The benefits, the drawbacks and where we currently stand: Could a fan shareholding work at Sunderland AFC?

After this week’s confirmation from the Red & White Army that they were taking the first steps towards becoming a Supporters’ Trust - which would enable them to purchase shares in the Black Cats in the future, should the opportunity arise - fans have been left curious as to the benefits and potential drawbacks of fans taking a shareholding in their club.

Could it be a potential option for the Black Cats? We take a look:

THE CURRENT SITUATION

Sunderland are, of course, currently owned in their entirety by Madrox Partners. Within that group, Stewart Donald holds a shareholding of 74 per cent, Juan Sartori owns 20 per cent and Charlie Methven holds six per cent.

Currently, supporters hold no shares in the football club - but a growing number of clubs are beginning to have an element of a supporter shareholding in their overall ownership structure.

While some clubs, such as Exeter City, are completely owned by supporters, a number of others - such as Wycombe Wanderers and Carlisle United - see Supporters’ Trusts take a smaller percentage of the club’s ownership, typically around 25 per cent.

Football finance expert Kieran Maguire, of the University of Liverpool, says the model is one with its merits.

“I think it can work,” he told the Echo.

“It's part of the democratisation of the game. Exeter have been successful, but I think we'd all agree they're on a different scale to Sunderland, and Motherwell up in Scotland have been very successful too.”

THE BENEFITS

There are, of course, a number of crucial benefits to supporters taking a shareholding in their football club.

According to Maguire, it could help correct some of the issues which have irked supporters over recent years.

“It would allow supporters’ voices to be heard,” he explained.

“It would improve communication links and it would improve the governance of the club - all of which are issues which have not been helped over the last few years and have led to a toxic relationship.”

But perhaps the key benefit to a supporter shareholding is the crucial veto they possess. This is more prevalent at clubs where supporters hold a majority share, but can still prove key when a minority stake is taken too.

It essentially ensures that supporters have a key say in what happens at their football club - especially when there are big investment and takeover decisions on the horizon.

The best example in recent years is seen at Portsmouth who, after their well-documented financial issues, were fully-owned by their supporters.

That was until 2017, when the Portsmouth Supporters Trust sold the club to former Disney CEO Michael Eisner and his Tornate group.

But before the deal could be sanctioned, fans were able to vote on Eisner’s proposals. Had they felt his bid wasn’t in the best interests of the football club, they could have blocked the takeover.

As it was, they agreed to the deal and Portsmouth have continued to grow.

Speaking at the time, Portsmouth Supporters Trust chairman Ashley Brown said: “This is true fan ownership and democracy at work.

“Our fans decided who the next owner of our club would be – and it will be Michael Eisner and Tornante.”

THE DRAWBACKS

But while there are naturally positives, one key drawback is finance - and what happens if a big-spending investor comes into the club.

As we have seen at Wycombe Wanderers recently, fan shareholdings can be diluted when a club goes through a change of ownership. In turn, that gives the fans less of a say and could see them out-voted on key issues.

HOW COULD IT WORK AT SUNDERLAND?

It’s unlikely given the size and stature of Sunderland that supporters would be able to take complete ownership of the club - unless a Supporters Trust were able to attract some significant backing.

But there is no reason why, should the opportunity present itself, that the soon-to-be-formed Supporters Trust could take a minority stake at the club.

It could lead to some much-needed transparency, and give supporters a belief that they had once again got their club back.

SO WHERE DO WE STAND NOW?

It’s fair to say that supporters talking a shareholding in Sunderland AFC is unlikely in the short-term - but the first steps are being taken to allow such an arrangement to materialise in the future.

The Red and White Army (RAWA) are aiming to convert to a Community Benefit Association - or, as they are more commonly known, a Supporters’ Trust.

In the long-term, this would allow them to purchase shares in the club should they become available.

A statement from the group, explaining their decision, read: “In essence, RAWA already satisfies much of the criteria required for Trust status so actually converting would be a relatively straight forward process,” they explained.

“The Football Supporters' Association advocate Trust status as best practice and they would assist us with the admin free of charge.

“As well as creating opportunities to raise finances for the benefit of Sunderland supporters and the local community, a CBS or Trust provides the platform to own shares in SAFC should the opportunity ever arise.

“The opportunity may never arise of course, but for the sake of a bit of admin and the price of a pint, we might as well be ready for it and make use of the other things we can do as a Trust.

“Football Clubs can be precarious entities at the best of times. The very nature of sport makes them so, and add to that relegations, promotions (remember them?), changes of ownership and all manner of crazy things we have all seen happen over the years.

“Now we are not suggesting that SAFC is about to go bust or require a bail-out any time soon. But like with the majority of football clubs in the land, it is a possibility and indeed it has happened in a pre-Covid world. Remember Bury?

“Traditionally, when a club goes "pop" it's a supporters Trust that is left to pick up the pieces and rekindle the club - see Portsmouth as a relatively recent example, and look at Swansea and AFC Wimbledon.”