific circumstances.

Must admit though that after supporting a club that’s been held hostage to the whims of one individual person for so long I prefer the idea of a range of ideas being considered and the financial responsibility shared around a little.

 

[thenobster]

But surely you would get what you put in so does it matter if 2 people all put in £15M between or its between 6-8?.

The only real sticking point I can see is when it comes to big decisions but most of these will be used to being on boards and understanding how these things work .

It's the pessimistic part of me. If it goes a bit iffy, then the fan gets messy

 

[Stuart W]

It's the pessimistic part of me. If it goes a bit iffy, then the fan gets messy

Always a chance as I can’t see him staying too long at Inter Miami.

 

[Dubai]

People need to separate shareholders and CEO's.

CEOs run the business. Eg. Tom cracks on.

Shareholders will have a vote and potentially a board seat. Not all shareholders hold a seat on the board, though.

If, further down the line, the board decide (through a voting system that will be well-defined) that they want to inject more capital into the club, they can do it in 4 ways;

1. All inject the same amount of money, and shareholding remains the same
2. Some inject more money and will take a more significant share-holding
3. Some inject more money, and this will sit as a debt to the club (likely with interest)
4. Source funds from outside the board, and this will come either as debt capital (unlikely), as new shares, therefore diluting current shareholders or by buying some shares from the current consortium.


I'd imagine the board will be set up something like this;

1. Tom - CEO
2. Head of Consortium - member 1 (As voted by the consortium - let's assume Justin Rees)
3. CFO (Maybe a member of the consortium or, at the very least, appointed by the consortium)
4. Shrimpertrust
5. Consortium member 2
5. Consortium member 3

In any vote, as long as the consortium is aligned (they will vote before the board vote on which way they will vote), they will remain the controlling voice.

It's not that complex and plenty of businesses run in this way (and not just businesses the size of Apple)

 

[overseas shrimper]

Some are members of the southend United fans club .They support the club so I believe they know what running the club intails.

We all support the club but I don't think many know how to run one.

(I'm not against the consortium/size of the consortium, just pointing out the flaw in your logic)

 

[Holy Joe]

People need to separate shareholders and CEO's.

CEOs run the business. Eg. Tom cracks on.

Shareholders will have a vote and potentially a board seat. Not all shareholders hold a seat on the board, though.

If, further down the line, the board decide (through a voting system that will be well-defined) that they want to inject more capital into the club, they can do it in 4 ways;

1. All inject the same amount of money, and shareholding remains the same
2. Some inject more money and will take a more significant share-holding
3. Some inject more money, and this will sit as a debt to the club (likely with interest)
4. Source funds from outside the board, and this will come either as debt capital (unlikely), as new shares, therefore diluting current shareholders or by buying some shares from the current consortium.


I'd imagine the board will be set up something like this;

1. Tom - CEO
2. Head of Consortium - member 1 (As voted by the consortium - let's assume Justin Rees)
3. CFO (Maybe a member of the consortium or, at the very least, appointed by the consortium)
4. Shrimpertrust
5. Consortium member 2
5. Consortium member 3

In any vote, as long as the consortium is aligned (they will vote before the board vote on which way they will vote), they will remain the controlling voice.

It's not that complex and plenty of businesses run in this way (and not just businesses the size of Apple)

Item 4. If buying shares from existing consortium the proceeds will go to the seller not the club.

 

[rigsby]

But surely you would get what you put in so does it matter if 2 people all put in £15M between or its between 6-8?.

The only real sticking point I can see is when it comes to big decisions but most of these will be used to being on boards and understanding how these things work .

Most will have made their money by being the top boy and might not be used to suddenly becoming midshipman.....Thats not a criticism, hats of to them.

The benefit of numbers is if someone isn't happy or decides on some other venture. Then they could be more easily replaced or bought out by the others.

 

[Liam AAS]

Government regulation should help with any (potential) future isses. The current setup seems sensible to me, the workload and financial strain is spread reasonably equally across a small group of people that only have the interests of the football club in common.

 

[Medway Blue]

I think some are overcomplicating things in their heads.

Firstly, a bigger spread seems sensible to me as it doesn't leave one person with the power to push through big decisions/changes, and it spreads the financial burden.

I'm not too worried about "too many cooks" as my impression is that they will all be on very similar pages. I know that can change, but I just don't foresee any kind of deadlock.

Secondly, all investor shares are most likely to be held in the parent company rather than directly in the club itself, and it's pretty clear to me that not all consortium investors will get, or even want, seats on the Board of the football club.

I get the impression that there is widespread cold, hard acceptance amongst the consortium members that the club will not be turning a profit for some time. It seems like the expectation will very much be that each consortium member will cover a % of losses equal to their shareholding. Conjecture on my part re. this second bit, but perhaps that also means that their individual injections of working capital will be a % of the agreed annual budget equal to their shareholding %?

E.g. if Joe Bloggs owns 15% of the shares, he perhaps puts in £525,000 (15% of a £2m whole-club operating budget and 15% of a £1.5m loss). Just an illustrative example.

 

[BEERMONSTER]

I think some are overcomplicating things in their heads.

Firstly, a bigger spread seems sensible to me as it doesn't leave one person with the power to push through big decisions/changes, and it spreads the financial burden.

I'm not too worried about "too many cooks" as my impression is that they will all be on very similar pages. I know that can change, but I just don't foresee any kind of deadlock.

Secondly, all investor shares are most likely to be held in the parent company rather than directly in the club itself, and it's pretty clear to me that not all consortium investors will get, or even want, seats on the Board of the football club.

I get the impression that there is widespread cold, hard acceptance amongst the consortium members that the club will not be turning a profit for some time. It seems like the expectation will very much be that each consortium member will cover a % of losses equal to their shareholding. Conjecture on my part re. this second bit, but perhaps that also means that their individual injections of working capital will be a % of the agreed annual budget equal to their shareholding %?

E.g. if Joe Bloggs owns 15% of the shares, he perhaps puts in £525,000 (15% of a £2m whole-club operating budget and 15% of a £1.5m loss). Just an illustrative example.

Perfect opening sentence in my humble opinion

 

[Tommy2holes]

Many hands do make for a much lower financial burden.

Better to have 10 people with a net worth of 100 million than just 1.

I'm sure the board will have changes over time and people will resign and others will come in.

With almost all clubs not self sufficient, this seems a far more financially safe option.

 

[TrueBlue]

Thanks for the comments, gives me a better understanding.

 

[Crowstone Crevette]

What he said ^^^^^

 

[Thundersley Blue]

Personally, not keen. It'll take some very clear heads for this to work out well I think.

It takes one mis-step somewhere along a very long line for it all to come crashing down.

Whilst I see the comparisons to big companies like Apple - Apple have a ton of money, with successful market share, with large profit margins, putting people with lots of experience in the industry in key positions in the structure.

With all respect to those involved, we are creating a consortium of people who have never ran a football club.

Not quite right. Gary Lockett has been a Director for some time. He is also a long standing supporter of the Club.

 

[Napster]

People need to separate shareholders and CEO's.

CEOs run the business. Eg. Tom cracks on.

Shareholders will have a vote and potentially a board seat. Not all shareholders hold a seat on the board, though.

If, further down the line, the board decide (through a voting system that will be well-defined) that they want to inject more capital into the club, they can do it in 4 ways;

1. All inject the same amount of money, and shareholding remains the same
2. Some inject more money and will take a more significant share-holding
3. Some inject more money, and this will sit as a debt to the club (likely with interest)
4. Source funds from outside the board, and this will come either as debt capital (unlikely), as new shares, therefore diluting current shareholders or by buying some shares from the current consortium.


I'd imagine the board will be set up something like this;

1. Tom - CEO
2. Head of Consortium - member 1 (As voted by the consortium - let's assume Justin Rees)
3. CFO (Maybe a member of the consortium or, at the very least, appointed by the consortium)
4. Shrimpertrust
5. Consortium member 2
5. Consortium member 3

In any vote, as long as the consortium is aligned (they will vote before the board vote on which way they will vote), they will remain the controlling voice.

It's not that complex and plenty of businesses run in this way (and not just businesses the size of Apple)

I would be amazed and impressed if the Trust were part of the board set up.