It seems to be difficult to get involved in football without paying helpers and, yet again, our old friends would seem to be generously remunerated by the new football fund being backed by Terry Venables (former Tottenham manager).
“Introducers”, as the people who bring investors to the fund are called, will be paid a stonking 6% commission. The fund manager itself–Cavendish Asset Management (a lesser known Cavendish, based in Anguilla, rather than the well-respected British asset manager)–will receive a meaty 2%, while a 1% administration charge will be paid to a Hong Kong-based company. It is not clear why the already generous 2% is not sufficient to cover administration expenses, but there must be a lot of administering to be done. Also, presumably, the introducers must be based outside the UK because UK-based regulated advisers are no longer permitted to take such payments. In fact, the Football Talent Fund itself has not been evaluated or approved by the Financial Conduct Authority and so the usual safety net of the Financial Services Compensation Scheme is absent; caveat emptor.
So what is the Football Talent Fund, and how does it plan to offer a return to investors? The plan is to use the contacts of the men running the fund to source young players from South America and Africa, and then for Venables and his associates to coach these players and move them on for a profit. Some of the money raised will be used to buy a stake in a second tier Portuguese club, to use as a feeder club, and then the Fund will retain the agency rights to the players as they are developed and sold on. It is not clear whether Venables himself would be doing any coaching, but it is surely unlikely that a man widely acknowledged to have been one of the most talented coaches of his generation is going to be setting up the cones for 16-year olds in Portugal.
The fund aims to raise £5 million, in lots not less than £5,000, from private investors and is hoping for a return of 12% (or more) per year, to be returned to investors after five years.
This fund has such a lot of things that I try to avoid in an investment, that I have made a list:
- Fees
I don’t like paying any, but the fees for this particular venture are eye-watering. - Speculation
Returns are to be earned from agency rights of players who represent the club, and from the value accretion and sale of players (as yet unidentified) by the Portuguese club (as yet unpurchased). - Lack of demonstrable track record
The key players in the fund (Venables, John Mitchell, Michael Black, and Hugo Ribeiro) do not have the track record of success for private investors that I would want before even considering paying fees such as this fund demands. - Not regulated in the UK
The fund has not been reviewed by the Financial Conduct Authority and instead marketed as a “offshore regulated investment”, where the regulation has been undertaken by the Anguillan regime. - Promised returns
The fund is predicting a return of 12% a year, which to me sounds high. It also would seem to be impossible to predict the returns that would be made from a batch of young footballers as yet unidentified. - Lack of liquidity
The promised return, which comprises initial investment plus growth, will be paid at the end of five years. Five years is a long time for a new enterprise to retain people’s money.
As always, there are alternatives. Nick Train has recently been buying more shares in Glasgow Celtic (CCP), a club that is run very sensibly by the well-respected Irish businessman Dermot Desmond and has an army of green and white hooped fans that would follow it merrily to the ends of the earth. For something with a little more continental sophistication, you could try Juventus (JUVE), which is controlled by the Agnelli family (owners of Fiat). If you fancy getting into bed with the Glazers (so to speak), you could investigate Manchester United (MANU), which is listed in New York. Of the three, only Juventus are in the new season’s lucrative Champions League, but Juventus’ and Celtic’s fans will no doubt insist that that situation does not remain the case next season.
For all their faults, at least by investing in a football club you get a wonderful brand and great digital content provider. With the Football Talent Fund you get little more than an illiquid and wildly speculative punt. Not for me.
I am doing the PR for this, and accept your comments. Just to put the record straight, Terry will help select the coaches and consult on training methods, regimes etc. He also brings a useful set of contacts to the Fund. There is also more to the business model than you appear to be aware of, and that is fully described in the Investment Memorandum. Basically, the 12% returns projected are based only on the sale of 8 players over a 5-year period, and each fetching roughly £1.9m gross transfer fee. The ‘output’ of players, and their projected value, are conservative in current or historic context of professional player values and ‘success’ rate for UK ‘branded academies. The fees on this fund are high, but there are annual caps in place on some charges. Overall, it is the price paid for doing this fund raising offshore. And, of course, putting the Fund together onshore would have been virtually impossible, and almost as costly, given the risk-averse nature of the EU regulatory regime. This Fund is not for the risk-averse, but – if you examine the business model in detail – it could prove rather more rewarding than the founders suggest, and a better bet than Celtic (out of the CL yet again) plc!!! Email me and I can send more info. cheers, Pam Spooner
Thanks for your feedback Pam and I wish the fund and its investors all the best. I will keep an eye on it to see how it develops.