The Well Society will reject the proposed investment from ex-Netflix chief Erik and wife Courtney Barmack and outline six reasons why they are doing so.I do not believe the negotiated terms are beneficial to the club” and urged members to oppose the offer in a vote next month.
The board of Well Society, Motherwell’s majority shareholder, voted against the proposal by a majority of 6-3 and released a statement after the club announced they had entered a ‘period of consultation’. A statement from Fir Park said: ‘The club has now entered a period of consultation. period of consultation with Well Society members and Motherwell Football Club shareholders in relation to Erik and Courtney Barmack’s proposed investment, with voting due to begin early next month. Following our last update, we can confirm that the Heads of Terms have now been agreed between all parties and will be distributed to all Well Society members and shareholders of Motherwell Football Club in the weeks leading up to the voting commencing on 1 July 2024.
But the Well Society immediately responded with a lengthy and detailed statement. They said: “We have worked quickly to finalize our position on this offer. We expect to have our members voting on this over a two-week period starting July 1, allowing the Well Society to reflect members’ views in the club’s expected results. shareholder vote We are currently working on logistics and will send more information to our members in due course.
“At that time, we will also share the Society’s plans for the future, if it remains the majority shareholder. These plans have been in development since the start of this year, with input from supporters, advisors, football experts and industry professionals, and we are now aiming to expedite the publication of our plans within the necessary timescales. There are six main reasons why we believe this investment proposal should be rejected:
1. The end of fan ownership
Fan ownership is the only way we can secure the club’s long-term future. These proposals will see the Society’s shareholding reduced from 71% to a maximum of 46%, leaving us with a smaller shareholding than Wild Sheep Sports, which will secure 49%.
We recognize that during our consultation earlier this year, a majority of Society members indicated that they would be open to an investment offer that would see the Society lose its majority stake in the club. However, we do not believe that the investment of £1,950,000 over six years justifies the significant risk associated with giving up fan ownership.
The Association was established as a “safety net” for the club, which has been used on many occasions. Following the agreement with Les Hutchison in 2016, which allowed the club to move to fan ownership sooner than expected, that model was temporarily changed, resulting in the Society investing on an annual basis in loans to Mr Hutchison, John Boyle and John Boyle . others were paid off.
Since then, the Society has worked hard to return to the safety net model and ensure we have over £750,000 in the bank, which continues to grow. This figure would allow us to close the potential gap in the club’s finances, should the need arise.
2. Inadequate club rating
Valuing a football club can be difficult. However, we reject Motherwell Football Club’s valuation of less than £4,000,000 as we find it completely unacceptable and are disappointed that negotiations proceeded on the basis of this valuation. We do not believe Motherwell supporters will agree that our club should be valued at a significant discount to the valuation published in our most recent accounts and at a fraction of the value placed on Hibernian earlier this year , which was based on the club’s widely reported value. £6,000,000 for a 25% stake, approximately £24,000,000.
3. Disproportionate influence in the boardroom to the tune of £300,000
although The investment proposal is structured over six years. The proposal would see Wild Sheep Sports immediately gain disproportionate influence in the boardroom in return for an investment of just £300,000 for an 8% stake in the club.
We believe that it is even remotely acceptable for the new investors to be given three of the eight seats on the Board of Directors, plus the chairmanship, and to have a decisive say in the outcome of a stalemate from day one.
4. Unfair demands placed on members of the association
The Society has already raised over £2,000,000 as a direct result of the fan ownership model. Under these proposals, the Society – in practice you, the members – will have to invest or raise a further £1,350,000, and write off 50% of the £868,000 loan the club owes.
It is unacceptable that the Association would commit to investing the equivalent of approximately £1,800,000 over the next six years, only marginally less than what would be invested by Wild Sheep Sports. We do not believe there is any logic or fairness in this arrangement, which would see Wild Sheep Sports reach a shareholding of 49% over a six-year period, while the Association’s shareholding falls from 71% to a maximum of 46%.
5. Harmful to membership growth
The Society’s renewed board believes that as a fan ownership group, much more can be done to grow our membership and maximize the Society’s revenues. However, to do this there must be a purpose: Motherwell supporters and potential members need to understand why the Society exists, how it works and the vital role it plays in the club as a fan-owned entity.
We do not believe that the investment proposal will lead to the empowerment or growth of The Well Society. Instead, given the drastic reduction in the Association’s shareholdings, we believe that there is a significant risk of a similarly drastic reduction in membership and revenues as current and future members would question the need to maintain the Association and to subsidize the club after the majority share has been reduced.
6. Call option can weaken club and society
The Call Option within the proposals is intended as a guarantee that gives the Association, for a period of six months in 2026, the unilateral right to buy out Wild Sheep Sports in full, including 10% to cover administrative costs and a minimum interest. total £660,000. Members of the Society should understand, however, that this proposed safeguard would not return us to our current position.
By this time, the Society will have committed to investing a total of £400,000 in the football club over the first two years of the six-year deal. This means that, if the Call Option were to be exercised, the Association would have to buy out Wild Sheep Sports for a total of £660,000, on top of the £400,000 already invested in the club. As a result, although the Association would once again become the majority shareholder, the Association’s current financial reserves, which act as a safety net for the football club, would no longer exist and we would essentially have to start from scratch.
However, we make a comment on the above with the acknowledgment that, without investments, we would be in a season 10 e leave the League Cup group stage in the SPFL or 4 e round of the Scottish Cup and having no player sales, the Well Society would have to plug the resulting financial gap, which would take up the majority of our current financial reserves. That is why we remain open to external investment that we believe would be good for Motherwell Football Club and the Well Society.
The proposals also include a provision for a buyback right, if the Well Society cannot afford to exercise the call option. This would allow the club itself to repurchase the remaining balance of shares that the Well Society would otherwise have held following the exercise of the Call Option. This proposal also provides for 30% of net turnover from player sales over £2,000,000 to be held in escrow until 31 August 2026, to partially fund the buyback right. However, we remain concerned that this cannot be used to part-fund the Call Option, meaning this will only provide benefits if the Well Society cannot afford to exercise the Call Option itself.
Given one of the original arguments for seeking external investment, which is related to the need to convince accountants every October that there are sufficient finances and reserves to meet all obligations for the coming season, we believe that exercising the call option or the right to repurchase could raise significant concerns. on the possibility for the club to do this in October 2026, as the Association’s financial reserves have been wiped out.
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