Dermot Desmond Under Threat At Celtic

Dermot Desmond’s control of Celtic is believed to be under threat.

The Irish businessman owns around 34% of the shares in the club and has been a Non Executive Director since 1995.

Desmond initially invested under Fergus McCann as the former Chairman made the club a Public Limited Company after wrestling control from the Kelly’s and Whites.

In 1999 when McCann was selling his 51% shareholding Desmond agreed to underwrite the issue. With 75% of the shares sold off Desmond took up the remainder, adding 12.75% of the club shares to his portfolio. He became the biggest individual shareholder but was well short of the level that McCann was in for.

In 2001 following the success and investment in the team under Martin O’Neill a further share issue raised £25m.

Covering that issue The Guardian reported:

The rights issue also has a few peculiarities that should appeal to hardcore supporters with a minimum £550 to invest. As well as a fixed dividend of 4 per cent on the new stock, there will also be an extra ‘participating dividend’ tied to the club’s success, or failure, in the European champions league which pays out a maximum 6 per cent if the club reaches the semi-finals, and nothing if it fails to qualify. Shareholders will also receive a special-edition certificate featuring the treble winning team.
Desmond, who owns just under 20 per cent of the club, will take up his rights and could see his stake rise to the high twenties depending on how many other shareholders apply. But he is not planning to get more involved. ‘The more successful the club, the more I can step back,’ he says.

It seems incredible that a Champions League semi-final place managed to feature in a Celtic prospectus. Since beating Barcelona in the UEFA Cup in 2004 Celtic haven’t won a knock-out tie in any European competition. Celtic has never won a Champions League knock out tie. Three times they got out of the group stage but each time they lost in the Last 16. To AC Milan, Barcelona and Juventus.

HOW DERMOT DESMOND BUILT HIS CELTIC POWER BASE

In 2005 Celtic had another share issue. There has been none since then.

Through the issues in 1999, 2001 and 2005 the percentage owned by ordinary fans has been diluted but those shares remain valid. The Celtic Trust and Celtic Supporters Limited have been working to trace and activate those dormant shares.

Many of the fans that bought those shares have died, almost all have moved home or had changes in circumstances.

Desmond was underwriting the £15m issue in 2005 by £10m.

With the club announcing the share issue BBC Scotland reported:

As part of the Stock Exchange announcement, the board also announced its intention to de-list from the London Stock Exchange and transfer its listings to AIM to take advantage of the greater flexibility of its rules.
The underwriting could give Desmond more than the 30% shareholding that would force him to make an offer for the rest of the company’s shares.
But the board is seeking approval from independent shareholders to waiver that requirement.

From that moment Desmond has been in control.

Significant figures like Brian Quinn and Patrick Sheehy left the company.

THE RISE AND INFLUENCE OF PETER LAWWELL

Since 2005 and the appointment of Gordon Strachan the profile of CEO Peter Lawwell has snowballed. After 17 years in that role he took an 18 month break then returned as Chairman. In-between those stints his son was parachuted in as Head of Scouting and Recruitment!

Almost anonymous alongside Martin O’Neill the former Clydeport accountant took the opportunity to gain control of the day to day running. Extending his power base by a series of underwhelming appointments throughout the club.

Twenty years on the club is a monument to laziness and cronyism.

The fresh ideas and direction of Dom McKay in 2021 lasted 72 days. Team player Michael Nicholson has been CEO ever since.

Nicholson has the profile of an ornament but without the same influence and clout. He picks up £17,000 a week for nothing in particular.

After the shambles of last season the club is heading for a repeat. Now it appears that some shareholders are concerned by the running of the club, asking questions and pushing for change.

Later this afternoon this convincing comment appeared

Over the course of time Desmond has evolved into being referred to as the owner of Celtic. He isn’t.

After winning the Scottish Cup Final last month at Hampden Martin O’Neill mentioned planning talks with the owner about his future.

All discussions with O’Neill and Robbie Keane were reported as being led by Desmond.

When O’Neill was brought back twice as manager the phone call was made from Desmond, a Non Executive Director.

CEO Nicholson has happily gone along with all of this. It gives him the quite life he enjoys and a salary that he will never get near outside of Celtic.

UNDUE INFLUENCE ON A PLC

A PLC shouldn’t operate this way.

Directors decide on policy with the CEO charged with carrying that out. Good practice is to have directors in place for 5-8 years then bring in fresh ideas, new voices and ambitions.

Celtic operate nothing like that. Once on board you are there for life, or almost. Tom Allison recently did a 25 year stretch. Brian Wilson has been on the gravy train since 2006.

It is on record that every significant decision has to be approved by Desmond.

At the turn of the century he had access to everyone at Manchester United, these days his Filofax is decidedly out of date.

If and it is a big if there are governance issues at Celtic the blame falls on the Directors, executive and Non Executive.

A NED shouldn’t be dictating policy with 35% of the shares. To dictate policy he should set up a Takeover, offering to buy out the other shareholders or to reduce his stock in the company.

Any action against Celtic would impact on all Directors. It could impact on other companies that they are involved with.

Last month the recently formed Celtic Supporters Limited published a 64 page Paradox- A Strategic Review of Celtic.

It raised a number of questions over how the club is run.

According to some on Kerrydale Street these issues are now being raised,

It could lead to a period of uncertainty at the club but after more than a decade standing still or treading water in Europe it is healthy that questions are being asked.

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