Thursday, January 31, 2008

Share & Share Alike?

Like many people, I had spent much of the last year or so wondering about the supine reaction of Liverpool supporters to the Gillett & Hicks take-over. Here were two people coming in with no apparent prior interest in Liverpool Football Club, making numerous promises and claims, but with the prevailing common knowledge becoming apparent that they didn't have the cash up front to pay for it. Very few people that closely connected wondered aloud where the money was going to come from. The club was being purchased for £300m and the new stadium will cost something like £400m. These are substantial amounts of money. They were also making promises of spending obscene amounts of money on players. In spite of this, Stars & Stripes flags were flown on match days. The arrivistes were feted as saviours. It was almost as if no-one had been paying any attention to what had gone on forty miles up the road at Old Trafford for the last few years or so. Considering that Liverpool is the city that was the birthplace of Militant, the home of the Dockers' strike and a city which remains one of the most politically left-wing in Britain, it was all most perplexing.

Over the last few weeks or so, the wheels have come spectacularly off the wagon for the new owners. They may have secured the refinancing package that they desperately needed, but it hasn't come cheap and it is now common knowledge that, just as at Manchester United, a football club is effectively paying for itself to be taken over by outside investors, and at a cost of £30m per year in interest payments alone - money which, ultimately, will come from the supporters themselves. The seeds of the problems for Gillett & Hicks were sown in their treatment of Rafael Benitez. Whatever the shortcomings of Benitez are, he has taken them to two European Cup finals in three years and is still enormously popular on Merseyside. The club's apparent misjudgement of this incurred the wrath of the supporters and a demonstration march to the ground towards the end of last year. The lack of harmony within the club may or may not be directly responsible for the club's slump in form, a slump so severe that it hasn't merely ended their Premier League championship bid but will quite possibly result in them taking part in the UEFA Cup next season rather than the Champions League. There was a further demonstration against Gillett & Hicks at the recent match against Aston Villa. Something, one suspected, was in the air. At last.

The upshot of it all is "Share Liverpool FC", launched today in the city by Rogan Taylor, a long time Liverpool supporter and the chair of the Football Supporters Association, Kevin Jaquiss, a lawyer specialising in employment law who was part of the group responsible for writing the legal model upon which all supporters trusts are based, and Phil French, a former director of communications of the Premier League who is now employed as the chief executive of Supporters Direct. In terms of knowledge and support, you couldn't really ask for much more experience. The plan is a simple (if ambitious) one: persuade 100,000 Liverpool supporters to pay £5,000 each and raise £500m to buy the club, and then run it as a not-for-profit mutual society, with no shareholder dividends and no profit. The group has had a somewhat shaky start (such was the level of interest that the web site collapsed fifteen minutes after it went live and, at the time of writing, hasn't recovered yet), but this would appear to bode well for them - a considerable amount interest in a concept that very few people had even heard about as recently as a couple of days ago.

So, can it work? Well, it
can. These are monstrous amounts of money, though - are there 100,000 Liverpool supporters in the world who will part with £5,000 in order to take control of the club? Are there that many supporters groups that will band together and buy shares between them? The next few weeks will provide a few answers to this, but it is worth remembering that if nothing else, we should applaud the principle of this idea. Some, such as the apparently "humorous" website Who Ate All The Pies, have already chosen to scoff at the announcement, with a magnificently ill-informed article on the announcement that appears to have been written on the back of a cigarette packet in the pub. I don't know which part of their piece on the subject (which I'm not linking to from here - if you want to see it, you can go and look for yourselves) is the worst: "They should leave the running of the club to the money men in suits who know about such things", or "this is communism at its most hare-brained" are vying with each other (and a whole host more) for the most the most ill-informed comment on the subject. Having embarked upon second and third readings of it, I can confidently state that more or less every single sentence of it is as bad as the one that preceded it.

My personal inclination is to think that this plan is unlikely to work, but that this shouldn't preclude people from supporting it. What, exactly, are the alternatives? Well, there's The Middle-Aged Man Possibly On The Cusp Of A Nervous Breakdown Model (Newcastle United), The Asset Stripping Leveraged Buyout Model (Liverpool, Manchester United), The Billionaire That Could Get Bored At Any Moment And Leave Your Club Staring Into The Abyss Model (Chelsea), The God Knows What He's Up To Or, For That Matter, What His Predecessor Was Up To Either Model (Cardiff City), The Buy The Club, Kick Them Out Of The Ground, Sell The Ground And Vamoose Model (Brighton & Hove Albion) or The Former Foreign Dictator Who Could Find All Of His Assets Frozen At Any Moment Model (Manchester City) to choose from. I'd be more inclined to be critical of this project if the people that have run our clubs for the last one hundred and thirty years or so were paragons of financial and moral rectitude, but the bare fact is that they're not. If Share Liverpool should fail, they'll have at least given it a go, and it might plant the seed of an idea in the supporters of other, smaller clubs. If does turn out to work, it might just revolutionise the way that English football is run forever. Seems worth a try, doesn't it?


Red Ranter said...

Fair enough. But you forgot to mention the MyFootball Club model. It is a try too, and you were critical of it. I understand your reasons for being critical of MyFC, but it surprises me that you have been fairly accommodating of the Share Liverpool project, when there is still precious little known about their 'business model'. A not-for-profit thing is dodgy to me. Although Barcelona have found success in this model.

Of course, I am a Man United fan and it would amuse me to no end to see the current predicament of 'Pool.

This is not saying that our club is foolproof at the moment, but at least we aren't the laughing stock of the world -- for the moment. (And playing some excellent football to boot.)

PS: Have been a regular reader but have been averse to comment because of your particular distaste of anything in the Premier league -- especially the so-called Big Four

200percent said...

The biggest single reason that I am being accommodating of this project is because I believe that the devil is in the detail. The business model is sound. It's covered by the Industrial & Provident Society Act, and it would essentially turn Liverpool FC into a massive co-operative society. The law itself provides enough safeguards to ensure that no-one can profit from it. It certainly works at smaller clubs (and I don't use the word "works" in terms of "winning trophies" because, to me, that's not what this is all about - I mean it in terms of "provides a stable type of club ownership, which prevents the club from recklessly running up debts and safeguards its future off the pitch".

My primary objections to MyFC are two-fold - firstly, I object at a personal level to Ebbsfleet United being used for such an experiment. I do not believe that there is a safeguard in place to cover the club should there be, say, a massive fall off in memberships if people don't renew. Secondly, the issue of the Trust (which runs the club) having a contract with the Limited Company (which "maintains the website") essentially means that someone will be making a profit from MyFC, under the cloak of mutuality law. I would happily bet a pound to a penny that those behind Share Liverpool will not have such clauses into the Trust user agreement should this take over ever happen. The public statements made by the MyFC "legal team" didn't exactly fill me with confidence, either.

Duffman said...

Agreed, MyFC is a social networking business using Ebbsfleet as its centre. That’s a shocking way to treat a football club. This Liverpool scheme is an entirely different model similar to those used on the continent.

I am also pessimistic over its prospects. However, it is an exciting idea which deserves support.

Not from me though I hate Liverpool.

ursus arctos said...

There was an interesting article in Le Monde this week about a French knock-off of MyFC, which has collected 50 Euro a head from several thousand punters in the hope of buying a lower division club.

The French equivalent of the FSA is investigating the entire enterprise, as they believe that they may have violated French securities laws on selling securities to retail investors (no prospectus, no disclosure of risks, direct solicitation, etc.)

Tom said...

Ursus, could you post or email me a link to the Le Monde article?

I also think Ian's support of the Liverpool scheme is entirely consistent with his coverage of MyFC and the Supporters Trust movement in general, as the former has little connection to the latter. Whereas the Liverpool scheme is endorsed by the Supporters Direct hierarchy.

ursus arctos said...

Tom, the article is here (http://www.lemonde.fr/archives/article/2008/02/01/devenir-proprietaire-d-un-club-de-football-professionnel-sur-le-web_1006345_0.html) with the last paragraph being the key one. I've read a bit into the AMF's refusal to comment on the basis of my own professional experience with them (and note that L'Equipe reached a similar conclusion here (http://www.lequipe.fr/Football/breves2008/20080201_185029Dev.html).

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