Fan Ownership: The Successes of the Trust Movement
The supporter ownership bandwagon is rolling ever quicker. Whether it’s Manchester United fans looking to buy out the Glazers, or Pompey fans making provisions for a new club, forms of fan control are edging ever closer. In the second part of our exploration of Trusts and football, we look at those clubs currently flying the flag for the Trust movement. The next post will look at those who’ve not quite been the resounding success the Trust movement was hoping for.
Go to an Exeter City away game and chances are you’ll hear Grecians fans singing “We own our football club” to the home support. It’s a powerful reminder of just how close the bond is between supporters and their club as City fans revel in their status as one of the few supporter-owned clubs in the country, and one of the most successful.
The Devon club may have become an unintentional poster child for the Supporters Trust movement but, as their vice-chairman Julian Tagg noted yesterday, there is no blueprint for a fan-run club at their current level of League One, far less the Premier League. It is an issue The Red Knights will no doubt be picking over, along with any other top-flight or Championship Supporters’ Trust that harbours ambitions of owning their own club.
Exeter City: the poster child
Whenever the example of Supporters’ Trusts come up, Exeter City are the obvious place to start. The Devon side may only occasionally trouble the back pages of national newspapers, but they’re also the leading example of a successful Trust.
Created, initially, to find funds to buy striker Gary Alexander, the Trust, like so many others, came into its own when the club was at its lowest ebb. In the spring of 2003, Exeter had been relegated out of the Football League and were staring oblivion in the face. Their chair and vice-chair, John Russell and Mike Lewis, had just been arrested for fraud (Russell was later convicted and jailed for this), the debts were mounting and saviours were in short supply.
The Trust were invited to take over the day-to-day running of the club and embarked on a period of intensive fire-fighting. They managed to negotiate the purchase of shares from former chair Ivor Doble at the 11th hour meaning the fans were truly in charge of the club. Had this not been completed, the Trust had a press release drawn up saying they could no longer continue to fund City and the 100-year-old club would have, most likely, been liquidated.
But while Trust members were happy to raise large sums of money, which saved the club in the long-term, much of their current success can be put down to luck or, more specifically, the moment Tony Cascarino drew them away to Manchester United in the 3rd round of the FA Cup. The money from this, and the replay, generated around £1m, enough to pay off a large chunk of Exeter’s debts.
From there the club has gone from strength to strength. After losing the Conference playoff final in 2007, they went one better the following year before securing back-to-back promotions as runners up in League Two. Heady times indeed.
Off the pitch, the Trust was slowly evolving as well, from fire-fighters into a more professional outfit. Exeter fans with experience in the city were brought onto the board, while Denise Watts, a single mum, took over as chair of first the Trust, then the club. This was the ethos of the Trust in a nutshell – any fan could join, stand for election and find themselves shaping Exeter’s future.
But promotion to a higher level has brought a new set of challenges. “At the moment we’re the second smaller club in the division in terms of the number of people our ground can take,” says Julian Tagg, the club’s vice-chair and one of the original Trust members who pitched in at boardroom level in 2003.
“We look at the rugby club [Exeter Chiefs]. They’ve boosted attendences and, via that and their facilities, leisure dollars spent at the ground. This is something, with the current stadium, we can’t quite match. There’s a lot of work to be done now in how we structure the club and how we maintain that Trust ethos, and how we rebuild the stadium to bring in new finance to the club.”
The stadium issue is one of the most pressing concerns for Exeter. Their Old Grandstand is on its last legs and badly needs replacing, the uncovered away terrace needs work and the whole pitch needs moving and relaying before any of this work can be done. The Grecians are reasonably fortunate in that while they don’t own their ground, the local council leases, meaning development, while slow, is possible.
For the time being, though, the club’s attention is also taken up by Exeter’s relegation battle at the foot of League One and while Tagg is confident they can survive, he knows their success on the pitch is tied into major off the pitch activity.
“We can compete in this league,” he says, “and we may even get into the league above, all things being equal. My ambition is always took look at Crewe as an example – much of their success has been down to youth.
“If we can complete our stadium then we can sit down and think about how we go from there, but we can’t do this overnight. Everybody wants instant success – that’s what causes their downfall – and as long as people can be patient, we can get there but we have to do it gradually.
“We sold four young players and it took ten years of work on them before it came to fruition. That’s not short-term at all. If we start with them at eight, nine, ten, who knows what could happen.”
It’s something that has been borne out by the club’s most recent accounts, when they announced losses of £227,000 between June 2008 and May 2009, although taking into account depreciation, the trading deficit stands at £67,092. This includes the sale of youngster George Friend to Wolves for around £350,000. Since then two more youth graduates have departed – Dean Moxey for Derby and Danny Seaborne to Southampton, both for six-figure sums.
Strangely, the club would have been better, financially speaking, to avoid promotion. The Grecians earned just £10,000 from finishing second in League Two. With bonus payments this meant Exeter would have been better off reaching the playoffs or missing out on promotion all together.
The clubs debts stand at £1.8m, although much of this is soft loans from the Supporters’ Trust. Even so, this shows what a hard job a sensible, relatively run supporter-owned club has in the lower leagues. Not that Tagg would ever consider selling up.
“An offer to buy the club would be something the members would have to vote on, and you never say never, but to me the only reason we’d do this is is we’ve failed and I’ve not got involved to preside over that. We’ll do the best we possibly can.
“If someone were to come along and they were genuinely philanthropic and loved the club then we may consider this, but I’d prefer that we stayed in the hands of the supporters.”
Brentford: The hybrid club
When Exeter gained promotion last season, the club that pipped them to first place was another fan-owned club, Brentford. Supporter power, for one season at least, ruled at the top of League Two. But while Exeter have stuck resolutely to the Trust model, Brentford have gone down the philanthropic route and found a rich fan willing to sit alongside the Trust, Bees United, at boardroom level.
Hit hard by the recession and the increased costs of League One, as well as plans for a desperately-needed new stadium, and at their borrowing limit, Bees United realised they needed a significant cash injection to compete and struck a deal with wealthy supporter Matthew Benham, who had already lent £4m to the club to help manage their debt.
Under the terms of the new deal, Benham will put in a million pounds a year for the next five years, while Bees United remain the majority shareholder, giving Brentford a form of financial stability. At the end of this period, Bees United can either buy Benham out and repay his loans, or Benham can exercise an option to become a majority shareholder, with Bees United becoming a minority stakeholder.
However, the Trust would also retain a Golden Share to ensure that Griffin Park could not be sold without their permission and the proposed new stadium at Lionel Road is not affected. Crucially, this deal had to be approved by the membership and 70% of Bees United members voted on the issue, with 99% agreeing to the move.
For Brian Burgess, former vice-chairman of the club and an active member of the Trust, the deal is a sensible one, and something he can see being replicated at other clubs. “I think that’s quite a good model for other Trusts because we have to live in the real world,” he says.
“The economics of football as such mean it’s very difficult to compete under the current regime with the big clubs and cubs who’ve got wealthy supporters putting in loads of money. So you need to do this sort of deal and at least we’ve got some safeguards in with the golden share in particular.”
Without it, Burgess doesn’t believe Brentford would have been able to compete. “The standard’s higher, we’re playing against bigger clubs like Leeds, Norwich, Southampton and Charlton and you need more money. Bees United couldn’t raise the kind of money we needed to compete. If we had serious aspirations to get promoted from this league into the Championship you need the Matthew Benham deal, we needed that extra million pounds a year.
“That doesn’t guarantee that we will get promoted, but the plan is to work towards getting promoted in the next four years and have a new stadium in the fifth year so we can progress from there. Without that million pounds a year, I think we’d struggle in League One and, of course, the danger is that we’d have got relegated again. In League Two because you’ve got smaller teams with lower away support, you just don’t get the revenue. You tend to get into a downward spiral. Obviously we want to get into a virtuous upward spiral.”
Bees United was formed in 2001 in response to worries over the future of Griffin Park and in 2006 the Trust brought the club from then-chairman Ron Noades for two pounds, although a condition of this was they relieved Noades’ company of the £4.5m owed in loans to the banks.
Former BBC director general Greg Dyke, a Brentford and Manchester United fan, was installed as chairman with Burgess as his deputy and although the club was relegated from League One in 2007, they managed to bounce back under young manager Andy Scott. In the meantime, Burgess and Bees United were, like Julian Tagg at Exeter, turning their attentions to their stadium, and rapidly concluded that it needed replacing.
“We knew we’d never really be sustainable as a business here at Griffin Park,” says Burgess. “We budget to lose around half a million pounds a year in order to give us even a reasonable playing budget, let alone one that can compete in League One. There’s no commercial facilities here, nothing. It’s very difficult for us to earn any kind of serious revenue because there are no corporate boxes, no hospitality suites.
“During the week we don’t have conferencing and banqueting facilities that would enable us to make commercial revenue. It’s always been the plan to build a new stadium. I’ve been working on it all the way through and at the end of 2007 we did a deal with Barratts to buy this site at Lionel Road and it was obvious then it would become a full-time job.”
The recession and the housing market crash knocked plans for the new stadium back from the original date of 2012, but it still remains on course as Brentford look to prove that Trusts and wealthy investors can co-exist comfortably at boardroom level.
The new clubs
Further down the chain comes two very unique success stories: AFC Wimbledon and FC United of Manchester. Both these clubs were formed out of protest – the Dons from the football league’s decision to relocate the original Wimbledon to Milton Keynes, while FCUM was a reaction to the Glazers takeover of Manchester United and a desire for United supporters to get back to their roots and ensure that ordinary supporters weren’t priced out of watching their team.
Both have enjoyed impressive rises through the non-league pyramid. Since their formation in 2002, AFC Wimbledon have risen from the Combined Counties League to the Blue Square Premier, including back-to-back promotions in recent seasons, and are currently still in the hunt for a play-off spot. Similarly, FC United won promotion three times in their first three seasons before stalling at the Unibond Premier.
It is, perhaps, no coincidence that both Wimbledon and FC United have enjoyed success at lower league levels. They both started with a blank slate – there was no burden of history or, indeed, historic debts and both had a ready made community and Trust ethos in place (the Dons Trust structure and values can be read here). What’s more, the crowds they were attracting gave them a significant financial advantage when competing in the lower leagues, where income is often scarce.
In many respects, both these clubs can be seen as being the purest and most successful wholly Trust-owned teams (even Exeter City have other minor non-fan shareholders) but as both teams climb the leagues and compete at a higher level, new problems arise. Just as the blank canvas benefitted these clubs at the start, so it also means each promotion is a further step into the unknown.
Chief among these issues is the now-common theme of the stadium. AFC Wimbledon currently groundshare with Kingstonian, although the Dons actually own Kingsmeadow Stadium, while FC United are tenants at Bury’s Gigg Lane. But as the Dons rise up the league, the looming question is whether they continue at Kingsmeadow or look to build a new stadium in the borough of Merton, their spiritual home.
This ties in with the debate about how best for the club to progress as a whole. Gone are they days when the old Wimbledon could rise from non-league to the top flight and win the FA Cup, but if AFC have aspirations to continue their climb up the football pyramid, there will be a level, as Exeter and Brentford have found, where Trust money can only fund so far. For the time being, though, Dons fans are enjoying their status in the Conference.
FC United are a slightly different case as they have no ‘spiritual’ home (unless you count Old Trafford) but are well aware that their own stadium is key to future progression. Currently rental on Gigg Lane is around £5,000 per match. The Rebels have recently submitted plans for a 4,000 capacity stadium to a supportive Manchester City Council (unlike Merton Borough Council, who are lukewarm on a Dons return) and will be looking to the end of their lease at Bury in 2011 as a rough timescale. A ground of their own will give them greater opportunity for matchday and non-matchday revenue.
What FCUM and AFC Wimbledon both have, though, that many clubs can’t buy is a stable well-run board and a genuine sense of community and belonging to the club. And in non-league, where many sides are an unexpected bill away from crisis, that counts for a lot.
The phoenix from the flames
As Dave Lister once said to the hologram Rimmer in Red Dwarf: “Cheer up, death isn’t what it used to be,” and that could equally apply to football clubs teetering on the brink today. If your club went out of business years ago, that was the end – or if a new club was set up with the same name, it would take decades to get back to where you once were as Aldershot and Accrington Stanley can testify.
But if a club collapses financially today, there is light at the end of the tunnel and often the Supporters’ Trust is waiting in the wings to reform the club and put it on a more even keel, giving fans the opportunity to run their club as opposed to an owner with big promises but smaller pockets.
Dave Boyle, CEO of Supporters’ Direct, is one of those who urges fans not to despair if it looks as if their club is going to the wall. “The idea that the worse thing that can happen to a club is that it be liquidated isn’t as strong as it was,” he says.
“Fans would be told of this horrible prospect of the club disappearing and then accept whatever sharp practice, ground sale, asset strip was put forward as the least worst option. Even if that didn’t happen, they’d fundraise like crazy trying to keep the club afloat when their money and energy were never going to do the job.
“But thanks to those trusts and those clubs, we know in fact what people always knew in their heart of hearts – that football in a given community isn’t about the limited company formed to play it in an organised football league. If that company were to be liquidated, football would survive in the community. And, thanks to the success enjoyed by those clubs and the enjoyment their fans have in owning their own team, we see a lot of people being very sanguine indeed about keeping a busted flush of a small town team alive.”
Perhaps the leading example of this is AFC Telford, who were formed out of the ashes of Conference side Telford United. The Bucks were liquidated in 2004 when the chairman and owner, Andrew Shaw, got into business difficulties and had to put his entire empire into administration. But no sooner had United ceased to exist, the Trust was waiting in the wings to create the phoenix club.
Having secured use of Telford United’s New Bucks Head ground, the club was placed in the Northern League Division One. Within three years they were playing in the Conference North, with crowds averaging around 2,000. Far from killing the support for football in the town, Telford United’s demise actually re-energised support. The town rallied round and created a community club that was far more engaged with its supporters. In both potential and execution, AFC Telford are the best possible advert for a supporter-owned phoenix club.
Scarborough Athletic are another example of the supporters rallying to keep professional football in the town after the original club, Scarborough FC went bust in 2007 with debts of £2.5m. Again, a new club rose from the ashes under the management of the Supporters’ Trust, although the Seadogs have fell further than many reformed teams and, after one promotion, currently play in the Northern Counties East Football League Premier Division, groundsharing with neighbours Bridlington.
Tomorrow, we will look at those who’ve not quite been the same kind of resounding successes the Trust movement was hoping for.