the celtic trust's report on the 2003 Celtic plc AGM

Subdued Mood

It says something about the extent of supporter disenchantment with Celtic's failure to strengthen the squad over the close season that even with the truly magnificent triumph over Lyon still very fresh in the memory the atmosphere, as around 750 shareholders gathered for the AGM, was very subdued.

Hanging over the event like a - if not quite black then certainly a darker shade of grey - cloud was the failure to make any significant signings since Seville.

As with the previous year the AGM began with a video presentation. It was divided into three parts. Firstly, Chairman Brian Quinn summarised the current position of the PLC Board which will by now be familiar to all Celtic supporters; that financial prudence was the new watchword.

The key to the Board's position, as Brian Quinn re-iterated in the following week's issue of The Celtic View (October 8th, 2003) thus '...The fact is we have lost £20 million over the last three years' (see Postscript section below for the Trust's assessment of how these losses came about). In other words, any expenditure on new players would have to come out of new income and not borrowings.

There then followed a segment where Martin O'Neill basically said he understood the financial constraints and would work within them.

Finally, Kate Cunningham from the PLC Chief Executive's office outlined Celtic's commitment to expanding the activities of the Celtic Charity Fund, the latter being perhaps the only item that everybody present was going to agree on given the day that was in it!

However, Celtic do deserve real credit for giving a higher priority to the importance of the club's charitable role, an issue on which the Celtic Trust has been lobbying. It serves to conserve and nurture the football club's connection with its charitable roots, while also making good business sense by helping to build the commercial value of the Celtic brand in the form of free advertising.

The formal business of the meeting then commenced with the first seven resolutions, including the re-election of Dermot Desmond as a director, passed overwhelmingly.

The Celtic Trust Resolution - A Supporter on the Board?

The eighth and final resolution, proposed by the Celtic Trust, read as follows: '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.'

By prior agreement with Celtic the Trust Spokesperson Jeanette Findlay then proposed the resolution. She began by acknowledging the fact that in contrast to the 2001 Celtic PLC AGM, when the Trust raised an identical resolution the, this year the PLC Board and, in particular the Company Secretary, Robert Howat, had been very helpful in ensuring that the process of tabling the resolution was carried out efficiently and effectively. The Celtic Trust's rights as shareholders had been respected.

She also thanked the Board for agreeing to distribute the Trust's supporting statement to all shareholders at no charge, something that was rejected in 2001; and neither was any fee for the circulation of the resolution charged (£250 in 2001). Celtic deserve genuine credit for this progressive stance. Jeanette then made the case for why a supporter should be elected to the Board (see http://www.celtictrust.tripod.com/ for the detail).

In essence the argument went that having a representative of the broader fanbase in the Boardroom would serve to ground the discussions of the Board in some reality of the experiences of the ordinary supporter, a dimension not currently present. Board decisions would hence be better informed.

There were no legal reasons why such an appointment could not be made. For example, Partick Thistle, had a supporter representative on their Board. With UEFA awarding the Celtic fans with the Fair Play Award it was now officially recognised that the Celtic support really was unique and special in its passion and commitment for the club. A supporter director would serve to pipe the views of this asset directly into the Boardroom.

The speech was greeted with great applause with no less a source than the following week's View acknowledging it as 'an eloquent and impassioned case' for the Trust's proposal. So clearly even Celtic don't regard the Trust as simply a bunch of rabble-rousers.

Brian Quinn then gave his by now standard rebuttal of the idea of a supporter-director; directors cannot represent sectional interests but must represent all the shareholders etc. He also spent some time arguing that the Board already went to great lengths to solicit the views of Celtic supporters through focus groups and the like.

Dermot Desmond then spoke, for only the second time in nine years. He re-iterated Brian Quinn's objections to the concept of an elected director, though he did state that if the Celtic Trust wanted to nominate someone for election to the Board, and that person met the Board members' criteria for enhancing the performance of the club, then the Board might support his or her election. But this person could not be elected to the Board as of right as a supporter-director.

Dermot then made a very public defence of Brian Quinn's chairmanship of the company and he re-iterated his own commitment to Celtic. However, he subsequently significantly undermined the credibility of this statement by announcing that he would have to leave the meeting early as he had another engagement, departing half way through the debate to a very audible murmur of discontent from the assembled shareholders. If this was Dermot's way of re-assuring the faithful he can listen then it was truly perverse. If it is not a priority to spare the only time formally scheduled in the year for Directors to listen to Celtic supporters and shareholders, well...?

Debate

The resolution was then thrown over to the floor of the meeting for discussion. First up was Celtic Supporters Association (CSA) General Secretary Eddie Toner who made a strong case for shareholders to support the resolution. Critically, Eddie made the point that well over 50% of Celtic's income in 2002/2003 came directly from the support in ticket sales and merchandise and not from TV revenues.

The next speaker opposed the resolution arguing that it would simply lead to wholesale leaking of confidential items from Board meetings to the media, an argument which was subsequently repeated by another speaker. This was greeted with some anger by many present. First Eddie Toner, and then the Celtic Trust Secretary, took to the microphone to highlight the fact that in the last two years there have been regular meetings between both the CSA and the Celtic Trust and representatives of the PLC Board and there had not been a single leak. Indeed the Trust secretary pointed out that one of the problems for the Trust when dealing with the press was precisely the fact that because the Trust was not prepared to publicly criticise the club many journalists were simply not interested in covering the Trust's activities.

Among a number of further speakers one telling contribution argued that if all the small-shareholders banded together to nominate a candidate for election to the Board then their sheer weight of numbers - 20-30% of the share capital - would ensure that such a candidate would have to be accepted onto the Board without the establishment of an new electoral mechanism. Of course this is precisely the reason that the Celtic Trust was established, as a vehicle to organise all of Celtic's small shareholders under one banner.

After a few more contributions a formal poll was then called, though again, as The View subsequently acknowledged, in the hand vote on the day 'a majority of those sitting in the Jock Stein stand voted in favour'. (The formal result of the poll would be announced the following Wednesday - see below).

Question and Answer Session

The main Q&A session almost exclusively focused on why Celtic had not given Martin O'Neill more resources to strengthen the squad with a number of speakers raising the issue in one guise or another. The financial prudence argument was now given another airing by the Chairman. However there then occurred the most telling moment of the day. Martin O'Neill was asked a direct question over the Emerson and McFadden non-signings. He gave his trade-mark meandering answer to the Emerson query with it boiling down to the fact that Emerson's agent started moving the goalposts at the end so he walked away.

But on McFadden he gave a very un-trade-mark short sharp response - 'I'd rather not discuss that at this time'. Martin O'Neill is clearly frustrated - very frustrated! He can sense that his team have something great within them, but the squad is lacking in depth, and they may soon peak, possibly starting with Henrik's departure at the end of the season. But it is clear Martin O'Neill's hands have been tied on new signings.

It is obvious the Celtic support share his frustration. And here we get to the core of the Board's difficulty. Brian Quinn can argue that the Board need to be prudent, but these arguments appear hollow, when viewed by a support who continue to fork out for season tickets/ merchandise/ away travel and all the rest of, even when they consider that a key reason Celtic may have so little room for financial manoeuvre is because of the breakdown of financial discipline during Alan McDonald's tenure as chief executive.

All the key figures on the Board, notably Brian Quinn and Dermot Desmond, were in situ at that time. For example, the £20 million that Brian Quinn reminds us has been lost over the last three years incorporates the £4.8 million signing fee for Rafael Scheidt, plus his wages, plus the £872,000 highlighted in this year's Annual Report for terminating his contract; a 'prudent' signing? Then there are John Barnes and Kenny D's pay-offs and the loss on the sale of Eyal Berkovic. It all starts to add up.

It is also the case that the Board is having to be 'prudent' because the PLC has a commitment to pay a dividend to those shareholders who took part in the 2001 share issue, mostly Dermot Desmond and a number of significant Irish and Scottish businessmen including the motor racing entrepreneur Eddie Jordan. The dividend is payable from August 2004.

But critically the reason why the 'prudence' defence doesn't wash is because everyone who was in Seville knows that Celtic are bigger than this argument. Seville demonstrated that the commercial potential of Celtic, if managed with imagination, energy and flair, is quite frankly enormous. A first class manager is in place together with the guts of a very decent team. The Seville phenomenon should have given the Board the confidence to take a few risks, give Martin even a limited transfer budget of up to £5 million, bring in a few flair marketing men/ women to really sell the Celtic brand worldwide. Instead, they chose to consolidate, possibly in part to protect the financial investment of major investors like Dermot Desmond.

The supporters are disenchanted, not because they want the Board to be imprudent - they don't - but because they are affronted by the conservative ambition of those who lead our great club.

Celtic is about glory not profit. Like almost all Celtic supporters the Celtic Trust looks at Seville and thinks, in the immortal words of the great Van Morrison, 'If only it could be like this every day'...But this time we win!

But does the Board share this vision? How badly do they want that glory? As much as Martin O'Neill?

Postscript

The result of the poll on Resolution 8 was announced on Wednesday 8th October and predictably the Trust's resolution was defeated by a wide margin. 1,180,371 shares were cast in favour of the Trust's resolution (665,678 in 2001) and 18,857,265 against.

The Trust estimates from data received on those shareholders who transferred their proxy to the Trust that around 1,200 shareholders voted for the resolution. The overwhelming majority of votes cast against the resolution were controlled by the Board (see the Trust website for a detailed analysis - http://www.celtictrust.tripod.com/).

As in 2001 the vast majority of Celtic shareholders - an additional 20,000 shareholders - did not vote.

As far as the Celtic Trust is concerned we are satisfied that the vote for our resolution demonstrated an improved level of support. We are here for the long haul and as long our support is growing we will be satisfied.

However, we are conscious of the fact that perhaps the majority of Celtic's supporters see the AGM as an irrelevance and we worry about that. The reality is that small shareholders can have real influence at Celtic but only if they combine under one banner and use events like the AGM to constructive purpose. An individual can complain about ticket allocation for example until they are blue in the face but it is only when the Plc is confronted by a large organised group of Celtic supporter-shareholders lobbying on a particular issue, or a supporter in the boardroom, that they will be persuaded to change policy.

The facts are that the decisions taken by the Board have a direct bearing on Martin O'Neill's room to strengthen the team. The PLC AGM is one of the few times in the year when ordinary supporters have the opportunity to tell the Board how they want them to exercise that influence, to put them under a little bit of pressure.

The Trust intends to continue use the AGM mechanism to constructively apply that pressure.

As Brian Quinn observed at the end of the AGM it was a real meeting with a real debate. He was right about that and Celtic is infinitely a healthier institution for having such open debate; we can leave the stage-managed pantomime AGM to our rivals.