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Why a Sports Cooperative might be your best Option for Incorporation

There are estimated to be over 40,000 football clubs operating in England, all with different needs. What is probably less known is that the vast majority of clubs will have sports cooperative structures. They are just unincorporated and are therefore not a legal entity.

If you look at their characteristics:

• Controlled by their members

• Elected committees responsible for the governance and major decision making

• Not profit distributing

• Set up to serve the community and offer participatory opportunities

The main difference of being incorporated (become a legal entity) is it provides limited liability, normally £1, to its members, whereas as with an unincorporated member’s club the members could be financially liable in some situations.

There are many reasons to consider incorporating such as a facility development, a possible asset transfer or just that the operation of your Club has grown to a bigger scale. Whatever the reason becoming a sports co-op is an option that is likely to feel the most similar to the way the club operated when it was unincorporated and gives you some added benefits too

Your characteristics remain the same but you have:

• Limited liability

• Assets held collectively by the members not by individuals

• Ability to do Community shares – a method of raising capital finance and potentially offering members interest on their investment

• Asset Protection

Using this model will also allow your Club to become a member of Supporters Direct and join a network of similarly minded clubs

The only drawback is you have to report annually to the Financial Conduct Authority with your accounts and details of directors, similar to a company having to report to Companies House. That said, this extra work can be seen as an advantage when developing the club and dealing with potential funders and partners.

Giving you more but changing very little.Some Clubs may already be incorporated, most commonly as Companies limited by shares or guarantee (members). Whilst being a Company provides limited liability, there are other benefits that Clubs might be missing out on by not being a sports cooperative.

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We are experts in community ownership structures which exist to primarily serve the community, rather than the individual. We think this approach is the perfect fit for sports clubs – big or small.

A community ownership model has a range of unique features that make them the ideal form for football clubs, including:

• COMMUNITY INVESTMENT: allows members to invest in the club using a unique form of share in a way that’s fair to both the club and the member, called community shares. • DEMOCRATIC OWNERSHIP: one-member-one-vote ensuring everyone has a vote in electing directors, and be consulted on big decisions about the long-term interests of the club.

• ASSET PROTECTION: added protection that prevents the assets of the Club being distributed amongst individuals and helps removes speculative interest not interested in the Clubs wellbeing.

• COMMUNITY OBJECTIVES: written into the articles or rules of the Club. Presenting the true values to partners that the club exists for the wider community not individuals.

• LIMITED LIABILITY: collective ownership of assets and liabilities, protecting the Club, its members and Directors

• REINVESTING PROFITS: any surplus being reinvested into the Club or maintained to keep sensible reserves

• MORE VOLUNTEERS: with more people involved in the ownership as members or investors, there is more collective interest and involvement in the Club

• MORE ATTRACTIVE FOR GRANT FUNDING: Given the right project, the model of community ownership is more appealing to public funding bodies.

What we can do for you>> Discuss with your owners, Directors, supporters and wider community why becoming a community owned club might be the best way forward for your Club.

>> Recommend the process of changing your legal structure to an incorporated community owned model.

>> Draft Articles of Association or a Constitution to fit your Club.

>> Register the entity with the appropriate regulator and help you through any hurdles with your league and governing body. >> Provide training and guidance to your Board and/or Secretary on their responsibilities

>> Provide consultancy to help your Club maximise the

We were looking for a means where the benefits of incorporation could be

coupled with a shareholder structure that ensured one man one vote with

asset protection. We were therefore most grateful with the help given by

SD to incorporate under the IPS structure that delivered exactly what we

required. GEOFF WRIGHT, TREASURER, BAMBER BRIDGE FC

Become a community owned club

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Our Work • We have registered more than 40 Clubs as Community owned at amateur, semi professional and professional level.

• We have advised clubs in football, Rugby League and Ice Hockey.

• We co-ordinate a series of network events for all Clubs that are Community Owned

• We have produced a range of action led research including a briefing paper on the business advantages of Community Ownership drawing on a number of case studies from our membership, a study on Community Club leaders, as well as our Social Value of Football research which includes advice on how you can measure your impact in the community.

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All sports clubs need finance, and for clubs lower down the football pyramid that usually means either searching for grants, or more likely, asking your supporters, and community for more money. Increasingly, grants are in short supply and not always available for capital projects that you need. The Sports Coop model by its very nature of community ownership is an attractive model for grant aid from public funding bodies given the right project.

In some cases the method chosen to raise finance for Clubs signals the end of ‘community ownership’ for that Club and whether intended or not the Club embarks on a different journey.

Supporters may already be paying for tickets, as well as contributing to fundraising events and schemes so asking for more money may be too much.

SD Club Development can help your club assess its capital and revenue requirements and work through the different opportunities that exist. These may be through traditional routes, but we will also explore loan and share issues as a way to raise serious finance.

COMMUNITY SHARES:

Community Shares are a unique form of share capital that can be issued in a sports co-op. They are proving to be a popular way for communities to raise money to collectively own and develop shops and pubs and now football clubs are becoming interested of their potential.

Thanks to funding from the Premier League Fans Fund, Supporters Direct have been able to launch 4 pilot projects at Portsmouth FC, Wrexham AFC, Bamber Bridge FC and Enfield Town FC. They have been for a variety of purposes including purchasing a Club for the Community, to refinancing, to facility development and have so far raised more than £2.5 million.

There are less barriers to raising finance than other legal models and the finance is raised in a way that retains collective ownership. We have seen some of our schemes qualify for tax incentive schemes, which offers the added benefit to potential investors of not just helping out their club but potentially themselves.

The project has been extended for a further 3 years and through SD Club Development we may be able to help your Club.

What we can do for you• Provide an assessment of your Clubs capital and revenue needs and direct you to opportunities that exist

• Plan, draft and execute a community share offer as a way to raise capital finance from your community

• Advise on potential tax incentive schemes and facilitate discounted support from tax specialists BDO

• Write and/or review grant funding applications

• Provide solutions for managing previous debt

• Advise on traditional fundraising ideas

Wrexham AFC found the help and support of Supporters Direct to be

invaluable during the purchase of Wrexham FC .

GAVIN JONES, BOARD MEMBER, WREXHAM FC

Raising Finance

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Our Work• Following the success of FC United of Manchester who raised £1.8 million towards a new stadium we are working with a range of Clubs from amateur to professional on community shares schemes for a number of purposes

• We can advise and assist with applications for tax incentive schemes that may be appropriate for share offers and have been successful in helping Wrexham in their application to HMRC

• We have co-ordinated or contributed to a number of business plans for Clubs, recognised as good practice by the F.A

• Working with our members on various initiatives over the past 10 years has seen our members raise over £30 million, often through traditional fundraising ideas

• We have published a briefing paper on raising finance and working with BDO have guidance for EIS and SEED tax incentive schemes

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Asset Purchase & Protection

Good Governance

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What we can do for you • Explore suitable legal and ownership structures to protect an asset

• Discuss opportunities that exist within legislation and government policy, particularly the Community Right to Bid and the Community Right to Buy

• Source grant funding and act as a support provider to assist a community in bidding for/buying an important Club facility

• Discuss and assist in finding funding options to develop a facility

What we can do for you • Analyse your existing governance structures and operational systems and assist with implementation of any recommended changes

• Advise on statutory responsibilities and fiduciary duties in line with recognised good governance practices

• Provide detailed role descriptions

• Deliver training sessions for your Board and/or Secretary

• Draft bespoke changes to articles and rules to reflect good governance

• Design policies and procedures for all aspects of your Club such as election rules, board membership, disciplinary, finance and standing orders

Our work• We have advised Clubs on legal and governance structures with a view to protecting assets

• We have tailored Company articles and mutual constitutions to include protections such as an asset lock or golden share

• We have advised Clubs and Supporters Groups on different ways to raise finance including community shares and ‘developer led’ opportunities to maximise a site for the benefit of the Club

• We have advised several sports organisations on how to designate and protect their sports stadia as an asset of community value

Our work• We have developed and implemented governance reviews at a number of Clubs including Wrexham FC, Chester FC and Hunslet Hawks Rugby Football League Club.

• We have held Board Member Development Courses for more than 300 participants and trained more than 50 Secretaries.

• We have designed and delivered bespoke training courses for Boards of a number of Clubs and organisations.

• We have drafted articles and side policies for a number of Clubs to protect member interests

Operations & Development

Club Supporter Engagement

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What we can do for you • Assist your Club in generating a detailed business plan from facilitating a session with key stakeholders, to producing financial projections and writing the final strategy

• Provide a comprehensive analysis of a Club’s financial situation, benchmarking against other Clubs

• Complete a social audit of your Club, providing recommendations on areas of improvement • Develop ticketing initiatives aimed at driving revenue and increasing attendances. (Including season ticket campaigns, group ticketing schemes and membership programmes)

What we can do for you • Help co-ordinate supporter consultations at your Club

• Advise, draft and implement different supporter engagement options

• Discuss creative ideas to engage supporters and the community

• Set-up volunteering schemes and encourage more people to become actively involved with their Club

• Help Clubs strike the balance between income and exploitation from their community, when it comes to ticketing, match day revenue, membership and other benefits

• Produce marketing and communication plans to better engage supporters

Our work• We have helped a number of Clubs including AFC Rushden and Diamonds, Merthyr Town and Fisher FC reform and secure a place back in the league pyramid.

• With the support of Substance we have produced guidance with real life case studies on realising business advantages of a community ownership model.

• We have produced extensive research and guidance in Social Auditing for Sports Clubs and have audited Clubs including AFC Telford United and Rochdale Hornets RFLC.

• We have supported Clubs in meetings with their governing bodies and leagues.

Our work• We have helped more than 60 supporters groups and clubs form structured relationships including representation on Club Boards.

• We have co-ordinated supporter consultations with supporters of AFC Wimbledon, AFC Telford United and Wrexham AFC.

• We have presented at countless public consultation meetings with supporters and clubs.

• Created the marketing and commercial strategies which led to Portsmouth FC being named as the Football League Family Club of the year in 2012. • We have produced various guidance on improving relationships between Clubs and supporters

Who we areSupporters Direct is the leading organization working with and promoting community owned sports clubs.

Our experience spans a number of sports but is most evident in the English football league system. Most clubs at the base of the football pyramid are run on an amateur basis by teams of dedicated volunteers, be they players, coaches, managers, organisers, administrators, groundskeepers, matchday officials, stewards, supporters, family and friends.

As clubs develop and some start to climb the football pyramid, there is more pressure to start paying players, develop grounds and facilities to meet league requirements, and run the club like a business.

There is always the danger that when clubs become more business-like, money interests take over and community interests are lost.

SD Club Development can help your Club climb the pyramid as a community-owned club, run as a professional business, working to sustainable, fair finance, and open membership principles.

If you believe that community-owned sports clubs are the way forward, then take a look at SD Club Development Services and see what we can do for you.

Our Experience Sports clubs are not just about the results on the pitch. SD came about because there was a recognition of the need for clubs to be closer to their supporters and local communities.

Thirteen years later that hasn’t changed. Now, because of the work of Supporters Direct, 34 COMMUNITIES AND MEMBERS OF SD are now in control of their clubs, and the number is growing. These range from professional Clubs in the Football League, right the way to amateur Clubs in step 11.

Thanks to that network of Clubs and other partners who like what we do, we are able to bring in experts from the game and funding partners to bring expert advice at a fraction of the cost.

Our ResearchUtilising over 10 years of experience working with supporters groups, clubs and authorities to improve governance and encourage greater engagement between clubs and their communities has enabled us to build up a wealth of evidence based research.

With this unique insight into the machinations of spectator sports, our research is not only academically robust but based upon actual experience.

Our research helps our development work, which in turn informs our research.

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www.clubdevelopment.coop/homepage/our-services

www.clubdevelopment.coop

James MathieSD Club Development m: (0) 79 3204 0186e: james@clubdevelopment.coop w: www.clubdevelopment.coop

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