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Club News

Shareholder and fans update

10 May 2021

Club News

Shareholder and fans update

10 May 2021

Just over a week ago, a shareholder document with comments from myself and the CEO regarding legal paperwork for the transfer of the Scunthorpe United site to its parent company was leaked and posted on various media outlets. Not wanting that to happen, or the content of this letter to be misread or leaked, I have decided to issue this statement to shareholders and fans at the same time.

I will try and clarify as much as I can, but there will be some commercial information which is not only confidential, but also sensitive as negotiations to invest in the stadium and land adjacent move forward.

The football club has been a subsidiary of my business, Coolsilk Property and Investment Ltd, for several years and that is due to the ownership of 91.5 per cent of the clubs’ shares valued at £8m. The club has been owned by my company since that point. When we initially came to the club, we had to invest around £4m to clear some outstanding debts, interest charges and charges against the site, as well as to cover the budget for the season which had already been set to stabilize the football club.

The value of the site when we arrived, and in the accounts of the club, can be seen at around £4m and then rising to £5.2m 18 months ago. The initial financial outlay of around £4m, plus the costs of constructing the training pitch and improving parts of the stadium such as the Iron Bar, improving the IT side of our business, along with player recruitment, are within the remainder of the £11m loan. HMRC rules mean, as also was the case with previous loans prior to my arrival at the club, that the loanee must charge interest and we have done that at the minimal level allowed. The removal of the loan for around £11m clears any legal charge on the football club and removes the interest charges of around £350k per annum, a payment we were paying indirectly to ourselves anyway!

While Covid-19 has ravaged the country for the last 14 months or so, it was imperative we continued the work, which had already started well in advance of the pandemic, of the club moving toward a sustainable model. As part of our first season in League Two in 2019/20, we had to find a different way of investing monies into the club because of a variation on the SCMP rules in that league compared to League One. This was done via stadium naming rights and as a result will lead to an investment of over £4m since the start of that season and continuing over the next 10 years - none of which is returnable to us.

We intend to start work on the apartments in the coming months and envisage a timescale of about 18 months, as well as begin work on improving the East Stand, which will be developed in stages. The profits from the apartments will go toward the financing of the stadium improvements and a new training facility, which will encompass all our football teams and the academy on one site. There will also be an investment in other parts of the site to improve traffic flow and car parking, with a new food village to improve our matchday offering outside of the stadium.

We have tabled an ongoing head of terms in the interim for the football club, which protects it for the next 99 years, not 999 years (although a slip of the tongue I don’t think this matters too much), and no rent is due until the club is sustainable which will then be set at a market rent. This agreement also stipulates that any owner of the assets can only move the football club if a brand-new stadium is built with training facilities, all of which are to at least be of the same standard, on another site.

When we finish our plans over the coming years, the site will operate as a standalone business which hopefully will generate the income needed, outside of football, to not only survive, but continue to invest in the team and football structure. I stated when I leave the club it will be in a better position off the field than when I started, and hopefully in the coming seasons on the field too as we continue to invest in Scunthorpe United Football Club.

It is so important that you as fans continue to support your football club. As I said right at the beginning of my tenure in 2013, that support comes through purchasing season tickets, coming back into the stadium to support the team when fans are allowed to back in and purchasing food and drink on matchdays. You can also help the club financially by buying its products, supporting events such as the outdoor cinema we have during May, supporting the restaurant outside of matchdays when it is open for lunches, including our Sunday Carvery, and also give us the opportunity to host you for your own personal celebration events. I will continue to support the club as we go through change and all I ask is you do the same. I have been asked recently why fans cannot buy shares currently and my answer is that there is no point or benefit to fans as we own over 90 per cent of the club. It is much more beneficial that fans support the club financially in the areas I have described above as they get something in return for their money.

There will be investment in the club, but that must be gauged and controlled so we do not put the club at risk. The club’s sustainability must come first; that is the path we are on and I would never risk the future of the football club.

In my first six years we ensured that fans enjoyed the football club with very few price increases on many of, if not all, our products and that was sustained by our investment. We have been regularly talked about as a value for money club and I have continued to be as transparent as I can in the press. I openly talk about the club through bad times and good, and face up to my mistakes but continue to do what I think is best for the club.

On the field we have been met with many challenges and yes, we have not quite got it right with managers, but we have a chance now to kick on. It might be a bit tight budget wise, but we cannot compete with the finances of other better-supported football clubs as the price of football still escalates. When we were challenging in League One, we were still competing with clubs who had triple our wage bill and that has not changed. Smaller clubs find they must look at different ways to compete and that is what we are doing. Our league structure is about promotion and relegation, and that’s why so many fans have stood up to protect it recently. We do have to look at a model where we can generate income from player sales and development. It is a model we are moving forward with but, unfortunately due to the Covid impact on finances, we are having to shelve our Under-23’s so we can focus on and have a more manageable first team squad for Neil. Some of the Under-23’s from that set up will be in our squad next season, so it is a model we will return to when finances improve, and we can do it justice. We will continue to develop our academy players and we need to look at how we can integrate that part of the club to enable players to progress into the first team at a younger age.

Our new proposed training facilities and investment from the development of the site will help us to do exactly that.

Off the pitch, we have been discussing several topics with the fans groups and as we begin to come out of lockdown there will be continued work towards our ongoing engagement with the community. In an ideal world, a club run with management, staff, fans, shareholders all singing form the same hymn book would be perfect, but impossible, and I am quite aware of the difficulties surrounding democratic decisions on signing managers, players and coaches. You just cannot imagine signing someone with a 55 per cent acceptance and a 45 per cent non-acceptance, it just will not work. The decisions must be made and currently I must be brave enough and confident enough to make those big decisions for the club and in full acceptance they may be wrong in hindsight. It is a wonderful thing, hindsight!

These decisions are not made on a whim or without consultation, as many people far more qualified than me do have an input, but the final decision is mine and I take that responsibility.

As a board, we have been in consultation with the various fan groups on how to get a fans representative on the board. It would help me, and it would give the fans a direct route into the boardroom. We hide nothing unless it’s commercially sensitive, so there is no problem with this. The difficulty will be on how we do it - the legal aspect, be that as a non-executive or executive, who do they represent and how they communicate back to the fans.

A board meeting may include personal information, data on staff and individuals, tribunals and finances, all of which are protected if you sign up as a director. We need to find a common approach and our fans groups have been asked to go away and look at a proposal they can bring back to the board for discussion and implementation.

A fan group recently applied for an ACV (Asset of Community Value), which was reported in the press as a legal protection for the stadium. Sadly, like many things recently reported, this is not a legal protection, it just offers a fan group the option to bid if the asset is put up for sale - nothing else, and even then the group are not entitled to buy the club. It gives the group about an initial six weeks for consultation and a further 20 weeks to come up with a bid and finances, thus delaying any potential sale of the asset to a new buyer. I have absolutely no issue with the fans having an option to bid and if I had been spoken to before the application was submitted, I would have been happy to have tried to come to some form of an agreement. However, the group have gone ahead and unfortunately the application has a few flaws which we have asked to be clarified by the council and will cost the club in legal fees. I am very happy to discuss and find a solution with the fan group on this issue, whether the ACV is declined or accepted, so that the fan group achieve what they want, without incurring cost to the club in the process.

Lastly, I want to thank all the fans, staff, and management for their help over the last, very testing 14 months or so. We are still here; we are still a league club, and we will come out fighting next season. There will be investment in players and, although we must be a little more prudent, there is a belief within the club that we can and will do well next season. Neil is a local lad, and he has had to endure more than most this season, but we have stuck together and we are building a team to fit within his expectations, and not just the club’s, and this will be a huge team effort. When you return to watch your team, we will endeavour to provide the entertainment and the results you crave after being away for so long and having to endure the last few seasons.

It is a clean slate and I want to thank all the players who move on this summer, I appreciate their efforts and will always class them as friends, not just players, and they know that. We wish them all the luck at their new clubs, except when they play us, and a prosperous and safe career. The lads that are here now have a huge opportunity to show what they can do and develop into quality professional footballers under the tutorage of Neil and his team.

Thank you for taking the time to read this and I wish you an enjoyable and safe road out of lockdown.

Peter Swann

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