labour-proposals

What will Labour’s proposals for greater fan ownership in clubs look like in practice?

A win for the Labour party at the next general election could see major changes in the way owners operate football clubs. There has long been dissatisfaction amongst football supporters in how little say they have in matters regarding the club they spend their hard earned money on. The proposals by Labour seem attractive on paper and will no doubt be attractive to fans up and down the country but how will they work in practice? 

The-proposals

What must be established first is exactly what Labour have put forward. The changes are being spearheaded by Shadow Sports Minister Clive Efford MP and were put together in consultation with 95 football supporters’ organisations. There are two elements to Labour’s plan[1]. The first is that supporters’ trusts will be able to appoint no less than two directors to the club’s board. They will be entitled to appoint more but it cannot exceed more than a quarter of the total number of directors. Secondly the fan’s trust will have the option to purchase up to 10% of the club’s shares should an owner ever sell the club to a new party.

What-this-means-for-fans

The most important element supporters would need to be aware of should they ever want to take advantage of the proposed changes is that they must all come together in one unified supporters trust. Should multiple trusts exist then nobody is entitled to appoint directors or be offered shares in the club were it be sold. Furthermore trusts would be required to be legally registered societies by the Financial Conduct Authority[2] and thus regulated by the Co-Operative and Community Benefit Societies and Credit Union Act 2010[3]. This piece of legislation is complex as it incorporates and references various other Acts of Parliament therefore the majority of supporters’ trusts may have to seek legal advice. While this may seem to a be small price to pay for some trusts, it can be an expensive burden for the trusts of clubs further down the football pyramid.

A trust that appoints directors will have limited powers. They will be able to obtain details on finances and other commercial information in regard to the club, which could encompass ticket prices, sponsorship agreements and changes to a club’s name; but they will not be able to block takeovers. Should a trust operate their right to buy of shares in the event of a new owner they would not be entitled to a further 10% should the ownership change again. They are of course, under current legislation, able to purchase more shares should they wish however the right to buy option can only be used once.

There will also be some discussion on what constitutes a change of ownership. Labour have stated that the right to buy option will be applicable if a buyer takes control of at least 30% of the club. Anything under that and the trust will have no right to be offered the shares. A trust would have 240 days to exercise their right to buy should a party take a 30% or more controlling stake in the club. The issue here is certainly not the application of this proposal. 240 days is nearly 8 months and therefore a substantial amount of time while the figure of 30% seems like a reasonable start point for both buyers and supporters. What the issue may be is the price of the shares. They certainly won’t be given away to a trust by the club and so Labour have suggested that the offered shares be priced at the average amount that similar securities were priced at during the preceding year of control. It is a policy that balances notions of fairness and the free market so it’s hard to criticise but the question that must be asked is in reality how many supporters’ trusts will be able to afford all 10% of shares in their club. For trusts who can only afford say 2% of shares, their position of power in the club and their ability to influence is severely limited.

Owners of clubs may see issue with having supporters on the board. Not because they are supporters but because they may lack the business acumen to help the club progress. Labour have suggested that all trusts will need to provide training for individuals they appoint to the board but as any businessman will tell you, there’s only so much you can learn on a training course. The real learning comes through experience.

Reaction

Labour’s suggestions have, inevitably, been met with heated discussion. Supporters Direct, the organisation that helps supporters set up their trusts, has naturally been supportive of the proposals and the increased say supporters could have in the running of their clubs[4]. There is no denying that football plays a vital role in the heart of communities. It brings families together, controversies can create friendships at the bar and seeing your local hero score against your bitter rivals can inspire youngsters. Those notions should not be disregarded by boards of directors quite so easily. Ultimately it is the supporter who puts the money in their pockets. Yet the Football League is wary of such changes[5]. While it doesn’t shoot them down, they warn of the risks involved which include the financial dangerous and responsibility in putting money into a football club. This is essentially a warning to supporters that they may have to foot the bill when things don’t go to plan. They also argue that implementing more barriers for potential owners to get over may put them off and investment into football may drop. For those investing in the giants of football these barriers may seem like a necessary evil but for struggling clubs who desperately need money, potential owners may not be so keen to invest when they know red-tape is stifling them.

Perhaps the most extreme reaction though is Matthew Lynn’s of The Telegraph who claims the proposals will put football in regulatory shackles[6].

Conclusion

While Labour’s proposals are a step in the right direction there is no hiding from the fact they are limited. Until we see them in action there is a chance their application may also be flawed. While we need to consider the notions of the free market, the fact that only 14 clubs in both the Premier League and the Football League have supporter representatives on the board shows that football, in its bid to become a global phenomenon, has left behind the people and supporters that got it there in the first place.

Links


References

[1] Labour: Putting fan’s at the heart of football’s future – Labour Press

[2] Registered societies – Financial Conduct Authority

[3] s.1, Co-operative and Community Benefit Societies and Credit Union Act 2010

[4] Supporters Direct welcomes Labour proposals for ‘radical shake-up of football’ – Supporters-Direct

[5] The Football League responds to Labour proposals for increased fan ownership – The Football League

[6] Labour should keep its hands off the Premier League – The Telegraph

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