Charlie Methven’s 6%: Could Sunderland supporters form a Trust to own part of the club?

Last week, I wrote an article that looked at the example of two socio club, owned or controlled by their memberships - HNK Hajduk and Athletic Bilbao - and proposed we as a fanbase look seriously into whether a version of fan ownership would be a viable and attractive route for us to explore as Donald seeks to end his ownership of the club.

Opposition to Sunderland AFC being owned and controlled by a single, rich and powerful owner has a long and not particularly successful history. Many will know that, back in 1888, our idealistic founder James Allen broke away from Sunderland Association Football Club to form Sunderland Albion - a protest club that had a short lived but interesting history.

It was a close run thing as to which club would again the loyal affections of the area’s footballing-loving public, but ultimately it was an experiment that came to an end when the club we all now support hammered their new local rivals 6-1, 0-8 and won their first Football League title in 1892.

The people were more interested in glory on the pitch than governance of the club itself and, fuelled by the industrial wealth of the shipbuilding industrialists of Wearside, the original club went from strength-to-strength – winning 6 league titles and an FA Cup before the War.

Post war industrial decline saw the club’s fortunes flounder, save the miracle of 1973, until the kitchen-building visionary, Bob Murray, built our wonderful Stadium and team during the economic boom of the late 1990s and early 2000s - our survival in the Premier League financed on debt and global finance. Correlation should not be confused with causation, but the economic fortunes of our club and our city are evidently and intrinsically linked.

Sunderland AFC via Getty Images (Safc.com)

The responses in the comments below my Socio Sunderland article were interesting and considered, with points raised on matters of both finance and decision making. The questions and concerns I’ve gathered can be that can be split into four broad categories:

1. Is it desirable? Is it what the fans want now?
2. Is it possible? Can fans realistically raise the kind of money needed to buy the club from Madrox in the time available?
3. Is it viable as a business model?
4. Would it be sustainable as a way to run a football club?

I don’t profess to hold all the answers – there are books and PhD theses written on the subject by those more knowledgeable than myself. But I will seek to respond here, and in doing so address those key questions as best I can whilst attempting to set out a sketch of a plan as to how we might proceed.

In my interview with Dave Rose from Red & White Army on Friday, I learned that a proposal for the group to constitute itself as a Supporters’ Trust, the legal organisational structure required for fan ownership in English football, had been voted down at their first Annual General Meeting in 2017 at the time when the club was moving from Ellis Short’s stewardship into the hands of Donald.

The appetite for fan ownership amongst the fanbases of big clubs in England is indeed questionable. We are generally a vocal but passive bunch. Those who advocate for change are often dismissed as troublemakers and dreamers. But it is possible to shift the mood when circumstances change. Josip Glaurdić, in his 2019 study, states that the Our Hadjuk fan group in Split:

...is notable for the success of active or activist supporters at overcoming the apathy of a generally passive and disillusioned body of fans which has hampered supporters’ achievements at other clubs.

Photo by Ian Horrocks/Sunderland AFC via Getty Images

Domingos Soares de Oliveira, the Chief Executive of fan-owned SL Benfica, has commented that British football fans seem happy to accept the “big man” model of fan ownership; it’s certainly easier being owned by an individual or small group – yet he prefers his club’s model.

He also spoke of the expectation of success that comes with fan ownership, and the need for clear, honest, open and constant communication – something that has been sorely missing from Sunderland for many a year - in order to manage this, the video is well worth a watch.

In order to move in this direction, Sunderland fans would have to take the leap of forming a Supporters’ Trust with members paying a membership subscription. The subscription was a key reason that the 2017 proposal was rejected by Red & White Army members – they wanted to keep membership free and open to all.

This is an honourable and perhaps sensible position for a group with a remit to have structured dialogue with the club, rather than take a direct role in its governance to take.

Photo by Ian Horrocks/Sunderland AFC via Getty Images

Democracy isn’t - or at least shouldn’t be - a one-shot game, with the result enduring for time immemorial. When circumstances change and after a reasonable period of time has passed, the electorate should be allowed the opportunity to change their minds. Dave Rose was clear when I spoke to him that he looks forward to the day when competing visions of the future of Red & White Army are presented at hustings then debated and voted upon by those at the Annual General Meeting.

There are ways of mitigating the subscription cost issue. I have recently paid £11 to join Welsh non-league CPD Bangor 1876 for a year, League 2 Exeter City charge £2 per month. But Sunderland is an enterprise on a much bigger scale than these clubs.

For sake of comparison, FC Barcelona membership is €144 (around £122) a year. It is not inconceivable that arrangements could be put in place for those on low incomes or receiving benefits could have their memberships subsidised by a charitable foundation, or that membership fees could be linked progressively to self-declared income along the lines of trade union membership.

Setting clear, realistic and achievable goals and having a well-thought-out plan will be crucial to winning over the doubters at any future RAWA hustings. Those who would lead this move would have to persuade fellow fans that, together, we can achieve what seems now to be an impossible pipe dream.

People are absolutely right to be sceptical and, if they are going to buy into it and lend it their moral and financial support, they will have to be convinced not by the purity of the idea or romance of the endeavour but by its likelihood of success.

Photo credit should read JAIME REINA/AFP via Getty Images

If we look around Europe and South America we see fan ownership everywhere. In Germany, the 50+1 rule is law – so Bayern München, Borussia Dortmund and every other professional club are majority owned by their members. A similar rule exists in Sweden and, in Spain, the towering giants of Real Madrid and FC Barcelona are member-owned financial powerhouses that top the rich list of European clubs.

The aim of any club or business in any sector, no matter what its ownership structure, should be to break even at the very least – otherwise it is financially unsustainable, it won’t get any more credit, and it will eventually go bust. Bayern München and Barcelona don’t struggle to pay wages and transfer fees. They can still bring in the best talent in the world and compete against the billionaire-owned clubs in England and France.

In other areas of life, Waitrose can build new supermarkets and Nationwide Building Society can open new branches and compete with global banking corporations for customers. My point here is that the ownership structure of an organisation does not always determine its commercial success.

Indeed, it can mean that they have a greater focus on the future, the welfare of their staff and communities and on the social impact of their operations. Memberships can hold their management accountable and mean that the business is in tune with and responsive to the needs and demands of their loyal customers.

Photo by liewig christian/Corbis via Getty Images

If we remain solely reliant on dialogue with owners with deep pockets and slick PR operations who the fans expect to basically subsidise reckless overspending, then we seriously risk that eventually we will end up back where we started, and this time the bored and battered benefactor may not be so kind as to write off hundreds of millions worth of debt as a final act of generosity. Then we really will be in trouble.

Sunderland is no Bayern or Barca but is a big club in terms of season ticket holders, overall attendance and wider supporter base in the UK and worldwide. Our potential revenue generation surely outstrips all but the top 10 clubs in the EPL, which would place us in the top 20 in Europe. As we – hopefully – rise through the leagues, this revenue will increase. TV money in League 1 is £1m, in the Championship it is £7m, who knows what in the Premier League in a few year’s time.

The pipe dream of moving towards fan ownership – something others have achieved successfully – is entirely motivated by a desire to mitigate the risk of our club going out of business whatever league we happen to find ourselves in in 5, 10 or 20 years time.

It will not be easy. It is complicated. It requires careful thought and consideration. That doesn’t mean it is the wrong thing to do.

Photo by Matthew Ashton - AMA/Getty Images

Today, Sunderland AFC is up for sale and probably valued at £30 million - £50 million. Raising this would be a monumental task, and possibly overambitious. Commentators rightly expressed doubt that 30,000-50,000 fans (a conservative estimation of our fanbase) investing £1,000 each, which would be enough to buy the club outright. However, I highly doubt that there are anywhere near that many people who could find that amount of money in the months ahead to take a speculative punt on the club, no matter how deeply they cared about it, and would leave nothing for the day-to-day running of the club.

HNK Hajduk was not owned by a single rich individual when it was taken over by the fans, the majority of its shares were held by the local city authorities and the club used as a political pawn by the corrupt and powerful elites.

As of 2019, Our Hadjuk holds 25% of the club’s shares, a stake that has been built up over the years since 2012, with 65% still owned by the city council. They control the club through its elected supervisory board, a structure we don’t have in the UK. However, within several years, Our Hajduk members have transformed not just their club but their city, and they have ambitions to transform the politics of the EU’s newest member state.

Perhaps tweaking this model and seeking a minority stake in the club, underwritten by our public authorities in a way consistent with British law and traditions, could provide an answer.

Sunderland AFC

Much is made of devolving power to communities in order to address the disconnect between the peoples’ priorities and those in power in the UK as we leave the EU. We are a much less corrupt society than many where a toxic mix of public owned stadiums and member-owned clubs has proven the breeding ground for clientelism and nepotism.

Whilst not without their problems, both Sunderland City Council and South Tyneside Borough Council both have a significant stake in the success of Sunderland AFC as an enterprise, and vice versa. Low interest loans or investments through arms-length bodies to support long-term cultural enterprises in our communities are not uncommon throughout the public sector.

Sunderland’s football club is the beating heart of our city and its economy. To me, it makes perfect sense for our public authorities to secure our club’s future for the citizens.

In Preston, Lancashire, an enlightened and forward thinking local authority’s focus on the mutual economy, cooperatives and investing in the sources of collective wellbeing in its community has paid dividends in terms of economic growth and health outcomes, bucking the trend of industrial decline and outperforming London and Manchester, as measured by the PWC Good Growth Index between 2016-18.

But how would a Supporters’ Trust, with public financial backing, feasibly secure get even a minority of shares in the club?

The move towards fan ownership can be process rather than an event. Let’s say Charlie Methven’s six per cent of Matrox Partners - the holding company which owns the club - is worth somewhere between £1.8 million and £3 million.

We have about 25,000 season ticket holders and SAFC UK Members, like me, who already pay £50 a year for a slightly enhanced chance of getting away tickets. 25,000 members (who wouldn’t have to be season ticket holders) paying £120 a year could buy this outright in the first year and build up funds for further investment in community activities and share purchases in future.

Methven, in his interview with BBC Newcastle on Tuesday, was clear that there are buyers lining up to take control of the club, and claimed that he and the other investors in the Madrox Partners holding company are seeking to ensure that they sell to new owners that have the best interests of the club at heart.

I am here proposing that, this one last time, we trust that this is not just the ‘usual PR guff that club directors normally come up with when they’re in open forums’ (Methven’s own words). Let’s seek to persuade Charlie Methven and FPP Partners, who must approve the transfer of Madrox shares, that the most sustainable way forward is to sell his stake to those who we know for sure do have the best interests of the club at heart - a newly established Supporters’ Trust.

This Trust could extend a hand of friendship to Donald, Satori and Methven’s creditors. If the American billionaires or any other new rich owner want to follow through on the original “Dell Boys” idea and bring Sunderland AFC within their global portfolio, investing the money that might catapult us back to our rightful place in the top flight whilst delivering themselves a handsome profit from the Premier League’s TV and sponsorship revenues, what better way to bring that passionate fanbase - that most intangible but valuable asset of Sunderland’s assets - with you than to give them a real, tangible stake in the enterprise? And not as humble recipients of a gift which can be taken way, but as shareholders investing at market value with a seat on the board elected by the members. True buy-in

Photo by Ian Horrocks/Sunderland AFC via Getty Images

An interesting side effect of having billionaire owner was that the stadium was neglected and its fanbase has been taken for granted. Why invest in the matchday experience, or maximise global revenues, when your owner is more than capable of covering your losses from his loose change? Perhaps a mixed model can be a safeguard against such drift and decay?

The successful fan ownership models have been studied and the lessons learned – we should apply them. The work of Dr Sara Ward is worth a look at for those interested in these things at an academic level. Let’s be clear, to be successful there are many hurdles that will have to be overcome and, given the timescales, action will have to be taken soon.

There is a need for committed, knowledgeable and professional individuals to be closely involved in both the Supporters’ Trust and Football Club Board. Within Our Hajduk, according to Glaurdić:

“Its leadership is staffed by highly educated and professionally successful supporters who thus defy the popular stereotypes associated with football supporters in the region [as nativist thugs].”

Take this, if you will, as call to action to those who don’t just believe this is right but know how to make it happen. Amongst our loyal fanbase we have lawyers, accountants, business owners, academics, social entrepreneurs, digital technologists, successful campaigners and footballers.

I repeat, it’s not going to be easy – nor should it be. With purpose, a plan and a little persuasion, we can do this.

So, let’s start by getting Charlie’s 6% for the fans.