Chelsea Pitch Owners – Grounds for Concern?

The Facts:

On Friday I attended the AGM of Chelsea Pitch Owners, which was held in the Vialli Suite at Stamford Bridge. Despite the company having over 14,000 shareholders, only 380 chose to return their proxy ballot papers, and only 20 shareholders attended. This inevitably meant that any dissent in the room would be overturned by the proxy vote, being in the hands of the Chair.

The meeting was chaired by Richard King, the Chairman of CPO, with the Company Accountant Bob Sewell sitting alongside him. They were joined by Roy Butler of Stone King, CPO’s legal advisor.

The meeting opened with a plea from one shareholder that this year an account of proceedings would be made public. Richard King agreed that a minute of proceedings of the “open forum” part of the meeting will be issued – although e-mails were mentioned, it will probably take the form of a pdf document on the CPO website.

No new proposals were avowed ahead of the formal part of the meeting which saw all four resolutions proposed and seconded, albeit the proposition that Richard King be re-appointed to the board of CPO met with a number of abstentions from the room. At the behest of “TheChels” I asked a question in relation to Proposals 3 and 4;

3. That the Directors of the Company be and they are hereby generally and unconditionally authorised pursuant to Section 551 of the Companies Act 2006 to exercise all the powers of the Company to allot relevant securities (with the meaning of the said Section 551) up to an aggregate nominal amount of £100,000 during the period expiring at the end of 5 years from the date of the passing of this Resolution save that the Company may before such expiry make an offer or offers which would or might require relevant securities to be allotted after such expiry and the Directors may allot relevant securities in pursuance of such an offer or offers as if the authority conferred hereby had not expired. The authority hereby given shall be a substitution for any previous authority granted to the Directors.

4. To empower the Directors to make all allotments of equity securities (as defined fo the purposes of Section 561 of the Companies Act 2006) (the ‘Act’) pursuant of the authority confirmed upon them to allot relevant securities (as defined in Section 551(2) of the Act) of the Company pursuant to Section 551 of the Act as if Section 561(1) of the Act does not apply to any such allotment provided that this power should be limited to allotment of equity securities which are to be wholly paid up in cash to an aggregate nominal amount of £100,000 during the period expiring at the end of 5 years from the date of passing of this Resolution save that the Company may before such expiry make an offer or offers which would or might require relevant securities to be alloted after such expiry and the Directors may allot such securities in pursuance of such an offer or offers as if the authority conferred hereby had not expired. The authority hereby given shall be a subsitution for any previous authority granted to the Directors.

Richard King thanked me for asking the question in order to be able to explain to the meeting what the wording meant. Resolution 3 and 4 simply mean that if, say, 100,000 people came forward to buy CPO shares, the Directors of CPO can issue these without having to write to existing shareholders to ask their permission (we’ll come on to this later in the article).

Following passing of the Resolutions, a lively “open forum” took place. Richard King admitted that he has been seen by many as being too close to the current regime at Stamford Bridge and a conscious decision was taken to move CPO away from Stamford Bridge and now operate from Bob Sewell’s offices in Weybridge. Thus, the current regime support but don’t interference.
Mr King went on to stress the lack of interference from the current CFC board when compared with the Ken Bates era. Mr Bates actively encouraged CPO to undertake commercial activities; however the only activity CPO now organise is the annual Lunch. It was Peter Kenyon who encouraged CPO to support the Past Players Trust, and Richard King now chairs the Ossie Trust. Mr King describes himself as having “no formal relationship with CFC”.

It was confirmed that CPO have an agreement in place surrounding the name Chelsea Football Club. As a result, should Chelsea Football Club move away from Stamford Bridge, the playing area and a small area beyond that remains under the control of CPO, and the rights of the name Chelsea Football Club remain with CPO. Since the drawing up of the original agreement, no clauses have ever been touched or renegotiated. If Chelsea Football Club ceases to play at Stamford Bridge, CPO simply calls for the lease to the playing area which the club hold to be surrendered.

There was some heated discussion between Mr King and a shareholder regarding the resignation of Paul Baker from CPO, and a number of articles which can at best be described as “unkind” regarding Mr King’s chairmanship after his alleged comment that CPO had “served its purpose”. Mr King said he has chosen not to respond or retaliate to these. Another speaker said that the internet accusations were shameful but Mr King needed to clarify his comments.

Mr King illustrated this by advising that an American Venture Capital firm were seriously looking into buying CFC prior to Roman Abramovich’s involvement in the club. The firm had undertaken Due Diligence and, when they saw the extent of the agreement with CPO, ran a mile. Hence his opinion that CPO has served its purpose in warding off property speculators, although he admitted that “continues to serve its purpose” is probably a better phrase.

He was also asked why Mark Taylor’s resignation wasn’t made public until some six months after the event. He took the opportunity to announce that although that was a mistake, Mark Taylor had been approached to re-join the board, and had not voiced an objection to this proposal.

According to a paper circulated by Paul Todd during the meeting, Dave Johnstone, who will be known to many Chelsea fans, has also expressed an interest in joining the board in order to increase the number of Directors (more on this below). At present it is felt that a board of just three is a very small number and the meeting expressed an opinion that the current arrangements lead to matters being driven through by Mr King.

There was also a frank discussion regarding the disappearance of information regarding contractual rights from the CPO website; Mr King now admits this was a mistake and the content has been restored, and that he was “carrying the can for someone else” on this. He advised the original wording was misleading and that this has been amended to read “CPO has contractual rights in the name Chelsea Football Club”, and blamed Ken Bates for misunderstandings regarding the original wording.

The meeting then went on to discuss the future of CPO. The question was asked, if Chelsea Football Club find a new home, what is the real power of CPO – can we stop the move? Richard King advised no. The power that we have is that they couldn’t sell the land (i.e. the pitch and surrounding area) – they can sell the hotels, health club etc. CPO would then be in the position to sell the land to any real estate company.

A shareholder asked precisely what area of the pitch individual shareholders own, and Mr King advised he would look into this.

I expressed my concern, which is that we simply don’t seem to be paying off the loan, and why the developing overseas markets weren’t being targeted. Mr King advised that it was his opinion that the market is saturated and he felt we were unlikely to sell many more shares.

I countered this by asking how did he know this? There must be many Chelsea fans in place like America, India and Russia who weren’t aware of the organisation, and that a comment on an internet forum indicated there were fans in Britain who’d never heard of CPO. Mr King said that CPO didn’t have a marketing budget and that a considerable amount money might have to be spent on such a campaign. He advised he would look into it.

Mr King was asked if anyone from CFC had spoken to him regarding a move, and he advised that this had not happened. He expressed a personal wish that CFC remain at Stamford Bridge, but he would consider any such proposal. He said his job was to represent shareholders.

There was a general view in the room that as long as CFC were to remain in the Borough and there was a possibility that CPO would retain a “pitch ownership” role, members were not totally opposed to a potential move.

Mr King stated that CPO would never respond publicly to speculation.

With regard to CPO continuing to support other club charities, he advised that all attendees at the CPO lunch he spoke to regarding this issue were in favour.

The meeting closed at 12.07pm

The Opinion:

Phew, glad that’s over. Now for the juicy bits. I’ve never been in the Millennium Reception before and it’s certainly very nice. A courteous young lady directed me to the lifts which took me to the third floor and into the Vialli Suite (turn right before the Dolce & Gabbana Lounge). Hallways all very chic and wood-panelled.

My jaw dropped when I saw how few people had arrived by 10.50 when I arrived, and although the meeting subsequently swelled to 20, it’s very clear to me that unfortunately many shareholders are totally apathetic about the organisation. And that’s a shame. We were invited to help ourselves to tea and biscuits (and water in my case).

Please believe me when I say I have absolutely no personal axe to grind with Richard King. He is doing what appears to be a fairly thankless task, but I am concerned that he and the current board are not doing enough to push CPO share ownership – it’s worth reminding that this is enshrined in the aims of CPO:-

“What are the responsibilities and aims of CPO in the ‘Roman era’?

Nothing has changed, the objective remains the same – to actively market and sell shares to raise money in order to pay off the loan used to purchase the freehold of the pitch.”

Whilst the meeting proved reassuring in that all agreements are copper-bottomed, and that there is an agreement in place to ensure that football is played in perpetuity, you do have ask yourself if that aim is being met.

Certainly the comments made regarding CPO’s commercial activities now being limited to the annual lunch aren’t encouraging, and Mr King’s comments regarding the lack of a marketing budget were of concern. (Paul Todd suggested after the meeting that maybe the shareholders attending the meeting should have had a whip-round ourselves to pay for an ad in the programme or a magazine).

Given the comments regarding “saturated” share ownership, it looks as if Resolutions 3 and 4 are a complete waste of time, as it will be a long cold day in Hell before we get 50,000 Chelsea fans demanding CPO shares at once.

I was also slightly concerned about the question regarding the precise area of “ownership”,that almost looked as if someone was counting their profit before it’s hatched. And that also begs questions about why certain parties aren’t interested in pushing the ownership envelope. If the club ever move away from the Bridge, your share will be worth much more if you’re one of only 15,000 as opposed to one of 100,000.

I totally support an increase in number of Directors. As one attendee said to me after, “Bob’s a lovely bloke but he’s a ‘yes’ man” – I don’t know Mr Sewell at all, but if he’s inclined to agree easily, then new Directors are needed simply to provide points of reference and, if needed, opposition. Therefore the news that Mark Taylor has been asked to return is positive, and I wholeheartedly agree that some much needed fan representation would be provided in the form of Dave Johnstone.

I took a day off work because I was concerned about the future of CPO – and this leads to another issue; if the meeting was moved to a weekend, surely more people would be able to attend – and whilst it proved a fascinating insight into the organisation, it certainly didn’t answer all my questions.

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