WHEN IS A RIGHTS ISSUE NOT A RIGHTS ISSUE?
By
Mickey Blue Eyes

Apparently it depends upon how you define a so-called “personal initiative.”

Which is why in my view vice chairman of the Shareholders Association Steve Allinson and executive committee member Mike Owen should resign their positions. In my opinion they should have resigned months ago, long before present circumstances accumulated.

What a difference eight months can make. At a time when we rightly deplore the government’s betrayal of a clear manifesto promise we get the kind of action described herein, albeit on a much smaller and relatively insignificant scale. The irony is almost too rich for words.

Almost.

I own just one share and that is the limit of my financial interest now and in the future. Ironically, the share was bought from Steve Allinson in 2002 at a price of £1475 after a previous attempt at purchase from another source proved a waste of time. It was bought at the behest of a friend who had expressed concern at the manner in which the affairs of the Shareholders Association were being conducted. He wanted my opinion and I duly gave it after attending various functions. It became obvious my opinions were already shared by many other members. Changes were needed.

In June 2003 a fractious election for officers and executive committee members of the Shareholders Association resulted in wholesale changes. Following prior discussion I supported these changes (indeed I proposed the name of the current chairman, John Sinnott) as desirable but naturally subject to performance of the new officers and committee. I supported too most of the publicly announced goals and objectives of the self-named “Reform Group.” At the time I was invited to join the group and stand for election but declined on two grounds – (a) I wanted to maintain independence of thought and action, and (b) I had made previous contributions in another limited area and thought it time for someone else to make an effort. This remains my position.

The election established John Sinnott as chairman and Steve Allinson as vice chairman, Nick Williams as secretary, Mark Edwards as treasurer and a new executive committee with ten others.

One of the most constructive actions of the changes was taken by professor Tom Cannon when voluntarily he transferred his research notes on a rights issue and fans trusts to the new Association secretary, Nick Williams. So these were available for the new committee right from the beginning. In fact professor Cannon had carried out preliminary discussion in 2002 with the club on the matter and had so informed the Association. The club co-operated in the initiation of market research in the matter.

You can find my thoughts at the time expressed here, together with a description of the Reform Group goals and objectives. They are a useful preface to this piece. Those thoughts remain unchanged. Hence this article.

In October 2003 a leaflet was issued during the Annual General Meeting of Everton Football Club. This contained information concerning a sale of shares by Steve Allinson, identified as “vice chairman, Shareholders Association.” Subsequently a member of the executive committee protested this was a conflict of interest and promptly resigned. Steve duly apologised and no further action was taken by the committee. It would be understandable if they thought his action was merely a singular aberration.

In December 2003 a press release was issued concerning a proposed rights issue in the shares of Everton Football Club. The release identified “Steve Allinson, vice-chairman, Shareholders Association” and was issued by committee member Mike Owen. In fact it transpired the press release had not been seen or approved by the executive committee and none of them had advance knowledge of its issue. The release said the proposals were a “personal initiative” but mentioned the Shareholders Association five times. In other words it was a unilateral action by Steve Allinson and Mike Owen but with the name of the Shareholders Association attached. Intended or not, the implication is obvious. Of course it also came as a complete surprise to independent members of the Shareholders Association like myself.

But the question of a rights issue has been the subject of a Shareholders Association Working Party almost from the moment the new group assumed position in the executive committee. Indeed there is nothing “new” at all in a proposed rights issue for football clubs. There had already been a different issue at Everton during the unlamented tenure of Peter Johnson. Other clubs have also followed this line of action. The Working Party was established openly to identify the history and various forms of issue and make recommendations to the Shareholders Association for eventual presentation to the club. They produced a draft report in December 2003. Individual action was never required or proposed and in any case was quite useless given the circumstances. Whatever strengths the Association has – and they are little enough – are based on collective effort and membership coupled with rational leadership.

As Association minutes of meetings show all of this was known as the subject was analysed by the Working Party. The open and laudable aim was to develop the subject and then advance it in cooperation with the club. In reality there was no other sensible way forward since Association membership consists only of minority shareholders who number less than three hundred and who have only a relatively tiny number of shares. There is no obligation whatever for Everton Football Club to listen to anything the Association does or says. That is the simple truth, palatable or not. Any exaggerated attempt to force an issue is therefore doomed to failure from the start. In any event any owner worth his/her salt – including Peter Johnson – will follow only the line of action considered in his/her best interests. So much is obvious. So too is an inclination to pay scant attention to ill thought out behaviour or mere self-promotion.

At the same time both John Sinnott and Steve Allinson met with various members of the Everton board of directors to discuss the principle of a rights issue and follow up Tom Cannon’s initial contact. My understanding is the owners expressed cautious encouragement, possibly on the understandable grounds the new group had yet to prove its credibility and professional discipline.

Once the unexpected press release was issued (like any interested member) I telephoned secretary Nick Williams, treasurer Mark Edwards, chairman John Sinnott, committee member Andrew Morris and a couple of other independent Association members. They all confirmed they had no prior knowledge of the press release or the so-called “personal initiative.” This led me to the obvious conclusion the rest of the committee also were unaware of events, a view apparently confirmed by subsequent exchanges.

I immediately e-mailed Steve Allinson and asked him to resign the post of vice chairman and membership of the committee in the interests of the Shareholders Association and Everton Football Club. In my opinion, the AGM leaflet issue + the press release = two strikes and you’re out. My e-mail also included the suggestion Mike Owen too should resign. Copies were sent to those committee members whose e-mail addresses I had. I did not see then and do not see now how both men could continue in their positions. I did not want the position to deteriorate any further.

Their so-called “personal initiative” was in direct conflict of interest with their positions and COLLECTIVE responsibilities on the executive committee. If they wanted to pursue personal interests they should not have joined the executive committee in the first place, or they should have resigned immediately they decided to follow such a line of action. The latter would have been entirely honourable. In these circumstances refusal to resign is the exact opposite.

It wasn’t until February 2004 that it was claimed the press release was the sole action of Mike Owen. I do not believe this claim. Additionally there has been no explanation why it took a month to make it. In February 2004 Mike told me he intended to resign, but at the time of writing that has not happened. When I asked him publicly, Steve Allinson failed to respond to my invitation to disassociate himself from the press release. Draw your own conclusions.

Despite being asked Steve Allinson has failed to say why he, at the very least, allowed his name to be used in a press release which went directly against proposed and agreed actions by the Shareholders Association. He has also failed to explain how the specific proposals of the press release were developed in the first place and if they were communicated at all to the Working Party for inclusion in their final recommendations.

1. If they weren’t, what was his purpose in denying them?

2. Why did he not contact ANY member of the committee before the press release was issued?

3. Indeed, if he was bent on a so-called “personal initiative” what was the point of his membership in the Association at all, let alone as vice chairman?

4. Isn’t this the kind of action the self-named “Reform Group” was founded specifically TO AVOID?

5. How can this kind of action other than reflect badly on the Shareholders Association?

The inevitable suspicion – justified or not – is that Steve Allinson sought some form of vainglory. If true, that notion is laughable. The question of a rights issue has been around too long in too many forms and has already been considered by many clubs, including Everton. It has been in the public domain for years. As mentioned above, professor Tom Cannon had even handed over his research notes willingly on the subject six months prior to the press release. Therefore any suggestion the press release could precipitate action is a bad joke. Events will take their course in spite of, not because of, the press release. The Association Working Party was intended to buttress the club’s efforts and help inform the fans on the issue. The press release turned this hope to ash.

In my view the press release contained two absurd claims – amongst other merely speculative inaccuracies – unsubstantiated by any reliable market research worthy of the name. The first implied a rights issue would raise £15 million. The second implied Everton would “put Chelsea in the shade” as a result of said rights issue. Now I am as big an Evertonian as the next man, but in present circumstances both of these claims verge on the farcical. Firstly, there is no guarantee whatever that a rights issue would raise as much as £15 million, and secondly, Abramovich’s money has ensured (even if the rights issue achieved that target) Chelsea are for the moment beyond our financial grasp. It is ludicrous and unreal to pretend otherwise. Should a rights issue fall short of either target, as seems likely, then such prior claims could only humiliate the club and demoralise the fans.

None of this is to deny the enormous potential we all know our club can realise under the right ownership and in the right circumstances. But we have a long, long way to go and there is much to do before we can even consider the club’s fortunes properly restored. Farcical claims and useless individual vainglory should not be on the agenda, not if we want to provide a sensible foundation for the future.

In addition to this Steve Allinson should answer the following questions if he wishes to resolve allegations of conflict of interest and remain on the executive committee:

1. How many shares has he bought and sold during, say, the last four years?

2. Who were they bought from and sold to?

3. What was the price of purchase and the price of subsequent sale of each?

4. What costs were incurred during purchase and sale of each?

5. This will allow us to calculate profits (if any) by straightforward calculation.

As can be seen from the above timescale I have not publicly voiced my concern on this matter for two months. The reasons are straightforward. I hoped common sense would prevail and the matter would be resolved privately. Steve Allinson and Mike Owen could have resigned with honour to pursue whatever personal agenda they thought appropriate. But this has not happened. Given the high hopes and the manifesto which the self-named “Reform Group” presented to the Association, including my own exhortations to fans to buy shares and get involved, our supporters are entitled to know the sequence of events.

The club have already made their feelings known, if not explicit. There was no club representation at the Shareholders Association annual dinner on Saturday, 28th February 2004. I am told this is the first time this has occurred. Other enquiries of mine imply the board of directors deplore the press release and its timing, and that it will not help the club’s own analysis of a rights issue. All of this is entirely understandable, especially in view of encouraging initial discussion and declared intentions between the board and the Shareholders Association.

It need hardly be said all of this compromises horribly the position of chairman John Sinnott who raised the subject with the executive committee at the next meeting in January. As chairman he is duty bound to draw to their attention any inappropriate actions or allegations of conflict of interest against any member. He did so. The minutes of the meeting have still not been issued, an unusual delay given the praiseworthy improvement of day-to-day administration matters of the Association. No action has been taken though there has been much phone talk and many e-mails, much of it verbose nonsense.

Since then I have met with both Nick Williams and Mark Edwards to discuss the situation. There is some common ground but little action worthy of the name.

Everybody should be crystal clear: This is NOT a case of Steve Allinson V John Sinnott. It is NOT a matter of personalities. It is a matter of issues and responsibilities. In my opinion Steve Allinson and Mike Owen failed badly in their responsibilities to the Shareholders Association. They should resign, in fact should have resigned over a month ago. Until they do, any contact with the club is likely to be cursory at best and probably moribund. Only when they go can we restore the kind of communication and good will established by John Sinnott’s professional approach. There had already been an agreement made on 6th October that the club and the Association would co-operate on any public statement of a sensitive nature. You can hardly get more sensitive than the question of a rights issue.

The executive committee will meet on Monday, 1st March to consider the position. I trust there will be a full attendance and no attempt to act as Pontius Pilate through absence. I hope too Steve Allinson and Mike Owen resign. They can’t have it both ways, great Evertonians or not. There’s too much at stake.