“Even if the voting is clear on June 1st, Port Vale’s future remains anything but”, was where we left Vale’s ownership soap opera last month. But the voting on June 1st – at an Extraordinary General Meeting (EGM) of Vale shareholders – was as clear as a very foggy day in Fogsville. And even FIFA’s Sepp Blatter, machinating furiously at the same time, might have glanced at the goings-on in Burslem and thought: “Blimey, that’s a bit much”. For six months, Vale’s board has been fighting what it views as a hostile takeover bid from local businessman and erstwhile Channel 4 ‘Secret Millionaire’ Mo Chaudry. Few non-board members felt any hostility to Chaudry’s offer to buy a controlling 51% stake with investment as vital at Vale as anywhere in the Football League’s cash-strapped lower divisions. Despite this, as reported previously, the battle got nasty and complex. But thanks to a level-headed approach from supporters group the ‘North London Valiants’(NLV), all issues were set for resolution at the EGM, which would vote out the board and clear a regulatory path for Chaudry’s takeover. Or so we thought. Unfortunately, the GM proved all-too ‘E.’ And the club is now struggling to staff a board to prepare for the new season.
The EGM has now been filed in the “seemed like a good idea at the time” column. Many educated observers (and me) predicted that it would produce a vote of “no confidence” in the board and a replacement “interim” board of more supportable figures. Special resolutions were tabled to make the required changes to the club’s constitution to facilitate Chaudry’s takeover; most notably deleting the “24.9% rule”, limiting individual shareholdings to… 24.9%. There were further special resolutions to reduce the minimum number of directors from four to three – the proposed size of the interim board proposed by a further special resolution. And Vale’s five directors were each up for re-election, requiring majority shareholder support to remain directors. NLV had consulted widely among fans and shareholders and felt confident that all required resolutions would be passed, even the rule changes which required 75% support under company law. But fans’ triumphalism masked the obstacles on Chaudry’s path to power. Fans making any reference to these potential problems were dismissed as “pro-board.” While Chaudry claimed “legal and technical issues about 75% resolutions are contrived and superficial” – legal and technical issues otherwise known as “company law.”
NLV’s consultations showed enough support among individual shareholders to pass even the resolutions requiring 75% support. All these consultations were based on “one shareholder, one vote.” But the EGM polls were governed by shareholder democracy. And shareholder democracy is hardly democracy at all. The, correct, application of “one SHARE, one vote” gave the board 28% of the electorate, putting paid to all the rule change resolutions and Chaudry’s 51% aspirations. It also gave the directors rather more than a “cat-in-hell’s chance” of re-election. The EGM run-up brought more twists and turns than a Premier League relegation battle. It was generally accepted that all votes would be close to 50-50. So the attitudes of more substantial shareholders took on special significance, which didn’t initially look good for the board.
Club sponsors Broxap owned 4.2%. Two weeks before the EGM, Broxap boss Robert Lee said: “We have no issues or preferences of control…(we are) merely looking for a return of our (£50,000) investment.” Chaudry gave Lee a “verbal undertaking… supported by a legally-binding agreement…confirming that our investment will be returned within four working days of (Mr Chaudry) taking control.” Broxap would vote against the board as their part of the deal. An observant Bratt noted that, “I think he wants his money back. I don’t think he’s against the board or for Mr. Chaudry.” This was correct… and was to prove significant. Better for the board was the suspiciously-timely arrival of Ameriturf Global Sports (AGS) as investors and sponsors to the alleged tune of £1.6m. The company are specialists in artificial pitches and their investment proposals were largely seen as artificial by Vale fans. “This board has been working night and day for six months to finalise this agreement,” claimed Bratt, stressing: “this is not a takeover,” though AGS would get a 24.9% shareholding and board seats, giving them and the board a controlling stake between them.
Bratt further claimed that the deal, “(retained) the corporate structure and safeguards which ensure that no individual may use our club for their personal gain,” although he may have been laughing when he said this. Chaudry wasn’t so amused, detailing the “self-evident flaws” in the deal and asking numerous versions of “Why them and not me?” His mood was not improved when Stoke-on-Trent city council entered the fray, via the suspiciously-timely emergence of an interesting clause in their five-year-old loan agreement with Vale. The clause said the council could “request” full repayment of the loan within 60 days of the club changing hands, approximately £2m that the board didn’t have on them. Chaudry threatened to withdraw his bid if his “advisers” and the council could not solve this ‘problem.’ “I found out about this clause several weeks ago,” he revealed, later defining “several weeks” as “six months.” And he accused the board of inserting the clause into the agreement because “they’re only interested in protecting their positions.” However, this was a non-issue on a number of levels. Club vice-chairman Peter Jackson noted, correctly, that “it’s a common agreement in these types of loan deals.” And it emerged that the council themselves had inserted the clause.
The loan, public money, was made to Vale as a, technically anyway, supporter-owned “social enterprise.” And the council naturally had the right to reclaim that public money if Vale went private. However, the council’s cabinet member for finance, Sarah Hill, said: “We don’t want to change the loan agreement.” But Chaudry and the board were too busy arguing the toss to hear. Robbie Williams-shaped salvation was at hand, though, as the “Potteries popstar” went back on his original pledge to keep out of the ownership arguments and offered his proxy vote, 21.2% of the electorate, to Vale’s supporters club (PVSC); “to give fans a voice at the EGM,” said a Williams spokesman. PVSC vice-chairman Dave Felstead promised that PVSC would “seek the views and wishes of our membership (and) the members of other major Port Vale supporters’ organisations,” before their committee decided how to vote.
No-one was on tenterhooks awaiting the outcome of this consultation, not least because two of the “supporters’ organisations” consulted were specifically anti-board. Even Bratt, understating furiously, admitted that “quite a few members don’t agree with us.” The consultation revealed no support for the board. So, with a sense of impending defeat, the board rolled out the relatively big gun of club solicitor Paul Bennett with his dire warnings about the consequences of the predicted EGM outcomes. Bennett suggested that any change to the board would trigger full and immediate repayment of the council’s millions. But amid the flagrant scaremongering, he made the wholly valid point that the three-man interim board would be unconstitutional unless the minimum director requirement was reduced from four to three. If that second motion fell, Bennett continued, the interim board would, among other limitations, “not have the ability to enter into contracts,” which would severely hamper new manager Micky Adams’ squad-building.
With the board opposing all motions and Bennett dismissed as a pro-board lackey, trouble loomed. Felstead realised this and suggested that the PVFC’s “massive mandate” to remove the board could be partly ignored so that Vale had enough directors after the EGM. “We will implement what we feel is in the best interests of the club,” Felstead declared – a phrase you suspect Bratt could not have got away with. But it was too small a lesson in realpolitik, learned too late. And there was one more twist. Broxap’s board received an offer on the afternoon before the EGM from two Vale directors who, Lee explained, “expressed a desire to immediately and unconditionally purchase our shares for the full price we paid six years ago.” Having taken legal advice, Broxap’s board accepted the offer and sold their shares to an “un-named Vale director.” A furious Chaudry accused the board of “dirty tricks” and fumed: “Broxap didn’t have the decency to give us the chance to re-negotiate.” Their move proved decisive, as every EGM vote was a 51-49 split.
All constitutional amendments fell, along with directors Peter Jackson and Stan Meigh. The vote of “no confidence” was passed, but directors Bratt, Glenn Oliver and Mike Lloyd were re-elected. And of the proposed “interim” board only high-profile Chaudry supporter Mark Sims got elected. Bratt, unexpectedly, had been right all along to suggest support existed for the board among smaller shareholders. And while fans pointed to Broxap’s “treachery”, Williams also went back on his original pledge – and if he had not, the entire board would have been re-elected, convincingly. Chaudry, predictably bullish, claimed the no confidence vote was “the most important thing”, even though it had no practical implications whatsoever. And many fellow-travellers seemed determined to ignore the EGM results altogether.
Even Malcolm Hirst of NLV, the organisation who called the EGM, said: “I would like to see the surviving board members relinquish power in a controlled way.” Felstead claimed: “This board have no mandate.” And Sims added: “It’s difficult to see how the existing directors have a future on the board.” Indeed, Sims has yet to decide whether to accept his victory, leaving Vale in the stasis club solicitor Bennett had explicitly predicted. Sims wants to undertake lengthy due diligence first, which would make sense, except that, as re-elected director Oliver noted: “If the interim board had been voted in they would have gained control of the club in the same financial and organisational state.” Sims explained that he was “walking (into the boardroom) as a minority individual,” as opposed to being on a controlling interim board, and had “to be satisfied with certain things,” while referencing unspecified “secrets” he expected to find. Chaudry also declared that “I still don’t feel I will be able to work with Bratt and Oliver (but) if they come knocking and want to talk business, then I will consider it.” He may be a long time waiting by his door.
In the meantime, the re-elected directors have invited NLV to nominate a board member and have backed manager Micky Adams’ directorship application, specifically to facilitate preparations for next season, such as “extending contracts for existing players and signing new ones.” Fans, however, claim the board is using Adams “to maintain their vice-like grip on power.” Hirst, almost suggesting that Adams was lying, said: “I do not believe it is a footballing decision.” Meanwhile, Felstead went emotive: “I think it is the most deceitful and underhand way of the board trying to duck the issues… if Micky Adams thinks he will walk into the centre circle on the first day of the season as a returning hero, he is in for a shock.” Such is the level of mistrust at Vale these days. Unfortunately, the bottom line is that NLV went through the proper channels to oust the board. And they only partly succeeded. The EGM vote highlighted as brightly as a hot sun how undemocratic shareholder democracy can be. But those remain the rules.
Vale will eventually have a functioning board, unless shareholders refuse to elect, and fans refuse to nominate, a fourth member. There is a six-figure investment deal on the table – which is what this whole sorry saga was all about, 94 years ago. They have a manager who seven months ago was guiding Vale into the heart of an automatic promotion battle. And among Vale people, including Mark Sims and, yes, Mo Chaudry, there is sufficient human and financial resource to give the club an opportunity to progress on-and-off the field. But the mistrust in Burslem could see this opportunity passed up. And unless the political lessons of the past seven months are learned, it almost certainly will be.
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