Sheffield Wednesday may be on the cusp of a £20 million investment which will help them start to become a main player in football once again. But, in lay man's terms, what does it all mean? Who is behind any proposed cash windfall, where will the money come from and how will it be spent? Star assistant editor Bob Westerdale put the questions to Owls chief executive Nick Parker:
Question: Can you sum up the latest situation for the man in the street?Answer: We have appointed Inner Circle Sports, a New York investment bank, who specialise in finding funding for American or European sports
businesses. They have an enormous network in institutions and very wealthy Americans who have an interest in investing in sports for financial- return reasons rather than 'trophy asset' acquisitions.
Q: Would these people be in it for the long term?A: This is actually a 'growing the asset value' opportunity for them. They buy it for X million today and hope that in five to 10 years' time they can sell it for 5X or it will be worth 5X.
Inner Circle have been over here for a few days and will probably be coming back again this week or the week after to go through the information we have gathered.
Q: Is this a due-diligence process?A: Yes. They are checking that what we've said about the club is true, essentially ... that it has the potential to grow, that there are opportunities to improve the customer experience and improve the cash that comes into the club - and therefore improves the possibility of it getting into the Premier League.
Join the debate on Sheffield Wednesday's future by adding a comment below. Everyone is welcome to contribute - whatever your team - but please refrain from a slanging match. Comments are monitored and innappropriate ones will be removed.Q: What type of potential investors are we talking about?A: Either institutions that invest in sports or wealthy individuals who have in the past got together to buy US sporting franchises and are interested in buying English ones.
We asked American investment banks if they were interested in taking on the Wednesday opportunity and also went to see institutional investors and private individuals.
It became apparent there was a degree of competition between the investors and a lot of them said we needed to appoint an investment bank to run the process. Some said 'we would like to invest but not if our competitors down the road are investing'.
Others said 'yes we'd like to invest but only if so-and-so is investing as well'. So there is a degree of bringing the syndicate together. The ideal investor would be a group of four or five either individuals or institutions all doing it as an arms-length financial proposition.
Q: Investors are actually competing with each other?A: Yes, we were surprised about that.
There were the two particular groups who own two competing sports franchises and they didn't want to invest if the other lot were investing in us. So the question was: Can we get an auction going here?
Q: Would individual American clubs be investors?A: No. It's about the people who have invested in any of the American leagues - baseball, football, soccer, ice hockey, basketball. But not actual clubs. We are looking for people who have looked at investing or have invested in sports opportunities before.
Q: Any one investor coming to the front?A: We haven't quite to the point where we say: "Right, come on - that's the deal. Put up or shut up." Whoever invests would have a majority holding. We want the right sort of investor, though - not any old money. You want someone treating Sheffield Wednesday as a special thing. And growing it.
We'd be looking for four our five individuals or institutions to invest. A £20m investment returning an 86 per cent stake is the mechanics of the deal structure I designed. That is not saying that structure is set in stone at this point. There is still a lot of negotiation to go on.
But the principle behind that structure is that as much of that £20m as possible stays in the club for development and growth of the club itself, rather than going to pay off the bank or other shareholders or loan note holders.
Q: And the remaining 14 pc?A: That's the existing shareholders. Overall, we are talking about a
new share issue. We are issuing around 450 million new shares. Its not
a tablet in stone and there are still negotiations.
The 14 per cent shareholders have to agree to it. We appreciate different parties have different aspirations. And so we need to find a way of bridging the gaps between them. That includes investors, bank, loan note holders, shareholders. The investors have all got different aspirations. But it can be achieved.
Q: Wednesday owe a lot of money to The Co-operative bank - why are they so accommodating?A: Because Bob Grierson and the other serving directors have done a good job keeping the club financially stable and looking after the Co-op. We are not a club that loses many millions of pounds every year in cash. In fact, we are mildly cash generative each year.
This club is very well run from a financial perspective. And that is a credit to all the previous directors.
Q: Will the Co-op want a piece of the investment?A: We're trying to get everybody to work together and find a way in which they will get their money, but in the longer term. Right now, no-one is going to get a penny if no investment comes in unless the club gets in the Premier League - and it's going to be hard to do that unless some investment comes in. So it is a chicken and egg. So why not get the investment in try and get in the Premier League and then they can all be paid out more than 100 pc.
Q: How important is (internet tycoon) Jeff Mallett in this?A: Jeff comes on a list of 60 people who have invested in US sports. It just happened that he popped up as an investor in Derby County, but we didn't know about that in advance. We went to see him and he pointed us at Inner Circle.
Q: Are you confident it's all going in the right direction?A: Very confident. Inner Circle are pushing us quite hard. I am encouraged by that because they must think there is something in it for them, which means they know that they can do this deal.
When we first walked into their offices, their reaction was: "If what you are proposing to us is that you are a Championship club - chuck some money at us and we will get promoted, then we are not interested."
We said that's not the situation. We are a stable Championship club which is cash generative or cash neutral and has a lot of growth opportunities even without getting to the Premiership.
After an hour or two of explaining our business plan - involving the community and increasing the fan experience and therefore the concourse and corporate revenues - they were convinced.
Q: And since then?A: They have converted my financial model into American-speak and prepared a virtual data room where all legal documents are available so, when they decide who they are going to bring forward into the investment process they can act immediately.
When they start getting the auction going, they can rapidly move on to the next stage.
Q: So these people are not chasing the Premier League right away; they just want a good business model?A: Yes, but then Sheffield Wednesday are pretty well unique in that we are cash generative. Our wage bill is low. Everyone in America was amazed that we didn't lose tens of millions of pounds a year in cash.
Q: Is the ageing stadium and infrastructure an obstacle?A: It's an opportunity. If we can put in proper retail systems and the E-ticketing system, its an opportunity to sell more and give the fans a better experience.
Q: Do Americans really care about a fan's experience here?A: Yes! America is all about service. One of the questions they had was about the quality of the women's loos. We are down to that sort of detail.
E-tickets is a priority. Fans will buy one at home, print off a barcode at home, come to the stadium and bleep their way through the turnstile.
We would also have a points system like Tesco Clubcard for when you buy tickets or from the shop. That means we can direct offers at the customer.
We are looking to improve catering on the concourse, trying to bring in local suppliers.
Q: What's the timescale for investment?A: We are not putting a timescale on it, but the next window to buy players is January. If you were an investor and part of your investment was to put an extra million in (manager) Brian Laws' kitty, you'd want to do it before then.
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