The story of Carlisle United OSC – part 2

In 2004, CCUIST became The United Trust. Acronyms were proving unpopular so the new name, together with new logo, were largely welcomed by members. Kate Rowley was put as chair and board rep in place of the departed Alan Steel. However the new identity and new personnel at the top didn’t mean a smooth year ahead. It turned out to be anything but. On the pitch, United had just been relegated to the Conference, ending their 76 year stay in the Football League. Problems quickly developed off the pitch, too.

The problems stemmed from the 2003 agreement via which the Trust had paid over £150,000 towards their 20% shareholding. New owner Fred Story had agreed behind the scenes to put £1 into the club for every £1 the Trust raised towards their own share target. But before ‘Fred’s Big Match’ saw the light of day, the United supremo decided, for his own reasons, to pull out. Enter Brooks Mileson. The owner of Gretna FC, a multi millionaire insurance magnate, agreed to take on the scheme, putting £1 into the Trust’s fund for every £1 raised by members. ‘Brooks’s Big Match’ then became the biggest donation in supporters’ trust history, as he agreed in November to make a £600,000 gift to the Trust to allow it to complete purchase of the first and second tranche of shares in the agreement, enough to become a 40% shareholder.

Story opposed this move and publicly questioned the efficacy of the 2003 agreement, claiming it was ‘fundamentally flawed’ and suggesting the supporters would never own more than 20% by sticking to it. This pitched him into a legal argument with the Trust, who defended the agreement strongly with their own legal advice, which they shared with members. A postal poll of members comfortably backed the 2003 agreement, which the Trust attempted to enforce.

Hence the two sides entered into a long and protracted dispute that would drag on for over 18 months. Bringing the two together proved problematical. There were two meetings with solicitors, one in January and the next in June, both arranged and paid for by the Trust. In between, there was a near-total impasse, with accusations flying back and forth. The Trust Board were particularly bemused when they were described as ‘extremists’ by one United director. Unsurprisingly perhaps, neither meeting brought a breakthrough as the legal dispute carried on.

A stormy AGM in August 2005 saw Alan Steel voted off the board by opponents of the legal action, although, as the Trust revealed earlier in the summer, there had been a sudden ‘joining’ by new members, few of whom remained for more than 12 months. The owner, for his part, claimed he would no longer negotiate with the then Trust board in place. Nevertheless, the legal process was set to run its course, as an injunction had already been applied for and granted, and an interim hearing was held in the High Court in London in November to rule on it.

This hearing ruled conclusively that the Trust’s injunction, acquired earlier in the year, could continue. The injunction required Story to comply with the 2003 agreement while the legal process was still in place. He was further restricted by being unable to sell his shares in Holdings, although he denied having any plans to do so. Furthermore no leave to appeal was granted, an unusually strict ruling, giving the Trust a significant legal victory. The local paper described the outcome, rather curiously, as ‘a draw’. It was clear the media would not be rushing to back the Trust.

Come 2006, and as is often the case with long drawn out disputes, there was a slow thawing of relations. The Trust, thanks to the Mileson donation, was able to complete purchase of the first 20% tranche, providing a timely financial boost to the Club. Story agreed tentatively to further negotiations, and a mediation process, to be overseen by the Court was put in place. An all-day meeting in London in May 2006 brought about a breakthrough. The two sides agreed after further discussions in Carlisle, to stay the entire legal action.

The Trust agreed, perhaps reluctantly, to acquire a further 5.4% stake to give a 25.4% share for a total outlay of just under £800,000. A member vote was arranged for June 2006 which saw an overwhelming majority in favour of accepting the deal and approving the updated agreement. After such a costly legal argument any appetite for continuing it was vastly reduced. The outcome was that the United Trust became a significant shareholder, controlling 25.4% of Holdings, and able to block special resolutions alongside other powers granted to a 25.1% shareholder. Alongside this came the right to veto major new share issues.

The big winners during this time were the team and manager, Paul Simpson. In 2004-05 they bounced back into the Football League at the first attempt, winning the Conference play-off final against Stevenage Borough. They won the League 2 title in 2005-06, reaching the third tier of English football for the first time in eight years.

So an uninformed observer might conclude that the Trust was about to enter into more tranquil waters. Not a bit of it. This, after all, was Carlisle United FC, Cumbria’s longest running soap opera. The years of disharmony and dispute were not over yet. The third part of our history sees new legal arguments develop and failed investment attempts.

The third part of the CUOSC story continues soon.

Written by Alastair Woodcock