David Conn: Manchester United find new shield by trusting supporters

Manchester United plc's board is to work with fans to help set up a supporters' trust which could play a crucial role in maintaining a balance of control at Old Trafford and fending off future takeover bids. Following the ending of talks with the American businessman Malcolm Glazer on Monday, United's chief executive David Gill said that Glazer's bid would have saddled the club with "unattractive" levels of debt, then concluded: "We would like to work with the Glazer family, Cubic Expression, Shareholders United and our other shareholders on a structure that will bring the club long-term stability."

For Gill to include Shareholders United, the collective of 15,000 supporters which formed to oppose the 1998 takeover bid from Rupert Murdoch's BSkyB, alongside Cubic Expression, the vehicle for the 29 per cent stake held by the Irish pair, John Magnier and J P McManus, and Glazer, who raised his holding in recent turbulent weeks to 28.11 per cent, represents an enormous breakthrough for the notion that clubs should be owned as far as possible by supporters.

Seen until recently as a combination of wonky detail and pie-in-the-sky idealism, supporters' trusts have come a long way since the first was formed by Brian Lomax and three fellow disaffected Northampton fans in the Butchers Arms pub in 1992. Lomax looked to reinstate the idea that clubs are groups of people uniting loyally around a common passion, not companies to be bought or exploited.

There could hardly be a greater distance between that idea, which ran successfully with Lomax as an elected director on the Cobblers' board for seven years, and Manchester United, owned by shareholders looking for a return, winning Premierships, making mountains of profit, distributing them every year in dividends, the very model of plc football.

However, the BSkyB bid, ruled out by the Monopolies and Mergers Commission in 1999, last year's trauma in which the club became the battleground for McManus and Magnier's fight with Sir Alex Ferguson over ownership of the racehorse Rock of Gibraltar, then the sudden decision by Glazer, an American who has never even seen United play, to mount a takeover, have led United's board to see profound attractions in the trust idea.

Since late last year, United had been holding talks with Shareholders United, moving beyond accepting the principle of a supporters' trust and into the detail of how practically to do it. The board even went as far as instructing lawyers to draft a trust deed. Then Glazer began to raise his stake and United entered a formal offer period and had to suspend work on the trust.

On Monday, United's board explained that it was ending talks because of "the level of debt [the Glazer family] were going to use in order to make their offer." Raising the spectre of Leeds' collapse, Chelsea pre-Abramovich, Bradford, Sheffield Wednesday and football's other meltdowns, Gill said: "We've seen many examples of debt in football over the years and the difficulties it causes."

Never a development to excite fans, the plc dream has faded. When the clubs floated, with some chairmen such as United's Martin Edwards making vast profits from their shareholdings, many supporters felt in their bones that this structure, in which shareholders were promised vast returns and profits were to be paid out not reinvested, was wrong for football.

Historically, the governing body, the Football Association, has believed this too. As long ago as 1899, when the clubs were forming limited companies, the FA introduced rules to prevent exploitation. Dividends were restricted, directors could not be paid, and grounds were protected against asset-stripping. When clubs floated, beginning with Tottenham in 1983, these restrictions were still in place in the form of the FA's Rule 34. The clubs evaded it by forming holding companies. The FA had nothing to say about it then, and has had nothing to say about it since.

In 1999, a majority of the Government's Football Task Force called for "a modernised Rule 34", new rules to help clubs in the modern era to "take advantage of the opportunities of the Stock Market while remaining football clubs in their nature and purpose." Proposals included clubs having a sizeable stake owned mutually by fans.

The FA and both Premier and Football Leagues rejected that, issuing a minority report which rubbished the idea of reforms. But the Government, impressed with Lomax's work at Northampton, established Supporters Direct to help fans form trusts at every club.

United's announcement coincided with Supporters Direct's fourth annual conference, at which Phil Tooley, the organisation's acting manager, said that there were trusts at 121 clubs, 38 clubs had directors on the board, and eight are owned by supporters holding shares mutually. The idea has hit a nerve among fans. Not without epic struggles, supporters' trusts took Lincoln, York and Chesterfield out of administration and now own the clubs.

The developments at United therefore have an air of breakthrough. United's board appears to have reached conclusions similar to those behind original trusts and the Task Force majority, learning from experience that being a profit-making, cash-rich, dividend-distributing plc makes the club more vulnerable to takeover attempts. "We are very positive about Shareholders United and supporters holding shares collectively," a spokesman said. "We are very happy to co-operate with the setting up of a trust, which will help to encourage stability at the club."

Nick Towle, Shareholders United's chairman, a partner in the City law firm Crowell and Moring, said: "This is a real sea change. The board understands the merits of fans being involved as a group of shareholders, and sees that it is constructive and will help to protect the club."

The new trust, to which fans will be able to contribute money for a fund to buy shares and hold them mutually, will launch in the next couple of weeks. Its backers should not kid themselves about the size of the battle; 25 per cent of United at current prices would cost £184m, way beyond the scope of fund-raising. Towle said that backers were talking to wealthy fans, "red knights", about major donations, and he is optimistic; small shareholders own 18 per cent of United and Shareholders United is to write to each one asking them to pledge their shares in a collective group. Even seven per cent, they believe, could act as a block to Glazer's kind of plan if his intention was to take United private and load it with debt. United have 198,000 members worldwide and Shareholders United argue that were the club to throw its full weight behind a marketing exercise huge numbers could be encouraged to buy shares.

"Some said we should accept Glazer's bid as market forces," Towle said. "We were not prepared to because we believe it was wrong for our club, and that having one individual in overall control is wrong. Having United's board work with us shows the argument is really being won."

Supporters Direct's conference was attended by all the football authorities and addressed by the Chancellor of the Exchequer, Gordon Brown, giving the organisation hope that it will find secure Government funding in the bosom of the Treasury.

The trust idea has come a long way in a short time. Football may be finally coming round to remembering one of its founding truths: clubs are clubs.

davidconn@independent.co.uk