Fan Ownership: The Fallen of the Trust Movement

Yesterday we looked at the current successes in the Trust movement, but that doesn’t mean that fan ownership always works perfectly. Today, in the latest in our series in fan ownership, we take a brief look at those clubs who’ve had the supporters take over, only for events to overtake them.

The current impression so far is that Trusts or fan ownership largely works. If that were the case, perhaps Exeter wouldn’t be an isolated example. As Brian Burgess of Brentford has said, a lot depends on luck and the people you get involved with the Trust. Without decent people on board, the best-meaning business is liable to fail.

Trust-run clubs are also subject to the same financial constraints as other clubs, often more so given how reliant they are on membership. To contrast, this season Charlton Athletic’s directors have put in £7m to the club to fund their push for promotion. Exeter City’s Trust has put in £1m over five years. And with football very much a short-term immediate results driven business, Trust-run clubs will inevitably come under the same pressures to deliver.

Perhaps one of the saddest examples of this in recent years is at Notts County. The focus of recent months has been, rightly, on Munto, the consortium that took over the club and turned out to be based on thin air and British businessmen rather than rich Arabs. But what can easily be forgotten is that Munto was handed the keys to County by the previous owners, the Supporters’ Trust.

Notts County logo

We’ve covered the financial disasters of County’s history before on Pitch Invasion, but it’s worth quickly summarising how the league’s oldest club could go from fan ownership to a smoke and mirrors consortium.

The Notts County Trust played a key part in rallying the fans and fundraising in 2003 following Albert Scardino’s disastrous reign before unassuming millionaire supporter Hadyn Green stepped in to save the club and take a 49% stake. In 2007, Green donated his shares to the Trust on the agreement that he would be paid £75,000 if the shares were sold on. Four months later, he died.

But the Magpies’ Supporters’ Trust could never really galvanise the club in the way Exeter or Brentford did. County languished at the wrong end of the League Two table, never quite getting a grip on the finances or ownership. Constant infighting and bitter disputes wore the board down. In April last year Trust chairman Jon Armstrong-Holmes survived a vote of no confidence from the members. It was a club and Trust trapped in inertia.

The Trust, or certainly Armstrong-Holmes, leapt on the offer from Munto Finance two months later and he embarked on a drive to convince Trust members of the value in handing the Trust’s 60% shareholding to Munto, describing their guarantees as “cast iron”, adding that Munto were among the most honourable people he had ever met. Members overwhelmingly voted for the Munto takeover and to write off the Trust’s loans to the club. We all know what happened next.

Perhaps even more depressing, though, is Stockport County, a side that could genuinely cease to exist at the end of this season. When The Hatters won promotion to League One two years ago, they were held up as yet further proof that Trust ownership was producing success. Less than twelve months later they were in administration with debts of £300,000. Since then, they have been operating under a transfer embargo.

Stockport County

The Stockport County Trust purchased the club for just £1 in 2005, but had one huge problem. Brian Kennedy, the millionaire businessman who owned both County and the Sale Sharks rugby team, retained ownership of Edgeley Park, meaning the Hatters saw huge swathes of potential matchday income denied to them. Limited incoming finances and a mounting unpaid tax bill, along with overspending in the promotion season, let to an inevitably sad conclusion.

County face being thrown out of the league at the end of the season if they are still in administration. At the current time of writing, former Manchester City player Jim Melrose has, apparently, finally had his consortium’s bid for the club accepted by the administrators but, after all that’s gone on at the club over previous seasons, Hatters fans know not to get their hopes up.

Cherry picking

Finally, a quick mention for Bournemouth, who, for a short-time were a community-owned club after the fans took over to rescue the Cherries in 2007. Here, perhaps, is a classic example of a club that badly needed a blank slate for such a takeover to be successful.

Bournemouth have been a perennial crisis club for over 15 years now and in 2007 the Cherries went into administration with debts of £4m. A supporter-backed takeover saved the club at the last minute after some serious bucket-rattling, but while the club was in the hands of the community, so was the debt. And it was that legacy that weighed down on the club.

AFC Bournemouth

Despite bouncing back at the first attempt in 2003 after relegation from League One the year before, the financial problems were growing and that year Bournemouth had to call in the PFA to help pay players wages. With debts spiraling and the stadium sold and leased back, the clubs members voted in 2007 to change the constitution that prevented any one person owning more than 10% of the club, as Jeff Mostyn and Steve Sly took control at Dean Court.

What followed was administration in February 2008, with the club’s debts at around £5.8m. Bournemouth were hit with a 10 point deduction, followed by a further 17 points the season after. They narrowly avoided relegation to the Conference and this season have been operating under a seemingly endless transfer embargo.

Meanwhile, ownership was passed from pillar to post as a range of bids for the club collapsed at the last minute before the Sport-6 consortium took over, only for events to unwind even quicker as the debts mounted up. Munto Finance were rumoured to be sniffing around at one point.

To detail the past eighteen months at Bournemouth is a blog post in itself but, despite resigning during the Sport-6 debacle, Mostyn is still involved with the club as part of a fresh consortium, while ex-Dorchester Town chairman Eddie Mitchell is now the Cherries new chair.

Mitchell claims to have reduced the debt from £1.8m to £800,000 since taking charge but financial details are thin on the ground. Meanwhile, the club faces yet another winding up order. Some jobs, it seems, are beyond both supporter owners or would-be white knights.

The fan who took over from the Trust

But not every former Trust-owned club is in dire straights, even if the move away from Trust ownership has been controversial. York City were saved by their Trust in 2003 after former chairman John Batchelor had comprehensively asset-stripped the Minstermen. Many members battled heroically to keep their club alive as a team that had been through so much finally came home to its fans.

York City FC

But since 2006, York City have been under the ownership of JM Packing, who own 75% of the shares, with the Trust holding the remaining 25%. The company is the family business of Jason McGill and his sister Sophie, dyed in the wool York supporters and active members of the Trust’s rescue effort back in 2003.

McGill became chairman but three years later argued that the Trust could no longer take the club forward as well as a professionally backed business and made an offer to buy a majority stake in York. Certainly the club was struggling at the time, with relegation to the Conference North a possibility. Under the terms of the deal, JM Packing would put in £1m a year for five years as loans.

When the club sells their ground, Bootham Crescent, as it is contractually bound to do within nine years under the terms of a £2 million loan from the Football Foundatio,n repayment of the £1 million principal to JM Packaging will be waived. But they will still receive the interest on their loan.

Supporters were divided at the time, but plans for the stadium remain on track and York are looking like genuine contenders for promotion back to the Football League this season. Should York get promotion, a new stadium and secure future, then the JM Packaging takeover may seem like an astute piece of business, while the Trust still retain a piece of ownership.

The odd experiment

For all the achievements of Trust run clubs, as well as their respective failures, the club that’s probably generated most column inches with regard to fan ownership is Ebbsfleet United, which is definitely not a Trust-run club, but could easily edge towards that model if the will was there. And despite the blaze of publicity that greeted when they brought Fleet, it’s debatable whether you could describe Ebbsfleet as fan owned currently.

The idea was a simple one: members would sign up to MyFC for £35 a year. The website would then buy a club, funded via the subscriptions, and members would vote on everything from the playing budget to the kit to transfers to picking the team. In theory, it was a footballing utopia; an antidote to the Premier League. In reality, it has been somewhat of a car crash.

Currently MyFC’s membership, after the latest round of renewals, stands at just over 4,000, down from a high of 32,000 in February 2008, and down from around 9,000 members this time last year. You don’t need a degree in maths to work out that this leaves the Fleet with a serious funding shortfall.

In reality, MyFC’s proposition was always going to be a risky venture for Fleet, albeit not for the owner, former journalist Will Brooks. Yes, the cash from the takeover was badly needed by a financially struggling club and, yes, Ebbsfleet won the FA Trophy soon after the takeover, but those are rare high points.

The problem with MyFC is taking a bunch of fans who have no loyalty to the club, promising them too much (picking the team and other innovations), failing to deliver but still budgeting for a decent number of renewals (and this budget can only be done on a yearly basis, making long-term planning difficult). As the membership has dwindled so have the Fleet’s fortunes on and off the pitch.

Tellingly, the current number of MyFC subscriptions is higher than many Trust memberships, including Exeter. But Exeter are in a much more stable financial position, annual losses notwithstanding, than Fleet, which suggests a successful Trust-run club is more than just letting fans run the club — it goes deeper than that. Trust members do not pick the team nor sign the players, or any other gimmick, but they do have a huge say in the way their club is run, democratically. And there lies the difference.

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