At our members meeting in November last year Jim Mitchell spoke about potential ownership change. He felt able to do so because he was covering ground that was already in the public domain. What he said was that CUOSC, the Club’s other owners and a third party (now identified by John Nixon as EWM) had developed a succession plan in early 2019. Things got as far as the drafting of press releases to announce the plan in which CUOSC was involved. From the point at which the press releases were about to go out, the progression of the succession plan stalled for a range of reasons including suggested variations being made to the agreed plan. The reasons for the stalling continued to stifle the forward movement of the plan during the rest of 2019. Then early last year, along came the pandemic and its effects further stymied any progress and looks like impacting on the future too.
This month the Holdings Board met and again considered progress in the succession plan. Following that meeting came last Tuesday’s fans forum at which John Nixon to our surprise announced further details of the plan, and events in the past months. Given that Jim and Billy Atkinson have fiduciary and confidentiality duties with regard to the Club’s board meetings which they attend they had felt obliged to respect those duties.
However, now that another shareholder has spoken freely about the succession situation it unlocks and opens the door for CUOSC to follow that lead.
As the succession plan, if implemented, would constitute a ‘change of control’ the EFL needed to seek assurances regarding the ‘source and sufficiency of funds’ which is normal when clubs are planning to see a change of ownership. Put simply, those assurances involve checking the investor has both the required resources, and equally importantly, is legally committed to providing them for 2 seasons. The EFL involvement occurred over many months and led to the suggestions for changing the agreed plan. These potential changes gave us some cause for concern and this was strongly expressed to the other involved parties.
CUOSC and the individual shareholders do however share a united view on almost all of the issues pertaining to succession. However, there are some specific areas which have remained fundamental to our position on succession, these are unchanged and are applicable to all interested parties. Just as the individual owners also have specific personal concerns like the personal guarantees relating to the Purepay Retail loan, all shareholders and the potential successor understand each other’s respective concerns.
It is now appropriate to publicly state our position.
We have always understood that our ‘voting rights’ could be a safeguard to protect both the Club and the Trust. We take that responsibility very seriously. With recent events in the game and the pending developments in football’s overall governance, the expectations of supporters’ trusts have increased and our duty and responsibility to exercise that power is greater than ever.
We really want to see succession and are totally committed to doing all we can to bring it about. We want a very positive change that suits the Club and its fans and is seen as very likely to take United forward.
We have assisted the process of succession by agreeing to the creation of new B shares to extinguish shareholder debt but in a way that did not dilute our voting rights. Whilst we know that our shares with voting rights attached are a potential disincentive to investment and succession, they are equally a safeguard and protection to help ensure the Club gets a positive change in regime.
We have consistently said we would reluctantly be prepared to consider diluting our voting rights in order to achieve the ‘right deal’.
Of course the other shareholders can do what they want with their shares, but in terms of the ‘right deal’ and a dilution, succession has to mean a change of control. It cannot mean that the current ownership regime remains in place and in apparent or real control, but funded by others or significantly influenced by others with the safeguards our votes provide for the club diluted.
If for example a staged transition were to take place which may well be possible and appropriate to help to progress a longer term succession, our rights would only be diluted if and when that transition finally becomes a change of control, which the EFL would of course need to approve.
For CUOSC to consider supporting any planned ‘change of control’ to its conclusion we need any interested party to set out clearly and convincingly their plans to take the Club forward. This is vital to carry supporters with them. We would also need in particular to see a commitment to funding and investment, openness and transparency and to prioritising fan engagement. Again for example, so that the Club continues to be at the top end of the ‘league table’ as far as the annual independent analysis of the performance in this respect of all EFL and Premier League clubs is concerned. These are all simple reasonable expectations of any person taking on the custody of this great club we all love.
The mood of the football world has shifted considerably of late. It’s not comparable with March 2019. Ownership of clubs has been under the microscope following the demise of clubs such as Bury and Wigan, new investor issues at the likes of Derby and Newcastle and the European Super League debacle. The importance of supporters’ trusts such as CUOSC and fans more generally has very much come to the fore. The long-awaited fan-led review of the governance of the game was announced by the Government last month. The terms of reference of the review include a revamp of the owners and directors test (known as the fit and proper person test) and the consideration of the introduction into the football system of an independent regulator (and this is very likely to happen). So there is movement towards more involvement and engagement of fans and more stringent requirements and expectations of new owners. Being remote and not engaging is unlikely to pass the new tests.
Hence the football world is going to be a very different one to the one that prevailed when the succession plan was formulated. Any new majority shareholder, or anyone with control, must be fully prepared to embrace this changed mood and requirements.
We do not intend to comment further on the details of the succession plan until we have met again and had discussions with the other parties to it. Once that happens we will hold a members’ meeting on this issue and other matters of interest.