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Andrews: PLC Shares Have Little If Any Value
Tuesday, 17th Dec 2019 14:06

Financial director Mark Andrews has explained why the value of the PLC, which owns 12.5 per cent of Town, has been written down to nil from £500,000 in the latest accounts.

The PLC owns 12.5 per cent of Ipswich Town Football Club Co Limited and consists of the club's shareholding - around 3,800 shareholders - prior to the takeover 12 years ago with Marcus Evans owning the other 87.5 per cent.

“What we looked at this year, and possibly should have done a couple of years ago, is look at the value of the shares,” Andrews, pictured above right, said in response to a shareholder’s question at last night’s PLC AGM.

“In 2007 when Marcus took over, we said at the time that the value of the shares wasn’t very much because, obviously, Marcus owns the majority [share in the company].

“At that time, he bought out the debt of about £32 million. If you look at where we are now, 12 years on, that debt has increased to over £95 million, so the value is now much less.

“The debt is now actually more than the actual club is worth is what we’re basically trying to say, so that the shares have very little, if any, value whatsoever.

“But on the other side, if we do perhaps get to the Premier League at some point we could look at that and reverse that situation.”

You can find notes from the question and answer session on the TWTD Forum here.


Photo: TWTD



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ITFCsince73 added 14:17 - Dec 17
Hang on... we have many an expert on here who will pick the bones out of these statements.
1

ITFCsince73 added 14:19 - Dec 17
Q Tim....
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dirtydingusmagee added 14:20 - Dec 17
JUST GETS BETTER !. tis the pantomime season , enter Bluearmy stage left.
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CavendishBlue added 14:34 - Dec 17
Why would anyone be surprised at this approximation?

It's basic 'O' Level economics.

Because there is no listing and probably the only person who would ever be interested in buying is the majority holder,the value is pointless currently.

Be honest peeps,if we bought them it was mostly to get the shirt and a small piece of history,not to feather our pension nest.
4

Radlett_blue added 15:11 - Dec 17
Exactly Cavendish - I and I suspect most others thought we were probably making a donation, not an investment. The only way the PLC could have any value is if Evans sells the club and the buyer wants to tidy up the minority interest (although no reason to do that as Evans didn't as he had full control with 87.5%).
2

positivity added 17:23 - Dec 17
no-one i know bought shares in the hope of seeing anything back from it.

for me, it was a symbolic gesture to help the club out
3

TheHound added 18:01 - Dec 17
I can't even remember when i bought the shares just that the club was in trouble and i wanted to do my bit. Certainly didn't expect to make any £ but it would have been nice!
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lightingblue added 00:38 - Dec 18
I have a gut feeling that we are going to enter administration. Fleece the supply chain, then we go again. Sorry I’m not a business person and don’t understand it all. I’m a football fan who wants his team to do well
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Ipswichbusiness added 10:29 - Dec 18
The debt is worth more than the club. If it wasn’t for Mr Evans we would be in really serious trouble.
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blrmy added 10:58 - Dec 19
If you are in debt more than what you are worth, you are worthless, no value. Actually negative value.

In simple terms, to make yourself worth something you have to reduce your debt, or increase your value.

To reduce the debt, we need cash. We have little to no options other than raising cash through promotion. We don't own the stadium. We don't have any other high value assets (players, etc). A buyer is not going to happen any time soon for all these reasons.

To increase value, we need high value assets. Buy cheap, buy young, and pray we can turn some into high value players. The catch being without cash to spend, they will be very cheap, and therefore high, high risk (ie. unlikely to happen).

Unless the value of a club is higher than their debt, the value of a club's shares will be worthless. Which is why high value clubs (Man City, Barcelona, etc) can have large but manageable debts. They can afford to borrow more, to increase their value more than the additional borrowed amount.

And there aren't many of those sorts of clubs.....

Short version? Don't invest in a football club!
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