a supporter on the board: the celtic trust's resolution to the 2003 Celtic plc AGM

As many of you will now know one of the issues facing this years' PLC AGM will be the call, through a resolution originating from the Celtic Trust supporter-shareholder group, for Celtic to organise a means whereby someone can be directly elected on to the PLC Board by the wider fan body. If those of you who are shareholders want to take a look at your Annual Report you will be able to see which resolution it is -Resolution 8 - it's the only one that the Board are asking shareholders to vote against!

The Board's response has hence been to adopt the hedgehog impersonation position (getting all defensive and prickly) and, yet again, seizing what could be a useful and exciting opportunity and turning it into a bone of contention between themselves and the fans, whilst possibly creating a bit of a PR disaster in the process.

The supporting statement for the resolution which, to give them their due, Celtic distributed with the AGM papers at no charge to the Trust, makes the argument that there are major communication problems between Celtic and the support which have resulted in a great deal of unhappiness and probably, ultimately, a loss in revenue both now and in the future. It goes on to argue that one way in which these communications problems might usefully be addressed is through the election to the Board of a representative of the wider Celtic support.

Hardly a radical proposal one might think; one director, among eight, to act as a line of communication into the wider fanbase.

Strengthening the Squad

Among related issues which the Trust highlights in the supporting statement is the debacle over ticket allocation for the UEFA Cup away games last season and the continued erosion of the benefits and rights of the Executive group of shareholders who made sizeable investments when called upon in the 1994 share issue which saved the club from financial collapse. Maybe there is a sensible explanation for the rationale behind the ticket allocation, but if so then Celtic have yet to make it clear.

More recently fans have been angered both by the lack of signing activity and by the feeling that they had been misled into thinking that investment in the squad would take place before the end of August. The recent comments from Martin O'Neill on this issue have done nothing to allay this disquiet. Again, maybe there is a good reason for this, but we have yet to hear it from the Board of Celtic Plc.

The publication of the PLC Accounts, which the Board have used to justify the failure to make any significant investment in the squad, has also increased concerns among the supporters. Serious questions need to be asked about the failure of the Board to capitalise on Celtic's global brand and the 'several million' (Annual Report, page 43) strong Celtic diaspora. What other club could take 80,000 fans to a major European final, have not one arrest, and win the UEFA Fair Play Award to boot? Yet where are the imaginative initiatives to take advantage of this huge well of goodwill and turn it into the financial muscle with which to buy the very best players?

Doom & Gloom

The Accounts also raise a number of questions. Getting technical for a minute, it is surprising that a deferred tax asset of approximately £6m was built up in 2000/2001 and 2001/2002 at a time when it seemed most unlikely that pre-tax profits would be earned for this to be set against in the future, and which was then written off in 2002/2003 thus making a significant contribution to the overall annual loss of £11.6 million. While this is a legitimate accounting device its use does tend to make the financial situation look rather blacker than it might otherwise have been painted.

This raises the question why, when the team squad is in dire need of strengthening, the Plc Board are presenting the financial situation in the most pessimistic of terms? Surely after Seville a little bit of speculating to accumulate might have been in order?

The Celtic Trust will be raising this and other questions on the accounts with the Celtic Plc representatives at our next Quarterly meeting.

The Fans a Sectional Interest?

In response to all of this the PLC Board have very little to say other than to argue that Celtic supporters cannot have a representative on the Board because you cannot have someone representing a sectional interest (Dermot Desmond is not representing a sectional interest, OK?) and because it would be too difficult to organise due to the fact that 'The creation and administration of a fair system to select candidates would, in the opinion of the Directors, be likely to result in significantly increased administrative burden and inappropriate expense and use of scarce corporate resources...' (Annual Report, page 43).

Could this expense possibly be more than the recent six figure pay-off to the departing chief executive, or the £4.8million paid for Rafael Scheidt?

Leaving aside the fact that we, the supporters and small shareholders, are more than a 'sectional interest' - small shareholders still own between 25% and 30% of the share capital, and (as even a cursory review of the Accounts demonstrates) Celtic supporters contribute the lion's share of revenue now that TV income has plateaued out - it is quite simply not the case that you can't have a fan on the board; Aberdeen has one, Partick Thistle has one, even Manchester United, where there is a very active supporters' trust called Shareholders United, is likely to have one before too much longer.

Despite what the Board has said the commonly accepted codes of corporate governance do not preclude significant stakeholders having representation on the board of a PLC; I think we can all agree that the Celtic support is a significant stakeholder, can we?

This holds for all businesses and not just football clubs. If its Good Enough for Barcelona...?

The second argument is even more hollow. Are the Board really saying that you must all vote against this resolution because an election might be too difficult and expensive to organise? The resolution is asking them to explore this very issue i.e. what mechanism could be used to organise such an election.

If Celtic is attempting to sign everyone up to the 'World Wide Huddle' as a de facto club membership exercise then how come a similar process to elect a supporter-director is now deemed impossible? They can manage it at Barcelona and Real Madrid, both of which are membership-owned organisations.

And by the way - supporters' campaigner Joan Laporta was elected as the President of Barcelona FC by a ballot of Barcelona members in a well-publicised election in June. So why not at Celtic?

The Celtic Trust, and every other fan organisation, could have an input into this initial exploratory stage to devise the electoral scheme. Indeed the Celtic Trust is specifically designed and regulated to that end.

But no, apparently the Board have decided that we can't discuss it because it would be administratively too onerous! If that is really the best they can come up with then I think we can safely say that the argument has been won.

It was probably won two years ago when the Trust first raised this issue at the 2001 PLC AGM but unfortunately the vote was lost. However, if we can galvanise all the small shareholders for the forthcoming vote- the vast majority of whom do not currently vote at all at AGMs - then even if we don't get a majority we can make a powerful enough statement to push this idea forward.

Vote for the Trust Resolution

Already we are getting a clear indication of an increased level of support for this idea through correspondence with the Trust since shareholders received their copy of the Accounts. It is vital that Celtic supporters don't let this opportunity pass. If you are a shareholder and thus have a vote then please use it, either in person or by proxy (see http://celtictrust.tripod.com for a guide to completing the voting form).

The Board of Celtic Plc have to be made to understand that Celtic fans are more than a cash cow for them to exploit any time they get themselves into a sticky financial situation. Now is the time to make it clear that we are Celtic and it is time that the Board showed some imagination and started allowing the support to start contributing more fully to directing the interests of the Club that we love.

Seville demonstrates that the supporters are prepared to put their money where their mouth is. Celtic Plc needs to listen to what the supporters have to say. Examining ways in which to elect a supporter representative to the Board - and that is all we are talking about at this stage - would make a good start to this process.

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Resolution:to the 2003 Celtic Plc AGM

"THAT the board is requested to propose a scheme at the next Annual General Meeting for the appointment to the board[s] of the Company and/or Celtic Football and Athletic Club Limited of an elected representative of supporters' organisations/small shareholders/season ticket-holders/and wider supporter opinion."

The Celtic Trust
The Celtic Trust is a not-for-profit membership organisation, formally constituted as an Industrial & Provident Society, that has been formed as a vehicle to mobilise the voting power of the many thousands of small shareholders at Celtic Plc. Over the last two years, through a series of quarterly meetings with Celtic's Chief Executive, the Trust has had a constructive dialogue with Celtic Plc on issues of concern. However, a key objective of the Trust remains to give the supporters a formal voice at Board level in the future development of Celtic Football Club.

Board/ Supporter Communication
The Trust has submitted the above resolution as it believes that the appointment of a non-executive director from amongst the wider Celtic support, as one of eight directors, would establish a direct line of meaningful communication between the Celtic Plc Board and the concerns of the ordinary fan. As an example of this one could point to the unhappiness surrounding ticket allocation and pricing policies which became the source of much disquiet amongst the supporter base during last year's UEFA Cup run. Supporter representation on the Board would ensure that the concerns of the ordinary fans, who are the life blood of Celtic FC, would always be heard by the custodians of the club. This enfranchisement of the ordinary supporters and shareholders would also encourage policies which were more obviously supporter-friendly, and which would benefit Celtic not only financially but also in many other and varied ways.

Protection of Share Privileges
As a shareholders' organisation the Celtic Trust believes it is in Celtic Plc's interests to protect the existing privileges of shareholders. Any erosion of these will simply serve to deter Celtic supporters from taking part in future share issues. The Trust is mindful of the fact that it was the mass participation of Celtic supporters in the 1994 share issue which saved the club from financial ruin. Celtic may need to turn to these supporters again. There is a perception that some of the privileges accorded and guaranteed to small shareholders are being eroded in order to satisfy the demands of corporate clients. However accurate or inaccurate this view may be, it might obviously act as a disincentive for existing shareholders to become involved in future issues. The presence of a 'supporter-director' would serve to place this concern high on the Board's agenda

The Celtic Family
The extraordinary exodus to the UEFA Cup Final in Seville and the impeccable behaviour of all those who travelled underlined again the extraordinary depth of feeling and respect Celtic supporters have for their club. This astonishing phenomenon was noticed all over the world of football, and particularly in the corridors of power at the UEFA headquarters in Geneva. The Trust believes strongly that the election of a supporter-shareholder to the Board of Celtic Plc would formally confirm the unique value of the Celtic support in the minds of the custodians, and guarantee the health and future of the club. It is custom and practice for large investors to have representatives on the boards of companies. For example, David Archer, Corporate Finance Director of Scottish Media Group who have a substantial holding in Heart of Midlothian Plc, is a non-executive director at Hearts. Small shareholders together currently hold a substantial holding in Celtic but have no equivalent formal voice at Board level. This should be rectified so that all supporters and shareholders in Celtic can move forward together to build the club. As Jock Stein famously said: 'Together we can do something to make this club great again.'