Fan ownership: The saviour of local football clubs

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Football is just not the same these days. The players are more concerned with their hairstyle than their first touch and those same muscle-bound egomaniacs won't get out of bed for less than £100,000-a-week. I'll stop there, because it's probably sounding rather familiar to you at this point.

The idea that football is now worse off because of the globalization of the game is one that is widespread. A growing number of fans are pining for the days that high boots were ignored and two-footed challenges were cheered; the game at its highest level has moved on from those seemingly barbaric days.

But as the Premier League takes a monopoly on British football, there is a growing realisation that the not-so-successful clubs are having to call on the local community, not the Russian oligarch, to stay alive. It is an idea that is spreading fast.

Fan ownership is taking British football by storm. Now, over 30 clubs in the UK are owned or majority-owned by trusts with the likes of Wrexham, Wycombe Wanderers and Portsmouth recently saved by fans willing to put their hands in their pockets.

But fans needn't wait for their club to be on the brink of extinction before getting actively involved in ownership. Most clubs in the Bundesliga have flourished while having a majority stake held by fans for years, while Barcelona and Real Madrid are owned by members, who elect their hierarchy through a democratic voting system.

Since the turn of the millenium, the UK has seen over 180 supporters' trusts created, of which over 100 enjoy at least a minority shareholding in their club.

Following the trend, supporters all over Scotland are attempting to take a controlling stake in their local sides. Benefactors are running out of cash as revenue streams dry up and more and more clubs are finding themselves with unsustainable amounts of debt.

Ultimately, clubs run into financial trouble because owners have either run out of money or grow tired of losing it after prolonged spells of unsustainable spending. In that sense, Portsmouth FC are the classic example of a club rescued by fan ownership.

Debts in excess of £100 million were brought under control in 2012 after the Portsmouth Supporters' Trust took loans from both the local council and local businesses. It brought Portsmouth out of administration with fans owning 60 per cent of the club. They're prohibited from selling shares or taking dividends.

"When you start running out of individuals that are willing to invest sizeable funds, the thousands of fans committed to that club in the long-term become your best option"

They're not exactly heading back to the glory days of FA Cup finals, but at least they're future is more secure. In the end, sustainability is more important than success. And in a period of austerity and a dominant Premier League that eats up the lion's share of the fanbase, staying alive is more difficult than it sounds. Giving fans the chance to get involved with a club and own a small part of it would help to secure their loyalty for the long-term.

Michael Wood, network support manager at Scottish Fans, has recently helped Hearts, Motherwell, Kilmarnock, Annan, East Fife, Livingston and Falkirk in gaining ownership and governance of clubs. He thinks securing the fanbase is key to keeping football alive at a local level alive.

Wood explained to GiveMeSport: "It’s very hard for investors to make a decent return, not just in Scottish football but any football club. Frankly, when you start running out of individuals that are willing to invest sizeable funds, the thousands of fans committed to that club in the long-term become your best option.

Taking control

Hibernian are hardly a club on the brink of financial meltdown but with a loss of £800,000 in the year to July 2014 and a revenue stream down by over 25 per cent from the previous year, trouble is on the horizon.

Andrew Sibley is one of the founding directors of the movement Buy Hibs, who are trying to gain enough fan support to purchase 51 per cent of shares in the club and gain seats in the boardroom, ultimately having influence over future decisions.

He told GiveMeSport: "In a recent survey it became quite clear that there was an appetite for a form of fan ownership. And the reason behind that is because the club has grown debt of up to £9.5 million, which the current owners have converted into new shares and a £5 million mortgage, which is not the same as bank debt, but will need to be paid back."

The owners sensed the tone and tried to launch their own movement, asking fans to invest in Hibernian Supporters Limited, which would gain a controlling stake in the club when a certain target was raised. The catch is that fans investing in the scheme would never directly own shares in the club and therefore wouldn't gain influence over board decisions. For Mr Sibley, that wasn't acceptable.

He continued: "To us that’s wrong because fans can contribute funds but there is still no voice on the board. That is a different model from what we want, which is to create share ownership amongst the fans and gain seats on the board. Fan ownership can only work if we are able to directly influence club decisions."

In a sense, the majority of football clubs are still important at a local level but representation from local people went missing as football moved to a business-led model. But now that is changing and there is proof that fan ownership does work right up to the elite level.

Swansea City: The blueprint

Swansea City have been the second team of choice for a lot of fans since they won promotion to the Premier League in 2011. Now they are established in the top flight with the Swansea Supporters Trust maintaining a 21 per cent holding in the club.

The trust has one executive director on the board purely to represent the views of fans and also have an associate director. Ten years ago they were in the fourth tier of English football and in 2013 they won the League Cup. This is the model other clubs are aspiring to.

Government intervention

Even the government are involved, launching an initiative to explore how more fans can get involved with the clubs they follow. Labour announced the radical proposal of giving fans the right to buy a significant share of a club when ownership changes.

It would be "the biggest legislative shake-up in the governance of football clubs since the advent of the game", as Labour put it. But there are major drawbacks to fan ownership, not least because it takes away the opportunity for an experienced businessman or woman to make tough decisions fans may not agree with.

But fans in Scotland are trying to work together with current board members and/or owners to create a joint venture between small businesses and themselves. It is working for Hearts, who are dominating the Scottish Championship after fans completed a successful takeover in conjunction with Edinburgh businesswoman Ann Budge in February 2014.

"At the moment it is the clubs with smaller revenue streams that are more inclined to explore the benefits of fan ownership," Wood continued.

"Hearts, who are in the transitional process of their current owner transferring her majority share to the Foundation of Hearts, are doing very well. What we’ve seen there is a relationship with fans and local businesses that has been very successful."

"For clubs with smaller revenue streams, community ownership is better from a sustainable point of view because if you have a group of supporters invested in the club, the chance of them withdrawing their support is very unlikely. Alternatively, if you have one individual in charge of the club looking for a return on their investment, they might not be willing to support the club for the long-term."

Community roots

Since the demise of Rangers Football Club in 2012, which saw one of Britain's great clubs banished to the bottom tier of Scottish football, the clubs who have lost out financially have had to make major changes to their business models. There is now an acceptance that they won't enjoy the money that the Premier League is generating and will have to turn to their loyal supporters to survive.

Former chief executive of the Scottish Premier League Roger Mitchell believes that fan-led takeovers of clubs is a result of a realisation that they will never be able to compete with their English counterpart.

He told GiveMeSport: "Football in Scotland has come back to its community roots. You’ve seen that happening in Motherwell, the phoenix that has come out of Hearts has been fan-led, what’s happening at Rangers is now fan-led and what is happening at Hibs is coming from people that realise their club is really a community club competing with local rivals, not international rivals.

"As such I think those are the right people that should be making the decisions because it is about what they are doing for that community, and that will probably happen on the playing side.

"There was a time when Scottish football went for the cheaper Eastern European import and ignored the local boy, but now it is going back to where football was in the whole of Great Britain in the 60s and 70s."

The good old days that so many fans have pined for is on the brink of returning, but it seems that fans of elite such as Arsenal, Manchester United and Chelsea will have to wait until their clubs look seriously at adopting the opinions of fans into their strategies for global domination.

But with the Premier League continuing to grow in popularity, taking the majority of new football fans along with them, it will be the local communities that the smaller clubs ultimately turn to. Scotland are already arriving, failing to benefit the Premier League gravy train and now looking at devolving their clubs right down to the heart of the fan Base. 

The model has been set by a small Welsh club, who are enjoying almost unbelievable success. But, Wood believes Scottish fans will have to deal with a lack of short-term success if they want to adopt the same sustainable model.

He finished:  "We might see one of these fan-owned clubs challenging for titles but not for another ten to 15 years. It’s more about sustainability and making sure the game in Scotland is not just one season after the other of fighting to stay alive."

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