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Watford FC, the second-tier English football club, has made a bold move by becoming one of the first major clubs in England to offer digital shares to fans and investors via private investing platform Republic and Seedrs, its European arm. This innovative approach aims to raise £17.5 million ($23 million) by selling approximately 10% of the club, valuing it at £175 million.
According to the club, Watford FC is looking to raise funds to continue to grow as a club and a community. They believe this approach will allow them to bring in investment from both fans and investors. This will allow them to strengthen their revenue streams and playing squads as they mount a push to English football's top tier, Watford said in announcement on Tuesday. The club is currently owned by Italian businessman Gino Pozzo, who has run the club following an initial family takeover since 2012.
Fans can participate in the digital share offering with a minimum investment of £49.76 for 4 shares on Seedrs and £99.52 for 8 shares on Republic. Payment can also be made in stablecoins. There's also 12-month lock-up period before trading the shares.
Are digital shares NFTs?
Digital shares are essentially ownership stakes in the club held electronically. Unlike traditional paper certificates, these shares are stored and managed on a digital platform with potential benefits like dividends and future trading opportunities
This approach differs significantly from the digital assets previously seen in football, such as NFTs (Non-Fungible Tokens) and fan tokens. The key distinction lies in actual ownership. Here, fans are purchasing equity in the club, albeit in digital form. NFTs and fan tokens, on the other hand, don't represent ownership in the club itself. They are essentially digital collectibles or utility tokens that may offer exclusive content or voting rights within a specific platform, but hold no intrinsic value or claim on the club's assets. Additionally, unlike regulated shares, NFTs and fan tokens are not subject to financial oversight and their market value is often speculative.
Questions over valuation
While the opportunity to own a piece of the club is undoubtedly exciting for fans, some skepticism surrounds the valuation. At £175 million, the price tag seems inflated considering Birmingham FC, a similar Championship club, sold a 45.64% stake for just £22 million last year. This high valuation might be influenced by the club's recent stint in the Premier League, with its inflated transfer fees and parachute payments that won't be a factor in the coming years.
Despite the questions about the valuation, the offering presents a unique opportunity. Unlike many fan-ownership models, Watford is offering actual equity in the club, albeit non-voting Class B shares. This means investors have a stake in the club's future success, with potential for dividends and a future secondary market for trading shares.
However, the lack of voting rights and the vagueness surrounding "other exclusive offers" raise questions about the true benefits for fans investing the minimum of £50. While the "potential" for significant payouts upon promotion or a takeover exists, it's important to remember these are just possibilities, not guarantees.
The cynics could view this as a quick cash grab for the club, with limited tangible benefits for fans. On the other hand, the chance to be a part-owner and potentially profit from the club's future success might be enough to entice some supporters.
One thing's for certain: Watford FC's digital share offering is a fascinating experiment in fan engagement and club financing. Whether it's a roaring success or a quiet fizzle remains to be seen.
Cohan Chew
