Secret agents

In this extract from the BBC book Football Confidential 2, the reporters from Radio 5 Live show On The Line quiz agent Paul Stretford aout his company's shareholders, people with familiar names like Souness, O'Neill and Keegan

The first thing to meet you after walking through re­­ception into the light, modern offices of the Proactive Sports Group plc is a life-size, wax­work figure of Peter Schmeichel, in full kit, poised to make a save. Initially it is a strange and disconcerting sight but the Dane has been an important figure in the rise of Proactive, one of the UK’s leading football agencies, which its current chief executive, Paul Stretford, started in his basement in 1987. High-profile Schmeichel is just one of the 260 clients the company now has worldwide.

Proactive are just one of the 170 FIFA-registered agents in England, each of them fighting for a piece of the lucrative football action. In the season 2000-01, £423 million was spent on transfers and £562 million on players’ wages in the Premiership alone.

In May 2001 the company, which counts former Manchester United players Jesper Olsen and Kevin Moran as directors, floated on the Stock Exchange. Among those who took up the offer to buy into Proactive were some of the most famous names in football management, some of whom, while shareholders, have bought and sold players who are clients of Proactive. Stretford protested: “I don’t know all of the shareholders… We have twice the amount of shareholders in the sector and we have a very high level of retail shareholders. It would probably mean I wasn’t doing my job correctly if I sat there all day just looking who has sold and who hasn’t sold.”

On the day Mr Stretford met On The Line, the following were listed among the shareholders in his com­pany: Sir Bobby Robson – 100,000; Graeme Souness – 400,000; Martin O’Neill – 172,000; John Gregory – 60,000; Peter Reid – 125,000; Craig Brown – 120,000; Steve Coppell – 40,000; Howard Wilkinson – 48,000; Kevin Keegan – 200,000; Sam Allardyce – 80,000.

After contacting all the managers concerned, On The Line had only three responses. One was from Peter Reid. His faxed statement included the following: “My financial advisors purchased the shares at the time of the public flotation. The acquisition was made in my own name so there can be no suggestion that this was concealed or of a lack of transparency as my holding was listed in the Companies House register which is in the public domain.”

On June 21 Reid sold his shareholding. While Reid held them, though, he signed a Proactive client, the American Claudio Reyna, for £5 million. By doing this he contributed to the publicly listed company’s profits and, by extension, he would have benefited personally as a shareholder.

In a fax from Martin O’Neill’s solicitors to On The Line dated May 13, 2002, they demanded his name be removed from the programme. Despite the record of his shareholding being in the public domain, they told On The Line that Mr O’Neill “will be taking steps shortly to ensure that no potential conflict of interest will ever arise”. By the end of October only Reid and Allardyce had sold up, the others all retaining their shareholdings. No one is accusing any of the man­agers, coaches and directors on the share list, or indeed the Proactive Sports Group plc, of any doing anything illegal.

Dr Bill Gerrard of Leeds University Business School advises the FA on transfers and he has devised a system to add some objectivity to player evaluation that has been used by a number of clubs to assess the worth of their squad. He says that there is no reason to believe that the dealings undertaken are not above board but it’s imperative to be 100 per cent sure: “The only way we can see that everything is above board is that any conflicts of interest are declared by those involved, so that fans know their motivation. And if there are clear conflicts of interest, then it should be a requirement for those to remove themselves from the transaction.”

The biggest holder of shares on the managers’ list was Blackburn manager Graeme Souness, who had 400,000 shares, which represents a small fraction of the total bought when the company floated at 25p a share. Just after Christmas 2001 Souness, sensing a relegation dog fight at the bottom of the Premiership, paid Manchester United £8 million for Andy Cole, one of Proactive’s highest profile clients. FIFA stipulate that agents should take roughly 5 per cent of any deal. One wonders how many Blackburn fans knew that their manager had such a stake in the company when the deal was being done.

Naturally, Paul Stretford bullishly defends the transfer and says that if they did know, they wouldn’t have cared: “What I think was more important to the Blackburn fans was that Andy Cole came and scored 13 goals in 20 games and… they won the Worth­ington Cup, and he scored the winning goal in the final. Virtually all the Blackburn fans will tell you that that is the most important factor.”

The list of shareholders with Sou­ness’s name and those of all the other shareholders on it is available to public scrutiny, deep in the expensive computer data­bases at one of the six branches of Companies House in the UK, though these are not, it might be suggested, the natural domain of the average football fan, Souness refused to speak to On The Line, but a spokes­man from Blackburn Rovers did tell the Observer: “Graeme has a minor equity stake in this company, but we are satisfied that there was no conflict of interest in our signing of Andy Cole.”

Another Proactive client to be bought by a manager who held shares at the time of the transfer was the man immortalised in wax behind the reception door at their Wilmslow office. At the end of their Division One Champ­ionship-winning season, Manchester City sign­ed 38-year-old former international Peter Schmeichel and, in time-honoured fashion, City manager Kevin Keegan posed for photographs with his latest acquisition – while he held 200,000 shares.

Asked if his company and shareholders would benefit from the transfer, Stretford said: “Peter is con­tracted to the company and within that contract it shows that we would receive recompense for conducting his contractual affairs… In my experience, the sole reason for people taking players is what they do on the pitch, and unless that is backed up on the pitch they will lose their jobs.”

The Football Association refused to be interviewed but they did issue a statement: “In itself these shareholdings are not unlawful or against regulations. What is important is that any conflict of interest or any deal is disclosed and dealt with. The people who would most want to ensure this area is covered by the club, its chairmen and shareholders. Transparency is the key, provided people know about any conflict they can deal with it conflicts are not in themselves the issue…”

It was this second sentence that most interested Dr Malcolm Clarke, chair of the Football Supporters Asso­ciation. As he stared incredulously at the faxed FA statement he said: “I am appalled and amazed that the Football Association do not include sup­porters in that list of people who would be most concerned. I would suggest that supporters would be the single group of people who would be more concerned than anybody else.”

Dr Gerrard at Leeds University ag­rees, and he thinks that football has to take more care than any other business because of the unique emotional bond between the clubs and their fans: “It’s a double-edged sword, the very intensity of the fans makes the conflict of interest in football as opposed to other industries more and more significant… It’s that intensity that creates the commercialism that creates the value, and hence creates the incentives to create those conflicts of interest.”

In the late 1990s the FA responded to fears that the game might be susceptible to the effects of org­­anised gambling, plus concerns over bungs in the game, by bringing in the former deputy commissioner of the Metropolitan Police, Sir John Smith, to investigate. Since then he has sat on the Football Trust as well as keeping a vigilant eye on the game from the side­lines. “I would be absolutely appalled,” he says, “if someone suggested to me that a manager had shares in an agent.”

From WSC 194 April 2003. What was happening this month