A political solution for football?

Since July 2009, the posts in this blog have tried to indicate what I think may be a better way to run professional football clubs in England. In the lower divisions of the Football League and in non-league clubs, there has been some progress but usually only when a club has reached financial desperation.

In the Premier League, the clubs and the sums involved are so much larger that only an incremental approach is likely to be effective. Recently both Manchester United and Liverpool supporters have tried to change the way their clubs are run, so far without success. The money which would have to be raised is simply too large for a one-stage process.

There has always been a general recognition of the part that the local football club plays in the life of the community. In the past, there have been several political initiatives intended to promote this connection. I believe politicians have not been unwilling to help and indeed some legislation has been passed to provide assistance. But it has been largely unsuccessful, particularly with the larger clubs. Is there a key to unlock this financial barrier?

Suppose that instead of trying to raise all the money and transfer ownership in one stage (which would be the usual method in business), a football club could be bought gradually by its supporters. It could probably happen at present, except that, given a choice, the larger clubs would probably prefer not to have to deal with tens of thousands of small shareholders. In other words, they would be very reluctant to change.

So it has to be plan B. This would require a political initiative to compel a football club to sell a fixed number of shares at an agreed price to any person applying for them. Over time, the number of shares bought and owned in this way would become a majority. The small shareholders could then, if they wished, decide on the next stage of restructuring the company. The model of FC Barcelona might be used to guide them!

Keen readers will probably find lots of snags in this proposal. So please make your views known, particularly if they include suggestions for improvement. Remember that all six MPs who declared themselves as West Ham supporters replied positively to the original initiative by WHAM!

John Sweeney's summer brake?

Which was the most significant of the footballing stories this summer? Not, I think, except for Spain and South Africa, one concerning the FIFA World Cup. It is true that there were other countries such as England, France and Holland who made the headlines but not, I fear, for their skills on the pitch.

No, my vote would go to an unlikely source - a Panorama television programme shown on BBC1 on Tuesday 8 July at the unpromising hour of 10.35 pm, just three days before the start of the World Cup.

John Sweeney, a reporter and Tranmere Rovers fan, had prepared a devastating indictment of English football, particularly of the Premier League where the total debt is now £3.4 billion. This is greater than the total for the rest of European football.

Supporters of Sweeney's case included:

Dave Boyle, Chief Executive of Supporters Direct, 'English football (is) groaning under the weight of unsustainable debt';
Andy Green, financial analyst, 'Glazer core business in USA got it absolutely wrong';
Dave Wheelan, Chairman, Wigan Athletic FC, 'Got to stop. Debt in Premiership is unsustainable. Wigan next season will break even. No more debt; what goes out must come in'.

Among the people and organisations who declined to appear (no great surprise!) were:

The Football Association, the Premier League, David Gill (Chief Executive, Manchester United), the Glazer family (father and six children), and Hugh Robertson (Minister for Sport) who was concentrating on our 2018 bid for the World Cup!

Football would probably not be top of the list of concerns for the politicians at the moment. But in the end, the solution to football's woes will probably have to be political. Most clubs are unlikely to volunteer to change. Few executives and directors are natural democrats. But change is needed if a financial catastrophe is to be avoided.

Next time
A political solution for football?

Contents and links

West Ham Blog with Plan #1

3 Jul 09 Introduction
The aims of this blog and my personal background.

4 Jul 09 A little bit of social history
The position of football in society from 1863 to the modern era.

8 Jul 09 Corporate structures for football clubs
 FC Barcelona as a model and the structures available to clubs in this country.

12 Jul 09 Why target West Ham?
The reasons why West Ham could become an English Barcelona.

12 Jul 09 Finding the resources
An optimistic assessment.

4 Sep 09 A message to all West Ham football supporters
Patience needed.

4 Sep 09 Can fans buy West Ham?
Football Club Project Version 3.2.

6 Sep 09 West Ham United supporters
Your club needs you!

West Ham Blog with Plan #2

4 Oct 09 The philosophical background
The ideas on which the project is based.

4 Apr 10 Update
A progress report.

15 Apr 10 Why did West Ham United Supporters Trust fail?
The essential lessons to be absorbed.

1 May 10 Steadily down?
The 'noughties' - a wasted decade.

13 May 10 Struggling upwards
The key problem, with an encouraging postscript.

14 May 10 Contents and links
With continuation of West Ham Blog with Plan #2

Continuation of West Ham Blog with Plan #2

20 Aug 10 John Sweeney's summer brake?
If this programme doesn't wake up football, then nothing will.

31 Aug 10 A political solution for football?
Plan B suggests a way for fans to buy your club.

11 Sep 10 The two sides in football
The private, the public, and a possible bridge between them.

25 Sep 10 An Olympian view
Olympic Park 1 Upton Park 3

1 Jun 11 Who owns football?
A review of the book.

6 Jun 11 The appointment of a ******* football manager
An unexpected application.

7 Jun 11 Investment in football
A possible alternative club.

Struggling upwards

Is there a route to the top of the football club management mountain? Sometimes it seems that 'snakes and ladders' is the most appropriate metaphor for supporters on the uphill trail. In principle the path is simple, but in practice it is full of sharp turns, blind bends, precipitous drops and difficult junctions where the way ahead seems a bit of a lottery.

Is it worth it? After all, you don't usually have a stake in the company that makes the film or a vote in the management of the theatre. You don't often get worked up about the appointment of the players in an orchestra. But somehow, football is different.

Football audiences are often large, sometimes enormous. They participate. They can influence the outcome of the entertainment. They are involved. And they are sometimes taken for granted, even abused.

So how can you start the ascent of the mountain? Nothing could apparently be easier. Buy a share in the club. Or even several shares. But supposing the owners don't want to sell you any? If the company makes widgets, they would be pleased to have your financial assistance. If they only make dreams and hopes, then the door is probably shut in your face. 'Well,' you may say, 'fair enough. Lots of doors are shut in my face.'

Why are the directors apprehensive? Do they see shareholding supporters as an unwanted, unnecessary and expensive complication, a bit of a nuisance? Probably yes. The mob at the gates is a powerful and frightening force in history.

But here's a strange fact. One of the most successful football clubs in the world doesn't react like that. The President of FC Barcelona, Joan Laporta, and his fellow board members don't seem frightened or worried. If FC Barcelona doesn't need to shut the door, why does your club?

This blog is trying to get West Ham (and other clubs) to open the door. By all means re-form a Supporters Trust if you wish, but unless its main activity is building the financial resources to buy shares in the club. I believe it would be wasting its time and, worse, the supporters' money.

How much bettter it would be if, as a first step, West Ham decided to make shares available for purchase by supporters. In present circumstances, there might be no great rush to buy. But the gesture would be significant. It could mark a change from conflict to co-operation and the start of building an English club in the image of FC Barcelona.

Why not get involved? If you would like to be informed of developments or you are able to provide ideas and expertise, please get in touch.

Postscript

David Sullivan (Chairman of West Ham) has recently written that 'in a few months' time, we are considering a general shareholding where supporters can buy shares in the football club. Every penny raised would be used to pay off debts and buy new players.'

WHAM! welcomes this encouraging development and looks forward to further details of the proposal.

Steadily down?

In retrospect, 2003 was a peak year at West Ham; not on the playing side (where they were relegated from the Premiership), but for supporter involvement in the management of the club.

Some long-term shareholders had decided to decrease the size of their holdings and these shares became available for purchase by supporters. This trend was not altogether welcomed by the directors who increasingly found themselves having to account for their decisions. As many of the new shareholders only owned a single share and took advantage of their right to attend general meetings, these events became less cosy and predictable. Especially so as some of those present were not always certain of the procedures to be followed. But they were cetainly liveley and interesting gatherings!

The opportunity for the ordinary supporter to be a shareholder disappeared at the end of 2006.

West Ham United Supporters Trust was formed in late 2001 and at its peak in 2003 had some 300 members. As previously mentioned on this site, it had its problems and only really flourished in a crisis. Its last recorded gasp was in January 2005. It must be admitted that there does not at the moment appear to be any great desire to build a long-term body to represent West Ham supporters.

Also at this time, the Hammers Bond Company (an unincorporated association of bondholders of West Ham United plc) was active. In November 1991, the Hammers Bond had been offered for sale in connection with obtaining finance for the development of the Boleyn ground. Although only 808 bonds were sold, the Bond Company became mainly a social organisation which could communicate the views of the bondholders to the football club management. Not perfect, but it certainly seemed to be effective.

Sadly, after the AGM in May 2008, nothing has been heard of the Bond Company. Letters and phone calls to West Ham have so far proved fruitless.

At the end of 2003, 'Whistle' appeared on the scene but after publication of the infamous 180 questions sent to the West Ham chairman, Terence Brown, in April 2004, the writs began to fly which, from the company's point of view, had the desired effect. 'Whistle' was silenced.

In the year ending 31 May 2006, the total emoluments paid to Terence Brown were over £1 million, about twice as much as might have been paid to the Chairman of a FTSE 100 company at the time.

On 21 Novemeber 2006, the sale of West Ham United plc to Eggert Magnusson and Bjorgolfur Gudmundsson for £85m was agreed. On 13 December 2007, Gudmundsson bought out Magnusson's holding. In June 2009, ownership passed to CB Holding, which was controlled by the Icelandic bank, Straumur.

In January 2010, David Gold and David Sullivan bought a 50% interest in the club, with an option to buy the remaining 50% in four years' time. The company was valued at £105 million including debt.

So not a very encouraging decade. But at least Premiership status has been retained, even if ordinary supporter ownership seems further away than ever. Perhaps this is the dark cloud before the silver lining.

Why did West Ham United Supporters Trust fail?

West Ham United Supporters Trust (referred to as WHUST) is the trading name of West Ham Supporters' Society Limited, IP29300R, first registered on 24 October 2001 and now dormant.

These notes are based on the only documents (no longer available) which could be found on the web. The information provides an insight into the likely reasons why WHUST has not survived. This is of obvious importance to WHAM! who would not wish to repeat any mistakes made by WHUST.

At the WHUST AGM in September 2003, it was made clear that the Trust "could not veer from its pro-fan agenda and therefore could never join the anti-Brown campaign".

It is likely that the fate of WHUST was sealed from that date as the West Ham Board, and the fans, realised that the 'revolutionary' forces did not have enough votes and the support of major shareholders to bring about change.

Weaknesses of WHUST revealed in the documents available

1. A shortage of active members
Amanda Matthews (who re-appears later in connection with the "Stand up, sit down" campaign) says that, of the original members, only two remain. On 15 January 2004, she appeals for more help for the 8 active members.

2. A lack of focus
It can't make up its mind if its main purpose is to raise funds to buy shares so that it can influence the football club or to act as a forum for the whole range of opinions you can expect from football fans.

3. Poor use of the resources it does have
Much effort is spent in replying to every point raised by fans on the website.

4. Some dotty ideas
These probably appear as a consequence of other weaknesses. For example 'we do have a healthy amount in the bank at our disposal, which we have earmarked to use to double our membership, in doing so will then be able to invest in more shares'.
But supposing this does not produce any new members? Or very few? What then, with no funds, is the future of the trust?

5. A lack of financial control
There is no indication that priorities have been properly assessed and finances directed accordingly, in other words having a plan with a realistic budget.

6. A lack of influence
As someone pointed out (18 September 2003), with just over 300 members at £20 each for each of the two years the Trust has been running, the total raised equals £12 000. Spending just half of that could have bought (21 May 2003), at £3 a share (including dealing costs), 2 000 shares. The Trust had 200!

Every effort has been made to ensure that the facts in this analysis are accurate and that the comment is fair. If you would like to discuss the matters raised, please respond, either on this site or by direct communication.

Update

The West Ham world has turned on its axis since my last post. The club has new owners and there is a desperate struggle to avoid relegation. The manager is the subject of speculation, the players lack the confidence to show their ability and the directors are accused of making unhelpful comments.

But hang on a moment! All that does sound dreadfully familiar. The fundamentals have not changed. The club is still far away from the ideals of FC Barcelona, both in playing ability and in corporate structure.

So what has happened to WHAM! in the last six months?

Taking the advice given by Supporters Direct, the time has been used to assess the level of interest in, and possible support for, the project.

Using information available on the internet, a list of the names of about a hundred declared celebrity West Ham fans was obtained. Further investigation soon revealed that some celebrities can have a very elastic definition of a football fan! So the list was reduced to 40 names where the attachment to West Ham could be shown to be sufficiently strong. David Gold, then Chairman of Birmingham City FC plc, was included. A letter explaining the nature of the project was sent to each name, with the following results:

• 6 MPs, 6 replies. Very impressive!
• 6 former West Ham shareholders, 1 reply.
• 14 media people, 2 replies.
• 14 others, 2 replies.

A letter inviting their support was also sent to the twenty-nine West Ham United plc shareholders who were on the 2007 register and had addresses in the BR postal area. This provided a representative and convenient sample. One reply.

Letters were sent to the Chairman and to the Secretary of The Hammers Bond Company. There has been no response.

A letter was also sent to Scott Duxbury, then Chief Executive Officer, West Ham United plc. An acknowledgement was received.

Where does this leave WHAM!? Still trying to gain supporters for the cause? Most definitely. Exploring possibilities? Certainly. Talking to West Ham directors? Perhaps. Giving up? Never!