Americans are sent packing by Owls after bid is slashed

SHEFFIELD Wednesday's proposed £20m investment deal involving Chicago-based Club 9 Sports has collapsed – just two weeks after the club's relegation from the Championship.

The Americans had slashed the size of their offer to a meagre 2m for a 40 per cent stake at Hillsborough. In addition, they wanted to charge 420,000 a year in management fees.

The news is a setback for the Owls but talks have been ongoing with other potential investors for several weeks.

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A statement released by the club confirmed the details of the offer and explained why it had been thrown out.

It accused Club 9 Sports of renaging on the original terms of the deal and questioned the validity of the management fees.

"The new proposal would lead to an initial investment into the football club at a significantly lower level than had previously been agreed by all parties," read the statement. "The shape and structure of a potential investment in Sheffield Wednesday had been agreed in principle in March.

"Dependent on which division Sheffield Wednesday would start the 2010-2011 season, there was agreement on the initial level of investment by Club 9.

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"Since March, Club 9 had been seeking final commitment from their co-investors that would allow them to formalise the process and ultimately see a proposal put to shareholders.

"The communication this week made it clear that Club 9 wanted to change the terms already agreed and wished to make a lower investment.

"The proposal put forward by Club 9 this week was for an initial 2m investment. After expenses, this would equate to no more than 1.6m.

"For this, Club 9 wished to gain control of circa 40 per cent of the company's total share capital, by way of new shares, and to have majority control of the board. Club 9 also indicated that as part of any investment they would charge the company 420,000 per annum in management fees.

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"The board do not believe that the initial investment into the club is significant enough to warrant giving away control of the board or of circa 40 per cent of the company's total share capital. Likewise, we do not believe that a company should pay inflated fees at this level.

"This position is one that is shared by the Co-op Bank (the club's major creditor) and, as such, the proposal put forward by Club 9 has been rejected."

John Prutch, one of Club 9's principal owners, had issued a statement proclaiming the offer as 'more than sufficient for the club to be operated successfully'.

He also described the amount involved as the 'highest value ever placed on a League One team' – yet it was nowhere near the 15m invested last summer in Southampton.

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"We believe the amount and structure of our offer is compelling and trust the board will accept the terms," said Prutch. "We believe our offer sets Wednesday on course to return to its rightful place in English football."

Chairman Lee Strafford insists that Wednesday do not need new investment to stay alive and, thanks to major changes in the last 18 months, are capable of balancing the books alongside an existing 26m debt.

However, this latest news follows other failed takeover deals at Hillsborough during the last few years that have involved Ken Bates, Carson Yeoung, Paul Gregg and Geoff Sheard.