Important update from the trustees of the Partick Thistle Football Club Trust
Yesterday, the Partick Thistle Football Club Board published its formal proposal to issue a further £500k of Class C shares to a group of investors led by Donald McClymont.
This would bring important new financial resource to the Club, but would “dilute” existing shareholdings, including that of the majority shareholder, the PTFC Trust.
If the “tranche 2” investment goes ahead, this would complete what was originally envisaged to be a two-part investment for £1 million, the first part of which happened back in October 2023. The combined Class C shareholding would be 20% if this deal goes ahead.
Partick Thistle is a fan-owned football club, with 72.6% of the voting share capital currently being controlled by fan groups. Under our Club-Trust Agreement, a beneficiary vote will decide whether “tranche 2” should be able to go ahead. The ultimate decision is therefore for the fans to take, rather than the Club Board or the PTFC Trust trustees.
Fans’ Guide to “Tranche 2” and Club Finances
The Trustees have prepared a “fans’ guide” to the investment proposal and the Club’s finances, which you can read here.
This detailed document is part of our commitment to transparency in representing your interests at our fan-owned football club.
Summary of Trustees' recommendation
The Trustees have examined the “tranche 2” investment proposal carefully, and are recommending to beneficiaries that it should proceed. This is for four key reasons.
New investment is essential
Firstly, and most importantly, it is clear that the Club’s cashflow position needs to be significantly strengthened, if not this season then certainly next season.
- This would be true even if the Club were “breaking-even” (it isn’t yet doing so)
- It was always envisaged, as far back as early 2023, that at least £1 million of new capital was required to stabilise and rebuild the Club from its perilous financial position, but only half of that new capital has been raised so far
- The original plan had been for “tranche 2” to happen by November 2023
Majority fan ownership is (comfortably) maintained
Secondly, dilution of fan-owned shareholdings, while a clear “downside” to this deal, would be relatively modest.
- The PTFC Trust would remain, comfortably, the majority shareholder of the Football Club
- There is no legal or practical difference, in governance terms, to the Club being only 65.3% fan-owned versus currently being 72.6% fan-owned
- The Club-Trust Agreement which governs major decisions at our Club and gives fans a direct voice would remain fully effective as it is now
No better investment deal is on the table
Thirdly, we are satisfied that the other terms of the investment are reasonable, and we are not aware of anyone else willing to invest the necessary amounts of money on more generous terms.
- The valuation of the Club underpinning this proposal appears sensible
- The impact of tranche 2 on Donald McClymont’s personal shareholding is relatively modest
- None of the new shareholders, all of whom are essentially friends and colleagues of Donald’s, would personally own more than ∼1-2% of the Club each
- There is no obvious financial up-side for the new investors as individuals
- There are no new implications for Club Board composition
The alternatives to investment are less desirable
Fourthly, the alternative approaches to dealing with the Club’s cashflow challenges are not viable or are significantly less desirable.
- Overdrafts or secured lending facilities would carry debt interest, making it harder to break-even in future seasons.
- Soft-loans from directors or others wouldn’t provide the longer-term security the Club needs.
- Selling-off Club assets (in practice all or part of Firhill Stadium or its precincts) would be a significant strategic mistake.
Financial stewardship provisions
Our position in favour of the share issue is conditional on certain other things being done as part of the investment deal. If “tranche 2” goes ahead, it has to come with appropriate oversight of the funds invested.
It is not sustainable for the cash put into the Club simply to be used to plug operating losses or unbudgeted cost overruns. These funds need to be used, for the most part, to restore the Club’s “margin of safety”.
We have asked for the Club-Trust Agreement to be amended to strengthen the financial reporting at the Club, and to tighten the existing rules on approval for new, discretionary, unbudgeted expenditure in periods of potential financial distress.
Post-investment, the Club Board would be expected to use its best endeavours to keep cash reserves above £300k at all times, and to keep the Club’s current ratio above 1.2. We think these two targets:
- are realistic, given the cashflow forecasts prepared by the Club Board alongside the 2024-25 budget and subsequently
- preserve flexibility for the Club to invest in facilities improvements and other revenue generating activity as it sees fit
- give the Club Board, and the Trustees, an “early warning” mechanism to anticipate, mitigate and/or prevent financial distress in the future
In the event that either target threshold is breached, the Club Board would have to set out to the Trustees:
- why the threshold would be breached, by how much and for how long
- what mitigating measures it had taken, or proposed to take, to restore the cash reserves/current ratio back to target levels
During any period where cash reserves or assets are below target, the threshold for trustee approval of new non-footballing contracts would also be lowered, from £50k to £15k.
At our urging, the Club Board has agreed to make these amendments to the Club-Trust Agreement, as part of the “tranche 2” package.
We are grateful for the constructive spirit in which our concerns were listened to and reflected in the proposed CTA amendment.
Next steps
Now that the proposal has been published, the beneficiaries will be given some time to consider the proposals and to make up your minds about how to vote.
To help inform your decision, a beneficiary Q&A meeting will take place at Firhill, where questions about “tranche 2” and the Club finances can be put to the Club Board. This will take place on Friday 29th November.
Following that meeting, each beneficiary of the PTFC Trust will receive a further email with a link to participate in the beneficiary vote.
Final thoughts
No one is under any illusion that “tranche 2” is a panacea for Partick Thistle, or for fan ownership. It involves clear trade-offs, and it provides no guarantees, on its own, of long-term sustainability. It has to be accompanied by greater spending discipline and revenue growth at the Club.
Without “tranche 2” the task of building a sustainable football club would be made significantly more difficult. Rejecting it would mean drastically scaling back the Club’s ambitions on the park, and a much longer path to sustainability off it. There are no other credible options on the table to raise the required levels of capital on the required timescales.
What “tranche 2” would do is enable the margin of safety to be rebuilt, and to buy the Club Board the time and breathing space necessary to turn Partick Thistle into a sustainable football club. It will then be for the Club’s leadership team to seize that opportunity and deliver.
The reality is that fan ownership at Partick Thistle did not begin from a position of financial strength or security. It began with the Club heavily in the red, losing money rapidly and on the brink of insolvency. There was no credible scenario where an investment of only £500k would have been sufficient to solve that problem.
With fan ownership comes both power and responsibility. Thistle fans had no say when new shares were issued or owners changed in the past. This time, the Club-Trust Agreement puts the decision on “tranche 2” firmly in your hands, and where it belongs.
Whatever your decision is, the Trustees, and the Club Board, will honour it.