Our Newcastle Knights: Community ownership model for Hunter's NRL flagship

[macavity]

So the solution is....?

 

[Knight76]

So the solution is....?

A yearly leagues club style grant.

If this plan is to work there needs to be a annual or bi-annual contribution from owners as I said above. Or it won't work.

We don't have a leagues club, and don't get their annual grants to bail us out. But we do have a strong supporter base, it remains to be seen if we can get 30,000 shares sold to generate 15 million.

But in my opinion the pitch needs to be adjusted to make it clear that further contributions will be necessary. In fact I believe we should be aiming at putting in a yearly amount of $2 mil which per share at 30,000 shares comes to just under $70. Very affordable once the initial outlay of $500 is done.

I would sign up under this style scheme for a share. But without an annual contribution I can't see how it will succeed.

 

[macavity]

You can make the capital they are talking about generate 2mil a year.

 

[Knight76]

You can make the capital they are talking about generate 2mil a year.

Yes, but that capital is going to be eroded.

Set up the annual contribution to keep the club alive, even if the capital is there generating a good income, an extra 2 mill a year ongoing and we can build from strength to strength. Maybe we can get to a point in the future where that annual contribution can be cut, or not required at all.

Id rather set this up from the outset with the contribution to ensure ongoing support, rather than find out we need it later and come back to the 30,000 share owners with cap in hand.

 

[Spot On]

So the solution is....?

Well, if a mob like Wests don't like what they see and a private owner doesn't want a bar of it then it is what it is.

Shit.

Solution? The powers that be needed a leagues club 28 years ago. That's still rings true today. Who knows what could have been in 2016 if that was somehow a long term priority that came to fruition.

Wests would be the solution but they obviously like their bottom line atm and won't so much if they jumped in.

 

[Alex28]

Now the Herald is saying it's up to 40,000 shares for $20M.

Just make it even more unachievable...

http://www.theherald.com.au/story/4...d-backs-our-knights-with-50000-pledge/?cs=306

 

[macavity]

I'm in for $5k. Now or never to back ourselves.

 

[Alex28]

It's no risk if they don't make the capital raising - you get your cash back. All good.

It's just too big a figure they are chasing...

 

[macavity]

It's no risk if they don't make the capital raising - you get your cash back. All good.

It's just too big a figure they are chasing...

Don't agree. I think there will be a lot of businesses in for 10K+ each. That is where they will make the bulk of it.

 

[PhilGould]

Newcastle Herald has already pledged $50k.

 

[slotmachine]

You can make the capital they are talking about generate 2mil a year.

if these guys can deliver consistent returns of over 25% they wouldn't need to be asking punters for money

 

[macavity]

if these guys can deliver consistent returns of over 25% they wouldn't need to be asking punters for money

15-20mil - 10-15% is achievable depending on industry. They have a severely under leveraged brand at their disposal so it's a good start.

 

[slotmachine]

It is anticipated the minimum capital necessary to future proof the Knights under Community ownership is $15 million. Approximately half of the capital raised is anticipated to be necessary to address current trading deficiencies and restructure the Knights operations for the first three years of operations.

7.5m-10m you mean.

 

[Alex28]

15-20mil - 10-15% is achievable depending on industry. They have a severely under leveraged brand at their disposal so it's a good start.

Does being a community shareholder instantly make them ineligible for third party agreements to top up the salary cap?

 

[perverse]

Does being a community shareholder instantly make them ineligible for third party agreements to top up the salary cap?

If you own a part of the club, I'd imagine it's a tough sell to be a third party. Good catch. It's hard to see how we get the town to rally behind buying the club and also field a competitive team afterwards.

 

[Sydney Knight]

If you get a certificate to hang in your shop window that says 'Knights owner' for buying one share I am wondering what is the extra incentive is for small and medium businesses to buy more?

Other than love of the club that is.

Don't agree. I think there will be a lot of businesses in for 10K+ each. That is where they will make the bulk of it.

 

[Burwood]

So it looks like this model is going to take, if all goes to plan, a minimum 12 months to be completed. What happens in the mean time if another buyer comes along that ticks all the boxes? Or if we get to September 2017 and all of a sudden the patrons trust model falls through?

 

[Knight76]

It's far too early to say if this model is going to take. So far we have what, 1 company saying they are going to buy in. No takers at the 4% maximum that has been made public yet.

Is a company going to gift the Knights $600,000 for a 4% stake in them?

If voting is cast at 1 vote per share, is a 4% vote worth $600,000.

Has it been disclosed how much of a the pie the 7 are buying?

It's way too early to say anything about this other than it is a plan!

 

[Alex28]

http://www.theherald.com.au/story/4361683/robert-dillon-sporting-declaration/?cs=303

If the club is struggling to sell 30,000 patches of turf at $30 a pop, how on earth are they going to sell 40,000 shares at $500 a go?

 

[perverse]

http://www.theherald.com.au/story/4361683/robert-dillon-sporting-declaration/?cs=303

If the club is struggling to sell 30,000 patches of turf at $30 a pop, how on earth are they going to sell 40,000 shares at $500 a go?

Simply, they can't. I don't think this model is real. Until a community model addresses long term prosperity - something no-one in charge has been able to do in 30 years - then it's a broken model. Betting the whole club on NRL grants is foolhardy at best, and won't be competitive against teams that can spend more in other areas anyway. Add in to that the total annihilation of 3rd party sponsor potential in the region and it just looks more and more half baked. I don't believe they'll come even in the ballpark of $15 million anyway unless the Patrons trust and a lot more of their buddies are slamming a full 4% each.

I know you really want this, Mac... but I don't think it's viable without rose tinted glasses. You need a helluva lot to go in the club's favour, now and in the future, for it to work at all, and then being successful under that model is another bridge again.