HUST seek equal representation

At the request of Trust members HUST are putting a proposal to the forthcoming club AGM seeking a 4th Trust nominated director on the club board.  A supporting statement from the Trust has been sent to all shareholders with the club AGM papers.  The statement reads as follows:

‘STATEMENT FROM HEREFORD UNITED SUPPORTERS TRUST (the Trust)

The Trust are proposing a change to the Club rules to allow the Trust to appoint an additional director to the board of Hereford FC (HFC) (the Board) upon completion of the purchase of £289,000 shares i.e. 50% of the shares in the football club.

Trust members have made it clear they feel that the Trust should have fair and equal representation on the Board to reflect the financial investment made by supporters in HFC.  The Trust is instructed by its members and therefore presents the proposal to the HFC AGM for approval by the club’s shareholders.

Shareholders, of course, should vote for what they believe to be in the best interests of HFC.  The Trust would therefore like to take this opportunity to outline briefly why the Trust strongly believes that an equal partnership between private shareholders and the Trust represents the best, and indeed the only realistic, way forward for HFC given the model of sustainability to which HFC is committed.

A sustainable and self-sufficient football club.

It has been stated from the outset that HFC must be self-sustaining.  The information published before HFCs inception spelled this out clearly:

“Making sure the club is sustainable and self-sufficient is seen as absolutely vital”[1]

If HFC is to be self-sufficient, then the supporters will need to provide the majority of funds.  This is exactly what has happened: in the last three financial years supporters have poured an estimated  £2.1 million into HFC, via match day attendance, season ticket sales, merchandise sales, programme sales, bar sales  and donations[2], and of course share purchase via the Trust.

Future funding

It is clear that fans have supported HFC enthusiastically and generously over the last few years and have provided the vast majority of HFCs financial resources.  However, if HFC is to re-establish itself in the Football League additional funding will be required, and the largest part of this, it seems, will need to come from supporters via both the traditional routes of match attendance and off field spending alongside potentially a second share issue as HFC rules appear to anticipate.

The challenge HFC will face will be to increase the revenue generated from supporters at a time while on pitch success is likely to decrease as HFC competes at higher levels of the football pyramid.  If this is to be achieved it will require continued and increased levels of engagement with HFCs most valuable asset – the supporters. Based on the experiences of other football clubs Supporters Direct  has advised the Trust that, by all interested parties pulling together, an ownership model based on an equal partnership between supporters and ordinary shareholders should be capable of propelling and sustaining the football club in the league.

The current state of play

HFC’s current structure gives the majority of the ordinary shareholders the right to appoint four of the club’s seven directors.  With five major shareholders each holding 50,000 shares in practice this places the majority of boardroom appointments in the hands of potentially just 3 individuals.

The Trust are currently able to nominate three directors to the Board.  If and when the Trust purchase £289,000 of shares the supporters will be the largest single shareholder and hold half the total share capital in the club. However, unless the current rules are changed the Trust nominated directors will continue to be outnumbered in the boardroom by directors appointed potentially by ordinary shareholders holding <26% of shares in HFC.  We believe that this arrangement is sub-optimal for the future success and sustainability of HFC for the following reasons:

1. Those who are required to contribute the most financially have the least control over the direction of the club.  This creates an ‘us and them’ attitude, a feeling that some shareholders are ‘more equal than others’ and a suspicion that supporters are being offered ‘second class’ shares.  The goodwill of supporters is HFCs most valuable asset, and should not be taken for granted.  We strongly believe that while supporters are willing to support the ongoing development of the club the model will be far more successful if supporters receive fair representation at board level for the money they contribute.  92% of voting trust members wanted a fourth Trust board member when asked via the member ballot in July. 

2. As well as the direct financial contribution, HFC also relies on supporter volunteers to provide directors to the club board, directors to the trust board and many other equally vital if less high profile positions. For the future success and sustainability of HFC it is crucial that the club is able to continue to attract talented and committed people to these roles. We believe this requires supporters to receive fair representation in return for their commitment to, and investment in HFC.

Our proposal

The Trust is proposing an amendment to the Articles to allow the Trust, upon its acquisition of 289,000 A Ordinary shares in HFC, to appoint four directors to the Board, and for the maximum number of directors to be increased to eight overall.

In Conclusion

The next few years will be extremely challenging as HFC seeks to raise more revenue while competing at higher levels.  The additional funds will need to come largely from supporters so it is vital to bring all supporters together in spirit of mutual respect – UNITED towards a common goal.   Four Trust nominated directors is a high visibility step towards fair representation for supporters,  and we hope that shareholders will support this important proposal which we believe will help HFC build on the achievements of the last few years and establish a sound foundation for future stability and success.

The Companies Act restricts this statement to 1,000 words.  Further correspondence will be sent to all shareholders on the further proposed amendments to the HFC Articles of Association directly by HUST.’

A further case for change has been sent by HUST to all HFC shareholders and will be released in due course.

The club AGM is on 6th December.  The Trust will be holding an SGM shortly afterwards to discuss the results of the Trust’s proposals and potential next steps for the Trust.

[1] https://www.herefordfc.co.uk/faq/

[2] Based on 2017, 2016 and 2015 HFC accounts available to shareholders and estimated figures for 2018.