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The future of fan ownership in Scotland

Motherwell fans

Author – Andrew Jenkin

 

While football clubs originated as member organisation, by the end of the Second World War the influence of key businessmen resulted in a shift in ownership models and led to the ‘benefactor model’ that we have known over the past 30 or 40 years.

Considering there have been 154 instances of British football clubs being placed in administrations or liquidated since the year 2000, there is now little doubt that there now exists a recognition that no one type of ownership model is right and instead a recognition that in certain markets (such as Scotland) football clubs are unlikely to make a profit.

The main purpose of this research was threefold. Firstly, to gain a greater understanding of the benefits of the fan and community ownership model. Secondly, to gain a greater understanding of its’ future growth in Scotland and thirdly to gain a greater understanding of the barriers fans groups face when trying to purchase their club in reality.

The research, conducted purely through interviews with numerous with experience of fan take ownership in Scottish football, revealed that the perceived benefits of community ownership were the financial sustainability and stability it brought, the fact under community ownership clubs were run for the benefit of their respective communities and that it brought democracy and transparency with fans represented at board level.

The cited reasons for its growth involved the economic climate and failings of Scottish football (with twelve administrations since 2000) and Scottish culture and traditions.

The research also revealed that in reality, the major barriers to further fan ownership in Scotland were lack of access to major funds and that the governance structure often put off potential investors.

This research concludes that the fan ownership model holds an encouraging future, however, suggests that this could have come about because of financial troubles within the game, rather than because of the model’s other benefits such as sustainability and democracy. Research helped conclude instability is caused by the motives of owners – which are unquestionably good if supporters are in charge.

Background and Methodology

While football clubs originated as member organisation, by the end of the Second World War the influence of key businessmen resulted in a shift in ownership models and led to the ‘benefactor model’ that we have known over the past 30 or 40 years. Often this transformation came from the opportunity for family inherited shares to be exchanged for new investment or, in several instances, for profit. Considering there have been 154 instances of British football clubs being placed in administrations or liquidated since the year 2000, there is now little doubt that there now exists a recognition that no one type of ownership model is right and instead a recognition that in certain markets (such as Scotland) football clubs are unlikely to make a profit. Traditionally, Scottish football clubs have been owned by single business people (often referred to as the Single Benefactor Model), but it is argued by Stephen Morrow in a lecture entitled ‘The Future of the Game in Scotland’ that clubs must lose the tag of being a ‘business’ before their true value is recognised. In 2010, Stirling Albion became Scotland’s first league to become 100% owned by its supporters. Four years on and the number of clubs under community ownership has risen by three, and Supporters Direct Scotland (the umbrella organisation concerned with the growth of the ownership model) identify a further four clubs could follow suit in the next twelve months. Alternative ownership models such as Stirling Albion’s are suggested as offering a more sustainable future with clubs such as Rangers, Hearts and Dunfermline having all encountered severe financial difficulties under the single benefactor models in recent years.

Ideally, supporters would want to see their clubs performing at the highest level while operating financially sustainably. However, as history has shown, when clubs operate outside of their means it often at the expense of the supporters. This is summarised by interviewee Jim Duffy who said “it’s great if you’ve got an owner with lots of money if it works, but when it doesn’t work, it leaves a club hanging by its finger nails”.

The takeover of Hearts and Dunfermline by Community Interest Companies could indicated a turning of the tide regarding the role of supporters within the game. Perhaps the biggest testament to this is from Shona Robison, Cabinet Secretary for the Commonwealth Games, Sport, Equality and Pensioners Rights in the Scottish Government. Mrs Robison stated the government’s desire was to see “football become in Scotland is it being sustainable and I think community ownership offers one model of helping clubs be sustainable, rooted in their communities, supported by their fans and their finances can be helped by that so”. This has been evidenced by the establishment of a working group to examine how fans can be further involved in governance within the game.

Purpose and Aims of the Research

The main purpose of this research was twofold:

  • To gain a greater understanding of the benefits of the fan and community ownership model.
  • To gain a greater understanding of its’ future growth in Scotland and the reasons for these.
  • To gain a greater understanding of the barriers fans groups face when trying to purchase their club.

In a wider context, this research was interested in exploring and predicting what the trends of ownership models in Scotland might be.

Methodology

In this instance, qualitative research methods are preferred as it allows a different level of insight into the relatively small cases of community ownership within Scotland. It also enables a greater level of understanding of the factors which led to its emergence in specific examples.

A range of people with varying levels of interest and knowledge of the subject matter were identified and interviewed for their opinions on the movement’s future. The following seven people were identified:

  • Eddie Docherty (Former Chairman of Stirling Albion Supporters Trust)
  • Professor Stephen Morrow (Senior University of Stirling Lecturer and Author of The People’s Game?: Football, Finance and Society)
  • Neil Bone (Chairman of Supporters Direct Scotland Council and Interim Chair of the Honest Men Trust)
  • Jim Duffy (Manager of Morton FC, formerly manager of fan owned Clyde FC)
  • Shona Robison MSP (Cabinet Secretary for the Commonwealth Games and Sport in the Scottish Government)
  • Bryan Jackson (Partner of BDO and specialist in Business Restructuring)
  • Margaret Ross (Head of Pars Supporters Trust and board member of Pars United)

An interview schedule was drawn up for all interviewees with the purpose of exploring each participant’s thoughts and beliefs regarding the benefits of community ownership. Interviews also sought to predict what future the model might have in Scotland. Each interview transcript was then analysed to identify key themes.

Analysis and Findings

From the qualitative survey of interviewees, it emerged there were three key themes and examples of the benefits of the fan and community ownership model. Two key reasons for its growth were also evident:

Benefits:

  • Financial sustainability and stability
  • Run for the benefit of the community
  • Democratic & transparent with fans represented

Reasons for its growth:

  • Economic climate and failings of Scottish football
  • Scottish culture and traditions

 

Benefits of the Community Ownership model

The three key themes of the benefits of the community ownership model were mentioned and referred to in some way by each interviewee highlighting the fact interviewees believe the model is more than an ideal, but has tangible benefits to a range of stakeholders.

Sustainability and stability

Certainly the most prominent theme throughout the interviews was the sustainability aspect fan ownership can bring football clubs. Stability was referred to in both a social and economic context.

Each interviewee mentioned the financial uncertainty the single benefactor model can cause. Mr Docherty, speaking anecdotally about the situation at Stirling Albion prior to the fan takeover in 2010 said, “Mr McKenzie (former Chairman of Stirling Albion) invested a lot of his own money into the club and he ran it with his heart rather than his head”. The theme of financially unreliable chair persons was common throughout the interviews and this instability is in turn, the key strength of the community ownership model. The perilous nature of some owner’s dealings and motives was summarised well by Bryan Jackson, who was able to speak from his experiences with clubs in financial hardships. “You see a pattern of people coming in from the outside and buying football clubs, and then it doesn’t work out and their funding runs out or their own original objectives have changed”.

In these occasions, as was the case with Stirling Albion, Dunfermline and Hearts, supporters have been the only thing in the way between the club and liquidation. Mr Docherty in his experience with Stirling Albion cited that “the only other option was to let the club die”. Similarly in the case of Dunfermline, supporters’ reliability was the only thing to keep it in existence. Maragret Ross said “When Gavin Masterton (former Chairman) put the club into administration, we were (the Supporters Trust) the ones keeping it going. We were the ones giving BDO money. We were the ones paying the players wages. If the fans hadn’t rallied together, the club would have gone”.

The stability that these groups, who have since taken ownership of their clubs, is a benefit reaffirmed by Professor Stephen Morrow who states the model “encouraged sustainability” because of the obligation those groups have to their respective communities. This implies critically that it is the motives of owners are the clubs biggest safeguarding or liability. From his personal experience of working with clubs in financial difficulties, Bryan Jackson pinpointed the assured motives supporters groups brought to takeover bids as a key reason to sell to them. He said “whereas with supporters it’s a long term issue. In some ways, it’s easier in dealing with supporters and selling clubs to them because you know they don’t have any alternative agenda”. He believed that the model’s benefits were not in its finance, but its motives.

Despite the perceived financial stability and advantages community ownership provides, the issue of finance was also referred to throughout the interviews as one of the model’s major drawbacks. Mr Docherty was able to reference the difficulties Stirling Albion Supporters Trust had in raising sufficient capital to purchase the club whilst Professor Morrow also commented on a lack of access to funds being a major hindrance. Jim Duffy was of the opinion that while CIC model (in place at Clyde) protected the club’s security, its’ biggest hindrance was that it prevented major investment due to the fact possible financiers may want equal voting rights which the model prohibits. This leads to the theme of democracy and governance.

Democracy, Transparency and Representation

The benefits of democratically controlled clubs are apparently shared among all interviewees with the terms democracy, transparency and representation all referred to in positive contexts and advantages of the fan ownership model.

All interviewees talked of the importance of fan representation and democracy within decision making. Bryan Jackson believed that the days of fans having little or no say in the running of their clubs were numbered. “I know historically, supporters have not had much of a say, but I think that’s an old fashion view, and I think that’s changing now and I think it’s important even if supporters don’t own and run the club, they at least have a say representation”.

However, it should also be noted that the element of democracy was cited by two interviewees as a disadvantage to the ownership model.

It was believed by both Mr Morrow and Mr Bone that the model prevented quick and streamlined decision making. Professor Morrow summarises its difficulties by stating there were “risks of slow decision making; political influences and factionalisation; democracy!”

Run for the benefit of the community

Maintaining and developing links within the community was also something stressed as a benefit of community owned clubs. It was evident that all interviewees believed that clubs were more than the team fielded on a Saturday afternoon but social institutions that should be embedded within their respective communities. Mr Bone was of the opinion that clubs should be “not just run for shareholders but run for the benefit of their communities”.

Reasons for Growth

Each individual interviewed believed the number of clubs under the model would grow in the future with two recurring reasons referred to.

Economic Climate

Firstly, the economic recession and lack of alternative options for current club owners was heavily referenced.

The financial state of the game in Scotland is cited as problematic with purchasing clubs undesirable and supporters being the only option for many of them.

Bryan Jackson who has worked with several clubs during the process of administration stated “I don’t if you want to call them it, but the ‘white knights’ seem to be disappearing over the horizon”. Mr Docherty was able to contextualise the situation by stating “go into any shopping centre and you’ll see shutters down and closing down sign and football is in the same situation. The clubs are dying off and must stand on their own two feet. The only option I can see is the fans themselves”.

However, some interviewees were not of the opinion that supporters groups offered much benefit financially and instead its benefits were in its stability and motives for ownership.

Within responses there was some overlap between the theme of the economic problems and the cooperative movement within Scotland.

Scottish culture and traditions/Growth of Cooperative movements

Whilst there are perceived benefits of community ownership of football clubs, analysis of interviewee responses revealed there was an underlying belief sport institutions such as football clubs should belong to their communities out of principle, particularly within Scotland. This was referred to by Professor Morrow who said community ownership was “the right thing to do to and it seems to fit with the traditional political and economic models that many Scots are familiar and comfortable with”. He later added “community and corporate ownership of society has a strong tradition in Scotland, so I think that might be seen to have an impact”.

The Future

The data collected evidences there is considerable reason to expect the community ownership model to grow. Indeed, Mr Duffy stated his surprised more clubs had pursued the model. “So many clubs are financially bereft and I think the CIC model is a terrific model to look at to protect your club’s future”.  He predicted that the model would grow significantly in the next 5 years because “fans want a bigger say, which is rightfully so and they want to see their club protected and not fall into a single owner who might not have the best interests of the club at heart.”

Mr Jackson was of a similar opinion. “I think it’s just the natural progression of things in terms of people recognising that supporters are the ones that are always there”. This belief was shared by all interviewees.

Fan’s Opinion

As many of the interviewees believed fans should be consulted, it was only right they were asked for their opinions on the matter! Through the Supporters Direct Scotland 2014 National Football Survey, over 2500 participants were asked whether they believed the community ownership model could work in Scottish football.

Survey image

Survey participants were strongly of the belief that the model could work within Scottish football with an overwhelming 91.11% of respondents stating so.

Conclusion

This research would suggest the model holds an encouraging future due to various circumstances, mainly the lack of finance to be made within the game leading to a desire from some owners to pass their shareholdings on.

Some interviewees belief, critically, that it is the motive of any owner which ultimately dictates the sustainability of a club. With this, the community ownership model is suggested to have clear positive motives, the longevity of the club, rather than to make money for personal means or simply win trophies at any financial expense.

Whilst qualitative research has shown there is a consensus on the benefits, there is also general agreement on the drawbacks of the unique features of community ownership. It is noticeable that some of the benefits are later highlighted as disadvantages in practice and some responses often contradicted each other, which implies interviewees were often caught between the ideals and pragmatism of the model. However, importantly, all interviewees stated that these drawbacks were outweighed by the positives of having a broader, community based ownership model which involved democratic processes and were focused on delivering benefits to the wider community rather than shareholders.

 

Andrew is the Head of Supporters Direct Scotland, having previously served as Project Manager. He is also the co-founder of the Africa on the Ball charity.