CO92 Seeking Investment

[je85]

David Ornstein is reporting that the CO92 are seeking additional investment into the club. Ornstein writes ‘The initiative, which will be led by Salford’s owners, aims to assess potential partners who can contribute to the club’s expansion plans. Initial expressions of interest in equity investment have already been received.’

Nicky Butt has reiterated commitment to the club and this is more to do with the next phase of the 10-yr plan. The article on the athletic says - Butt, the club’s chief executive, said: “We are backing Salford City with as much commitment and confidence as ever. We have achieved very special things here but there are major opportunities in front of us and we want to make sure we have the right mix of investment and strategic partners to take advantage of those opportunities.

“We had an original 10-year plan and with strong foundations now in place, it was always the intention to explore options for the next phase. That includes potentially bringing in new partners to help us grow the club and best serve the fans and community.”

Tifosy Capital & Advisory Are assisting the owners seek alternative investors.

Additional investment would see a dilution of CO92 involvement surely?

[chipbarm]

My initial thought when I saw this is that Lim has had enough and they are looking to replace his funding. The club seems to have tightened the purse strings recently and we have discussed on here whether the C92 would walk away but at least that part seems not to be the case. It mentions investors plural and some interest already so it will be interesting to see what happens from here

[tangerinedream]

I'm sure that plenty will jump on the clubs statement and infer that our owners are looking to walk away. On the other hand the more investment that we can generate through additional partners can only be beneficial in the long run and there's no doubt that the Class Of '92 brand is still an attractive one that many wish to be associated with. In terms of financial assistance/support etc we'll just have to wait and see who is wanting to jump on board for the journey we're on.


www.salfordcityfc.co.uk/news/2024/february/26/salford-city-fc-exploring-range-of-strategic-partners-to-further-the-club-s-growth/?fbclid=IwAR1b69y_8pTYj6JB5fDjbBbnidOpSLQa8xSNY9s0rJSGS_ll1rC-e2BjBRo

[je85]

I don’t see the announcement as a negative, I am actually relieved that the owners have had the wherewithal to communicate to the fans the way they have. It appears the owners are early in the process and looking at who is funding St.Micheal’s in town with Neville, Beckham’s contacts in the US and the Middle East I don’t think this process ends with us becoming either Red Bull Salford or fans doing collections to keep the club afloat.

I’ll put my response to the article below because I knew the athletic comments section would be majority Wrexham fans, US based Wrexham fans, and online United and Liverpool fans chirping up weird “glazer” type comparisons essentially digging out Gary Neville. Appreciate GNev makes daft comments that if you take in isolation either from the Doc, his podcasts, or comments whilst on comms you could think it’s raining fifties at Moor Lane. The ‘3rd/4th biggest budget’ comment is always asking for trouble and always sounds complete B****cks IMO. But the collective view in this forum is closer to the relative reality as we see things on the ground week in week out. I don’t think anyone on here can suggest on field or off we don’t need something extra.

A couple of points that have not been mentioned yet to my knowledge, is in the 10-years since the takeover the world view has changed massively. Most businesses perception of value regardless of what field they are in has changed and that has found football. Running costs, staffing, players wages, number of staff required, compensation for head coaches/managers have all increased and the requirements needed to make a success at L2 level has changed.

Looking back I think the only year I thought opportunistically we could’ve sneaked up with our budget was the post-Covid year. Since then we have seen effectively arms races between 3/4 teams every year. FGR spent, Bolton spent, Northampton spent, Leyton Orient spent, Stevenage heavily recruited and fast forward to this season Wrexham has a working budget of £11mil, Stockport’s owner is writing off millions, Gillingham has recruited heavily since Jan’23 and Mansfield the same for the last 2-3 seasons. Mansfield arguably have made a worst fist of a tilt at promotion than us, but our squads are always tight in comparisons to most. My point is that for a club like ours we are fighting for three places in the playoffs - and it’s safe to say 10+ sides into three doesn’t really go.

I do think pushing more youngsters at it with better recruitment will be the route for us to go up, and KR is the guy to do that. Exeter is the best example I can think of in the last few years of developing and selling players whilst playing a style of football that warranted promotion.

Salford could replicate that, based on what we have seen in terms of players getting chances from the B’Team. Regardless it’s still going to take a bit more time and budget. The owners know better than anyone what the cash flow and budgets look like, and we have all suggested ways that could improve things but it’s all speculative and wishful thinking. To go up maybe we have to join the arms race, or does it just take a little bit more in form of one or two more players. The reality is it’s not coming from gate receipts currently so the money has to come from elsewhere.

[je85]

Below is what I put in the comments on the back of Ornstein’s piece:

There has been murmurings for a while at Moor Lane that either Peter Lim would wind back his investment in Salford or the CO92 would look to bring in additional partners - they did it with Beckham so this isn’t a surprise. Peter Lim was hoping for the club to be in a position to purchase the AJ Bell stadium - the home of Sale Sharks and Salford Red Devils RL to develop the surrounding area with apartments and housing to accelerate a return on his investment. As soon as that was off the table I think mentality wise, Salford became Valencia 2.0 on a smaller scale.

The elephant in the room for the last few years has been the EFL’s budget rules and only being allowed to spend 55% of your earnings on wages. Wrexham and Stockport’s spending potential is 3x or even 4x that of Salford - fair to assume Wrexham’s available budget is in the ball park £6-7mil based on their earnings since the takeover.

The CO92 have done a lot and deserve a lot of credit for getting to the EFL. With that they have always caveated they wouldn’t do anything that jeopardised the club financially and would apply tight controls on the finance. Despite the playoff appearance last season Nicky Butt made it clear the budget would be the same for 23/24. We don’t get massive crowds because Salford on the whole will be people’s second or third team in the area, we do get a bump from football tourists if City or United play on the Sunday but Salford will never get the gates Bradford, Wrexham, Stockport, Notts County, Barrow do.

The changes to the U21s to a B team has so far delivered 4/5 prospects into the first team and in Luamba and N’Mai Salford may have another Brandon Thomas Asante. I don’t think the league position is a major factor in the announcement, despite a small squad it is reasonably well put together and Karl Robinson is getting a tune out of them on the back of a poor start. But if Salford really want to make the next step up on the field they have to expand the budget, the club has done well commercially but the match day revenues are constrained by low turnout and the stadium itself.

Coming out on the need for increased investment and being transparent about the search for it should be applauded, locally Bury, Rochdale and Oldham kept supporters in the dark which created significant levels of stress when things went west. This appears to be one of the CO92 better handled initiatives.

[Deleted]

It's been clear to supporters for some time that our budget has decreased. While I appreciate je85's optimism I'm worried what will happen to the club if this additional funding is not secured. Additional funding has never been mentioned before this despite their claim it was always their plan.

I hope this is a positive sign of things to come but I've made no secret of my worry for the club's future.

I do have more faith in Jonathan Jackson than the C92 so hopefully he can help secure a more sustainable structure going forward.

[dannyboy]

Apologies if this has already been stated elsewhere but what would be in it for the new investors in terms of getting a return or profit in the future. Maybe I’m looking at it too negatively but I don’t see us as an attractive proposition to sink money into

[Chris P. Bacon]

This could be good or bad news. As said above, the rumour about Lim pulling his investment is a worry and if true, is this just a replacement for him or an investment that will lead to a stronger squad?

[je85]

I don’t think anyone buys into football to turn a profit especially at this level. The main USP of Salford for an investor is still the CO92, like them or loathe them association is a massive sell. If you pull back from our up close and personal view there is a consensus in football circles SCFC is well ran and play good football because of the owners. One thing this initiative does have in its favour in relation to finding a cash injection is the ownership are extremely well connected domestically and internationally. I don’t think they will struggle to find the finance they believe they need to progress the “project”.

Hypothetically and very much glass half full with a dash of cynicism, pinch of being a grumpy sod and shaken over capitalism from the outside looking in there are good investment opportunities being attached to perceived community asset in the near future. The AJ Bell shaped Albatross is painted as a fail for the owners, but at no point do I think a new stadium has been off the agenda for them and is their main focus to drive revenues. We are about to move into a general election cycle where righting the wrongs of the current incumbent will make up the lion share of the discord. The knock on is MPs will always seek visionary schemes that curry favour on the doorstep. Shiny new facilities, new housing developments and improved X, Y and Z will be promised and the club is an easy rubber stamp of legitimacy to jump on especially following Mondays announcement. In turn this means gov funding into projects that draw on the ‘northern power house’ type pots of money like Jim Ratcliffe has been talking about for redeveloping the surrounding area at Old Trafford finding its way to Salford. If you invest, the club then isn’t using as much of your money to deliver the better facilities that may then contribute to an improvement in on field performance. Mr or Mrs Investor then - if it all goes to plan looks like a hero in the eyes of 2800 people on a match day whilst not spending as much as you thought. Positive ROI…

That said, I don’t think we are seeing a single individual or fund being the only route to increased investment. The owners choice of Tifosy to handle putting feelers out will probably see bonds being issued like they have done for Bolton, Rangers and Stevenage to name a few. This is the route AFC Wimbledon took when looking to make the short fall up on the new Plough Lane aka the Cherry Red Records stadium. Their aim was to maintain fan ownership to complete the stadium financing. For us I imagine the ideal scenario will be the same in reverse - issue bonds generate funding + CO92 money + Lim money = new stadium w/local gov support to get land on the cheap X housing developer to build apartments (probably Neville and Lim like St.Michaels in town or Fred Done’s Salboy then sold to more international buyers) and amenities or cheap council housing adjacent - Everyone’s a winner!

I am not trying to write the CO92 prospectus with the above but sprinkle all that with potential for ‘multi club’ with Valencia and Inter Miami, The Karl Robinson revolution, a thriving B team in year 1 with a £1million winger in Luamba ready to follow BTA to the promised land - Plus free kick abouts on the roof of Hotel Football with a bunch of treble winners. All in all if I had it, I would drop a few million a year into Salford… maybe.