The FA, Football League and Premier League to consider Supporters Direct's recommendations for using co-ops to boost clubs
As Portsmouth Football Club gets back on an even footing following a majority buyout by fans earlier this year, and countless clubs continue to struggle with their finances, questions are being asked in parliament on Tuesday about how more clubs can become sustainable and achieve more fan-ownership.
The Football Association, Football League and Premier League will listen and respond as Supporters Direct (SD), which works with sports clubs to develop supporter ownership and financial sustainability, gives evidence to the All Party Parliamentary Group for Mutuals.
It's part of a series of such hearings and will also see SD launch an accompanying paper titled Supporter Share Ownership: recommendations on how to increase supporter ownership in football.
In the UK, 30 clubs are owned or majority-owned by supporters' trusts, including AFC Wimbledon, Exeter City, Portsmouth and Wycombe Wanderers.
Kevin Rye, network development manager at SD, says: "Under fan ownership, healthier financial decisions are made. Today, we are proposing solutions to the current barriers to growth of fan representation in football clubs. Barriers include access to finance, obstructive owners of individual football clubs who do not wish to engage with trusts and the governance of football in general which continues to exclude football supporters from having a meaningful say."
Since 2000, 180 supporters' trusts have been created in the UK, with more than 400,000 individual members. More than 100 of the trusts have a shareholding in their clubs.
The report uses Portsmouth football club as a typical example of one rescued by fan ownership. But Rye believes that clubs shouldn't wait to be on their last legs before considering fan control. "In Germany, there is a really solid model of fan ownership, and the sport is far more financially sustainable there," he says.
In January 2012, Portsmouth entered into administration for the second time in two years, with estimated debts in excess of £100m. The Portsmouth Supporters' Trust (PST) quickly stepped in, taking on loans from the local council and a local businessman and asking fans to buy in to Portsmouth Community Football Club (PCFC), a community benefit society. Fans now own just under 60% of the club and are prohibited from selling shares or gaining a dividend.
Ashley Brown, chair of Portsmouth Supporters' Trust, says: "From a supporters' perspective we now feel that the club is in the hands of people who love and care about it and every decision made is for the benefit of the club and not for darker reasons."
"We sell T-shirts and tea at a far cheaper price and wages only account for 30% of our revenue. At some points in recent years, wages have accounted for 100%."
Brown says the club is still paying competitive wages in League 2, but if it returned to the Championship, which is operating under a "crazy wage structure', Portsmouth's finances would become "a more complex puzzle".
Both Rye and Brown say there are moves in the right direction by football authorities to make wage structures more sustainable, which could go some way towards levelling the field.
But supporters clubs want to see more openness from the League in allowing supporter-owned clubs and community benefit societies. SD would also like to see the upper limit of £20,000 in share allowance within community benefit societies raised.
The paper's central proposal is for the creation of a community football fund, which would be established as a social investment intermediary to assist supporter ownership.
Deloitte's annual review of football finance, which came out in June, stated that in the summer 2012, Premier League net debt was £2.4bn. "Wage costs have consumed 83% of Premier League clubs' revenue growth since 2006-07 and the wages to revenue ratio has reached 70%, while operating margins are now only 4% and are forecast to narrow even further," the report stated.
It continued: "Championship clubs continue to spend 30% more than they generate – a clearly unsustainable position without owner benefaction, a source of funds upon which the Football League is trying to reduce its member clubs' dependence."
A spokesman for the Football Association said the FA believed in the long-term sustainability of clubs but did not believe supporter control was the only way to achieve this.