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One consequence of the downturn in football finances is that finding a rich benefactor is increasingly seen as the way out of financial trouble. This is no less true for unfashionable clubs like Bolton Wanderers. The club may have been a surprise package in the Premiership so far this season, confounding the usual relegation predictions, but the situation off the pitch has been less happy. The Burnden Leisure group reported a pre-tax loss of £5.7m on revenues of £38m for the year to 30 June 2003 and said at the time that it had been unable to get long-term funding. Like other clubs, the Trotters have been grappling with high wage bills for players against the background of attendances far lower than those enjoyed by leading clubs. They are also afflicted by the costs of developing a new stadium six years ago, albeit that it included a hotel and conference facilities (used for the hearing of the Rio Ferdinand case). Burnden decided to take itself off market earlier this year when the shares fell to less than a penny giving the club a total value of £2.4m, far less than its assets were worth.
Step forward 56-year old Eddie Davies, described as an Isle of Man-based businessman. He is estimated to be worth £50m. His fortune is based on his large shareholding in Strix, an Isle of Man company that manufactures electric kettle thermostats. Not the most glamorous of products, but apparently it has a 70 per cent worldwide market share and annual sales of £70m. He had already injected £11.75m and owned just under 30 per cent of the parent company. At the group's annual meeting on 29 December shareholders vote through by a large majority a plan for a massive issue of heavily diluted new shares to be taken up by him. In return for a further £2.25m, Mr Davies (through the E Davies Trust) will take his holding to 94.5% which is above the level needed to mop up the remaining equity holders. More than 57 per cent of the Bolton shareholders had already agreed to the move and in an open letter to shareholders chairman Philip Gartside claimed that an issue was the only option left. 'Demands placed on the company arising out of financial pressures being experienced by many professional football clubs continue to have a negative impact on your board's ability to refinance the approximate £38m of debt. Without such a financial commitment, the club would almost certainly not have been able to survive in the Premier League over the past three years. Equally, there is little to suggest that the financial burden of remaining in the Premier League will ease.' Bolton is better placed than some clubs since it owns its purpose built stadium which incorporates a four star hotel (admittedly not in the most glamorous or sought after location, but there's always the 'conference' trade) and is in the process of developing commercial offices. Chairman Phil Gartside has claimed that the club's bankers, led by the Co-op, had given 'a half promise that if we could deliver this deal, they would look at restructuring the debt.'
Nevertheless, some fans believe that they have got a raw deal. Bruce Halsall bought 1,500 shares shortly after the club was floated in 1997 at 69p. He told the Financial Times , 'For an extra £2.25m, he goes from 30 per cent to 94 per cent. That is the sort of price you would pay for one Premier league player and to sell the whole club for that seems ludicrous.' Rowan Palmer, a London based investor who had a one per cent stake before the dilution commented, 'It is an excellent deal for Mr Davies. He is pating a fraction of the true price.' Perhaps, but share purchases in a football club should arguably be seen as another way of giving money to the club. I see my shares in Charlton as another way in which I have given money to the club, alongside my shirt sponsorship of Curbs. Indeed for the latter, I get an annual dinner with Curbs and a framed signed shirt, whilst my shareholding only gives me the right to attend the annual meeting. The way ahead in terms of giving fans a greater say is surely through the supporters' trust model. Business is necessarily red in tooth and claw and can lead to community values coming way behind making money or conferring status.
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