Independent Manchester United Supporters Association

IMUSA Campaigns

 

IMUSA Home Page
About the Organisation
Latest IMUSA News
Details of IMUSA Meetings
IMUSA Campaigns: Past and Current
Online Discussion Forum
How to Join IMUSA

Contact IMUSA
Links to Other Relevant Sites

 

Ownership and governance options for football clubs

Jonathan Michie and Andy Walsh
Paper for February 3rd 1999 Conference on
The Corporate Governance of Professional Football
Birkbeck College, London
27th January 1999 version - comments very welcome


Contents
1. Introduction
2. How did we get in this mess?
  2.1 Club to Private company
2.2 PLCs
3. Football at the crossroads
  3.1 Greed and power
3.2 World Championship
3.3 Who runs football?
4. Future options
  4.1 Mutualisation
4.2 Trust status
4.3 International examples
4.4 Fans' voice
4.5 Historical examples: Back to the future?
4.6 Current examples: Northampton and Bournemouth
4.7 Local Government
4.8 Golden shares
5. Next Steps: Beyond the Task Force
6. Conclusion
References

1. Introduction

The attempted take-over of Manchester United by BSkyB in 1998 - an attempt which may be renewed in 1999 if the Government gives BSkyB the go-ahead - highlighted what had been apparent for some time. Football has become increasingly commercialised. It is now big business.1

Associated with this increasing commercialisation has been a second worrying development. At most Premier League clubs in England there has been a gentrification or yuppification of the fan base, amounting to a form of social exclusion.2 Ticket price increases have priced many traditional football fans out of regular attendance. This is particularly the case with young fans.

On the positive side, there has at least been wide recognition not only of the dangers to the game from these twin developments, but also of the need for action to deal with the problem.3 Hence, for example, the establishment of the Football Task Force.4

However, the BSkyB bid is more significant than simply having served to draw attention to these existing problems. It also represents a serious additional threat to the game. Firstly because it will exacerbate the problems referred to above. And secondly because it will create additional threats to the game, most particularly the threat that the top, glamour clubs will be taken over by media companies. This will result in these clubs being run in the interests of the media companies that own them. Indeed, it would be the legal requirement of the companies' Directors to so act, regardless of whether their actions were in the best interests of the football club. According to British company law, if the Directors were presented with a course of action that would be in the interests of the parent company but not the football club, they would be legally obliged to adopt the course of action that was in the interests of the parent company of which they were Directors. The interests of the football club, and their fans, would have to be sacrificed. A practical example might have been when, in 1998, the Premier League threatened Manchester United with expulsion (along with the other clubs involved) if they joined the European Super League about which the clubs were in discussions. Had BSkyB owned Manchester United at the time, it might well have been considered to have been in the interests of the broadcasting company to go ahead with the European Super League, and to therefore use Manchester United to help launch it, regardless of the longer term damage which would have been done to the football club through expulsion from the Premier League.

There would, though, be a far more general, continual potential conflict of interest over matters such as the amount of money to be put into the operation of the football club in lieu of the fact that nothing was being paid for the right to screen live matches, which otherwise would generate large revenues for the club. And there would always be the danger of asset stripping by selling players, or selling the club's football ground as commercial property, or whatever.

The need to consider alternative forms of ownership and governance for football clubs is therefore urgent. Our paper aims to contribute to this task. Sections 4 and 5 below consider the various possible options. Some of these are undeniably ambitious and perhaps utopian, but others are very much on the immediate agenda, given the threat from BSkyB. Before speculating on where we would like to be, though, it is important first to consider where we are now, which we discuss in Section 3, and how we got there, which is the question we begin with, in the following Section.

Back to Contents

2. How did we get in this mess?

The establishment of PLCs in football is based more on the desire to take money out of the game than, as football club directors would have one believe, putting money in. The flotation of a football club is often accompanied by a club director or financial advisor talking the language of 'people's capitalism'. Manchester United's 1991 prospectus declared a wish to 'give employees and supporters a greater opportunity to invest in Manchester United' and talked of a desire to 'widen the ownership' of the Club. The latter is ironic as it was Louis Edwards, the father of United's current Chief Executive Martin Edwards, who deliberately set out to concentrate the ownership of Manchester United in his own hands in order that he might exploit the Club for his own gain. One story from the time recalls Louis taking the late Sir Matt Busby into his confidence about a potential new share issue; Sir Matt rejected the idea. Instead he suggested that the Board go to the fans if money was needed who 'would gladly throw money over the wall'. It is no surprise to learn that one of Louis's advisors at the time was Roland Smith, now Professor Sir Roland Smith and Chairman of MUFC plc, the alleged architect behind United's current sell-out to BSkyB.

2.1 Club to Private company

Around one hundred years ago football clubs began to form themselves into limited companies a move intended to protect those running the clubs from personal liability should the newly found professionalism of the era go awry. In an effort to protect the integrity of the game the Football Association imposed Articles of Association that debarred profiteering by club directors. Rule 34 imposed a maximum dividend payout and outlawed payments to club directors. It also laid down the provision that in the event of a club folding, the assets would have to go to other local sporting institutions. As illustrated below, and also in the paper from the Barcelona supporters' group, we can see that this principle was adopted abroad where the idea of football being organised into 'clubs' was enshrined in the constitutions of famous institutions such as FC Barcelona. As can be seen in the case of Barcelona, the concept was developed to give the 'Club' a real link with its community and its supporter base.

This move for the good of the game stands in stark contrast to the FA's capitulation to the bigger clubs one hundred years later when the FA allowed itself to be used in the establishment of the Premier League, breaking away from the rest of league football.

2.2 PLCs

In 1983 Tottenham Hotspur became the first English club to go to the market. Few regarded it as a good idea; the City was unenthusiastic, and fans and others in football were suspicious. It was not until the Hillsborough Disaster and the financial implications of Lord Justice Taylor's report that the idea of using the financial markets to raise investment capital really took hold. There are around twenty clubs now quoted on the markets with capitalisation ranging from a couple of million at Swansea City to over half a billion at Manchester United. In the meantime, as this development was taking place the vision shown by the FA's forebearers in devising Rule 34 was being circumvented. The formation of PLCs as holding companies was used to allow clubs to appoint paid directors. Gone were the days when local businessmen became involved in football just to boost their prestige and standing in the local community. Now the far more 'modern' pairing appears to be boosting personal wealth and massaging egos.

Back to Contents

3. Football at the crossroads

At the time of this conference the idea of a regulator for football is being widely floated in the media, and is being seriously considered by the Football Taskforce. The incoming Labour Government set up the Taskforce as a direct response to widespread public concern for the health of 'The Peoples Game', thus honouring its pre-election pledge. This new approach to football is in contrast to the attitude of previous Governments who thought that the problems of football should be resolved from within. There appears to be for the first time proper recognition that sports such as football play an important part in the social and cultural fabric of society. In addition the Government to date appears to have recognised the important role that all the various interest groups in football have to play. For the first time, fans' and players representatives have a recognised place at the table and though there is still a great deal of cynicism about what the eventual outcome may be, a start has at least been made in tackling some of the most pressing problems.

3.1 Greed and power

Ironically the FA already has the power to carry out the role of regulator but appears unwilling to act. Rule 34 still stands but in the sixteen years since Spurs first floated the FA has failed to come up with a plan of how to protect the game from the commercial pressures that now threaten to suffocate it. The European governing body, UEFA, is now the latest target of attack from the big clubs. The insatiable desire of these clubs for more control and more money has forced the revamping of the European club competitions. This has been driven not by the wishes of the fans, players or, it seems the managers, but by TV and commercial interests. The European clubs who accepted the ethos that a football club was part of the community, enshrining that tenet in their constitutions are now also threatening to float on the stock market. Franz Beckenbauer and other European football directors have cast avaricious glances at what is available to their English counterparts. They may dress up the aims in the language of the 'greater common good' but that is precisely what directors of English football clubs have done before. Often the appointment of a new 'suit' from the City to a football club boardroom is accompanied by the declaration that the esteemed individual is a life long fan; by implication they are not a threat to the existing order. It is doubtful whether any of the fans following the team around the country, paying ever increasing prices for the privilege, would recognise any of these individuals from their travels. Yet it is a tacit acknowledgement that the approval of the club's supporters for the actions taken in the boardroom is still seen as in some way necessary. The antics and comments of the Newcastle United FC directors Douglas Hall and Freddie Shepherd may have exposed a mind-set that extends beyond the river Tyne; at the very least this episode demonstrated that taking the fans for granted can have serious consequences, at least in the short-term.

3.2 World Championship

It took seven years from the formation of the breakaway Premier League to the threats of a breakaway European Super League but there are signs now of a quickening of the process. Within a few months of matters reaching an uneasy settlement at a European level a world-wide dimension for club football was being broached. FIFA General Secretary Sepp Blatter's declared wish for a two year World Cup were seized upon by Rupert Murdoch, his response was to agree with the proposal except that the competition should be contested by clubs not countries.5

3.3 Who runs football?

Football the world over recognises the authority of bodies such as the national FAs, UEFA and the world governing body FIFA but that authority is undermined by the secrecy and exclusivity of these organisations. There is little involvement or input at the administrative level from those at the sharp end: fans, players, managers and staff. This allows media moguls like Berlusconi and Murdoch to exploit divisions and cynicism for their commercial advantage. Murdoch is no sports fan but for commercial reasons has declared his admiration for the American model of sports clubs and sports administration. Two of America's biggest sports are in the grip of crisis, and some commentators believe this is a result of the way sport is actually organised. Is it therefore merely a coincidence that after the virtual collapse of the live audience for American Baseball and with a similar scenario now unfolding in American Basketball that Murdoch is looking to Europe, and England in particular, for new areas to exploit? Possible ways to combat the commercial threat to our national game are explored later in this paper. Arguments are made for Government intervention not because football is a charity case, far from it. Rather, those charged with protecting the welfare of the sport and the interests of its participants have reneged on their responsibility, allowing the very future of the sport to be placed in real jeopardy.

Back to Contents

4. Future options

We are faced with a choice. Allowing the further commercialisation of the game, with the glamour clubs to be bought up by global media corporations, further weakening the social, cultural and sporting role of the local football club and exacerbating the current process of social exclusion. Or recognise the wider public interest, and strengthen the links between clubs and fans. How can the second choice be implemented? What would it mean in practice?

There are a number of ways in which aspects at least of the wider public interest have been recognised. Lessons can therefore be learned from some of these examples from the past, from other countries, and even from the operation of some English clubs today. We are not, however, simply advocating a return to the past. On the contrary, that would be to return to the structure that created the current mess.

4.1 Mutualisation

The ultimate form of fan involvement would perhaps be to have a mutual structure. Here the fans would own the club itself. This would be through their membership of the club, and their involvement through attendance, rather than the ownership of share capital. This is discussed in the paper by Michie and Ramalingam (1999) and so we do not analyse it further here, other than to note the following. Firstly, the problem of how to get from here to there would be large, given the existing share capital that would need, in the case of most clubs, to be bought out. Secondly, the case of Barcelona indicates that even given such an option, much depends on the detail regarding the actual operation of such a structure (on which, see L'Elefant Blau, 1999).

4.2 Trust status

Apart from mutualisation, the other way to move from a PLC to an alternative structure that would avoid the continual danger of take-over by outside commercial interests wanting to use football clubs for their own (media) ends, would be the use of trust status. (For a discussion of how a Supporters Trust works in practice, at Northampton Town FC, see the separate paper from Lomax, 1999.) This for example is how the ownership and operation of the Guardian newspaper is structured. To have a football club operated as a trust has the added advantage over a PLC that no dividends have to be paid out to share owners. The club's revenues can be kept within the game. The problem, again, is how to get from here to there. The question can be posed in two ways. First, how to persuade the existing shareholders to accept the change in the status of their shares - into a form in which no dividends are paid? Or secondly, where to find the money to buy the existing shareholders out?

In the case of those clubs that are already PLCs, it seems unlikely that the institutional shareholders would agree to the change in the status of their shares. They would, presumably, need to be bought out. The bulk of the other shareholders would in most cases be fans of the club, either Directors of the club who may hold large shareholdings, or else the large number of small shareholders. Here it might be thought there would be more chance of the shareholders agreeing to the change in status of their shares, into shares in a Trust. For most of these shareholders the prospect of an annual dividend would not be particularly important. However, what would be important in most cases would be that the individuals would be able to sell their shares at any time, to realise the capital. There are two issues here. Firstly, would one be able to sell one's shares in the Trust? To whom? And secondly, how much would one get? How would the price be determined, if the shares were not being traded on the stock exchange? To be a practical proposal, any move to Trust status would need to provide the desired answer to both these questions. Firstly, it would have to be possible to sell one's Trust-shares. And secondly, there would have to be the expectation that one would receive as good a price as one would have, had they remained PLC-shares.

One way of answering these questions is to refer back to how the problem of the institutional shareholders would be dealt with. Ironically, what appears at first sight to be a problem might turn out, in the context of the British football industry, to instead represent the answer as to how Trust status might be a realistic and practical way forward. The problems referred to in the previous paragraph arise in the context of the move from PLC to Trust being 'all or nothing'. With all the shares being Trust shares, how will these be valued. And who would buy them, if they pay no dividends, and whether or not one will be able to sell them again in the future - and for how much - is rather uncertain. These questions would be answered if the company were actually to remain a PLC, with its shares still traded on the Stock Exchange. The problem of the institutional shareholders would be solved if it was ignored, by not attempting to bring them into the Trust, leaving them instead as they are, as holders of dividend-paying shares in a PLC traded on the Stock Exchange. So where does the Trust come in. The suggestion here is that a part, but not all, of the shares might be transferred to a Trust. One would then have a PLC in which a block of the shares would be owned by a Trust. This Trust would have Trustees. The Trust might have one or more of their members as Directors of the PLC. They would certainly make it their business to ensure that the PLC Board had suitable Directors and that the Board acted in all times in the interest of the club. One of the key points would be to have this block of shares held by the Trust sufficiently large to prevent a take-over of the PLC by outside commercial interests who might misuse the club for their own commercial ends.

Both sets of problems - those of how to overcome the objections of the institutional shareholders, and those of how to overcome the objections of the non-institutional shareholders - would thus be dealt with simultaneously. All shares would, in effect, continue to be treated in like manner, as they are now. This would require that those who had transferred their shares to the Trust would have to be able to sell them at any time, and to be able to receive the same as if they were non-Trust shares being sold on the stock exchange. But if those who held their shares within the Trust sold them on the stock exchange, the proportion of shares held by the Trust would diminish. The preferred method of dealing with this would therefore be for the Trust itself to automatically buy the shares from anyone who held shares within the Trust who wanted to sell. Where, though, would they get the money to do this?

The answer to this is also provided by the 'problem' of the institutional shareholders having prevented a wholesale transfer to Trust status. Because instead the company continues to be a PLC, albeit with a large block of the PLC shares held collectively in a Trust, administered by Trustees, all shares would need to be treated symmetrically in terms of dividend payments. One implication of having only a part-Trust structure is that the advantage referred to above, of not having to pay dividends, would not be fully realised. However, the Trust could be established as follows. When given the choice of whether to transfer your shares into the Trust, we have already said that it would be a risk-free option, in that you could still sell them outside the Trust, as PLC shares, at any time on the stock exchange. In addition, although dividends would no longer be receivable, they would have to be paid by the PLC to the Trust on all the shares just as they are individually on all the PLC shares. Thus each of the shares you transfer to the Trust would be paid a dividend, administered by the Trustees, and this annual income would be used to buy additional shares for the Trust, and would be allocated in proportion to all those holding their shares in the Trust. Thus, if one chose to transfer one's shares to the Trust, then instead of being paid a cash dividend of say 5% a year, one would instead receive additional shares each year, to be added to one's existing shareholding within the Trust, equivalent to 5% of one's holdings.

If a shareholder actually wanted the cash that would have come as a dividend then they could of course just sell the additional 5% of shares. And rather than go through this slightly convoluted procedure, the Trust might ask as a matter of course which option each shareholder wanted to elect for - to take the dividend in cash, or in additional shares, or in some mixture of the two. The hope would be that the additional shares which the Trust would need to buy to add to the existing shareholdings of those whose shares were held within the Trust would outweigh any sales of shares by those whose shares were held within the Trust. Put another way, it was said above that there might be a problem of the Trust representing a declining proportion of shares if those who held shares within the Trust chose to sell. The point is that such shares would be bought by the Trust using their annual dividend receipts, and these shares would be allocated to the remaining Trust-shareholders in lieu of dividends.

In addition to the annual purchase of PLC shares by the Trust - for allocation to Trust shareholders in lieu of dividends - it might be that other PLC shareholders would transfer to the Trust, so that the proportion of shares held by the Trust would rise by a greater amount than would be accounted for just by their annual purchase of PLC shares. Or perhaps more likely than PLC shareholdings moving to the Trust, new shareholders buying PLC shares through the stock exchange, might elect to have these shares held within the Trust. Indeed, the Trust would presumably continually campaign for local people to buy shares and have them held in this way.

One specific target for such a campaign might be the employees of the club, including the players. There are Government tax incentives for people to take up shares in their company. And in the case of the Premiership clubs - which are the ones where the scale of the sums involved make it particularly difficult to imagine a complete buy-out from PLC status to any other (Trust, mutual or the like) - the players often have large sums to invest to make provision for their post-playing days, and in any such investment it would make sense to receive the annual income in the form of additional shares rather than cash.

4.3 International examples

Some reference has already been made to overseas examples and the paper from Barcelona's 'L'Elefant Blau' goes into greater detail for that particular football club. Elsewhere in Spain there are similar examples of other clubs being owned and democratically run by the fans. Typically a Board of Directors is elected to run the club and remains directly accountable to the members. There has been widespread adoption of some of the principles established in England prior to the First World War. The English FA's Rule 34 for example recognises that football clubs have sprung from the local sporting community and provides for the assets to be distributed to the local sports institutions if the football club is ever wound up. This 'ashes to ashes' view of a professional football club is not just a quaint tradition; it is regarded as sacrosanct to many fans on the continent of Europe used to nothing less. The current constitution and rules of many Spanish clubs have been in place for over sixty years having been adopted under General Franco's regime in 1930s Spain (see Crolley and Duke, 1996). There has been evidence in recent years of a desire to follow the English example once more, to change the present rules and allow the establishment of publicly quoted companies. This is a threat that the fans are in general are deeply suspicious of - rightly so, in our view.

In Germany similar examples exist of clubs being owned by the members. As recently as 5th December 1994 Schalke 04 adopted a new constitution, for the club to be owned by its members. This was drawn up in conjunction with the German FA and the DFB, with the aim of providing a model for the whole Bundesliga. Each year up to eleven people are elected to an administrative 'Board', called the Aufsichstrat. Though football predominates, Schalke field teams in many sports including table tennis, athletics, basketball and handball. The Aufsichstrat includes a representative elected from the Sportbeirat, a committee representing all the sporting staff of the club. In addition Schalke has around 400 fan clubs across the world organised into a Federation; they too elect a representative to the Aufsichstrat. A further six members are elected at the Club AGM and the Aufsichstrat has the power to co-opt up to three further members should they feel specialist advice or expertise in a certain area is needed.6

For the day to day running of the Club an Executive of between three and five members is elected by the Aufsichstrat called the Vorstand; all of those on the Vorstand are paid and employed full-time.

In England the supporters and staff are only ever involved in the running of clubs when there is a crisis. On the European Continent it is an accepted part of the club culture that the game is administered with all members of the club having an interest and taking part. To change attitudes will require a momentous effort but as FC Barcelona and others have shown over the years, a democratic club structure is no bar to running a successful club.

4.4 Fans' voice

It needs to be remembered that one of the main aims of the various examples and options referred to above is to ensure that the interests of the fans are taken properly into account, and that fans are not, over time, excluded from the clubs. The social exclusion that has, undoubtedly, taken place to some extent over the past few years, must be overcome. This means that the various ownership options should not be viewed mechanistically, as technical 'solutions'. Such options will only be as good as their implementation. Conversely, some progress could be made even within existing PLC structures. Proper representation of fans' interests could be required of football clubs by Government. This could be through a Code of Conduct, which clubs would have to comment on in their Annual Reports, or even by requiring appropriate Articles of Association to be incorporated by all companies whose business included owning a football club.

Again it would be crucial to pay attention to the detail. Most football PLC Boards would no doubt claim that the Directors are all supporters of the club. Such fan representation would therefore have to be seen to be genuinely independent of the club.

4.5 Historical examples: Back to the future?

The independence of a supporter on the Board is vital if the members of the club, the fans, are to have any faith in the system. The fans' representative must be seen to be independent and to carry the same authority as other Board members. This can not be achieved when the level of authority in the boardroom is determined by the number of shares held by the individual as is the case today.7 The Board of Directors should be a team of individuals put in place to achieve the best possible set of outcomes for the club and its members. In this respect any supporter representation at Board level must be meaningful. At Manchester City Francis Lee used the carrot of a fan on the Board to show how different he was going to be when he took over from Peter Swales. The fans' representative on City's Board was Dave Wallace, editor of the fanzine 'King of the Kippax'. The experience was not a happy one, Wallace was not treated as an equal by other members of the Board, he was seen as a means of demonstrating 'a new openness' but the Board merely wanted him to act as their PR agent amongst the fans. The Board did not allow Wallace to be present at all of their discussions and when Wallace refused to tow the line the post of fans' representative was abolished.

4.6 Current examples: Northampton and Bournemouth

It is ironic that with Swales and Lee long gone Manchester City now find themselves in the Nationwide League Second Division where real fan power is active in the boardrooms of AFC Bournemouth and Northampton Town.

In 1992 Northampton Town were in receivership. The fans and the local community saved the club from extinction. Although the club is not wholly owned by its members, a supporters' trust now has approaching 10 per cent of the shareholding and elects a director to the Board.8 The local authority now owns the ground freeing the club from expensive upkeep as well as preventing the threat of a speculative purchaser coming in and selling the land for development as has happened at other clubs.

When Bournemouth found themselves in financial difficulties in 1996 they looked to the trust fund set up at Northampton and called on the local community to help establish their own supporters' trust which now runs the club. The involvement of the wider communities in Northampton and Bournemouth in running their football clubs has definite parallels with the continental approach to football as part of the community.

4.7 Local Government

Local Government has played - and continues to play - an important role in football clubs. This is usually most crucially with regard to the ground. This involvement by the local authority has often been used as a lever to try to tackle problems such as racism at grounds, for example with both Millwall and Leeds.

On the other hand it is important not to simply advocate greater local authority involvement to solve the problem of how to take account of the wider public interest, or in reaction to the success stories referred to above. Local authorities are already over-stretched. The reasons that the individuals concerned have become local councillors or local authority officers may be quite unrelated to the sort of issues referred to above, and the sort of skills required to tackle them. A vision for the future of football in Britain should certainly include a careful consideration of the role that the local authority could and should play, but this will be both more complex and varied than any generalisable ownership structure that could be set out in the context of the current paper. Certainly, though, in cases where local authorities currently lease the football ground to the club, we would suggest that the Department of Culture, Media and Sport could brief local authorities on the sort of arrangements for fan involvement that might be proposed to football clubs as part of the agreement when clubs seek to negotiate, or renegotiate, the lease on the ground. Such considerations might also include introducing the role of 'golden shares', discussed in the following section.

4.8 Golden shares

During the privatisations of the 1980s, the practice of the Government retaining a 'golden share' was used to prevent, for example, foreign interests buying up newly-privatised concerns that were considered to be of strategic importance to Britain. There can surely be few companies where the importance of maintaining a degree of local ownership is more important than the case of local football clubs. Thus while it is not our intention in this paper to be prescriptive about what role local and national government might play in the ownership and management of football clubs, there is clearly a strong case for using this sort of notion of 'golden shares', held perhaps by both local and central government. These would serve more as a blocking mechanism, as with their use in the 1980s' privatisations, than as a real ownership stake. The most obvious purpose would be to prevent take-overs of football clubs, at least without explicit consideration and approval by local and central government.

Back to Contents

5. Next Steps: Beyond the Task Force

The above discussion has not been intended to be prescriptive. Rather, it has considered various options and has suggested that there are a variety of lessons that can be learned from examples of different football clubs, here and now, as well as from abroad and in the past. One of the reasons for not having been overly prescriptive is that while the danger to football in Britain has been made urgent and imminent with the BSkyB threat to take-over Manchester United, it is still early days in terms of consideration of the Football Task Force recommendations and possible legislative and/or regulatory responses to that. The only definite, prescriptive conclusion that is absolutely clear is therefore that the current BSkyB attempt to take over Manchester United must be stopped, at least until such time as the recommendations of the Football Task Force have had a chance to be properly considered, debated, and acted on.9

Beyond that, there are certain general themes that come through from the various examples and proposals reported above. The first and foremost is the importance of staying focused on the goal, and the key danger to it. The goal is to develop football as an important part of Britain's social, cultural and sporting life. And within that, to strengthen and further develop the links of the clubs with the local communities. It may prove no exaggeration to say that whether or not this Government succeeds in one of the key goals it has set itself - namely to overcome social exclusion - will depend to a significant degree on whether it can rise to the challenge facing football in Britain. Football has perhaps been, in a small way, part of the problem. It threatens to become part of the problem in a big way. Yet there is no doubt that given the political will, it could become part of the solution to many of the problems of social exclusion, not just by encouraging young people back into football grounds but also through the wider community programmes.

The second general theme is that it is not just what is done that is important, it is how it's done. While a proper elaboration of the legal and institutional mechanisms are important, equally vital are matters such as the representation of fans' views and interests. Any proposal needs to be specific about ensuring that such representation is arrived at democratically, and that the process is not subverted by the Board of Directors at a club unenthusiastic about having any input from the fans.

Thirdly, while some of the general principles need to be applied throughout the game, when it comes to specific ownership structures there may be no 'one best way'. In some cases the ideal of a mutual, with the club owned and run as precisely that - a club - may be achievable. In other cases the existing ownership structure may be acceptable provided the sort of general principles referred to above - relating to the representation of fans' views, and the protection from take-over - are acted on. Then there are the existing PLCs for which the big question is how to get from here to there when that might involve buying out the existing shareholders. Where would the money come from? As discussed above, there may be ways of overcoming even these problems. But the answers may be different from club to club.

Fourthly, there are practical legislative and regulatory measures the Government could take, both to advance the general goals of overcoming social exclusion, and also to underpin and assist the various specific action that might be taken from club to club. Thus, a golden share could be taken in all PLCs that own football clubs to at least prevent their take-over and misuse by outside commercial interests. And the proper and independent involvement of fans in the running of clubs could be made a requirement through specified Articles of Association for such companies, or at the very least through guidelines that had to be commented upon in the companies' Annual Reports.

Back to Contents

6. Conclusion

The aim of this paper has been to consider the various ownership and governance options for football. This is an important issue given the increased commercialisation which has been generally recognised as having, to some degree at least, taken the game away from the fans and the fans away from the game. But the problem over these past few years has not been fan apathy. On the contrary, this period has witnessed the emergence of an independent culture, with the launch and growth of fanzines, and the founding and growth of independent supporters' associations. Alongside the growth of the problem has developed activity that could be crucial to the solution. There is clearly a great deal more work needed to flesh out the ideas raised in this and related papers, and to implement the proposals from the Football Task Force. Focusing on this long time horizon should not be used as an excuse, by Government or anyone else, for taking their eye off the immediate and urgent danger to the game from the threatened BSkyB take-over of Manchester United. If that were allowed to proceed it would do more damage to the longer-term work needed than would just about anything else. Similarly, there is an urgent need to prevent British football being split between a few glamour clubs to be owned and run be global media interests on the one hand, with the majority of Premiership clubs - not to mention the non-Premiership clubs - carved out. But this immediate battle needs to be seen within the broader and longer-term need to develop the game positively. Without that, the 'glamour' clubs will be left sitting on the Stock Exchange waiting for the next corporate raiders to come along. The longer-term vision needs to be seen as inextricably linked to the immediate campaigning issues.

Back to Contents

References

Brown, Adam (1999), 'The Football Task Force: New Governance or Old Compromises?', Paper presented at The Corporate Governance of Professional Football conference, Birkbeck College, February 3rd

Crolley and Duke (1996), Football Nation and the State, Longmanns

Conn, David (1997), The Football Business, Mainstream Publishing Projects

Conn, David (1999), 'The 'new commercialism'', Paper presented at The Corporate Governance of Professional Football conference, Birkbeck College, February 3rd

L'Elefant Blau (1999), 'The Battle for Barcelona', Paper presented at The Corporate Governance of Professional Football conference, Birkbeck College, February 3rd

Lomax, Brian (1999), 'Supporter involvement in Northampton Town FC', Paper presented at The Corporate Governance of Professional Football conference, Birkbeck College, February 3rd

Michie, Jonathan (1999), 'From Barnsley to the Green Bay Packers: ownership of football clubs', Paper presented at The Corporate Governance of Professional Football conference, Birkbeck College, February 3rd

  1. On which, see Conn (1997) and Conn (1999).
  2. This is nicely illustrated at Newcastle Football Club which infamously rips off - according to the Directors whose conversation was, unknown to them, being recorded - their fans by selling the replica shirts which so many of them can be seen wearing at the club's matches. As with most grounds now, significant sums are also made from the more expensive seats in Executive Boxes. The replica shirts that the traditional supporters wear in such numbers are banned from these Executive Boxes.
  3. The problem of social exclusion has been made a particular priority for action by this Government, although to date the links with football appear not to have been fully made.
  4. On which, see Brown (1999).
  5. Despite his ambition, even Mr Murdoch is aware of his limitations: he can always try to own a football club but a country takes a little more time and time is in short supply.
  6. At the present time the Aufsichstrat consists of just nine as only one member has been co-opted.
  7. Unless of course the Director elected by fans also represented a block of shares held in Trust, as described in the paper from Lomax (1999) for the case of Northampton Town FC.
  8. On which see Lomax (1999)
  9. And, we would say, the various contributions to the February 3rd 1999 and July 8th 1999 conferences at Birkbeck College, have likewise had a chance to be properly considered.


Back to top

 


1995-2003 IMUSA