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It sounded like a great deal: as this BBC article led with last month, “Wycombe managing director Steve Hayes has offered to write off a portion of the club’s debt, in return for becoming majority shareholder.” The Wycombe Wanderers supporters’ Trust, whose approval was needed for Hayes to gain overall control of the Club, has accepted his offer. Hayes plans to move the club away from their own home at Adams Park to a groundshare with the rugby team Hayes also owns, London Wasps, at a new stadium.
This seemingly kind offer, however, has a sting in its tail: as David Conn points out in the Guardian, it would mean the end of the remnants of supporter control at Wycombe that had been the bedrock of their rise up the league in the 1990s. Hayes’ offer was to convert £3m of the £6.9m he had lent the club over the previous five years into shares and control of the club, or Wanderers supporters would have to face the consequences of the club’s spiralling debt. The local Bucks Free Press put it this way before the Trust’s vote, “Wanderers fans are facing the biggest decision in the club’s history – hand over their club to multi-millionaire Steve Hayes or his funding will dry up.”
The alternatives to rejecting the Resolutions are stark and deeply concerning for the Club. Mr Hayes has made it clear to the Board and the Founder Shareholders’ Trust that he cannot continue to fund the Club with the current structure in place. If Mr Hayes’ ceased his funding, the Club will not be in a position to carry on trading without the need to consider a formal insolvency procedure such as an administration. Of course in this event the Club’s ability to enter into new player contracts for the forthcoming season, or to approve the management teams’ contracts will be severely compromised. In all likelihood the Club’s playing squad will regress from last season. The anticipated player purchase budget will, without Mr Hayes’ funding, be negligible and will seriously prejudice the Club’s ability to compete in League One and the danger of relegation next season would be considerable (especially in the event that points are deducted if the Club were to enter into administration).
In essence, the Club’s Board offered the Trust the choice of accepting Hayes’ offer or facing administration and relegation going forward — and they were given sixteen days to respond. Hayes’ tactics, financial management of the club, and the role of the rugby team in his grand vision for a new stadium development all raise serious question marks over Wycombe’s future under Hayes and out of supporter control.
The End of Supporter Control at Wycombe
Hayes joined Wycombe the year they moved away from the 100% supporter ownership model that had taken them from non-league to League One football, when they became a Public Limited Company in 2004 — Hayes bought a 25% share for £250,00. Yet the transition to a PLC has hardly brought the club financial success; they are now mired in even more debt, and thus further dependent on the loans Hayes has made to the club in the meantime. These loans provided the strings he pulled to pressure supporters — who retained some control of the club when it transitioned to a PLC via important “Enshrined Articles” safeguarded by the Founder Shareholders’ Trust — to approve his plans for total control of the Club and the stadium.
Hayes, originally a double-glazing salesman, made his fortune as a finance broker through loans.co.uk. Crucially, in December 2008 he purchased overall control of the London Wasps after several years involvement with them, and they currently groundshare at Wycombe’s Adams Park. Wasps are one of the top rugby union teams in the country and Hayes plans to build a shiny new 20,000 capacity stadium to host both his rugby and football teams; in order to move ahead without the obstacle of supporter control, he needed to gain overall ownership of Wycombe. The PLC agreement approved by the Trust in 2004 limited any individual to owning a maxiumum of 25% of the Club’s shares and had a clause that gave the Trust a veto over the sale of their current ground, Adams Park: Hayes demanded these safeguards were removed.
The Trust board’s vote in favour of Hayes’ proposal was very close, only approved 8-7 (with one abstention), with many supporters complaining they felt bullied into making the choice to save Wycombe from the threat of administration if Hayes pulled out. Trust board member Joe McKenna resigned after the vote, and said “It was nasty and oppressive. The Trust board were bullied into their decision. It was a case of accept it or the terms would be withdrawn.”
That Hayes only gave the Supporters’ Trust 16 days to respond was a tactic criticised by Karen Adams, the granddaughter of Frank Adams, who gifted Wycombe their previous stadium Loakes Park (later sold to finance the building of Adams Park, named in his honour) in 1947: “No-one likes being bullied,” she said. “I think it is clear it could have been handled a lot better. He hasn’t given the Trust a lot of time.”
Many on the Trust feared the club’s future was in doubt financially without Hayes. Yet ironically, Hayes can hardly be seen as having been the club’s financial saviour either past or present: rather than simply writing off the loans as the BBC piece we opened with implies, he is instead converting £3m of his loan into shares in the club to gain 100% voting control. The Club will still owe him the remaining £4m.
What’s almost perverse about the ultimatum presented to supporters is that it is under Hayes’ own tenure as Managing Director that the club’s costs have spiralled into millions of pounds in debt, and the Trust therefore had to face the threat of administration if they rejected Hayes’ proposal. Hayes had failed in his original aim, stated when he bought 25% of the club in 2004, that clearing the debts by 2010 was a priority for the club.
Indeed, Hayes himself recently admitted that it was his overambition that had cost the club so much money: “Not all of that £7m was well spent. I have wasted money in some areas. I have chased promotion for five years and been paying League One wages for five years and not got it until now.”
Trust member Francis Glenister offered the most damning critique of Hayes’ plan along these lines:
1) In the 5 years since the conversion to a PLC, Mr. Hayes has been the driving force behind the spending decisions that caused the Club to accumulate debts of approximately £8 million and to establish a cost structure under which the operating costs are higher than the Club’s income. How will the new structure, in which Mr. Hayes owns 100% of the voting shares, produce either increased revenues or reduced costs at the Club when he has failed to achieve this in the last 5 years?
2) As part of the process of conversion to a PLC, two of the current directors Mr. Beeks and Mr. Kane promised the then members that the Club would follow a plan to break-even. The PLC has never broken-even. Given that Mr. Beeks and Mr. Kane will continue to be directors after the proposed restructuring, how can shareholders have any confidence that the financial problems of the Club will be addressed?
3) Shareholders and supporters were continually assured at many meetings that the money being put into the Club by Mr. Hayes was “his money” and that there was no need to be concerned. The money was only Mr. Hayes money if it was a gift to the Club. Why is Mr. Hayes not gifting the money to the Club?
4) At the time of the conversion to a PLC, certain rights were assigned to the holders of the Founder Shares. These include the necessity to obtain a majority vote of Founder Shareholders to sell the Club’s ground. The Club only owns its ground as the result of a gift of a previous benefactor, Mr. Frank Adams. Under these rights, the ground can be sold providing the Club can make a case that this is the sensible thing to do. Under the proposals, the need for such a vote by Founder Shareholders is removed. Why is it necessary to remove the need to make a case for why such a future sale is in the best interests of Wycombe Wanderers?
Perhaps — to address that final question — it’s because it’s unclear why the football team needs a new, grand stadium at all that Hayes wanted that veto removed.
A New Stadium: for the Wanderers or the Wasps?
With gates historically hovering around 5-6,000, the proposed capacity at the new ground of 20,000 seems designed for the benefit of the London Wasps rather than Wycombe Wanderers, who are unlikely to fill their current 10,000 capacity Adams Park even if they were promoted to the Championship. Adams Park itself was only built in 1990; it might need a new lick of paint soon and improved access routes if expansion is desired, but it’s hardly a dilapidated albatross around the club’s neck: compact and rent-free, it’s just about right for a club of Wycombe’s size.
The new stadium is unlikely to be ready until 2014, leaving Hayes pursuing an expensive stadium dream and the Wanderers essentially living in limbo and debt for several more years, until they eventually rattle around in a stadium twice the size it needs to be for them — albeit one with shiny new seats. Proposals to renovate and improve the existing Adams Park to better accommodate the rugby club have been left on the shelf by Hayes, according to supporters. The sale of the existing stadium would be, of course, crucial for Hayes to raise the capital needed for the new venue.
Losing control of their stadium has often proved to be disastrous for lower league clubs, and in this case, it seems likely that Wycombe will be playing second fiddle to the Wasps and Hayes’ broader property development goals, with a new stadium management company owned by Hayes profiting from the entire development. At the new stadium, Wycombe would lose the ancillary revenue from the stadium and £600,000 in groundshare rent paid by the Wasps to Wycombe Wanderers at Adams Park. The new stadium would feature “retail, hotel, conference and other facilities” that would not be for the benefit of the football club.
It’s the rugby club, rather than Wycombe Wanderers, who seem most likely to gain from the new ground’s capacity. As well as now being able to earn all the revenue from their games at the new stadium, Hayes clearly hopes the Wasps can become a “superclub” in rugby union and fill the proposed 20,000 capacity stadium regularly. Hayes has been cleverly testing out the club’s potential by — to the chagrin of some Wasps fans — staging numerous ‘home’ games away from Adams Park. Wasps CEO Tony Copsey was euphoric when 33,282 showed up to support Wasps v Leinster at Twickenham in January: “To reach ticket sales of over 30,000, successfully achieving our target of a capacity lower bowl, supported the decision to take this game to a larger stadium highlighting the huge interest in club rugby and in Wasps as a whole.”
One suspects that this potential is the real motivating force behind Hayes’ grand plans, and down the road, Wycombe supporters may regret that the club’s future and stadium is no longer safeguarded under their control.