Archive → July 29th, 2011
Football Governance. Good but for us too little too late
With the publishing of the football governance report today there are a lot of welcome recommendations. These are good for many smaller clubs but for Manchester United supporters, the ones you could argue who got the report rolling in the first place after the green and gold and red knights publicly stunt it looks like it doesn’t really do much. There isn’t much but the new licensing system which could affect the clubs ownership and style. One thing that caught my eye early on was point 220.
“220. We recommend that the Government consider passing legislation to protect minority supporter stakes that would otherwise be the subject of a compulsory purchase order.”
This basically means a supporters trust with shares within a club would be protected if the law was passed. In 2005 this would have meant the 15% of club would have been protected under shareholders United or todays Manchester United Supporters Trust if under todays co-operative style scheme. Sadly for us this is 6 years too late even for the recommendation. In the Premier League Arsenal, Swansea and Norwich City supporters trusts would have their shares protected under a such a system. This would be true for many other clubs throughout the Football League and lower leagues of the English Tier system.
The other point that can be noted is the new licensing model. ”The licensing model adopted should both review performance and look to promote sustainable forward-looking business plans.” You could argue in an instant the current business model in many clubs isn’t sustainable. Especially at clubs like City and Chelsea. United could also be targeted. A business plan aiming to give away a large amount of it’s revenue to interest payments with no foreseeable end can’t be called sustainable. If a licensing model was introduced that targeted a certain business style such as the rumoured Arsenal model and not the differing United or City business models we could see certain types of debt models and large scale spending models a thing of the past.
I also did a blog yesterday on how Sky could be affected by European broadcast rights at the European Court of Justice and this report supports Sky’s view keeping it as it is. My view comes from the consumers view of charging through the roof for sky sports products.
On Leveraged buyouts and debt in the game apart from criticising both areas, they haven’t said how to reduce debt and didn’t say ‘leveraged buyouts should be banned’. The only thing to protect support shareholdings would be the recommended protected supporter share legislation but even that is limited to a point. It’s the same as before buy as many shares as you can before someone takes over but with your shares in supporters trust intact. This may change as the government has asked the FA and Premier League to get involved in developing supporter ownership. One recommendation which could affect the way we currently see private ownership is the recommendation of Full Transparency on ownership and on debts. So this will change in the case of Leeds United were currently the owners who own a certain percentage can keep their details hidden will now be forced to give up who they are. Debts are also another important area for Manchester United fans. Although currently hidden away in Delaware and considered private, the PIKs which were paid off and rumoured to be refinanced, maybe forced to come to light. It could be argued this money was used to buy the club, which it was and it has had constant links mainly through the large dividend payments put in place during the bond agreement.
The report also urges clubs and supporters trusts to work together on other issues besides ownership issues. On the face of things you can’t force clubs to talk to supporters trusts, so in our case there is zero chance of David Gill and our Supporters Trust or IMUSA getting involved with each other. I don’t think either party wants anything to do with the other. Those battle lines we’re drawn along time ago.
The good points.
The likely hood of less clubs being in financial trouble through a licensing system.
Full Transparency on ownership of football clubs and on debts.
Protection of Supporter Trusts shares already held within football clubs.
The bad points.
Supporters trusts are less likely get take hold of shares unless a club is in big trouble. Administration or the like.
No mention of compulsory or optional share schemes for supporters trusts to buy shares.
Government recommends clubs still rely on Sky TV money which leads to its own problems.
There is no chance of either the club or supporters trust getting involved with one another unless something very big chances.