Supporter involvement in Scottish football clubs: consultation analysis

7. Views on Raising the Necessary Funds to Execute the Right to Buy and the Time Allowed for this

Background

The Scottish Government recognises that the "right to buy" or "right to bid" options would most likely need to provide a period of time to allow interested supporters' groups to raise the necessary funds or put in place the governance arrangements.

During this time the market value of a club and/or its assets may be impacted and others would be locked out of bidding which could lead to risk of reduction in the value of the club and other negative financial implications.

The Working Group recommended the establishment of a Business, Community and Football Enterprise Unit to provide expert legal and financial support (including provision of bridging acquisition capital) to football club supporters and owners seeking to restructure a football club to one focused in form and substance on social and community impact, and/or to provide advice and financial support to clubs, however structured, which seek to align their social and community activities with national policy initiatives.

Question 5: What are your views on raising the necessary funds, including the amount of time allowed for supporters to do so, to give supporters a right to buy their football club?

520 respondents addressed this question including 20 of the organisations and 500 individuals.

Amongst the respondents to this question, the vast majority were in favour, so long as a clear time limit is set so as to minimise uncertainty and prevent the process drawing out indefinitely.

Views on allowing time for supporters to raise funds

Many specified that in addition to current fund-raising, supporters should be required to have in place a well structured plan for sustaining funds over the longer term, similar to a business plan.

"Like any other business they should provide a business plan detailing the next 3 or so years for the club to show where this investment would come from and how it would be put to use" (Stewarton Academy Young Ambassadors).

An overarching theme was that consideration should not focus solely on raising the initial funds to bid for and purchase a club, but equal emphasis should be placed on sustaining funding and establishing necessary financial governance and expertise into the future.

"This comes down to people; if you have the right people with expertise and knowledge of funding or monies that are available and how to raise such an amount of money. If there is no expertise they should not entertain the notion of buying their club" (Cumnock Academy).

General concerns were expressed over protecting supporters from exploitation by lenders and ensuring tight controls are in place to prevent further financial crises.

A view shared by many individuals was that the period allowed for raising funds should be agreed on a case-by-case basis with factors such as size of club, value of assets and time of year all to be considered when setting the time limit. An alternative view was to set timescales perceived to be a reasonable balance to enable supporters to put their bid/funds together, whilst protecting the value of the club as far as possible. Most suggested timescales of up to one year, although durations of up to 5 years were also put forward.

A minority of respondents argued against allowing supporters time to raise funds to buy their club. The main argument was that supporters should not have any privileges or special status over other bidders. In a free market, where any party can bid for a club, a supporter-led bid should have the same terms as any other. Bidders who already have sufficient funds should not be held up in the bidding process whilst waiting for supporters to find adequate funds and bid against them.

"If an owner wants to sell his property to the man on the right who's got the cash in hand, the sale shouldn't be held up for the posse on the left to match him" (Individual).

Another recurring concern was that if supporters are given time to raise funds, the market value of clubs is likely to diminish during this period.

"We consider that any "bid period" during which supporters have a right to bid or buy to the exclusion of other third parties would negatively affect the market value of the relevant club's underlying shares and assets and the club's ability to secure future investment - the longer the "bid period", the greater the risk to the club" (Celtic plc).

A small number of respondents considered the entire issue futile as they perceived the concept of supporters finding monies to buy a club a "pipe dream" and irrelevant, particularly in the case of larger clubs.

It was also argued that any club in severe financial difficulty would require a fast solution rather than one which allowed supporters time to develop a bid and source funds. They emphasised that creditors would be pushing for immediate payment from any club in this situation.

Views on Scottish Ministers involvement in raising funds

One suggestion put forward during the passage of the Community Empowerment (Scotland) Act 2015 was that Scottish Ministers should provide funding to supporters' groups to allow them to make an offer to buy a football club, or provide loans and/or underwrite a purchase. However, the Working Group on Supporter Involvement in Football Clubs was of the view that it was not the role of Scottish Government to provide such support.

Of the substantial number of respondents who addressed the topic, a clear majority opposed the involvement of the Scottish Government in providing funding or loans to supporters' groups to allow them to bid for their football club. The main arguments against this were:

• This is not the role of the Government.
• It would amount to state aid which would have to be funded by the taxpayer and is not an appropriate use of public funds.
• The Government has more important things to do.
• This could be viewed as the Goverment favouring one club over another or favouring one sport over another.
• It would be just a short-term solution which would not address the issue of longer term financial support.

Amongst the minority of respondents who favoured the involvement of the Scottish Government in this role, a prevalent perception was that this amounted to investment in social and community capital and empowerment, which was seen as very much part of the Government's remit.

One individual commented that this should be no different from the Government's continued support of the arts and other sporting activities. Others envisaged the Government acting as a guarantor of funds and being involved on a short-term basis only.

Views on the proposed Business, Community and Football Enterprise Unit

There was much support from across several different respondent types for the Working Group proposal for a Business, Community and Football Enterprise Unit.

The proposed unit was envisaged as having a range of roles including: providing advice; providing training for supporters; mediating between owners and supporters; providing a safeguard against rogue bidders with ulterior motives; and enabling/overseeing efficient sourcing of funds.

Some emphasised that the Unit should be sufficiently resourced, supported and accountable. Others cautioned that care should be taken to ensure it did not provide simply another bureaucratic hurdle standing in the way of supporters purchasing their club.

Amongst the small minority of respondents opposing the proposed Unit, the Celtic Supporters' Trust argued:

"We have many reservations... e.g. if this was funded by Government then it may seek to impose political policies on clubs which may well be inappropriate and unacceptable."

Other concerns were:

• Not needed as other bodies exist to provide such help.
• The Unit may be without work during some periods and very busy at others - perhaps the role could be subsumed within another body's remit.
• It would need continued resourcing.

Views on widening the criteria and role of social investment institutions

The Working Group also proposed that the investment criteria and role of social investment institutions be widened to allow them to act as vehicles which could support football supporter collectives.

This proposal received general support from the small number of respondents who addressed it specifically.

Several respondents alluded to the need for some form of community investment fund or trust, with independent and impartial advice available, and funds available for community initiatives such a buying a local football club.

A few respondents recommended additional assistance in the form of tax relief for local organisations raising money to contribute to the purchase.

A recurring theme was that, rather than borrowing funds to bid for a club, supporters need to have raised the money from within their supporter base, thereby demonstrating their ability to raise and manage their own funds. This was also perceived as showing capacity to raise further funds over time, rather than simply raising initial monies which then run out leaving a club financially unstable further down the line. The "Heart of Midlothian model" was mentioned repeatedly as being effective in enabling supporters to buy their club from the owner in an incremental manner, over time, according to an agreed schedule of payments. However, a few respondents cautioned that such a model relied on a benefactor with available capital underwriting the process.

Summary of key points

Most of those who addressed this issue were in favour of allowing time for supporters to raise the necessary funds to buy their football club so long as a clear time limit is set to prevent the process drawing out indefinitely. A common view was that supporters should also be required to develop a well structured plan for sustaining funds over the longer term.

Whilst some respondents considered that the period permitted for raising funds should be decided on a case-by-case basis, there were others who argued for a set timescale, with up to one year most often suggested.

A clear majority of those who addressed the topic disagreed with the involvement of the Scottish Government in providing funding or loans to supporter groups to allow them to bid for their football club.

Much support was expressed for a suitably resourced and accountable Business, Community and Football Enterprise Unit which was envisaged as: providing advice; providing training for supporters; mediating between owners and supporters; providing a safeguard against rogue bidders with ulterior motives; and enabling/overseeing efficient sourcing of funds.

The proposal to widen the criteria and role of social investment institutions to allow them to act as vehicles which could support football supporter collectives was generally favoured by the few respondents who addressed it.