Wiltshire | Archive | 2007 | August | 20
From the This Is Swindon Town FC, first published Monday 20th Aug 2007.
TOWN fans deserve more clarity on the financial implications of the takeover at the County Ground, says Swindon Advertiser business columnist Rob Harman.
In his first press conference last Friday, chairman designate Jim Little described investors Best Holdings as a "fluid organisation" in which members can invest money and take money out.
But Harman (pictured right), a partner at Morris Owen Chartered Accountants in Swindon, believes this explanation will only confuse the supporters.
He said: "Looking at it from a financial perspective, the phrase to invest money and take money out appears to be a contradiction in terms.
"I can understand why the fans might be a little bemused.
"I think they would like more clarity as to what is meant by that phrase."
Harman explains the best way to secure Town's long-term financial future is to invest in shares and avoid borrowing.
He said: "There's not enough detail in Mr Little's statement to be absolutely sure what he meant.
"If, let's say, £1million in cash is introduced as loan finance, the company's position is not significantly improved as, subject to the terms of the loan, the lender can demand repayment.
"If it is introduced as share capital the money is locked in and the company's position is significantly improved.
"So from a stability point of view you don't want to fund a business entirely by loan because there is no solidity to the underlying balance sheet.
"If you are buying shares the only way to get your money back out is either to sell them to somebody else or by winding the company up.
"So if you invest in shares you are locking your money into the club."
Non-executive shareholder Bob Holt attempted to shed some light on how the business would be run under Best Holdings.
"I'm not a shareholder but as I understand it will be a managed fund," he said.
"Like with a pension, you can take out a low risk, a medium risk or high risk one.
"Football is definitely a high-risk fund.
"The money is always there. If somebody takes money out it's up to the investors to find a replacement."
With issues such as ground redevelopment and Paul Sturrock's playing budget tied into the new investment, Town fans will hope more answers are forthcoming when the takeover is completed in the next few days.
© Newsquest Media Group 2008