Yeovil Town director Stuart Robins has bought a 20% stake in the club and the money will be going straight in to its accounts – but we’re not quite sure how much money is involved.
A recent statement filed by Yeovil Football & Athletic Club (YF&AC), the company which runs the club’s operations, showed the new director had acquired 341,442 ordinary shares in the business valued at £1 each.
But, following a series of questions from Gloverscast about the investment, it appears the simple mathematics (if there such a thing) is not quite as simple as it seems because £1 is apparently the nominal value of a share in the business, not the current or market value of one.
In a statement, the club told us: “Mr Robins’ has acquired 341,442 shares in YF&AC at the deemed current market value.
“This does mean that Mr Robins now owns 20% of YF&AC with the balance of 80% (1,365,772 shares) currently retained by Yeovil Town Holdings.”
Yeovil Town Holdings being a company set up by former owners Norman Hayward and John Fry which was acquired by chairman Scott Priestnall during his 2019 takeover, and lists the chairman as its only director.
So, if the shares were acquired from Yeovil Town Holdings, does that not mean that the money goes straight to it and bypasses the football club? It appears not.
The statement claims that a loan arrangement agreed with the clubs “professional advisers” whereby the YT Holdings has loaned YF&AC the amount invested and then written off the loan, leaving the club with the full investment on its books.
Let’s assume for the sake of this example Stuart Robins has invested £100,000 for his 20%; this means YT Holdings received £100,000 in the deal which gave no direct benefit to the football club itself. So, to enable the club to see the benefit, the statement suggests that, by way of accounting convention, the money has been given as a loan by the holding company to the football club, and that loan has then been written off, leaving the football club with the £100,00 in cash. But, of course, we don’t know how much it actually is.
If that doesn’t make sense, here’s how the club’s statement explains it: “It was intended that the new investor’s funds be made immediately available to the football club for working capital purposes. However, following discussions with our professional advisers, it was known from the outset that the investment was going to need to be made in return for shares held by Yeovil Town Holdings Limited.
“As a result, it was also recognised from the outset that the investment would, from an accounting perspective, create an unnecessary loan balance between Yeovil Town Holdings Limited and Yeovil Football and Athletic Club Limited.
“As such, following the initial investment transaction made into Yeovil Town Holdings Limited, the second and immediate step required was to then waive that loan between the two entities such that the funds rest in the football club and could not be called back by Yeovil Town Holdings Limited.
“Our professional advisers have helped guide us through these transactions to ensure there are no other related issues arising that may be detrimental to the football club, and we are pleased to confirm these transactions have indeed been completed and concluded accordingly.
“The investment funds have therefore ended up in the football club without any additional liability arising on the balance sheet of any entity.”
That is a somewhat long-winding way of saying that the money which Stuart Robins has invested for his 20% stake in the club is now on the books and being used for its intended purpose – as “working capital”.
What is working capital? Again, it could mean a lot of things. It could be wages, it could be transfer fees, it could be buying pies and pints for the teas bars – or any combination of these things.
As you’d probably expect, the statement tallies up with what the new director told us when back in Glovercast #178 at the start of July, when he said: “That money has gone straight to the club, that money is being used to help further develop the club, it’s not gone in to anyone’s pocket.”
So with that cleared up (right?), we did also ask for an update on any new investors and/or directors joining the board – remember we were promised a few back in April? If not, read here. Oh, and we asked what was going on with the South Somerset District Council (SSDC) plans to develop the land.
The reply on directors/investors was: “The search for further investors/club directors continues. Confidential discussions have been held with a number of individuals and it would be inappropriate to comment further unless or until agreements are reached.”
And on SSDC, it was: “Plans to develop the Huish Park site are subject to ongoing discussions with SSDC.”
In the time between the publication of the Confirmation Statement and receiving the answers, we got a response from SSDC which provides a little more detail on the latter point which you can read – here.
Smoke and mirrors