Letter to Brian Quinn June 2005

Published on Wednesday 8th June, 2005 by Celtic Trust

Desmond's disappointment - a Celtic Trust response

On the 3rd June an article appeared on the official Celtic Football Club website entitled “Desmond's Disappointment” In this article Celtic Plc Board Director Dermot Desmond, the holder of 29% of the shares of Celtic Plc, took the wider Celtic support to task, critically focusing on what he perceived as the supporters' lack of financial commitment to Celtic Football Club when compared to his own. In response the Celtic Trust has written to Brian Quinn, Chairman of the Celtic Plc, raising a number of points. The text of this letter is as follows: Brian Quinn Chairman, Celtic Plc Celtic Park Kerrydale Street Glasgow, G40 3RE 7th June 2005 Dear Brian On behalf of the Celtic Trust, I am writing to you, in your capacity as Chairman of the Board of Directors of Celtic Plc, regarding the comments made by your fellow Board Director Dermot Desmond at the end of last week, which were published in an article on the official website of the club under the title: “Desmond's Disappointment”. You may be aware that some of these comments have greatly angered very many fans including many of our own members; notably Dermot Desmond's assertions that the wider Celtic fanbase lacked financial commitment to Celtic Football Club when compared to his own. A number of issues arise from these comments and we felt it necessary to contact the Board in order to seek clarification. Firstly, we would like an explanation as to why his condemnation of the treatment you received from a minority section of the support, which we also found distasteful, was then linked to some extremely disparaging remarks regarding the financial commitment of the wider Celtic support to Celtic Football Club? Second, we would like to ask if any explanation will be forthcoming as to why these remarks were made some number of weeks after the incident took place? Clearly Dermot Desmond is entitled to his opinion and is also entitled to make that opinion public. However, we note with some considerable dismay the fact that this opinion was made public via the club website. We would regard as wholly inappropriate, and poor corporate governance, the use of the club website as a mechanism for individual Board members to communicate their private views. We would like to know if his views can therefore be taken as reflecting those of the Board as a whole? Notwithstanding the point made above, it is also our view that fans/shareholders have an absolute right to direct criticism, in an appropriate way, to those people entrusted with the running of Celtic Football Club, without being the subject of insulting and misleading comments in response by Board members. We further note the following: Dermot Desmond states that he has never heard the fans say “Let's double the price of season tickets so we can use the funds to buy players”. In the period since Mr Desmond has been on the Board at Celtic Park, the average season ticket price has not just doubled but has, by some measures, almost quadrupled - we can provide you with the relevant supporting data should you require it. In addition, statements you personally made to the BBC in 2001 made it clear that you understood that season ticket sales were the primary source of income for players. Has your view now changed? If not, this should be made clear given the confusion which Dermot Desmond's comments regarding season ticket prices might have caused. Mr Desmond and his fellow Board members must take the responsibility for the very poor decisions made during the Dalglish/Barnes/McDonald era, during which Celtic went from having virtually no debt to having debts of around £21million. In the view of the Celtic Trust, Celtic Football Club continues to be constrained by the financial consequences of this era of management. In our view, these debts necessitated the 2001 share issue, in which Mr Desmond invested heavily on very favourable terms. Specifically, he now holds eight million convertible preferred ordinary shares on which he, along with the other investors in the 2001 share issue, is guaranteed a dividend of 4.per cent plus a strong degree of protection that the value of his holding will not fall below a level associated with the £1.25 per share issue price by 2007. He has already been paid over £1million in dividends on those shares alone. At the same time the original 1995 investors, who were in very large part ordinary fans with ordinary incomes, saw the value of their investments decline by more than 50% after the 2001 share issue. These remarks hold regardless of the fact that Mr Desmond and other Board members also bought shares in 1995. A section in the “Desmond's Disappointment” article states that Dermot Desmond “has invested significantly more in Celtic than any individual in the club's history”. As far as we are able to ascertain, Dermot Desmond has not made any losses as a result of his investment in Celtic and indeed has derived some significant income via dividend payments. If this is not the case we call on him to make a clear statement of what these losses amount to. In any event it is inappropriate for him (and other Board members) to continually make comments which portray him as a benefactor rather than an investor. As a private individual he is entitled to make any investment decision he so chooses. However, the proportion of his disposable income which he contributes to the club in terms of revenue, is miniscule compared to that spent by the average fan, the latter with no expectation of a financial return. We find it incredible that a person of his financial background can compare the financial commitment made by Celtic fans in terms of season tickets, merchandising and travel to both domestic and European away fixtures - all with no hope of any financial return - with the sound business investments which are made by shareholders with a clear expectation of both a dividend and a capital gain. Frankly, it is exactly because of pronouncements such as the one made by Dermot Desmond that the Celtic Trust continue to campaign to have an elected supporters' representative to be appointed to the Board of Celtic to ensure that Celtic Plc Board decisions remain sensitive to the concerns of the ordinary fans, the people on whom the financial success of the club is ultimately dependent. These are the same group of people who invested in huge numbers in 1995 to buy shares as part of the original financial reconstruction of the club. By our calculations, in the past 6 years alone fans have, by buying season tickets, match tickets and merchandise, contributed to revenues at Celtic to the tune of almost £223 million! This makes the wider Celtic support the biggest single investors in Celtic by a country mile. In addition the role of Celtic fans as ambassadors for the club has been formally acknowledged by both UEFA and FIFA. We call on the Board to make an immediate public announcement acknowledging the crucial role which the fans play in making Celtic financially viable, specifically, the extent to which season ticket money alone contributes to total revenue at a time that the 53,000 odd season books at Celtic Park are being renewed. Given the seriousness of the issues raised by Dermot Desmond's comments, we advise you that we intend to make the Celtic Trust's position on the matter, as outlined above, public via our website. We would also intend to make public any response by yourself on behalf of Celtic as these matters are of critical interest to all Celtic supporters. Yours sincerely The Secretary The Celtic Trust


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