Corporate structures for football clubs

There can't be much doubt about the football club which provides the best model for others to aspire to - FC Barcelona.

Examine its statutes. They are available on its website, not only in Spanish and Catalan versions but now also in English. You will see what makes this club so very special. In addition to its football record, consider the range of other sports offered, its democratic structure and its truly noble aims. They make it a shining example to the rest of the world. It is no surprise that it has an inspiring stadium and a team to match.

Also no surprise that, at the latest count, it had 173,071 members!

So what can England offer at the moment? What should we be looking for?

I would suggest that there are two essentials.

1. One share per member and hence one vote per member. This would keep control of the club in the hands of its supporters.
2. A sound policy by which the financial resources of the club are assured and can increase as the number of members increases.

The simplest example which might match these requirements is a Supporters Trust. This a democratic, not-for-profit organisation of supporters. These structures were established following a UK government initiative in 2000. In spite of the name, these bodies are not charities.

Supporters Direct helps fans to form trusts (over 140 since 2000) and pays for the legal costs of formation. The preferred type of organisation is an Industrial and Provident Society (IPS) which has limited liability of £1 per member. An IPS can own shares and property but, at the moment, the Football League does not permit its clubs to be IPSs.

Currently, Supporters Trusts have control at four Football League clubs and eight non-league clubs in England.

Another possible model is the Community Interest Company (CIC). Introduced in July 2005, there are now nearly 3,000 CICs but few are football clubs. A CIC is limited by shares or by guarantee or by a plc. It operates for the benefit of the community, rather than rewarding owners or investors. It also has a statutory "asset lock" which ensures that any transfer of assets must satisfy certain requirements. Various conversions are possible between a CIC and a variety of other types of bodies.

Could a football club qualify as a CIC? Encouragement of sport is included as an example of something which could benefit the community. So, yes, Canterbury City FC (which is a CIC) and FC Barcelona (which isn't) qualify, at least in this respect. But West Ham? The only answer would be to try it and see.

If these two models fail to gain support, then it would be back to a Limited Company and devising an appropriate "Memorandum and Articles of Association".

Further reading
Types of Company
Community Interest Company (Information Pack)
Community Interest Company (Information and Guidance Notes)
Community Interest Company (Forms for Legal Changes)
Objections to IPSs
Independent European Sport Review 2006

Next time
Why target West Ham?