David Conn: Chairman's threat leaves the future of York in doubt

Historic York is more renowned as a tourist honeypot than a hotbed of football, but York City supporters have risen up to condemn the club's chairman, Douglas Craig, who last week announced that, unless he could find a buyer for the club, he would withdraw it from the Football League. If he fails to achieve the asking price of £4.5m for the club and its Bootham Crescent ground, York will be forced to leave their home, which is owned by a holding company in which Craig has a 62 per cent stake.

Craig and three fellow directors paid between them around £200,000 for their shares. They transferred the club and ground to the holding company in 1999 to sidestep an FA rule designed to prevent shareholders making money by winding up a club and selling its ground. At the time they told shareholders the move was designed to secure the club's future at Bootham Crescent.

This normally sedate, prosperous city has been in shock since. Craig has been unpopular with fans for years, but was still generally regarded as an old-fashioned chairman who would look after the club. Even the local newspaper, the Yorkshire Evening Press, which sponsors the club, last week accused the directors of "betraying" the fans and "selling them down the river."

Craig, 72, described in Rothmans Football Yearbook as Douglas Craig OBE, JP, BSC, FICE, FI, MUN E, FCI ARB, M CONS E, is an engineer and a former local Tory councillor. He was invited on to York City's board some 20 years ago and became chairman 10 years ago, taking over from Michael Sinclair, a former businessman who is now a local priest. Sinclair has not spoken to the press, but he is known to have passed his 123,000 shares to Craig not for the market rate, but for no more than £1 each. Several former directors have said they did the same, explaining that it was considered a privilege and a duty to serve the club, and it was a York City tradition never to seek to make money out of it.

Under Craig, York have struggled, first to stay in the Second Division, then, since relegation in 1999, to avoid relegation to the Conference. They have, though, developed a reasonably successful youth policy which included the sale of Jonathan Greening to Manchester United for £1m in 1998. Craig earned national notoriety in 1994 by becoming the only chairman to refuse to sign up to the "Let's Kick Racism Out of Football" campaign, a stance he maintained until two years ago.

In July 1999, Craig wrote to all York City's shareholders, asking them to approve a plan to transfer the club, and Bootham Crescent, to a new company, Bootham Crescent Holdings (BCH). Craig pointed out that he and his three fellow directors, John Quickfall, Colin Webb and the former playing hero Barry Swallow, owned 94 per cent of the shares and had already approved the plan.

He explained that the purpose of the transfer was to escape one of the Football Association's rules. The rule provides that when a club is wound up, its shareholders should be paid only what it originally cost them to buy their shares. If there were any surplus, the rule provides that the money must go to local sporting or charitable institutions, or the FA's Benevolent Fund, not to the shareholders.

Craig explained: "Your directors are concerned that in certain circumstances these provisions could adversely affect the ability of the company or any successor to continue playing football at Bootham Crescent."

In fact, it is difficult to see how the rule could be interpreted in this way. Its purpose is the exact opposite – to protect clubs and their grounds from asset strippers by removing the ability to profit financially from winding up a club and selling its ground. The rule was for a century part of three aimed at preventing people from exploiting clubs financially. The other two provisions of "Rule 34" were restrictions on dividends and directors' salaries.

Since Tottenham Hotspur became the first football club to float on the Stock Exchange in 1983, top clubs have sidestepped the provisions by forming holding companies, thereby allowing shareholders to make money out of clubs. The FA has never protested.

In 1998, on the advice of Nic Coward, the FA's head of regulation, Rule 34's first two restrictions were abolished, even while the Football Task Force was reaching a conclusion that the rules should be updated, not weakened, to provide effective protection for clubs in the age of the plc. Yet, after a thorough review of the rules, Coward recommended that the FA keep the third restriction, against winding up a club and selling its ground.

At York, the transfer of the shares duly took place and Bootham Crescent was transferred to the holding company, free of the FA's restriction. The Land Registry notes that BCH paid the club £165,000 for Bootham Crescent.

In BCH's latest accounts, filed only a fortnight ago, Craig wrote: "BCH was formed as part of a corporate restructuring exercise to enable the club to be secure in its activities."

The accounts disclose a club making a loss, its wage bill exceeding its income, but not in the near-terminal position of many lower division clubs. It has no major creditors, an overdraft stated to be under £100,000 and, crucially, no mortgages on Bootham Crescent.

All of which has made the directors' actions even more unpalatable to supporters. Last Wednesday, Craig released a statement which put a price of £4.5m on BCH, which owns the club and the ground. Alternatively, a purchaser could buy only the club, which would then be forced to leave Bootham Crescent. "Any parties seeking to acquire the ownership of the Football Club will be required to vacate the ground and premises at Bootham Crescent," the statement says. BCH, it says, would give anyone buying just the club £1m towards paying off its overdraft and making Huntington Stadium, a local athletics ground, fit for football. If no buyer comes forward by 31 March this year, Craig has said he will resign the club's membership of the Football League on April Fools' Day. Craig says he cannot afford to keep the club going in the face of mounting debts.

Bootham Crescent is in a residential area close to the city centre and the £4.5m demanded for the club and stadium reflects the ground's perceived market value. Far from securing the club, the transfer to the holding company means that Craig and his three fellow directors stand to share nearly £3.5m from selling BCH and the ground.

Fans have reacted furiously – particular anger has been directed at Swallow, the club captain during the Seventies, when York played in the Second Division alongside Manchester United and Aston Villa. So far he has not spoken publicly. A supporters' trust is being formed, hoping, in the short term to help to buy the club, if not the ground. Some supporter-shareholders are understood to be considering a legal challenge to Craig's actions.

Fans have bitterly pointed out that Bootham Crescent has been substantially built by supporters' fund-raising efforts, including most recently the roof on the Shipton Street end paid for by fans in memory of David Longhurst, the York player who died on the pitch in 1990 during a match against Lincoln City.

"I thought Craig was ultimately a fan and had the club's interests at heart," said Steve Beck of the official Supporters' Club. "He has revealed now he is not the club's custodian but an asset stripper. The directors should go for the price they paid for the shares, and let others safeguard the future of the club we love."

Craig did not return my call this week, nor did he answer a series of written questions about his actions. The club's website said yesterday that he was talking to two "serious" prospective buyers. Many people are at a loss as to what has motivated the directors to behave as they have. From the FA, the game's governing body, which has seen a vitally important rule sidestepped again, there was similar, baffling silence. York fans are urging them to act to enforce their own rule, but as things stand, only £4.5m, or a change of heart by Douglas Craig, can save York City and their ground.

davidconn@freeuk.com