The opportunity for foreign investors to buy into the multibillion-pound football industry in the UK has been highly popular.
Forty five per cent of the Premier League football clubs are owned solely by one shareholder with 70 per cent of the 20 clubs having nine or less shareholders.
The opportunity for supporters to have voting rights and influence the governance of the clubs is greatly diminished when the clubs are solely owned by foreign businessmen – who mostly have a lack of in-depth football knowledge.
This is unsurprising considering that Premier League clubs account for six of the 10 most valuable clubs in the world, with Manchester United top at an estimated worth of over £3billion.
Research into the ownership of football clubs across England’s four divisions and
the Scottish first division has revealed some interesting yet sadly unsurprising figures. In recent years the distance between the fans and the influence they have on the running of their clubs has been growing, with many fans becoming frustrated by the lack of interest shown by owners into the results of the clubs – several owners not showing up to matches for several years, for example.
These issues have been highlighted publicly by some sets of supporters protesting and pleading for the owners to sell the club to someone who will have more of a proactive interest in football rather than just viewing their club as a business such as Coventry City and Blackburn Rovers.
In 2000, Supporters Direct was established in light of the growing issues facing football supporters and their diminishing control over the clubs decision making.
The organisation has helped establish more than 107 supporters’ trusts that have a shareholding in their club, providing the supporters with a foothold in their club’s governance. However, the future of the organisation is under threat with uncertainty surrounding funding. With the football leagues generating billions of pounds, why is there not more being done to encourage supporters to have an input in the club’s governance? The current issues that surround football clubs relating to owners running them into the ground, date to 1983 when the FA’s Rule 34 was abolished.
Rule 34 stated that “no member of a football club could draw a salary as a director” and “no one could take an income from owning share in a football club, and any dividends were restricted to just five per cent of the face value of any shares.”
When it was realised that profits could be made from the growing revenue of TV rights, Tottenham, for example, found a loophole by having a separate holding company owning the football club thus freeing themselves from financial regulation and forcing the FA to abolish Rule 34. There are some positive outcomes to be borne from the reduced regulations. Chelsea, for example, have established themselves as a top club in Europe since the takeover by Roman Abramovich in 2003.
However, such owners have been widely criticised for overpaying players and wages spiralling out of control.
The lack of regulation and restriction on who can purchase a football club is astounding. Up until last month it has been possible for foreign owners to purchase a club even if they have committed offences in their home country that would be considered illegal in the UK. These regulations have been tightened recently although perhaps too late for Southampton as they could be taken over by Chinese investors, whose founder has previous allegations of corruption in his home country.
The ownership issue does not stop at the Premier League. Sixty three of Championship clubs have three or fewer shareholders, 87 per cent of which have just one shareholder. Research shows that the Championship is slightly more encouraging for football supporters with 37 per cent of football clubs having hundreds of shareholders, compared to just 25 per cent in the Premier League. Lower in the divisions, the number of shareholders increases. Only a third of League 1 and League 2 clubs have six shareholders or less with 63 per cent of these clubs having a large number of shareholders.
In the Scottish Premiership, 100 per cent of the clubs are owned by hundreds of shareholders. From these findings it is clear to see that the larger and more valuable clubs have little or no influence from supporters, with all of the top six Premier League clubs being owned by one sole shareholder.
Unless stricter regulation comes into force and more attention is paid to the supporters, the distance between the club owners and the fans is only going to grow.
The opportunity for supporters of some clubs to voice their opinions exist. Becoming a shareholder of your football club gives you the opportunity to vote in the decision making. JP Jenkins, a trading platform for unlisted securities, allows fans to buy and sell shares. Previously Arsenal, Liverpool, Manchester City and West Ham have traded on the platform with Millwall and Rangers supporters currently benefiting from this facility.
Max Medhurst, 22 is a graduate from the University of Nottingham and is an intern at share trading company JP Jenkins. He conducted research to find out which football clubs had multiple shareholders and uncovered some interesting results.