Darlington FC has been fan owned since 2012. DFCSG owns a controlling stake in the Football Club and sets its strategic direction in line with the interests of the DFCSG membership. In other words, DFCSG members are the Owners of DFC. At this time, there are just over 1,250 members of DFCSG with c90% voting rights. But what does that mean in practice? This section of YOURCLUB sets out to explain fan ownership and what that means for Darlington Football Club in greater detail.
When we refer to fan or community ownership, what do we mean by that?
The Football Supporters Association’s strict definition is that fan/community ownership requires a minimum of 50% + 1 of the voting rights of the club to be controlled collectively by a democratic entity which has an open and inclusive membership based on one member, one vote with no substantial barriers to participation as a voting member.
This '50+1' ownership rule applies to all clubs in the Bundesliga and football is popular in Germany with top-quality play, the highest average attendances in world football, low ticket prices and a great fan culture.
What does 'community ownership' mean in practice?
It means that the voting members get to choose who runs their football club. All members are eligible to put themselves forward for election to be one of those that run their club.
It does not mean that as members you get to decide, for example, who the Team Manager should be or which players the manager should sign or move on. At the end of the day, professional football clubs are commercial organisations in competition with each other and therefore much of the information that is commonly accepted as commercially sensitive, such as transfer fees and details of players’ contracts etc, would remain confidential whether or not a club is 'community owned'.
Are there any wider benefits of 'community ownership'?
Any profits are reinvested back into the club as opposed to being distributed to shareholders. The club is committed to running as a sustainable business.
A club owned by its community has the potential to develop deeper longer-term partnerships, particularly local authorities who historically favour this model, and can attract a different type of investment and utilise a different type of finance.
Community-owned clubs offer greater protection and transparency within their constitution, which appeals to partners, funders, and sponsors. Giving people the chance to own a club can increase their connection with it, so people share the responsibility of sustaining 'their' club, unlocking more volunteers and participation. If supporters know that the money they spend will be reinvested in the club, they are more likely to spend or donate more.
How widespread is 'community ownership' in the ranks of professional football within the UK?
In English football, the highest-placed fan-owned club is Exeter City in EFL1. In EFL2, there is AFC Wimbledon.
In addition to Darlington FC, in National League North/South, Banbury United, Chester FC, Scarborough Athletic, Bath City and Tonbridge Angels are all fan-owned clubs.
Although Chesterfield FC in the National League is owned by a 'Community Trust', the Trustees aren't elected so can't be considered to be 'fan-owned' in the true sense.
Fan-ownership is also strongly represented at every level of professional football in Scotland. In the Scottish Premiership, there are Hearts, St. Mirren and Motherwell. In the Championship there are Greenock Morton and Partick Thistle. In Scottish League 1 there are Stirling Albion and Annan Athletic and in Scottish League 2, Clyde FC complete the set of fan-owned clubs.
The FSA are continually being contacted by supporters' groups concerned about the current ownership and financial state of their clubs and the conversation very often develops into discussions about the potential for fan-ownership.
How does the governance of Darlington FC work?
Darlington Football Club is the trading name of 'Darlington 1883 Limited' – a private limited company registered at Companies House.
Darlington FC Supporters Group (DFCSG) is the trading name of Darlington 1883 Supporters Society Ltd., which is a Community Benefit Society regulated by the FCA.
Approximately 90% of the voting rights of Darlington FC are owned by DFCSG. The remaining 10% of the voting rights are owned by individual shareholders (maximum individual stake is <5% of the total voting rights). Consequently, DFCSG has a controlling interest in Darlington FC. Therefore, Darlington FC is a subsidiary of DFCSG.
At the DFCSG AGM, members elect a new DFCSG Board. Members also vote to mandate which way the DFCSG Board should vote at the subsequent Darlington FC AGM (eg, re-election of Darlington FC Directors).
Darlington FC Board currently has five Directors (the Articles of Association make provision for a maximum of six Directors), one of which is DFCSG as 'Corporate Director', who is normally represented by the DFCSG Chair. The DFCSG representative has a voice in the collective decisions made by the Darlington FC Board and is therefore integral to the day-to-day running of the Football Club.
In addition to DFCSG having a seat on the Darlington FC Board, the Club's Articles of Association require that the Darlington FC Board should seek advice from the DFCSG Board on various matters (eg, the appointment of new Directors, the prudence of budgets and financial plans, etc).
There is a 'Memorandum of Understanding' between Darlington FC and DFCSG that sets down in detail the various matters on which the Darlington FC Board should seek advice from the DFCSG Board. Depending on the significance of these matters, the DFCSG Board may seek the views/endorsement from members (eg, plans to move to a new ground).
Darlington FC's Articles of Association allows the Darlington FC Board to co-opt new Directors between AGM's (subject to consultation with the DFCSG Board). However, they will be subject to re-election at the next Darlington FC AGM and therefore will be subject to endorsement of DFCSG Members at their preceding AGM.
As Darlington FC and DFCSG are two separate legal entities, the DFCSG Board accepts that their representative on the Darlington FC Board will from time-to-time become party to confidential matters that can't be disclosed to the DFCSG Board, for example players' remunerations or transfer fees (where confidentiality is a condition of the transfer) or the identities of unsuccessful candidates for roles within the football club.
What is the significance of DFCSG having a controlling interest in Darlington FC?
With voting rights in excess of 90%, DFCSG has the ability to propose and pass 'Special Resolutions' at Darlington FC AGMs. 'Special Resolutions' are resolutions that require a majority of at least 75% (eg, modifications to Darlington FC's 'Articles of Association').
What is DFCSG’s response to any calls for DFC to be proactively seeking external investment?
The Darlington FC Board Directors are appointed to operate the Club within the confines of it’s Articles of Association. These Articles do not provide the Board with any mandate to directly seek external investment. Such a mandate could only be provided by the Club’s shareholders, of which DFCSG has the controlling interest.
The DFCSG Board Directors are elected to run DFCSG within the confines of the Objects set down in our constitution. With reference to specific Objects:
4.2 achieving the greatest possible supporter and community influence in the running and ownership of the Club; and
4.4 operating democratically, fairly, sustainably, transparently and with financial responsibility and utilising its acquired interest in the Club and responsibilities defined in the Club’s Articles to encourage the Club to do the same;
Consequently, the DFCSG Board would be unable to provide the DFC Board with a mandate to directly seek external investment without contravening our Objects 4.2 and 4.4.
Nevertheless, should DFC receive an unsolicited significant and credible offer of external investment, the Club would be obliged to refer the proposal to the Club’s owners ie DFCSG.
To date, DFSCG has not received any offers of investment. In the event of such an offer, DFCSG would consider the value of the proposed investment against any measures that may be necessary to safeguard owners’ interests for example by bolstering DFC’s Articles and limiting the proportion of equity to be released to an investor. The proposal would then put it to the membership for their consideration.
In the absence of an investment proposal, it would be premature for DFCSG to hypothesise the necessary safeguards.
In what ways can DFCSG members influence the direction of their Football Club?
You can read more about becoming an Owner of Darlington FC, and sign up, by clicking here.
