Everton

Fans on boards, the benefits, challenges and how it can be achieved

The behaviour of the largest clubs with their “big picture” idea, and latterly the Super League proposals has quite rightly led to the call for greater levels of governance within the game and in particular, a call for fan representation on club boards. Whilst the principle of fan board representation is an easy one to support (if you are not a current director or owner of a football club) very little consideration appears to have been made as to how it would happen, the election process, any additional powers granted the “fan director” etc. Equally few have looked at the benefits of such.

Firstly what is a director and what powers /responsibilities does he or she have?

A company acts through two bodies, its shareholders and its board of directors. The board of directors are in charge of the management of the company’s business; they make the strategic and operational decisions of the company. Additionally, they are responsible for ensuring that the company meets its statutory obligations. As an individual director, your role is to participate in board meetings to enable the board to reach these decisions and make sure that the company’s obligations are fulfilled.

Directors are effectively the agents of the company, appointed by the shareholders to manage its day-to-day affairs. The basic rule is that the directors should act together as a board but typically the board may also delegate certain powers to individual directors or to a committee of the board.

There are seven duties as a director, including following the company’s articles of association, promoting success (i.e. acting in the best interests of the company), retaining independent judgement, exercise reasonable care, skill and judgement, avoid conflicts of interest, never accept 3rd party benefits,  and finally inform other directors if you might personally benefit from a transaction the company makes.

Every single club in the country will have a number of supporters who have the skills, experience and determination to adequate discharge their duties as directors of a football club.

The difficulties regarding fan directorships

However, there are significant issues in terms of how a “fan director” might be selected. The assumption is that the fans select by voting from a panel of suitable candidates. That raises a lot of questions. Firstly, how is the panel created, how does each candidate promote their candidacy, what rules relate to campaign activities? Can the club or shareholders suggest their preferred candidate? Who administers the voting process? Then who votes for the preferred candidate? Season ticket holders? anyone with a fan number (i.e. has engaged with the club previously either as a member of some sort, bought tickets or merchandise from the club) ? What would be the term of the directorship and what (other than a shareholder decision -see below) is the means of ending the fan directorship?

Should the candidates have to be independent of the club meaning that they do not have a material or financial relationship with the club or connected persons? How and by whom is this verified?

Thus there are significant issues relating to clubs having a “fan director”. Perhaps the biggest issue is that ultimately being a director of a company is subject to the approval of the shareholders. Therefore any “fan director” would have to meet the approval of the majority shareholder or shareholders. Would Moshiri or Kroenke, just as two examples, accept a supporter who may be critical of their ownership, yet be popular with fans as a result of their criticism?

Having laid out the problems though, none of the above is insurmountable, and is certainly not a reason for clubs not to move forward. The extremely poor governance of football clubs generally (I know there are exceptions) means that as part of a new more highly regulated football industry having a fan director becomes part of the licensing requirements of the future. The benefits of having fan representation at board level far outweigh the practical difficulties, in my opinion.

The benefits of fan directorships

Openness and transparency should lead to better decision making and most importantly improve relationships between the board and fans. Improved relationships lead to trust and more meaningful communications. Importantly, if it works, it leads to boards being less defensive in their actions, communications and relationships with the fans.

There are other benefits too. Why is it that most owners and directors who despite their legal entitlements to decision making and ownership, believe that strategy should just be the preserve of the board room? No-one is asking for the removal of commercial confidentiality, the right to privacy for all employees (including players) in terms of their contracts (incidentally executive directors don’t have that right. Shareholders can demand to see the contracts of executive directors although confidentiality would be expected). But given the extraordinary relationship between clubs and their fans and particularly if the custodial role of directors and owners of a community asset (the club) is recognised in future regulation then the sharing of strategic options and ultimately decisions should be welcomed and embraced. The fan director would play a pivotal role in this regard.

If ultimately new regulation of football enshrines the “golden share” scenario protecting the principle identity and IP of the club (name, location, shirt colours, badge, heritage, association with their local community etc) by only permitting change of such by fan approval, then board representation has to be part of this process.

The question is how is the selection of a fan director achieved and how is the obligation of the fan director to be independent of thought squared against the wishes of the fans?

How can that be achieved?

Almost all clubs have different representative fan bodies, a shareholders’ association, fan trusts, a fans’ forum, equality and inclusion groups, special interest groups such as international supporters, supporters with disabilities representation, independent fan groups, social media groups, fan media and influencers. Combined each of these entities should represent the interests, ideas and concerns of all fans. Importantly, all should be independent of the club in terms of constitution and decision making. None should be under duress with the trade of access and opinion which sadly is the case across many clubs.

My view is that each of these organisations/groupings determine a representative to sit on a Fan Advisory Board of perhaps 8-12 members depending upon how many recognised grouping there are. From that FAB there is an election process by which the fan director is determined. It’s important that the FAB members (from my perspective at least) are independent of the club. The role of this board is to consider strategic, policy and “golden share” issues, not as is the case of a fan’s forum more operational issues.

The elected fan director would chair the Fan Advisory Board and be responsible for the delivery of communications, thoughts and proposals  up to the club board and of course, communications from the board to the fan advisory board.

In order to provide sufficient time for fan directors to establish themselves at board level I would envisage a minimum term of two years and a limit of two successive terms for each director.

The club (certainly in the case of the Premier League and Championship) would meet the  reasonable costs of the campaigning and election processes for each election.

What if majority shareholders did not wish to agree to fan directors? I think it is really important that in the future with independent regulation it is part of the licencing conditions for each club to put agreed provisions such as the above into the articles of association of each club. A move by a majority shareholder or group of shareholders to remove the provisions would be a breach of the licencing terms.

Independent regulation of the game generally, is a result of years of poor governance and decision making. Fan directorships not only continue this policy to club level but recognise the intrinsic value and nature of the relationship between club and fans. With ownership of football increasingly in the hands of ultra high net worth individuals, sovereign states and increasingly professional, financial-return driven investors such as private equity groups, the need for meaningful fan representation at board level has never been greater. This article doesn’t cover all the issues, but it lays a route map to something which not only fans should welcome but the more forward thing club owners and directors should embrace.

Fans are the most invested of all people in football clubs. It follows that their involvement in the decision making processes should not only be a means of protecting that interest but actually a means of improving clubs going forwards, securing vital community assets for future generations.

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