Happy Coincidence Of Interest?

With a signed copy of Lennie’s book in my sweaty palm, looks like an early night with a mug of cocoa for me. Can’t wait. The great man was looking very well and of course we wish him every success with Bristol Rovers – although not to the extent of denying us promotion, or to letting them have Chris Dickson for less than his true worth (on that one perhaps it would be in our interest to let the player himself decide an appropriate valuation; I still harbour hopes that he could return as there’s no doubt he has something, but the odds on that now would seem to be pretty long).

Promotion for us this season – or bust (if not bust the forced sale of a number of players, again). That would seem to be the (albeit very welcome) message from news of the investment of £7m in the club from seven directors. The board must have been well aware ahead of the transfer deadline that the prospective Varney takeover was either dead in the water or close to it. That would have left the directors with a clear choice: sell players and accept that rebuilding will take some years (if £7m is the estimated shortfall it would have taken more than Shelvey going), take the offer on the table (if it ever was on the table) and avoid player sales but see your investment wiped out, or stump up the further cash necessary to fund the club on current plans “throughout the 2009/10 campaign”.

The negative interpretation is that despite cuts made since relegation we are some way away from balancing the books, which given the pre-deadline player retention had looked likely in any event. As things stand, therefore, a failure to get promoted this season will mean more of the same – decisions on fresh expenditure cuts and/or fresh investment. We haven’t fully adjusted to being a third-tier club and are not counting on remaining one. The board must clearly be praying that Parkinson delivers.

Before merited praise of the directors’ actions is delivered, let’s just be a little realistic for a minute. If I was faced with the choices that seemed to confront the board over the past couple of months, and assuming I could write the cheque, the splendid start to the season would seem to make further investment a sensible decision purely on the grounds of personal interest. No takeover, no fresh investment, and player sales would have risked killing off thoughts of promotion this season at least, which could in turn have seen season ticket sales for next season fall sharply (along with merchandise income etc). On that basis the value of the directors’ personal investment would remain very low for the foreseeable future. A takeover which (if reports are to be believed) would have meant no return for the current shareholders (ie the board) would on the face of it give all the potential upside (in the club’s value) to the incoming owners. Instead, a collective new investment of £7m could, if the club is promoted, see the value of the directors’ total investment rise significantly. On that reading putting in £7m and betting on promotion rather than handing over the club for nothing (for them personally) looks like a perfectly sensible decision in view of the start to the season we have made.

This isn’t being cynical. The board, while acting collectively in the best interests of the club (which as directors they are legally obliged to do), is made up of individuals who have to give some consideration to the investment they have made. There has to be potential conflict of interest in any company which is run by the people that own it (or strictly speaking own the vast majority of it). It’s not an unusual situation. In this context, for the board to have turned down an offer for the club (assuming there was a concrete one) which could have been in the interests of the club but not necessarily themselves might have raised concern. To turn one down and to then provide what was needed to keep the club going without player sales would seem to me to be a happy coincidence of interest for all concerned (including us fans).

While joining those in expressing thanks to the directors for stumping up, there is even now an information shortfall (which will no doubt be addressed in due course). We are informed that seven directors have provided fresh investment totalling £7m. But no word yet whether that is in new shares, in additional debt for the club, or some other instrument. The club statement said that “significantly, the directors who had previously agreed to apply some of this investment to purchase the training grounds have now agreed not to complete those purchases ... as a measure of their commitment to the club, as well as putting in fresh money”. I’m just not quite sure what the real difference is between buying an asset (which if memory serves correct the club had the option to repurchase) and investing in the company that owns the asset, whether in the form of equity or debt. Also, the statement referred to the training grounds, not all the transactions previously mentioned (which included some property close to the ground). Are these still going through?

It is reasonable to suppose that a future sale of the club would be cleaner if it was evident that it still had ownership of the training ground. According to Chappell, “attracting new investment into the club continues to be our primary objective”. This is somewhat stronger than the normal attitude of being open to any realistic offers, so the whole issue of a takeover is (understandably) not going to go away. Chappell did note that “there has been a degree of frustration among supporters at the lack of information” through recent months but that “legal and corporate obligations have restricted what we have been able to say”. Fair enough, no-one expected chapter and verse to be made public, but given the time involved and the ongoing speculation simple and brief statements of fact would not have hurt the club, or I imagine contravene confidentiality. And in a piece touching on conflict of interest, while we have directors who are fans and investors, and supporters, the club also has shareholders who are not directors.

Perhaps this does lead to supporting a case for a supporters’ trust – not as some antagonistic pressure group, or to replace the work being done by the fans’ forum, but to amalgamate the interests of small shareholders and season ticket holders (and other fans). With my partner Suzanne in London last week I couldn’t make the meeting to discuss options (and haven’t read up on the outcome), but maybe there’s a case.

With thanks to Uttlesford Addick for the Norwich report, it will be back to long-winded and inaccurate assessment come Saturday. The news of Norwich’s last-gasp equaliser put me so out of sorts that I had to have another bottle of anaesthetic and completely forgot to put out the plum jam and mulberry sauce to accompany the duck (yes, a l’orange if shoving one inside said bird is what it amounts to). No more pain on Saturday please.