Norwich City announce £3.5m Canaries Bond to fund Academy

[Marc]

A pretty interesting read below, if you have a vague interest in football finance. Is this a first in the UK?

My thoughts at the bottom with a bit of maths

Quote

Norwich City is launching a £3.5m Canaries mini-bond to build a state-of-the-art Academy, giving supporters the chance to invest in the Club’s future.

Investing in the Academy is part of a long-term strategy to produce more home-grown players, building a sustainable future for the Club while continuing to develop a first-team squad capable of being promoted and then remaining in the Premier League.

The money raised by the five-year bond, which has a maximum £5m threshold, will be ring-fenced to ensure it is invested in facilities at Colney, maintaining the Academy’s Category 1 status and enabling the Club to attract the best young players in the region and beyond.

The Academy is being revamped under its new Manager Steve Weaver and Sporting Director Stuart Webber with a brief to bring through more first-team players to follow in the footsteps of Jamal Lewis.

The Club’s owners and directors plan to invest in the bond and Managing Director Steve Stone presented the plan to 200 club partners at Carrow Road on Thursday evening.

The Club’s vision is to become an established Premier League club, driven by its proud, passionate community, and long-term supporters are being given an opportunity to pre-register prior to the public launch on March 28.

The bond will pay 5% gross interest annually, with an additional 3% gross in club credit, and investors will be paid a one-off 25% bonus if the Club is promoted during the lifetime of the bond. The minimum subscription is £500 with no upper limit; investments must be paid in increments of £500. The Canaries Bond is an unsecured investment and prospective investors will be advised at every stage of the process of the potential risks to their capital.

The bond will be available through Tifosy, the world’s first sports investment platform, which was co-founded by former footballer and manager Gianluca Vialli. Last year, Tifosy successfully launched English football’s first mini-bond, raising £600,000 for Stevenage FC to build a new all-seater stand, and the first in Italian football, a €1.5milllion mini-bond for Serie B club Frosinone to invest in its stadium.

Norwich City Managing Director Steve Stone said: “The Club is delighted to be offering this investment opportunity in partnership with Tifosy, who have a proven track record of helping professional clubs in the UK and Europe to deliver major capital projects through schemes just like this one.

“Developing the Academy is a vital part of our strategy for the long-term future of Norwich City, securing Elite Player Performance Plan (EPPP) Category 1 status into the foreseeable future. We have a firm commitment to produce more young talent to play for our first team and this work is an essential part of this. All support for the Canaries Bond will make a major difference to this Football Club in the years ahead.

“I will be investing along with many of my colleagues at Carrow Road and Colney and members of the Board. All support for the scheme will make a major difference to your football club in the years ahead and if you are interested, please read the details of the offer carefully to see if you’d like to become involved in helping us to Build Our Future.”

Tifosy co-founder Gianluca Vialli said: “A strong Academy is the lifeblood of any club and supporters love to see local players break through to the first team. Norwich City wants to invest in its Academy and the Tifosy platform gives supporters the chance to become partners with the Club, investing together in its future.

“We are excited by the Club’s long-term vision to develop more of its own young players and are delighted to be supporting the Canaries Bond.”

Who are Tifosy?
Tifosy is a sports investment platform. It was co-founded by former Italian footballer and manager, Gianluca Vialli, and CEO Fausto Zanetton, who advised some of the largest companies in the media, technology and sports sector during his banking career.

It helps leading sports clubs raise capital online by issuing debt or equity and connecting them with a global fan and investor base. Tifosy’s mission is to enable everyone to invest in sports, fairly and transparently, and it is the only such platform licensed by the UK financial regulator, the Financial Conduct Authority.

FAQs:
Why is Norwich City launching the Canaries Bond?
The Club believes that investing in its Academy and producing more of its own players is the best way to deliver sustainable long-term success. The Club is taking on short-term debt so it can build for the future while continuing to invest in the first-team squad and finance day-to-day club operations.

How do we know the money will be spent on the Academy?
The Club has undertaken to spend the funds raised on the specified infrastructure at Colney Training Centre. It will not be used for any other purposes.

What are the risks to the Club of taking on the debt?
Norwich City does not have any long-term debt on its balance sheet so taking on short-term debt to accelerate vital infrastructure investment does not represent a high-risk strategy. In the long-term, producing more home-grown players is a more sustainable business model than only buying players from other clubs.

What provisions have been put in place to make sure the money is paid back?
The Club has put in place a robust financial plan, which will be monitored by the Board, to ensure that sufficient cash will be available to repay the Bond. On an annual basis, interest payments will be financed through operational savings made by building the new training facilities.

Why are supporters being asked to finance the investment – why can’t the Board finance it?
Some Board members have invested significantly into the Club and have committed to invest into the Canaries Bond alongside supporters, on the same or lesser terms. Moreover, Norwich City is a partnership between the Club and the supporters and the Board has decided to offer the opportunity to fans to invest their money at an attractive rate of return and be part of building the Club’s future together. The Club consulted with representatives of the Canaries Trust to obtain feedback on the Canaries Bond offering.

What are the risks of investing in a mini-bond?
As with all unsecured investments, the Canaries Bond does put the investor’s capital at risk. The risks are made clear to potential investors at every stage of the online investment process and in all the bond documentation and promotional material. Supporters are required to certify that they have understood the risks and read key documents before they are allowed to invest. Potential investors are encouraged to seek independent advice from their Financial Adviser. Having carried out a detailed assessment of the risk profile, Norwich City and Tifosy have set an interest rate appropriate to that level of risk.

How do I invest in the Canaries Bond?
Anyone interested in learning more about the Canaries Bond, or considering investing, can register to receive priority access to the investment page, ahead of the public launch on March 28. Registration is through the Tifosy platform: www.tifosy.com/canaries Click on ‘Pre-Register Now’.

For how long will the bond offer remain open?
The Club can decide when to close the bond, but the offer will close no later than May 25, 2018. The maximum threshold for the bond is £5m.

What happens if the Club does not raise the £3.5m target?
If the bond raises more than the £2m threshold but does not hit the £3.5m target, the bond will be issued and the Club will investigate further funding options to cover the deficit. It has undertaken to continue with the planned developments regardless.

What happens if the Club gets promoted more than once during the five-year bond period?
The promotion bonus is designed to ensure supporters share in the proceeds of the Club’s success. It will only be paid once, on the first occasion the Club is promoted to the Premier League within the term of the bond.

Why is the Club working with Tifosy rather than issuing the bond directly?
Under Financial Conduct Authority guidelines, the Club is required to use the services of an FCA-authorised company to issue a bond. Tifosy is authorised to issue bonds on behalf of sports clubs and provide the specialist expertise required to execute a bond issuance. They are global experts on online sports capital raises and have worked successfully with other clubs in England and Italy.

https://www.tifosy.com/en/campaigns/pre-register-to-invest-in-the-canaries-bond?utm_source=Weekly Bulletin&utm_medium=Email&utm_campaign=Canaries Bond&utm_term=Section 1&utm_content=bondbull0903

 

Fag packet maths suggests £1000 investment would return £50 per year and £30 in club credits (presumably to be used in club shop, not sure if it can be used on season tickets, yet). That's £250 cash and £150 in club credits over 5 years, then the potential of a £250 bonus if we get promoted.

At the end of the 5 years, you would have £1250 (£1500 if promoted) plus £150 worth of 'club credits' admittedly, most people would probably spend the credits on something they normally wouldn't buy.

Negatives:

You obviously have your money tied up for 5 years. It's also unsecured, if we go into admin for example you may not get your money back. I'd suggest that's highly unlikely as we currently have zero or very little debt. Even if we went down to league 1 again I doubt that happen and it would piss off so many local people, but a risk.

The other negative, which I do agree with. We are not a supporter ran club. In effect the punters are putting value in the club for the shareholders. There is also a lot of frustration that we didn't improve the academy when we had the Premier League riches. This would've been a drop in the ocean then.

 

I'm considering investing, the the casual fan making £500 or £1000 investments it won't change lives, but helps the club and you might make some money,

[Berserker]

Though it had something to do with the Canary Islands.

[Marc]

4 minutes ago, Berserker said:

Though it had something to do with the Canary Islands.

Instead of buying Wolfswinkel and Naismith we probably could've bought a couple of canary islands and had change to spare to build this academy 

[Honey Honey]

Surprised Ed Balls name didn't come up in the article. Has he left?

[Marc]

20 minutes ago, Kitchen Sales said:

Surprised Ed Balls name didn't come up in the article. Has he left?

Nope, still chairman.

[Dave]

Given the category one status and the relative success of players progressing through the academy in recent years I'm not sure Norwich are the right side to be experimenting.

On a side note, given the number of players being churned out at sides like Norwich, Ipswich, Forest, Fulham etc it only strengthens the belief that academy players are better off playing for a Championship team than a Premiership one. I feel sorry for our Academy players now, and not surprised we haven't produced another player like Clyne, Moses or Zaha since.

[Smiley Culture]

“We’ve spunked all the Premier League money, so give us more of your money and we might produce a couple of kids who make the first team”.

I’m not sure that I’d be tempted to part with a four figured sum to a club who, quite frankly, blew the income from being a Premier League club on thin air. It also wouldn’t fill me with confidence that the board couldn’t muster £5m to put towards this. 

[Marc]

9 hours ago, The Palace Fan said:

Given the category one status and the relative success of players progressing through the academy in recent years I'm not sure Norwich are the right side to be experimenting.

 

.I don't get what you mean by this? Do you just mean we have a few players coming through and cat 1 anyway so we could keep gambling on it continuing?

8 hours ago, Smiley Culture said:

“We’ve spunked all the Premier League money, so give us more of your money and we might produce a couple of kids who make the first team”.

I’m not sure that I’d be tempted to part with a four figured sum to a club who, quite frankly, blew the income from being a Premier League club on thin air. It also wouldn’t fill me with confidence that the board couldn’t muster £5m to put towards this. 

Yeah, i agree with that to an extent. The club blew the money and now the punters that are footing the bill. The only thing I would say is that this is effectively an (unsecured) loan to the club not a gift. I think it's highly, highly unlikely the club goes bust and we may even take out some kind of insurance. Imagine the uproar if we fleeced the supporters of their money.

I guess when it's your club, you're always go to have some blind faith in the club. It is for the academy as well which hits a soft spot with people.

To be honest I personally probably won't invest. I'm not really at the stage of life where it would be right for me to have money tied up for 5 years, but if I was older and had a couple of grand in premium bonds making fuck all then I'd go for this, for a small investment and to help my club.

[Dave]

Norwich are set to go ahead with the construction of a new state-of-the-art academy after raising £5m through a bond scheme.

More than 700 supporters and investors contributed to the five-year Canaries Bond, which had been set for a public launch on March 28 before it reached its maximum threshold, meaning no further investment could be accepted.

A statement released on the club's website said "the successful raise supports Norwich City's long-term strategy to produce more home-grown players" while "building a sustainable future for the club".

[Inverted]

I like the sound of fans becoming more closely involved in the fortunes of the club, but as others have said it seems a bit stop-gap to have fan investment schemes in an otherwise normally-held company. 

But good luck to them.