Questions for the PST
This is a potentially momentous point in our history, and we need to proceed, as the prospectus says, as a 'Club that is transparent and accountable to its supporters'.
I commend the PST on their hard work, and the "glossy" nature of the prospectus.
However, as Mike Hall showed recently, transparency is paramount. There should be no sacred cows any longer. No more benefit of the doubt for anyone. Let's say it as it is, and like Mike says, "shine a light" into all of the potentially dark corners, just to make sure.
I am being asked to put in money, as the rest of us are, so it is only fit & proper to ask questions. I have a few of my own & I expect others have more too.
I wonder if someone from the PST would be happy to answer them?
Q1. Page 4 claims that PST ownership will deliver "a new level of appeal to sponsors, increasing attendances and match day spend". What % increase in each of these core revenue streams has been built into the budget? (See Q10 below)
Q2. Page 6 says that "The majority of the PST Board are elected by the membership". Why not fully elected? Is this to be the case going forward?
Q3. Page 6 says "We want to recognise the individuals who purchase shares by giving them benefits at the club." What "benefits" do you envisage? If these are discounts, have they been built into the financial model? E.g. if 20% discount on season tickets, then has 20% been taken off 2,000 season tickets?
Q4. Page 6 indicates that it is possible that the club will be majority owned by "the Presidents". How could such a scenario be described as a "community club"? Isn't this just a consortium of local businessmen purchasing the majority shareholding with the PST simply helping them to get the keys to the boardroom?
Q5. Page 7 says that the sale & leaseback arrangement contains a "secure option allowing the club to buy-back the stadium in the next five years." What does the contract say if the 5 years elapse? It is conceivable that funding won't be available within 5 years to purchase outright, as lenders may be reluctant to lend against a football ground (ultimately it isn't a very liquid asset).
Q6. Page 7 says that "The ethos of 'one member, one vote' will remain at the core of PST's activities." How can this be the case when the business model is that c.50% of the equity & a minimum of 50% of the seats on the board are being given away to wealthy people?
Q7. Page 7 says that the Presidents will have 3 seats on the board of the acquisition company (Portsmouth Community Football Club Ltd), plus a seat for anyone putting in more than £200k. Page 10 says that PST (i.e. the £1,000 brigade) get to elect 3 seats on the board. So the best the £1,000 brigade can hope for is 50% of the seats on the board, but more likely, less than 50%. If the Presidents are as altruistic as we are lead to believe (to quote Mike Hall - "they are saving your club") then why do they need a seat on the board?
Q8. Based on the answer to Q7, page 10 says that the board can allow for more shares to be sold to the Presidents. If the board is more than 50% controlled by the Presidents, then would the PST not agree that it has very limited power to actually regulate this process, and the Presidents could quickly, and relatively cheaply dilute the PST? The PST would not have funds to do anything about this as it would need to match the money going in to retain % shareholding.
Q9. "Shares can not be transferred or sold". Presumably this is shares in PST, not in PCFC Ltd? I.e. the Presidents are still able to do what they like with their shareholding, but not the £1,000 brigade?
Q10. Page 8 shows a 19% growth in revenues between the 2013/14 & 2014/15 seasons. What is driving this growth? Considering that it is likely that we will be playing in League Two, with no guarantees of promotion back to League One, how is it considered prudent to show such growth?
Q11. Following on from Q10, if the revenues were to stay the same as they are in 2013/14 for the next 3 seasons in the model, then revenue would be a total of £2.97m lower across the 3 years. Taking the margin of 10.2% shown for 2014/15, then this would mean cash would be £300k lower overall. Indeed, it would mean that the model runs out of cash in 2015/16 (£100k lower in 2014/15 & £100k lower in 2015/16 means negative cash at end of 2015/16). This means that the assumptions behind this strong revenue growth need to be clearly understood.
Q12. Page 9 says "More detailed financial analysis can be found on
www.communitypompey.co.uk.". I don't seem able to find it? And the FAQ section is being "updated". When will we get to see this?
Q13. What happened to the difference between having the pay the former players the £9m and the fact that the PST had only put aside c.£3m? Has this renegotiation been scrapped? If yes, how has the gap been bridged?
I do applaud the work done to date, but am a little "nervous" about the power that the "Presidents" have the ability to wield, and am nervous about the PST being driven out / side-lined by these chaps.
I have worked on enough start-ups & business deals to know that you have to make concessions, but let's be very clear. If the Presidents are "saviours" and just normal fans, then why do they need a majority of seats on the board?
I really want this to work, so don't want us to set-out in the wrong manner.
Answers very much welcome!
Written by Pompeytim and initially posted in the forum - click here.
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