British football clubs will soon see a new level of financial transparency, as UK companies are now required to identify ‘persons of significant control’.
Football clubs have had to disclose similar information to football authorities for a while, but it is a shame that the football authorities, despite their rhetoric on transparency and accountability to fans, have not delivered public disclosure.
For fans though - and especially for those of the most secretively run clubs - this provides an important opportunity. We focus below on the Scottish game in particular, since this has seen the most damage from secrecy in recent years - while the authorities have done next to nothing to address the risks.
Why transparency matters for fans
Like many others, we have long made the case that the ownership of football clubs should be completely transparent. For a start, there is no good argument for anonymous ownership of any company. Markets work better with full information; and so too does taxation and regulation. Secrecy, in contrast, allows criminality and tax abuse to flourish.
These arguments are especially strong in the case of football clubs. Here is how Supporters Direct and the Football Supporters Federation put in, in Christian Aid’s 2010 report Blowing the Whistle (emphasis added):
Clubs are not businesses as they are commonly understood to be. They have a responsibility to act in a way that serves the communities they represent. […]
Nowhere is this clearer than in the issue of transparency of ownership. Most people don’t care who ultimately owns the companies that make the cars they drive, the food they eat or the TVs on which they watch football (although they care passionately about safety and probity). Football clubs, however, are public institutions that matter like little else culturally and socially to the towns and cities in which they play. That is because the story of these clubs is the story of those communities, and the stories of the generations of families who have supported them through thick and thin: as someone once said, ‘No one ever had their ashes scattered at Tesco’s.’
The privilege of owning one of these institutions carries with it responsibilities to the community that has sustained it. The first of these is the responsibility to reveal your identity. In short, you can remain an anonymous private citizen, or you can own a football club, but you should not be allowed to do both.
Despite the introduction of various, largely toothless, ‘fit and proper persons’ tests for club owners, UK football authorities and league bodies have stopped well short of ensuring that fans can be sure who owns and/or controls their clubs.
As we showed in the Offshore League Table, financial secrecy is a pervasive problem - and has been central to most, if not all, of the episodes of clubs entering administration and liquidation that football fans have suffered.
The new transparency requirement
As of June 2016, UK companies have been required to register a ‘confirmation statement‘ at least once a year. This replaces the requirement for an annual return, and the big difference is this: each company must include details of all ‘persons of significant control’ (PSCs).
PSCs are defined in law as follows:
A PSC is anyone in the company who meets one or more of the conditions listed in the People with Significant Control Regulations 2016. A company can have more than one PSC. A PSC is a person who:
- holds, directly or indirectly, more than 25% of the shares;
- holds, directly or indirectly, more than 25% of the voting rights;
- holds the right, directly or indirectly, to appoint or remove a majority of directors;
- otherwise has the right to exercise, or actually exercises, significant influence or control over the company;
- has the right to exercise, or actually exercises, significant influence or control over the activities of a trust or firm which is not a legal person, the trustees or members of which would satisfy any of the four conditions above.
For most small companies, their PSCs are likely to fall into the first and second, and possibly the third, category above. The fourth and fifth categories are typically associated with more complex corporate structures [i.e. Bolton Wanderers in the days of Eddie Davies].
The key point here is that the emphasis is on control - so that a ‘shadow’ director, or a lender who influences key decisions without holding shares, must be named. Failure to comply is a criminal offence, and the company, its directors and any other officers could be prosecuted because maintaining a register of PSCs is their responsibility.
There can be no excuse for FAs and/or league authorities not to collate and publish this information, and to require clubs to link to it from their websites.
The case of Scotland
Scottish football fans have suffered more than most from the risks associated with a lack of transparency. As STV and others reported at the time, two Scottish teams made it into Christian Aid’s 2010 Football Secrecy League, Rangers ranking 6th and Hearts 23rd. No action was taken, and within three years, Rangers had entered liquidation and Hearts were in administration.
It is extraordinary, and deeply disappointing, that the authorities have since then taken no serious steps to ensure greater transparency either about the ownership of clubs or their finances. We’ll leave club finances for another day - except to note that the elephant in the room is once again Rangers, whose accounts show year upon year of spending in excess of income.
Given that this is the exact pattern that preceded the club going into liquidation in 2012, where are the authorities? Crossing their fingers and hoping that history won’t repeat itself? If it does, the fans can rightly point the finger at this dismal failure to protect their interests, and the stability of the game more widely.
The table below lists the dates by which each of the SPFL clubs must meet the new requirement (these vary according to the existing schedule of each company).
Rangers fans may also be among the most interested in their club’s confirmation statement, given the range of anonymous shareholders since the 2012 incorporation. Celtic fans too may appreciate greater clarity, given how high their club ranks in the Offshore League. For these two clubs, we include both the plc and the Ltd companies as they have separate reporting requirements.
For some clubs, there is already impressive transparency - Inverness Caledonian Thistle‘s last annual return, for example, includes 12 pages of individual shareholders and their holdings. Motherwell, as the table shows, were the first to fall due and have already published theirs. It lists a single person of significant control, Mr Leslie Hutchinson of Barbados, holding between 50% and 75% of shares.
For other clubs, this will be an opportunity to address some governance failings. Ross County, for example, should have published their last annual return before the switch to confirmation statements by 18 June 2016, making it 3 months overdue. Late filings are often seen as a warning sign of a business with issues (see e.g. Rangers before they entered liquidation).
Once again, fans might ask: where are the football authorities here? Have they even noticed this failure to file? What do they consider as their responsibilities in ensuring the stability of the game, never mind transparency and accountability to fans? We have written at length about the Scottish Football Association’s failure to protect the game and fans’ interests, in respect of their treatment of pre-liquidation Rangers.
For the SFA to continue to ignore those lessons is a further betrayal. It demonstrates, once again, the complete lack of accountability to fans - despite the facts that Scottish football fans turn up for matches, week in and week out, in greater numbers per head of the population than any other serious European leagues; and that - possibly due to the authorities’ incompetence in negotiating TV deals - the financial reliance of clubs on fans’ season tickets and matchday purchases is also notably high.
The time is surely overdue for change - and it seems clear that can only be achieved through a widespread mobilisation of fans across the country to demand greater transparency and accountability. Any takers?
| Club | Company | Company number | Confirmation statement due |
| Motherwell | Motherwell Football and Athletic Club Ltd (The) | SC005702 | 22 August 2016 |
| St Johnstone | St Johnstone Football Club Ltd (The) | SC007629 | 23 September 2016 |
| Celtic (Ltd) | Celtic F.C. Ltd | SC223604 | 08 October 2016 |
| Aberdeen | Aberdeen Football Club plc | SC005364 | 24 November 2016 |
| Rangers (plc) | Rangers International Football Club plc | SC437060 | 30 November 2016 |
| Heart of Midlothian | Heart of Midlothian plc | SC005863 | 23 December 2016 |
| Celtic (plc) | Celtic plc | SC003487 | 14 January 2017 |
| Kilmarnock | The Kilmarnock Football Club Ltd | SC006219 | 14 January 2017 |
| Partick Thistle | Partick Thistle Football Club Ltd (The) | SC005417 | 14 January 2017 |
| Dundee | The Dundee Football Club Ltd | SC004585 | 27 February 2017 |
| Inverness Caledonian Thistle | Inverness Thistle and Caledonian FC Ltd | SC149117 | 03 March 2017 |
| Ross County | Ross County Football Club Ltd | SC033275 | 04 June 2017 |
| Rangers (Ltd) | The Rangers Football Club Ltd | SC425159 | 12 June 2017 |
| Hamilton Academical | Hamilton Academical Football Club Ltd | SC005420 | 01 July 2017 |