Why Clyde FC became a Community Interest Company

Clyde FC adopted a ‘Community Interest Company’ structure in 2010 which allowed fans to have a share in the club and giving them a vote on club affairs. Their website on the move reads:

Clyde FC has gone back to where it began in the 1870s, as a sports club owned by its supporters and dedicated to working within its community. That step into history is your opportunity to take the club forward.

Now, as a Owner of Clyde CIC you will have a meaningful say in the running of Clyde FC.”

That’s because:

  • You have a vote and as every Owner’s vote is equal, your vote really counts
  • You will actually be part of the democratic process that adopts club policy
  • The articles of association guarantee transparency and accountability in the running of the club
  • More than ever before this is your club.

Here is an interview with former Clyde FC chairman John Alexander about why the club adopted this legal structure.

Most examples of supporter ownership appear to come from a crisis situation. Why should a club adopt a fan owned model if they are currently successful or not in any financial trouble?

I would argue that that most clubs are already in supporter ownership. So the challenge is why are they not in a more representative ownership structure. Recognising that clubs are already supporter owned takes away one of the major gripes of club directors who get irritated that nobody seems to recognise that they are supporters when espousing the benefits of supporter ownership.

A club should only adopt a representative model if they see that it meets their strategic objectives. Being in financial trouble should not be a reason to be supporter owned. Whatever legal/ownership structure gets a club out of trouble is good. We all want our clubs stable and secure and we are all less interested in the ownership model than we are in having a successful club. Not a popular view, but it is honest.

A club should therefore adopt a broad based ownership model if having greater engagement with customers is recognised as something that could lead to greater success (the definition of success will vary from club to club). I don’t think there is any business that would not want to have significantly increased engagement with stakeholders, but they are probably businesses that would know how to deal with challenging engagement. For instance, all listed companies have to deal with stakeholder engagement and the vast majority of them are not controlled by a single individual and they are often very successful.

How much of a factor was the move towards a Community Interest Company structured club in the abolition of the club’s debt?

For Clyde, the switch to a CIC came long after the financial troubles, we still had debt but we were in a stable structure of collective supporter ownership but it was structured through 3 companies. One  of our reasons to become a CIC was to simplify our legal structure into a single company. Debt reduction was in no way linked to the historic finances.

Why should other clubs adopt the CIC structure?

No easy answer. The reality is that a CIC structure is not a silver bullet for the ills of the game – which are many. The start point is at each individual club where they need to consider their medium and long term succession plans and strategic objectives for the club.

Having done that it is possible to establish what legal/ownership structure would best support the club in delivery of those objectives. One of our objectives was to improve corporate and financial governance and that was achieved by making the board directly accountable to the supporters on a one person one vote system. However, we did not need to convert to a CIC to achieve that, it just set it more in stone. A major factor for us in choosing a CIC was a marketing issue – we wanted it clear that we were a community club and that the community had to be part of building the club. This is a very difficult message to sustain within a football club unless it is already in their DNA, it was not in ours. We were clear that the future of the club lay in being a community focussed club so wanted to ensure that future club leadership could not easily revert to an unsustainable model of operation.

Was the transition to a CIC club a smooth one? What advice would you have for any clubs considering doing the same?

Technically it was very easy, I understand company law and guided the lawyers through what I wanted and I used lawyers that could make sure that what I wanted was delivered. Our bigger challenge was communicating it to stakeholders, amongst whom there was some opposition. We put a great deal of effort into communication and explaining the benefits – the benefits are not generic and are specific from club to club, so when we cited examples that related to our club then they were fully understood. The same examples of benefit might not be relevant to another club. There are a few things we might have done differently but not many.

The advice I would give is that anyone considering becoming a CIC should not rush it and should not do it unless they have established that it would support their strategic objectives. They should also take good advice as there is an element of creativity in thought that is required to manage a transition. It is possible to achieve the same perceived benefits that a CIC delivers within a standard Ltd company structure with no need to convert to a CIC – so the advice is to start with the objectives in mind and retrofit a legal structure, do not decide on legal structure first.

How does the club use CIC to set its goals both on and off the pitch?

The honest answer is that it doesn’t. On the pitch is not linked to being a CIC. The off the pitch activities, which are growing, meet and exceed CIC regulator objectives but these are just part of our model of operation now and would happen whether we were a CIC or not.