Chiefs seek £7.5m cash boost from share issue
TONY Rowe has revealed Exeter Chiefs hope to raise £7.5m through selling shares to enable them to start expanding Sandy Park next year.
The chief executive is currently working on plans to release preference shares for sale to supporters and private investors over the next few weeks.
That comes after the club announced they made a profit before tax of £116,142 last season – one of only three clubs in the Aviva Premiership to return a profit.
While that figure was down on the £711,651 they made the previous term, turnover was up more than £100,000 at £8,366,907.
And the club's directors have used some of their surplus cash to fund a £5m purchase of Leeds' P shares in Premier Rugby, which guarantee clubs extra income through central funding.
Currently the founder-member shares are worth £600,000 a season.
"We are in correspondence with a lot of supporters and investors at the moment and over the next few weeks we'll release the shares and we hope they'll sell well," Rowe said.
"The initial response is very good. Not only is it a good return on your investment but a lot of people see it as an opportunity to support a Westcountry club in achieving its ambitions.
"We need to have the Sandy Park business in the background because that generates the cash to keep everything going day to day.
"We need to build and we need to raise initially £7.5m in a preference share issue.
"We will be announcing shortly where they can be obtained locally. There will be somewhere in Exeter where people can acquire them."
The first phase of the development will see the West Grandstand expanded, doubling the capacity of the bars and adding another couple of thousand to the current capacity of 10,744.
Work on a new training complex at Clyst St Mary will start at the same time.
"Hopefully, if we have a successful issue, we can get under way with that ready for the start of the 2013/14 season, so in just under a year's time," added Rowe.
"The training ground is wrapped up with doing the West Stand. Work on them both will run concurrently."
Rowe and his fellow directors have certainly been busy off the field in recent months working on the plan to sell shares in the club as well as completing a deal to buy Leeds' P shares.
Premier Rugby rules meant Leeds had to sell their shares once a fee was set by an arbitration panel and Rowe was delighted to finalise the purchase, having initially sought to buy Bristol's shares instead.
The extra money the P shares bring in, plus the cash generated from an expanded Sandy Park, will be pumped back into the playing side to enable head coach Rob Baxter to continue the club's development on the pitch.
"I'm pleased to have secured another income stream," he said. "From start to end the negotiations took a year, which was far too long.
"When you look at an opportunity or challenge you always look to take the easiest route to goal. The easiest route to acquiring P shares was to go after Leeds.
"We've borrowed some money to buy them, not all of it, but by the time we make the repayment we'll have something left over so we can top up the playing pot.
"That's where our surplus goes. We engineer the profit in as much as we don't want to make great big handsome profit because our supporters and members are not going to thank us for making a big profit if we're failing on the pitch.
"Every year is a balance between making a profit and being able to afford what Rob needs to bring in results on the pitch."