Supporters direct conference community shares presentation
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Transcript of Supporters direct conference community shares presentation
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Football finance FC..ked
Premier League: 5 years from 2003 to 2008
• Matchday income up 53% from £363m to £554m
• Total income up 55% from £1,246m to £1,936m
• Borrowing up 276% from £825m to £3,106m
• Shareholder funds down 248% +£297m to -£442m
WHERE HAS ALL THE MONEY GONE?
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Buy buy United Guardian headlines say it all!• Manchester United's sales pitch is far from a premium bond
(13 Jan)
• Success for Manchester United as Glazers raise £504m from bond issue (22 Jan)
• Red Knights confirm plans for Manchester United bid (2 Mar)
• Glazer family reject secret £1.5bn offer for control of Manchester United (6 May)
• Fury of Old Trafford faithful not enough to force boardroom to sell up (20 May)
• Red Knights shelve plans (2 Jun)
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Community Shares ProgrammeTwo-year action research programme funded by Office of Civil Society and Department of Communities and Local Government, delivered in partnership by Development Trusts Association and Co-operatives UK
Working with 10 organisations raising community investment:• Ashington Minors – childcare nursery• Cybermoor – rural broadband services• Brixton Green – community land trust and urban regeneration• FC United of Manchester – building new stadium• Hastings Pier & white Rock Trust – development trust • Hurst Green Village Shop & Centre • Oxford Cycle Workshop Training • Sheffield Renewables – urban renewable energy schemes• Slaithwaite Co-operative – community-owned greengrocers• Tutbury Hydro Electric Project
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Financing community ventures
• Grants, gifts and donations are best because they are free, but how much free money is (will be) available for community enterprise?
• Loans and bond finance is readily available from institutions and (to a lesser extent) individuals, but commit the venture to generating a fixed amount of profit to pay interest and refund capital, and can be short-term
• Equity investment through community shares, is more flexible, longer term, and connects the investor to the enterprise, sharing in the risks and rewards
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Community shares summary• Defined as community enterprises with more than 20
members with combined investment of more than £10,000
• Oldest surviving example is Lincolnshire Co-operative Society est. 1861: 161,000 members £9.6m shares.
• Currently 141 enterprises fit this definition, 40% of which have been established in the last 30 months
• Combined community investment of over £300m and combined membership of nearly 6m.
• In last ten years total community investment of £30.5m from combined membership of 60,000
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Community shares by trade activity
Trade activity Number orgns. Share capital Members
Renewable energy 28 32,191,000 11,687
Regeneration, land and buildings 22 13,516,000 2,947
Consumer co-operatives 19 182,455,000 5,843,000
Community retail stores 18 571,000 2,561
Transport (inc historic railways) 18 20,809,000 n/a
Finance and investment 10 7,489,000 1,858
Food production and farming 6 886,000 9,539
Fair trade products 5 33,409,000 18,705
Pubs and breweries 5 575,000 388
Football 4 1,231,000 31,704
Other 6 8,849,000 39,084
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Growth in community share offers
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2009 IPS community share offersShare
capital £No. of
memberAv. £ per member
The Cochabamba Project 623,003 89 7,000
Sustainable Hockerton 167,550 41 4,100
Ecological Land Co-operative 123,000 38 3,200
Hudswell Community Pub 219,100 151 1,450
Sheffield Renewables 12,050 12 1,000
Go! Co-operative 58,006 70 830
Busy Bee Toyshop Co-operative 32,250 102 300
Fairtraders Co-operative 85,000 370 230
Slaithwaite Co-operative 15,000 121 120
Dunbar Community Bakery 23,000 230 100
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Football and community shares
Name Legal format
Share capital
No. of members
Year Est.
AFC Wimbledon plc £1.2m?? 2,500 2003
FC United of Manchester ips £2,093 2,093 2005
My Footballclub Society ips £9,055 9,055 2007
Eastbourne Borough FC cic cls ?? ?? 2008
Stenhousemuir FC cic cls ?? ?? 2009
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Why is IPS the preferred format?
Unique attributes of IPS share capital:• Withdrawable share capital• One-member-one-vote• Upper limit on investment• Flexible cap on financial returns• Dividends on transactions, as well as interest on
share capital• Optional statutory asset lock• Exempt from regulation
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Community shares: key elements
CommunityShares
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Attracting and engaging members
Member
Supporter
Viewer
Audience
Director
Activist
CustomerVolunteer
Investor
Service user
Worker
Supplier???
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How members strengthen the business model
Members roles How these roles strengthen the business model
Investor Lower cost of capital; greater acceptance of risk
Customer Greater loyalty; accept higher prices & dividend
Service user Demonstrates support to funders; better feedback
Activist More engagement; better feedback; better targeting
Volunteer Lower labour costs; access to specialist skills
Suppliers Greater loyalty; lower input prices
Workers Greater loyalty; lower input prices; better feedback
Directors Access to specialist skills; lower input prices
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ShareLiverpool FC
• IPS established 2008• Aims to lead community buy-out of LFC• 35,000 registered supporters pledged £40m• Shares cost £500 each• Aims to raise
– £11m member share capital– £140m member loans– £100m commercial investors– £100m bank loans
• Website says there are 4m LFC fans in UK & Ireland
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Conservative manifesto 2010
“Our new ‘community right to buy’ scheme will give local people the power to protect any community assets that are threatened with closure. In addition, we will:
..reform the governance arrangements in football to enable co-operative ownership models to be established by supporters.”
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Further information
Community Shares website: www.communityshares.org.uk Publications• Community Investment using IPS legislation• The Community Shares Programme: One Year On • Guide to governance and offer documents (July 2010)• An investor’s guide to community shares (July 2010)• A practitioner’s guide to community shares (Mar 2011)Further contact:www.bakerbrown.co.uk [email protected]