In his End of Season Overview our Club Chairman, Edward Chorlton OBE, referred to our being a supporter owned club and how it is different to being a club under private ownership. He promised to draft a separate note on how ‘ It is different in many ways but is also the same in some others’. In the note he outlines his thoughts on these differences and similarities and also seeks to explain the roles of various parts of the Grecians governance arrangements and how Trust members are involved in them. Here is the note:-
Some thoughts on being a Supporter Owned Club
It is often asked what the difference is between Exeter City being a supporter owned club and one owned by a private individual or a group of people. It is different in many ways but it is also the same in many ways. It gives fans more say but also means that the only people to ‘bankroll’ the club are those very same supporters.
Exeter City is a supporter owned club. Similarities with privately owned clubs exist because we play in the Football League and are therefore subject to the same rules and regulations as other clubs. These rules not only apply to what happens on the pitch but also in terms of the ground, its capacity, financial records, transfers, player contracts, loans, Financial Fair Play, customer charters, the fit and proper persons test for directors, floodlights, press facilities, youth development, safety certificates and so on. So with all of these matters it should feel pretty much the same as for any other club, including the fact that the cost to compete has to be born by the club. In this sense the principles are the same as for any business wishing to compete in its chosen market – it must abide by the rules that that market imposes on it if it wishes to compete in it. Assuming no impropriety, it can do this regardless of its ownership model or structure.
So once it has complied with the Football League rules, every football club has a choice for its owners to then define what it stands for. In theory this choice should be placed in the hands of those who choose whether or not to support the club as they, ultimately, determine whether that club exists. The reality for many, or maybe most, clubs is that the fans don’t really have that choice because money talks, so rich owners get to do what they want with their clubs.
It is at this point that we see the first major difference in being a supporter owned club – the choice of what the club stands for, its purpose and the principles guiding how it delivers and where it invests in order to achieve that purpose. At Exeter City, the purpose and principles are defined through our fans. First of all we aim to run a sustainable, and successful, professional community football club. We are honest on and off the pitch. We do what we say. We are open and transparent. We have no hidden agendas or areas. We expect sound financial management, i.e. we live within our means. We believe in and are committed to youth development. We expend much of our available resource on being at the heart of our community and listening to and looking after our fans and the broader geographic area we serve.
The majority shareholder of the club is The Exeter City Supporters Trust. It is therefore through and with the Trust that we deliver to our purposes and principles. This affords Trust members access and influence in every area that we are working in – from the Boardroom to the training ground, from the Finance Committee to the matchday experience. Trust members are integrated into everything either directly or through their Board of Society. Membership of the Trust is open to anyone who cares about the club. Members of the Trust elect Trustees who have the responsibility to look after the interests both of the Trust as a body and of its members. Those Trustees form the Board of Society, formerly often referred to as the BoS but now more usually as the Trust Board.
It is here that some differences emerge from a normal football club. The Directors of the Club are bound by the rules of the football world in ensuring that the Club is able to compete, but as an Industrial & Provident Society (IPS) it is the it is the FCA that sets the rules for our owners. The role of trustees of an IPS is broadly that of trustees of a charity namely a) to follow the law and the rules in the IPS’s governing document; b) act responsibly and only in the interests of the IPS; c) use reasonable care and skill and d) make well informed decisions, taking advice when you need to.
Understanding that there are different points of authority for the Directors and owners of the Club also points to the reason why there needs to be constructive tension, and checks and balances between the two bodies. Not a tension that is born out of mistrust or dislike, but one that is rooted in the requirement for both to be governed in accordance with different and separate rules and guidelines and redress if things were to go wrong. The Supporters’ Trust, a body owned on an IPS model, is the majority owner of the Club. The Club itself though is a Limited Company and has to comply with UK Company Law. It is managed by a Board of Directors (currently 8 in number). Company directors’ duties are now set out in Limited Company legislation. A company director’s general management duties are to a) act in accordance with the limited company’s constitution and exercise their powers for proper purposes; b) act in a way to promote the success of the limited company for the benefit of the members as a whole; c) exercise independent judgment; d) exercise care, skill and diligence; e) declare to the other company directors the extent of any interest in a proposed transaction or arrangement with the limited company and f) avoid conflicts of interest and not accept benefits from third parties. The directors have to act in the interests both of the company and of the shareholders.
The real difference between Exeter City and any other Club that is not owned by its supporters is in the point of coming together of the two formal bodies overseeing its well being – its owners (the Supporters Trust) and those who run it (the Club’s Board and its employees; for its employees, and indeed the volunteers who support those employees, work for the company that the Board is accountable and liable for, not for its owners). This coming together is most readily expressed by the fact that in carrying out its work the Club Board and employees involve members of the Trust Board in all manner of decisions. For example:
• Firstly, two of the Club Directors are also Trustees from the Trust Board, these normally being the Chair of the Trust and one other. They do not attend the Club Board solely as Trust representatives. They are full Board Directors and take part in all Board decisions. The current members are Laurence Overend and Roger Conway;
• The Trust Board has three representatives on the Finance Committee which is a delegated sub-committee of the Club Board that oversees all of the financial matters relating to the Club. The current Trust members of this Committee are Peter Holding, Richard Clutterbuck and Anthony Smith;
• The Club Board Appointments Committee comprises 2 members of the Trust Board and 2 members of the Club Board plus the Company Secretary as the non-voting recorder. The purpose of the Committee is to scrutinise all nominations for Club Board membership, interview candidates and to make recommendations to the Board about any proposed appointments
• Two (Paul Farley and Roger Conway) of the Gates Committee which predict and monitor gates and the match day experience are Trustees.
• The One Goal One Community Group which includes representatives from FITC, Devon FA, Police, the national Kick It Out campaign, Disability Groups and others including two Trust Directors (Paul Farley, and Martin Weiler, who coordinates the group).
So supporters are represented through the Trust on all key Club decision-making bodies. This reflects the model of Trust ownership having representation and real influence through the Trust Board, and also the need to ensure that the different bodies come together for the good of the Club at all points.
The Trust Board is in part in place to ensure that the Club Board, recognizing too that it has to be a separate body that exists for a separate legal purpose, makes all of its decisions in the interests of the Club. For example, this is enshrined in the principle that any profit made by the club is only ploughed back into club facilities and the team. In addition, because all Board Directors are members of the Trust they do not own any shares and therefore, unlike at privately owned clubs, do not take a dividend out of the club and instead rank as equals in the Trust’s membership. The Board is in place solely to work in the interests of the future of the Club, its shareholders and its supporters. It does not spend money it doesn’t have. It does not buy players the club cannot afford. It does not pay players more than it can afford. It seeks to live within its means. It values its volunteers of which over 100 contribute regularly to the club. It does not build up unsustainable debt in the hope of future success which has been the downfall of many a club in the past including our own.
Whilst there are many things that a supporter owned club can do as evidenced above there are some things that a club such as Exeter City cannot do. Without a rich benefactor its owner it is not in a position to provide additional, out of budget, funding for the team should it need refreshing for whatever reason in the January transfer window. It does not have any capital funding to enable it to make significant investment in new facilities and to that end has to work with partners to enable changes to take place.
So how should it feel being a supporter of a fan owned club? It should feel unique and passionate and as different as you are wanting to be by being involved. The more involved our fans are through the Trust the more distinctive we become and the more supporter ownership will really drive Exeter City forward. As a fan you can join the Trust, stand for election to the Trust Board, join our army of volunteers, encourage others to contribute to our community focused club, and help to ensure that the Club runs in a sustainable way, putting supporters and the community at the centre of its activities whilst investing in youth and trying to build a successful professional team and Club.
Edward Chorlton
29th May 2014