Response to ETims July 2005

Published on Sunday 31st July, 2005 by Celtic Trust

Why Supporters Should Have 'Trust' In Themselves

A recent article on the Etims website under the heading `Can Supporters Really be 'Trusted'?' had some pretty harsh things to say about the activities of the Celtic Trust and it's aspirations. Here the Celtic Trust gives its response. The Celtic Trust On the 1st July the Celtic Trust organised a meeting on the subject of: Malcolm Glazer's Take-Over of Manchester United - Why It's a Disaster for all Football Supporters; and The Implications for Celtic. The guest speaker was Sean Bones, one of the spokesmen for Shareholders United, the independent Manchester United supporters' organisation. Many of you will have seen Sean Bones on various TV channels in May and June as the influential Shareholders United - the supporters' trust at Manchester United - with its 32,000 members, argued their case against the Glazer take-over. In a nutshell Shareholders United's argument was that, as the bulk of the £800 million odd takeover was financed by debt (some of it at over 15%) it was virtually impossible to see how the Glazers could repay this debt without completely compromising the budget for players and ramping up the prices paid by supporters in the process, with a very real threat of bankruptcy at the end of it. Think Leeds United. Presumably on the basis that you don't look a gift horse in the mouth, our own Dermot Desmond (who owned a few per cent in Manchester United) and his friends John Magnier and JP McManus took the money and departed with their saddlebags well stashed. We at the Celtic Trust felt that this was a subject that Celtic supporters might be interested in and so we organised the public meeting to give Celtic fans the opportunity to hear what Shareholders United had to say. Our objectives were modest - we were not looking to change the world in one night. In the event 40 odd folk turned up on a warm July Friday evening. A lively debate ensued. Folk went away maybe a little wiser as to where the increasing commericalisation of football might take us. Job done. Nearly three weeks later, on the 17th July an article appeared on the Etims website under the title `Can Supporters Really Be 'Trusted'?' under the bylines of Hylas and Proudboy. It purported to be a commentary on the Trust event. In fact it was a rather bizarre combination of the bad and the good - factual inaccuracy, careless reporting, prejudice, mixed with quite a bit of fair commentary and insightful analysis - which left us at the Trust - if not necessarily unhappy - then certainly disappointed. So we would like to take this opportunity to set the record straight. At the outset can we also say that we at the Celtic Trust are big admirers of Etims. It is an excellent site, its great success underlined by its longevity. Also, we have also got a fair crack of the whip from Etims over the years, for which we're grateful. We are also well accustomed to taking a bit of stick - it goes with the territory and we wouldn't have it any other way - and frequently would just let this kind of thing go. And it is not even the case that we think that some of the things that Hylas and Proud Bhoy have to say don't have some merit - a lot of it does. It is just that on this occasion some of the assertions made are so ridiculous we cannot allow them to go unchallenged. So it's nothing personal but… Who are the Celtic Trust? First of all a bit of history… The Celtic Trust is a supporters' trust, an organisation established to represent the interests of small shareholders and supporters at Celtic. It is constituted as an industrial & provident society (a co-operative) with each member having one vote on matters of policy, and with regard to electing the officers of the Trust. There is a degree of financial rigour imposed by adopting this structure which makes the management of the organisation more onerous than that of a straightforward supporters' club. So, for example, every year the Trust has to submit annual accounts to the Financial Services Authority (FSA). As an incorporated body it can own shares in its own right, and we do own a few shares in Celtic There are over 120 such Trusts across the UK - more details of which can be found at the following website: Some of them have been very successful. For example, the Dundee United Trust, the Arab Trust, is the second biggest shareholder in United - (see under `Latest News'). At Celtic our impact has been more modest. The main focus of the Celtic Trust's activities over the last few years has been to raise independent resolutions onto the agenda of the Celtic Plc AGM. In 2001, 2003 and 2004 the Trust raised a resolution calling for Celtic to appoint an elected representative of Celtic supporters and shareholders to the Board of Celtic Plc. Our argument is that if Celtic have a genuine supporter representative on the Board it will enhance the quality of decision-making as discussions will benefit from the views of someone genuinely in touch with what the average fan is thinking. This is a modest enough objective. We are not talking a fan take-over here, just a voice, one amongst many, in the boardroom. Again Dundee United does have a director in their boardroom so there is no legal impediment to such an appointment. Those of you who know your corporate governance (yawn, yawn, we know…but, to quote Hylas and Proud Bhoy, in the world of the `big boys' these things matter) will know that best practice guidelines for public limited companies quoted on the stock exchange recommend that companies like Celtic have a certain number of independent non-executive (not full-time employees of the company) who provide a level of oversight on management decision-making, and who also provide a degree of experience and expertise not already present on the company board. What the Trust is proposing is that one, out of eight, Celtic directors, would be a supporter-elected director. Celtic has recently appointed former Energy Minister in the Labour government and Celtic historian Brian Wilson to the Board as a non-executive director. In our view, by submitting resolutions such as this one calling for an elected supporter-director the Board are kept on their toes and made more accountable. We think this is a good thing. We should also say that Celtic Plc have been exemplary in the way in which they have allowed the Trust to exercise its role as the representative of small shareholders in facilitating the raising of these resolutions onto the agenda paper. In the three years that the Trust has raised this resolution the number of shares voting in favour has virtually quadrupled to over 2m. So somebody is clearly listening. Last year the Trust achieved something of a breakthrough. The Trust put forward a resolution calling on Celtic to introduce a scrip dividend re-investment scheme. If accepted this would allow shareholders to re-invest their dividends in Celtic as new shares rather than taking cash, thus keeping more money in the club. At the time, the Plc Board called on shareholder to vote against the resolution but, having agreed to examine the proposition, put forward proposals at an Extraordinary General Meeting (EGM) on Thursday 21st July to introduce just such a scheme. It is to the credit of the Celtic Plc Board that they were prepared to introduce such a progressive scheme which will see more money becoming available to be spent on the playing pool. It is also clear that the catalyst for this decision was the independent resolution raised by the Celtic Trust at the 2004 AGM. (see for more details). Were all existing shareholders were to opt to take their dividends as shares, our calculations are that Celtic could be better off to the tune of £1million a year. In our view, if the Celtic Trust does nothing else then this small victory on its own would justify our existence. And so to Hylas and Proud Bhoy… The words & wisdom of Derek Johnstone! Hylas and Proud Bhoy begin by quoting with approval the great sage of Clydeside, Mr Derek Johnstone: `I don't know much about supporters trusts - I just know I don't like them'. Top man Derek. It takes a special kind of stupidity, crossed with a particularly preening splash of self regard, to declare with such authority that you dislike something you admit yourself you know very little about. At this point I suppose the massed ranks of Etims readers are probably pondering that perhaps it was ever thus with the bold Derek. But let's not digress. Let's just say that with this opener the alarm bells were starting to ring that maybe we were not in for an entirely objective account. The role of the Directors Having lined up behind the bold Derek, the authors then proceed to put the boot into the concept of a supporter director, opining: `What would they do, play with the abacus whilst the big boys talk money?' Inherent in this observation is the assumption that the critical thing that anyone brings to the role of a director is a shed load of cash. This logic dictates the boardroom would be full of multi-millionaires. In fact there is only one multi-millionaire in the Celtic Boardroom - Dermot Desmond. The remaining seven directors are successful men in their own right, but none of them are substantial investors in Celtic. For example, non-executive director Tom Allison holds only 20,000 ordinary shares, Eric Hagman holds only 5,000, and Brian Quinn a total of 35,125 shares across the three classes of shares (see page 13 of the 2004 Celtic Plc Annual Report). The reason they are there is because of their expertise. Presumably Brian Wilson has been appointed because his career in politics means he has experience/contacts that might be helpful to Celtic. As far as we know the founder of the Highland Free Press, a radical co-operative venture I believe, is not a millionaire. The Trust's proposal that a supporter-director be appointed follows exactly this same logic. Such a person would bring a range of experience and expertise to the Celtic Plc Board not already present. It goes without saying that this person would have to be someone of calibre. But in principle there is nothing to stop it happening except the willingness of Celtic's board to accept the good sense of the proposal. The absence of a big wallet is not a bar. Looking after number 1… Hylas and Proud Bhoy then speculate as the possible role of a supporter director; to: `Let the board know what real fans endure following the Hoops everywhere?' Well, actually, yes. Then the Board might be able to begin the process of improving things for ordinary supporters, thus increasing the satisfaction of the faithful, boosting revenue, which is then spent on better players. Is there a problem here? Unfortunately the lads find this an incredible proposition opining: `I don't know about you, but if I ever roam the corridors of power at Celtic Park I'll get tickets for every away game I can and as for sitting on a bus to Kazakhstan…'. OK. So it's fairly obvious that this particular commentary is informed by a fair dollop of self-deprecatory humour and we doubt if the guys really mean it. Nevertheless, if you did take this statement at face value then what the lads are saying is that if they ever got into a position of power they would screw the rest of us. Well, speak for yourself fellow Celt! At the risk of dating the Trust Committee members a bit, we feel these sentiments are all a bit Thatcherite and, dare I say it, un-Tim-like. Surely the whole spirit of being a Celtic supporter is about solidarity with our fellow supporters - this is what made Seville so special. The lads finish the paragraph with the rhetorical flourish: `All these theories are great ideals but hold no water when put into operation in a multi-million pound global industry'. Really? Are you Malcolm Glazer in disguise? Come on. We're better than that old shite. If Brother Walfrid had followed that line he would have been selling dodgy meat off the back of a wagon on London Road making money off people's misery, instead of setting up a football club with the aim of feeding the poor, improving their lives and giving hope for the future; establishing one the world's greatest sporting institutions in the process. Who are the Celtic Trust? Having established their ideological credentials as fully paid up members of the Margaret Thatcher fan club, Derek (`I don't know anything about it but I don't like it anyway') Johnstone branch, the authors then move onto to ask the question: who are these shadowy Celtic Trust people who speak at the AGM and get quoted in the papers as representing the small shareholder? `I know they exist but I have always found it hard to find any information about them.' Really? The authors complain that they had to trawl through 4 pages on google to find the Celtic Trust website. By our reckoning that should take about two minutes. Whilst we appreciate that in the Thatcherite mindset time is money, is that complaint, to use the vernacular, `ripping the ass out of it' a bit in the context of a two minute web search? The facts are that the Celtic Trust has had a website for the last four years. Any decent search engine will find it. It has varied in quality over that time, but it has always been there. Over that time we have had several thousand enquiries. We have answered virtually all of them. Our problem has not been that people have not been able to find us but that they have not been persuaded enough by what we have to say to join us - we put our hands up on that one. We dearly wish we had been more successful. But we can tell you when you are marching with O'Neill, God bless him, it's hard to rouse the faithful, and who could blame them. This is a challenge we acknowledge and is one we continue to work at. The Celtic Trust - Celtic's Only Banned Organisation Perhaps one of the reasons that more Celtic supporters have not heard of us is because we remain the only Celtic supporters' organisation who are banned - that's right banned - from publishing adverts in Celtic's publications. Chairman Brian Quinn justifies this on the grounds that the Trust represents a sectional interest - small shareholders - whilst directors represents all shareholders. Make of that what you will. According to Brian Quinn, Dermot Desmond represents you; OK? Right. Perhaps the real reason the authors had difficulty finding out the Celtic Trust is because they are a bit disorganised. For, having first lambasted the Trust for being difficult to communicate with, the authors then acknowledge that they were able to find out about the Shareholders United meeting in good time, but then `I had lost the details of the meeting'. But the day was saved when after a quick two minute search on google they find the details of the meeting again. In the light of this it is a little hard to take protestations about difficulties in contacting the Trust seriously. Its called democracy To be fair to the lads they arrive early for the meeting and, as they note, they walk in in the middle of `official business' As a formally constituted co-operative the Trust has certain constitutional obligations. One of them is to hold at least two members' meetings a year. So we have scheduled a business meeting of members for before the public meeting. We're a bit surprised to see the early comers as we have an operating assumption that as this is a meeting for Celtic supporters everybody will turn up five minutes before kick-off, just like at Parkhead! But that's OK. It is the tail end of the meeting so we reckon it's no great hardship for any non-members to sit through the final bits of business. Our reporters take a jaundiced view of the official business in their report. They observe: `I am too young to have attended a shop floor union meeting in the 70's but I imagine it was like this'. They don't mean this kindly either. This is a bit worrying. As what they saw was a formal meeting conducted under democratic principles according to the requirements of a written constitution registered with the Financial Services Authority. Thousands of these kinds of meetings take place every year across the country at co-operatives, members clubs of all descriptions, credit unions, company agm's, trade union branches, anywhere in fact where an organisation is governed by a written constitution, or memorandum & articles of association in the case of a company, which requires approval for rule changes/election of officers by a vote of members/shareholders. However, this is an area of life which would appear to have passed our reporters by, which is vaguely depressing. Under the Trust constitution, in order to put a resolution forward to a postal ballot of Trust members seeking approval to raise it as a resolution at the Celtic Plc AGM the Trust Committee must first seek approval of a vote of members at a general meeting. This is what we were doing. It is not very sexy or exciting but observing such formalities are a critical part of good corporate governance. The Trust Committee just cannot make it up as the go along. It may be a bit `70's' but it is necessary. In exactly the same way that the Board of Celtic Plc just cannot make up the business of the company AGM every October as they go along. They have a legal obligation to submit resolutions, such as those regarding the re-election of directors, to a vote at the AGM. It's not very exciting, but it has to be done…properly…before all the assembled shareholders get down to the core business of grilling the manager and the chairman, and Dermot Desmond if he can be bothered to turn up, about asking where the next Henrik is coming from. Shareholders United The authors then get onto the subject of the presentation from the representative of Shareholders United. Despite the fact that he is introduced as Sean Bones, that he is billed as Sean Bones in the meeting advertisement, our intrepid reporters refer to him as Sean Bowden throughout. Getting the main speaker's name correct is pretty basic. But they cannot even get this right. It doesn't exactly inspire confidence. To be fair to them, the lads then make a reasonably balanced report of Sean Bones' presentation. They are sceptical of Shareholders United's aspiration to ultimately take over Manchester United from the ruins of a bankrupt Glazer financial crash and burn. We at the Celtic Trust don't share that scepticism. But they are entitled to their opinion. Where forward for Celtic? The authors do make an important point that one reason why the fans' ownership model faces a particular challenge is that it is more complex to raise funds from large numbers of supporters - as in the case of the 1995 Fergus McCann-inspired share issue - than to just bring in a `Sugar Daddy' with a load of cash. However, the problem with Sugar Daddys, as Dermot Desmond demonstrates, is that they usually want a return on their money, whereas the supporters don't. Perhaps that is why two of the biggest clubs in the world, Barcelona and Real Madrid, are members' clubs. Both elect the club president. At Celtic that would be like use electing the Chairman of the club - what price Brian Quinn? The authors also make the valid point that given there our 22,000 shareholders at Celtic how come `apathy rules'? It's hard to argue with their explanation that `Perhaps Celtic supporters are content with their lot and have no issue to fight the board with. We are not at death's door and with any decent run we will win the league and have a go at the Champions League'. And then to be doubly fair to them they then pose the question: `Is this our ambition and is this our lot in life?' At this point it becomes obvious that behind all the bluster the authors are basically the same as the rest of us - passionate supporters of Celtic who are very frustrated about the fact that the club doesn't appear to be fulfilling the potential so evident in the events surrounding Seville. The authors clearly ask the question; wouldn't it be good if we could somehow fashion an organisation that could effectively mobilise these 22,000 shareholders? This is exactly the question the founders of the Celtic Trust asked when the set up the Trust five years ago. But, just when you thought they were about to throw off the old cloak of cynicism it's back to business as usual. The lads then proceed to lambast the Trust for the fact that the meeting is not packed to the rafters, having already provided an explanation in their previous paragraph - in comparative terms the club is still in the midst of a very successful period on the pitch, and in theory at least is in reasonable financial health, and so apathy rules. They then have a good old go at the Trust's communications failings - some of which is fair comment. There is no doubt that the Trust needs to do a whole lot better in terms of improving its communications but in order to do this you need more resources and the people with the right skills (if these people are out there please contact us now via our website as you will be welcomed with open arms). And then ask the accusing question: `who does the Trust represent?' To which the answer is our members. The Celtic Trust has never purported to represent all small shareholders at Celtic. But we have sought to represent the idea that small shareholders should have influence at Celtic Plc commensurate with their total shareholding. While there are many things we have done wrong, we have managed to achieve a certain level of credibility with the Board by virtue of the fact that we do have the wherewithal to raise independent resolutions onto the agenda of the AGM of Celtic Plc - a reasonably complex procedure to initiate. And contrary to the authors' assertion, the Trust has never had any difficulty in finding the minimum 100 shareholders necessary to put forward a resolution. It's getting the mass of 22,000 small shareholders to vote that is the challenge. Every year only around 2,000-2,500 actually vote. In this way we have been able to bring the voice of one small group of organised shareholders to bear on Plc Board policy. That is why they are introducing a scrip dividend re-investment - because the Celtic Trust organised sufficient small shareholders to force the Board to consider the proposition. It seems the central criticism of the authors is not that they really disagree with what the Trust stands for, but that they are angry that we have not been more effective than we have been `ya bassas', and are not top of the range in the area of electronic communication via websites. So as the authors begin to wind down they observe: `The Trust has been soundly and legally constituted and set up very diligently and efficiently but if it is to move on and be the one truly representative voice it must take up the new [communications] challenges and meet these head on.' To which we at the Trust would say we don't disagree with any of this - so why don't you come and join us and help us make it happen instead of putting the boot in fairly gratuitously. Believe us you will be welcomed with open arms. In their penultimate paragraph the authors argue that a better-organised Trust should seek to go into alliance with a `Sugar Daddy' willing to bring more capital into the club. We assume they have someone like Fergus McCann in mind following the logic that while he may have made a good few bob out of Celtic, nevertheless he did open up ownership of the club to the masses, brought in substantial new capital, took a big risk and successfully modernised the financial management of the club e.g. we have a new stadium, and in the process laid the ground for an SPL-winning team. Implicit in all this is a serious disenchantment with Dermot Desmond's more `conservative' approach to risk. They explicitly state `Shareholders Utd have realised too late the potential of properly channelled supporter power and just perhaps the Celtic Trust could be that vehicle [at Celtic].' It says a lot for the power of the central idea that the Trust stands for - that Celtic should ultimately have a significant and influential ownership stake controlled by its supporters - that having given the Trust a pretty good metaphorical kicking around the park the authors conclude by saying that, you know something, these Celtic Trust characters might be onto something. Essentially the authors end up arguing for a well-organised small shareholders' organisation, in partnership with business interests who really care about the club, as a model to take Celtic to the next level. There is not much in this proposition to upset the Celtic Trust. But then they go and spoil it all by telling us to live in the `real world of football capitalism and not in a football utophia where clubs exist as supporters' co-operatives'. Barcelona is a co-operative by the way but never mind! Conclusion We have had our say and in doing so we have a bit of fun at the expense of Hylas and Proud Bhoy, who in the parlance of bar-room scraps worldwide, `were asking for it'. If you are going to kick us up and down the high street and you can't even get the name of the keynote speaker right then of course we are going to have a pop back. But if truth be told we at the Trust don't think there is that much difference between us, when it really gets down to it, except tone and attitude. Having spoken with Hylas and Proud Bhoy at the Trust meeting we have no doubt they are Celtic fans to the core who try to take a more intelligent interest in the club's affairs. While the tone of their article is often pretty offensive their genuine concern for our great club comes through and they were gracious enough to acknowledge that the Trust has been established on an efficient and effective basis - it's just our communications that are shite - by the way! OK let's just agree that there may be room for improvement here. Where the Celtic Trust does agree with Hylas and Proud Bhoy is that there is a crying need to organise Celtic's 22,000 small shareholders under one banner and we both think the Trust could be that vehicle, and that it is soundly established. We both agree that the Trust needs to significantly improve its communication skills. But we don't share their scepticism over the viability of mutually owned organisations and democratic principles. In fact this is where we feel the lads are missing a very central trick. If you want to organise 22,000 individuals under one campaigning banner then you have not a hope in hell in successfully persuading people to join unless it is a one-member-one-vote, collectively owned and not-for-profit organisation. Why should people sign up to a dictatorship of one particular businessman for example? That in fact is one of the reasons why a number of significant businessmen are wary of the Trust as if they took up membership their vote would be one, the same as everybody else regardless of how many shares they have. But an organised supporter-shareholder organisation cannot be built in an environment which is rancid with cynicism. Celtic supporters obviously need to keep a critical eye on developments, but let's try to be constructive in our approach. We believe that one way to do that is by joining the Trust - contact us at the website below. It's really not that hard. Regardless we at the Celtic Trust are going to continue to hang on in there raising our resolutions at the Plc AGM and trying to hold the Board to some kind of account. The alternative is to do nothing; which is not much of an option. The Celtic Trust


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