LFU CBS AGM – Answers to members’ questions
Questions for Q&A Leeds Fans CBS Annual General Meeting
We have received various questions from members for the LFU Board to answer and we present the answers here.
21 March 2018
1. Can I get my money back?
There is no provision for money to be taken out at will. The Offer Document details what we can and cannot do. This document highlights the legal rules and restrictions we operate under (the relevant law is the Co-operative and Community Benefit Societies Act 2014) and we are unable to vary this.
The two scenarios that allow us to return money are that either we get a deal to buy shares in the club, or the CBS decides to close and return all the money. At this moment in time neither of these scenarios have happened so the lawyers are unable to release the money they hold. The LFU Board has not received nor has access to the money.
The law covering the Society does allow for you to make an application for the 10% money that has been released to LFU, and for which you have received Community Shares, to be withdrawn when the Society has earned a surplus, and the Offer Document makes it clear that it may be a long time before a return could occur. If we become in a position to return money we are able to include a small interest rate but this is not guaranteed and will depend on circumstances at the time.
2. How long does the board consider it acceptable to continue before they take the decision to close and return the money?
We did a poll of members in 2016 and 86% of people did not want their money back. Given the club has changed owners since then, and particularly in light of the fact that the club has indicated that fan ownership is something they would consider, we need to allow ourselves sufficient time to pursue this on our members’ behalf. However, the current LFU directors have voted to make the 90% monies available for return if no deal has been agreed by the end of this year at the latest, or earlier if negotiations cease.
3. How many people have asked for their money back?
Since we started selling shares in LFU, we have had members occasionally enquire about getting their money back – 50 people in total. Of those 50, 15 have responded to our explanation of why we can’t return their money to tell us to continue. So we have 35 people out of 2100 wanting their money back, which represents less than 2% of the total shareholders.
4. What are the current expenses being taken each year? What are the expenses of individuals in managing the fund, please break this down to individuals and what expenses they claimed for each tax year?
No one has claimed any expenses or taken a salary since Leeds Fans Utd started.
5. Is there independent financial advice being given to make sure the funds are growing?
The idea behind members sending their funds directly to our lawyers was security of those monies. Our lawyers do not offer any investment options with their Escrow account and for LFU to remove that money and gamble it on the financial market was seen as contrary to the principal of maximal security of funds. LFU is run by volunteers and we do not have the skills to invest without risk to members’ money.
6. Has any individual member been successful in withdrawing their investment since the inception of the scheme?
No one has withdrawn their investment. LFU does not have the power to order the lawyers to allow such a withdrawal from their Escrow account and LFU has not made a surplus from which to allow a withdrawal of Community Shares.
7. Are there any individual shareholders who hold greater than 10% of total shares in the scheme?
8. What is the current value of the scheme available for investment in the club?
Leeds Fans CBS has £331,726 and Leeds Fans Utd Limited has £162,000 available.
9. When will be the next election of officials? What would the requirements be for this to occur?
We held an election in January and notified all shareholders that two of the current executive were up for re-election. Philip Robinson and Howard Nelson were the two directors retiring and both indicated that they wished to stand again. We requested that any further candidates notify us should they wish to stand against them. No further candidates came forward so Mr Robinson and Mr Nelson were duly elected unopposed on January 24th. The next elections will take place in 2019.
10. Why doesn’t Leeds Fans Utd invest into the academy? Or put a small percentage of the fund to community initiatives such as improving fan facilities on the away buses, improve disabled access, or towards the price of match day tickets
We have indicated to the Club that we would like the LFU investment to go into something meaningful and long term, rather than being spent on player wages for example. We also feel the money that we have already, in addition to any money from a future fund raise, be put towards something that has clear benefit to all fans rather than a few.
11. What have you done to increase the interest from Leeds fans to invest in the CBS?
After the deal with Massimo fell through, we continued to work behind the scenes to work with potential new owners and investors. We then decided to do the shareholder vote as to whether or not we should continue, and just after that we were first made aware that Massimo was in early talks to sell a stake to Andrea Radrizzani. Given we knew that negotiations were ongoing, it didn’t seem like a sensible time to be trying to drum up support because we didn’t really have anything new to say. Rather we took the decision to wait and see how it all played out. Then Mr Radrizzani indicated fairly early on that fan ownership was something he would consider, so we took the decision to wait and give him a chance to get his affairs in order and sort out the priorities (i.e. on the pitch). We met with the club last summer and talks have been ongoing since then. Ultimately, we took the decision that this is a long term opportunity and trying to keep drumming up support was fairly futile in the short term with no new news – and importantly we felt that once an offer was on the table, that we were actively able to market in partnership with the club, then we’d be able to get the news out much wider.
12. Why has your communication been limited over the last 12 months?
As a rule, we have tried to avoid talking for talking’s sake. When we have relevant new information we share it with shareholders first. We respond to all shareholder emails and aim to get quarterly updates out to them, but sometimes there’s very little that we can share. We’ve been talking to the club for a while now, and Angus agreed we could send out an update to shareholders late last year saying that we’re in talks and that the club thinks fan ownership could work. Ultimately though we can’t share confidential information and remain a credible negotiating partner.
13. Is there a possibility of implementing timescales to achieve goals so that shareholders can have it set in stone whether you have achieved your targets? This could be done by picking a date and seeing if you can negotiate a deal in that time. Then if you have been unsuccessful you can give a detailed breakdown on how the club reacted to the group and thus the shareholders are significantly more informed.
The club will always be the ones to dictate the timescale. We have done all the necessary prep behind the scenes to be ready to go in any eventuality, and there’s been many meetings and significant amounts of man hours put in over the last nine months looking at various scenarios to ensure we have all bases covered. Given the club has demonstrated that they have an interest in making fan ownership happen, and against the backdrop of everything else that we can all see needs sorting out, we wouldn’t want to put a timescale in place and then miss it for reasons out of everyone’s control.
14. Is there an objective way to determine whether the shareholders should be given the opportunity to vote on the continuation of the CBS?
We asked shareholders already if we should continue and the vote was a yes. If we haven’t achieved a stake for fans by the end of this year, and have at that time no immediate prospect of doing so, we’ll return the remaining 90%. Having discussed our plans with the club, seen their response and talked through what fan ownership could look like, we wouldn’t want to jeopardise what fan ownership could deliver in the long term just because of short term frustrations.
15. Why didn’t you speak up on behalf of the fans during BadgeGate or during the issues with season ticket pricing?
LFU is a single issue organisation looking to get fan ownership at Leeds United. We don’t yet represent the fans on wider matters. If we already had a fan ownership structure in place, where fans groups are consulted on heritage or legacy matters ahead of it going to a shareholder vote, then BadgeGate may have unfolded differently. Regardless though, the club is entitled to make its own commercial decisions on matters that impact the day to day running of the club and it’s not feasible that fans can be consulted on everything, however, with a formal and close fans’ relationship with the club we expect to be able to discuss and maybe vary matters such as ticket pricing before they get set in stone and announced in the press.
LFU thanks you for your continued support.