March 1 (Bloomberg) -- Fans of English soccer team Darlington have turned to the Internet to help them keep their 129-year-old club running.
Darlington, which plays in England’s fifth tier, went into administration, a form of bankruptcy, on Jan. 3. Facing liquidation, the supporters stepped in and formed a company which turned to crowdfunding -- the soliciting and pooling of small investments, often online -- to raise money to buy the team.
“It was the only way realistically we were going to be able to raise the funds,” Laura Drew, a board member of the company -- Darlington FC 1883 Ltd. -- said in a telephone interview. “Were trying to put together a sustainable business model based upon community involvement and community engagement.
A total of 291,450 pounds ($464,000), 39 percent of the investment target of 750,000 pounds, has been raised so far according to a statement from crowdfunding website Crowdcube, which has listed the bid. The campaign runs until April 23 and if successful, would give the fans 100 percent ownership of the northeastern England club.
Investors can buy a share online for a minimum of 100 pounds, with no party able to own more than 15 percent, according to the bid listing. Backers will get an opportunity to vote in the annual election to appoint a board to run the club and to put themselves forward to sit on this board.
Drew said her group has signed an exclusive right with administrator Taylor Rowlands to buy the club.
‘‘We’d had various people come forward to look at buying the club and they’d all fallen away,” she said. “We were the only people that offered in, a kind of variable option for the future of the club.”
Harvey Madden, a joint administrator for the club, didn’t immediately return a message seeking comment.
Response to the crowdfunding campaign has been “overwhelmingly positive” and has come from some unlikely sources, according to Drew.
“An under-11s football team has raised enough money to buy a couple shares and it gives them a bit more of a connection with the team,” she said.
The share sale has been structured to raise 250,000 pounds in each of three phases.
The first, which needed to be raised quickly, allowed the club to pay off all soccer debts. Investors in this stage received two shares for every 100 pounds invested.
“We reached the first target in five days flat, which was far better than we could have dreamed of,” Drew said.
The second phase would help satisfy the club’s remaining creditors and the final would provide Darlo, as the club is known, with money to start next season and provide the basis for long-term sustainability.
Several British clubs have gone into administration this season as overspending and the economic slump hurt profits. Portsmouth, which won the 2008 F.A. Cup, went bankrupt last month for the second time in two years as it struggled to pay wages and bills after parent Convers Sports Initiatives Plc entered administration Nov. 29. CSI, a U.K.-based investment vehicle used by ex-owner Vladimir Antonov to buy Portsmouth, defaulted on an interest payment to former operator Balram Chainrai.
Rangers Football Club Plc, the Scottish soccer champion, went into administration Feb. 14 as U.K. tax authorities attempted to force the Glasgow team to pay bills.
Darlington has mainly played in the lower divisions of English soccer since its founding in 1883. The Quakers last year won the second-tier F.A. Trophy and currently are in 20th place in the 24-team Blue Square BET Premier division after a 10-point deduction for going into administration.
The club is trying to raise additional funds by auctioning shirts autographed by Arsenal, Manchester United, Newcastle and other Premier League clubs. The players have also organized a horse race fundraiser after the March 3rd match.
Local businesses, along with school and civic groups, will be turned to in the next round of fund-raising as locals get the chance to become a soccer team owner.
“ There’s a buzz about the club again,” Drew said. “We’ll be looking to involve them more in the day to day operations and really embed the club as the hub of the local community.”
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