- QPR Mini Bond Minimum £500. Provides 5% gross interest per annum for the purchase of
- Fans will be offered other incentives including a 25% bonus when promoting the club
- Big deal for the bond club and investors, says CEO Lee Hoss
- Investors should be aware of the risks, warns UK market regulator
Queens Park Rangers have opted to bypass banks and other traditional methods of financing for their new £20million training facility, which the West London Football Club hopes to build with the help of fans and everyday savers.
Club chief executive Lee Hoss, who has drawn praise from fans for his role in helping turn a dire financial situation since coming on board, believes the plans are a win-win; Cheap to QPR and an attractive income investment for individual savers.
The introduction of the QPR bond in late September gives investors the opportunity to earn 5 percent gross interest annually for a minimum purchase of £500.
Loftus Road-based QPR is hoping to partially fund its £20m training facility through a mini bond offering
This compares to 2% interest over five years for a minimum deposit of £1,000 through Identity Bank – the best paying fixed rate account currently available in the UK.
‘Right now, it’s a very good rate of return for what the high street banks are paying,’ Hoos told This Money.
‘Traditional Way’ [of financing] Too expensive for us. That way, we subtract a few percentage points from the interest we’re paying, and investors are getting a lot more interest than what they’re getting at a high street bank.
‘It’s a win-win deal for all.’
CEO Lee Hoss says fundraising method ‘brings clubs and supporters closer together’
And, if you’re a fan of Rangers, there’s more to it than the attractive interest rate.
The Mini Bond, which is available through Tifosi Capital & Advisory, and is Innovative Finance ISA-eligible, will pay an additional 3 percent gross interest in club credits redeemable on tickets and merchandise.
Perhaps most lucrative, according to Hoos, however, will be the opportunity for investors to earn a one-time 25 percent bonus if the QPR is promoted during the lifetime of the Premier League’s five-year bond – the ‘promised land’.
Handy Checklist: What You Need to Know Before Buying a Bond
*Any investor buying individual shares or bonds would be wise to learn the basics of balance sheet reading. Read a guide here.
* When viewing bonds, thoroughly examine all recent available reports and accounts of the issuer. You can find official stock market announcements including company results on This Is Money Here. You can search company house Here.
* Check that cash flow is healthy and consistent. See also interest cover – the ratio that shows how easily a firm will be able to meet interest repayment on its debt. It is calculated by dividing earnings before interest and taxes (known as EBIT) by spending on paying interest. Here’s a guide to investing this way.
* It is very important to find out what the bond debt is protected against, and you will be standing in line of creditors if the issuer goes bankrupt. This should be included in the bond offer’s description, but contact the issuer directly if it is not clear.
*Instead of tying your money with just one company or organization, consider spreading your risk out by purchasing a bond fund.
*Inexperienced investors who are unsure of how bonds work or their potential tax liabilities should seek independent financial advice. find a consultant Here.
*If the interest rate is what attracts you to the bond, see if it’s really worth the risk involved. Generally speaking, the higher the rate on offer, the higher the risk.
* If the issuer is a listed company, before deciding whether to buy it, it’s worth checking the dividend yield on the shares to see how it compares with the return on the bond. Share prices, charts and dividend yield can be found at This Is Money Here.
*Investors should keep in mind that the risk involved in investing in some bonds can be harder to gauge than others – it’s easier to assess the likelihood of Tesco closing down than smaller and more specialist businesses.
The offering has already proven popular, Hoos says, with more than 2,000 individual commitments as of Monday, October 4.
“Obviously, this doesn’t include my wife and I, who haven’t done anything yet, but we will definitely do that because it’s ISA-compliant,” he said.
‘There are some people who have indicated an investment of £10,000 or more. Of course, there will be a lot of people who will stick with £500 – the key here is that we’ve opened it up to everyone.’
QPR says the two-year £20million Heston training ground project will provide state-of-the-art facilities for all of its players, from the first team to the academy, on a single site.
Opening during the 2022-23 season, the new training ground will include seven specially constructed pitches, a performance gym, rehabilitation facilities, dining and recreation areas, classrooms and a performance analysis suite.
QPR has seen 20 players developed by the academy play for the first team over the past seven years, including fan-favorite Elias Chair. Hopefully Heston will help the club continue this momentum.
But the new facility also helps maintain the club’s commitment to being sustainable and self-sustaining in the years following the financial restructuring.
Hoos points out that the goals of player growth and financial stability are intrinsically linked.
He says: ‘Part of our game plan is that we believe we need to develop players and sell them at some point.
‘If you’re only relying on operating income, there are very few Championship clubs – or Football League clubs for that matter – that will be able to make ends meet.