Lancashire CCC promising big return if you invest £1,000 or more.
Lancashire County Cricket Club has launched a ‘Cricket Bond’, offering investors the chance to pocket a return equivalent to 7% on their money.
This is a retail bond, so it’s not like putting your money into a bond with a bank. Instead you are essentially lending your money to the organisation in question. Over the life of the bond you’ll be paid a return on the money you have placed in the bond, then at the end (if all has gone to plan) you’ll be given your initial stake back.
What do I get for my money?
With the Cricket Bond from Lancashire, investors will enjoy 5% interest in cash and a further 2% in Credit4Cricket Units, which will be paid semi-annually. Credit4Cricket Units can be used to purchase (or at least part-purchase) tickets for county and international matches at the Emirates Old Trafford ground, as well as food and drink or membership fees.
You’ll need to invest at least £1,000, and the bond runs for a five-year term. You do have the option of extending the bond by successive one-year periods, so long as you give Lancashire six months’ notice.
The Cricket Bond can be placed within a Self-Invested Personal Pension (SIPP) to take advantage of tax benefits.
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Tax
Lancashire will arrange for the basic rate of Income Tax (20%) to be deducted from all interest and Credit4Cricket Unit payments. Higher rate taxpayers may need to pay more.
No Stamp Duty is payable on the redemption of the bonds.
How safe is my money?
If you put your money in a conventional savings account with a high street bank, it will be protected by the Financial Services Compensation Scheme. That means that the first £85,000 you deposit is safe, even if the worst happens and the bank goes bust.
There’s no such protection with a retail bond like the Cricket Bond. Should Lancashire run into financial difficulties, then your money could be at risk. For example, there’s no guarantee that Old Trafford, Lancashire’s ground, will actually be selected to host Test matches beyond 2016. If it isn’t granted those matches, the revenues will take a hit.
It’s also worth noting that your money really will be out of reach until the bond matures – you can’t cash it in early, or sell it on the markets.
However, Lancashire currently appears to be on a pretty sound financial footing, having reporting record operating profits of £3.54 million for the 2012/13 financial year.
Where is my money going?
Lancashire is looking to raise £3 million from the bond, which will be used to fund the development of a four-star branded hotel to replace the existing Old Trafford Lodge.
The new hotel will have 150-plus bedrooms, and is part of a strategy of driving non-cricket revenues.
However the bond document points out that Lancashire doesn’t actually have planning permission for the hotel project. If permission is refused, or sufficient funding is not raised, then the money from the bonds will be used for either a smaller hotel scheme, replacement stand or other “income-generating development projects”.
How do I apply?
You have until 1pm on Monday 27th October to apply for Cricket Bonds. While Lancashire is looking to raise £3 million, it is prepared to issue up to £5 million of Cricket Bonds.
To see the full invitation document and to apply, head to the Cricket Bond website.
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