Football clubs at any level need to raise funds in order to survive. An event such as
relegation will always cause a financial hit with a drop in income sources such as TV rights.
Newcastle owner Mike Ashley, for example, provided the club with a loan of £33 million
December 2016, the funds issued simply to keep the business running.
In an open letter written to secretary of state for Digital, Media, Culture and Sport
Jeremy Wright in August 2018, Ashley defended himself from criticism received by revealing
– while Newcastle still owe him £144 million in interest-free loans – he had wiped all
third-party debts totalling £76 million. Clubs can also raise much-needed income by
floating the company on the stock market but the conventional options are often unpopular
with supporters. Those who are loyal to their respective teams
already contribute to their clubs financially through ticket, merchandise and matchday sales.
Therefore asking them to put their hands in their pockets once again is unpopular.
But there’s a new method emerging. Working with former Chelsea and Juventus striker
Gianluca Vialli, former investment banker Fausto Zanetton has come up with a different
approach in the form of his company Tifosy. Just as companies such as Kickstarter have
provided a way for those who believe in a project to back it financially with the promise
of a reward, Zanetton saw a way for football supporters to be rewarded for their loyalty.
Here's an example of how it works: In order for championship club Norwich to achieve promotion
and remain in the top flight, they recognised the need for a revamp of their academy at
their Colney Training Ground, to develop more home-grown talent as part of a sustainable
model. Yet as many clubs in the past have demonstrated,
investing in the current playing squad whilst also providing money to build for the future
is a difficult, if not impossible task. For this reason Norwich partnered up with Tifosy
– who had already raised £600,000 by way of a supporters bond for Stevenage FC – and
announced back on March 8th this year that they were seeking the ambitious figure of
£3.5 million to upgrade the Canaries’ training ground.
Plans included the installation of new pitches, the construction of a state-of-the-art building
with video editing suites, classrooms for Academy players and club offices. There would
also be new dressing rooms for all age groups, linked to a purpose-built gym. If there were
any initial fears about whether the target amount would be reached, these were soon allayed,
as Norwich raised £1 million from 220 fans investing a minimum of £500 during the first
day alone. As that figure soon exceeded the £3.5 million target, reaching the investment
limit of £5 million through over 700 backers, the planned public launch of the bond due
for the end of March was soon scrapped and the project declared a roaring success.
In return for supplying funding for what became the biggest bond in the history of English
football, Norwich fans received a range of benefits. Purely in terms of finance, the
investment will yield a rate of 5% in annual gross interest. There will also be an additional
3% gross offered in club credit, redeemable for matchday tickets, hospitality, and in
the club shop. Backers will also be paid a one-off 25% bonus if the club is promoted
during the lifetime of the mini-bond. With the money ring-fenced to the stated aim,
clubs cannot misappropriate the money raised to pay off debts or buy players, and in the
case of Norwich, supporters can easily see their money being turned into something tangible
in the training ground project.