Welcome to our second monthly communications update of the new season. The first part features in detail the club ownership situation, while there are also general club updates in the second part – so keep reading! With the new campaign now underway, a lot of work is continuing off the field to improve the future of Newport County, both in the short and long term.
The club held an open fans’ meeting last night (August 10) where members of the Board and its representatives provided an update on various developments relating to finance, investment and a potential change in ownership model.
This meeting followed on from the first Trust meeting held at Rodney Parade last month.
The agenda was broken down into several key themes which were delivered to a packed room by Shaun Johnson and Colin Everett, a former director acting as an independent link between the Board and potential investors, before the floor was opened to questions and discussion.
Colin confirmed that things were moving quickly and there were two key investors in discussions, one at an advanced stage, but they could eventually work together. There was an urgency to finalise a heads of terms agreement, ideally by the end of August, due to the current financial position and to help build the club’s off-field capacity in areas such as senior management, commercial and marketing. He also stressed that the Trust, who would maintain a shareholding, still had an important role to play going forward, both from a support and financial perspective, and the investor had to be the right fit for both parties to work together for the betterment of the club.
Also, any investment proposal would have to go before a special general meeting of the Trust, hopefully in September, where 75 per cent of shareholders would have to give the green light.
The themes covered:
Review of current position
- Full review of the financial position with external support
- Detailed budget and cash-flow planning in place for 2023-24
- Tight budgetary controls in place
- Creditors being managed
- One-year stadium lease signed with Dragons Rugby
- 2023-24 In-year operational budget gap still to be met
- There is an urgency to secure the financial future for 2023-24 and the longer-term
Investment and ownership options
- Option 1: Trust owned model (as current)
- Option 2: Hybrid model of shared Trust and Investor ownership (as is the case in all EFL clubs where trusts have been significant in the recent club’s history - with two exceptions). This would require the Trust to sell a proportion of its equity shareholding to the investor
- Option 3: an outright sale of the Trust shareholding
Engagement with potential investors
- A small number of potential investors have expressed an interest in coming into the club
- Discussions at different stages with one at an advanced stage
- We are offering the opportunity to buy-into a League Two club
- Ideally we need a combination of investment – immediate and over a prolonged period – and football club management and business expertise
- The investor will need to cover the creditor debt and the 2023-24 budget requirement in return for a sizeable equity in the club
- We need a long-term partnership with the investor
- ‘Due diligence’ checks by both parties – investor and club
What change would mean for the club
- To commit to the size of the up-front investment needed the investor is likely to require a majority (51%) equity stake in the club
- The Trust will need to sell the majority of its shares to make this happen
- The investor would become the majority club owner and would set out how the club will be run and directed
- We would seek a partnership model with the new owner valuing and working with the Trust as the voice of supporters
- In return, the owner is likely to expect the Trust to maintain and increase its annual fund-raising to share the risk
- The new owner is likely to want more equity year-on-year as they add to their upfront investment
Process for making a big decision
- The Trust is the majority shareholder in the club as things stand (79% plus of the total shareholding)
- Once we have a firm and detailed offer ‘on the table’ – with due diligence completed – we would need to convene a Special General Meeting to consider the offer and decide our future
- Three quarters of the members present would need to vote in favour for a change of ownership
- If the offer was rejected, and no others come forward, the Trust itself will have to raise substantial funds to cover the creditors and balance the annual budget for 2023-24
- Complete the discussions with potential investors with urgency
- Keep Trust members updated via communications
- As and when there is a firm offer which could secure the future of the club, convene a Special General Meeting of the Trust
What can we do next . . . As Trust Members
- Increase our monthly contributions as current owners
- Persuade fellow fans to join the Trust to help raise funds and send a positive signal to potential investors
What can we do next . . . As Supporters
- Take part-in and promote all commercial streams e.g. the County Lottery
- Support all initiatives e.g. the Playing Fund
- Stay loyal and spend what you can with the club
Season ticket sales are continuing as we speak, so thanks to all those supporters who have renewed or purchased new. Your continued support is appreciated.
The club has currently sold 1,980 full season tickets compared to a final figure of 2,179 (excluding half-season tickets) last season. Historically, sales of child season tickets continue until Christmas due to their good value, so we are on course to match last season’s figure.
The club sold an additional 120 half-season tickets last year. A decision on whether we will repeat the offering will be made closer to the time.
The club would like to confirm that Matthew Owen has now left the club as commercial manager. We would like to thank Matthew for his services.
The club is currently reviewing its entire commercial and marketing operation and will update supporters on the way forward in due course.
The club will endeavour to update supporters on a regular basis on any new developments, with a particular focus on off-field activities.