Football Dynasty-Chapter 12: The Covenant pt.1

"However, as a club that values tradition, let's not disrupt our foundation," Frank continued. "What I'm trying to say, gentlemen, is that we value and believe the covenant was established with clear rules designed to guide Manchester City toward a better future."

Frank paused for a moment, ensuring his point was clear before continuing. "Gentlemen, I believe some of you may have questions regarding this. Currently, nine plus one seats are occupied, which means adding another—without proper adjustments—would technically violate the covenant's terms."

Everyone nodded in agreement.

"However, gentlemen," Frank continued, "I also believe some of you may have overlooked the fact that one of the board members who should be here has his shares locked away in his lawyer's bank due to certain circumstances."

The moment Eric heard this, his face froze.

His father's shares.

Everyone already knew that, according to the covenant, when Albert Alexander eventually passed away, his shares would be transferred to Eric Alexander, his designated successor.

This meant that, since Albert was still alive, Eric couldn't legally take control of the shares just yet.

At the time, Albert was unable to attend the meeting due to health issues, leaving Eric to represent him. However, since Eric was acting purely as his father's proxy—through their familial connection and not as the legal controller of the shares—Albert's shares were deemed inactive.

As a result, his seat was effectively considered vacant.

Of course, Eric had no ulterior motives toward his father—he deeply respected and loved him. No one on the board had any bad thoughts either, as none of them wanted to provoke tension or attract media attention that could damage their reputations.

Hence, since Albert's shares were inactive, they were securely locked away in his lawyer's bank to prevent any risk of them going missing again.

Why bother to lock them away? Missing again?

Back in the 1960s, during Albert Alexander's tenure as Manchester City chairman, the club faced serious challenges regarding share ownership and control. At one point, the club's shares went missing, causing internal uproar that nearly tore the club apart.

In March 1964, during this period of turmoil, a consortium led by property developer Peter Donoghue made a £100,000 takeover bid for the club, which the board firmly rejected. The fact that the bid coincided with the missing shares raised suspicions, with the board viewing it as a hostile takeover attempt.

In response to this, two directors at that time hired private detectives to track down the missing shares. Despite their efforts, no one was certain what would happen during this sensitive time. Political changes was also making the board fearful.

Donoghue, who was a Labour councillor, then had been selected as a Labour candidate for the 1964 General Election. This raised concerns within the board, as a Labour government—led by a Prime Minister who openly supported football—could potentially aid Donoghue's takeover plans.

Recognizing the threat, Albert Alexander and the board decided that a new defensive strategy was needed. This crisis led to the creation of the Deed of Covenant.

The purpose was simple: the covenant ensured that if anything happened before the missing shares were recovered, the shares would remain within the club, divided among the remaining directors.

This safeguard was designed to prevent external parties from gaining significant control over Manchester City. Thankfully, the crisis eventually ended when the missing shares were found. With their recovery, Albert's allies controlled four of the six boardroom votes.

Donoghue, by that time, had withdrawn from the takeover group. Had the shares fallen into the hands of the consortium, the consequences could have been severe—something one key figure at the club was keen to exploit.

Now, the question is—why didn't Albert simply transfer or gift his shares to Eric, his designated successor? He could've just gone to his lawyer, signed the papers, and it would've been done, right?

The answer lies in the nature of business dynamics. When an organization reaches a point of stability, internal conflict almost inevitably follows.

The hostile takeover attempt by Donoghue's consortium had initially united Manchester City's board, but what happened after that?

Once people have tasted power, they tend to cling to it. The confrontations between board members became fierce.

Shares shifted hands from one director to another, though they remained within the internal circle. Eventually, Albert, who was still chairman at the time, began experiencing health problems due to old age.

His shares became a hot commodity, but Albert, being a seasoned political player, was shrewd. He decided to step down as chairman and part with some of his shares, while locking the rest away in his lawyer's bank for safekeeping.

After long and tense discussions, a kind of Christmas truce was called. As a goodwill gesture, Joe Smith even offered to make Albert chairman for life if the takeover succeeded.

His target?

The shares in Albert Alexander's hands—the ones he might be willing to part with.

Albert agreed, as this was the most appealing offer on the table. But in reality, both sides were secretly preparing their legal strategies.

With Smith taking the lead, other board members threatened to issue a "huge new block of shares" to block the takeover. Smith, whose legal team had prepared a list of eight alternative courses of action, was confident he could prevent it.

The current director, Joe Smith, became the largest shareholder at the time thanks to Alexander's shares. However, his plan to become chairman didn't go smoothly. He fought fiercely with other board members, especially Frank Johnson, the vice-chairman at the time, who was also eyeing the chairman's seat.

The conflict intensified, and this was exactly what the media craved. After further digging, a hot piece of news emerged — it turned out that the Oldham-based double glazing tycoon, Joe Smith, owed his position on Manchester City's board to none other than Johnson himself.

This revelation made everything even more dramatic.

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