Yesterday evening, an event was held at the Weston Homes Stadium to present the Peterborough United Bond to a group of season ticket holders and hospitality guests. Representing the Club were co-owner Stewart Thompson (“RST” below) and CEO David Paton (“DP”), and there were three representatives of Tifosy also there to answer questions.
What follows is an abridged write-up of the Q&A session, for the benefit of those not in attendance.
Q: Peterborough United Football Club is the legal entity that is actually offering the bond. Is that correct?
Tifosy: That is correct.
Q: Peterborough United Football Club makes a loss. Isn't a risk here that we're just going to increase the debt in the Club?
RST: This does increase the debt on the Club, yes. But we're talking about paying 9% on £2.5m. We spend more than that on a single player, so that's an easy piece for us to manage.
Tifosy: The sustainability of your football club is not completely dependent on its accounting profits. A football club can be sustainable – despite the fact it makes losses on an accounting basis – by generating cash from player sales and from owner injections. There are lots of good examples of football clubs which make losses all the time but have wealthy ownership who put money into the Club. One of the things we look at during our process is how much money have the owners put into the Club over the last four years. Of course, there is no guarantee that they're going to put money into the Club during the next four years, but there is a track record there.
DP: We're fortunate we have three ambitious owners and they've tasked me with growing the revenues significantly across the board. Not just on matchday – the sponsorship level, hospitality, all levels of the business. There are a couple of things coming that are going to make six-figure numbers in new revenue that we didn't have previously and will also add to the blend of revenues, which again make this a more sustainable business.
Q: When you talk about cash 9%, is it cash in the bank, or is it a mixture of cash and Club credit?
Tifosy: It's cash, not Club Credit.
Q: If the club gets promoted during the Bond term, when will the 15% bonus be paid?
Tifosy: By 31st of December of the same year.
Q: Is the bond an asset I can sell?
Tifosy: On the Tifosy platform, you can find the Tifosy Exchange. It is like a notice board where you can list bonds at the price that you would like to sell them and other members of Tifosy can open a dialogue with you to buy them. You can then negotiate with them on the price and decide whether you would like to sell that bond to that individual. Importantly though, there’s no guarantee that you'll be able to sell your bonds nor that you'll be able to get the price that you'd like for it. There is also an administration fee of £25 pounds for any sale.
Q: Could you say a bit more about the possibility, the dreadful thought of relegation to League Two and exactly what that would mean?
Tifosy: There is a covenant on the Bond stating that if the Club were to be relegated at least 50% of the Bond would be repaid.
RST: The Club's value would decrease and therefore our ability to carry that debt would decrease. So we would have to pay half the Bond if we were to go down.
Q: What would happen to my bond if I should die before five years is up?
Tifosy: The Bond would form part of your estate. Once it had been determined who would be the beneficiary, your executors would write to Tifosy and we would transfer the Bonds to a new account in that person's name.
Q: What happens with tax if investing through a company?
Tifosy: UK tax resident corporations are not subject to withholding tax, so the interest would be paid gross and you would declare corporation tax in your account filings.
Q: If you've already used your ISA allowance for this tax year, can you transfer from another ISA?
Tifosy: Yes. You can transfer funds from an existing ISA into a Tifosy ISA, but only from a previous tax year. You cannot transfer funds you have invested this tax year.
Q: What is the split of funding required for the three projects you have mentioned?
DP: The split is almost a third of the £2.5m on each project.
Q: Do you have to register through a computer?
Tifosy: Yes, the investment process is fully online and you will need an email address to set up an account. You can ask for assistance from a family member provided you are the one making the decisions on investment and completing the steps on the website.
Q: Are the investor privileges going to make somebody investing £1,000 a second-class investor against somebody that invests £50,000 pounds?
DP: Not at all. The whole point of this bond is you invest what you are comfortable investing. People have different amounts of funds available that they are willing to put into an investment.
Q: I understand these are mission-critical projects for the Club. What happens if the funds are not raised? Will the owners underwrite the money?
RST: They are essential, but they are not time-sensitive, except the safe standing. But would I take money out of our core operations and buying players to do a sports bar? No.
Q: If Tifosy ceases trading within the Bond period, what happens to the Bond capital, returns and the administration of the bond?
Tifosy: In the unlikely event of an end to Tifosy’s operations, administration of the Bond would be passed to another management company selected by the Club. Invested funds and returns would be unaffected.
Q: Are there any criteria under which the 9% rate of return would be reduced or stopped?
Tifosy: No. There are no conditions which would lead to a change in the interest rate being paid on the Bond. However, as is clearly explained on promotional materials, investment in a security of this nature involves risk and returns are not guaranteed.
Q: If you apply for Bonds next week, when do you need to pay?
Tifosy: Payment must be received within 14 days of the application for Bonds being made.
Please note that investment in a security of this nature, being an illiquid investment, involves a substantial degree of risk and returns are not guaranteed. An explanation of the risks and the full terms and conditions is available at www.tifosy.com/pufc.
Approved as a financial promotion by Tifosy Limited which is authorised and regulated by the Financial Conduct Authority (no. 717605).