Peter Geoghegan looks at St Mirren supporters’ bid to buy the club through turning the Buddies into a Community Interest Company
Billed as a “national day of action”, November 30 witnessed the largest strike in Britain for a generation. That evening, 70 supporters gathered at St Mirren Park not to protest changes to public sector pensions or Tory cutbacks but in a bid to resuscitate an innovative community-led takeover of the Paisley club.
At first glance, St Mirren seems an unlikely candidate for a fan takeover. Solidly established in the lower reaches of the Scottish Premier League since returning to the top-flight in 2006, the club, which has been up for sale since September 2009, is generally regarded as a well-run outfit. Tesco’s purchase of their former Love Street home in 2007, in a deal reportedly worth £15 million, left St Mirren financially secure at a time when many higher profile SPL rivals are feeling the pinch.
Chairman Stewart Gilmour, who saved the Buddies from huckster Reg Bearley’s pernicious grip more than a decade ago (see WSC 153), stated openly that he would prefer to sell the club to a community bid than on the open market. The solution, or so it seemed, was to turn St Mirren into a Community Interest Company (CIC).
The brainchild of New Labour uber-moderniser Alan Milburn, a CIC is essentially a limited company with a social purpose. It attempts to combine the advantages of a company – flexibility in organisation, operation and governance – with the ability to restrict rampant risk-taking and protect assists for the local community. A CIC can pay dividends and interest, but is restricted in the amounts and is subject to law and regulation.
When it comes to football, one of the most attractive features of a CIC is that it “locks-in” all the club’s assets, ensuring that the assets built up over time cannot be squandered for profit by the current generation. Instead assets must be used for the stated community purpose. Even if the CIC is wound up, its assets must be transferred to another, similarly asset-locked body. All this makes it mightily unattractive for any would-be robber baron chairman.
Ayr businessman Richard Atkinson has spearheaded the move to turn St Mirren into the first professional club run as a CIC in the UK – Stenhousemuir and Clyde, in the Scottish second and third divisions respectively, are both CICs. When St Mirren were put up for sale Atkinson, who has a background in logistics, formed 10000 Hours, a social enterprise co-operative with the dedicated purpose of purchasing a 52 per cent majority shareholding in the club.
“What makes this takeover different is that we are trying to buy the club when it is just up for sale, not when it is going out of business. In other cases fans are buying the club off the administrator at a knockdown price – often with an agreement to take on the club’s debts – so they own the whole club. But we have had to try and raise the money to buy out the shareholders,” Atkinson said. Under the scheme, 10000 Hours borrows from social enterprise lenders – rather than traditional banks – to buy just over half of St Mirren, with fans’ subscriptions to the co-operative as well as revenue generated by the CIC after the takeover used to pay off the debt. No debt is loaded onto the club, as it has been in the case of Malcolm Glazer’s takeover at Manchester United.
Until November, 10000 Hours looked odds-on to succeed. A broad church of social enterprise backers and charitable bodies had pledged almost £1.3m, mostly in the form of soft loans and “patient capital” (so called because repayments are delayed by a set number of years).
However, after months of negotiations, a decision to sanction the final tranche of funding was reversed. Current director Ken McGeoch has taken advantage of the interstice to announce his intention to pursue a conventional takeover of the club. But Atkinson, who has sat on the board of St Mirren for two years, is determined to
continue the fight.
The hope now is that more supporters can be convinced to join 10000 Hours, at an individual rate of £10 per month – which would be repaid as equity in the CIC, once the debt is repaid. Since November’s announcement, membership has risen from 800 to over 900. Retiring football chairmen are wont to declare their desire to safeguard the long-term future of their club – Wigan’s Dave Whelan springs to mind. A CIC is not foolproof – a board could still overextend and get into serious debt – but it does introduce safeguards to protect the club for those who value it most. Whether 10000 Hours are successful or not, the CIC model is one other clubs, and their supporters, could well profit from.
From WSC 300 February 2012