4% bonds - AFC Wimbledon football club

N15Matt

AFC Wimbledon, the football club, has just published a bond issue and you can choose your preferred rate of interest up to 4% per annum!

The bonds are for 5, 10 or 20 year terms for a minimum investment of £1,000. The club has already raised over £1m from the bond. (Google it, “The Plough Lane Bond” - I can’t post a link :doh:)

Obviously, it’s capital at risk etc and it depends on your view of how risky football clubs are (although AFC Wimbledon is unlike most football clubs as it is owned by its supporters through a co-operative), but 4% seems like a good investment to me - I did a Google search and the only long term bonds I could find were around 1-2%.

The funds are being raised to complete the construction of a new 9,000-capacity community stadium in Wimbledon, a few hundred yards from where the old Wimbledon FC used to play (before the club was relocated to Milton Keynes). The club has already raised over £21m from other sources, including sale of existing ground, grants and a community share issue, and will fund the remainder through a communication of these bonds and a commercial bank loan.

As well as being a great story and an ethical investment, it sounds like a decent investment to me. Your thoughts?
:money:

Jrose1927

Il watch this thread with interest very interested in football and the history of this club

Football is a risky investment though

Thrugelmir

Invest only if you are a fan of the club. Football clubs are a money pit......

Aretnap

Any investment in a football club should be regarded as extremely high risk for various reasons, not least the football creditors rule which means that should the club go into administration you would rank well below players, other football clubs etc in the queue to recover money owed to you.

4% is not particularly high in the world of capital at risk loans to companies. You can, to pick just one example, get 10 year British Telecom bonds paying an effective rate very close to that. They are not particularly low risk either - 10 years is a very long time in the technology industry, and Moody's rate them a couple of notches above junk - but I'd respectfully suggest that BT is still likely a safer proposition than a lower league football club.

If I had some money I could afford to lose and wanted to help the club out I might consider this sort of thing almost as a form of charitable donation - but not as an investment.

bostonerimus

Why on Earth would you even consider this when there are plenty of excellent mutli-asset funds that will be far better places to risk your money. Mini-bonds, energy-bonds etc should be avoided.

ColdIron

4% is not enough reward for me to compensate for the high risk nature of this bond. You can get that much or more in a strategic or corporate bond spread over hundreds of different issues, many of which are household names

N15Matt wrote: »

I did a Google search and the only long term bonds I could find were around 1-2%.

These are likely fixed term cash 'bonds' where your capital is not at risk

aroominyork

This is a classic example of why the term 'bond' is so problematic. It is used in two totally different ways.

One meaning, like The Plough Lane Bond, is a loan to a company (or to a government, when they are known as gilts) which carries the risk that the company (or govt) goes bankrupt or is unable to repay. These are tradable in a similar way as shares so, if the risk/return becomes more attractive as time passes, you can sell it and make a profit. The other bond is a fixed term savings account which in theory carries no risk (and may have FSCS protection up to £85k if the bank or savings institution goes under). That is your 1-2% type.

I would like to see the FCA (or other appropriate authority) try to do something to change the use of wording and reduce the confusion out there.

chucknorris

N15Matt wrote: »

AFC Wimbledon, the football club, has just published a bond issue and you can choose your preferred rate of interest up to 4% per annum!

The bonds are for 5, 10 or 20 year terms for a minimum investment of £1,000. The club has already raised over £1m from the bond. (Google it, “The Plough Lane Bond” - I can’t post a link :doh:)

Obviously, it’s capital at risk etc and it depends on your view of how risky football clubs are (although AFC Wimbledon is unlike most football clubs as it is owned by its supporters through a co-operative), but 4% seems like a good investment to me - I did a Google search and the only long term bonds I could find were around 1-2%.

The funds are being raised to complete the construction of a new 9,000-capacity community stadium in Wimbledon, a few hundred yards from where the old Wimbledon FC used to play (before the club was relocated to Milton Keynes). The club has already raised over £21m from other sources, including sale of existing ground, grants and a community share issue, and will fund the remainder through a communication of these bonds and a commercial bank loan.

As well as being a great story and an ethical investment, it sounds like a decent investment to me. Your thoughts?
:money:

Do they own the stadium and is the bond secured on the stadium? I have £67k invested in the Wasps bond. That is secured on the stadium (car park, conference centre and hotel). The value of the bond is £35m, and the 32k capacity stadium (and associated buildings) is valued at over £65m. The bond pays 6.5% per annum, and I invested at the average price of 84p, so with the 'tax free' capital gain it provides a gross return of 14% per annum.

I have not seen anything in your post which indicates that this investment is better than the Wasps one, which has an extremely higher yield. At this level of risk, I wouldn't invest in it at a mere 4%, how is a league 1 club with only a 9k capacity stadium and an average of just over only 4k going to service the interest on the bond?

EDIT: I would suggest that if you want to invest, invest only a little at first, then top up when it possibly goes wrong (that is a real possibility) and you will get a better yield and more money (if you make it to the maturity date).

AnotherJoe

N15Matt wrote: »

Obviously, it’s capital at risk etc and it depends on your view of how risky football clubs are (although AFC Wimbledon is unlike most football clubs as it is owned by its supporters through a co-operative), but 4% seems like a good investment to me - I did a Google search and the only long term bonds I could find were around 1-2%.

Something is not determined to be a "good" investment based on the size of the return they state !
Before it went bust, LC&F was offering 8% , so was that an even better investment?
You'd be better off putting your money in an income fund at least that is tradeable.

Once you've invested in the football club, that's it you won't be reselling. As someone else said only invest if you wish to support the club and don't mind if you lose all your money.

msallen

I wouldn't consider this in a million years unless I was a Wimbledon fan, and then I would only put in what I could afford to lose, and expect to do so. Any capital returned at the end would be a bonus.

Malthusian

4% a year for investing in a lower league football club? Are they missing an 0 on the end?

Look up what happened to Bury FC investors who invested in parking spaces in their club's car park.

AFC Wimbledon fans will be lucky to see a penny back (or more than a year's interest's worth of their own money paid back to them) and I wouldn't be surprised if the football team didn't see much of the money either.