Should YOU risk going from fan to financier?
As AFC Wimbledon raises £3.5m in just one month by selling bonds to fans to pay for a new stadium...
ECONOMICS teacher Cormac van der Hoeven does a fair imitation of a Cockney market trader. ‘Get your Plough Lane Bond!’ he yells at confused bankers at Canary Wharf Tube station. ‘Help AFC Wimbledon return home!’ But the bankers aren’t biting. Cormac, 32, is trying to raise £5million to help his club play at Plough Lane in Wimbledon, South-west London, for the first time since 1991.
If successful, it will equal the biggest bond scheme in English football history. Investors can put in anything from £1,000 and choose annual returns of up to 4 pc over five, ten or 20 years. It is hoped many will opt for a lower rate to help the club.
‘Most people who stop to talk have a Wimbledon connection,’ Cormac admits. ‘But the returns are genuinely competitive.’
So does it pay to invest in football, or is it only ever a fans’ folly?
In 2018, Norwich City raised £5 million to build an academy. The Canaries Bond offered 5pc gross annual interest — and investors were paid a one-off 25pc bonus after the club went up to the Premier League last season.
But investors in a similar Bury FC scheme are expected to lose all their money after the club collapsed last year.
ASCHEME launched by West Ham in 1991 to fund the redevelopment of its ground sparked pitch invasions from fans furious at being asked to buy bonds in return for season tickets. The bond was wound up after poor sales.
The Plough Lane Bond, though, was set up by The Dons Trust, the fan group that owns the club.
Their pitch is drenched in emotion. In 2002, the old Wimbledon FC — a club that caused one of British football’s greatest upsets by beating Liverpool in the 1988 FA Cup final — faced bankruptcy. So the board moved the club 60 miles north to new town Milton Keynes, rebranding it as MK Dons. Enraged, fans founded a new team with two aims: to return to the Football League — and to Plough Lane.
Almost 20 years and six promotions later, the club is almost level with MK Dons in League One.
In 2017, the club got permission to build a new stadium at Plough Lane, but last December fans were told they faced an £11 million shortfall. Three investors were prepared to put £7.5 million in for a 30 pc stake, but that would see fans lose control of their club.
It’s hoped the bond scheme will persuade a commercial lender to find the other £6million. So far £3.5 million has been raised — the club must find the rest by Friday.
Xavier Wiggins, 48, helped launch the bond. He says the average investor chooses a 2 pc return over eight years, friendlier terms than the club would get from a bank.
The best easy access rate now is 1.35 pc with Goldman Sachs.
Back in Canary Wharf, Cormac has a potential investor. Barclays worker Elliott Ghent, 21, who grew up in Wimbledon, says: ‘Interest rates are slightly lower than from a purely economic investment but when you combine it with the community element it does have appeal.’
Meanwhile, Jamie Newell, 52, a West Ham fan who lives in Bath, has invested £10,000 in return for 4 pc over ten years. He says: ‘That money would normally just be resting in an easy-access account, but this bond’s rate is far better.
‘The investment does come from my love of football. For me there are two romantic stories in the game: West Ham winning the World Cup in 1966 [heroes Bobby Moore, Martin Peters and Geoff
Hurst played for the club] and Wimbledon’s “Crazy Gang” winning the FA Cup. I’d love to see them back at their old ground.’
Tom Selby, senior analyst at AJ Bell, says while a 4 pc return seems attractive compared to cash savings accounts, it comes at a risk.
He adds: ‘There are many issues to think about but for some supporters they may be secondary considerations. They should only invest if they can afford to lose their money.’
Buying shares in a publicly listed club could be a safer bet. Fund manager Nick Train invests in three ‘icons’: Juventus, Celtic and
Manchester United. A £100 investment over five years would have returned £539.85, £196.05 and £118.25 respectively.
But Adrian Lowcock, of Willis Owen, says Train’s funds are diversified — investors shouldn’t pile all their cash into one club.
In Scotland there are two successful fan-owned clubs – Motherwell and Hearts.
Xavier, meanwhile, has just one goal in mind. ‘The dream for misty-eyed 40-year-olds like me is just to go back to Plough Lane, and to Wimbledon,’ he says.