Football Governance - Culture, Media and Sport Committee Contents

6  Supporter involvement

The case for radical change

193.  The examples of bad ownership are sufficiently numerous to point to systemic failure. A case can be made that, rather than tighter regulation, a more fundamental ownership change is required. Dave Boyle, former Chief Executive of Supporters Direct, argued that:

the benefactor model is more ruinous than contributory to the health of the game. […] Benefactors are often quite good in the short-term. The medium-term record is very poor, and I think one of the biggest contributory factors to football's economic poor health is the very short time horizon.[273]

He proposed a supporter ownership model along the lines of the German majority ownership by sports club model, as a better alternative. English football culture and tradition is, however, very different from that in Germany, and given its survival for well over a century—albeit with growing challenges—we are not convinced that the case can be made for such revolutionary change. A less radical but possibly more fruitful approach might be to consider whether a supporter ownership model can thrive alongside the private company model and, if so, what the advantages might be. Within the English context, this has become associated with majority or minority ownership by a supporters trust, the model advocated by Supporters Direct.

The case for incremental change

194.  Evidence from supporters trusts, a number of which already owned their clubs, suggested a number of reasons why a supporter ownership model might prove advantageous. The first advantage stressed was the community benefit. Julian Tagg, Chief Executive at supporter-owned Exeter City, currently playing in League 1, observed that his motivation to become involved was "about providing something for the city".[274] Runcorn Supporters Trust, which owns its non-league side, explained how it produced a development plan for the local council "to ensure that our vision was for a community club at the heart of the local sporting community".[275] Brentford Supporters Trust, which again owns its league 1 side, acknowledged that many clubs, regardless of ownership, have community-based activities, but argued that the difference was that "where a trust is involved at board/shareholder level, community work is seen as 'must do' rather than 'nice to do'".[276] Michael Frater CBE, Chief Executive of Telford and Wrekin Council 2000-2006, contrasted the community approach of non-league Telford United's previous private owner with that of the current supporter trust owners:

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.[277]

195.   Closely linked to the community benefit was the argument that a supporter trust model offered more reassurance that the club would be able to provide such benefits in the future, given its commitment to protecting the club in the interests of future fans. Andy Green argued that, where supporters trusts have a share in the club, they act as a break on recklessly short term borrowing and are more likely to safeguard historic grounds for their communities.[278] Cardiff Supporters Trust pointed out that, even though it did not have a share in its club, it had pushed for an Annual General Meeting (not held for three years) and provided financial scrutiny in conjunction with small investors. Fisher Supporters Trust, which owns non-league South-East London side Fisher FC, contrasted the sustainable approach with the short termism of the previous owners.[279]

196.  A further related argument was that the supporter trust model brought in fans and contributed to a more dynamic environment. Brian Lee, Chairman of the Football Conference, observed that at Exeter "all the supporters having paid their entrance fee, go and clean the terraces".[280] In its evidence, FC United, a new club formed by disenchanted Manchester United fans, pointed to a real sense of energy, with 300 volunteers regularly assisting the two full time staff in keeping the club running.[281] Chester City Supporters Trust highlighted increased attendances under their new supporter trust-owned model, even though they were now playing three divisions lower than when they were a League club.

197.  Supporter trusts were also keen to highlight another practical benefit: their ability to attract more money into the club. York City Supporters Trust explained how it was able to raise enough money to acquire the club from administrators in March 2003 with a majority 85% share holding. Brentford Supporters Trust commented that it was able to assemble a £5 million funding package to re-finance the club's bank overdraft. Southend Supporters Trust, although not involved in the ownership of the club, provided £60,000 to release Southend from a League-imposed transfer embargo, and stepped in several more times to ensure suppliers were paid and to underwrite travel costs. At the time it submitted evidence, Southend Supporters Trust was still waiting for the Chairman to honour a promise to invite a supporters trust member onto the Board. Bradford City Supporters Trust commented that it took the initiative in raising £250,000 within a few weeks in the summer of 2004, during the club's second administration, "and this sum saved the club from extinction".[282]

198.  Mention of supporters trusts providing emergency funding highlights another key practical benefit of supporter trusts: the role they are already playing as owners of last resort, though this can be a double-edged sword, as it leaves supporters trusts more open to failure. Dave Boyle told the committee that supporter trusts at York City, Stockport County, Notts County and Chesterfield had all fulfilled this role. Lord Mawhinney observed that "York City was extremely important because the supporters trust in York City deserve an enormous amount of credit for saving that club from going out of business".[283]

199.  There was some debate in the evidence as to whether the supporters trust ownership model required a majority ownership stake for clubs to reap all of the aforementioned benefits. Supporters Direct identified 90 supporters trusts with a minority equity stake in their clubs and 64 with a seat on the club Board. It argued that:

The ability of this involvement to bring benefits to a club depends on its approach to good governance. Where the club has proper procedures in place, supporter-elected directors can play a very positive role as part of a balanced board considering club strategy.

Conversely, where the club's governance is poor, with dominant individuals making most decisions outside of formal processes, the ability of any minority interests to influence decisions is limited.[284]

Lincoln City Supporters Trust, which has a substantial minority stake in the club, argued that the introduction of supporters into the running of the club had "created a team ethic behind the scenes and not just on the pitch".[285] Swansea City Football Club is a particularly interesting example of minority supporter ownership because the club has just won promotion to the Premier League. Swansea City Supporters Trust owns 20% of the shares. In its submission, it summarised its contribution to the club as follows:

without the work of the Supporters Trust there may well have not been a football club at Swansea City […] Critically now following that crisis the supporters and the community have a voice in the way the club operates which adds to that feeling of togetherness and trust that seems to be sadly lacking from most other clubs where fans are purely seen as customers. We add a lot more than money to the club; be it professional skills, a unique understanding of our heritage and community, volunteer time, check and balance to the financial strategy, two way communication between the fans and the Board - the list goes on.[286]

200.   John Bowler, Chairman of Crewe Alexandra, was very positive about the benefits if Crewe's Supporters Trust were to take a minority share and a place on the Board. He noted though that it was proving hard to set up because "it is no mean task setting up an efficient supporters trust and there are a lot of bodies in the cemetery already where it has not worked".[287] In principle, though, he felt that smaller clubs would like to see the supporters trust have a share in the club as it would bolster its community involvement. FA Chairman David Bernstein commented that he thought that "on the whole minority holdings, where possible, are quite desirable".[288]

Problems with supporter ownership

201.  Other evidence, however, pointed to areas of weaknesses in the supporter trust ownership model. Lord Mawhinney, Greg Clarke and David Bernstein all highlighted the difficulties that could ensue when share-holding supporter trusts appointed a fan to sit on the Board. Lord Mawhinney suggested that the fan on the Board risked being torn between his fiduciary responsibilities and trust expectations that he would keep them informed of all that was going on.[289] Greg Clarke drew on his own experiences working with a fan on the Board at Leicester City:

He was a cracking director but he got into all sorts of trouble with the trust; not nasty but they would say, 'Well, who are we going to buy then in the transfer?' and he would say, 'Well, I can't tell you'. They would say 'What good are you doing if you can't tell us what is going on?[290]

David Bernstein made a different point, namely that for supporters trusts' own protection there were "some boards that they may better not be on" for what he termed "obvious corporate reasons".[291] This could be a reference both to financial risk and the possibility that a duplicitous owner might use a minority share-owning supporters trust to lend legitimacy to his actions.

202.  A second, linked, potential weakness identified was slow decision-making. Leeds United Chief Executive Shaun Harvey was clear that, "the best model is a small dynamic board that's able to make decisions quickly".[292] Julian Tagg, Chief Executive of a supporter-owned club, agreed that slow decision-making could be a handicap.[293] A third related point was the difficulty sometimes in identifying a properly representative trust with the legitimacy to enter into a partnership. David Gill, for example, made this point.[294]

203.  A fourth issue identified from the evidence was the challenge faced by supporter-owned clubs to compete financially with more conventionally-owned rivals. Brian Lee, Chairman of the Football Conference which has seen a number of supporter-owned clubs come up or down its ranks, observed that "The problem with supporters trusts is that they do not have the financial background. They have a lot of enthusiasm and a lot of passion, but unfortunately enthusiasm and passion don't pay the bills".[295] He observed that, in 2010, Chester City Supporters Trust was unable to save Chester City from folding because the finances involved were just too great. York City Supporters Trust acknowledged that it had found it necessary to sell the majority share holding of its club to a private individual to secure the long term funding of the club. Wimbledon Owners Supporters Trust, which will next season compete in League 2 for the first time, commented that the only disadvantage of the supporter-owned model was "the difficulty of competing with clubs where rich owners can make substantial sums of money available for players' wages".[296] Brentford Supporters Trust commented similarly about the competitive disadvantage of competing against clubs with "reckless sugar daddies".[297]

204.  Associated with the issue of finances, a further weakness identified was the failure of some trust-owned clubs to sustain their initial impetus. Hendon Football Club Supporters Trust accepted that:

a Trust owning a club is no silver bullet to all of the problems of other ownership models: Notts County, for example, suffered from problems with supporter pressure for investment ultimately leading to the Trust selling the club and the recent abortive Munto/Quadbak takeover.[298]

Stockport County was also cited as an example of a "failed" supporter-owned model.[299]

Mitigating circumstances

205.  Other evidence, however, argued that the problems identified above were by no means insurmountable. Malcolm Clarke, Chair of the Football Supporters Federation, was critical of "patronising" suggestions that fans could not be trusted with confidential information. He suggested, instead, that supporters trusts can often draw on a range of skills and experience. Dave Boyle further observed that: "The relationship that a lot of clubs seem to have with their fans to me is more redolent of perhaps an Edwardian marriage where the wife would be never told the salary of her husband because these matters were not for her".[300] Greg Clarke noted that, in his Leicester City example, the supporters trust appointed as its fan on the board, "one of the senior partners of one of the biggest law firms in Leicestershire".[301] Julian Tagg argued that Exeter City had managed to evolve a model that allowed for slower decision-making and the supporters trust's need for information. Though the model was not perfect, he stressed that "we've made it work".[302] He also suggested that it was not such a bad thing that the supporters trust wanted to discuss things and to receive information about the club as, ultimately, this strengthened governance.

206.  Malcolm Clarke told the Committee that it was relatively easy to establish the legitimacy of supporters trusts. He pointed out that supporters groups are democratic organisations and that the numbers involved were a good indication of credibility. He was critical of David Gill, asserting that:

certainly at Manchester United both the Trust and other organisations have been very successful with very large memberships. I think it's a bit of an excuse from Mr Gill, to be honest, to try and pretend that some of those big groups are not representative of very significant strands of opinion.[303]

Supporters Direct also stressed that supporters trusts are registered as Community Benefit Societies with the Financial Services Authority (FSA).

207.  Dave Boyle offered a defence of the mixed record of supporters trust-owned clubs, pointing out that where supporters trusts have had to relinquish control of their club, "in every one of these cases I can point to astonishing legacy problems".[304] He observed that:

No supporters trust has ever really inherited a club which was going well. They've been investors of last resort, the people who rescue it because the alternative is to let it die and that's just not an option, and because of that, they have incredible problems with debt, with loss of assets.[305]

A way forward for supporter ownership

208.  The supporters trust ownership model appears to us to be one of the positive developments in English football. From the evidence we have received, it is clear that supporters trusts are building up an impressive track record as owner of last resort, providing real community benefits and making an important contribution to the sustainability of the game. Although not a practical solution in every case, and less likely to be an option further up the League pyramid, the supporters trust ownership model deserves further encouragement. We also note that, where majority ownership is not possible for financial reasons, a substantial minority shareholding can still influence the culture of the club for the better, and that next season, in the form of Swansea City, there will be a practical example of this in the Premier League. It would appear, therefore, that the Government is on the right lines in wishing to encourage supporter ownership where this is possible. To do so, however, it will need to consider ways of addressing at least some of the main frustrations highlighted by supporters trusts.

209.  One complaint is that the process for setting up and running supporters trust organisations is overly bureaucratic. Steven Powell explained that:

I think that first of all we're trying to fit a square peg into a round hole […] Clearly there has to be security for anybody who is investing money in the scheme, but the hurdles we had to jump were designed for a different sort of financial product. I'm a member of the trust, and I invested my money every month. I'm not looking at that to help me in my retirement, I'm looking at that as an investment in my football club and I've left my units in my will to the supporters trust when I go.[306]

Supporters Direct wrote that "there are regulatory burdens imposed on trusts because they are raising funds to buy shares in a private company and so treated like any other investment activity, which is unsatisfactory".[307] Steven Powell is a member of Arsenal Supporters Trust (AST), which has pioneered a model that allows fans to own part of a shareholding in Arsenal Football Club. Arsenal is one of the few clubs whose shares are still traded on the stock market. Given that Arsenal shares trade individually at around £10,500 and are out of the reach of most supporters individually, the scheme gives them the opportunity to invest smaller amounts in a partial share. AST's written evidence explained how the scheme works:

The Arsenal Fanshare Society buys shares in Arsenal Holdings PLC and nominally divides each one into 100 Arsenal Fanshares. As the value of one share in Arsenal Holdings PLC is currently around £10,500, the value of one Arsenal Fanshare is currently around £105.

AST explained that members in the scheme gain a direct ownership stake in Arsenal; an opportunity to attend the Arsenal AGM; a quarterly shareholder email update from Arsenal; a vote on key club resolutions; and access to scrutiny of the club's finances. Arsenal fans paying in enough to purchase one full share gain a guaranteed place at the club AGM and the full voting rights for one share. AST noted that the scheme had been a great success, with more than 1,600 members and the active support of the club. However, it was critical of the regulatory burden on the scheme.[308]

210.  AST felt that its work had been "greatly complicated by the inflexible nature of Financial Services Authority regulations".[309] It focused, in particular, on the Financial Services and Markets Act 2000, which prohibits the Trust from offering shares or investments unless it complies with a number of regulations. For example, only organisations or individuals authorised by the FSA can issue any investment advertisement to a general consumer. Additionally, supporter ownership models are likely to be classed as Unregulated Collective Investment Schemes, preventing the offer of shares to persons other than high net worth individuals, sophisticated investors and exempt institutions. To get round this, AST had to establish a second Independent and Provident Society—the Arsenal Fanshare Society Limited—and ensure that it "does not make any profit nor have any trading income so we can establish it is not a business and thus not an unregulated collective investment scheme". AST concluded that: "This is a tortuous issue that impeded our efforts for many years and means that we have had to put in place duplicate structures for AGMs, Boards, accounts and even legal advice, with all the effort and expense that entails". Furthermore, in light of various other issues by which AST could also fall foul of FSA rules, it decided to engage a management company, Equiniti, "to administer the scheme on our behalf at considerable expense".[310]

211.  The second big frustration encountered by supporters trusts seeking to take a stake in their clubs is lack of opportunity. Setting aside the general issue of finance, supporters trusts are not usually offered shares unless the club is in dire straits. There are very few clubs like Arsenal now, where supporters are able to purchase shares on the stock market. Dave Boyle told us that:

A lot of clubs make it very difficult for supporters trusts to come on board because there are no shares available in them. There are only five clubs in the English professional league which are quoted on stock markets where you can actually go and buy shares.[311]

212.  Even at Arsenal, a recent change in the ownership structure posed the risk that one owner would seek to purchase sufficient shares (90%) to precipitate a compulsory purchase of all shares, wiping out the Arsenal fan share scheme. Such acts have occurred at Liverpool, Manchester City and Manchester United. David Bernstein, the former Chairman of Manchester City, told us that:

When I was chairman, we had 5,000 shareholders. We had an AGM where 800 shareholders turned up and I was very, very proud of that and I was very disappointed, in many ways, when the club was taken over and all the shareholders were removed to a single ownership.[312]

What can the Government do to address these frustrations? The evidence suggested a number of possible ways to reduce bureaucracy and increase opportunity. Henry McLeish was one of a number who suggested that greater use could be made of the Community Interest Company (CIC) as a model for a supporter-owned club to raise finance. Observing that it allows "because of the structure and status of the organisation, for them [clubs] to obtain finance and possibly obtain some grant funding that they wouldn't have been able to get in their old classification as a public liability company". He noted though that "I think it needs encouragement. It is happening but it is going to happen very slowly".[313] Olswang similarly suggested that:

CIC's, particularly for lower league clubs, may well be a very useful model to encourage clubs to adopt. A CIC is formed primarily for social enterprises that are being carried out for the benefit of a community […] CICs are not for profit, provide the directors and shareholders with the benefit of limited liability and their primary purpose is to pursue activities designed to benefit the community.[314]

Bates, Wells and Braithwaite provided a detailed argument in favour of CICs as a model for community-orientated football clubs. It pointed out that the CIC model guaranteed transparency through an annual report requirement and an asset lock that "reduces the opportunity for private gains and provides some protection for the club's assets".[315]

213.  Other evidence looked to the Localism Bill as a source of assistance for supporter- owned clubs. Dave Boyle observed that it includes provision for community groups to bid for community assets. This could provide more opportunity for supporters trusts to purchase clubs which have gone into administration, as currently one of the challenges for them is to put a bid together quickly enough to see off alternatives. Dave Boyle concluded:

the idea of a big society bank perhaps providing liquidity to such groups [supporter trusts] would be very, very helpful, because at the moment it's that speed of access to cash which is often paramount, specifically where a lot of football clubs have transferred ownership under crisis terms where there needs to be an immediate injection to cover losses.[316]

Wrexham Supporters Trust hoped that the Localism Bill would help it to buy back its ground.[317]

214.  Other evidence looked for different ways to secure the same end: preferential status for supporters trusts seeking to purchase clubs that were up for sale. The Liverpool Supporters Trust—Spirit of Shankly—proposed a transfer window policy "whereby clubs that are in the process of changing ownership or ownership stake in excess of 20% are legally bound to offer a properly constituted Supporters Trust the opportunity to purchase a shareholding in the club".[318] Under different circumstances, Bristol City Supporters Trust proposed that: "If a club goes into administration, the administrator should be obliged by law to favour a rescue package involving participation by a recognised supporters trust of at least three years standing".[319]

215.  Other evidence put forward the benefits of tax relief on supporters trust fundraising schemes that were intended for community benefit. Co-operatives UK noted that, in Manchester, FC United had benefited from being granted Enterprise Investment Scheme tax relief.[320] Dave Boyle, however, wondered if this would be replicable.[321] AFC Wimbledon proposed that fan-owned clubs with a turnover less than a designated amount should be exempted from VAT. Southend Supporters Trust argued that the rules on Corporation Tax should be changed for the benefit of supporters trusts.

216.  AST was one of a number of supporters trusts that wanted what it described as a more level playing field with private investors who were allowed to claim tax breaks on their investment in clubs. It proposed that:

DCMS establishes a working group that includes the Cabinet Office and Treasury, that has as its remit to review all the regulatory and fiscal structures that apply to fan investment schemes like Fanshare and recommend additional measures that can be taken to assist them to grow.[322]

217.  We asked the Sports Minister what measures he was willing to consider to encourage supporter ownership. He replied that he was open-minded, willing to look at any option that "moves us forward". He was, for instance, prepared to look at the Financial Services and Markets Act (FSMA) as it applied to supporters trusts. He was, though, cautious about the practicalities of majority ownership of "extraordinarily valuable big football clubs" and cautious, too, about the availability of tax breaks in the current financial climate.[323]

218.  The Minister set a challenge to come up with proposals to promote wider supporter ownership. We recommend that he look at two areas: measures to assist clubs that are already supporter-owned, particularly options that increase their ability to raise money; and measures that increase the opportunity for supporters trusts to achieve a share in their clubs, whether on a minority or majority basis.

219.  Supporters trusts can be organised as Industrial and Provident Societies, that are able to bid for social and community funds. Unfortunately, trusts face significant legal and bureaucratic hurdles when raising funding, including from fans themselves. We recommend, therefore, that the Government amend the Financial Services and Markets Act 2000 in order to recognise the special nature of supporters trusts. Supporters Direct should continue to play an important role in advising supporters trusts on how to take best advantages of the opportunities available, possibly including use of the Community Interest Company model.

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.

221.  As part of the licensing process, the FA should give some thought to ensuring that properly constituted supporters trusts, or consortia which include supporters trusts, can play a part in rescuing clubs from insolvency. One fruitful avenue might include giving trusts or such consortia a real opportunity to make a successful matching bid for a club that has gone into administration.

222.  Supporter involvement is not just about ownership. There are a number of examples of effective consultation with fans. These include Arsenal, Sunderland and a new approach from Liverpool with the Liverpool Football Club Supporters Committee. We welcome these approaches to consultation with supporters in a more structured format, and urge other clubs to follow suit.

The role of the football authorities

223.  Our earlier recommendation on licensing would, if properly implemented, have the effect of reducing the number of football clubs going into administration, and hence reduce the opportunities for supporters trusts to assume ownership of them or to start up phoenix clubs. We would suggest, however, that the wider governance and community benefits of the model should encourage clubs—particularly, though not limited to, the lower leagues—to consider the benefits of a majority or minority supporter shareholding model in circumstances where there is no threat of administration. However, the attitude of the football authorities will also be important here. In this respect it is disappointing, though perhaps not surprising, that the FA, Premier League and Football League have a somewhat ambivalent attitude to supporters trusts, taking a line of strict neutrality on ownership models, which can have the effect of keeping supporters trusts on the outside. Supporters trusts offer some trenchant criticism of what they see as the over-commercialisation of the game, while the FA, Premier League and Football League offer an equally trenchant defence of their work to increase the popularity of the game at home and abroad.

224.  Move beyond this, however, and they all share a key objective; sustaining the unique size and strength-in-depth of the English pyramid structure. The Premier League needs lower divisions to "blood" its young players; help develop new player and managerial talent; and provide competition both in the cups and for the promotion/relegation battle, without which the Premier League would become increasingly sterile. The pyramid structure is fundamental to the rationale of both the FA and the Football League. Supporters trusts, meanwhile, see sustaining the viability of their local club within the pyramid structure as pivotal. The pyramid structure thrives on compelling narratives, and the stories of Swansea City (underdog into Premier League), Exeter City (saved by the supporters trust and the luck of a great FA Cup draw) and AFC Wimbledon (working its way up from the bottom to secure a league place) provide three such recent stories for the football authorities.

Supporters Direct

225.  The submissions to this inquiry spell out a strong message that the role played by the Supporters Direct organisation has been absolutely vital to nearly all supporters trust success stories. Supporters Direct was established in 2000, following a recommendation in the Football Task Force report "Investing in the Community", published in 1999. Like the supporters trusts it seeks to support, it is registered as a Community Benefit Society. Its mission is to promote sustainable sports clubs based on community ownership and supporter involvement, and to that end it provides support and advice to individual clubs, commissions research and works to publicise the benefits of the model. As well as providing support to English football clubs, it is active in Scotland, Europe and in English rugby league.

226.  William Gaillard told us that UEFA was funding Supporters Direct to promote the model in Europe. He observed that "Supporters Direct in England and Scotland have done a fantastic job at rescuing clubs, but also at injecting a lot of rationality and positive supervision, thanks to their [supporters trusts] participation in club boards". He stressed that "our experience with them is that they are highly qualified and determined people with an excellent track record in managing projects".[324] Academic Richard Giulionotti similarly emphasised that:

The achievements and successes of the 'Supporters Direct' movement should be underlined, as reflected in the agency's own reported figures: Trusts are in place at over 160 clubs; there are over 120,000 members; Trusts contribute board directors at almost 60 clubs; and, Trusts own or control 15 clubs. Trusts have also played a key role in the survival of several clubs that have been placed in administration. This kind of proximity to club owners and directors should allow supporters to convey their specific views regarding, for example, ticket allocations and prices, club expenditure, and security in stadiums.[325]

We also received a number of testimonials from individual supporters trusts. Merthyr Town Supporters Trust recounted how the Trust "sought the assistance of Supporters Direct, and as the club continued to slide towards administration as the 2008/09 season got underway, began to pave the way for a future containing a more positive community-based club".[326] Telford United Supporters Trust explained how Telford United Independent Supporters Association turned itself into a Trust having come into contact with Supporters Direct and seen the benefits of the Trust's legally recognised and fully democratic structure. Fisher Supporters Trust wrote that "we have reformed our club as Fisher FC, and received much practical and moral support from Supporters Direct in order to do so".[327] FC United Supporters Trust explained how "with the assistance of Supporters Direct the model of an Industrial Provident Society (IPS) was adopted as the basis on how the club would be structured".[328] Chester City Supporters Trust wanted to place on record its thanks to Supporters Direct along with other supporters trusts. Swansea City Supporters Trust and Scarborough Supporters Trust noted Dave Boyle's presence and advice at key meetings when the decision was taken to form the Trust.[329] Pompey Supporters Trust concluded that "Supporters' Direct are the perfect vehicle to support non-profit and democratic football clubs".[330]

227.  It is of deep concern, therefore, that, despite its track record in helping to deliver sustainable outcomes for football clubs throughout the football pyramid, Supporters Direct's funding has frequently been precarious and its future is currently uncertain. In 2006, a three year deal drawing on funds provided by the Government, Football Association, Premier League and Football League for the Football Stadia Improvement Fund (FSIF) distributed by the Football Foundation, promised more security. Supporters Direct received £574,000 in 2007-08, £591,000 in 2008-09 and £610,000 in 2009-10. However, when this agreement came to an end, the Government indicated—understandably given wider financial challenges—that it would no longer be able to contribute to the FSIF. The Football Foundation decided to establish a new fund—the Fans Fund— to allow applications for funding for any supporter group, including Supporters Direct. The Fans Fund would be financed solely by the Premier League. In the interim, the Premier League agreed to fund Supporters Direct's core running costs through the FSIF, until such time as the new long-term arrangements were in place. The FA's written evidence noted that it had financially supported Supporters Direct for many years, but not why it no longer did so.

228.  Richard Scudamore told us in April that "in a practical sense we now fund Supporters Direct, and we have done for some time".[331] We asked whether he would continue to fund Supporters Direct at the current level. He replied that "this is an ongoing debate as to whether we, the Premier League, should be funding these organisations. We took up the Supporters Direct funding when Government decided it didn't meet the Government criteria of participation only". He also observed, however, that "they admit by their own efforts that they would rather find more sustainable sources of funding, because they find it awfully odd being paid for by the Premier League".[332]

229.  Richard Scudamore appeared to be a somewhat reluctant funder. In June long-running discussions between the Premier League and Supporters Direct over funding reached a crisis point when the Premier League, and the other representatives on the FSIF reacted to inappropriate comments posted by Dave Boyle on his personal twitter account upon AFC Wimbledon's promotion to the Football League in May. These were directed at a named individual with a role in the decision to allow Wimbledon FC to move to Milton Keynes—a decision which had prompted Wimbledon supporters to establish AFC Wimbledon. Deeming his apology, conveyed by Pauline Green, Chairman of Supporters Direct, insufficient, the FSIF withdrew its offer for future funding. Dave Boyle subsequently resigned and new Chief Executive Brian Burgess entered into urgent talks with the Premier League to establish under what circumstances the FSIF would consider future applications from Supporters Direct for funding from the Fans Fund. Supporters Direct accepts the need to reduce its core costs and the need to increase its own fund raising. As things stand, the Premier League has agreed to pay Supporters Direct payroll costs to prevent immediate redundancies. The FSIF agreed on 15 July 2011 to approve one of Supporter Direct's frozen grant applications—£268,292 for running costs over the next three years. FSIF will consider whether to approve the remaining grant applications—around £1,200,000 over three years—in August 2011. Even if the FSIF does approve all its grant applications, Supporters Direct would still face a drop in grant assistance of 37% from 2010/11 to 2013/14.

230.  The Premier League reaps the benefit of collective bargaining on the basis not just of the integrity of the competition but also its commitments given to Government that it will channel some of the proceeds for wider community benefit. We do not, therefore, see anything particularly problematic about the Premier League funding Supporters Direct, though we are surprised that the Football League does not also see fit to make a contribution, given its interest in the sustainability of clubs in its competitions. For the same reason, we are surprised at the absence of any obvious FA commitment to the work of Supporters Direct. We do see something problematic in funding organisations punishing a recipient organisation for an individual's mistake, particularly when that individual proffered an apology and subsequently resigned. While the comments made on a personal site were unacceptable, it seems to us to be a massive over-reaction to use them to question the validity of an organisation whose track record is so strong. The consequence is that the actions of the Premier League and the FSIF appear vindictive and motivated by a desire to clip Supporters Direct's wings. While we can see the advantages of the Fans Fund distributing some funding directly to individual supporters trusts, we also note that supporters trusts have asserted that they also need to draw on the expertise of Supporters Direct. In this context, William Gaillard, who expressed concern that the financial future of Supporters Direct was not safe, observed:

If the experiment is to succeed it cannot be left to just a bunch of volunteers who would basically give some of their time to the cause. We need a core organisation—a small one albeit—to run Supporters Direct. We do our part with the European side and I think it would be a tremendous loss for English football if this great experiment, which has already given so much to this country's football, was discontinued or was less efficient than it has been just because of a lack of funding.[333]

231.  The reluctance of the FA, Premier League and Football League to devise a formula for the long term future of Supporters Direct is deeply disappointing given the fact that all have a vested interested in sustaining community-based clubs. It constitutes a failure of imagination and a failure of governance by the football authorities, and we urge them to work quickly towards a funding solution that allows Supporters Direct to develop its role assisting supporters trust organisations and makes realistic assumptions of Supporter Direct's own fund-raising potential. We urge the Government, as part of its commitment to supporter involvement in football, to use its influence with the football authorities to work to this end. There is a positive opportunity here for the football authorities to show their commitment to supporting community-based initiatives.

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284   Ev 221 Back

285   Ev w20 Back

286   Ev w180 Back

287   Q 320 Back

288   Q 451 Back

289   Q 246 Back

290   Q 106 Back

291   Q 451 and Q 470 Back

292   Q 318 Back

293   Q 321 Back

294   Q 185 Back

295   Q 689 Back

296   Ev w58 Back

297   Ev w70 Back

298   Ev w189-90 Back

299   Ev 82 Back

300   Q 330 Back

301   Q 106 Back

302   Q 322 Back

303   Q 326 Back

304   Q 333 Back

305   Ibid Back

306   Q 336 Back

307   Ev 221 Back

308   Ev w52-3 Back

309   Ev w55 Back

310   Ev w55 Back

311   Q 334 Back

312   Q 451 Back

313   Q 246 Back

314   Ev w131 Back

315   Ev w216 Back

316   Q 336 Back

317   Ev w105 Back

318   Ev w41 Back

319   Ev w65 Back

320   Ev w182 Back

321   Q 336 Back

322   Ev w54 Back

323   Q 777 Back

324   Q740 Back

325   Ev w62 Back

326   Ev w50 Back

327   Ev w113 Back

328   Ev w123 Back

329   Ev w178 and Ev w149 Back

330   Ev w175 Back

331   Q 684 Back

332   Q 685 Back

333   Q 740 Back

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© Parliamentary copyright 2011
Prepared 29 July 2011