Investment Proposal - Trust ballot

Super Ronnie Jepson

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As Al has suggested, the risk may be more around the financial robustness of the preferred contractor so care should be taken to ensure the contracts contain appropriate performance bonds. For sure, the contractor’s balance sheet is remarkably skinny and the year-end debtors (at £1000k) suggests their turnover is modest so this is a very sizeable contract for them. In my view, it is unfortunate that a ‘community club’ could not find a local contractor to perform the work.

From the projections, it would appear to be affordable although I have some concerns around future wages (which are projected to decrease over the stathe next few years), as previously noted by Matt Phillips. If the figures are right, they deserve an explanation. If they are wrong, it calls into question the accuracy of everything else!

For me, the bigger issue is whether most/all of the stated objectives can be obtained without having to spend as much as £2.2m. To an extent, that is dependent upon your thoughts regarding the academy. Some may argue its reputation already attracts the local talent; others might believe far superior facilities are needed. Relative to turnover, this is huge expenditure at an uncertain time and I am not sure a simple ‘yes/no’ on a single proposal is the right approach. The more prudent amongst us might see value in doing a two stage project.
Would the wages be decreasing because we're currently operating with an enhanced playing budget after the sale of Ollie, Amps etc?
 

MJP_Exeter

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I personally again am not an expert on these things so my opinion really is almost irrelevant as to whether it should happen.

But i am a huge fan of the club infrastructure being significantly improved from where it has been / is as this in turn helps the club keep up / progress.

On a side note I am winning the £184m on the Euro millions tomorrow so will give the club £20m to cover this and more.
 
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Does this work mean we can take our academy up to the next category?
OK, thanks Martin for your succinct response.
Thought it was quite a reasonable question.

With a big investment like this I thought it might be good to tick off some items off of the shopping list of requirements needed to take us up to the next Academy Category level. (Refer to Page 2 of the letter to members, first sentence under "Background" and first sentence under "Rationale"etc.) The primary aim appears to secure the "Academy Pathway". So if we move up a category, thereby getting more revenue if we lose young players under PPFbollox thought that might be an attractive proposition. It will keep us ahead of the Slime who have seen the benefits of a decent academy, we'd be ranked the academy highest west of Bristol?/Bournemouth? AND by definition we will have achieved this aim.

So, if this not in the planning, can I ask another stupid question? "Why not?"
 

Super Ronnie Jepson

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OK, thanks Martin for your succinct response.
Thought it was quite a reasonable question.

With a big investment like this I thought it might be good to tick off some items off of the shopping list of requirements needed to take us up to the next Academy Category level. (Refer to Page 2 of the letter to members, first sentence under "Background" and first sentence under "Rationale"etc.) The primary aim appears to secure the "Academy Pathway". So if we move up a category, thereby getting more revenue if we lose young players under PPFbollox thought that might be an attractive proposition. It will keep us ahead of the Slime who have seen the benefits of a decent academy, we'd be ranked the academy highest west of Bristol?/Bournemouth? AND by definition we will have achieved this aim.

So, if this not in the planning, can I ask another stupid question? "Why not?"
I believe we would also require an indoor pitch, amongst other things.

I also wonder if Martin's response has more to do with a belief that achieving Category Two status is actually an expensive waste of time? The more I read about it, the more I believe it's unnecessary.
 
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I believe we would also require an indoor pitch, amongst other things.
So if these improvements tick off some of the “other things” then it will be a step towards Category 2. Later if funds permit and we retain our trajectory we could add an indoor pitch. Perhaps phasing the development (as Ed suggests). Is this to be the last infrastructure improvement for the next 48 years? Hopefully not just the first part of the jigsaw for global domination.

Pardon my ignorance, I thought the “Categorisation” of Football Academies was the metric by which they were judged. All I want is the best for my Club
 

Trapdoor

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It's debatable as to whether gaining cat 2 status would bring many tangible benefits.
It's not clear that we would be able to command higher fees for our players since we aim to avoid selling under EPPP rules anyway. Nonetheless improvement of our club holistically is a good thing and this is a much needed development.
 

Pete Martin (CTID)

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There seem to be quite a few questions regarding risk, liabilities failure to deliver by the contractor etc. These seem generally entirely valid, but has anybody read the full attached document?

A number of the concerns seem to be dealt with within it. Most notably is this section which makes it clear that agreeing to the loan doesn't automatically mean the proposal will go ahead as more work needs to be done to ensure the whole project is sound and viable.

Proposed process from here

The Trust Board have formed an independent view on the proposal. Its merits, its risks and whether
to back a Club Board decision (if taken) that the investment in Cliff Hill is the best use of shareholder funds.

In a typical investment project involving outside funders (i.e., a bank or investment fund), the process would typically be:

• Management prepares a plan and detailed costings
• Present this to the Funder
• The Funder agrees to proceed in principle – and asks for a short period of further diligence (generally financial due diligence) from a third party to ensure the numbers ‘add up’
• This is done quickly, does not commit the funder to ‘do the deal’ and if the diligence backs the management plan and its reliability an offer is made by the funder with terms attached.
• Crucially too, if the diligence is negative, management are able to either revise their
projections to ensure they are achievable or reject proceeding with the project in light of the new evidence.
This, we suggest, is a process that we should follow in this instance. It is also a rational model to
mitigate much of our risk at this point in the project.
 

Colesman Ballz

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OK, thanks Martin for your succinct response.
Thought it was quite a reasonable question.

With a big investment like this I thought it might be good to tick off some items off of the shopping list of requirements needed to take us up to the next Academy Category level. (Refer to Page 2 of the letter to members, first sentence under "Background" and first sentence under "Rationale"etc.) The primary aim appears to secure the "Academy Pathway". So if we move up a category, thereby getting more revenue if we lose young players under PPFbollox thought that might be an attractive proposition. It will keep us ahead of the Slime who have seen the benefits of a decent academy, we'd be ranked the academy highest west of Bristol?/Bournemouth? AND by definition we will have achieved this aim.

So, if this not in the planning, can I ask another stupid question? "Why not?"
Another essential item for cat 2 status as mentioned is a covered pitch (3/4 size minimum ?), then there are extra staffing levels needed. Of course you receive more funding for cat 2, but whether this would cover those increased staff costs I am not sure.
These proposed works will keep us ahead of the game at Cat 3 level, but for now at least Cat 2 is an aspiration that is beyond our immediate reach.
 

Super Ronnie Jepson

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Another essential item for cat 2 status as mentioned is a covered pitch (3/4 size minimum ?), then there are extra staffing levels needed. Of course you receive more funding for cat 2, but whether this would cover those increased staff costs I am not sure.
These proposed works will keep us ahead of the game at Cat 3 level, but for now at least Cat 2 is an aspiration that is beyond our immediate reach.
IIRC Colchester have a Cat 2 academy. I'd put money on us having made more from the sale of academy graduates than they have.
 

Alistair20000

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But it's not a one-off project. The club has proved over the last few years that it is capable of delivering projects like the new grandstand and upgrading the pitch successfully without damaging the club's finances. To my non-expert eye it reads like the club have covered all the angles already - what angles do you think they have missed? And what do you think they should do with the money instead if you are not in support of this project?
I am in support of the project.

On any analysis this is a one off project given that the cost is £2 million plus.

One concern I have is that the contractor company has a very weak balance sheet.
 
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