Dear Mr. Reynolds,
West Bromwich Albion Plc
I refer to your letter to me of 20 June 1999. Your letter was addressed to me personally and so I have decided to respond in kind. Your response to this letter will determine whether I need to take matters further.
You claim to have written to me in your capacity as a private shareholder. Nonetheless I note that you have not only copied your letter to Mr. Beddard of the Club's shareholders association but you have also authorised him to copy your letter to all the other shareholders in the Club. This fact and the unnecessarily aggressive tone of your letter beg the question of whether you discussed the contents of your letter with Mr. Hale or any of the other remaining directors of the Club before writing it or whether you truly are just a shareholder acting as a wholly independent agent.
You make great play of the fact throughout your letter that I am the chairman of a public company. This is true and I am well aware of my responsibilities to everyone who is involved in or in any way deals with the company's business. I hope, however, that I am always open and frank with people regardless of the capacity in which I am acting when I meet them.
I took my obligations as a director at West Bromwich Albion very seriously. It is because, in all conscience, I could no longer remain a director of the company that I resigned in January. At that time I made it clear to the board that I would continue to support the Club and I have never waivered from that commitment.
It is totally incredible for you to suggest that if I was a mere investor in the Club with no real interest in its success that I would have bothered to make the stand that I have made to try to force some real change for the good of the Club. Why should I bother? The truth is that I am not just a fair weather supporter of the Club but a committed fan and I intend to do everything in my power to see the Club succeed. My aim throughout has been to promote a sensible discussion about the future of the Club and I cannot allow unjustified personal attacks by you or anyone else to detract from that process and/or to mislead my fellow shareholders from making a properly considered decision on 8 July.
You have suggested in your letter that neither at the Moat House meeting you attended nor in my letter to shareholders dated 15 June did I make any mention of the Club's fans/supporters. This is simply wrong. You suggest that I referred to "a plan for the business" as one of the five key elements for a football club. This is, also, wrong. At my presentation to shareholders the Club's supporters" were clearly stated to be one of the five key elements for success and I made no mention of a business plan in this context. The five key elements were the squad of players, the supporters, the stadium, the manager and the chairman. I have the relevant slide to prove what I said. In my letter of 15 June I made it clear that the Club now needs a new chairman who will put in place a three year plan after consultation with shareholders and supporters. A three year plan does not just mean a business plan. A three year plan means a plan to put the Club in a position whereby it either is in the Premier League or is in a position where it is a clear contender for promotion.
It is indicative of the aggressive tone and poor quality of your letter to me that the first point on the first page which you have put in dark type and underlined is demonstrably wrong. This is no way to persuade your fellow shareholders that what you have to say is worth listening to.
You suggest in your letter that I implied at the meeting at the Moat House that John Wile would be forced to come into line behind a new chairman because of his financial dependence on the Club. You have suggested my comments at that meeting were "beyond contempt". My letter to shareholders of 15 June accurately records precisely what I believe to be the position relating to Mr. Wile. The simple fact of the matter is that as a full time paid executive of the Club it is his duty to work with the board of the Club and that includes whoever may be chairman from time to time. He cannot, therefore, be independent and it would be totally unfair to him to expect him to act in such a manner in this type of situation. In many ways his position is similar to civil servants in that they have to implement the policies of a government until a new government is elected at which time they then have to implement a totally different set of policies. The way in which you have tried to distort my remarks is, therefore, highly misleading and does not bear serious analysis.
On the second page of your letter you accuse me of either not understanding basic financial accounts or suggest that I am deliberately misleading shareholders. You are effectively accusing me of either being incompetent or deceitful. You then go onto explain in your letter that the Club has significant cash receipts which are taken in June and July due to season ticket sales and that the cash reserves then fall in the period after such sales. You suggested that at my meeting all I had done was to highlight this phenomena and that to describe it as serious mismanagement was "at best naive and at worst dishonest". This attack on me is, also, seriously flawed. I am not in the business of making false accusations with the intention of trying to mislead people.
At the meeting at the Moat House I compared the Club's group balance sheet at 31 December 1998 with its balance sheet at 31 December 1997. The figure for cash at bank and in hand at 31 December 1998 was just £6,000. The equivalent figure at 31 December 1997 was £1,597,000. The total figure for current assets for the Club at 31 December 1998 was £680,000 whilst the total figure for current assets at 31 December 1997 was £2,672,000. If the figure of £6,000 I quoted was not evidence of a serious deterioration in the Club's financial position but simply evidence of seasonal fluctuations in the Club's cash balance then you would have expected to see an identical cash position in December 1997. However, in December 1997 the Club had £1,591,000 more cash than it did in December 1998.
These facts speak for themselves and your letter does nothing to explain them away. Trying to accuse me of naivety or dishonesty cannot hide from your fellow shareholders the truth of what I have been saying.
In your letter you asked me the question of whether I have ever promoted myself from "within" to become Chairman. You no doubt know from Mr. Hale that in early 1997 I did offer to become Chairman of the Plc (but not the Football Club) in order to assist the Club to raise £10 million at that time. However, Mr. Hale wished to retain the chairmanship of the Plc as well as that of the Football Club and £10 million was not raised. No doubt as a shareholder and keen supporter you will be disappointed that £10 million was not raised for the Club in 1997.
It is also true that when I resigned as a director in January of this year I made it clear to Mr. Hale that I believed he should stand down for the good of the Club. However, when he refused to do so I considered that my only alernative was to resign and I did not take the matter further.
I only decided on my present course of action after the finish of this year's football season. By the end of this season it was clear that the Club's position had deteriorated even further than I had feared was possible at the time of my resignation. I can also confirm that I did not discuss my intention to call for Tony Hale's resignation or to pursue the resolution for his removal with either Mr. Hurst or Mr. Stapleton. It is they, wholly independently from me, who decided for their own reasons to resign as directors and to support my action. They are both free agents following their own consciences and doing what they now believe to be in the best interests of the Club.
On the final page of your letter you suggest that I am locked into my shareholding at West Bromwich Albion for a further two years unless I am prepared to forego tax relief of up to £400,000. This accusation is, also, false and unfounded. I could only have got tax relief if I had invested in the Club as an individual. However, my investment has never been driven by a desire to obtain any short term tax advantage. My investment was almost entirely made through my private limited companies and, therefore, does not qualify for any such tax relief and your suggestion that I may have invested for such reasons is quite wrong.
It may surprise you to learn that I have a deep love of football. It is for this reason that I wanted, as a successful businessman, to find a club that I could support, invest in and help to turn into a genuine success for the benefit of everyone associated with the Club. I resent, therefore, your attempt to suggest that my involvement with the Club is somehow motivated by a desire to make a short term tax saving. This is completely nonsensical and wrong.
In your letter you, also, suggest that I may have wished to improve my financial position by capitalising on grant aided funds for the construction of the new stand. In my time as a director of the Club I can remember no discussions at board level concerning the availability of grant aid for the construction of the new stand. It is my understanding that the Club has probably already exhausted its allocation of such aid. If this is right then using your logic I probably had to pay a premium for my shares when I invested. However, if I am wrong and such aid is available then, as you well know, the real beneficiary of such aid would be the Club, its players and supporters and any knock on benefit to shareholders in terms of enhanced share value would be small.
You also suggest that by the building of a new stand I would almost certainly gain additional shares in the Club at a discount. I find this accusation highly ironic. My offer in June of last year, when I was still a director, to underwrite the first £2,000,000 of a rights issue was deliberately pitched at a price of £125 per share which would ensure that I could not be accused of trying to obtain new shares in the Club at a discount. My offer is a matter of record and I resent the wholly misleading suggestion that I might have tried to acquire shares at a discount and, effectively, in a manner which would have prejudiced my fellow shareholders. The real irony of your accusation is that it was Tony Hale who disagreed with the price I had set for my suggested rights issue and it was he who effectively proposed that any rights issue should proceed at a lower price. Maybe you should discuss with Mr. Hale why he felt that a lower price was appropriate before you start to talk about discounts.
Finally, in your letter you have asked the question why as a shareholder should you participate in a rights issue which is limited to £2,000,000 and is clearly inadequate. This is clearly another misleading reference by you to my offer last June to underwrite the first £2,000,000 of a rights issue. At no stage did I or as far as I am aware, did anyone else suggest that such a rights issue should be limited to £2,000,000. I was simply making known my own willingness to commit up to a further £2,000,000 from my personal resources to such a fund raising exercise. Clearly, it would have been up to the Club to persuade its existing shareholders and/or any new potential investors to invest for the additional shares that would have been issued as part of such a rights issue.
In the context of this commitment by me I find your accusation that my interest in the Club is "dubious" and that my commitment to the Club is simply driven by a desire to achieve personal tax savings wholly indefensible.
If I was not genuinely committed to the Club I would not have pursued my current course of action and if I was interested in making a quick return on my capital there are far better investments I could make than investing in a football club. I can also think of many far better ways of spending my time than having to answer ill-considered and vindictive attacks on my personal integrity.
I have not referred this matter to my lawyers even though I would have been justified in doing so. This is because I am prepared to assume, until you tell me otherwise, that you have genuinely acted as an independent agent in this matter and that the false and misguided accusations you have made against me and which you have allowed to be published to my fellow shareholders are the product of misinformation and ill-considered haste.
I hope that now that I have demonstrated the misguided nature of your attacks on me, you will be prepared to retract your letter in its entirety and agree to a further letter withdrawing your accusations being sent to all the shareholders without further delay. If you are a man of honour, honesty and integrity, I am sure that you will.
I would prefer to give you the opportunity to set the record straight as I believe that this is the best way to build bridges for the future. However, if you are not prepared to correct the misleading impression you have created then clearly I shall have to take whatever steps I can to ensure that the full facts are provided to all shareholders with the minimum of delay.
I look forward to hearing from you by return.