Written evidence submitted by Daniel York
and Ben Westmancott on behalf of the board of Fisher FC
SUMMARY
— The
history of Fisher Athletic's bankruptcy and reformation provide
important real-life evidence of the failure of current governance
arrangements for football clubs, and of new ownership models that
can benefit the game.
— Fisher
FC is a supporter owned and run community football club and we
are developing and growing on a sustainable basis. The governance
model that Fisher FC use is successful at many other football
clubs at professional and amateur levels, and embeds democratic
ownership within the supporter base - the people who care most
about the club.
— There
are numerous examples of the football authorities failing to ensure
good governance at football clubs. Self-regulation is not working.
— Football
clubs are important emotionally and economically to local communities,
and must be treated differently to other commercial organisations.
There is an urgent need for government intervention to prevent
the asset stripping and poor financial management that is prevalent
in modern football.
— Spectator
sports clubs run sustainably and on a not for-profit basis can
and will be successful on the pitch.
BACKGROUND AND
CONTEXT
1. Fisher FC was formed in May 2009. But our
history does not begin there, it begins in 1908 when a Bermondsey
schoolteacher formed the Fisher club to provide underprivileged
children with the opportunity to take part in sporting activities.
Over time Fisher developed a senior side, and Fisher Athletic
became one of the most well-known non-league clubs in the country
with a spell in the Conference—the top level of non-league
football.
2. In 2004, the club was taken over by local
businessman and property developer Sami Muduroglu. A number of
events followed this takeover that will be familiar to fans of
other clubs around the country, and they are events that could
be prevented with strong government action on the governance of
football clubs.
3. Mr Muduroglu, who after being banned as a
company director was replaced by his brother Eren as Fisher Athletic
chairman, separated the ownership of Fisher's ground (the Surrey
Docks Stadium) from the football club. The freehold was purchased
from the council, and ownership of the stadium transferred to
Stadplex Ltd, a separate company to the football club.
4. On the pitch, things were apparently going
well as Mr Muduroglu invested in a high quality playing staff.
Fisher moved through the divisions. The club moved out of the
Surrey Docks Stadium and into a groundshare with Dulwich Hamlet,
as planning permission was granted for the redevelopment of the
ground—including some residential development alongside.
5. The first warning signs appeared in 2007,
when new plans were announced to develop a stadium in Southwark
Park. These plans, which included a 10,000 seat stadium for a
club with an average attendance of 200, never progressed beyond
some sketches. Meanwhile, the Surrey Docks Stadium and surrounding
land stood derelict, and the money began to run out as the credit
crunch arrived. The club did nothing to build links with the community,
and crowds did not grow despite the on-field success. Links with
the Fisher Athletic youth teams, who provided opportunities to
play sport to local young people, fell away through neglect. Links
with local businesses were dropped; sponsorship came from another
company owned by the Muduroglu family.
6. Mr Muduroglu stopped funding the club in 2008,
with the club in the Conference South—one level below the
Conference. Without a regular cash injection, the club's position
was unsustainable and the players left. A group of supporters
and some unpaid players kept the football side going although
the team was regularly beaten and crowds dropped. HMRC issued
a winding up order, and after a couple of deferrals Fisher Athletic
were wound up in the High Court in May 2009.
7. For Fisher supporters this meant two things.
Their club had been wiped out, having been allowed to spend far
more than it could earn over a number of years until an unmanageable
level of debt had been racked up. Secondly, the club's ground—it's
sole and most important asset—was now owned by a private
company.
8. We have reformed our club as Fisher FC, and
received much practical and moral support from Supporters Direct
in order to do so. We are owned by the fans, and operate on a
not-for-profit model. Our aim is to build a sustainable club that
is part of the community and provides the same opportunities to
Bermondsey youngsters that the original Fisher club did a century
ago.
9. But we are starting again with nothing. The
motives of our former owner remain unclear, and are probably irrelevant.
What destroyed Fisher, and 100 years of history, was that it was
so easy for a small club to rack up incredible debts through uncontrolled
spending. And that it was so easy to separate the football club
from its major asset, the ground that provided the income stream
and opportunities that could have allowed Fisher Athletic to work
as a sustainable club at the heart of its community. Instead the
ground lies derelict, attracting vandals and anti-social behaviour
(see Appendix) while the club starts again on the bottom rung
of the football ladder.
10. Supporters of Brighton, Wrexham, Chester,
Mansfield and many others will provide you with evidence that
Fisher's experience is not unique. It is clear that the current
governance arrangements for football clubs do not promote sensible,
sustainable development. They do not protect football supporters
from having their club used and asset-stripped by property developers.
There must be change to the way that football in the UK is governed
and regulated.
CONSULTATION
11. Fisher FC's views on the specific questions
raised in the consultation are below.
Should football clubs in the UK be treated differently
from other commercial organisations?
12. Yes. Football clubs are different, they are
not shops or banks. Football clubs have a role and standing in
the community which makes them different from other business which
can be taken over, moved etc with less impact on customers. There
is a lot of evidence that highlights the positive role in community
life that a football club plays and safeguards are required to
ensure that football clubs can continue as part of the local community
landscape as a positive influence and not be subject to takeovers
and asset stripping that is common in the game at present.
Are football governance rules in England and Wales,
and the governing bodies which set and apply them, fit for purpose?
13. Clearly not. The "Fit and Proper Persons"
test has not succeeded in preventing individuals from taking over
football clubs for the sole purpose of making money by taking
control of the club's major asset: its ground. Clubs can also
fall victim to benign but incompetent management—racking
up huge amounts of debt, and operating business models that are
unsustainable and will lead to bankruptcy. Because football clubs
are different, the failure of a football club affects people and
communities in a way that the failure of another commercial organisation
simply doesn't. The current governance arrangements do not do
enough to prevent this from happening.
14. Corporate Governance and football don't often
get spoken about together. Football clubs need to be protected
from unscrupulous types who use them for their own ends. Our Treasurer
is an Associate member of the Institute of Chartered Secretaries
and Administrators (ICSA) —the world's leading authority
on corporate governance. We would welcome an increased role for
the ICSA in strengthening governance arrangement of football clubs.
15. If the FA and other bodies are not going
to be able to enforce good governance then local stakeholders
need to be empowered to do more. It makes sense that fans of a
football club are very well placed to provide scrutiny at a local
level. An increased role for Non Executive Directors could also
be beneficial with representatives from Local Authorities and
other local stakeholder groups/bodies well placed to add value.
Is there too much debt in the professional game?
16. The steady stream of clubs attending the
High Court to answer winding up orders suggests that there is
too much debt, and that the debt is a result of running unsustainable
business models. Often that money is owed to local businesses,
or organisations such as St John's Ambulance. When the football
club can no longer pay its bills, it is not just the fans who
suffer—small local businesses who have provided services
and support also lose out.
What are the pros and cons of the Supporter Trust
share-holding model?
17. There are many positives to the model. Fundamentally,
the model secures two things: that clubs are run sustainably,
on a not for profit basis, and are not used by individuals to
make themselves richer at the expense of the club and community.
It also puts the supporters at the heart of decision making because
the model is democratic.
18. The Supporters Trust model is no bar to clubs
obtaining finance in order to grow and develop—but it does
ensure that this is done in a way that reduces the risk of the
club borrowing money it cannot afford. FC United's community shares
scheme is an example of this.
19. The model embeds local ownership within the
community that surrounds the club and puts power directly into
the hands of that community.
20. The case can be made that because ST-owned
clubs have to be run sustainably, they find it difficult to compete
at the higher levels of the game where other clubs have greater
access to finances through loans, or individual benefactors. But
that is not an argument against the model, because those competing
clubs are often being run in a way that puts their future at risk—while
they may achieve short-term success, in the longer term they run
the risk of serious financial problems. Watford, Hull City, Portsmouth,
Sheffield Wednesday, Leeds, Leicester, Plymouth Argyle, and many
other clubs who have spent beyond their means in order to chase
success on the pitch have all suffered varying degrees of financial
problems over the last few years. Many of those clubs entered
administration, and when they exited administration they left
behind a trail of unpaid bills to local firms, charities, as well
as unpaid tax.
Is Government intervention justified and, if so,
what form should it take?
21. Government intervention is justified because
football clubs are so important to communities, and to supporters.
They are also highly vulnerable to exploitation because many of
them own valuable land, which is attractive to people who are
looking to make money for themselves regardless of the impact
on local communities.
22. Intervention should actively encourage sustainable
models of ownership. This could be through tax incentives, and
through regulation that addresses the excess debt incurred by
poorly-run clubs.
23. It is absolutely essential that the government
acts to prevent asset-stripping of clubs by protecting football
stadiums. Football must no longer be attractive to individuals
who are looking to exploit clubs for personal gain rather than
for the good of the local community.
24. The FA has not shown itself able to promote
good governance and Government intervention is now essential to
strengthen the game and ensure that football takes good governance
and good financial stewardship seriously.
Are there lessons to be learned from football
governance models across the UK and abroad, and from governance
models in other sports?
25. Yes. There is clear evidence that the governance
of football in the UK is flawed, and that the FA are not willing
or able to address the flaws.
26. In the USA, the Green Bay Packers provide
clear evidence that a not-for-profit, supporter owned sports team
can be successful and competitive in a harsh commercial environment,
competing against sides with wealthy owner-benefactors - and winning.
The Packers are owned by their fans, and have a governance structure
that requires them to publish a balance sheet each year (the only
organisation in all major league American sports to do so). They
have a clause in their Articles of Incorporation that means that
if the franchise is ever sold, all profits from the sale will
go towards the building of a soldier's memorial. This clause means
that no property developer, or asset stripper, can profit from
buying the Packers and moving them away from their home. Consequently,
unlike so many other US sports teams, the Packers have remained
in Green Bay since their formation in 1923.[34]
27. On 6 February 2011, the Packers will compete
in the SuperBowl. Their 112,000 owners will be cheering them on
as they attempt to win one of the most high-profile sports championships
in the world.
January 2011
34 http://en.wikipedia.org/wiki/Green_Bay_Packers#Public_Company Back
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