A prominent shareholder of Motherwell Football Club will oppose external investment in the club, it has been confirmed.
The Well Society will stand against the proposed investment from Erik and Courtney Barmack next month.
The Fir Park club today released a timeline for a voting schedule on the potential investment from the former Netflix president and his wife.
A statement from the club states: "The club have now entered a period of consultation with Well Society members and Motherwell Football Club shareholders with regards to the proposed investment from Erik and Courtney Barmack, with voting scheduled to commence at the start of next month.
We can provide the following update on the proposed investment from Erik and Courtney Barmack.
— Motherwell FC (@MotherwellFC) June 10, 2024
"Following on from our last update, we can confirm that the Heads of Terms have now been agreed between all parties and will be distributed to all Well Society members and Motherwell Football Club shareholders in the weeks prior to the vote commencing on July 1, 2024."
Chairman Jim McMahon noted: "As has been well documented, the club has been in discussions for a number of months with Erik Barmack, a Los Angeles based entrepreneur. These talks have centred round how Erik and his wife Courtney could make an investment in MFC and become involved in helping to run the club.
"These negotiations have now advanced to the point where MFC have signed Heads of Terms (HOT) about how this would work going forward and the Board of the club are recommending that shareholders accept the offer."
However, members of the Well Society are being urged to reject the proposed terms, on the following grounds.
• The proposal, which follows a campaign for commercial sponsorship, partnership or investment opportunities, would end fan ownership at Fir Park as the Well Society’s majority shareholding drops to 46 percent.
• The offer of £1,950,000 over six years for 49 percent shareholding drastically undervalues the club.
• For an initial investment of £300,000 for 8 percent of shares, Wild Sheep Sports would immediately receive disproportionate influence in the boardroom.
• The deal requires almost equal investment, including writing off 50 percent of the loan owed to the Society by the club, from the Well Society in exchange for a decreasing stake.
• Well Society plans to grow membership are likely to be severely hampered as the original purpose of the fan ownership model becomes obsolete.
• The Society would no longer be able protect the long-term future of the club as a minority shareholder and, if Call Option or Buyback Right is utilised after two years, would possibly need to “start from scratch”.
A lengthy statement reads in full: "The Well Society, as majority shareholder in Motherwell FC, has today (10 June), alongside the publication of statements from outgoing club chairman Jim McMahon and Wild Sheep Sports, outlined the Society Board’s current position to our members.
"The Well Society Board, by 6-3 majority, does not believe the negotiated terms are advantageous to the club and recommends that Well Society members reject this offer in a forthcoming ballot.
"Having been given sight of the finalised Heads of Terms on May 20, we have worked at pace to finalise our position on this offer. We anticipate that we will ballot our members on this over two weeks beginning July 1, which will then allow the Well Society to reflect members’ views in the club’s anticipated shareholder vote. We are currently working on the logistics and more information will be sent to our members in due course.
"By this time, we will also share the Society’s plans for the future, if it remains as majority shareholder. These plans have been in development since the beginning of the year, with input from supporters, consultants, football experts and business professionals, and we now aim to expedite the publication of our plans within the necessary timescales.
"As part of the ballot process, we also intend to provide the opportunity to engage the Society Board on these proposals, both online and in-person.
"There are six key reasons why we believe this investment proposal should be rejected:
"1. The Ending of Fan Ownership Fan ownership is the only way we can safeguard the long-term future of the club. These proposals will see the Society’s shareholding reduced from 71% to a maximum of 46%, leaving us with a lesser shareholding than Wild Sheep Sports, who will secure 49%.
"We recognise that, in our consultation earlier this year, a majority of Society members signalled they would be open to considering an offer of investment that sees the Society lose its majority shareholding in the club. However, we do not believe the investment of £1,950,000 over six years justifies the significant risk involved in giving up fan ownership.
"The Society was established to be a “safety net” for the club, which has been used on many occasions. As a result of the agreement with Les Hutchison in 2016, which allowed the club to move into fan ownership quicker than expected, that model was changed temporarily, resulting in the Society investing on an annual basis until loans to Mr Hutchison, John Boyle, and others were paid off.
"Since then, the Society has worked hard to return to the safety net model, ensuring that we have over £750,000 in the bank which continues to grow. This figure would allow us to combat the potential gap in club finances should the need arise.
"2. Inadequate Club Valuation Valuing a football club can be difficult. However, we reject the valuation of Motherwell Football Club of under £4,000,000, finding this to be completely unacceptable, and are disappointed that negotiations proceeded on the back of this valuation. We do not believe supporters of Motherwell will agree that our club should be valued at a significant discount from its valuation published in our most recent accounts and at a fraction of the value placed on Hibernian earlier this year, which was, based on the widely reported £6,000,000 for a 25% stake, around £24,000,000.
"3. Disproportionate Boardroom Influence for £300,000 Although the investment proposal is structured over six years, the proposal would see Wild Sheep Sports gain disproportionate boardroom influence immediately in exchange for investing just £300,000 for an 8% stake in the club.
"We do not believe it is remotely acceptable that the incoming investors should receive three of eight seats on the Executive Board, plus the Chairmanship, and a casting vote in the result of a stalemate from day one.
"4. Unfair Demands Placed on Society Members The Society has already raised more than £2,000,000 as a direct result of the fan ownership model. Under these proposals, the Society – in practice, you, the members - will have to invest or raise a further £1,350,000, as well as writing off 50% of the £868,000 loan it is owed by the club.
"It is unacceptable that the Society would be committed to investing the equivalent of around £1,800,000 over the six years, only marginally less than what would be invested by Wild Sheep Sports. We do not believe there is any logic, or fairness, to this arrangement which would see Wild Sheep Sports achieve a shareholding of 49% over the six years, while the Society’s drops from 71% to a maximum of 46%.
"5. Damaging to Membership Growth The refreshed Society Board believes that far more can be done, as a fan ownership group, to grow our membership and maximise the Society’s income. To do so, however, there needs to be a purpose – Motherwell supporters and prospective members need to understand why the Society exists, how it operates, and the vital role it plays in the club as a fan owned entity.
"We do not believe that the investment proposal will lead to the empowerment or growth of The Well Society. Instead, given the drastic reduction of the Society’s shareholding, we believe there is significant risk of a similarly drastic reduction in memberships and income, as current and prospective members would question the need to subsidise the Society and the club after having the majority shareholding diminished.
"6. Call Option Could Weaken Club and Society The Call Option within the proposals is designed to be a safeguard that allows the Society, for a period of six months in 2026, the unilateral right to buy out Wild Sheep Sports in full, including 10% to cover administrative costs and minimal interest - a total of £660,000. However, Society members should understand that this proposed safeguard would not return us to the current position.
"By this timeframe, the Society will have been committed to investing a total of £400,000 in the football club over the initial two years of the six-year agreement. This means that, if the Call Option was to be exercised, the Society would be required to buy out Wild Sheep Sports for a total of £660,000, on top of the £400,000 already invested in the club. As a result, although the Society would return to being the majority shareholder, the current financial reserves held by the Society that act as a safety net for the football club would no longer exist and we would essentially have to start from scratch.
"However, we do caveat the above with the acknowledgement that, without investment, in a season we finish 10th in the SPFL, exit the group stage of the League Cup or 4th round of the Scottish Cup and have no player sales, the Well Society would be required to plug the arising financial gap, which would total most of our current financial reserves. This is why we remain open to external investment that we believe is right for Motherwell Football Club and the Well Society.
"The proposals also include provision for a Buyback Right, if the Well Society cannot afford to exercise the Call Option. This would allow the club itself to buy back the remaining balance of shares which the Well Society would have otherwise held following the exercising of the Call Option. This proposal also makes provision for 30% of net sales from player sales exceeding £2,000,000 to be kept in escrow until 31 August 2026, to part fund the Buyback Right. However, we remain concerned that this cannot be used to part fund the Call Option, meaning that this is only of benefit if the Well Society finds itself unable to afford to exercise the Call Option itself.
"Given one of the original arguments for seeking external investment related to the need to convince auditors every October that there were suitable finances and reserves to satisfy all commitments for the season ahead, we believe exercising either the Call Option or the Buyback Right could raise significant concerns over the ability for the club do so in October 2026, due to the Society’s financial reserves being wiped out.
"Next steps. The Society Board, in line with the January 2024 campaign, remains open to commercial sponsorship, partnership and investment opportunities and we’ve had encouraging conversations with external parties to that end since the beginning of the year. It is clear from these discussions that the fan-ownership model is a major selling point, something that would be lost if the Society was to give up its position as the largest shareholder in the club.
"We’re also still open to discussing opportunities further with Wild Sheep Sports, who we’ve found to be engaging and enthusiastic, with skills and experience that would be of benefit to the club in partnership with the Society.
"That said, we’re clear that commercial sponsorship, partnership or investment opportunities can’t come at any cost. As Scotland’s first top-flight, fan owned club, our shared history, investment and passion has delivered real progress, on and off the field.
"As the outgoing club chairman confirmed, with the support of the Society the financial future of the club is not in question. Your refreshed Society Board, working with fresh leadership at the club, is in a strong position to reset what fan-ownership means for Motherwell. Working together, we believe our future is bright."
