With the current high level of interest and speculation into the ownership of our football club, highlighted by the consortium lead by Gary Hoffman trying to engage with SISU, many supporters have asked about the Trust’s involvement in this venture and what plans the Trust does have.
To date the Trust has had no input into Mr Hoffman’s offer but, as with any other potential investor, we would be happy to discuss the offer, judge it on its merits and see if it could dovetail with the Trusts own plans.
The Trust has asked for a third time to meet with Ms Seppala to discuss the viability and mechanics of a supporter lead takeover but as yet this request has not been responded to. The Trust’s outline offer framework has been constructed by our professional advisors, in conjunction with in-house experts and Supporters Direct, and would offer a potentially mutually beneficial outcome to all parties. The near decade of failure by SISU which has resulted in relegation to the lowest tier of professional football in England makes Ms Seppala’s refusal to even discuss the proposal all the more frustrating. The recent promotion of supporter owned Portsmouth shows that this type of ownership model can lead to success, something that our current hedge fund ownership clearly does not.
Many supporters have expressed a genuine interest in supporter involvement in ownership but are unclear about what exactly it means, how it would work and how it can be achieved. Below is some information about the Trust’s proposed ownership model etc. Full details of this Q & A can be found on the Trust website www.skybluetrust.co.uk
If supporters have any specific questions please e-mail secretary@skybluetrust.co.uk
SUPPORTER OWNERSHIP – Q&A’s
Q1 What is it? – It is a means for the fans of a club to take a collective ownership stake (usually through a Supporters Trust) in a significant, or ideally majority, of the voting share capital of theirfootball club.
Q2 Is there only one way of doing this? – No, it depends on a lot of factors and each set up should be appropriate for the fans and their club. Some clubs are fully fan-owned, others hold more than 50%, whereas others have a minority shareholding which often is supported by a shareholders agreement giving certain rights and protections for the Supporters Trust. Because of the size, potential and history of CCFC, a joint venture with other investors is likelyto offer the best alternative.
Q3 what can fan ownership gain the supporters? Anything from the overall decision in big issues at the club (such as the budget, business strategy) to a protective position, or at least a genuine voice. A chance to be included rather than excluded and ignored
Q4 does it mean that the fans run the club or pick the team? No: there are major business decisions that the supporter shareholders would be involved in, but just like any other club, the Board will delegate responsibility to experienced people to run different parts of the business. This would require a Club Chief Executive and others with a record of running successfully the business side of football clubs. As now, the manager would run the football side and pick the team.
Q5 how is fans’ ownership achieved? In some situationsfans have been permittedto buy a separate class of shares, allowing attendance at the AGM but without the right to vote – little more than lip service to the idea. This is not what the Sky Blue Trust is seeking. Fans must have a proper voice. To achieve this, the fan shareholders’ rights would be set out in the Company Articles (Rules) and in a shareholder agreement. Importantly, the fans need ownership of all or part of the ordinary share capital, giving them votes on important company decisions and an element of control.
Q6 will each fan have a share in CCFC? No, fans will be invited to invest intoa Community Benefit Society (CBS) which will hold the investment collectively in CCFC. That gives the supporters a unified, stronger voice. The Directors of the CBS must act in the best interests of the CBS investors. The CBS would hold a proportion of the share capital of CCFC in conjunction with other investor-partners.
Q8 Will the fans have a seat on the CCFC board of directors? This would be something required by the terms of the investment. The CBS and any co-investors would appoint Directors to the CCFC Board. It would be expected that the supporter shareholders would have representative(s) at the board meetings. All of this would be detailed in the share offer documents, if we move forward to that stage.
Q9 How much will it cost to achieve part ownership? We won’t know that until the club becomes available to purchase. It will also depend on discussions with any co-investors. Any price paid must be realistic compared to the value of assets purchased and structured so that it can be funded without detriment to the successful operation of the football club. It must be viable and affordable. Fans should be prepared to walk away from the opportunity if these conditions are not met. It is not, nor cannot be, “buy at all costs.”
Q10 Will the money be expected in full up-front at the launch of any bid? No, it is not certain that a deal could be brokered. To begin with, it is likely that the CBS would look for commitments/pledges of total funds but to move forward a down payment if a suitable agreement can be brokered. That way should the bid fail the funds could be easily returned less deduction of reasonable costs. The CBS could also, for example, set up a credit facility or union to allow supporters to save for their investment
Q11 Has there ever been an intention or plan to force through fans ownership by administration of CCFC. Categorically NO, that claim is ill-informed. The planning has been done and the professionals put in place, because of a fear of administration should the finances and fortunes of the club deteriorate under current management, together with a strong desire to ensure CCFC continues to exist. A safety net, if you like, to provide a way for the fans to protect their club should existing decision makers create the problem. The only party that could control an administration and its timing in the current set-up are the owners of CCFC because they are the only material creditors/shareholders. Fans’ ownership does not rely on the club going in to administration to happen, and never has been a requirement. Fan ownership needs minds that are open to the possibility and thedrive to make it happen.
Q12 Will the club be run at break-even? The club must be viable and pay its way. It will need to develop income streams and control costs. Any detailed plan will require the input of co-investors, but creating massive unsustainable debt on the small chance of success is not an option. It is a fact of life that football clubs buy and sell players to survive but, with fans’ support, such trading could be used to improve the team, not weaken it. A sensible break-even does not have to be centred on slashing costs. The Academy is an important asset to retain, not justfinancially but importantly for the community and growing the club. It will be necessary to start building foundations both in the community and financially so it would be wrong to assume thatinstant success will be achieved, or to viewa lack of immediate success as failure. A new start wouldprovide the opportunity to form robust, positive partnerships; to be stronger with the involvement of the fans; to go forward as one, rather than pulling in different directions.
Q13 Is there any risk, could it fail? As with any investment there are no guarantees. Yes, there is risk and it could fail. But it could also succeed, look at what happened to the part fans owned Swansea City. The Sky Blue Trust, in common with many supporters, believes that fan involvement has a far greater chance of bringing success to Coventry City, than continuing as we are. Any launch of a share offer or pledge scheme will clearly identify the risks.
Q14 Is there a plan of action to achieve fan-ownership? Yes, detailed plans have been drafted and a summary of the steps required will be published in due course. The Sky Blue Trust have also engaged professional advisors to assist with the financial and legal implications. Please remember that these plans cannot progress unless SISU indicate that they are a willing seller and that their expectations on price and other terms are realistic.