Raith Rovers: Empowerment Through Information

This article first appeared in Issue 19 of The Football Pink fanzine

Before you can be empowered you need to be informed. Raith Rovers fans work hard to understand as much as they can about the workings of their club and its structure, and work with others to secure a stronger future for the club, as ALAN RUSSELL explains.

I was once told that Raith Rovers hold the Scottish record for the highest number of promotions any team have enjoyed. The sucker punch to this is that we also hold the record for relegations! By my reckoning we are going for the 13th promotion in our 135-year history this season – and while I can’t be certain whether this is a record, we certainly fit the bill of “yo-yo club”. While there were only two divisions in Scotland we bounced up and down spending roughly equal amounts of time in each; when Scotland went to three divisions in the mid-70s we spent most of our time in the second (with a few visits to the third), and eventually made it into the top tier in its final season before Scotland moved to four divisions. Rumour has it that, with an eye to what was best for Scottish football, our representative at the league voted for expansion to four divisions and the reduction from 12 to 10 teams in the Premier that put us back down to the second tier in the mid-90s. We returned a couple of years later, but since then have bounced between the second and third tiers again.

Off the pitch we have also experienced our fair share of turmoil, and as a result have the most complicated structure of any club in Scottish football. Not one, not two, but three holding companies, each of which emerged in response to a different crisis. Since the early days of the ‘punk football’ movement we have had an active supporters trust, and the fans have made a significant investment in the club over the years. We now sit in the boardroom at the club, but while our investment has bought us influence, we are a long way from having control, and the nature of how we use our influence has had to adapt to the priorities of others at Stark’s Park.

Throughout the club’s first 100 years its structure was very straightforward – shares in Raith Rovers Football Club Ltd were largely held by local men, most of whom owned just a small number. It may be a romantic notion, but ownership of the football club was seen as a responsibility rather than an opportunity. As John Litster wrote in his indispensable 2006 history of the club, “Always Next Season”, there was a powerful motivation for careful management of the club: “The directors were constantly accountable for their husbandry of the club’s affairs; at work, at leisure, in the High Street on Saturday morning and in the Kirk on Sunday. The team’s failure made for an uncomfortable existence in the town for the directors, and fear of that potential criticism concentrated their minds and redoubled their efforts.”

In the early ‘90s Alex Penman, a local builder, was keen to increase his investment in the club, but with all of the share capital issued, a Special General Meeting was needed. Three major shareholders collectively held more than 25 per cent of the club’s shares, and were therefore able to block the motion. However, the votes in favour had been close to 50 per cent, and one of the club’s directors noted that if they could gather the support of just a few more shareholders they would be able to form a holding company and transfer their combined controlling stake across to it. This manoeuvre paid off, and in April 1994 Raith Rovers Holdings Ltd was formed, side-lining Raith Rovers Football Club Ltd’s three largest shareholders.

As well as the transfer of shares, the formation of the holding company enabled the new investment desired by Alex Penman to be made. This gave him ownership of 85.7 per cent of the shares, meaning that the club was under the control of one person for the first time in its history. This controlling shareholding was subsequently sold, twice, with disastrous consequences – but not before Raith Rovers enjoyed the most successful period in their history, with glory in the League Cup final against Celtic, three rounds of UEFA Cup action (beaten by eventual winners Bayern Munich, despite holding a half-time lead away from home in the Olympiastadion) and another couple of seasons in the Premier Division, which was accompanied by the building of two shiny new stands to accompany the old main stand (a unique Archibald Leitch design). These successes came at a cost, with Alex Penman’s successor Alan Kelly first authorising unprecedented spending on transfer fees and wages, and then selling the club on to Danny Smith, Colin McGowan and Alex Short, who at first slashed costs and then sought new outside investment.

Up stepped Claude Anelka, nightclub DJ and agent/brother of France international Nicolas, who said he intended to transform Raith Rovers into the “third force” in Scottish football. In return for complete control of playing matters he injected several hundreds of thousands of pounds into the club. The players he brought in may have been talented, but few had played professional football before, and the guidance they received from Anelka was not sufficient to make up for that lack of experience. By early October, with the club bottom of the league with one point from a possible 27, Claude Anelka left the club – graciously not asking for his money back.

During their time in charge, Stark’s Park had been transferred into a separate company (West City Developments Ltd, since renamed as Stark’s Park Properties Ltd). With no more cards to play the owners wanted out, and the sense of crisis intensified when it emerged that they had applied for planning permission to build houses on the land where Raith Rovers had played for 114 years.

Along with the remainder of the club’s board, the Raith Rovers supporters and the local community set about saving the club, and the “Reclaim The Rovers” campaign eventually saw a takeover concluded in the final minutes of 2005. Enough funds were raised to buy out the departing owners, and a new holding company, New Raith Rovers Ltd, was formed. Despite over £800,000 of new investment, the takeover was under-funded and only the controlling shareholding in Raith Rovers Holdings Ltd was able to be purchased by the new holding company. The supporters initially held 12.4 per cent of the shares in New Raith Rovers Ltd through the supporters trust, securing them a seat on the board for as long as they maintained at least a 10% shareholding.

New Raith Rovers Ltd was set up to ensure a stable ownership structure, with a more even distribution of shareholdings than had existed throughout the years of turmoil, and with restrictions in place to prevent it ever being controlled by any one person. The company’s articles of association placed a limit of 40% on any individual shareholding, building the principles of collaboration and cooperation into the club’s structure. However, having two holding companies plus a separate company owning the stadium was far from simple, and as new shareholders the supporters trust sought to provide transparency where simplicity did not exist.

Over the next few years this picture at first became even more complex, as new investment in New Raith Rovers Ltd was required to bridge the gap between revenue and expenditure while the club spent four seasons in the third tier, cutting costs to the bone. The sands were shifting beneath our feet, too. John Sim, one of the new investors joining the club in 2005, and one of the few with deep enough pockets to act as guarantor to the bank for the lending secured on Stark’s Park, reportedly had very different ideas to those of the club’s board regarding the direction needed for the club.

Mr. Sim was largely absent from Kirkcaldy, and the discord between him and his fellow directors came to a head in 2008, when in a general meeting of Stark’s Park Properties Ltd, acting through a lawyer, he removed all three directors of the company (including the supporters’ representative), replacing them with himself as the sole director.

The questions about ownership, and about John Sim and his possible intentions, came thick and fast. We began to share our understanding of the ownership structure by developing an infographic, and showing how this complexity had developed over the years. The conversation gradually shifted from “who owns what?” to “how did this happen, and what can we do about it?” Around the same time, we also commissioned research into the demographics of our fanbase, and mapped out a typical lifecycle of a Raith Rovers supporter – how people become fans in the first place, how they become regular supporters and how they become diehards; and also the points in their life where fans typically scale back their attendance. We found that the greatest potential for growing the fanbase was to attract primary school age kids (whose parents would attend with them and hopefully also get hooked!) and make supporting the Rovers a habit that would stick before their heads got turned by the glamour of big-time football elsewhere – we now have over 500 children in the ‘Roary Club’ that we set up a few years ago, many of whom are ever-present at home matches, collecting the free gifts that come for attending milestone numbers of games. Not bad for a club with average gates of around 2,000.

Concern about John Sim’s intentions for the club remained, but shifted to the background as the club returned from the third tier to the newly named Championship in 2009. Despite the differences in his views to the rest of the club’s board, his investment in 2005 had been substantial and essential, and he was regarded as a critical friend, rather than the type of predatory investor seen at some other clubs. In addition to a stable run of mid-table finishes in the Championship and a Challenge Cup final victory over Rangers, the financial health of the club seemed to have improved, with modest profits – a rarity in Scottish football! – even posted in a couple of years.

Season 2016/17, however, turned out to be our downfall. After a bright start we plummeted from the promotion play-off places to a relegation dog-fight, due to a run of 17 games without a win. Gary Locke was allowed to assemble a larger squad than we needed, and sent our promising young striker Lewis Vaughan on loan to Championship rivals Dumbarton (described by The Scotsman as “the worst transfer of the Scottish football season”). Locke was eventually replaced by John Hughes who destroyed whatever confidence was left in a dispirited dressing room. We were eventually relegated, finishing behind Dumbarton on goal difference. Goals which, almost inevitably, had been scored by Lewis Vaughan (who after returning to Kirkcaldy broke a Raith Rovers’ post-war goal scoring record, netting in 11 consecutive games at the beginning of this season).

At the end of the season we were advised that a takeover of the club by Stark’s Park Properties Ltd (the company owning the stadium) was imminent, and in August the takeover was concluded. Essentially, Stark’s Park Properties Ltd purchased New Raith Rovers Ltd’s majority shareholdings in both Raith Rovers Football Club Ltd and RRFC Holdings Ltd, meaning that it is now in overall control of every aspect of the club. Prior to this, John Sim also acquired another major shareholder’s shares in New Raith Rovers Ltd, taking his share in that company to 46%. This information only came to light after the takeover was completed, and it is still unclear how the 40% limit on shareholdings in this company was circumvented.

In the lead-up to the takeover, the supporters trust voiced its thoughts and concerns about the takeover, and while we had no wish to stand in the way of progress we were disappointed that our ideas on the shape of the takeover were not implemented. In particular, we were concerned about the club moving away from the principle of “shared and stable ownership”, which had been part of the club’s own published strategy, and also a fundamental principle in a “concordat” agreed upon by the board and the fans.

Having a supporter on the board of the football club was unfortunately not enough to prevent the dilution of the supporters’ shareholding in the club. Over the last 15 years, supporters have invested over £225,000 in the club via the supporters trust. Whilst it held its majority shareholding in the club, our 14% shareholding in New Raith Rovers Ltd was equivalent to 11% of the total shares in the club. Now that New Raith Rovers Ltd only owns a minority shareholding in Stark’s Park Properties Ltd, our 14% now represents less than 3% of the total shares in the club.

Clubs at our level, possibly at any level, are often only a decision or two away from crisis. That was certainly the case in 2016/17, when years of progress were undone by managerial appointments and decisions about our playing squad that didn’t work out. And when crisis strikes, hard-won principles can be very quickly disregarded in the name of survival.

On a more positive note, it is encouraging that John Sim has indicated a desire for continuing supporter representation on the board of the football club. Whilst this position was previously by right of our shareholding, rather than by invitation as it is now, this still puts us in the privileged minority of Scottish football supporters as fewer than half of our clubs have supporter representation of any kind in their boardroom.

The Raith story typifies that of many Scottish clubs. Supporters must know who owns their club, and where their intentions lie. We need greater transparency in our game, and also the means to enable greater supporter participation in the running of our clubs. Following on from my work on providing greater transparency on the structure of Raith Rovers, I was invited by Supporters Direct Scotland to help bring a similar level of transparency to the ownership of the other clubs in Scotland, and in spring 2017 we published the first ‘SD Scotland Index’ exploring the governance and ownership of all 42 SPFL clubs.

As well as documenting the ownership status of each club, the index builds on a Working Group Report on Supporter Involvement in Football Clubs (made up of the SFA, SPFL, Supporters Direct Scotland, Scottish Government and Sportscotland) which provided recommendations on reducing barriers to further involving fans within their clubs. Some of these recommendations were ultimately not accepted or pursued by clubs, but are still regarded by SD Scotland as good practice, and the index assesses clubs against the following criteria:

•            On Engagement… do the club:

o            have a Supporter Representative?

o            have a Supporter Liaison Officer?

o            engage in Structured Dialogue with supporters?

•            On Transparency… do the club:

o            publish financial data on their website?

o            list the directors of the club?

o            provide details of who owns the club?

o            provide information on the number of board meetings held, and on the number of directors attending?

It can be difficult to really understand who owns our football clubs. Club ownership structures can be complex – none more so than my own club – and it can be confusing and time consuming to find accurate and up-to-date information. We often hear soundbites in the media about new investors and takeover deals, and only discover later that the true picture is not as simple as we thought. Through this work we have tried to keep things simple and transparent without losing sight of the crucial details. We try to keep the index up-to-date so that this remains as accurate as possible, and encourage supporters throughout Scotland to use this as the first port of call if they want to know more about their club’s ownership and governance.

Being passionate about your club is sometimes not enough. If you are to make a difference, information is vital. Only by knowing their club inside-out can supporters take action, and empower themselves to effect meaningful change.

Alan Russell is chair of Raith Supporters Trust, a council member of Supporters Direct Scotland, and currently represents Scottish football supporters on the Scottish Football Association Congress. He can be contacted at chairman@raithtrust.org.uk

The Raith Rovers’ “Who Owns What?” infographic can be found at http://www.raithtrust.org.uk/?p=2188

The SD Scotland Index can be found at http://www.supporters-direct.scot/research/sd-scotland-index/