Read previous blogs from 12 blogs at Christmas and the next lot that I will be publishing daily here
The Lewes FC Fanzine 12 Blogs at Christmas. – Lewes FC Fanzine Blog (wpcomstaging.com)
For the last 10 years years former club directors and part creators of the Lewes FC Community model Mr Ramsden and Mr Dobres, latterly his wife too, were the only people to donate large sums of money to Lewes FC.
A trawl through 12 years of accounts show they have donated nearly two million pounds to the club, mainly over the last few years to finance the growth of the women’s team and budget parity. Now they are off the Board after their 4 three year terms have ended although they can stand again after a three year ‘cooling off period’ after recent changes to our constitution.
At the recent club AGM it was announced these large donations will no longer happen and instead an ‘endowment fund’ has been set up.
This club announcement is pivotal to our future finances.
Lewes FC…..’Many owners will be aware that the two resigning directors have made significant financial contributions to the club over the years, and that the club, for now, still typically runs at a financial deficit. In order to minimise the club’s financial risk, Dobres and Ramsden have created an “endowment fund” for the club on their departure from the Board, which is to be used by the ongoing Board, and future Boards, to backstop any financial shortfalls and increase financial sustainability. The Board have been aware of this endowment fund since February, and it is now integral to the club’s financial planning. For clarity, the club remains completely debt free.’
For clarity also let us emphasise Lewes FC trades at an enormous loss, but is debt free as the bankrolled loans are written off.
How do endowment funds work?
Simply an investor will plonk funds into the fund. These funds cannot be touched, but the return on the fund rather than going back to the investor will essentially go to Lewes FC.
I did a spot of research and the returns mooted seem to vary between 3.75 to 12%.
Returns seem to vary according to risk. The higher the risk of a good return one year, the higher that conditions may mean there is no return the next year or a lower risk strategy may mean a lower return but a consistent amount.
Hypothetically then, had the £2 million or so Mr Ramsden and Dobres been invested in an endowment fund 12 years ago, that £2 million would still be in the fund but the annual return may have of between £50-150,000 annually to go into the club.
Essentially in layman terms, the original investment cannot be touched but the return skimmed off the top for the club.
Makes sense except to cover our huge trading losses the fund will need to maybe be worth up to £8,000,000.
What it will do therefore is provide a permanent income stream of money through the returns.
This was not how we expected our club to be financed but I guess it scrapes in at the bottom of the barrel in the self-sustained class. However, it may or may not make us self-sustained through the fund but the purity ethos of a community club being self-sustained is that the club activities self-sustain the club not rich people paying into an endowment fund. This is not what we were told was on the agenda.
However long-term it may well be possibly ticking a box towards one of our core aims. To be self-sustained. But it makes a compete mockery of another core aim, that of transparency.
The crux of this is that the current transparency of who is bankrolling the club will now disappear. It won’t be the people we know and know about and in the case of Mr Ramsden and Dobres we all understand their personal endeavours, commitment, and genuine love of the club. The donations must remain anonymous.
Part of the importance and a key aim of all fan-owned community clubs is accountability and transparency. A healthy thing about Lewes FC over other clubs that are routinely bailed out is that fans are not left to second guess where the money has come from. As Directors donating to the club previously, I can only suggest that the 12 years of donations were transparent via the accounts as Mr Ramsden and Mr Dobres as they had to declare the donations being on the board as ‘related party transactions.’ Although I am not suggesting they would not have possibly made their contribution known otherwise.
I have questioned the club about transparency and whether at least we reach some conclusion of the number and value of donations but not the contributor names so we can at least get a feel for the money chain, but no chance
Are we going a step forward to achieving one of our core aims of self- sustainability with the endowment fund but sacrificing that at the altar of transparency. It feels like another enormous shift in principle from community ownership to private ownership. Reading the Fan Led Review by Tracey Crouch MP and you’ll be left in no doubt that this is not healthy governance.
My understanding however, is that technically the fund can be compromised and in reality be made pointless by investments being withdrawn or the club model being changed. I stress that I am not sure of this but am luckily seeing my dad over Christmas who as luck would have it has written two books on financial planning, albeit a long time ago, so I shall update.
Lewes FC in the 2021/22 Club Strategy made clear they were in the market for seeking other rather charmingly named ‘persons of high personal worth.’ A lousy terminology for our sort of club don’t you think? Really sorry the rest of us are so inadequate!
The crux of this is that the current transparency of who is bankrolling the club will now disappear. It won’t be the people we know and know about and in the case of Mr Ramsden and Dobres we all understand their personal endeavours, commitment, and genuine love of the club. The investors must remain anonymous.
What we know so far is that there have been three contributors, whether that is Mr Ramsden and Mr and Mrs Dobres we will never know and that is not healthy.
The Rights of Fans. 