FAO: Corky, RE: Supporters Trust Shares

Hi Paul

The need for 5% of shareholders required to call an EGM got me thinking about the Trust and the shares we hope to buy in the club. Is this still something the Trust is looking into? If so, does the Trust hold any shares yet? Also, if say the Malaysians or any other party were to take over the club, how is this likely to affect the Trust's position with regards to holding shares.

Many Thanks,

Andrew

Good Questions mate.

The Trust were allowed to buy £1,000 worth of shares last Year, although that took quite a bit of negotiating because there were no shares being sold by the club at the time....Also you have to remember that the Trust is a very new organisation with less than 700 members. We have raised over £11,000 at the moment and part of that is allocated to buying shares, if they go on sale again.

There are 41,050,759 shares in Cardiff City football club so the Cardiff supporters and their trust would have to acquire 2,052,537 shares...if the club valued them at 35 p each...Don't ask me to work out how much that is????? but you can soon work out that the fans could not raise that money in a short space of time.

So the alternative is to use the shares the Trust has acquired to formally ask the club to call an AGM...a Letter to that effect has been sent and the club have until this week end to respond with either a yes or no. If the club refuse to voluneer to hold an AGM then the Trust has already started making contact with the smaller shareholders so collectively we can reach the 5% required.

We have been fortunate to have had a good start in this task, Annis for instance is amongst a few with sizable shares to offer to help and we are confident that we will reach the target but we felt we had to offer the club the chance to call an AGM first.

If we get a no from the club then we have a plan in readiness to collect the 5% we require, it will be a lot of work and we may need help from our members but we had a Trust board meet last night and we are putting a system in place to get the 5% required to demand an Extraordinary General Meeting.

A supporters Trust is set up specifically to help the fans have a chance against major shareholders...the government support Trusts and Trusts have the power to gather shares from small shareholders as Proxy...shareholders can proxy their voting power to the Trust. All members are covered by a long (and fecking boring constitution) that makes all members only liable for £1 in case of litigation.

It would be the same situation with any owners mate, but hopefully the Malaysians or other potential buys would run the club more efficiently.

Thanks for the reply Paul, some interesting points there.

Firstly, I think the Trust board were right to write to the club to request an AGM be held in the first instance. It just seems the most professional way to go about it. I understand from other posters (Since 62 I believe, but I'm not sure), that the club have not held one for the last 2 years. Are they not required by corporate law to hold one every year (as the name suggests!)?

Secondly, I think its worth asking if club gave any reasons as to why they could not sell more than £1000 worth of shares to the Trust?

I think a sum of £11,000 is quite impressive for a new organisation to have raised in the year of so it has been running. Really well done to all Trust members, and especially the board members. I just hope more supporters realise that by becoming members of the Trust, we have a bigger mandate to take the supporters views to the people in charge of running our club.

By the way, I make it £718,387.95 required to purchase 5% of the shares in the club based on the 35p figure (on a calculator, not my head!)

Thanks for the reply Paul, some interesting points there.

Firstly, I think the Trust board were right to write to the club to request an AGM be held in the first instance. It just seems the most professional way to go about it. I understand from other posters (Since 62 I believe, but I'm not sure), that the club have not held one for the last 2 years. Are they not required by corporate law to hold one every year (as the name suggests!)?

I think they do not have to hold AGM's now but others would know better than me.

Secondly, I think its worth asking if club gave any reasons as to why they could not sell more than £1000 worth of shares to the Trust?

That was the ammount of money we had raised at that time to buy shares and to be honest we were not happy with the 35p price but we had promised members we would buy shares so we agreed to just £1,000 at that time.

I think a sum of £11,000 is quite impressive for a new organisation to have raised in the year of so it has been running. Really well done to all Trust members, and especially the board members. I just hope more supporters realise that by becoming members of the Trust, we have a bigger mandate to take the supporters views to the people in charge of running our club.

Thanks mate, it is not easy and the volunteers actually lose money(pertrol, expenses etc) by attending meetings, nobody takes a halfpenny out. It is hard to convince people to join though, many don't see the point because they believe a Trust can have no use against such a big organisation.

By the way, I make it £718,387.95 required to purchase 5% of the shares in the club based on the 35p figure (on a calculator, not my head!)

Cheers for working that out

Ah that would make sense. 35 pence does seem overpriced. I hear it speculatd that shares are priced at 45 pence per share now.

Are there plans to get the Trust message out and about? I know there is JOP and myself who post on here who are members of the Maesteg Bluebirds. Perhaps a Trust Rep could come to a meeting in the near future and bring some membership forms along. May result in a couple of new members?

Yes we would come to a meeting in Maesteg mate, just give us the nod.

Thanks mate, it is not easy and the volunteers actually lose money(pertrol, expenses etc) by attending meetings, nobody takes a halfpenny out. It is hard to convince people to join though, many don't see the point because they believe a Trust can have no use against such a big organisation.

Uccello Azzurro did a great piece yesterday on club membership which is hugely popular on the continent. His example was Benfica who have 100,000 members paying around £11 P/M.

This allows the supporters to ‘own’ their clubs and run them properly with a President elected each year. I think it’s a brilliant idea and is not a million miles away from the Trusts aspiration to ‘own’ shares.

The Trust might only have £11,000 now but if the aspiration for us to own our club was marketed we could in theory raise £2m P/A (e.g. 16,000 season ticket holders paying £10 P/M).

Obviously that is a lofty goal but if the Trust is to grow it will be through radical ideas and TBH what is more radical than club ownership?

Great. I'll speak with other members to find out when the next meeting is and let you know.

Thanks for the reply Paul, some interesting points there.

Firstly, I think the Trust board were right to write to the club to request an AGM be held in the first instance. It just seems the most professional way to go about it. I understand from other posters (Since 62 I believe, but I'm not sure), that the club have not held one for the last 2 years. Are they not required by corporate law to hold one every year (as the name suggests!)?

Secondly, I think its worth asking if club gave any reasons as to why they could not sell more than £1000 worth of shares to the Trust?

I think a sum of £11,000 is quite impressive for a new organisation to have raised in the year of so it has been running. Really well done to all Trust members, and especially the board members. I just hope more supporters realise that by becoming members of the Trust, we have a bigger mandate to take the supporters views to the people in charge of running our club.

By the way, I make it £718,387.95 required to purchase 5% of the shares in the club based on the 35p figure (on a calculator, not my head!)

We have to get 5% of the nominal value of the shares (i.e. their face value of 10p each) rather than 5% of the price they were issued at (mainly 15.69p but some at 11.1p and some at 35p).So , based on the latest available published full list , we need 2,052,538 of the 41,050,759 in issue.

Thanks Keith. So £205,253.80 rather than my initial amount of £718,387.95? If this is correct, that is a hugely significant difference.

Thanks Keith. So £205,253.80 rather than my initial amount of £718,387.95? If this is correct, that is a hugely significant difference.

If you want to buy 5% of the shares then it would most likely be more like your initial amount, as the most recent share purchase was around 35p I think, I'm sure Keith or someone can correct me! But the club aren't selling any more at the moment

For the EGM they need to get 5% of the existing shareholders to agree to it, or ask for it.

edit: I've just re-read the first couple of posts, If the trust needed/wanted to hold the 5% figure then it would cost £700k or whatever it is, but hopefully with the support of existing shareholders the 5% figure should be attainable

Thanks Keith. So £205,253.80 rather than my initial amount of £718,387.95? If this is correct, that is a hugely significant difference.

If you want to buy 5% of the shares then it would most likely be more like your initial amount, as the most recent share purchase was around 35p I think, I'm sure Keith or someone can correct me! But the club aren't selling any more at the moment

For the EGM they need to get 5% of the existing shareholders to agree to it, or ask for it.

edit: I've just re-read the first couple of posts, If the trust needed/wanted to hold the 5% figure then it would cost £700k or whatever it is, but hopefully with the support of existing shareholders the 5% figure should be attainable

Just to clarify.

The Trust is not looking to , nor does it need to , BUY any shares to get the EGM.The shares will remain owned by the existing ownerat all times.

All we have to do is pursuade the 5% to write to the club requesting the directors to call the meeting. We will draft the standard letter required for them and co-ordinate receipt of the letters and lodging at the club (not that we would suggest that some letters might get "lost in the post"

Thanks mate, it is not easy and the volunteers actually lose money(pertrol, expenses etc) by attending meetings, nobody takes a halfpenny out. It is hard to convince people to join though, many don't see the point because they believe a Trust can have no use against such a big organisation.

Uccello Azzurro did a great piece yesterday on club membership which is hugely popular on the continent. His example was Benfica who have 100,000 members paying around £11 P/M.

This allows the supporters to ‘own’ their clubs and run them properly with a President elected each year. I think it’s a brilliant idea and is not a million miles away from the Trusts aspiration to ‘own’ shares.

The Trust might only have £11,000 now but if the aspiration for us to own our club was marketed we could in theory raise £2m P/A (e.g. 16,000 season ticket holders paying £10 P/M).

Obviously that is a lofty goal but if the Trust is to grow it will be through radical ideas and TBH what is more radical than club ownership?

Thanks TBW.

I would add that the typical members club seems to be able to achieve membership numbers that are c.2x their stadium capacity. Bayern Munich has c.150,000 members and a c. 70,000 seat stadium. Sporting Lisbon has over 100,000 members and a c.50,000 seater stadium. Barcelona has c.170,000 members and a c.100,000 seater stadium. Benfica has over 200,000 members with a c.65,000 seater stadium (c.3x their stadium capacity)

Among members-owned clubs, Benfica seems to stand out as an example of what can be achieved. In May 2004, Benfica's membership was c.95,000 (less than 1.5x their stadium capacity) and average home match attendances had dwindled to as low as 20,000-25,000. To address this, the Benfica members' organisation launched an aggressive and sustained (5 years) marketing campaign and membership reached 200,000 in September 2009. I understand that typical home attendances are now up at 40,000-45,000 with full houses for the major league and European games. Having achieved this, the Club has now set targets for 250,000 and then 300,000 members.

Benfica membership costs c.€12.00 per month (€144 per annum) - as TBW says, c.£10 at today's exchange rate. I would emphasise that GDP per capita in Portugal is much lower than the UK so this represents more of the household income for a typical Portuguese. A reasonably positioned season ticket is priced at c.€300.

If you want an introduction to the Benfica members' organisation in Lisbon, I might be able to help with this.

If a new owner came to the club and bought more than 75% wouldn't they then force all the smaller shareholders to sell their shares ?

If a new owner came to the club and bought more than 75% wouldn't they then force all the smaller shareholders to sell their shares ?

In private companies, I believe that a "squeeze-out" of minority shareholders can only take place once a 90% threshold has been achieved. A lawyer would need to confirm this.

If a new owner came to the club and bought more than 75% wouldn't they then force all the smaller shareholders to sell their shares ?

In private companies, I believe that a "squeeze-out" of minority shareholders can only take place once a 90% threshold has been achieved. A lawyer would need to confirm this.

The Articles of Association of Cardiff City have a clause (clause 8) called a Drag Along Option.It allows a position where , if 50% or more of shareholders (by value not headcount) agree to sell their shares , then all the other shareholders are forced to "drag along" and sell their shares as well at the same price.

If you add together the shares held by PMG/Paul Guy and those held by the current board directors it comes to about 19.8m shares which is 48% of the shares. So not far to go at all to get to 50% and get a deal that is legally binding on everyone else.Even if one of those director shareholders dissented , should still be quite possible to get others to agree to top up to the 50% level.


Keith