Supporter involvement in Scottish football clubs: consultation analysis

5. Options for Legislation: Supporters' Right to Bid for their Football Club

Background

The Scottish Government views the right to influence and the right to govern, as providing safeguards throughout the ongoing decision-making of a football club. Another option, which they perceive as providing the ultimate safeguard when a club is sold, is to give supporters the right to bid for the club.

A right to bid could ensure that football supporters are firstly treated as a priority and given the full opportunity to bid for their football club should the owner(s) decide to sell.

Question 3: What are your views on making a law to give supporters the right to bid for their club?

571 respondents addressed this question, including all of the organisations and 546 individuals. A further 15 individuals referred to their previous answer.

Establishing a clear picture of views was difficult on account of different respondent interpretations over whether the question referred to preferential rights to bid or the opportunity to bid along with any other potential purchaser. For example, whilst some respondents appeared not to support the proposal, it is not clear whether or not they did not support prioirity treatment of supporters or were opposed to supporters bidding for their club under whatever circumstances.

Responses indicated widespread support for the principle of right to bid but support was lower for enshrining this in law, especially amongst organisations who largely opposed this. Football cClubs in particular highlighted potential drawbacks of going downt the route of supporters bidding for their clubs.

Reasons in favour of giving supporters the opportunity to bid for their club

Comments in support of supporters' opportunity to bid for their club revolved largely around their earning this right due to long-term commitment to the club and having the club's best interests at heart. Once again supporters were termed the "lifeblood" of their clubs with their passion viewed as an advantage in terms of commitment to rescuing failing clubs.

Enabling supporters to bid for their clubs was viewed as essential to ensuring the long-term sustainability of clubs, safeguarding against asset-stripping, and improving supporters' chances to take ownership of their club.

Qualifying views

Whilst many respondents supported the concept of supporters bidding for their clubs, some qualified their support. Three key qualifications emerged repeatedly:

• Prior to bidding, supporters should have finances secured for the purchase and for longer term sustainability of their club.
• Supporters should have access to professional help with their bid.
• Supporters will require to have business expertise and acumen to be effective in participating in the bidding process.

A few respondents were in favour of supporters having the opportunity to bid for their club under certain circumstances, for example:

• Only if the club is failing, for example, in financial difficultites.
• So long as stringent financial controls are put in place

"More detailed consultation on mechanisms and safeguards will be required. We recognise the need to preserve the financial and trading stability of a club in the midst of bidding and acquisition processes" (Scottish Football Supporters' Association).

• So long as controls are in place to ensure there are not rogue takeovers and those bidding are legitimate supporters.
• So long as a fair value is established and another possible sale is not held up whilst supporters develop their bid.
• As long as supporters are not favoured over a bidder who could sustain the club financially better in the longer term:

"If a club was to be put up for sale then everyone should have the option to bid, however the final decision must be based on the economic and social benefits for the club" (Perth and Kinross Council).

• The owner must want to sell the club to supporters and not be forced to do this.
• Supporters must be made fully aware of their responsibilities and the legal and practical issues associated with buying a club.
• The club's identity within the community should be preserved and the club should remain firmly part of the local community.

Other challenges were identified as: establishing a fair evaluation; the amount of time and effort required to lead a bid; complying with legal issues which arise; resolving tensions between different groups of supporters with different views; and handling raised supporter expectations in a process in which they may be outbid.

Reasons given in opposition to making a law to give supporters the right to bid for their club

By far the most dominant argument against making a law to give supporters the right to bid for their club was that existing legislation already provides for this. For example, respondents (including three football clubs) were unclear what further legislation would add to current company law, under which shareholders could increase their shareholding until they can bid for outright control of their club.

"Any person or group of persons who can put together the funding needed to make a reasonable proposal can seek to engage in negotiations for the purchase of a club or its assets in line with the well-developed framework in the UK for the buying and selling of shares or assets. In practice, a right to bid, therefore, already exists" (Celtic plc)

"I'm not sure what this offers over and above existing rights" (Individual).

Another prevailing view was that such legislation would interfere with current business law and would risk legal challenges.

"...risks distorting the market" (Dunfermline Athletic Football Club Limited).

One further significant argument against the introduction of legislation was that this would most likely be ineffective due to:

• owners still having the power to say no to any bid
• little demand to use the law/few supporters are in the position to use it
• too many laws already/overkill.

Once again, a comment was that all football clubs are different in their legal structures and implicit in the proposal is that one size will fit all, which they felt was not the case. One individual envisaged the legislation resulting in, "a constant merry-go-round of changes" as groups of supporters used the legislation one after each other resulting in continuous bidding and takeovers.

A few respondents considered legislation to be premature and that we should learn lessons from elsewhere first, and focus on ensuring supporter groups are democratically established, prior to going down this formal route.

General views on the perceived drawbacks of supporters bidding for their club

Many respondents, whilst not referring specifically to the question of introducing a law, identified what they perceived to be drawbacks associated with supporters bidding for their club.

Most commonly, respondents commented that supporters do not tend to have the financial backing to bid for and then sustain a club financially. Some felt that this may not always be the best option for clubs, with supporter buy-out not of clear benefit to clubs that are already financially sound and running well.

A recurring theme was that even if supporters have no intention of bidding for their club, the mere existence of legislation to enable this could deter potential investors.

"...prospective club owners would be put off investing in the club in that they may be forced to sell at a low price under the right to bid, and that the asset value of the club may be reduced as a consequence" (West Lothian Council).

" FFC believes that if football club assets can be defined as community assets and be subject to mandatory acquisition by a third party, then directors and shareholders will stop investing in the club's infrastructure" (Falkirk Football and Athletic Club Ltd).

The issue of clubs possibly being forced to sell below valuation, and questions over whether or not other potential bidders would be locked out of the bidding process for a period of time, were causes for concern amongst a few respondents who envisaged falling share prices and valuation during the bidding period.

Views on alternative approaches

Within the Localism Act 2011, community assets can be nominated by relevant groups with a connection to the community, for example a supporters' trust, to be listed as an "Asset of Community Value". If the nomination is accepted, local groups will be given the time to come up with a bid for the asset when it is sold.

Very few respondents referred explicitly to the potential of this arrangement for supporters safeguarding their football club. Those who did provide substantive views were all in favour of using the 2011 Act in this way to protect assets.

"We believe that transparency on registered assets is important, support football stadia and facilities being recognised as assets of community value, and welcome the idea of the extension or adaptation of appropriate provisions of the 2011 Localism Act to Scotland, in accordance with parliamentary and democratic procedures" (Scottish Football Supporters' Association).

"I do like the concept of registering assets as a community asset as it would prevent any one person benefitting (or at least make it more difficult for them) to the detriment of the community and the football club" (Individual).

A few respondents questioned whether this approach would add value, with one querying whether this law applies in Scotland.

Another approach proposed in the consultation to safeguard football club assets was placing a duty on the Board of Directors of football clubs to fully consult with supporters of the club in the event of a sale (or transfer) of the football club. This was seen as ensuring that fans have access to necessary information to help them to make an informed judgment on any bid. Very few respondents referred to this proposal explicitly, but those that did were all in favour.

Summary of key points

The majority view amongst individuals and organisations was for supporters having the right to bid for their club. However, there was less support, particularly amongst organisations, for enshrining this in law.

Reasons in favour of supporters having the right to bid for their club revolved largely around their deserving this due to their long-term commitment to the club and having the club's best interests at heart.

In order to bid for their club effectively, respondents recommended that supporters should be required to have finances in place for the purchase and longer-term sustainability; should have access to professional help with their bid; and will require to have the necessary business expertise to participate.

The dominant argument against making a law to give supporters the right to bid for their club was that existing legislation already provides for this. Other common views were that supporters are not likely to be able to secure sufficient funding to bid for and sustain a club; and that bidding for their club may not always be the best option for clubs that are already financially sound and operating well.

Very few respondents addressed the possibility of using the Localism Act 2011 to safeguard their football club, with those who did, generally in favour.