Foresight Not Crisis: How Scottish Football Clubs Are Moving Into Fan-Ownership

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The good owners are right on their doorstep all the time, literally on their doorstep, the local supporters, there they are at every single club.

SD Europe recently sat down for an in-depth interview with SD Scotland’s CEO Alan Russell to dig deeper into the phenomenon of structured transitions – a carefully planned process by football club owners and supporters to move a club from private ownership into fan-ownership. You can listen to an extended version of the interview below here.

It seems quite often now that another Scottish football club announces it is moving into fan-ownership. But rather than the usual story of a club failing and supporters having to band together to pick up the fragmented pieces to start again, owners are working with supporters groups to handover control.

This phenomenon, termed as a ‘structured transition’ by SD Scotland, offers football club owners the opportunity to protect their legacy and pass on the ownership of a football club to its supporters whilst working with them to ensure they are prepared to continue running the club well for the long-term.

Can you just give a brief summary of what the idea of a structured transition into fan-ownership is, and is this a term that SD Scotland coined?

There was a bit of a pattern to what was happening in Scottish football clubs. And I wanted to write about it and wanted to give it a name that I could remember so I could talk about it as being distinct from other things. So it is a term that we’ve coined up here to describe what happened to a few clubs in Scotland and really what it is, is a move for a club being under conventional traditional ownership and to fan-ownership, but done in a way that doesn’t have to come out of crisis. And it’s not where the supporters are seen as the as the owner of last resort, which I think has been the case in the past in Scotland and elsewhere, is that clubs only really went into supporter-ownership as a last resort when they were in crisis, when there was nobody else willing to take on the club and a way of keeping it alive. Structured transitions are a proactive step by an outgoing owner to say, ‘well, I want to go into partnership with the supporters group in order to gradually move into supporter-ownership and give it the time to work and for it to be a lasting way of embedding their legacy in the club’. We’re very deliberate to describe it as something that’s planned, something that’s good for everybody. It’s good for the outgoing owner, it’s good for the supporters group and it’s good for the future of the club.

Is it fair to say these traditional owners have started to realise the opportunity that’s there to become a supporter-owned club?

I was talking to somebody, an owner of a football club, a traditional owner, and he said to me, it’s far easier to buy a football club than to sell a football club. And if you’re reaching the end of your time or the end of your money and you want to sell it to somebody else, it’s very, very difficult to find a good owner or a good buyer for that club, whereas anybody with the gift of the gab can turn up and convince somebody that they are going to be a good owner. So it’s very, very easy to buy a club and a lot of them are for sale, but it’s harder to sell it to a good person, to the right person when you want that to happen. And I think that stuck with me ever since. This traditional owner would say ‘how do we find somebody to take on the club and keep on doing a great job? The way that I’ve been doing, the way that I want to do it for the next few years. But when my time’s up, how do I pass it on to somebody who’s going to keep on doing a good job of it?’ So that’s the other thing that drives the need for structured transitions in supporter ownership. The good owners are right on their doorstep all the time, literally on their doorstep, the local supporters, there they are at every single club, if only they had a way of figuring out how to make it work, without it being a risk to hand over. That’s this idea of a tapered handover from one owner to supporter-ownership.

So which was the first club to do this? And what triggered this method of ownership conversion?

Clyde and Stirling Albion were supporter-owned before Hearts got into financial trouble in 2013. But it wasn’t done in quite the same way. They were more like traditional transitions into supporter-ownership. The first club to actually get a long term planned stable transition as a way of achieving that was at Hearts where Ann Budge (Scottish businesswoman) stepped in with deep enough pockets to keep things going, to get the club out of trouble, but then said her goal always right from the word go was that she would basically look after the club until the fans were ready. So she was the first one to put that kind of deal in writing. So right from the start, the Hearts fans had a plan that they had a formal contract in place that when they hit all these requirements, then that will trigger the transfer of the shareholding. So they were the first club to do it in Scotland eight years ago. And that’s the really interesting part of it, is it’s eight years down the line and they’re ready to take over. It would have happened last year but the pandemic got in the way, so they put it on ice until after lockdowns finished and it’s now planned imminently.

Hearts fans pictured as a part of SD Scotland’s ‘Colours of our Scarves’ project

Was there a date set in stone in the agreement between the owner of Hearts and the supporters that the transition had to be completed by?

It never had to happen on a specific date. It had to happen when they raised enough funds to pay off the last instalment of the debt to the owner. She put a large sum of money in and they were working to pay that off and then once they paid the last instalment of that, then the shares would be able to transfer across. So they made the last payment in February or March of last year. They then decided on a date to formally take on the share ownership.

How many clubs have gone through this process or are going through this process at the moment?

Two have gone through that process already. And there’s two more where there’s exploratory steps being taken. So the second one to happen through this kind of model was at St. Mirren back in 2016. A guy called Gordon Scott, he invested money temporarily to buy over the working majority shareholding from outgoing shareholders and had a plan in place with SMiSA, the St. Mirren Independent Supporters Association, that they would gradually take his shareholding over. And in the meantime, they would have a director on the board of the football club to basically learn the ropes. They structured it so that every two years another fan would come into the boardroom to get experience of being a director. So by the end of five years or six years or eight years, however long it took, several people would have had real experience of being part of decision making at the club and know exactly what it took to run the club so they would work alongside Gordon Scott to basically be ready to take over and also in the meantime, raise the money to do it, and then the handover of shares, which would happen at the right time. They’re on track probably before the end of this year to take on that majority shareholding from Gordon Scott and then operate the club as majority shareholders. And again, it was very deliberate, an individual said to supporters ‘I think you’re the best model for this club as owners, going forward. I’ll help you get there and I’ll give you the time to be ready for it, to raise the money so you don’t have to cut corners along the way and also have the experience to run it’. The next one after that was Motherwell in 2017. Again, it was maybe three shareholders decided to buy the majority stake and then work in partnership with the Well Society (Motherwell supporters trust). What they did there, they handed over control of the club to the Well Society straight away and they retained a seat on the board as well. But the Well Society set up an operational board to run the club straight away. And they had an agreement with those other shareholders that would gradually pay back their debt over a few years.

Is it fair to say that there’s not just one way to go through a structured transition and in fact there are a number of avenues to go down to achieve the final result of fan-ownership?

I think the only thing that’s consistent between all five of these is the level of trust and the level of credibility that the fans organisations have. If they have that credibility, if they have experience, if they’ve already got a good relationship or at least a working relationship with somebody with the wherewithal to make it happen, then they can do it any way they want. It can take any form, it can go for any timeframe. And if you’ve got the trust there, you can put these arrangements in place and hold each other to account. That’s the bit that you need to have, but everything else is really open for negotiation or the creativity and to figure out what’s right for the club.

Do you think there is something inherent to Scottish football that uniquely places it to this method of converting football clubs to supporter-ownership? Is there something about Scottish football?

I think there’s a few things actually. The first one is just the numbers involved. For most of our clubs, it’s a relatively achievable goal to have, to say ‘we could collectively own this’. I think in the English Premier League, if you look at teams and what they are spending, £80-90 million on a player or several players for that, those sorts of price points every summer. The massive amounts of money flowing around English football in the top flight and even in the in the second or third tiers dwarfs the kind of money that’s in most of the Scottish game. I think the second thing is that we have a lot of football clubs in Scotland. We have 42 professional clubs for a country of less than six million people. Every large town has a professional football club in it. So the clubs are closer to the community. I think just the number of clubs that we have means most clubs are smaller. The average attendance for most Championship clubs is around two to five thousand fans in the second tier of our game. They’re not operating on this financial landscape that makes supporter-ownership a massive, massive challenge. We have lots and lots of medium sized or small clubs that make it more achievable to do it. I think the last thing and this might sound quite political, but by its very nature, Scotland is quite a collectivist country where we are left-to-centre on most things. Generally, we have a lot of people that believe in collectivism and collective ownership and a long history going back generations of trade unionism and a lot of principles in that are the same as acting together for the common good. And that just gives you a different idea of what would be possible and a different idea of what’s normal. It’s normal for people to come together and do things together. I think so and that’s just my personal political perspective. Others might disagree with me.

Motherwell fan pictured as a part of SD Scotland’s ‘Colours of our Scarves’ project

What do you think has been the standout benefits from going down this route into fan-ownership where there is this transition as opposed to waiting for the inevitable? And have you observed any sort of challenges or side effects that that clubs and supporters have had to negotiate going down this path?

The advantages first, the advantage is it gives people a good look at each other and at the club, so allows you a prolonged period of due diligence. But it also allows the owner to really see the credibility of the supporters group and see these aren’t just idiots that are calling for the manager’s head at every turn and that are only interested in how many goals they put past the opposition on Derby Day. They are calm, sensible, credible people and also they have a lot of skill and experience within their ranks. It also gives the fans an opportunity to work alongside the owner just to see what the pressures are. See the difficult decisions that have to be made in order to balance all the other competing priorities, balancing the books, competing on the park, investing in the future and the rest of it. So they get to see the owners as real people rather than these kind of one dimensional or maybe two dimensional figures, sometimes ogres, sometimes white knights. When none of those things are true. Most owners aren’t ogres, most owners aren’t white knights, most owners are somewhere in between. So that’s the biggest advantage, building that credibility and experience. The challenges are around maintaining people’s enthusiasm for it. When you’re deep in crisis, it is easy to motivate people to put their hands in their pockets to help out. When you’re seven or eight years into that handover period, it’s not as exciting as it was at the start. And actually keeping your membership levels and keeping your financial contributions up, that’s a challenge. And you have to work hard at it. Again, there’s an advantage to that because you’re going to have to work hard for the rest of time. So it allows you to kind of set that expectation that we’re going to be fan-owned, we don’t have deep pockets. We don’t have a spare three million down the back of the sofa to buy a centre forward in the January transfer window. In order for us to compete and be able to react to changes, we’re going to need to build up a buffer of contributions from members. So you can turn it into an advantage if you campaign the right way.

Viewing the situation in Scotland externally, it does seem that more clubs are turning to supporter-ownership each year. Is this the case? And is there anything in particular that you think has catalysed this?

I’m not sure it is increasing every year. It’s quite steady progress. I think there was probably a surge of interest in the idea back when Supporters Direct was formed about twenty years ago, there was a surge of interest in supporters’ trusts setting up with an aspiration to do that. It’s more or less one per year a club starts this process. And that’s a fairly steady drip rate. And I think what’s happening is, it’s certainly increasing the numbers of big clubs that are looking at fan-ownership in those top two divisions. The thing that’s catalysed that is owners of football clubs talking to each other on match days in the boardroom. Any club that goes and visits St. Mirren, Hearts or Motherwell, is entertained and sees how professionally the club is run and sees the supporter director in the boardroom talking about what’s happening and what their aspirations are, seeing the improvements that they’ve made to the club in the meantime. Then those visiting directors or owners will have it in their head that it is something that might work for them. And it’s something I’ve heard from them, from the supporter directors at some of those clubs. They’ve said there’s more conversations about it on Saturday afternoon in the boardroom now, there’s been visiting directors ask what it’s all about. And, people who would previously dismiss it as a crazy idea that has no chance of ever working, actually can see for themselves that it is working. We’ve been very deliberate about the way that we talk about this, we say this is an opportunity for you to ensure that the good work that you’ve done continues. That’s a very different perspective coming from us than maybe they’re expected to come from organisations like Supporters Direct Scotland. They want somebody to look after what they’ve done after they’ve gone. And it’s only the bad owners that would disagree with that.

Looking more broadly, there is even a campaign by supporters of Celtic FC to try and gain shares in the football club now, do you think the future of Scottish football is fan ownership?

I think the future of Scottish football is for fan-ownership to be the norm rather than the exception. We will probably never get there for every club unless we had something like the 50+1 rule come in that forced everybody to do it and it would have to come in probably beyond just Scotland because Celtic you mentioned your question, Rangers as well, Aberdeen, they have ambitions to compete in European football. Other clubs do as well. I’m not saying they’re the only three, but Celtic and Rangers particularly, they operate with much bigger numbers than the rest of Scottish football. And there’s a handful of clubs at the next tier down that have lots more money flowing through them than the majority of football clubs. But certainly for our biggest clubs, in order for them to continue to compete in European competitions, if they’re to have realistic ambitions to get to the knockout stages of the Champions League more often than once in a blue moon, that’s a big step to make under fan-ownership. We don’t have the money coming into our game through broadcast deals in Scotland that would allow them to do anything other than either rely on money coming in through the turnstiles, benefactors or lending. We absolutely can’t rule that out, because that is how a lot of clubs are able to compete, by borrowing from tomorrow. The present of Scottish football has got more fan-ownership in it than it used to, and I think in of the next couple of decades, we’ll see more clubs going down this route and it will actually feel like the right thing to do and a very natural thing for clubs to do.

These examples from Scotland highlight that private football club owners are appreciating the long-term sustainability and opportunity to preserve their legacies by working with supporters to secure football clubs’ futures through supporter-ownership. Scottish football demonstrates what can be achieved when supporters and owners work together to protect their football clubs and bring them closer to their communities.

Thank you to Alan and SD Scotland for providing an insight into structured transitions.