Hedge Funds in Football - As I see it

[One_Matty_Lucas]

First of all maybe we should put a thread about Coventry City as a sticky at the top of the forum, as a reminder of how things can go wrong.

I work in the Hedge Funds space at the moment and for me HF running football clubs is not a positive.

For those who dont know what they are, Hedge Funds are vehicles which pool capital from investors (high net worth people or financial institutions) and make investments with this (from stocks and shares to special investments like DRFC).

The end goal for any Hedge Fund is to return the capital of the investors plus a sizeable return on top of this. To do this with DRFC would mean returning the capital by (IMO):

 - Using the Premier League revenue
 - Selling club assets (extreme example, dont think this would ever happen)
 - Using the club to develop/sell land (as SM has mentionned the land isnt in the lease)
 - Selling the club to someone else for more than the investment (hoping the Prem makes the club worth more)
 - Making the club profitable by thickening our revenue streams (this is where Sporting Doncaster could fit in)

For me there are one (maybe two) way(s) which everyone can benefit and that is by thickening our revenue streams and making a profit (then returning this profit to the investors). The other way is building the club up and selling to someone for a profit, but this opens us up to ownership from anyone because we wouldnt have JR / TB in place to rebuke bad owners (and afterall the FL has no real controls in place!).

Conclusion:

For the most part I am against HF owning DRFC due to the fact that we are a community club and not a cash cow. But all of the above is based on my opinion and nothing from SC so I am happy to wait and see some strategy from them before completely being against it.

[Alickismyhero]

Very informative Matty,

What concerns me is the lack of control we will have. If you have read the book "Broken Dreams" by Tom Bower you will know what I mean.

 The FA/ FL and the supporters would not know who actually own the club only that it was SC, just refer to the Bates situation at Leeds.

 Control of money goes out of the window even with a JR type as Chairman the HF would dictate what happens.

I am hoping that Bramall's view is released via Gavin soon.

Until then " THE KING IS DEAD LONG LIVE THE KING"

[GazLaz]

A hedge fund can be used to protect identity of the people wanting to invest.

[One_Matty_Lucas]

Correct in terms of the investors putting the money in, but the people who control the fund  (the club) would need to be specified in the Offering Memorandum.

Person X invests into SC (we would never have to know who this is)
SC runs the club (we would know who this is)

Would be interesting where FFP sits with this.

[wing commander]

    The stock market is something that takes up a huge amount of my time...On the whole Hedge funds are pretty ruthless in how they achieve there aims and have a terrible reputation....People need to know that they wont be interested in us the fans..Just how to implement the revenue stream back to there investors...I've seen some absolute cut throat hedge funds in action and seen the destruction they cause once "the vehicle" has served its purpose.....
   

[Mr1Croft]

Very informative Matty,

What concerns me is the lack of control we will have. If you have read the book "Broken Dreams" by Tom Bower you will know what I mean.

 The FA/ FL and the supporters would not know who actually own the club only that it was SC, just refer to the Bates situation at Leeds.

 Control of money goes out of the window even with a JR type as Chairman the HF would dictate what happens.

I am hoping that Bramall's view is released via Gavin soon.

Until then " THE KING IS DEAD LONG LIVE THE KING"

On a positive note the FA and FL have been told in clear terms to sort out this side of football out after Shaun Harvey (ex Leeds CEO now FL CEO) was brought in front of a Select Committee who demanded to reveal who owned Leeds United.

Another positive is that is was great watching Harvey break...

[GazLaz]

This hedge fund will be just a facade to hide identity I'm sure. Nobody from Belize will be involved I'm sure.

[One_Matty_Lucas]

Gaz,

Fully agree, the lack of regulatory requirements makes it dodgy to start with (HF dont need to file any records about who owns the fund or what the fund invests in).

VSC would never be able to invest in the fund either as they decide who is in or out of the fund.

For all those out there questioning the VSC and TB:

- Why would a millionaire with no connection to Doncaster invest in Doncaster Rovers?
- If they were that genuine why would they hide behind a HF?

Im sure the people who are backing this random HF are the same ones who email Nigerian Princes their bank details.

[GazLaz]

The investors may just want to remain anonymous, maybe for tax reasons?

[silent majority]

The investors may just want to remain anonymous, maybe for tax reasons?

They're not allowed to be, for Football League reasons.

[GazLaz]

The investors may just want to remain anonymous, maybe for tax reasons?

They're not allowed to be, for Football League reasons.

In that case how can a hedge fund with anonymous investors but a football club?

[silent majority]

At some stage they have to declare who they are, they can't remain anonymous forever. So why not tell us?

[CraigyBoy]

Will it make any difference if they tell you who they are? Will you change your opinion? Nope.

[GazLaz]

Why should they or anyone tell us any details? We should be able to trust the current custodians of the club, who are genuine blokes and successful businessmen, to choose investors who they are fit. There are intelligent men with the town at heart brokering this deal, we should trust them.

[IDM]

Will it make any difference if they tell you who they are? Will you change your opinion? Nope.

What a stupid question!  If we know who the buyers are and their intentions, of course our opinions may change - they may not - depending on the outcome.

[IC1967]

Hedge fund and sensible ownership of a football club do not go well together. I'd much prefer us to never get to the Premiership and still have a football club in 10 years time.

[donnybel]

Agree totally with you IC. I'm probably a glass half empty person but winning games in L1 and enjoying it is far better than all this garbage going on.