Merger Proposal and Business Plan - nxedge.io
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Merger Proposal and Business Plan
There are two key elements in demonstrating to supporters that a merged organisation can
successfully operate out of Gigg Lane. Firstly, that the new combined organisation can function
effectively and represent the interests of its members, and secondly, a business plan that
demonstrates that the club and ground are financially stable in the long term.
We appreciate there will be many individual questions to address but we believe we can answer
some of them in advance by providing written information under these two key topics.
We are inviting questions from members on the corporate structure and governance issues at this
stage, which will be answered in writing and built into FAQs. You can do this by emailing
merger@buryafc.uk or questions@buryfcss.co.uk with your questions.
We will deal firstly with the governance and structure of the merged organisation.
Governance and Structure
The proposed merger will take place within The Bury Football Club Company Limited, which will
wholly own Bury Football Club (2019) Ltd (the football club) and Gigg Lane Stadium (the ground) as
two separate subsidiaries. This is a company limited by guarantee, so there are no shares in this
company, only members. There will be two members in this company, the new Community Benefit
Society (CBS), and Bury FC Benefactors Ltd. As there are no shareholdings, the voting rights are
dictated entirely by the Articles of Association, which make clear that the CBS board members will
have the majority vote required to make all decisions within The Bury Football Club Company
Limited, and consequently for the football club and the ground.
There are only three decisions which the CBS cannot make as they are prohibited within the Articles
of Association:
1. The Bury Football Club Company Limited cannot take on debt. This does not prevent
subsidiary businesses from using standard trading debt such as credit cards and overdrafts,
but it does mean that significant debt into the holding company is not permitted. We have
also been advised that this would not prevent the CBS from raising capital in future through
community share issues.
2. No distributions are to be made. This means that any profits or reserved capital must be
reinvested into the club or ground.
3. A change to the Articles of Association themselves, which would require a 75% vote by
members and consent of Bury FC Benefactors Ltd to change.
These are the Articles already in place for The Bury Football Club Company Limited and can be found
at Companies House here. They were negotiated as part of the central government funding and filed
on 10th February 2022. We believe they are fit for purpose.
Board members of The Bury Football Club Company Limited are required to vote in accordance with
the wishes of the organisation they represent, not as individuals. This means that CBS board
members can effectively approve any decisions, either through a member vote which they would
then implement, or as a decision of the CBS board where it is within their remit.Bury Council may take a board position if they provide funding but have agreed that should they take a board position, they will remain focussed on protecting their investment and discharging any legal obligations, and do not want to act against CBS member voting intentions unless there is a clear obligation to do so. Bury FC Benefactors Ltd have agreed to put in place an investment policy which states that any surplus generated by further share dilution, which is expected to be the way in which further capital is created by this company, will be re-invested into The Bury Football Club Company Limited rather than retained within Bury FC Benefactors Ltd. They are also able to sell shares privately. Should anyone wish to invest in The Bury Football Club Company Limited, this must be done via the new CBS or Bury FC Benefactors Ltd under the proposed structure. It is possible to create a new ‘member’ of The Bury Football Club Company Limited but any change to voting rights would also require a change to the Articles of Association, which requires a 75% vote by members and consent of Bury FC Benefactors Ltd as stated above. This is a higher bar than is currently set with Bury AFC where share dilution or a full sale can happen with a 51% vote in favour, and creates more certainty around the future of the club as ‘one member, one vote’ fan-owned. All key appointments, policies and processes will therefore remain with the CBS board, however, they may also change over time if the CBS board and/or its members wish to do so. We are also proposing that the two current CBSs - Shakers Community Society Limited and Bury FC Supporters’ Society Limited - merge into a new CBS. The vote will be to fold the existing CBSs and transfer the assets into the new CBS. Anyone with a membership in both CBSs may vote in both CBSs motions. The rules that the two CBSs operate under are almost identical, but the new CBS will ultimately be run by a newly elected board. They will be elected by members of the new CBS. This is a time-consuming process and there will potentially be a period where three CBSs could be in existence whilst the two current CBSs are wound down. We also have a football club and ground to operate. For this reason, we are discussing a transitional period whereby existing CBS board members are able to oversee the transition until a new CBS is authorised by the FCA and a new board is elected. We expect this to be in place at the start of the 23/24 season or just in advance of it, at which point all parts of the merger will be complete. There are a number of practical reasons why this is the case and has been agreed by all parties. There can be no change of name mid-season, so we will work with the FA and apply for the change of name if the merger is agreed in the hope that it is available to use from the start of the 23/24 season also. We hope this will bring all of these elements together at the same time. We understand there is always nervousness around change, and a desire to protect the fan ownership and control currently enjoyed. It will continue to be the case that members will control who will sit on the CBS board., and all key decision-making power will be in the hands of the elected board going forward. A corporate structure chart is included below for reference which shows all relevant organisations and their relationship to each other. A separate operational company (OpCo) is likely to be created as an additional subsidiary. This will be used to employ non-footballing personnel and contract for non-footballing matters such as catering and building work.
Shakers Community Bury FC Supporters Bury FC Benefactors
Society Limited Society Ltd
(8350) (29385) (13814771)
Community Benefit Society Community Benefit Society Company limited by shares
Merge into
New CBS
Community Benefit Society 1 member
3 votes
1 member
The Bury Football
4 votes Club Company
Limited (13907755)
Company Limited by Guarantee
OpCo
Bury Football Club
Limited
(2019) Limited Company limited by shares
Company limited by shares
Gigg LaneBusiness Plan
BURY COMMUNITY FOOTBALL STADIUM P+L BALANCE SHEET & CASHFLOW
PROFIT AND LOSS ACCOUNT Year 1 Year 2 Year 3 Year 4 Year 5
Matchday Revenue 207,312 268,821 435,855 618,322 752,767
Membership Fees 135,000 108,000 108,000 108,000 108,000
Donations and Fundraisers 45,500 42,000 42,000 42,000 42,000
Sponsorship 92,917 63,333 70,000 70,000 76,667
Shirt Sales and Merchandise 88,900 79,958 81,625 81,625 83,292
Pitch Rental 15,470 128,625 140,467 140,467 139,650
Community Room Rental 26,892 28,833 28,667 28,667 28,500
Gym Rental 75,333 80,000 80,000 80,000 80,000
Income 687,324 799,571 986,613 1,169,080 1,310,875
Staff Wages 146,030 155,760 155,760 155,760 155,760
Legal Professional and Insurance 42,500 40,000 40,000 40,000 40,000
Ground and Match Costs 120,846 102,984 108,724 108,724 114,464
Shirt Sales and Merchandise Cost of Sales 49,583 40,475 42,058 42,058 43,642
Football Staff Wages 129,387 193,551 235,204 349,726 451,660
Rates 37,500 30,000 30,000 30,000 30,000
Utilities 48,539 67,492 69,827 69,827 69,630
Social Media and Advertising 15,625 12,500 12,500 12,500 12,500
Sundry Expenses 7,500 6,000 6,000 6,000 6,000
Pitch Maintenance 6,497 54,023 58,996 58,996 58,653
Community Room and Gym Maintenance 26,000 24,000 24,000 24,000 24,000
Bank and Merchant Costs 6,020 4,800 4,800 4,800 4,800
Depreciation 54,267 152,784 197,034 197,034 197,034
Amortisation of Grant (36,250) (104,350) (136,200) (136,200) (136,200)
Expenditure 654,045 780,019 848,703 963,225 1,071,943
Operating Profit 33,279 19,552 137,910 205,855 238,932
BALANCE SHEET Year 1 Year 2 Year 3 Year 4 Year 5
Fixed Assets 2,116,415 2,848,631 2,651,597 2,454,563 2,257,529
Cash 590,422 428,681 643,100 925,769 1,244,051
Accounts Receivable 57,277 66,631 82,218 97,423 109,240
Other Current Assets 14,319 16,658 20,554 24,356 27,310
Accounts Payable (25,964) (30,204) (37,270) (44,163) (49,519)
Other Liabilities (25,000) (50,725) (78,818) (106,912) (134,842)
Grant (1,413,750) (1,946,400) (1,810,200) (1,674,000) (1,537,800)
1,313,719 1,333,271 1,471,181 1,677,036 1,915,968
Retained Earnings 280,440 313,719 333,271 471,181 677,036
Current Earnings 33,279 19,552 137,910 205,855 238,932
Other Equity 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
1,313,719 1,333,271 1,471,181 1,677,036 1,915,968
- - - - -
CASHFLOW STATEMENT Year 1 Year 2 Year 3 Year 4 Year 5
Cash Brought Forward 269,316 590,422 428,681 643,100 925,769
Grant Receipt 760,500 637,000
Benefactors 248,055
Operating Profit pre-Depreciation and Amortisation 51,296 67,987 198,744 266,689 299,766
Capital Expenditure (727,963) (885,000)
Change in Receivables (18,962) (11,692) (19,484) (19,007) (14,770)
Change in Payables 8,180 29,965 35,159 34,986 33,286
Cash Carried Forward 590,422 428,681 643,100 925,769 1,244,051Notes on the Business Plan Years 1-5 in the model are based on promotion each year, from Step 5 (year 1) to Step 1 (year 5) in non-league football, which is unlikely in practice, but used to demonstrate changes in crowd sizes, ticket prices and playing budgets. Please note the figures quoted in these notes are inclusive of any applicable VAT and the figures used in the business plan are net of any applicable VAT. Ticket Projections Ticket revenue is the main driver of additional revenue which can be used to increase the paying budget. Whilst lines of revenue such as kit and stadium sponsorship can grow as the team progress through the leagues, the additional demonstrable benefit to sponsors whilst the team remains in non-league football means they are unlikely to increase in line with increased gate receipts. For this reason, we created a number of scenarios using different ticket prices and crowd sizes to sensitize the model. Pricing We have simplified the model by using adult tickets only, although concessions will be made to juniors in reality. Bury AFC currently only offer discounted prices to under 16s and they constitute around 10% of the total crowd based on historic averages at Bury AFC and across most other clubs. Specific offers and events increase this percentage but do not have a material impact on revenue, as prices are typically discounted further. For the purposes of understanding the potential revenue we have deemed these to be immaterial. The policy of not offering discounts to over 65s was voted in by Bury AFC members with only 5% against this and, as it has a significantly detrimental impact on revenue, we have assumed this policy continues with a merged club, although it can be changed. Equally, we have not included ‘enhanced’ season tickets which could include benefits such as preferential seating or hospitality, and generate more income. We have set out comparative ticket prices for clubs in Steps 4 -1 in Appendix 1, which demonstrates that the prices used are not out of line with the market. We note there are several special offers and innovations included by a small number of clubs within their prices but are just showing the basic adult price to make it easier to compare like for like. We have not adjusted the prices for inflation as it is useful to compare and assess the prices in today’s terms and we assume throughout the model that inflation will push up costs and revenue in equal measures. Crowd Sizes Whilst we expect there will be an initial boost to attendance figures from a return to Gigg Lane, we need to project well beyond this period and have tried to come up with a realistic crowd average using a number of scenarios. Promotion should bring larger crowds, not just from increased interest in the local community, but from a small number of larger away crowds, acknowledging that the away attendances remain relatively low throughout the whole of non-league and even in the EFL.
We modelled three crowd level scenarios – high, medium and low – to see how this impacted revenue. These are shown in Appendix 2 and range from 1000 to 3000 depending on division. We also simulated footballing scenarios which included both constant promotion and stagnation. Assuming all other elements of the business plan performed as projected, the break-even point for the stadium is with an average attendance of 1400 people paying £8 on the turnstile (or a £143 season ticket) at Step 5, which is the league position and ticket pricing for Bury AFC next season. We believe this is achievable. It does not allow for significant investment in players for a promotion challenge, nor does it allow us to build up capital reserves, but it does demonstrate where the break- even point exists and allows a budget which would be competitive at Step 5. Competitiveness of Playing Budget The higher the division, the greater the correlation between playing budget and league position. We know that success on the pitch is important to keep attendances growing, especially after the early seasons. We wanted to assess if playing at Gigg Lane could generate enough revenue to create a competitive playing budget for each division we play in, without taking any unnecessary financial risks. The current business plan automatically allocates 25% of the revenue generated to the football club playing budget (which includes manager and coaching staff). This creates a budget which should allow the team to compete at each level, although from Step 3 upwards, additional budget would probably need to be allocated to the playing budget to gain promotion. This is most evident in Step 1 where significant sums can be spent on playing budgets to get into the EFL. 35% is a low percentage of total revenue to allocate to the playing budget, with 70% the recommended cap by the Fair Game lobby group. The model shows positive cash movement each season if things go to plan, creating a cash surplus, so there is scope to increase it. To ensure that funds are not depleted to a level which puts the club and those working for it at risk, we have suggested retaining working capital of £300,000 within the football club at all times, which should only be used if there are liabilities which cannot be met by any other means. This equates to around 3 months, total costs at the most expensive point of the model. This could be almost fully funded instantly from the funds available within the combined Community Benefit Societies – Shakers Community Society Limited and Bury FC Supporters Society Limited – which could hold this cash to be used on behalf of its members and potentially only after a member vote. If all excess cash was reinvested into the playing budget, subject to a cap of 70% of revenue and retaining a minimum of £300, 000 working capital, we believe we can support promotion to Step 1 and remain competitive in that division. Women’s Football For simplicity, and because the costs and revenue are relatively small, we have not gone into any detail on women’s football but the strategy is to continue the commitment to this growing part of the sport in future. Bury has enjoyed success last season with the Bury AFC Women’s and Bury FC Foundation Women’s team and we wish to support this in the future also. Community Gym The gym will be housed in the ground and first floor of what was Starkies restaurant. The architect’s drawings are complete and the works have been issued for tenders from 3 local firms.
The total budget is estimated at £150k, comprising £80k for the conversion works and a further £70k for equipment. Internal works are relatively straightforward, and we also plan to remove the turnstiles immediately facing the Manchester Road End to provide a more attractive, better lit entrance. Funding for the core works will be a 50:50 combination of benefactor funds and the matching grant from the Community Ownership Fund. Bury Council have also identified the potential to utilise space in the Manchester Road End for Personal Training Facilities. As part of the £450k grant under consideration, an allocation will be used for free weights and other outdoor fixtures under the roof of the stand. Gross revenue of £96k p.a. is forecast from a combination of memberships, personal trainer commissions, Community Group bookings and sports team rentals. The gym will also provide complementary footfall to the main stand, e.g. the community café, further contributing to revenue. The gym will operate on a “Pure Gym style” operating model, with key card-based access and minimal on-site staffing. The gym design includes fully accessible areas broadening the usage and engagement. Changing facilities are included and free parking is another competitive advantage. The view from the exercise machines looking out on the pitch will be a unique selling point. Personal Trainer services utilising space in the Manchester Road End will be encouraged from which we will receive commission. The stand is covered, lit and provides a secure environment which is particularly attractive in winter months. We are in negotiations with a 3rd party gym operator to run the facility for a fixed initial period. This party has over 30 years’ experience and operates over 200 facilities across the UK. They combine commercial expertise with experience running community-focused services. This helps reduce the operational risk and allows our team to gain practical experience from a market leader. Longer term, we may wish to take on the full management and therefore collect more of the revenue. Community Multi Use Space The core multi-use space is the central section of the Main Stand, formerly the Est 1885 suite and floor directly above. We also intend to repurpose the space either side of the core to provide community use facilities e.g. offices, mental and physical health treatment space, a Library of Things and community meeting rooms. The core of the main stand will be refurbished and repurposed to provide a flexible meeting space that can be used 7 days a week. The total budget for the core space is £250k which is an estimate based on the indicative architect’s designs. Funding for the core works will be a 50:50 combination of the benefactor funds and the matching grant from the Community Ownership Fund. The main stand has already benefited from numerous donations of materials, equipment and services from local supportive businesses such as Trident Windows, McR Gas, Cheetham Hill Construction, RC Solutions Pitch Care, KAR UK Ltd, Garic, Orange Skips, Seniors Waste Removals, Manchester Safety Services, VJ Technology Services and Window Plas. This has significantly helped the budgeting and delivery. The works either side of the core will be funded from a portion of a £450k Bury council grant which is being considered for approval.
Gross Revenue is conservatively estimated at £71k p.a. which includes room hire together with food
and beverage purchases, this equates to £195 per day. As this includes peak periods such as match
days, this is considered comfortably achievable.
Complementary facilities opening such as the pitch hire, gym etc will help further boost this revenue
stream.
The staffing projections include a full time Community Liaison Co-Ordinator whose job is to drive this
element. Experience learned from other clubs is that this employee becomes self-funding as the
additional revenue they generate offsets their overhead plus a good margin.
The core space will be used for a variety of purposes, the list below presents examples however,
community groups and businesses are coming forward daily, seeking details of how they can use it:
▪ Match day hospitality
▪ Sports Bar every weekend
▪ Community Café Monday - Friday each week
▪ Youth Zone
▪ Adult Education
▪ Social Inclusion – e.g. Elderly, Alzheimer’s, South Asian Community
▪ Health and Wellbeing – NHS – Vaccinations, Physio, Outpatient Care
▪ Skills training via Bury College
▪ Business Conference events
Currently the Est 1885 suite is already able to host events and bookings have been made. Barclays
have been particularly proactive and supportive in this respect. This is temporary revenue until we
complete the design and tendering allowing us to commence the refurbishment works.
The internal design process is ongoing and includes engagement with community groups to meet as
many needs as possible and ensure adaptable space.
A Community Café due to open on 18th July 2022. Again, this facility is temporary until the full works
commence, however, the café will be included in the long-term arrangements for the Main Stand. This
drives usage, community engagement and social inclusion.
Lettings of existing office space are already in place and as the plans for the space either side of the
core are finalised, this will be expanded.
In addition to the Main Stand, we are also finalising a 5-year letting of the club shop to a 3rd party
operator. This produces regular revenue, and the club shop retail offering can be accommodated in
the stadium and online.
3G Pitch & Associated Facilities
Replacement of the existing grass pitch with a 3G surface allows for greater community use and more
engagement with the wider stadium facilities. As the elite men’s team rises through the football
pyramid, the pitch may eventually require replacement with a grass surface, however, that is
mitigated as follows:
• At the point this becomes relevant, the surface will be towards the end of its natural life,
allowing a strategic decision to be made
• Other revenues will be generated as the team is higher in the league which can offset the lost
3G revenue• Football regulations are continuing to change, and it is conceivable FIFA Quality Pro pitches
may be permissible at League 2 or even League 1 level at a later date.
The total budget is £885k which includes additional low-level lighting and installation of changing
facilities in the Cemetery End Stand.
Tenders have been received from 3 suppliers at levels in line with expectations. The existing pitch
benefits from excellent drainage, together with a flat and stable base which helps minimise installation
costs. The Football Foundation will need to oversee the final survey and tender process.
Funding will be primarily from a Football Foundation grant where the application process is underway
and a letter of support has been received from the CEO. This will be combined with a contribution
from Bury Council and the residual funds from the Community Ownership Fund and associated
benefactor match funding.
Due to the lead times securing the Football Foundation Grant and the global supply chain challenges,
the pitch will likely be installed during mid-2023.
In the interim, the grass pitch has been fully restored and has already hosted numerous football
matches and other revenue generating events. This will be continued for the coming months.
Total Gross Revenue of £154k p.a. is assumed once the new pitch is installed. This equates to £70 per
hour, 7 hours per day, excluding match days. Pricing has been benchmarked against Goshen and
Pompey in the Community who operate 4 pitches in a location with a similar level of demand. Both
charge >£80 per hour and are fully booked for the coming year. Bury Council has identified a 9-pitch
shortfall for the town confirming significant demand.
The range of users is exceptionally wide. The pitch will be capable of sub-division allowing rental from
11-a-side down to toddler games. Men’s, women’s and youth teams have confirmed demand and are
already using the grass pitch and paying a premium rate. Schools and Bury College have significant
demand particularly helping daytime usage. Walking Football, Accessibility Sports, Fitness classes
linked to the gym and the Council’s public health agenda. An artificial surface is also better suited to
hosting non-sporting events e.g. weddings, corporate events and media filming.
A conservative maintenance budget is included, together with a sinking fund for eventual
replacement. Use of stadium level LED lighting limits overhead in winter months and avoids any
nuisance for local residents.Appendix 1 – Adult Ticket Price Comparison Step 4 Team Matchday Season Ticket Macclesfield £12 £180 Witton Albion £11 £180 Workington £11 £180 Leek Town £10 £150 Glossop North End £10 £150 Runcorn Linnets £10 £150 Skelmersdale Utd £9 £144 Clitheroe £9 £80 Ramsbottom Utd £9 £120 Newcastle Town £9 £120 Trafford £8 Unclear 1874 Northwich £8 £128 Kidsgrove Athletic £8 £123 Prescot Cables £8 £120 Mossley £8 £115 Colne £8 Unclear City of Liverpool £8 £140 Widnes £8 £125 Bootle £8 Unclear Hanley Town £6 £97 Mean £9 £135 Median £9 £128 Step 3 Team Matchday Season Ticket Stafford Rangers £12 £225 Gainsborough Trinity £12 £210 Matlock Town £12 £200 Hyde United £12 £199 Nantwich Town £12 £187 FC United of Manchester £12 £150 Guiseley £12 £145 Marske United £11 £198 Belper Town £11 £180 Whitby Town £11 £175 Atherton Collieries* £10 £240 South Shields £10 £215 Morpeth Town £10 £210 Ashton United £10 £185 Bamber Bridge £10 £180 Liversedge £10 £180 Warrington Town £10 £180
Lancaster City £10 £175 Stalybridge Celtic £10 £170 Radcliffe £10 £150 Marine £10 £145 Warrington Rylands 1906 £8 £120 Mean £11 £183 Median £10 £180 Step 2 Team Matchday Season Ticket Hereford £17 £310 King's Lynn Town £17 £340 AFC Telford United £16 £295 Kidderminster Harriers £16 £322 Alfreton Town £15 £270 Banbury United £15 £275 Buxton £15 £225 Chorley £15 £260 Curzon Ashton £15 Unclear Gloucester City £15 £275 Kettering Town £15 £300 Spennymoor Town £15 £199 AFC Fylde £14 £190 Boston United £14 £280 Bradford Park Avenue £14 £140 Chester £14 £270 Darlington £14 £240 Leamington £14 £269 Peterborough Sports £14 £235 Scarborough Athletic £14 £275 Southport £13.50 £240 Brackley Town £13 £220 Farsley Celtic £13 £190 Blyth Spartans £12 £250 Mean £15 £255 Median £15 £269
Step 1
Matchday Season Ticket
Barnet £22 £396
Notts County £22 £350
Oldham Athletic £22 £330
Scunthorpe United £22 £264
FC Halifax Town £21 £349
Wrexham £20 £340
Aldershot Town £20 £340
York City £20 £299
Southend United £20 £295
Boreham Wood* £20 £185
Torquay United £19 £323
Altrincham £19 £298
Woking £18 £329
Chesterfield £18 £325
Gateshead £18 £295
Yeovil Town £18 £260
Maidenhead United £18 £219
Bromley** £18 £200
Solihull Moors £16 £290
Dagenham &
Redbridge £15 £350
Wealdstone £15 £325
Maidstone United £15 £320
Eastleigh £15 £200
Dorking
Wanderers*** £12 £300
Mean £18 £299
Median £19 £320Appendix 2 - Crowd Numbers
Crowd numbers at Gigg Lane by division (Step 5 = NWCFL Premier Division). Includes both season
ticket holders and single ticket payments. All adults, no concessions or complimentary tickets.
Step 5 Step 4 Step 3 Step 2 Step 1
High 1900 2100 2300 2600 3000
Medium 1400 1500 2000 2200 2200
Low 1000 1200 1400 1400 1400
Base 1600 1750 2200 2400 2500You can also read
