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4% bonds - AFC Wimbledon football club
Comments
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aroominyork wrote: »The govt has a responsibility to ensure people have clear, appropriate and accessible information on which to base decisions. The word ‘bond’ confuses people. They could fix that.
No they couldn't. The Government is not going to ban using the word "bond" and mandate that everyone uses more specific terms like "insurance bond" "loan security" "fixed term deposit" on pain of imprisonment. Anything short of that will have no real effect.
Most of the confusion arises from sloppy journalism, and the Government can't crack down on sloppy journalism without compromising freedom of speech.
Has anyone ever died because your son fought his way to the front of the crowd with his Henry James thesis and blocked a medical doctor from attending the patient?(While they are at it, they should address the similar situation with the word Doctor. When someone calls out “Is there a doctor in the house/on the plane?” it’s not much use if my son offers to read his thesis about Henry James.)
Presumably your son has some sort of literary degree so it might be useful if you asked him to explain the concept of context and its importance in semantics.
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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:
Looking at it purely from a potential investor to make money, I’m surprised anyone would class this as a good invest.
If you read the terms and conditions they make it very clear that not only is it high risk, that they expect to need more investment in the future. They also mention those who have invested in these bonds will be last in line to get paid.
To make things worse the club is only just above the relegation zone. Avoid unless you are a fan that simply wants to donate.
May I ask if you are a Wimbledon fan looking for investors?0 -
aroominyork wrote: »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.
Wrong:
The Plough Lane Bond is not a loan to a company, it's a loan to a Friendly Society.
This bond is not tradable.
This bond complies with all current legislation.
This Bond is more like a fixed term saving account, but pays more than the 1-2% you suggested.Don't be a fool, stay out of debt.
Use a cashback CC and screw the industry, I do.0 -
This Bond is more like a fixed term saving account, but pays more than the 1-2% you suggested.
Please explain why if this is the case that the T&C make clear it is high risk and ranks fairly low as a creditor.0 -
chucknorris wrote: »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).
We hold the freehold of the land already.
We don't claim it to be better than the Wasp's one, that's your comparison.
There will be a bridging loan after Bond issue of between £6m-£9m depending on funds raised by Bond; this bridging loan will be replaced after 1 to 2 years and a built stadium with much cheaper long-term funding. This loan is against a stadium of total build cost £31m, and the Bond liability plus the bridging loan will not exceed £11m.
Our current 4K is in fact a full current stadium, with many wanting a seat but unable to get one.
There will be no top up offered.
This post is my opinion and does not reflect the view of the Dons Trust, nor AFC Wimbledon.Don't be a fool, stay out of debt.
Use a cashback CC and screw the industry, I do.0 -
AnotherJoe wrote: »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.
It's not an investment, it's a fixed term loan, and capital is repaid at maturity, with annual interest payments on the way.
This post is my opinion and does not reflect the view of the Dons Trust, nor AFC Wimbledon.Don't be a fool, stay out of debt.
Use a cashback CC and screw the industry, I do.0 -
verybigchris wrote: »This sort of investment always makes poor financial sense, by definition.
A normal corporate bond is boring. Nobody's getting excited about it. The return is therefore determined solely by supply and demand: the market will determine a rate of return that is commensurate with the risk.
A bond like this, where there's emotion attached to it, sees an increase in demand from people investing with their hearts not their heads. That will inevitably pull down the return to a level lower than the market alone would have demanded.
(BTW, Bury FC had a mini-bond scheme running too)
This is not an investment, it's a fixed term loan with capital repaid at maturity and annual repayments on the way.
It's not a corporate Bond, it's issued by a Friendly Society.
There is no market, the rate (0%-4%) and term period (5, 10, or 20 years) is chosen by the customer.
This is nothing like the Bury scheme.
This post is my opinion and does not reflect the view of the Dons Trust, nor AFC Wimbledon.Don't be a fool, stay out of debt.
Use a cashback CC and screw the industry, I do.0 -
MarkCarnage wrote: »Please explain why if this is the case that the T&C make clear it is high risk and ranks fairly low as a creditor.
Because it is a: fixed rate, fixed term financial instrument, with the correct use of the word "Bond", and is correctly warned as "capital at risk".
It's a loan, in the form of a Bond; but the Dons Trust is a Friendly Society, not an FSCS covered organisation, and that's why the warning has to be stated.
I also used the words "more like", not "exactly".
This post is my opinion and does not reflect the view of the Dons Trust, nor AFC Wimbledon.Don't be a fool, stay out of debt.
Use a cashback CC and screw the industry, I do.0 -
We hold the freehold of the land already.
We don't claim it to be better than the Wasp's one, that's your comparison.
There will be a bridging loan after Bond issue of between £6m-£9m depending on funds raised by Bond; this bridging loan will be replaced after 1 to 2 years and a built stadium with much cheaper long-term funding. This loan is against a stadium of total build cost £31m, and the Bond liability plus the bridging loan will not exceed £11m.
Our current 4K is in fact a full current stadium, with many wanting a seat but unable to get one.
There will be no top up offered.
This post is my opinion and does not reflect the view of the Dons Trust, nor AFC Wimbledon.
Make your mind up!
I didn't think anyone could make this look less appealing. Congratulations on proving me wrong.0
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