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Trust Chair’s Verdict On Cardiff City Executives Under Proposed New Owner, Director Tests

Trust chair Keith Morgan

Trust chair and football finance expert, Keith Morgan, gives his verdict on whether Cardiff City directors would pass or fail proposed new Owner and Director Tests drawn up by the Football Supporters’ Association’s (FSA) in a recent paper  requested by the Football Association.

For owners, the paper proposes that anyone taking ownership of more than 25% of a club’s shares should firstly be required to pass a test proving that they have a sustainable business plan for the club and that they will appoint people to be the club’s directors that have the skills and experience to run it properly, including having satisfactory engagement with the club’s supporters and other stakeholders.

Tests for both owners and directors would involve full disclosure of any previous personal insolvency issues, failures as a director of insolvent companies, criminal convictions etc. and that any such incidences should be regarded prima facie as a bar from becoming an owner or director. There would also be a bar on owners borrowing money to buy a club but giving the lender security over club assets for that lending i.e. borrowing money personally, but leaving the burden of that lending to be met by the club.

The first thing to say is, of course, to express our sympathy to our fellow fans at Bury FC  following their expulsion from the English Football League (EFL). We’re pleased that Bolton Wanderers has been saved from a similar fate to that of Bury.

If the proposed new rules for Owner and Director fitness tests had been applied in the Bury case, the sad outcome may well have been avoided.

At Cardiff City we are fortunate in that, as Chair of Cardiff City Supporters’ Trust, I have regular meetings with the Chief Executive Ken Choo and also dialogue with the Chair Mehmet Dalman on issues such as corporate governance at the club, its overall financial strategy etc. to receive at least a degree of assurance and comfort for our fans that a Bury or Bolton crisis situation will not happen at our club.

Also, our involvement with the FSA enables us to be kept up to date with discussions with the football authorities and to provide our input into those discussions.

One issue to be considered perhaps is, if the proposed new Owner and Director tests were applied to Cardiff City FC (CCFC), how would its owner and directors be assessed? This cannot be determined accurately, and is looked at now with the benefit of hindsight and applying proposed rules which were not in force at the time of their appointment.

These are my personal views of how they might be applied to the owner and directors of Cardiff City.

Owner – Tan Sri Vincent Tan

No history of past business failures and has invested heavily with his own money into the club without taking it out by way of dividends, bonuses or even loan repayments as debt due to him has largely either been written off or converted into non-repayable shares as part of a historical promise to do so.

No football knowledge or experience before involvement with CCFC but has gained a lot since, including with other clubs.

Would pass new owner test – YES

Chair – Mehmet Dalman

Highly successful businessman, with no record of business failure.  Also invested in the club (since repaid) through a business in which he has an interest at a time when the club needed a cash injection.

Had football experience before CCFC, including involvement with owners of Manchester United and has certainly dealt with football problems and issues since at CCFC.

Would pass director test – YES

Chief Executive – Ken Choo

Experienced businessman and qualified accountant, but no football experience prior to joining CCFC. Has since gained huge experience at this club and other football clubs owned or part owned by Vincent Tan. Test applied to Ken would have been financial skills level he brought to club.

Would pass director test – YES

Director – Steve Borley

Very experienced and successful local businessman, who has invested into the club when required to assist it financially and is also a long standing fan of the club.

Would pass director test – YES

Director – Derek Chee Seng Chin

Research shows him to be a senior lawyer in Vincent Tan’s Berjaya business empire but appears to be the owner’s employee rather than to have any specific role for the benefit of CCFC (the club uses external lawyers for its own advice).

Would pass director test –NO, as actual work for CCFC as an entity unclear

Director – Marco Ronaldo Caramella

Not clear what his direct role at CCFC is, but he is a highly successful businessman in Malaysia and has a Cardiff link from his schooldays here. Possible role is in some form of profile raising or seeking additional investors for the club in Malaysia.

Would pass director test – UNLIKELY, as role seems more “ambassadorial” than any role in actually running the football club

Director – Danni Rais

Even doing some research makes it unclear what Danni Rais does, but he seems to have a high social profile back in ,Malaysia and his father was a senior figure in government there until recently. No apparent role at CCFC.

Would pass director test –NO

Director – Ronald Issen

Has a senior role in a business which raised a lot of money in the USA last year , but no apparent reason for him being involved in CCFC and far from clear why he was made a director in 2018.

Would pass director test – NO

Keith Morgan, Chair

Corporate Governance Of Football Clubs

Trust chair Keith Morgan

With recent turmoil surrounding the future of Bury and Bolton Wanderers, Trust chair Keith Morgan, a football finance expert calls for action over the way football clubs are run and owned, the so-called Owners and Directors Tests

At the Football Supporters’ Association Annual General Meeting held at the end of June 2019, attended by myself on behalf of Cardiff City Supporters’ Trust, one of the matters discussed was a paper concerning corporate governance of football clubs.

In particular, proposals made to the Football Association (at their request) recommending changes to how the FA ensured that football club owners  and the directors they appointed to run the clubs were “vetted” to try and ensure that they properly protect, sustain and run clubs in the long term interests of the fans and communities those clubs represent.

 The paper strongly recommended that those responsible for setting and monitoring compliance with these regulations should be independent of the clubs and their owners and directors.

The very sad recent news concerning Bury FC and Bolton Wanderers FC (now saved) has just served to strike home what an important issue this is, requiring urgent action by the football authorities acting in unison with fan representative bodies to minimise the risk of future similar damaging impact on the game of football as we know it.

Currently there are three sets of tests covering Owners and Directors – one for the Premier League( PL) , one for the English Football League(EFL) and one for the National League(NL). The paper proposed consolidating these into one consistent set of rules.

For owners, the paper proposes that anyone taking ownership of more than 25% of a club’s shares should firstly be required to pass a test proving that they have a sustainable business plan for the club and that they will appoint people to be the club’s directors that have the skills and experience to run it properly, including having satisfactory engagement with the club`s supporters and other stakeholders.

The paper, therefore, acknowledges that the owners themselves may not have the relevant football knowledge and skills, but that they should ensure that those they appoint to the board should and that they apply that knowledge and skill for the benefit of the football club.

Tests for both owners and directors would involve full disclosure of any previous personal insolvency issues, failures as a director of insolvent companies , criminal convictions etc. and that any such incidences should be regarded prima facie as a bar from becoming an owner or director. There would also be a bar on owners borrowing money to buy a club but giving the lender security over club assets for that lending .i.e. borrowing money personally, but leaving the burden of that lending to be met by the club.

There will now be undoubted further pressure from Football Supporters Association on the FA to bring about these changes to the regulations as soon as practicable.

Unfortunately it has taken the expulsion of a long standing football club to make it more likely to take heed of the warnings set out in the paper.

Keith Morgan

Trust Chair Looks Forward To New Season

Trust chair Keith Morgan

Trust Chair Keith Morgan, a football finance expert, takes his annual look ahead to the new season with just five days to go to The Championship opener.

The new season is now almost upon us and I am sure we will all be looking forward to it with the usual mix of optimism and doubts about how successful the season will be for the club we love Cardiff City FC. Similar feelings will undoubtedly be shared be fans of other clubs right across the country at all league levels.

Despite last season`s relegation from the Premier League, the general feeling from fans that I have been speaking to is that this season back in the Championship may turn out to be an enjoyable one with a realistic chance if the squad can be further strengthened before the transfer window closes on August 8 of promotion back at the first attempt. We have already seen a number of arrivals and departures in the squad as part of the necessary reorganisation that follows either a relegation or a promotion.

Financially, our year in the Premier League provided a major boost and helped avoid what might otherwise have been a difficult year financially if we had not got there as 2017-18 was our final year of receiving “parachute payments” from our previous promotion to the top level.

 I have not seen the 2018-19 accounts, but would expect them to show a reasonable profit, perhaps sufficient to cover the losses incurred in the previous season at Championship level. Therefore, despite a big reduction in income as the new parachute payments are only at about one half of the levels of TV revenues we enjoyed in the Premier League, we start the season in decent financial shape.

There is little or no risk of the Financial Fair Play(Profitability and Sustainabilty) problems that we have all seen so publicly covered in the media impacting on a number of other clubs and which may well be a problem for others, including some direct rivals in the Championship, in the near future.

The senior management team at the club has also been kept together , with rumours of the club Chair Mehmet Dalman leaving to take over Charlton Athletic now having been dispelled, at least for the short term. That continuity can only be helpful in the effort to get the club moving forward on the field.

The togetherness of the club, its owner, directors, management and fans all pulling together in the same direction last season was a great strength. Let’s all work together in the same way this season as well so that we can all be in celebratory mood come next May.

All The Best,

Keith Morgan, Chair, Cardiff City Supporters’ Trust

The Threat Of Possible European Super League

Trust chair Keith Morgan

Trust chair Keith Morgan, who is a football finance expert, gives his view on the impact of a possible European Super League in football.

The possibility of some of the biggest European teams breaking away from their domestic leagues to join in a “closed shop” European Super League has been discussed on more than a few occasions in the past and usually dismissed as highly unlikely to happen. However, the threat has never actually gone away.

At the AGM of the Football Supporters Association (the merged body of the previous Supporters Direct and Football Supporters Federation) at the end of June this year , the topic came to the fore again because it would appear that discussions have been held again recently between such clubs and media bodies with a view to progressing such plans.

It is rumoured that a league , if formed , would include having a number of its games televised live at 3pm on a Saturday afternoon as part of a media package negotiated for the benefit of participating clubs only.

The question that many fans might ask is “Well, how will that impact on me or my club?” Surely it only impacts on the Premier League and its bigger clubs? Actually , no , for the following reasons.

The current TV deal with Premier League clubs is highly lucrative and virtually all clubs at the top level are crucially dependent upon it for their financial wellbeing. If that funding were to be removed because TV companies want to reinvest instead in a Super League it would mean that those in the Premier League left behind would see most of their income disappear. Furthermore , the money that cascades down to the lower divisions by way of parachute payments and loyalty payments would also disappear, so the impact on all League clubs would also be great. A further adverse impact would be the draw of live Saturday TV coverage of the “big” games taking away crucial match attendance numbers from clubs.

The FSA (and its European counterpart) is actively lobbying clubs and the football authorities in an effort to reduce the risk of the above scenario happening either in the short or the long term.

Trust welcomes clarity over accepting cash at Cardiff City Stadium

The Trust was contacted by members concerned about the possibility of cash payments no longer being allowed at the Cardiff City Stadium.

Trust chair Keith Morgan contacted club official, Wayne Nash to raise the issue.

One of our members was worried about any move to accept only contactless payments, particularly because of the impact on unaccompanied young people who might not have a debit card.

Keith Morgan said: “Wayne told me in response that cash payments will continue to be accepted at all outlets.

“It appears that a recent Press release on contactless payments affecting all bars and food kiosks caused some confusion. We’re very pleased this has been clarified.”

Trust Supports Brain Injury Charity For 2019-20 Season

The Trust board has chosen the brain injury association Headway as its charity for the forthcoming season. Headway was chosen after Trust members were asked to nominate a deserving cause.

We’re also thrilled to announce that Cardiff City Football Club has kindly agreed to allow Headway to hold a bucket collection in aid of its vital work before the derby clash against Swansea City in January.

Trust chairman, Keith Morgan, said: “We are very grateful for this generous gesture by Cardiff City and thank chief executive, Ken Choo, for agreeing to the collection.

“When we held a collection last December for The Wallich’s work with homeless people it was very well supported by generous Cardiff City fans. We’re confident supporters will give their full support to Headway.”

Headway is a charity that works to improve life after brain injury. An acquired brain injury (ABI) is an injury caused to the brain since birth. There are many possible causes, including a fall, a road accident, tumour and stroke.

 In Cardiff and south-east Wales, Headway works from Rookwood Hospital in Llandaff. It was established in 1985 as a support group by people with ABI, their families and therapists at Rookwood.

The aim was to address the lack of support available to families on discharge and the isolation they could experience.  Headway has grown and evolved over the years in response to the changing needs of the ABI community.

From its Rookwood base, the charity runs a five day a week Independence and Wellbeing Centre, Information and Outreach, Welfare Benefits and Counselling Services, and monthly Family and Friends group. Information and Outreach Officers visit people wherever needed and Headway runs weekly social and activity groups that meet at various locations in Cardiff and Pontypool.