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Monday, April 09, 2012

Article : PFC's Pre-Share Offer

It has been a week since Pompey Supporters Trust launched its pre-share offer on the Community Pompey website. The response of fans to this has been illuminating. Committing to the cause is requiring fans to take an enormous leap of faith in both themselves and in the Trust.

Early indications are that hundreds of fans have already committed £100 to show willing to invest in a £1000 share in the club, should the Trust be successful in its buy-out attempt. Many of those that cannot commit so much money are looking to form syndicates to hold a share between them. The enthusiasm for making Pompey the biggest fan owned club with values such as those outlined elsewhere on this site by Micah Hall is clear in the response so far.

The leap of faith is necessary due to the fear that the club will face liquidation at the end of the season. The Trust has a very short time-frame in which to act. This was brought home by Trevor Birch at the Fans Conference meeting before the Burnley game. He indicated there were three groups hovering with a possible interest in the club but none were prepared to make a bid. In reality the only real competitor for the Trust currently is liquidation.

The Trust is undertaking due diligence before formulating a firm business plan but to make itself a credible bidder for the club it needs to prove it has the requisite ‘skin’ to put into the game. Having ‘skin in the game’ is indeed a leap of faith in the business world where it describes insiders using their own money to invest in a company they run. Pompey fans go one further than this – we are the football club that we are investing in. Time after time we say we make this club what it is. Now we need to back ourselves with our own money to prove that this club is indeed something special.

The chance will never be this good again. Trevor Birch has undertaken to deliver a debt free club to the new owner. The price paid for the club - as long as it is more than the club’s value in liquidation – is the price the creditors will have to accept in settlement of what they claim to be owed. Outstanding football creditors will be hopefully dealt with by the continuing parachute payments. Run by the Trust the club will have to operate within its means so no further debt will be added. It seems that the club will have to run at a loss for two – three years initially, but then there is every possibility that it can run at a sustainable level. It is worth repeating the fact that the club is only worth what a buyer will pay for it. This puts the Trust in a good bargaining place.

Birch seemed to be very much in favour of the Trust ownership being part of the club’s future, either alone or in partnership with new owners. However, it was also made clear that the Trust will not stand in the way of suitable new owners becoming involved in the club if such a bid were to emerge. All options are being kept open.

Until due diligence has been completed the Trust would be foolish to publish any detailed business plan. We have had enough owners who have found to their cost that lack of due diligence gets your money into very hot water. The Trust can usefully learn from their mistakes. However, this may have led to the element of uncertainty that many detect in the Trust’s future intentions.

I suppose it wouldn’t be Pompey if there wasn’t a dose of cynicism in amongst the enthusiasm for the Trust’s initiative. There are many, many questions being posed about the future business plan, the competency of the Trust to run the club, the real intentions of the administrator and the still ominously present figure of Balram Chainrai. The Trust are trying to address all of these, whilst at the same time undertaking due diligence at the club and administering the pre-share scheme itself. Answers to frequently asked questions are on the website linked above. If further information is needed the Trust will answer any questions addressed to info@pompeytrust.com as honestly as they can. If people are genuinely wanting information on which to base a decision regarding their own involvement this is really the best way to get the most accurate answers.

It has to be emphasised that this is a pre-share issue, aimed to gauge the degree of both faith and will among fans. It is not asking for a hard and fast commitment from fans before they know the full facts and it is not a promise from the Trust that they will buy the club. It is the first step towards deciding the kind of offer the Trust can make for the club. The Trust are being transparent when they say there are many variables in the situation yet to be addressed and there is much they still do not know. The eventual share offer will carry details of a business plan but this pre-share offer is part of the evidence gathering that will shape that plan. So they are indeed asking fans to have faith in their ability to make an offer to the extent of lodging a returnable sum of money in an escrow account.

Yet there are still those who assert ‘it won’t happen’ whose black and white thinking cannot cope with the uncertainty that a leap of faith requires them to overcome. A quick chat with mates in the Fratton End, a speculative discussion on a message board, a dramatic headline on a news report all can easily be turned to ‘facts’ which in turn are used to denigrate and belittle attempts to explain an attempt to save the club that has to be organic in its development. It is perhaps human nature but is also disturbing when ascribed to ‘the Pompey way’. An element of the club’s support still wants to ‘have a go’ at those working to save the club and prove the job impossible. It is almost as if some fans have no faith in themselves or anyone else to be a better custodian of the club than the last five or six owners of it have been.

Schadenfreude sometimes seems to be such fans’ default setting. Is it too much to ask that people check their facts at source and suspend their fears long enough to realise that an attempt that has to be made before the club goes under? The Trust is not asking for blind faith or unlimited risk taking with fans’ money, just an expression of will and trust in other Pompey fans while the matter is explored. Cynicism about the way past owners have behaved is understandable but is misdirected when aimed at fellow fans. That surely cannot be the ‘Pompey way’?

Legitimate worries have been raised about the level at which the share offer has been pitched and the inclusivity of the share scheme. The Trust has listened and is exploring ways of making it possible for all levels of involvement to be acknowledged. Already syndicated share ownership has been made possible. It has further to be understood that as these will be community shares the offer will not confer any extra voting rights on those buying them than the rights held by any other member of the Trust. Ultimately any decisions by the Trust will be made on a one-member-one vote basis. If members are unhappy with the way the Trust board have managed the buy-out bid they have the ultimate sanction – they vote them off the board.

In the end it is of course an individual decision as to whether any fan can take up the share option the Trust is offering. But the sad fact is that without ‘skin in the game’ fan interest in the club will always be subjugated to that of any owner that the Football League sees fit to sanction. We have already learned the hard way that that is no assurance of the continued existence of Portsmouth Football Club.

S. J. Maskell


Click here to find out more about the Pompey Supporters' Trust's pre-share offer.

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