Community Shares Programme

Two-year action research programme, funded by Cabinet Office & DCLG, delivered by DTA and Co-operatives UK, working with 10 organisations raising community investment completed April 2011:

• Ashington Minors – childcare nursery

• Cybermoor – rural broadband services

• Brixton Green – community land trust and urban regeneration

• FC United of Manchester – building new stadium

• Hastings Pier & White Rock Trust – development trust

• Hurst Green Village Shop & Centre

• Oxford Cycle Workshop Training

• Sheffield Renewables – urban renewable energy schemes

• Slaithwaite Co-operative – community-owned greengrocers

• Tutbury Eco Power – renewable hydro energy

What’s wrong with football finance?

• Football dominated by the wealthy few who are not constrained by financial fundamentals

• Revenue spending far outstrips revenue income

• Lack of equity capital and too much loan capital

• Loan capital is expensive, short term and places control in the hands of the lender

• Clubs are stripped of their physical assets (land, property) and loaded with intangible assets (players, brand)

• Some stakeholders (star players, star managers, agents and some owners) are extracting huge fortunes from the game

• Meanwhile, fans pay the price directly (match day), or indirectly (media subscriptions)

A call for financial fundamentalism?

• Clubs must be profitable – income exceeds spending

• Clubs must be solvent - equity and reserves exceeds debt

• Finances must be fair to all stakeholders across the whole sector

• Finances must be transparent

• Replace speculation with real value-added

What are community shares?

• Community shares is the term used for withdrawable shares in co-operative and community benefit societies.

• Withdrawable shares can be withdrawn from the society when members need their money back, subject to fair terms and conditions of withdrawal set by the society.

• Withdrawable shares are not subject to stock market speculation or capital gain

• Withdrawable shares are democratic, one-member-one vote, not one-share-one-vote

• There is a limit of £20,000 on individual shareholdings to prevent wealthier members having undue influence

Planning for withdrawals

Societies must plan for future withdrawal of share capital by replacing it with:

• Retained profits

• Reinvestment of interest by existing members

• Investment by new members

• Additional investment by existing members

Community shares 2009-11

• 115 new societies registered

– (66 community benefit societies, 49 co-ops)

• 43 community share offers

• 32 share offers completed

• £5.74m raised from 6,164 members

• Average raised £179,000 (median £85,000)

• Average membership 192 (median 151)

• Average investment £930 (median £180)

Community share society registrations

Jan- Jun 2011

Projected

total 2011

0

10

20

30

40

50

60

70

80

90

100

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Community share societies

Trade sectorPost 2009 societies

Pre 2009 societies

Members Share capital

Renewable energy 34 13 8,831 £15,304,000

Community shops 20 9 2,492 £903,000

Community regeneration 14 9 3,041 £1,908,000

Food & farming 18 4 10,228 £1,171,000

Consumer co-operatives - 20 8,553,000 £191,275,000

Pubs and brewing 10 2 687 £733,000

Community finance 1 9 1.837 £2,114,000

Community land trusts 7 2 318 £25,000

Fair trade 2 1 9,222 £26,151,000

Other 9 9 38,530 £7,345,000

Totals 115 (27) 78 (75) 8,629,000 £247m

Challenges facing community-owned football

• Will supporters ever have the right to buy clubs at a fair price under reasonable circumstances?

• Can supporters really afford to provide both capital and revenue?

• Can supporters improve profits in other ways, as volunteers, season ticket holders, recruiters of new members, providers of expert skills?

• How will supporters feel if their club is not competitive on the pitch? Can clubs survive without rich patrons?

Further information

Community Shares website: www.communityshares.org.uk

Publications

• Community Shares Factsheets

• Community Investment using IPS legislation

• The Community Shares Programme: One Year On

• Guide to governance and offer documents

• Investing in community shares

• A practitioner’s guide to community shares (published today)

Further contact:

www.bakerbrown.co.uk

Jim.brown@bakerbrown.co.uk