Exclusive: Government faces war with clubs over 'golden share' fan proposals

The Government has been warned clubs will wage war against its proposals for so-called 'golden share' fan votes on the basis "it goes against every principle of capitalism".

Alternative suggestions from ministers for a German-style 51-per-cent supporter-owned model are also "complete non-starters", current and former owners warn.

Amid ongoing outrage over the failed Super League breakaway, Chelsea made the first move to improve transparency on Tuesday by promising to elect three "supporter advisors" who will attend all board meetings.

However, a host of smaller Premier League and Championship clubs remain concerned at potentially punitive measures from Whitehall. Mehmet Dalman, an investment banker and chairman at Cardiff City, is the first executive to go public with concerns after Government hinted it is considering a golden share veto of board decisions or the "50+1" model. "It's simply not workable," he told Telegraph Sport. "I'm all in favour of not losing the soul of football, but in any corporation, any company, why would you give somebody a golden share to block you from minimising your losses or maximising your gains? It goes against every principle of capitalism and every principle of capital markets."

In a separate interview with Telegraph Sport Lord Sugar, who was chairman and part-owner of Tottenham between 1991 and 2001, supports Dalman's point that extensive fan involvement in board decisions is a "non starter in the UK".

"I don't think that will ever happen in the UK because they can't gift 51 per cent of an entity that's worth billions," he said. "I'm afraid to say it's not going to happen in the UK, certainly with the owners that we have here."

Oliver Dowden, the Culture Secretary, had first spoken of the merits of supporter ownership in the Bundesliga a fortnight ago as he triggered a manifesto pledge to investigate footballing governance. Tracey Crouch, the former Sports Minister, has since launched the inquiry and will be looking to calm a storm of protests from fans against the Big Six ownerships who plotted to break away from the European status quo. Many of the United protesters who caused the postponement of the club's fixture against Liverpool held up "50+1" placards. Similar sentiments have been echoed outside the Emirates and Anfield in the past 10 days.

Sugar - a life peer, renowned business magnate and TV personality - is severely critical of the "American-led" breakaway plot, but says supporters should not be granted a "divine right" to take control of clubs. "If I own a company, let's call it Amstrad, and I own 100 per cent of the shares, why am I going to give 51 per cent to my customers? What divine right do they have to take a half a billion pounds of my assets in their hands. It's an absolute nonsense, total nonsense."

In Germany, the 50+1 rule gives fans of all Bundesliga clubs guaranteed majority voting rights for strategic decisions to ensure owners are held to account. Borussia Dortmund chief executive Hans-Joachim Watzke said in 2016 that the rule is there to ensure supporters are "no longer regarded as a fan but instead as a customer".

The law has played a major part in helping stadium prices remain lower than they are almost anywhere else in Europe, and also ensured Germany has the highest average attendances on the continent. However, both Sugar and Dalman said the free market economy in English football has evolved beyond the stage that such curbs could be introduced.

"The rule would be most troublesome. It's just nonsense," agreed Dalman. "We would need to be able to get the clubs to a financially healthy position, which we're not. Say at the end of the year you make 30 million pounds loss - who's going to pay for 30 million pound loss? You go to an owner and say we need 30 million to fill the gap and he would have every rights to say 'yes, but now I only own 49 so I'll give you £15million and you can get the other £15million from the other 50 per cent shareholding'. Good luck with that."

Ownership Q&A

How does the German model of fan ownership compare with the 'golden share' option?

The 50+1 rule gives fans of all Bundesliga clubs guaranteed majority voting rights for strategic decisions to ensure owners are held to account. Under DFL rules, football clubs are not allowed to play in the Bundesliga if commercial investors have more than a 49 per cent stake. Historically, German teams were not-for-profit organisations run by members’ associations, and until 1998 private ownership of any kind was prohibited. The alternative plan mooted by ministers in recent weeks is to hand club season ticket holders “golden shares” in their clubs so they have a say in “legacy decisions”. Under such a plan to be deliberated by the fan-led review, supporter groups would be able to vote on key decisions, like moving leagues, stadiums or new ownership, without having access to the revenue.

Will such anti-capitalist restrictions be introduced in the UK, and, if so, when?

For a libertarian like Boris Johson, the 50+1 model seems particularly unlikely. However, such was the outrage over the European Super League, the Prime Minister has already told football he was willing to drop a "legislative bomb".

Oliver Dowden, the Culture Secretary, said then that he had been impressed by German football's immediate response in dismissing the breakaway before it had been launched in such disastrous circumstances. Dowden went on to tell Parliament, as he triggered a fan-led review of governance, that "we've examined the German model very closely." "It's very interesting to note that German teams are not participating in this - that makes the case rather for the fan-led review looking at the German model," he added.

Tracey Crouch, the former sports minister who is leading the review, is likely to take months talking to supporters groups, governing bodies and clubs before making her recommendations. A battle to then seize back some power for the people from the billionaires in charge at the biggest clubs could take years, however.

What are the clubs saying about it?

Clubs outside the Big Six had welcomed the Government's decisive action in breaking up the breakaway, but the threat of major interference in the way they are allowed to do business will provoke a storm.

It is in England's second tier, the Championship, where restrictions on owners may be too late, and ultimately exacerbate club problems.

Mehmet Dalman of Cardiff is among a host of clubs who are appalled by the prospect of fans having financial input as they fear that owners, who plug huge losses every year, will see walk away from the cash-strapped sector entirely.

While the 50+1 model has been an undoubted success in Germany, the prospect of introducing it in a footballing pyramid in turmoil would be fraught. "The lunatics already control the asylum - it's simply too late to tell them they must now hand over their power and money," said one senior administrator.