[Archived] The Blackburn Football Charitable Fund

[Daniel Louis Grabko (Dan)]

Hi all,

Finally managed to join this wonderful community - I think my previous attempts at registration got lost in the mail.

Anyway, I have introduced myself in the correct section of the forums, but now want to introduce you all to a concept that shows a viable business plan for making a small market Premier League club like us Rovers financially competitive on a short AND long-term basis:

The Blackburn Football Charitable Fund

I have already received great support for the concept from many prominent supporters, and Wayne Wild is working with me to set up a site to gauge the initial interest and gather market data. That should be completed this during the weekend. In the mean time I would encourage everyone here to make sure that they make the time to read all the entries at the Fund's blog so you can make informed opinions about it. Then I would highly encourage discussion about the concept, its viability, and what could be done to support the idea.

It is incredibly important to get as many Rovers supporters informed about the site, and get as much exposure to it as possible, so that when the time comes to collect data, we have a chance of actually getting an accurate picture. It is only a four day old blog site, but I have tried to cram it plumb full of information and discussion about the reasons for the initiative, what got us to that point, why it is the most positive way forward as a movement supporters can get behind, and the reasons why Rovers are in a unique position to actually be able to pull off the Fund's mission and make it a success.

Thank you all for the support, and I hope you take the time to read!

[2PAC 4 Blackburn]

Sorry, but are you trying to ask Fans to buy the club like Barca?

[Sparky Marky]

Pissing in the wind.

[PAFELL]

This is a good idea. But the reality is that the average supporter is not likely to be able to afford the shares required. Sadly support for Rovers is often dependant on how well the team is doing on the field. So income from supporters could flutuate.

I suggest the first port of call is to try and get as many local- small and large - businesses interested in part ownership of the club. Then certain rich and influentual folk in the area. Then turn to the 'average' supporter.

But the club being owned by supporters is a good idea in itself. But I think it can only be part owned by supporters, with business being the other part.

[Daniel Louis Grabko (Dan)]

This is a good idea. But the reality is that the average supporter is not likely to be able to afford the shares required. Sadly support for Rovers is often dependant on how well the team is doing on the field. So income from supporters could flutuate.

I suggest the first port of call is to try and get as many local- small and large - businesses interested in part ownership of the club. Then certain rich and influentual folk in the area. Then turn to the 'average' supporter.

But the club being owned by supporters is a good idea in itself. But I think it can only be part owned by supporters, with business being the other part.

Pafell, I agree that it will be next to impossible to get a 100% funding level from only the fans - there needs to be investment from all levels - but the key difference here is they way the ownership structure will work. People are being asked to invest in a fund which will give dividends - it is like a giant credit union, really - it won't be close to being the highest yielding investment fund out there but that's not why one would invest in it.

The Company structure would be set up in such a way that the Fund investors can't ever really have any direct say in the policy of the club, that is left over to the intermediary company, which in most cases for Premier League clubs is a holding company, but in my business plan would be a supporters association that operates in a legal sense as limited company and will have authority over the Board of the Club and the Fund. The investors are there because they want to support the club, and get a guaranteed dividend, regardless of the financial performance of the club itself.

It is a very attractive ownership structure for the very rich, or larger companies that would like to invest in a Premier League Club, but don't have the footballing knowledge or the willingness to enter into a money pit situation where they just keep sinking money into something with no return. My plan stipulates a set level of investment and a guaranteed level of return, albeit very modest, but it is guaranteed.

It would be ideal to get a 100% investment from a global supporter base, but if the capital can be secured in any combination of corporate investment, high net worth individuals, plus supporters, then it will be a success.

I also agree that it is important to get local businesses involved, that's why I went to Wayne with it first, before I went public.

Plus, the share structure is very subject to change - all you have to do is increase the number of shares, and the price for each goes down. I am very open to this type of scaling, but I wanted to get the idea out in the open, and produced the document I did with a lower number of shares as a "proof of concept" document. It definitely needs fine tuning, but the investment levels required have been carefully calculated to be failsafe, meaning that if the investment level can be achieved, it is virtually guaranteed that the business plan projections of financial results and Fund subsidizing of the Club will be attained.

Sorry, but are you trying to ask Fans to buy the club like Barca?

Kind of, not quite - it isn't the same structure of ownership -

[Bluemonday BRFC]

Great -idealistic- proposal.

To Imagine an Ewood owned by the fans rather than the Raos is like the difference between heaven and hell!

But, in reality, I can't see the fund being able to attract the required levels of investment from that many ordinary fans, as well as businesses. I mean I'm as loyal as the next fan but I simply don't have the money to beable to put in the club, and I think that would be the case with the majority of fans. Even those who do have the cash, I just can't see people putting their own money in like that. Especially considering the state of the economy at the moment. Fans already invest in the club through tickets, merchandise and their own time; but when it comes to maybe paying off some debts, or upgrading a car or whatever, I think people would beable to justify spending their money on other more practical things.

The reality is, this type of thing can only be carried out with a massive financial input by a very wealthy few individuals/companies. In saying that, would such persons be willing to invest that amount of cash without any real gain? This thing can only work for much smaller clubs probably not in the Football League. Shame.

Great as it sounds, and I'd love it to happen, it isn't going to...

[PAFELL]

How would such a structure get passed the fit and proper owners test - but there again, if chicken farmer can, so can the rest of us.

[Hughesy]

Glad you have joined as Iv looked at your document on twitter. Post that on here too....

Il come back with some comments when I have abit more time... But early queries were -

• You said people could pay monthly for their share.....who will monitor that? And what would happen when someone doesnt pay up?
  
• Why limit the shares so that we can never be bought out of control?
  
• Why keep the transfer budget at £15m every year? In 5-10 years time that is more than likely going to be nothing in football terms. Look at Jack's £3m promise as an example.
  

Oh and another point I wasnt clear on was how much did you plan on offering Venkys for the club?

[Amo]

Just leave the takeover to me.

I've found a sure-fire data entry job when you earn $3,000 a week! What could go wrong?

[Daniel Louis Grabko (Dan)]

How would such a structure get passed the fit and proper owners test - but there again, if chicken farmer can, so can the rest of us.

The PL (and the FA, I believe) requires that the club be own by an actual company, that is why a structure such as that of Barcelona (which is own by a registered association that has members, and not shareholders) wouldn't work, because it would never be allowed by the PL. So the structure itself is actually made that way so it CAN pass that part of the "Fit & Proper" tests. The other part of the tests look at financials - will the Fund have enough assets to cover the operating deficit and debt of the club as a going concern is the main thing the PL looks at. I think that's why the Venkys passed - they do have the wealth, and they even expressed their intent to use it to support the club, promising both the Walker Trust and Barclays that the debt would be greatly reduced under their tutelage.

[Daniel Louis Grabko (Dan)]

Glad you have joined as Iv looked at your document on twitter. Post that on here too....

Il come back with some comments when I have abit more time... But early queries were -

• You said people could pay monthly for their share.....who will monitor that? And what would happen when someone doesnt pay up?
  
• Why limit the shares so that we can never be bought out of control?
  
• Why keep the transfer budget at £15m every year? In 5-10 years time that is more than likely going to be nothing in football terms. Look at Jack's £3m promise as an example.
  

Oh and another point I wasnt clear on was how much did you plan on offering Venkys for the club?

- The proposal assumes the club can be had negotiating a purchase price of around £10m plus the assumption of the debt, or about 2/3 of what Venkys paid for it assuming the debt level is the same as when Venkys bought it, or about £23m.

- If you sign a binding contract to buy a share it is like any other binding contract you would enter into to make a purchase, such as financing a TV, motorcycle, car, or house purchase. It is not a verbal agreement when buying a share...

- The current version of the proposal assumes that buying into the fund automatically gets you voting rights in the "holding" supporters-association/limited company. This is why the investment level would be restricted. The way the fund works is that after 2018, it is self sustaining, never needing additional investment.

- Fair comment, however, the money floating about in football is almost guaranteed to reach a ceiling in the very near future, and if it doesn't then there will be break off elite leagues for Europes top clubs anyway, something which we won't be invited to participate in. That's my reasoning behind it anyway.

Oh, and to make sure everyone is reading the latest version of the document so we are all talking about the same thing, here is the link

[glen9mullan]

I have spoke to Wayne at length about this today, and its a start, but only a start. The presentation is well presented, but carries various errors, i.e £13 for away games, away prices are set by the home team and the revenue equally goes to the home team.

A supporter buy out could be a way forward but not on this scale, and I do know as FACT, Venkys have been advised in the last 3 months to give the club away as they will see no return on future investment, whilst the chance of finding a buyer is slim.

I will discuss this with Wayne next week, Whilst I have asked Wayne to speak at the open supporters meeting, which he has agreed. I urge all to get to the open supporters meeting and put their views forward.

Wayne is very interested in working with Daniel and I confirm that he is going to help gather information via a purpose built website, but how much of this business plan is relevant is questionable. Our only way out is new ownership and that is the direction all supporters must push towards, even if it feels so far away at this stage. However we need to believe this can happen, and I will be spending many hours over the next few weeks looking at our options whilst speaking with potential investors.

We have to be careful that if our club does get new ownership, that its not from the list of vultures who could potentially be circling

[Daniel Louis Grabko (Dan)]

I have spoke to Wayne at length about this today, and its a start, but only a start. The presentation is well presented, but carries various errors, i.e £13 for away games, away prices are set by the home team and the revenue equally goes to the home team.

A supporter buy out could be a way forward but not on this scale, and I do know as FACT, Venkys have been advised in the last 3 months to give the club away as they will see no return on future investment, whilst the chance of finding a buyer is slim.

I will discuss this with Wayne next week, Whilst I have asked Wayne to speak at the open supporters meeting, which he has agreed. I urge all to get to the open supporters meeting and put their views forward.

Wayne is very interested in working with Daniel and I confirm that he is going to help gather information via a purpose built website, but how much of this business plan is relevant is questionable. Our only way out is new ownership and that is the direction all supporters must push towards, even if it feels so far away at this stage. However we need to believe this can happen, and I will be spending many hours over the next few weeks looking at our options whilst speaking with potential investors.

We have to be careful that if our club does get new ownership, that its not from the list of vultures who could potentially be circling

Hi Glen,

The proposal does not count with away match revenue at all, I don't know where you are getting that from. All it states is that ticket prices at Ewood Park would be the same for home and away fans AT EWOOD PARK - apologies for the caps. The proposal is thoroughly thought out, but admittedly since I am the sole creator of it, it would greatly benefit from having several qualified minds looking at it. I would welcome a thorough read through from you and then some reflections on it.

I realize that I am a complete unknown entity in the tight-knit group that is the BRFC supporters' community, and skepticism is going to be high, but I think I at least deserve to have my document analyzed properly before those kind of general statements (such as that it contains several errors) are made to dismiss it as overly optimistic and unrealistic. It actually paints a rather ugly picture of the true amount of investment that would be required to make Rovers a healthy club on and off the pitch again, and regardless of which new owner comes in and when, would be a great reference for what to expect if they actually have good intentions, as I do.

The long-term welfare of the club depends on being realistic with the amount of investment needed, and especially the motivations of the new owners...obviously having the collective of the global Rovers supporters play a major role in that would be the most optimal, because we all know that our hearts lie in the right place.

I wish I could be at that meeting, even remotely, although I know that it next to impossible to arrange. I just hope it goes well and you give Wayne a good listen.

[47er]

I could see an amalgam of local business people, fans and anyone else with an interest possibly getting the sum together to buy the club----assuming Venkys would sell, but isn't that just the start of it? Are you sure your plan caters for the running costs?

Post Venkys, the new owners would have to fill the positions Venkys have left unfilled. That would be expensive for a start. There'd be a pay-out for the likes of Kean (that would grate).

I probably have not understood properly but are you sure your plan provides for on-going finance?

Anyway, you're giving us hope where there currently is none so well done!

[pick32]

Great idea but sadly i think allot of supporters like me couldn't afford the share price. I think you would have to be incredibly lucky to raise that amount of money, local business men might buy a few shares but other than that can't see anyone outside of Blackburn helping us when they get so little in return. its hard enough getting £16,000 people to pay £15 a fortnight to watch the home games.

[Daniel Louis Grabko (Dan)]

I could see an amalgam of local business people, fans and anyone else with an interest possibly getting the sum together to buy the club----assuming Venkys would sell, but isn't that just the start of it? Are you sure your plan caters for the running costs?

Post Venkys, the new owners would have to fill the positions Venkys have left unfilled. That would be expensive for a start. There'd be a pay-out for the likes of Kean (that would grate).

I probably have not understood properly but are you sure your plan provides for on-going finance?

Anyway, you're giving us hope where there currently is none so well done!

Hey 47er,

Yes the plan does account for on-going financing. Have you read the proposal, and looked at the financial projections? There is a whole section dedicated to the issue.

[Uddersfelt Blue]

I believe that whilst this proposition may not currently be feasible, it is at least showing us that there are alternatives to the current ownership model.

It is an idea that has been well thought out and is worthy of consideration and debate.

[Daniel Louis Grabko (Dan)]

Great idea but sadly i think allot of supporters like me couldn't afford the share price. I think you would have to be incredibly lucky to raise that amount of money, local business men might buy a few shares but other than that can't see anyone outside of Blackburn helping us when they get so little in return. its hard enough getting £16,000 people to pay £15 a fortnight to watch the home games.

I appreciate that concern, pick32.

The business plan was created "backwards" if you will, in that its starting point was finding out how much investment was needed and then calculating out shares and their numbers and prices. What that means is that the number of shares and the price are almost infinitely scalable, as long as the final resulting investment levels are attained. You could, for example, have 161m shares at £1 each instead at the cheap end of the extreme. Then people could just buy as many shares as they could afford, for example, and the fund could at the same time look for investment from elsewhere...

The document in its current form is really a "proof of concept" document, showing that the assumptions about investment levels, fund growth, etc. are realistic, and that the maths actually do work. Fine tuning the mechanism for raising capital is a very valid and needed discussion to have, and I am totally open to anyone who wants to contribute constructively in that area.

[47er]

Hey 47er,

Yes the plan does account for on-going financing. Have you read the proposal, and looked at the financial projections? There is a whole section dedicated to the issue.

tbh-------no! Just taking the easy way out!

[Sparky Marky]

I appreciate that concern, pick32.

The business plan was created "backwards" if you will, in that its starting point was finding out how much investment was needed and then calculating out shares and their numbers and prices. What that means is that the number of shares and the price are almost infinitely scalable, as long as the final resulting investment levels are attained. You could, for example, have 161m shares at £1 each instead at the cheap end of the extreme. Then people could just buy as many shares as they could afford, for example, and the fund could at the same time look for investment from elsewhere...

The document in its current form is really a "proof of concept" document, showing that the assumptions about investment levels, fund growth, etc. are realistic, and that the maths actually do work. Fine tuning the mechanism for raising capital is a very valid and needed discussion to have, and I am totally open to anyone who wants to contribute constructively in that area.

I don't think you will get enough interest to invest. We're a small town club with limited catchment area and i feel you will struggle to drum up the numbers. Unless you're a charlatan with lots of shady potential investors.....

[glen9mullan]

Hi Glen,

The proposal does not count with away match revenue at all, I don't know where you are getting that from. All it states is that ticket prices at Ewood Park would be the same for home and away fans AT EWOOD PARK - apologies for the caps. The proposal is thoroughly thought out, but admittedly since I am the sole creator of it, it would greatly benefit from having several qualified minds looking at it. I would welcome a thorough read through from you and then some reflections on it.

I realize that I am a complete unknown entity in the tight-knit group that is the BRFC supporters' community, and skepticism is going to be high, but I think I at least deserve to have my document analyzed properly before those kind of general statements (such as that it contains several errors) are made to dismiss it as overly optimistic and unrealistic. It actually paints a rather ugly picture of the true amount of investment that would be required to make Rovers a healthy club on and off the pitch again, and regardless of which new owner comes in and when, would be a great reference for what to expect if they actually have good intentions, as I do.

The long-term welfare of the club depends on being realistic with the amount of investment needed, and especially the motivations of the new owners...obviously having the collective of the global Rovers supporters play a major role in that would be the most optimal, because we all know that our hearts lie in the right place.

I wish I could be at that meeting, even remotely, although I know that it next to impossible to arrange. I just hope it goes well and you give Wayne a good listen.

I think you misunderstood my post, I'm supportive of what you are trying to do, and my general opinion of the document is that a lot of effort has gone into putting it together.

Its certainly a start and this is why I asked people to come and listen to what Wayne has to say upon the idea

On the £13 a game, I have had a quick look through the document just now and apologise, I mis-read it.

16000-20000 investors/supportors of 10k plus is the stumbling block as we do not even get that through the turnstyles on match days, saying that though does not mean a supporter buy out is a non-starter.

[Daniel Louis Grabko (Dan)]

I think you misunderstood my post, I'm supportive of what you are trying to do, and my general opinion of the document is that a lot of effort has gone into putting it together.

Its certainly a start and this is why I asked people to come and listen to what Wayne has to say upon the idea

On the £13 a game, I have had a quick look through the document just now and apologise, I mis-read it.

16000-20000 investors/supportors of 10k plus is the stumbling block as we do not even get that through the turnstyles on match days, saying that though does not mean a supporter buy out is a non-starter.

Thank you for the clarification, Glen. Wayne told me as much in an email conversation we had yesterday, so I know you are open to the idea as long as it is a sound one. I agree it is a huge stumbling block the way the capital raising is proposed at the moment, but it is important to remember that it is infintely scalable in pricing and number of shares. The main thing is that the correct level of investment is reached over time.

I also think that a lot of people in and around the local Blackburn area underestimate and would be surprised by the international support base that Rovers actually have, which isn't only limited to expatriates. Remember that Rovers are a club that compete in the most well known and followed football league in the world, are founding members of that league and have been almost an ever present, not to mention being the only one of four clubs ever to win it, and the only provincial one. Combine that with a rich and attractive history, and there are many people out there that have fallen in love with the Club for various reasons. Rovers won a much larger international following through winning the PL than a lot of you may realize, there is a romantic feeling of rooting for the underdog that follows this club around, which especially resonates in countries like the US, where the Cinderella Story is an underlying popular cultural sentiment and ideal. Rovers' success in the PL also put Rovers on the map internationally, as well as the town itself. If someone knows what the Premier League is, they are almost guaranteed to know who Blackburn Rovers are.

[xtp]

First off, you have my respect for spending so much time putting this together.

I've read the proposal, and as I'm not a financial expert, I'm struggling to get my head around it. On the Financial Projections page of the proposal, what does the term 'Investment Income' signify? I could not figure out whether it meant interest on the Investment Fund itself, or scaled payments coming in. If interest, it seemed disproportionately high. If scaled payments, it seemed too low to account for the year-by-year increases in 'Rovers Trust Fund' row. Please be aware that I am completely ignorant on this, so I'm not trying to catch you out. Just understand.

Assuming that there are enough people willing to invest, it seems to me that the part people will find difficult to accept is that any mid-table Premiership club can spend £15 million more than they take in in the transfer market, and have that only equate to a £1 or £2 million overall loss to the club, as you project us doing by the end of the decade. I'm no expert on the numbers, but doesn't Rovers recent history directly contradict that possibility? Under the Trust, we basically had to keep our transfer dealings neutral - only spending what we got in or a tiny bit more - to avoid increasing our debt.

So what factor in your calculations changes this state of play? I'm afraid that with my limited knowledge I can't identify it merely from reading the proposal.

Many thanks.

[Daniel Louis Grabko (Dan)]

First off, you have my respect for spending so much time putting this together.

I've read the proposal, and as I'm not a financial expert, I'm struggling to get my head around it. On the Financial Projections page of the proposal, what does the term 'Investment Income' signify? I could not figure out whether it meant interest on the Investment Fund itself, or scaled payments coming in. If interest, it seemed disproportionately high. If scaled payments, it seemed too low to account for the year-by-year increases in 'Rovers Trust Fund' row. Please be aware that I am completely ignorant on this, so I'm not trying to catch you out. Just understand.

Assuming that there are enough people willing to invest, it seems to me that the part people will find difficult to accept is that any Premiership club can spend £15 million more than they take in in the transfer market, and have that only equate to a £1 or £2 million overall loss to the club, as you project us doing by the end of the decade. I'm no expert on the numbers, but doesn't Rovers recent history directly contradict that possibility? Under the Trust, we basically had to keep our transfer dealings neutral - only spending what we got in or a tiny bit more - to avoid increasing our debt.

So what factor in your calculations changes this state of play? I'm afraid that with my limited knowledge I can't identify it merely from reading the proposal.

Many thanks.

Great questions, xtp!

Investment income is a combination of interest and of investing the money in a relatively conservative mix of financial instruments, such as money markets, mutual funds, etc. and assumes, on average, an investment income rate between 5-7.5% annually. This strategy would exclude for the most part any sort of stock market trading activity as that would be too risky to be involved in. Thus, it is more than simply sitting in an interest bearing account, but being less than active investment into the fund, just as you say. 5-7.5% should be very achievable, unless the world economy takes another nose dive that is worse than the one we've just experienced, and if that is the case, we all have alot more to worry about than Blackburn Rovers.

The slow leveling out of the Club's financial results from around 2017 onwards is due several things, both from income and expense sides.

The first assumption made is that the TV money will continue to increase at approximately the current rate of growth until about 2020, when it starts to level off a bit. The second and related assumption is that our expenses do not rise in direct proportion to the TV money income - most notably in the wage bill expense area. This of course rises right along with the TV money, but at a slower rate. Other operating costs also rise consistently, but again, not at the same pace as the TV income.

In addition to this, the ticket pricing scheme presented also increases the Club's matchday take than under our current regime, assuming the attendance targets can be attained, which is not unrealistic considering the proposed ST and regular ticket prices, and the close relationship with the fans this type of ownership structure will create. The reason is that the take on tickets will equal what the club takes in with all matchday income combined at he moment, i.e. concessions and matchday merchandising, which is what this line item represents (Total matchday intake, not just tickets). So £7m is a constant figure instead of the £5-6m that has been the number under Venkys and the WT.

Commercial income is also an area which will get better as time goes on, as the Club's brand image gains more and more positive PR through the ownership structure and culture being cultivated - a lucrative shirt sponsorship for one, better ad-board revenue (all being given away for free at the moment to Venkys), etc - there are numerous areas where smart marketing moves will produce income for the club there. So while the projections do not include a significant rise in Comercial revenue, it does assume a slight improvement in this area.

[xtp]

tbh-------no! Just taking the easy way out!

With regard to the question about on-going financing, and for anyone who doesn't want to wade through the financial projection, Dan's proposal relies on establishing an Investment Fund of well over £100 million (paid over six years, assuming investors take the longest payment option), with the interest plus various conservative investment mechanisms on that fund being used to cover running costs and provide a small dividend.

Investment income is a combination of interest and of investing the money in a relatively conservative mix of financial instruments, such as money markets, mutual funds, etc. and assumes, on average, an investment income rate between 5-7.5% annually. This strategy would exclude for the most part any sort of stock market trading activity as that would be too risky to be involved in.

Thanks, that makes sense.

I also agree about Matchday Revenue and Commercial Sales increasing. The decline in attendance can be linked to the disconnect people feel with the club. By revitalising it and connecting it to the fans, you'll give Blackburn a club it can be proud of once more. That would clearly impact on attendance and on brand image.

However...

The first assumption made is that the TV money will continue to increase at approximately the current rate of growth until about 2020, when it starts to level off a bit. The second and related assumption is that our expenses do not rise in direct proportion to the TV money income - most notably in the wage bill expense area. This of course rises right along with the TV money, but at a slower rate. Other operating costs also rise consistently, but again, not at the same pace as the TV income.

What is the basis for the assumption that wages will not rise at the same level as TV money? Correct me if I'm wrong, but haven't wages historically risen in line with TV money? Isn't that the very reason that so many clubs are going deeper and deeper into debt, instead of turning a profit? There may be something I'm missing, once more, but whereas you've taken the most conservative estimates in every other area, here your calculations seem optimistic to me.

However, the generous £15 million annual transfer market budget you allow, could be used to plug this gap. I remember that John Williams had to do something very similar, when he was in charge: making us a trading club with a high wage budget, rather than a buying one with a low wage budget. After all, there was a much higher correlation between wage bill and league position than there was between transfer expenditure and league position.

On the subject of John Williams, I notice that he is listed in the 'prepared for' section of your proposal. Has there been any contact? Securing his support would do a great deal for the credibility of the venture.