The Well Society rejects former Netflix boss Erik and wife Courtney Barmack’s proposed investment and outlines six reasons why they are doing so.does not believe the negotiated terms are beneficial to the club” and is urging members to oppose the bid in a vote next month.
The board of the Well Society, Motherwell’s majority shareholder, voted 6-3 by a majority against the proposal and issued a statement after the club announced it had entered a “period of consultation. A statement from Fir Park read: “The club has now entered a period of consultation with members of the Well Society and shareholders of Motherwell Football Club regarding the proposed investment by Erik and Courtney Barmack, with voting due to begin early next month. Following on from our last update, we can confirm that the main terms have now been agreed between all parties and will be distributed to all members of the Well Society and shareholders of Motherwell Football Club in the weeks leading up to the vote, which begins on 1 July 2024.”
But the Well Society immediately responded with a long and detailed statement. They said: “We have been working at a fast pace to finalize our position on this offer. We expect to put this to a vote of our members within two weeks from 1 July, which will then allow the Well Society to reflect members’ views in the expected shareholder vote club We are currently working on logistics and other information will be sent to our members in time.
“By this time we will also share the Company’s future plans if it remains the majority shareholder. These plans have been developed since the beginning of the year with input from supporters, consultants, football experts and business professionals and we are now looking to accelerate the publication of our plans within the necessary time frames. There are six main reasons why we believe this investment proposal should be rejected:
1. End of fan ownership
Fan ownership is the only way we can secure the club’s long-term future. These proposals will result in the Company’s shareholding being reduced from 71% to a maximum of 46%, leaving us with a smaller share than Wild Sheep Sports who will secure 49%.
We are aware that in our consultation earlier this year, the majority of the Society’s members indicated that they would be willing to consider an investment offer which would see the Society lose its majority stake in the club. However, we do not believe that an investment of £1,950,000 over six years justifies the significant risk of giving up fan ownership.
The company was established as the club’s “lifeline” and was used on many occasions. As a result of the Les Hutchison deal in 2016, which allowed the club to move into fan ownership faster than expected, this model was temporarily changed, resulting in the company investing on an annual basis until loans to Mr Hutchison, John Boyle and others were paid.
Since then the Society has worked hard to return to the safety net model and has ensured that we have over £750,000 in the bank which is growing steadily. This number would allow us to bridge a potential gap in the club’s finances if necessary.
2. Inadequate valuation of the club
Valuing a football club can be difficult. However, we reject the valuation of Motherwell Football Club below £4,000,000, which we consider to be completely unacceptable and we are disappointed that negotiations have continued on this basis. We do not believe that Motherwell supporters will agree that our club should be valued at a significant discount to its valuation published in our latest accounts and at a fraction of the value allocated to Hibernian earlier this year, which was based on the widely reported £6,000,000 for 25% share, approximately £24,000,000.
3. Disproportionate influence of a £300,000 boardroom
Although the investment proposal is structured over six years, the proposal would see Wild Sheep Sports immediately gain a disproportionate influence on the board in exchange for an investment of just £300,000 for an 8% stake in the club.
We don’t think it’s remotely acceptable for incoming investors to receive three of the eight seats on the executive board plus the chairmanship and the deciding vote in the outcome of the stalemate from day one.
4. Unfair demands placed on company members
The company has already raised over £2,000,000 as a direct result of the fan ownership model. Under these proposals, the Society – effectively you, the members – will have to invest or raise a further £1,350,000 as well as write off 50% of the £868,000 loan the club owes.
It is unacceptable for the Company to commit to investing the equivalent of approximately £1,800,000 over six years, which is only marginally less than Wild Sheep Sports would invest. We do not believe there is any logic or fairness to this arrangement which would have allowed Wild Sheep Sports to reach a 49% share over six years while the company has declined from 71% to a maximum of 46%.
5. Damaging membership growth
The renewed Society Board believes that much more can be done as a group of fan owners to grow our membership and maximize the Society’s income. However, for this to be possible there needs to be a purpose – Motherwell supporters and potential members need to understand why the Society exists, how it works and the vital role it plays in the club as a fan-owned entity.
We do not believe that the investment proposal will result in the strengthening or growth of The Well Society. Instead, we believe that given the drastic reduction in the Society’s shareholding, there is a significant risk of a similarly drastic reduction in membership and income, as current and future members would question the need to subsidize the Society and the club after the majority share is reduced.
6. A call option could weaken the club and the company
The Call Option in the proposals is designed to be a guarantee that gives the company the unilateral right to buy Wild Sheep Sports in full for six months in 2026, including 10% to cover administration costs and minimal interest – for a total of £660,000. However, members of the Society should understand that this proposed guarantee will not return us to our current position.
Within this timeframe, the Company has committed to investing a total of £400,000 in the football club over the first two years of the six-year deal. This means that if the Call Option is exercised, the Company would have to buy back Wild Sheep Sports for a total of £660,000, in addition to the £400,000 already invested in the Club. As a result, while the company would return as the majority shareholder, the company’s current financial reserves, which act as a safety net for the football club, would cease to exist and we would essentially have to start from scratch.
However, we draw attention to the above with the recognition that without investment in the season we will finish 10th. Thursday in the SPFL leave the League Cup group stage or 4 Thursday round of the Scottish Cup and they have no player sales, the Well Society will have to fill the resulting financial gap which would make up the majority 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 provisions for the right of repurchase 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 that the Well Society would otherwise hold after the exercise of the call option. This proposal also provides that 30% of net sales from player sales in excess of £2,000,000 will be held in escrow until 31 August 2026 to part-fund the right to buy back. However, we remain concerned that this cannot be used to part-fund the call option, meaning that it is only beneficial if the Well Society finds that it cannot afford to exercise the call option itself.
Given that one of the original arguments for seeking external investment related to the need to convince the auditors each October that there are adequate finances and reserves to meet all obligations for the coming season, we believe that the exercise of either a call option or a right to repurchase could raise significant concerns. despite the club’s ability to do so in October 2026 as the company’s financial reserves will be wiped out.
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