Well Society Consultion: Active Investment

[Kmcalpin]

Hopefully by now, members will have received the consultation email. To understand the background to this initiative and submit your response, its best to view the full podcast beforehand.

[grizzlyg]

12 hours ago, Kmcalpin said:

Hopefully by now, members will have received the consultation email. To understand the background to this initiative and submit your response, its best to view the full podcast beforehand.

Got it and will view podcast in due course.  Maybe looking for extra investment to cover all the fines we are going to get hammered with 🤪🤪

[joewarkfanclub]

Ive watched the podcast and read the document and I am certainly intrigued by the proposals.

It would make sense that once the security reserve figure has been reached that we should be looking at other ways to use Society Funds. No point building a huge pot of money if its never going to be put to good use.

Im unsure whether taking this step now, before we have met the reserve figure is the correct thing to do, but I think I could be persuaded.

Making our money work for the benefit of the club certainly makes sense. A little investment here and there could generate further revenue for the club and that would be welcome.

What I wouldnt be in favour of however, is the Society money going straight into the running costs of the club and being absorbed.

Having seperation between the Well Society and the Club was done for a reason, and should be kept that way.

The club should still be required to balance its books and the operational shortfall must be closed if we are going to be run sustainably. That figure cant include Well Society cash.

Also, Id be wanting something in return for any money the Society puts into the club. Previous loans were attached to security on the stadium. So we are in a situation where no one can sell Fir Park from underneath us. That is a good thing.

Ive seen it discussed elsewhere that future loans might be leveraged against increased shareholding for the Society, and something like that would be appealing.

Hopefully all these discussions can take place during the consultation period, and I have put them forward in my response to the active investment document.

It feels like the club and the Society are both in good health at present. The ideas being put forward appear positive and as long as we get the small print correct, I think we can move forward in good faith.

[dennyc]

Still mulling this over. Plenty of good intention but yet to be convinced.  Also trying to leave the emotional fan owned buzz out of things.

First thing that strikes me is the reserve figure of £1.5m as the target originally set…..in 2011. That figure equates to almost £2.4m in 2026. So it’s nowhere near like for like or close to the level of emergency funds that were visualised as appropriate in 2011. Should it therefore be £2.5m we look to have before we use any excess funds for ‘projects’? To give us the same level of protection that was seen as required in 2011. That initial target was for the exact same scenarios set out in the Broadcast. Effectively relegation. 
Hard to understand why relegation nowadays would have less of an impact than in 2011. I don’t believe using St Mirren and £500k as a yardstick is wise either. Pretty sure other Clubs have identified relegation as having greater financial implications than £500k, even allowing for an immediate return to the top division.

My other concern is ‘Why now and who is driving it?’

Fund raising initiatives have worked well this season. And congrats to all concerned. Mrs Baillie’s as an example. So why not carry on in that manner meantime? Walk before you run. Or perhaps, is the upgraded Training  Ground and the apparently hush hush Fir Park Report playing a part here?  Bearing in mind external funding is not straight forward as the WS hold a First Charge over Fir Park. Lenders don’t like being second or third in the queue if things go belly up. The WS is also a much cheaper source of finance. And per the broadcast, we may have heaps of transfer monies due but only in increments over the coming years. ‘ We do not have £10m in the Bank’ as a direct quote. So how are those two projects being funded?
 

Perhaps I am being too cautious but, until convinced otherwise, I would rather build up to £2.5m before proceeding as proposed. 
 

Interested to hear what others think. 

 

 

 

 

[weeyin]

1 hour ago, dennyc said:

Hard to understand why relegation nowadays would have less of an impact than in 2011.

 

I imagine that's in part due to the better financial package in the newer Premiership structure. First of all there is a parachute payment if you are relegated, and secondly there is more money when you finish last. Livi's share of league prize money was just over 1.5 million when they were relegated.

I'd also imagine our finances are more stable than they were in 2011.

Not that I'd want to be relegated, but at least you are going down with more money in your pocket. If you stay there for 3 or 4 years, then that is a different story.

[dennyc]

34 minutes ago, weeyin said:

 

I imagine that's in part due to the better financial package in the newer Premiership structure. First of all there is a parachute payment if you are relegated, and secondly there is more money when you finish last. Livi's share of league prize money was just over 1.5 million when they were relegated.

I'd also imagine our finances are more stable than they were in 2011.

Not that I'd want to be relegated, but at least you are going down with more money in your pocket. If you stay there for 3 or 4 years, then that is a different story.

Fair point. I think from memory the 2011 figures were based on possibly taking a few years to rebuild and bounce back up. 3 years times 500k perhaps? Just in case. As u say promotion first up is far from guaranteed. Just ask Ross County. And our commitment wage and contract wise must be greater than back then. 

Clearly we are not going down 🤞 but if we are serious about building a fallback fund just in case, then the figures have to be realistic taking into account all possibilities. I still think we should align with 2011 in real terms. Is there a rush? Which brings me back to ‘Why now’ etc. 

[weeyin]

37 minutes ago, dennyc said:

Fair point. I think from memory the 2011 figures were based on possibly taking a few years to rebuild and bounce back up. 3 years times 500k perhaps? Just in case. As u say promotion first up is far from guaranteed. Just ask Ross County. And our commitment wage and contract wise must be greater than back then. 

Clearly we are not going down 🤞 but if we are serious about building a fallback fund just in case, then the figures have to be realistic taking into account all possibilities. I still think we should align with 2011 in real terms. Is there a rush? Which brings me back to ‘Why now’ etc. 

I agree with that, and there's a question or two worth asking.

To your point, has the 1.5 million been adjusted for the rise in costs since 2011?

Also, if we haven't met that target yet, why not wait until we do? Of course, given the time some of these projects take, and the process to approve, I don't have a problem planning ahead.

 

[dennyc]

32 minutes ago, weeyin said:

I agree with that, and there's a question or two worth asking.

To your point, has the 1.5 million been adjusted for the rise in costs since 2011?

Also, if we haven't met that target yet, why not wait until we do? Of course, given the time some of these projects take, and the process to approve, I don't have a problem planning ahead.

 

Hopefully the valid points raised are clarified as we move forward.

My belief is that the Society should operate as a separate entity and leave Brian and the Board to manage day to day operations. And it is also for the MFC Board to come up with plans to fund and time the major infrastructure projects we appear to need. That’s why they are in position.

The WS Board should have input of course and seek fan approval if appropriate. MFC approaching the Society with requests for funding strikes me as questionable. I fear lines are again becoming a wee bit blurred and there is a danger of the Society being viewed as easy and cheap finance. As it was under previous Society/Club Boards which ended up with sizeable amounts being ‘donated’ rather than loaned. Subscription monies gone forever.  I prefer not to see a total shift from what was originally the intent of the Society. I’m not saying that is the current intent but there is a shift being proposed.

I do suspect this proposal will be sanctioned as it stands. Mainly because of the feel good factor it gives fans. Only time will tell if it is a clever move. 

No problem with the Society contributing as per Mrs Baillie’s but beyond that level of support I’m not so keen. Certainly not until the reserve fund is a lot more substantial and relates to the current day. 

[grizzlyg]

Hopefully they improve their communication as I emailed them 2 1/2 weeks ago and still not had a response. 

[Kmcalpin]

7 hours ago, dennyc said:

First thing that strikes me is the reserve figure of £1.5m as the target originally set…..in 2011. That figure equates to almost £2.4m in 2026. So it’s nowhere near like for like or close to the level of emergency funds that were visualised as appropriate in 2011. Should it therefore be £2.5m we look to have before we use any excess funds for ‘projects’? To give us the same level of protection that was seen as required in 2011. That initial target was for the exact same scenarios set out in the Broadcast. Effectively relegation. 
Hard to understand why relegation nowadays would have less of an impact than in 2011. I don’t believe using St Mirren and £500k as a yardstick is wise either. Pretty sure other Clubs have identified relegation as having greater financial implications than £500k, even allowing for an immediate return to the top division.

My other concern is ‘Why now and who is driving it?’

Absolutely Denny. Personally, I'd like to know more about the projects that would be supported. As you say, I'd prefer to wait until our reserve fund is fully built up; certainly it should be set in excess of £1.5 m now.  

A blurring of responsibilities? Whilst the Society should not seek to involve itself in day to day matters, the club should be mindful of who its owners are. That should involve being held to account by the Society. The Society owns the club ; the club does not own the Society. 

[dennyc]

28 minutes ago, Kmcalpin said:

Absolutely Denny. Personally, I'd like to know more the projects that would be supported. As you say, I'd prefer to wait until our reserve fund is fully built up; certainly it should be set in excess of £1.5 m now.  

A blurring of responsibilities? Whilst the Society should not seek to involve itself in day to day matters, the club should be mindful of who its owners are. That should involve being held to account by the Society. The Society owns the club ; the club does not own the Society. 

Held to Account yes. 100%. Undoubtedly. 

However, the Club Board do have the expertise to operate like any other football club board. They have done that pretty well so far.  Seating aside 😂. That responsibility surely includes managing infrastructure projects. The only difference is that they have ‘bosses’ to report to who can intervene if appropriate. In effect that arrangement should provide extra security for us fans. My question is whether the Society Board are strong enough to disagree with the Club Board/Brian and say NO. That has not always been the case in the past. They certainly appear to have sidestepped the POD seating issue. But hopefully those days are behind us. 
 

The current proposal has some merit. But are we in a position to commit at this time? I guess that is the question folk have to answer for themselves.

[santheman]

14 hours ago, Kmcalpin said:

Absolutely Denny. Personally, I'd like to know more about the projects that would be supported. As you say, I'd prefer to wait until our reserve fund is fully built up; certainly it should be set in excess of £1.5 m now.  

A blurring of responsibilities? Whilst the Society should not seek to involve itself in day to day matters, the club should be mindful of who its owners are. That should involve being held to account by the Society. The Society owns the club ; the club does not own the Society. 

Ceetainly 2.5m is a more reaistic figure if you base it on inflation rates since 2011.

Im led to believe that the WS currently raise approx 200k per year?? so in theory it would take 5 years to reach the updated figure of 2.5m so in 5 years would it then need to be 3.5/4m to keep pace with inflation?.

The 1.5m reserve will therefore always be a moving figure.

Im supportive of the plan in principle as its a nice straightforward way of building up the reserve whilst releasing monies for 1 off projects which might not otherwise get funded through general expenditure.

The most obvious example of this for me personally would to see lifts in the  Cooper and McLean stands and some form of elevated viewing position for our disabled fans which the DSA have been lobbying for the last 10 years.

[joewarkfanclub]

1 hour ago, santheman said:

Ceetainly 2.5m is a more reaistic figure if you base it on inflation rates since 2011.

Im led to believe that the WS currently raise approx 200k per year?? so in theory it would take 5 years to reach the updated figure of 2.5m so in 5 years would it then need to be 3.5/4m to keep pace with inflation?.

The 1.5m reserve will therefore always be a moving figure.

Im supportive of the plan in principle as its a nice straightforward way of building up the reserve whilst releasing monies for 1 off projects which might not otherwise get funded through general expenditure.

The most obvious example of this for me personally would to see lifts in the  Cooper and McLean stands and some form of elevated viewing position for our disabled fans which the DSA have been lobbying for the last 10 years.

Definitely way overdue for the DSA.

Ive always had it in my head that this is something we could do if the decision IS to remain at Fir Park and rebuild the POD.

Whilst a full height stand cannot obviously go the full length of the pitch, an innovative elevated platform for the DSA could fill that space without blocking out light to the houses behind......

[Kmcalpin]

6 hours ago, joewarkfanclub said:

Ive always had it in my head that this is something we could do if the decision IS to remain at Fir Park and rebuild the POD.

Yes, I would support this kind of project. However the initial stumbling block is the lack of decision on the stadium feasibilty study. 

[dennyc]

Is it the case that we should as a minimum know the basics of what the ground report revealed? And what upgrades are urgently required. If we are staying put even. I support 100% any proposal that improves things for our less able supporters. Lifts being installed seems like a no brainer to me. In this day and age all grounds should be adapting as required. Other venues have to by Law but football seems to get an easy ride. We need to know what the long term plans are re Fir Park before we commit to any expenditure. I hope at the very least the Society have had some indication of what that Report revealed. As owners, I am reminded.

As to what we need as a Reserve should disaster eventually strike, the McLean houses over 4500. Relegation would lose us 2 home games against Rangers, Celtic and more than likely Hearts, Hibs and Aberdeen. Assuming top six. (The reason no League reconstruction will be sanctioned). That equates to around 30,000 paying away fans. Possibly more if the other three exceed 2000 per game. At £25 each that totals lost income of £750,000……for one season (somebody please check my calculation. It shocked me). I guess playing Arbroath, Livi, County etc would not really compensate. Add loss of tv revenue, match day sales etc. WeeYin rightly mentioned Parachute payments but how much will that really compensate given other areas that would also be adversely affected. In the absence of a sugar daddy or external finance I don’t think a reserve of £1.5m or less is anywhere near enough. And I don’t really care what other Clubs have in place. Each situation is unique.

Of course my figures are only guesstimates. How about someone from the Society with access to accurate figures and the Club Board draw up details of the financial impact of relegation?  That’s what we should be made aware of, even if nobody believes it will happen. What cuts would require to be made if sufficient resources were not available? Cuts which would affect our ability to bounce straight back up. 

I’m in no way against the Society providing funding as they have done for the likes of Mrs Baillie’s. It’s a great ambition and the results benefit all. . But let’s not forget why the Society was created in the first place.

[David]

Lengthy rambling post incoming, btw...

I think there are two different lines of thought being discussed here.

The first is whether the Society should ever use some of its money to invest in the club rather than continuing indefinitely to put everything into the reserve. On that, I can see a strong argument for change.

The second is whether this particular structure is the right way to do it. I’m less certain about that.

One thing I wouldn’t underestimate is the risk of doing nothing. As a club, we are competing against clubs where private owners or investors can put additional capital into training facilities, stadium improvements, commercial infrastructure, recruitment systems and sometimes simply provide financial headroom when it’s needed. That doesn’t guarantee success, and badly spent money can obviously achieve very little, but over a number of years that investment can compound.

Better infrastructure can help develop players. Better commercial operations can generate more revenue. Better facilities can improve recruitment. Those things can eventually feed back into the playing budget.

So if Motherwell cannot generate enough surplus internally to fund that type of long-term investment, and also decides not to access Society or external capital, there is a genuine risk of falling behind structurally. For me, that is probably the strongest argument in favour of the principle behind Active Investment.

Where I think we need to be careful is making the jump from:

“Motherwell needs access to investment”

to:

“therefore this particular annual rolling-loan model is the answer.”

They aren’t quite the same thing in my opinion.

The £1.5m reserve is still the first thing I would want clarified. If £1.5m represents the amount the Society believes it prudently needs to protect the club against relegation and an unforeseen event, I still struggle slightly with the logic of diverting half of the default subscription income elsewhere before getting there.

If £1.5m is simply a longer-term target rather than a minimum safety level, that's a different matter. But I think members need to understand which it is.

I also don’t think simply inflation-adjusting an old £1.5m number necessarily gives us the answer. The correct reserve in 2026 should be based on the risks facing Motherwell in 2026, not just what £1.5m from years ago is worth today.

The consultation explains that around £1m could be required in a relegation scenario, plus another £500k for an unexpected loss of income. That sounds reasonable as a starting point, but I’d be interested in how far the downside scenario goes.

For example, what happens if we spend two seasons in the Championship rather than one?

What happens if relegation also affects transfer income?

The consultation itself acknowledges the importance of recent player sales in covering potential shortfalls while the underlying operating deficit is reduced. If we were relegated, there is at least a possibility that player valuations fall, buyers know we are in a weaker negotiating position, some players want to leave, commercial income drops further, and the timing of sales becomes less favourable.

That doesn’t mean £1.5m is wrong, by the way. It just means fans might like to know that those risks have been considered together rather than relegation being treated as a single isolated £1m event.

I also agree with the point made above about the difference between productive investment and plugging ordinary losses.

If the Society lends £200k for a project that has a credible business case and will save the club £60k a year, increase commercial income, improve an asset or otherwise produce measurable long-term value, I can see the logic.

If the money gradually starts disappearing into normal annual operating expenditure, that is a very different proposition.

The answer there could be a pretty firm rule that Active Investment is for identifiable investment projects, not simply another source of working capital to reduce the club’s normal deficit.

That also brings me to the loan structure.

Calling the scheme “Active Investment” is understandable, but what is currently proposed, from what I can see, is essentially an ongoing shareholder-loan arrangement. Again, there is nothing inherently wrong with that. Private football club owners use shareholder loans all the time.

The difference is that a private owner is normally risking their own capital and may ultimately extend the loan indefinitely, convert it into shares or write it off. The Society is deploying money accumulated from thousands of supporters, so I think the terms deserve more scrutiny.

When the consultation says the investment will be “protected”, what exactly does that mean? Is the loan secured? Does it earn interest? Where would it rank against other creditors? What happens if the club cannot repay after the stated period? Is rolling the loan expected to be the normal outcome?

If loans keep being rolled for ten or fifteen years, is the Society effectively providing permanent capital anyway, and if so, would equity sometimes be a more appropriate structure?

I don’t have a predetermined answer to those questions. I just think they are fundamental rather than technical details.

There is also a broader point about how the projects are generated.

I’d much rather the sequence was:

“Here is a project the club believes is worth £250k. Here is what it costs, what it saves or generates, the payback period and why Society finance is the best funding source.”

rather than:

“We have £200k of Society money available every year. What can we spend it on?”

That distinction is important, I think, because otherwise the existence of an annual funding pot can eventually start driving the spending decision.

That is something private owners also have to guard against. Access to easy capital can be useful, but it can also reduce financial discipline.

So I’d probably be somewhere in the middle on the whole thing.

I don’t think continuing forever with every penny going into a bank account is necessarily the best use of the Society’s position as majority shareholder. If other Scottish clubs are investing significantly in their businesses and Motherwell refuses to access any additional capital, there is a legitimate risk that we fall behind over time.

But equally, being the majority shareholder should mean more than simply being the easiest source of finance available to the club. It should mean deploying capital selectively, independently and with a clear understanding of both the upside and the downside.

That’s why I keep coming back to what seems like an obvious compromise.

Agree the Active Investment framework now if members support the principle. Put the project appraisal process, loan terms and safeguards in place. But unless there is an urgent investment opportunity that makes waiting genuinely disadvantageous, why not maintain the existing default until the reserve reaches whatever level is finally agreed to be prudent?

At that point you have both sides of the model in place: a properly funded safety net and a mechanism for investing in growth.

For me, the question isn’t really whether the Society should invest in Motherwell. The answer is that It probably should.

The more important question is how it does that without weakening the very financial protection that supporter ownership was designed to provide.

[joewarkfanclub]

10 minutes ago, David said:

Lengthy rambling post incoming, btw...

I think there are two different lines of thought being discussed here.

The first is whether the Society should ever use some of its money to invest in the club rather than continuing indefinitely to put everything into the reserve. On that, I can see a strong argument for change.

The second is whether this particular structure is the right way to do it. I’m less certain about that.

One thing I wouldn’t underestimate is the risk of doing nothing. As a club, we are competing against clubs where private owners or investors can put additional capital into training facilities, stadium improvements, commercial infrastructure, recruitment systems and sometimes simply provide financial headroom when it’s needed. That doesn’t guarantee success, and badly spent money can obviously achieve very little, but over a number of years that investment can compound.

Better infrastructure can help develop players. Better commercial operations can generate more revenue. Better facilities can improve recruitment. Those things can eventually feed back into the playing budget.

So if Motherwell cannot generate enough surplus internally to fund that type of long-term investment, and also decides not to access Society or external capital, there is a genuine risk of falling behind structurally. For me, that is probably the strongest argument in favour of the principle behind Active Investment.

Where I think we need to be careful is making the jump from:

“Motherwell needs access to investment”

to:

“therefore this particular annual rolling-loan model is the answer.”

They aren’t quite the same thing in my opinion.

The £1.5m reserve is still the first thing I would want clarified. If £1.5m represents the amount the Society believes it prudently needs to protect the club against relegation and an unforeseen event, I still struggle slightly with the logic of diverting half of the default subscription income elsewhere before getting there.

If £1.5m is simply a longer-term target rather than a minimum safety level, that's a different matter. But I think members need to understand which it is.

I also don’t think simply inflation-adjusting an old £1.5m number necessarily gives us the answer. The correct reserve in 2026 should be based on the risks facing Motherwell in 2026, not just what £1.5m from years ago is worth today.

The consultation explains that around £1m could be required in a relegation scenario, plus another £500k for an unexpected loss of income. That sounds reasonable as a starting point, but I’d be interested in how far the downside scenario goes.

For example, what happens if we spend two seasons in the Championship rather than one?

What happens if relegation also affects transfer income?

The consultation itself acknowledges the importance of recent player sales in covering potential shortfalls while the underlying operating deficit is reduced. If we were relegated, there is at least a possibility that player valuations fall, buyers know we are in a weaker negotiating position, some players want to leave, commercial income drops further, and the timing of sales becomes less favourable.

That doesn’t mean £1.5m is wrong, by the way. It just means fans might like to know that those risks have been considered together rather than relegation being treated as a single isolated £1m event.

I also agree with the point made above about the difference between productive investment and plugging ordinary losses.

If the Society lends £200k for a project that has a credible business case and will save the club £60k a year, increase commercial income, improve an asset or otherwise produce measurable long-term value, I can see the logic.

If the money gradually starts disappearing into normal annual operating expenditure, that is a very different proposition.

The answer there could be a pretty firm rule that Active Investment is for identifiable investment projects, not simply another source of working capital to reduce the club’s normal deficit.

That also brings me to the loan structure.

Calling the scheme “Active Investment” is understandable, but what is currently proposed, from what I can see, is essentially an ongoing shareholder-loan arrangement. Again, there is nothing inherently wrong with that. Private football club owners use shareholder loans all the time.

The difference is that a private owner is normally risking their own capital and may ultimately extend the loan indefinitely, convert it into shares or write it off. The Society is deploying money accumulated from thousands of supporters, so I think the terms deserve more scrutiny.

When the consultation says the investment will be “protected”, what exactly does that mean? Is the loan secured? Does it earn interest? Where would it rank against other creditors? What happens if the club cannot repay after the stated period? Is rolling the loan expected to be the normal outcome?

If loans keep being rolled for ten or fifteen years, is the Society effectively providing permanent capital anyway, and if so, would equity sometimes be a more appropriate structure?

I don’t have a predetermined answer to those questions. I just think they are fundamental rather than technical details.

There is also a broader point about how the projects are generated.

I’d much rather the sequence was:

“Here is a project the club believes is worth £250k. Here is what it costs, what it saves or generates, the payback period and why Society finance is the best funding source.”

rather than:

“We have £200k of Society money available every year. What can we spend it on?”

That distinction is important, I think, because otherwise the existence of an annual funding pot can eventually start driving the spending decision.

That is something private owners also have to guard against. Access to easy capital can be useful, but it can also reduce financial discipline.

So I’d probably be somewhere in the middle on the whole thing.

I don’t think continuing forever with every penny going into a bank account is necessarily the best use of the Society’s position as majority shareholder. If other Scottish clubs are investing significantly in their businesses and Motherwell refuses to access any additional capital, there is a legitimate risk that we fall behind over time.

But equally, being the majority shareholder should mean more than simply being the easiest source of finance available to the club. It should mean deploying capital selectively, independently and with a clear understanding of both the upside and the downside.

That’s why I keep coming back to what seems like an obvious compromise.

Agree the Active Investment framework now if members support the principle. Put the project appraisal process, loan terms and safeguards in place. But unless there is an urgent investment opportunity that makes waiting genuinely disadvantageous, why not maintain the existing default until the reserve reaches whatever level is finally agreed to be prudent?

At that point you have both sides of the model in place: a properly funded safety net and a mechanism for investing in growth.

For me, the question isn’t really whether the Society should invest in Motherwell. The answer is that It probably should.

The more important question is how it does that without weakening the very financial protection that supporter ownership was designed to provide.

You have very eloquently expanded on some of the thoughts I was having and put flesh on the bones of what I was trying to get across.

Very well done! 🧡❤️🧡