Building for the future comes at a cost in football but Norwich City hope they have found a low-risk method of raising funds to invest in their academy – from which supporters could also turn a profit.
The Canaries want to raise £3.5million to allow temporary buildings at Colney to be replaced with a new permanent structure, gym facilities and to complete pitch improvements.
Work on new academy dressing rooms is already under way after funding was arranged, as City strive to maintain their Category One academy status, deemed to be crucial to producing homegrown talent for the club's self-funded model away from the wealth of the Premier League.
With work to balance the books already advanced under managing director Steve Stone and sporting director Stuart Webber – ahead of top-flight parachute payments ending this summer, following City's 2016 relegation – the challenge was to find a way of raising funds for the necessary work without asking fans to dip into their own pockets, after several years of academy donations being included in season ticket renewals.
The result? A five-year 'mini-bond' with a maximum £5m threshold and the money raised being ring-fenced for the academy.
The club's owners and directors plan to invest – although the amount they are investing is not being revealed – and were at Carrow Road last night as Stone presented the plan to 200 club partners at a launch event.
Long-term supporters are being given an opportunity to register prior to the public launch on Wednesday, March 28. The club can decide when to close the bond – with an excess of the £3.5m target potentially allowing further work, up to the £5m threshold – but the offer will close no later than Friday, May 25.
The bond will pay 5pc gross interest annually, with an additional 3pc gross in club credit, and investors will be paid a one-off 25pc bonus if the club is promoted during the lifetime of the bond. The minimum subscription for the unsecured investment is £500 with no upper limit, rising in increments of £500.
Stone, who has previously invested in a similar bond which raised over £24m for the Jockey Club's redevelopment of Cheltenham Racecourse, will be among the investors.
'We didn't want to be in a position where we were asking fans and businesses to donate to the academy,' City's MD explained. 'We see this as an investment opportunity, a very good investment opportunity, to get the academy up and running but it is a loan rather than a donation.'
Sports investment platform Tifosy will be making the bond available for the Canaries, a Financial Conduct Authority regulated company which was co-founded by former Italy and Chelsea striker Gianluca Vialli.
Last year Tifosy launched English football's first mini-bond to help League Two club Stevenage raise £600,000 to build a new stand, they also launched the first in Italy with a 1.5m euro mini-bond allowing Serie B side Frosinone to invest in its stadium.
This all means that City will take on a short-term debt which club bosses consider to be low-risk, so that it can continue investing in the academy without taking funds away from the first team squad or day-to-day club operations.
Stone continued: 'The board will be investing in this bond, just as other people at the club will, staff and myself included. There is an element of the board's money going into this but part of this and part of the rationale for going down this route was having something that our fans could participate in as well and feel part of something for the future of the club that is ring-fenced from player trading.
'This is something we have wanted to put to one side from that, raise the funding specifically for the academy, spend it specifically on the academy, have the players coming through and be in a position to repay that loan in five years' time after people have been involved in seeing the growth of the academy and earned a decent rate of interest at the same time.'
With funds put aside each year to ensure the money can be repaid to investors, with interest payments financed by operational savings made by the new training facilities.
If the bond meets the £2m minimum threshold but not the £3.5m target the bond will be issued and club will have to investigate further funding options.
Stone added: 'What people are really investing in, in my view, is confidence in us to be able to run the club and to be able to develop the academy, bring the players through, give us the best chance of getting into the Premier League and being able to repay that debt in five years' time.'
• Potential investors are encouraged to seek independent advice from a financial advisor. For full details of the bond, go to tifosy.com/canaries
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