Supporter involvement in Scottish football clubs: consultation analysis

6. Options for Legislation: Supporters' Right to Buy their Football Club

Background

During the passage of the Community Empowerment (Scotland) Act there was debate around a right to buy option for supporters' trusts to buy their football club for an agreed price or an independent valuation.

During the development of the Act, some supporters' groups indicated their view that a right to buy is an important safeguard to protect the interest of football supporters.

The Scottish Government acknowledges that the right to buy option brings with it challenges in relation to defining what a football club is, and also which supporter group has greater legitimacy to the right. In addition, a number of community owned football clubs have raised concern over a right to buy model, highlighting potential risks and consequences.

Question 4: What are your views on making a law to give supporters the right to buy their club?

This question attracted the most volume of responses, with 848 respondents addressing it, including 22 organisations and 826 individuals. This reflects the prompting of the Green Party via its Fans First campaign in support of legislating for supporters to have a right to buy their clubs.

Whilst a clear majority of individual respondents favoured making a law to give supporters the right to buy their club, views were mixed amongst organisations. Football clubs dominated those organisations opposing making a law to give supporters the right to buy their club.

It should be noted that amongst those opposing the proposal were respondents who were supportive of the right to buy, but were against preferential treatment given to supporters in this process.

Reasons in favour of giving supporters the opportunity to buy their club

Very few respondents argued specifically for a law to give supporters the right to buy their club. The two arguments in favour of enshrining this opportunity in law were that this would be consistent with other community buy-outs and that, without making this law, it would not be possible to enforce the right.

Many respondents highlighted more generally what they perceived to be the benefits of giving supporters the opportunity to buy their club. Seven main benefits emerged repeatedly:

1. It will safeguard football clubs from asset stripping and those intent on short-term business gain, and return clubs to longer term sustainability.

2. Supporters will do what is right for their club. They are the best long-term stewards; will take the game back to the terraces; safe hands.

3. It will strengthen the local community; engender community spirit; link clubs with communities.

4. Supporters deserve to be at the helm of their club as they contribute passion and commitment and should have more of a say than owners with little connection to the club and who are out of touch with the local community.

5. It will create transparency by empowering supporters and including them in decision-making.

6. It could protect the club from the ups and downs created by different ownership and speculation over developments; supporter ownership could provide consistency and stability.

7. This is what works in other countries. Germany was mentioned most frequently in this regard.

Other reasons given in support of the proposal were:

• Will greatly improve the game's governance.
• Keeps the owners on their toes.
• Scottish football needs innovation and a right to buy is a way of achieving this and energising clubs.
• Could create the opportunity for supporters to purchase an ongoing concern rather than a club getting into a fire-fighting scenario when it finds itself in financial difficulty.

A few respondents proposed that supporters be given the right to buy a percentage of the club with 30% being suggested by one respondent; some referred to the Foundation of Hearts model as a preferred approach; reference was made to learning from successful models of supporter right to buy in other countries; a few respondents favoured what they termed a "preferred bidder status" for supporters.

Qualifying comments

Some respondents qualified their general support for the proposal, the most common qualifications were:

• Any bid should have sound financial backing.
• Appropriate financial safeguards should be in place, with the bid subject to external scrutiny by an independent financial authority.
• Supporters exercising this right should have the necessary expertise and business acumen to carry it through.
• The right to buy should be an option of last resort, only to be implemented in extreme circumstances when a club is under stress.
• The owner should have the right not to accept the bid.

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

Many respondents argued against enshrining the right to buy in legislation.

Most commonly, respondents argued that there is no need for a new law as many supporters already have the opportunity to buy their club under existing company law, and many questioned how the new law would fit with company law. It was felt that preferential treatment given to football club supporters would be out-of-step with business protocol and legislation.

"If a football club is a company limited by shares, there is an opportunity to buy the club right there" (Individual).

"I think European legal and company law would dictate this rather than the Community Empowerment (Scotland) Act deciding this" (Individual).

In keeping with responses to earlier questions, common arguments were: that what is best for one club may not be the best option for another and this should be about individual clubs rather than blanket legislation; and Scottish Government should not involve itself in football with this proposal being seen as a step too far.

Finally, some argued that forcing a club to sell against its wishes is unfair, particularly if the current owner has invested much into the club.

General views on the perceived drawbacks of supporters buying their club

Many respondents argued generally against the principle and practicalities of supporters buying their club.

Some respondents expressed concern that the proposal could be open to abuse, with unscrupulous people, posing as bone fide supporters, taking over clubs. Others commented that all supporters may not have the best interests of their clubs at heart, and friction could develop between different supporters within the buy-out group.

"Supporters are not saints; they are just as susceptible to factionalism as any other governing body and just as subject to self-seeking motivation rather than motivation in the interests of the club as a whole, including the interests of the fans. A strong dose of reality is needed to avoid clubs falling into the hands of the unscrupulous" (Individual).

Another recurring view was that giving supporters the right to buy their club would create uncertainty for potential financial backers, presenting a threat to would-be investors and generally be a deterrent to future investment. Some respondents predicted a stagnation of investment due to the uncertainty.

"There is also a possibility that the right to buy would be a disincentive to buying and investing in a club for non-fans groups, which would clearly be detrimental to the game overall" (West Lothian Council).

"…this may dissuade private investment in clubs and non-supporter interest in purchasing clubs" (Stirling Council).

Others forecast share values dropping, for example:

"A right to buy would also cut across the principle of unfettered ownership of shares in the UK. This in turn would be a serious impediment to the sale or marketability of any such shares and would likely have a significant negative impact on the value of the underlying shares, affecting both the value held by existing shareholders (whom, in many cases, will be supporters of the club) and the underlying value of a club's assets" (Celtic plc).

A small number of respondents cautioned that, even if supporters manage to buy their club, over the longer term this may not be commercially viable. They doubted whether supporters could sustain the funding required to weather the bad times as well as the good and they questioned whether all the operating costs associated with running a football club would be taken into account at the bidding stage.

" FFC's Sustainability Review looked at examples of supporter ownership and a common problem was the inability to raise significant funds to support current operations, invest for promotion or avoid relegation" (Falkirk Football and Athletic Club Ltd).

One further substantive argument against supporters buying their club was that supporters may not have the organisational skills to buy their clubs and run them successfully. Such doubts were expressed in relation to larger clubs in particular:

"I have no desire to have my club run by a bunch of amateurs" (Individual).

Summary of key points

The question of whether a law should be made to give supporters the right to buy their club attracted the highest level of response of all the consultation topics reflecting prompting by the Green Party via its Fans First campaign to support such legislation.

A clear majority of individual respondents favoured making a law to give supporters the right to buy their club; views of organisations were mixed.

The most common argument in favour of giving supporters the opportunity to buy their club was that this will safeguard football clubs from asset-stripping and those intent on short-term business gain. Another prevailing view was that supporters will do what is right for their club and will ensure secure stewardship into the future.

The most common argument against making a law to give supporters the right to buy their club was that they already have the opportunity to do this under existing company law. Preferential treatment given to football club supporters over other potential buyers was seen as out-of-step with business protocol.

A common concern was the proposal to give supporters the right to buy their club could be open to abuse with unscrupulous people potentially purchasing the club posing as bone fide supporters. Other prevalent concerns were over: friction between different groups of supporters; deterring future investment; value of clubs dropping during the purchasing period; and longer-term viability of clubs purchased by supporters.