Another thought experiment - the Packers model

[dibo]

Another thought experiment.

Was chatting with a mate on Facebook about the Red Bulls thing, and he mentioned the German thing of clubs being fan owned.

Given Heart went for $11m, WSW went for $11.5m, let's assume CCM goes for $10m. At $1000 per member to buy 50%, it seems pretty unlikely.

But then there's the Packers model.

The NFL's Green Bay Packers are fan-owned. Shares sold for $250 at the last stock issue (2012). Nobody can hold more than 200 shares (so the maximum stock holding is $50,000).

Let's say the Mariners restructure their shareholding, and issue a minimum of 40,000 shares to raise $10m - equivalent to being bought for $10m. Cap the individual shareholding at 200 to ensure no individual is overly influential by their stock alone.

Shareholders meet to have elections for the Board of the Company, but the Board once elected is expected to manage the club in accord with their obligations under the Corporations Act.

The Company should be encouraged to not issue dividends but instead reinvest any profits (HA!) back into the Company.

If only our members were to buy shares, each member would have to fork over for roughly 8 shares ($2000) to raise the cash. If we're losing $1m a year, each shareholder would have to buy an additional share every year to keep the capital topped up. Effectively this means you've got your initial outlay, then your membership goes from being about $190 to being about $440 per annum. Seems unlikely.

Even getting members to buy up a 50% stake ($1000 each and then another $125 per annum) strikes me as unlikely.

Is there any realistic size for a supporters' stake in the club?

 

[sydmariner]

Another thought experiment.

Was chatting with a mate on Facebook about the Red Bulls thing, and he mentioned the German thing of clubs being fan owned.

Given Heart went for $11m, WSW went for $11.5m, let's assume CCM goes for $10m. At $1000 per member to buy 50%, it seems pretty unlikely.

But then there's the Packers model.

The NFL's Green Bay Packers are fan-owned. Shares sold for $250 at the last stock issue (2012). Nobody can hold more than 200 shares (so the maximum stock holding is $50,000).

Let's say the Mariners restructure their shareholding, and issue a minimum of 40,000 shares to raise $10m - equivalent to being bought for $10m. Cap the individual shareholding at 200 to ensure no individual is overly influential by their stock alone.

Shareholders meet to have elections for the Board of the Company, but the Board once elected is expected to manage the club in accord with their obligations under the Corporations Act.

The Company should be encouraged to not issue dividends but instead reinvest any profits (HA!) back into the Company.

If only our members were to buy shares, each member would have to fork over for roughly 8 shares ($2000) to raise the cash. If we're losing $1m a year, each shareholder would have to buy an additional share every year to keep the capital topped up. Effectively this means you've got your initial outlay, then your membership goes from being about $190 to being about $440 per annum. Seems unlikely.

Even getting members to buy up a 50% stake ($1000 each and then another $125 per annum) strikes me as unlikely.

Is there any realistic size for a supporters' stake in the club?

What happens if share prices go down

 

[dibo]

They don't. They're fixed.

 

[eenfish]

This would be fantastic. Feasible? Maybe not. But then again, my girlfriend is a diehard Collingwood fan and between her, her sister and her mum they spend upwards of $1200 a year on membership tickets that include tickets to every melbourne game and guaranteed grand final tickets. And now I live in Melbourne I'm gonna keep up my full general admission membership for whenever visiting the parents.

 

[MagpieMariner]

This would be fantastic. Feasible? Maybe not. But then again, my girlfriend is a diehard Collingwood fan and between her, her sister and her mum they spend upwards of $1200 a year on membership tickets that include tickets to every melbourne game and guaranteed grand final tickets. And now I live in Melbourne I'm gonna keep up my full general admission membership for whenever visiting the parents.

Your girlfriend & her family are very intelligent people with great taste!

 

[dibo]

Are they? Their support of Collingwood would certainly indicate otherwise.

 

[MagpieMariner]

Now now Mr Dibo, not nice.

 

[Big Al]

Not Feasible Dibo

Who's going to keep putting in with the cash burn supposably $1m a year. After the initial share investment money is burned I don't think CC members would keep dipping into their own pockets. Funny though because we do expect others to.

Either the club would have to cut players wages even further so that the TV guarantee can be used to cover the other running costs that help as burn the money every year but this would be mean a sub standard team. You could pack it with locals or Aleague rejects or injured players trying to return but would the fans want to pay for a substandard team.

We just don't have the size or the area with financial clout to pull that off. E.g If it was Vaulcluse then the small number wouldn't be a worry due to large available finances.

Much prefer the global giant takeover everything model like Red Bull or Man City. Chelsea have a bucket load of cash & now they have to meet fair play rules all that extra waste they used before can come our way.

 

[Big Al]

Or every member contribute $10 per week to a lotto ticket.
Winnings buy new players
If we loose no new players just like now

 

[adz]

I think the idea of owning a football club sounds good to most people, but only if it doesn't come with the responsibility of putting their own cash into it every year and seeing it disappear.

It's easier to bag millionaires and say they are doing a bad job by not throwing their money away every year, than doing it yourself

 

[midfielder]

Dibo

Maybe adjust slightly ....

Say 5, 000 members at $ 2, 000 equals the 10 million...

Given we already have an owner ... maybe buy 40 to 60 % ...

To raise 4 million is $ 500.00 over two years or $ 250.00 per year ... board would need shareholder reps ..

BTW not suggesting what I have posted is the answer simply illustrating there are a number of alternatives to achieve the same end... but still based on the Packer model..

 

[midfielder]

Another issue is the general economic health on the Coast ... The announcement of the brewery closing will have no direct effect on us ... the stadium has not had a sponsor for must be close to 12 months now ...Singo is not renewing his lease on the stadium and it reverts back to Gosford council and we are in bluff and counter bluff over the stadium rental with the council...

However the brewery closing follows a number of big employers moving or closing their Australian operations on the Coast, mainly food companies .... The knock on effect is unemployment will rise ... this could effect our crowds ... The Coast had a number of well known food brands made / packaged on the Coast does not make the same sorta headlines like when Holden close in SA ... however the effect is the same and we are a targeted growth area for families ... twin issues rapidly increasing population and falling number of jobs...

So no direct effect on any economic model ... but discretionary spending by the good folk of the CC could effect us and or plans to invest in us ... we have a very high unemployment rate with most having to travel to Sydney these days for work for highly paid work... Singo made some interesting points yesterday .... no other regional area our size has no airport or university or large TAFE ... He tore into Barry re not investing or moving jobs to the Coast [as he said he would] and gave some details of a very logical plea [is not to strong a word] to the Commonwealth gov to invest on the Coast ...

OK rant over ....

 

[bikinigirl]

. i think there is some merit to this idea but the numbers simply aren't there at the moment ... sure there are some that would chuck a bit of cash at the club under this model, but there is no way we could expect every member (including many part-timer memberships, kids, etc) to contribute anywhere near the amount required. shit, it is incredibly difficult to get people to put $20 towards a membership for the supporters club in an attempt to give them a voice with the club ... so you can forget talk of thousands of dollars

. it is something that would have to be built up over many years ... building awareness and a sense of ownership and symbiotic dependence amongst the community ... as well as the time required to save. an undeniable parochialism needs to be built across the whole community ... to the point where people feel obligated to participate or feel they are letting everybody down if they don't. this is not something you can just spring on people (to a degree charlesworth has tried this short-term version with his threats)

. we would need to know how and why the packers model works for them (just being american is not an elaborate or sufficient answer) ... and apply similar logic in a local fashion

. get people emotionally invested early and keep them interested ... for example percentage discounts on shareholdings for continuous years of membership

. of course transparency needs to exist before such a model could even be proposed ... we still have no understanding of the $1m p.a. losses reported (considering we were apparently losing less than that when our crowds were lower and the salary cap was not being met by the tv rights deal). additional year-on-year funding via memberships is not a bad option if absolutely necessary ... but effectively doubling the membership may be a step too far

 

[dibo]

Another issue is the general economic health on the Coast ... The announcement of the brewery closing will have no direct effect on us ... the stadium has not had a sponsor for must be close to 12 months now ...Singo is not renewing his lease on the stadium and it reverts back to Gosford council and we are in bluff and counter bluff over the stadium rental with the council...

However the brewery closing follows a number of big employers moving or closing their Australian operations on the Coast, mainly food companies .... The knock on effect is unemployment will rise ... this could effect our crowds ... The Coast had a number of well known food brands made / packaged on the Coast does not make the same sorta headlines like when Holden close in SA ... however the effect is the same and we are a targeted growth area for families ... twin issues rapidly increasing population and falling number of jobs...

So no direct effect on any economic model ... but discretionary spending by the good folk of the CC could effect us and or plans to invest in us ... we have a very high unemployment rate with most having to travel to Sydney these days for work for highly paid work... Singo made some interesting points yesterday .... no other regional area our size has no airport or university or large TAFE ... He tore into Barry re not investing or moving jobs to the Coast [as he said he would] and gave some details of a very logical plea [is not to strong a word] to the Commonwealth gov to invest on the Coast ...

OK rant over ....

Our unemployment rate isn't that different to the rest of NSW or the rest of Australia:
http://economy.id.com.au/central-coast-nsw/unemployment

September quarter of 2013 we were at 6.11%, NSW was 5.78%, Australia was 5.75%.

That's 10k unemployed out of a labour force of 162k.

The bigger problem is that the labour force itself is small - too many kids and too many retirees and not enough young adults = a small labour force. The labour force is 50% of the population vs the national average of nearly 65%. That's a lot of people not earning money, so per head we generate less money than other areas.

 

[midfielder]

HHHMmmmmm the unemployment rate is high especially in the young ... with quality [wage levels] positions leaving the Coast ... add you lower than normal levels of retires and kids ... decentralisation from major cities to regional areas IMO is clever and if governments could push say 1, 500 public service positions to the Coast from Sydney, in of itself that would create another 4, 500 jobs using a multiplier of 3...

The result on most reports have governments saving heaps on rent and wages after moving to regional centres ... Gosford is becoming a ghost town ...

We need something ...

 

[eenfish]

See, now that would make sense and be logical and well thought out. These are key attributed government officials seem to lack.

 

[dibo]

Definitely over-represented in the <$50k earners and under-represented in the >$50k earners, particularly in the >$100k earners.

Ideally, to drive growth you'd want a population with a mix a little closer to the NSW averages. Greater density of good office jobs would drive that hard - government departments are great for seeding that sort of growth.