Football Governance

Written evidence submitted by AFC Telford United (FG 51)

Written Submission on behalf of AFC Telford United by Lee Carter, Chairman AFC Telford United with supporting quotes from Michael Frater CBE, Chief Executive of Telford and Wrekin Council 2000 - 2006 in relation to Item 4 of the Inquiry agenda: What are the pros and cons of the Supporter Trust share-holding model?

Memorandum

Introduction

Lee Carter is Chairman of AFC Telford United who play in the Blue Square Conference North.

After the financial collapse of Telford United with debts of over £6.5million in 2004, Lee was part of the team that set up the Telford Supporters Trust and formed AFC Telford United. He became the clubs first Chairman in June 2004 and has overseen a period of unprecedented success on the field with the club winning two promotions in five years, narrowly missing out on a third promotion back to the Conference in May 2009.

Off the field, Lee has led a committed team of co-Directors and Staff who have worked tirelessly on building a thriving business that has consistently delivered on it’s responsibility to maintain Community owned values in all aspects of it’s operations, whilst at the same time making the business a commercial and operational success. He has also been instrumental in developing partnerships with key public, private and voluntary sector organisations in Telford which have helped deliver several innovative education and social inclusion projects including the construction of a £1million Learning Centre funded by the Football Foundation.

The clubs success on and off the field has attracted regional and national interest with Lee having made presentations to Local Government Association, Regional North and West Midlands Development Agencies, The Plunkett Foundation and CiPFA. He has also advised several individual Football Clubs, Supporters Trusts and Local Authorities on Supporter Ownership and how clubs and Local Authorities can work better together.

The club’s partnership has won LGA and Municipal Journal awards for their community work and have been commended in two early day motions in the House of Commons.

Lee was made Honorary Freeman of the Borough of Telford and Wrekin and named BBC Midlands Sports Personality ‘Unsung Hero’ in 2005.

Summary:

- Background – the formation of a new Supporters Trust run and Community owned club after the financial collapse of Telford United F.C

- Working in partnership for the benefit of the communit.

- The Local Authority perspective: The role of the authority prior to financial collapse; How the Authority dealt with the opportunity presented by the financial collapse of Telford United FC; Reflections on the period since 2004.

- Community Ownership working in practice – On the field Success and the future

- Conclusion

Background – the formation of a new Supporters Trust run and Community owned club after the financial collapse of Telford United F.C:

1.The name of Telford United has been synonymous with non-league football for many years. "The Lilywhites" reached the FA Trophy Final at Wembley five times between 1970 and 1989, winning the competition on three occasions, whilst the club also hit the headlines during the 1980s for a string of FA Cup giant-killing victories against the likes of Bradford City and Preston North End. The 1990s, however, proved more barren until businessman Andy Shaw bought control of the club. Shaw redeveloped the club’s Bucks Head ground to Football League standards and invested significant money on players in an attempt to fulfil his promise that Telford United would achieve Football League within five years. In 2004 Shaw’s business empire collapsed and all financial support for the club disappeared.

2. At that time TUISA (Telford United Independent Supporters Association) became the focus of attention. Over the following weeks, a number of people offered their services to the TUISA Business Committee which included people skilled in areas such as Finance, IT and Marketing. As the fantastic fund-raising efforts of the fans continued, the supporters went on to raise £64,000 in just four weeks. It was clear that support for Telford United was as passionate as ever and that, if organised properly, the fans could have a significant voice in the running of the club.

3. The TUISA Business Committee then came into contact with Supporters Direct, the umbrella organisation for Supporters’ Trusts nationwide. The original motive for forming a Supporters’ Trust was that it offered a legally recognised and fully democratic structure that would allow the community to have a say on how the money that the supporters had raised should be spent. The longer term benefits of becoming a Trust were also immediately apparent and so the Trust was formed and registered with the Financial Services Authority, with the TUISA Business Committee forming the interim Trust board. In an incredibly short space of time - a record for the registration of an Industrial and Provident Society (IPS) - the entire constitution of the Trust was decided and the final document signed and processed. However, despite this – and the assistance of several other Trusts – it soon became clear that the existing financial commitments of the club could not be met without a wealthy backer. Before long the inevitable day arrived when the Board of Directors announced the club’s liquidation, bringing to an end a proud history dating back more than 130 years.

4. Following this liquidation the Trust formed a new limited company/football club - AFC Telford United - within 24 hours. There was no manager, no team and the assets and ground lease were in the hands of the liquidator. Time was also running out ahead of the start of the 2004/5 season. A significant amount of work was done by the Trust to put a management team in place whilst considerable effort was made to establish community links, re-establish dialogue with sponsors and to build a financial base. In the background, there was also constant dialogue with the bankers and liquidator regarding the assets and stadium lease. A good relationship was established with the bank and discussions became more and more constructive.

5 . In the end, thanks to the hard work of everybody involved, the final negotiations over the ground lease and assets were concluded just in time and AFC Telford United ran out for its first competitive game against North Ferriby United on 21st August 2004. Whilst the old club could rarely attract attendances above 1,000, AFC Telford United have regularly averaged 2,000 fans for home matches whilst more women, children and families have come into the stadium. Two promotions later, the club now finds itself in Blue Square Bet North – just one level below that from which Telford United fell and with a much more stable future. As it stands now the structure of the Governance model in operation at AFC Telford United is as follows:

Telford United Supporters Trust – 900 members with an annually elected board of 15. The Trust owns 100% of the issued share capital in AFC Telford United Limited. Directors of the Limited Company are appointed/removed by the Trust and are responsible for the day to day operation of the limited company as well as developing and implementing short, medium and long term strategy.

Working in partnership for the benefit of the community:

6.AFC Telford United’s on going success since formation in 2004 has been the result of the club learning from its predecessor’s failings; by understanding the benefits of partnership, capitalising on the ‘sense of ownership’ engendered through a supporters-owned model, and by respecting and utilising tradition whilst also interacting with and understanding the wider community.

7. The basis for club’s success has been the importance of working in partnership to achieve common goals and, to this end, the Partnership have worked on the following common objectives:

· To work in partnership with the public, private and community sectors;

· To improve the area through physical, economic and social regeneration in a sustainable way;

· To promote the Town through football and sport and put Telford on the map with the development of this new inclusive model;

· To tackle disadvantage and social exclusion through learning via a range of new facilities and initiatives including health promotion;

· To promote local talent and excellence in football and sport with children and young people;

· To develop a model that installs ‘community ownership’, civic pride and that delivers community renewal.

8. However, the partnership was only possible thanks to the support of Telford and Wrekin Council which understood the benefits to the Borough of establishing a symbiotic relationship with the football club and other partners.

9. That foresight from Council leadership means that, nearly seven years since the Partnership was conceived, all stakeholders are now reaping a plethora of benefits. For the Council the Partnership has driven improvements in a variety of areas including education, health, social inclusion and economic regeneration whilst it has also engendered lower levels of crime and deprivation as vulnerable and disaffected young people have had their aspirations raised through the power of football. Over 2,500 local children play at the New Bucks Head each year, over 4,000 attend various education and inclusion programmes at the Stadium whilst many local community groups benefit from community facilities as well as health and education programmes. Meanwhile the football club has gone from strength-to-strength having been able to cultivate additional support and community involvement through its Partnership work.

10. These benefits have been achieved through a series of schemes which have reached out to the local community. For example:

· Football Foundation funding was secured to finance a Learning Centre facility as well as a state-of-the-art Sports Dome located at the nearby Telford College of Arts and Technology (TCAT);

· The Telford Football Excellence Centre was formed

· Numerous joint initiatives were organised which ensured interaction and engagement from local schools, Sunday League football clubs and other community ventures;

· The ‘Telford and Wrekin Challenge’ has enabled 8,000 children per year to engage in modules including numeracy, literacy, enterprise and health;

· The ‘Playing For Success’ project has provided after-school provision including mentoring by club officials;

· The ‘Football Inclusion Project’ comprises a session in the Learning Centre followed by a visit to the Dome and has resulted in improved school attendance and consequently financial savings for the Authority;

· Several other schemes have engaged local youngsters.

11.The club’s lease on the New Bucks Head was recently extended from 20 years to 150 years at a peppercorn rent. This new lease, however, epitomises the mutual benefits of the relationship. It includes clauses requiring the club to deliver a wide-ranging community programme and which also preserve the right of the community to enjoy the facilities at the stadium. The club and council have also secured funding for a new football facility at the stadium and both parties are keen to establish a community-use agreement for this facility.

12.Looking ahead, the club and council are currently investigating the viability of developing a Community Sports Foundation which would bring many of the existing education and community programmes under one organisation. This body would also play a role in organising some wider sports development functions and sports facilities that are currently run by the Local Authority.

Saving Telford United – The Local Authority Perspective by Michael Frater CBE, Chief Executive, Telford and Wrekin Council, 2000-2006

13.Telford United has played an incredibly important part in the life of the town of Telford in different ways for many years. The relationship between the local authorities and Telford United has changed and matured over the last 40 to 50 years as Telford, a 1960’s New Town, has changed and matured.

In the 1970’s and 1980’s Telford Development Corporation (TDC), a government agency established to build the town invested heavily in the club. TDC saw the club as an important element in the social and community development of the new town. They also saw the club as an important part of the commercial marketing or ‘selling’ of the town to inward investors.

The Evolving Role of the Local Authority:

14.With the winding up of TDC in 1990’s the approach of the local authority was to work with the new owner, Andy Shaw, to create the conditions for Telford to have a football league club. This was to be achieved by using limited council resources as ‘sprats to catch mackeral’ by attracting external resources from the New Towns Commission (the Residuary Body subsequently incorporated into English Partnerships) and the European Commission in particular. This was in order to regenerate the area including the old Bucks Head ground to provide a Council owned, Football League standard stadium on a 999 year lease to the club.

15.When I joined the Council in 2000 I was keen to continue with the regeneration initiative but took a broader view of regeneration than simply modernising or ‘prettying up’ run down physical infrastructure. I wanted to broaden our approach to drive social, economic and cultural regeneration in the area surrounding the new stadium in particular. This was where the majority of both the Afro-Caribbean and Asian BME communities live as well as some very deprived white communities. It 16.was an area where inter racial tensions were frequently manifested along with a number of other social tensions associated with long standing social and economic deprivation.

17.The Council was keen to pursue a range of initiatives recognising the power of sport to inspire and engage young people in particular. However, it felt like trying to ‘push water uphill’ because Andy Shaw, the owner, was single minded and driven by his single ambition of achieving promotion to the football league. It was clear from my conversations with him that anything else was a distraction. He didn’t oppose what we wanted to achieve but he was not willing to provide active support either.

Local Authority perspective-The opportunity presented by Telford United going Bust:

18.The news that the club was ‘bust’ was a huge shock to the town. I took the view that a crisis is an opportunity in disguise. Barack Obama has since talked of ‘not wasting a good crisis’. We were determined not to waste the opportunity that this crisis presented. I put my top regeneration officer on the project to provide dedicated project management support, co-ordination and day to day leadership, put one of my top lawyers on the case to sort the governance and legalities and my Finance Director to negotiate with the liquidator and the clubs bank.

19.My approach was that we would not put public money into the football club (there were too many examples where this had gone badly wrong) but if we could achieve a club that would help the Council and it’s partners achieve a range of social, economic, educational, health, crime reduction and other outcomes then we would be happy to ‘wrap public money around the club’ in terms of funding for allied and joint projects.

20.Using the Council’s ‘good offices’ and well deserved reputation for successful partnership working we convened a series of meetings with a range of people who could potentially help save the club. This ranged from the Supporters Club who were doing amazing fundraising to keep the club afloat till the end of the season to the town’s two MP’s, David Wright and Peter Bradley. David Wright made the connection with Supporters Direct whilst Peter Bradley searched for a wealthy benefactor/investor and also made connections with the Football Foundation. Peter Bradley introduced the club to Capgemini who had recently moved to Telford. They have been the clubs main sponsor for over 6 years and have a rolling sponsorship dela in place that will see them remain as the clubs major sponsor whilst they have a presence in Telford. Their Chief Finance Officer in the UK, Ian Dosser, was appointed to the Board of Directors of the Football Club in 2004.

21.In addition a range of other partners came together to commit resources, provide support and to think about the sort of club we would like to see arise from the ashes. These included the PCT, the Technical College, Headteachers, various community groups, the Police and many others. We were very clear we still wanted a club that could put the town on the map by achieving Football League status. But importantly we wanted a ‘Community Club’ to act as a hub for a wide range of community initiatives not just in the surrounding and diverse communities but also across the town as a whole. We believed there could be a real synergy by harnessing the power of sport to inspire and engage young people in particular.

22.With literally just hours to spare we were able to buy the stadium from the bank, give the club an initial 20 year lease (subsequently extended to 150 years), a rent-free first season and a safety certificate so that the new AFC Telford could compete in the new season about to start. At the start of the season I stood in the centre of the pitch with the Mayor whilst the Council was applauded and cheered by over 2500 fans. Believe me that doesn’t happen very often!! But it was more than just the Council, much more. It was a range of partners and the community coming together not just to save their club but to create a new community club.

Local Authority perspective-Reflections six years on. Did it work, was it worth it?:

23.In terms of the reasons that the Council got heavily involved, social and community wellbeing, we had high ambitions and aspirations and these have been massively exceeded. I quickly lost count of the number of fantastic community based projects (not all of them sport based) that started within weeks and months and continued to grow with buy in and commitment from the community and partners. The role of the club in the community has continued to grow and develop despite the effects of the recession in a town that is always disproportionately affected by economic hard times.

24.On the face of it this might look like a commercially risky venture with the club’s commercial viability directly related and determined by success on the pitch. Everyone in the club knows that and it provides an ‘edge’ that wouldn’t be there with a single wealthy owner. Because the club is owned by it’s fans there is also a commitment to continue to turn up and support the club even when things aren’t going well on the pitch.

25.In my dealings with the club before and after going bust I have dealt with two very different ownership models, Single wealthy owner and Industrial and Provident Society supporter owned.

The single wealthy owner was not interested in the idea of a community based club and then went bust. The Industrial and Provident Society model owned by supporters has embraced the community model with energy and enthusiasm and has since 2004 gone from strength to strength in footballing and financial terms as well as providing enormous community benefit.

26.Based on my experience it’s a complete ‘no-brainer’

On the Pitch Success:

27.The success of AFC Telford United in its work with the community has also been mirrored by the club’s success on the football field. Two promotions and another ultimately unsuccessful play-off final have been achieved through sensible budgeting, regular financial monitoring and an ability to maximise sources of income; for example by cultivating support from within the community through Partnership work.

28.Notably, the financial problems of its predecessor mean that AFC Telford United still cannot gain an overdraft or credit facility and so the club’s on-field achievements have been made only by spending its own income. Whilst some have argued that football clubs cannot be run by supporters, AFC Telford United has just registered its seventh consecutive year of profit; a feat achieved by very careful financial monitoring, utilising the non-contract registration system and by rewarding players for results rather than reputation. In addition, there are other key aspects that underpin the continued financial sustainability of the club:

· Directors have no power to issue share capital in the Limited Company because this power has been withdrawn. The power now lies with the Board of Trustees;

· Through the constitution of the Limited Company, Directors are prevented from authorising any borrowing without the express permission of the Board of Trustees;

· As members of the Football Conference, the club are compelled to comply with the Financial Reporting Initiative. This requires the completion of a quarterly financial report which is submitted to the management accountant employed by the Competition. This report requires information on amounts outstanding to HMRC and other creditors as well as details of any repayment arrangements in place with HMRC and expenditure on salaries. As part of this initiative the club has to sign a tri-party information-share agreement between the Football Conference, the club and HMRC.

Conclusion:

29.AFC Telford United’s success story shows what can be achieved through the power of supporter ownership and the club’s achievements have not gone unnoticed. The club has won the LGC Community Involvement award, been shortlisted for the Enterprising Solutions ‘New Social Enterprise’ Awards and also provided the main case study at the NWRDA and LGA conferences on the ‘Power of Football.’ The club has also regularly been asked to offer advice to other football clubs and Local Authorities.

30.It is testament to its wider benefits that the AFCTU Partnership has now endured the tenure of three Council chief executives as well as two separate political administrations.

31.Along with council support, the club attributes its success to the following key principles which underpin the supporters-owned model:

· Taking a long-term view whilst providing consistent delivery to the highest of standards;

· Strong leadership and hard work from all the key partners;

· Learning from other organisations and putting this learning into practice;

· Being prepared to work in partnership; understanding the ‘win-win’ and not adopting the ‘all or nothing approach’;

· Building resilience to downturns in performance or wider influences through increased loyalty.

· Displaying good communication;

In conclusion, the story of AFC Telford United shows the benefits of utilising the power of ‘Fan Owned Football’ to build foundations for the future – both on and off the pitch.

January 2011