Rangers Supporters Trust “Share Scheme” Launch
By Grandmaster Suck
Updated Saturday, 27th August 2005
Overview:- “Fans buying into the Club – We are the People”The aim of the Rangers Supporters Trust since inception has been the long-term goal for supporters to invest in the club and have influence at the highest level of the club. The most vital ingredient in any club is the fans. Players, owners and the club managers increasingly come and go, but the supporters are the one constant – theirs is a lifetime commitment
This aim is shared by the Supporters Direct movement as a whole. There are Supporters Trusts already in place that own their club, although clearly this is not on the same scale as our precious one – but then they do not have the supporters base we do.
About Supporters Direct – the movement
Supporters Direct is a government initiative, funded by public money, with offices in London and Glasgow. Their aim is to help people "who wish to play a responsible part in the life of the football club they support" and they offer support, advice and information to groups of football supporters.
Supporters Direct exists to:
Promote and support the concept of democratic supporter ownership and representation through mutual, not-for-profit structures
Promote football clubs as civic and community institutions
Work to preserve the competitive values of league football in the United Kingdom and promoting the health of the game as a whole
Some facts about Supporters Direct
Over 100 Supporters’ Trusts across England, Wales and Scotland
61 Supporters’ Trusts hold equity within their football clubs
39 Football clubs have supporter representation within the boards of
their football clubs
Supporter ownership or control at 4 football league clubs (Brentford, Chesterfield, Rushden & Diamonds and Stockport County)
Supporters’ ownership at 8 non-league clubs (York City, Exeter City, AFC Wimbledon,AFC Telford, Newport (IOW), Enfield Town, FC UNited of Manchester and Clydebank)
Supporters’ Trust involvement in saving a club at 13 clubs
Supporters’ Trusts have brought around £10M of investment into the game on the basis of 750K over 3 years to support the work of
Supporters Direct – over a 5-fold increase on that initial funding.
The Rangers Supporters Trust
The trust have one main aim, or is it a dream, that one day the fans will own our club, Look at the media attention surrounding events at Manchester Utd, a club now at the mercy of an individual with absolute power. No Man Utd. fan wanted this but they were helpless. We will never be helpless.
For complete clarity the trust is willing to work closely with the current Board of Rangers Football Club to introduce our “Share Scheme” our members are always motivated by doing what we believe is best for Rangers FC. For information meetings have been held in preperation of the scheme with both David Murray – Chairman and David Joliffe – Finance Director.
The Rangers Supporters Trust shall launch, with our members approval, a share scheme that will enable supporters, who must first be a member of the trust, the opportunity to save a monthly amount that shall be used to purchase ordinary shares in Glasgow Rangers PLC. The amount of shares purchased is the sum of all your monthly contributions less costs and this becomes your “entitlement”. At anytime throughout this scheme you can exercise this entitlement and have the shares, or cash, returned to you in your own name. Alternatively, once you exercise this entitlement you could opt to sell your shares to the scheme and receive the cash equivalent.
It is important we look at the individual “entitlement” and explain this further. The supporter who saves is ALWAYS the beneficial owner to the cash he/she saves, and to the shares, once this transaction takes place. At anytime this cash (if still not invested) or the shares you are entitled to, can be withdrawn.
The shares shall be acquired in one of two ways:-
Direct from the club through a new Share Issue (preferred route):
This would enable ALL funds raised to be invested direct to the club. In simple terms if 10,000 members each invest £20 per month, then the full £200,000 (less costs) would go direct to the club in exchange for ordinary shares. In our example this would be £2.4M approx to the club in new income – it is clear to see the benefit.
Buy from the market – (secondary channel):
This allows the “scheme broker” to buy shares, however, the funds go direct to the seller. This route would allow the share scheme members to gain a greater % stake for their cash, however, the main downside is that the club would not benefit from the cash injection – the seller would.
How do we do this-
Each supporter in Rangers shall be given the opportunity to save a monthly or annual amount. These funds, less a small admin fee, go entirely to share acquisition, and directly to the club.
For their money, the fans get an “entitlement” to ordinary shares in Rangers FC PLC. This gives the fans the ability to own shares in their club at cost effective rates. For example if a fan saves £10 per month, over a 5 year period they will have acquired £600 of Rangers Shares less minimal costs over the period.
This scheme does NOT lock anyone in. Shares bought and held by the trust’s broker on behalf of the share scheme members can be taken back by the supporter at ANY time. Using our example above, if the fan left after a year we would give him/her a certificate for £120 worth of Rangers shares, after 3 years £360 worth and after 5 years £600 worth.
To be clear there is no lock in period – the supporter chooses the time they remain in the scheme.
In addition, we have allowed a facility for individuals to create involvement in the scheme through a one-off or annual contribution.
Security – this is the key. We can only ensure the security of the supporters cash until this is invested in shares, however, once the share purchase is made as with any investment in stocks and shares the price could fall as well as rise. The idea is to have an regular purchase of shares in Rangers, and as such each participant in the scheme will accumulate shares on this basis. Rangers are currently listed on Ofex, therefore fans can see the value of the shares at anytime.
TO BE CLEAR THIS SCHEME IS NOT GEARED FOR INVESTMENT PURPOSES, IT IS TO CREATE A VEHICLE THAT WILL RESULT IN WIDER AND INCREASED OWNERSIP OF THE CLUB BY THE FANS.
We expect the formal launch to take place on or around the Rangers PLC AGM in October 2005. The launch is subject to ratification by our members at the trust agm.
Why the scheme-
There are a number of key drivers in our desire to launch a share scheme-
It is our aim for supporters to own or have significant influence in their club – this is a mechanism that allows fans to stand together and make a greater impact – and importantly it is cost effective and allows fans – no matter their personal circumstances – the chance to be part of the scheme and make a real difference.
In a time when football clubs have increasing financial constraints, this would inject some much needed fresh capital into our club, which we hope will be for our own enjoyment. Clearly to achieve this we need the club to support this initiative – and our meetings to date would suggest that the club are behind this scheme.
We have all seen what happened at Manchester Utd. We must ensure this EVER happens to our club. Action now will give fans the opportunity to gain a stake in the club and have wider ownership. This would put the future of the club in the hands of the fans.
Where are we now-
In launching this scheme, the Trust has invested heavily in advisory fees, well into 5 figures, and this does not include personal time by any trust board member. There are a number of issues that are key to successful launch of the scheme and being the professional body we are, we were prudent to ensure these were all covered prior to launch:-
Advice – the trust cannot be seen to promote investment in Rangers FC as
This is a regulated function. The trust can also not be seen to undertake investment business, again this is a regulated function.
Structure – we have to ensure the structure is sound and that our rules cover our involvement in the scheme. Clearly making the appropriate amendments where required, and obtaining the necessary vote from our members. The resolutions proposed today are as a result of this.
CIS – we will have to structure the share scheme in such a way as not to fall foul of the rules referring to Collective Investment Schemes. Again this would have required regulatory approval and added a number of obligations on the trust. Cost of the scheme would increase dramatically if it were a CIS.
A collective investment scheme arises at its simplest where property is being managed on behalf of a number of passive participants who have no involvement in the day to day management of the property. Such schemes cannot be promoted to people in the UK at all unless the scheme is "authorised" (typically an authorised unit trust scheme or something called an open ended investment company fund). Authorisation involves FSA regulatory approvals and significant expense. We are therefore structuring the scheme so that it is not a collective investment scheme and this is why it is so important that each member has an individual beneficial interest in individual shares.
Marketing – We shall take the appropriate advice on how best to market the scheme, again ensuring we do not fall foul of the rules relating to financial investments or promotions.
5. FSA approval – whilst we do not intend the scheme to be regulated, we have prudently requested a written assessment by the Financial Services Authority (FSA) to confirm this status. This ensures no future investigations into the scheme
The above tasks are being undertaken by Linklaters Solicitors, a highly respected law firm based in London. Linklaters have significant experience in the workings of the FSA. As your chairman, and current FD in Direct Sharedeal stockbrokers, I have extensive experience in the workings of the FSA and will work closely with Linklaters, which shall reduce the cost of the scheme substantially.
OTHER POINTS OF NOTE
(i)It is worth pointing out that in the above examples we assume individual contributions are buying whole shares , if the contribution cannot be spent in full (as you cannot buy part of a share) then excess funds will be retained in the scheme account until the next purchase.
(ii)Any dividends paid on the shares an individual owns must be re-invested in additional share but only to the extent that whole shares are bought.
(iii) that the trust will not derive any financial beneift or make any profit from setting up the arrangements and in its limited involvement in them-it will merely recoup its costs, although the scheme broker will receive its usual fees and charges in connection with the transactions and describe how those are in line with its usual or even lower;
(iv) the arrangements set up by the trust are not in any way intended to be a professional dealing service-individuals wishing to buy shares generally and for specualtive investment purposes should go to an appropriate authorised broker in the usual way.
(v) neither the trust or the scheme broker will be giving advice on the merits of buying or selling the Rangers shares. Members using the scheme must only do so in the interest of contributing to their club and helping the trust achieve its non-investment aims. If advice is required, members should refer to an appropriate financial adviser or broker in the normal way.