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Response to some questions about the BC announcement
Response to some questions about the BC announcement

Hands On Bootham Crescent!

In the Trusts Newsletter we offered to respond to any questions or queries that supporters wanted to submit.  Whilst theres not exactly been a weight of queries to enquiries@ycst.org.uk, below we pick up a few questions that have arisen on Red & Blue discussion forum.  If anyone has any questions or comments, please get in touch with a Trust/Club representative and/or contact enquiries@ycst.org.uk


The Trust has produced the Newsletter about the ground solution to supplement the information provided in the official statement by the Club to help provide a better understanding of the issues involved. It is necessarily lengthy, but hopefully of interest and use to those who read it.


The 'Hands On Bootham Crescent' Newsletter is available via the Trust's website by CLICKING HERE


The ground situation has been the single most important issue for the Trust and its Football Club to resolve for the long term benefit of York City and provides the context in which all other matters take place.  As noted in the Newsletter, the Club Board - put in place by the Trust in March/April 2003 and all working on a voluntary basis - deserve much credit for their hard work and achievements over the past year or so.  Over the past 18 months, much has been done to ensure financial survival and to implement the Trusts Community Vision and these have been vital aspects helping to deliver the long term ground solution.


At times, some people choose to comment about the Trust in unfavourable terms.  Of course, everyone is entitled to their opinion (however ill-informed that may be).  It was through the actions of the directors of the 'old' football club company, since 1999, that York City had been driven to the brink of extinction.  Many people thought that York City was beyond salvation and there was only the Trust that pulled together a rescue package, including all of the business aspects that entailed.  One of the important aspects to note about this agreement is that it has been possible only because, through the Trust, the supporters rescued York City from the brink of extinction in March 2003.  The proposed transaction will now provide the new York City Football Club with the stability of its own home.


As a Trust Board, and as supporters and the guardians of the Club, we aim to continue to remain focussed to work for the best interests of York City Football Club.


 


 


What is the relationship between the Trust and the Club?


The York City Supporters Society Limited (known as the Trust) - an Industrial and Provident Society - is the main body through which the supporters have acted.  In March 2003 the Trust became the holding company of the business of York City Football Club.


Each Trust member there are over 2,000 current members - owns one share in the Trust.  In turn, the Trust owns 212,500 1 A Ordinary Shares in York City Football Club Limited (the Club).  This equates to 85% of the total ownership of the Club.


The day-to-day running of the Club is carried out by the employees, supplemented by the help of many volunteers including, but not restricted to, the six Directors.  Between them, the Clubs Board of Directors are legally responsible for running the Club; not the Trust Board.  It is the Club Board that drive forward the York City business.  Therefore, from a legal perspective, it is inappropriate for the Trust Board to interfere with or direct the business decisions made in relation to the running of the Club.  Also, from a practical perspective, you cant effectively manage a football club, or any other business, by committee/referendum.


As the majority shareholder, the Trust, through the collective decision-making of the Trust Board, has certain rights under Company Law.  For instance, shareholders rights with regard to the appointment and removal of Club directors.


All of the Club Directors are members of the Trust.  Three of the Club Directors Steve Beck, Mike Brown and Sophie McGill are elected members of the Trust Board.


As the representative body of the members, the Trust Board has an ongoing relationship with the Club Directors in relation to their carrying out of Club responsibilities.  For instance, working relationships between Club Directors and Trust Board members in relation to particular aspects of the business (e.g. in relation to financial management, corporate governance and the ground issue), meetings between the Boards of the Trust and the Club and consultation with Trust Board representatives on particular issues.


The existing Corporate Governance framework at York City was largely established around the time of the completion of the Trusts Rescue Package in March 2003.  That is, the framework of structures and processes to help ensure that the Club is managed in the best interests of the owners (i.e. the supporters and the community of York), by applying good governance principles.


In the first quarter of 2004, the Trust commenced a review of the Corporate Governance framework at York City.  This review has been called Project Spirit.  In part, this relates to developments regarding Bootham Crescent.  Some of the products of that review have already been implemented.  The review is expected to be finalised and published following completion of the transactions relating to Bootham Crescent.


 


Whats the situation regarding B Shares?


In addition to buying the house for c. 300,000, Trust Member Jason McGill provided an initial cash injection of 50,000 to acquire 37,500 1 B Shares in the new company.  That represents a minority stake of 15%.  This was an essential contribution and an integral part of the Trusts Rescue Package.


In February 2003, the Trust had indicated to people that it was prepared to discuss a limited ownership stake with anyone prepared to contribute at least 50,000.  Jason came forward with that backing and the Trust negotiated an arrangement with him that provided the minority shareholding with restricted rights attaching to those shares.  There was one other City supporter that contributed 50,000, but that person has preferred to remain anonymous and did not want an ownership stake.


As advised by Cobbetts (legal), a new class of B shares was created that, in some respects, have limited rights compared to the shares owned by the Trust.  That includes a restriction of 20% on the voting rights of the shares and restrictions on selling/transferring the shares to anyone (other than his family).  As for any company, the Memorandum & Articles of Association are available from Companies House.


For the avoidance of doubt, the Trust Boards appointment of Jason as a Director of the Club was entirely on merit.  His massive commitment, leadership and the results achieved so far have proved this.


At the time of the Trusts Rescue Package, the Club was expected to remain at Bootham Crescent only until May 2004 and financial survival for the following year was going to be very difficult to achieve.


 


Will the current directors or shareholders of York City financially benefit from the proposed Bootham Crescent arrangements?


For the avoidance of doubt, the arrangements in relation to Bootham Crescent do not involve any change to the ownership of York City Football Club Limited.  The ownership of Bootham Crescent will be under the control of the Trust and the Football Club.  In future, if/when Bootham Crescent is sold, the monies that are realised, over and above any amounts owed, will all be used for the benefit of York City.  None of the Club directors can or will benefit financially from the sale of Bootham Crescent.


As noted above, in some respects, the corporate governance review relates to the Bootham Crescent arrangements, whereby the Trust will have control over the future ownership of Bootham Crescent.


 


Will Bootham Crescent be leased or owned?


Following conclusion of the arrangements, the ownership of Bootham Crescent will be under the control of the Trust and the Club.  It is not a lease arrangement.


 


Can the Club afford the payments in relation to the loan from the FSIF?


The FSIF loan to York City will be interest bearing (at 0.5% above the variable base rate).  On the basis of current interest rates, it will cost York City approximately 100,000 per annum to service the loan.  The Club has to service the interest costs.  The money from the FSIF is by way of a loan (with conditions attaching to it), not a grant.


Therefore, naturally, the Club will have to budget to include the cost of paying the interest to the FSIF each season.  This is a significant annual cost for a business of the size of York City, but one that has to be dealt with.


Servicing the debt is far less of a concern than not having a ground to play at or being forced out to Huntington.


 

 
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