West Bromwich Albion have launched an investigation into a loan made to former owner Jeremy Peace in 2014. In this draft extract from my forthcoming book ‘Where’s The Money Gone - One Fan’s Football Finance Odyssey’, I try to unravel a complicated history.
On 14 May 2013, Peace created a new company called West Bromwich Albion Holdings Limited (“Holdings”) into which he transferred his 60% shareholding of West Bromwich Albion Group (“Group”) – the parent company of West Bromwich Albion Football Club (“Club”).
In a manoeuvre that would have left most fans shrugging their shoulders with a mixture of indifference and bafflement, he resigned a week later as a director of Group, while remaining as Chairman and director of Club.
As one source with knowledge of the transaction told me, “At the time we thought nothing of it. We didn’t really know what he was doing”.
His faithful lieutenant Mark Jenkins, WBA’s Chief Executive, remained as a director of both Club and Group.
Although Peace was by now the majority shareholder in Group, minority shareholders (who still owned 40% of the company) retained the power to block major changes in its corporate structure.
Most of these small shareholders were ordinary fans, who had invested when West Brom became a PLC in 1996.
Most did so out of loyalty rather than any realistic expectation of a serious dividend, and had retained their shares as a rather expensive item of memorabilia.
These were initially marketed to supporters at either £500 (“ordinary” shares) or £3,000 (“premier” shares) and were mostly traded below those values in the years that followed.
Having been placed on a part of the stock exchange known as AIM (Alternative Investment Market) the club was eventually delisted, becoming a private company once more under Peace’s control in 2004.
After a decade spent steadily increasing his stake in the company, in 2014 Peace - through his new company “Holdings” - made an offer of £3,000 per share in “Group”.
This which was accepted by 179 shareholders – edging Peace’s shareholding past the crucial 75% threshold.
This cost “Holdings” just over £3million.
This is where the story takes a twist that has never been fully explained – or at least not to the satisfaction of the remaining small shareholders.
Shortly afterwards, in September 2014, “Club” – of which Peace was still Chairman and director, remember – lent £3.7m to “Holdings”.
According to The Times, Peace “has strongly denied the loan was to increase his shareholding and insisted that he did not participate in the decision to make it.”
This debt was never repaid by Peace, and following the sale of “Holdings” to Guochuan Lai in 2016, it remains outstanding.
If you’re thinking that this is all rather difficult to follow, imagine how it felt for the shareholders when for the three financial years between 2013 and 2015, consolidated accounts for “Group” were not published.
Consolidation involves bringing together the financial reports of subsidiary companies within those of the parent company, allowing anyone with an interest in the club to gain a fuller picture of its finances.
Nor was close scrutiny of the club’s affairs made any easier by the decision to switch the club’s Annual General Meeting from The Hawthorns to the London offices of Peace’s solicitors Memery Crystal.
When these events were held in West Bromwich up to 100 shareholders might attend; in London that dwindled to a handful, not helped by the early start which made the cost of rail travel prohibitive.
A cynic might suggest that this was all designed to obfuscate what was happening behind the scenes; even a more generous interpretation would have to admit that holding such an important meeting more than 100 miles from The Hawthorns was designed for the convenience of the owner, rather than the minor shareholders ie ordinary fans.
In the event, the existence of the loan by “Club” to “Holdings” wasn’t made public until February 2017, when consolidated accounts were finally made public. This was nearly three years after the loan was made.
Details of the loans were also omitted from the “Related Party” section of the Club’s accounts until 2021 – a curious oversight.
By this time, Peace and Jenkins had both gone, with the club having been sold for a reported £200million in 2016.
This would have valued shares at an estimated £24,000 each – far greater than the £3,000 per share that had been offered to shareholders a couple of years before.
This saga begs so many questions. Why did West Bromwich Albion – a football club, not a bank – lend money to another company?
What was the rate of interest? This has never been made public. Which directors at “Club” signed it off?
Was there a possible conflict of interest in that “Club” (of which Jeremy Peace was chairman and director) made a loan to “Holdings” (sole shareholder Jeremy Peace).
Why didn’t “Club” aggressively pursue repayment when it wasn’t repaid?
Were shareholders made fully aware of the implications of selling shares at eight times below their subsequent value?
When Peace was quizzed by the Times in 2021, he strenuously denied any wrong doing, saying “I want to make it clear that money was not borrowed from the football club to buy shares.
“There was nothing untoward or improper in respect of any of my dealings with West Bromwich Albion.
“I welcome an investigation to put an end, once and for all, to the baseless comments of a small group of shareholders.
“The loan made to West Bromwich Albion Holdings by the football club was on arm’s length and commercially attractive terms”.
Of course, the terms – no matter how “commercially attractive” – are irrelevant if the debt is still outstanding
After badgering by minority shareholders, which included calling a General Meeting last year, the club is finally launching an investigation into the loan in December 2022 – eight years after it was made.
A separate loan made to a company controlled by current owner Guochuan Lai also remains unpaid, with one wag suggesting that an investigation into that is due to begin in 2028.
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