David Conn: Barrow's case exposes hole in ownership rule

The Football Association's sole rule on who can own football clubs is in tatters following a match in this season's FA Cup. When Barrow played Chester City in the fourth qualifying round last month, both were owned by the same person, in direct contravention of the FA's law prohibiting dual ownership of clubs. Barrow won 1-0 and are still in the competition.

When the draw was made, Stephen Vaughan, a Liverpool-based boxing promoter, owned both Chester and Barrow, the former Football League club which went bust in January 1999. As told in this column three weeks ago, Vaughan had pulled his financial backing out of Barrow in November 1998, leading to the club's liquidation, because, he said, Customs and Excise and the National Crime Unit were investigating allegations that he was laundering money through Barrow on behalf of Curtis Warren, a convicted drug trafficker.

Warren, who is serving 12 years in a Dutch jail, once boasted that he owned Barrow. Vaughan denied this but admitted he is a childhood friend and former associate of Warren. No charges have ever been brought in relation to the money laundering allegations. Vaughan was, incidentally, convicted of assault following a road rage incident in September last year.

Barrow nearly folded until the FA forced the UniBond League to accept them for the 1999-2000 season, and the club have since been revived by a community-wide effort led by a new chairman, Brian Keen. Last month, Vaughan announced he had agreed to pay £500,000 to take over Chester from the unpopular American eccentric, Terry Smith. Vaughan sacked the manager, Gordon Hill, and Chester have begun to climb up from the bottom of the Nationwide Conference.

When Chester drew Barrow, the FA pointed out that the competition rules prohibit two clubs from playing each other where "a person, or any associate of that person, is interested in [a club] and a second club participating in the competition".

The FA threatened to cancel the game and expel both clubs from the Cup unless Vaughan resolved his dual interest. Three days before the match, Vaughan announced he had sold his Barrow shares, for an undisclosed sum, to "Mr Brown". The FA pronounced itself "completely satisfied", thanked Vaughan for his co-operation, and allowed the tie to be played. Vaughan took abuse from many Barrow fans and there was, amid the unrestrained delight, some gloating at their Holker Street ground when Barrow won 1-0. They proceeded to a first-round tie at Oldham.

On 7 November the club, whose liquidator Jim Duckworth faces a crucial High Court hearing next month over the ownership of Holker Street, announced more reason to celebrate: they had bought Vaughan's shares. At a meeting at the Tickled Trout hotel in Preston, Vaughan said he had sold his Barrow shares for £29,500 to the new board and also assigned his claim that Barrow owed him £269,000, which he invested in the club before it collapsed. "This completely severs my ties with Barrow," Vaughan said.

Keen said: "This is fabulous news as it means we've got the club back much earlier than we ever envisaged." Last Saturday, Barrow's inspiring recovery continued; 3,000 fans watched the club hold Oldham to a 1-1 draw, earning a replay at home next Tuesday for which all 4,500 tickets have already sold out.

"We're absolutely chuffed," said Keen. "The whole town has had a tremendous boost. We are still at a delicate stage over our ground but the end is now in sight." Only one awkward question remains: what about Mr Brown? Vaughan had already sold his Barrow shares; so how could he then sell them back to Barrow? Was the sale to Brown a sham? Vaughan, now installed at Chester's Deva Stadium, is nothing if not open: "Transferring the shares to Mr Brown was just a paper exercise to get the cup-tie played. Mr Brown was Bobby Brown, a painter and decorator working on our ground here.

"I transferred my Barrow shares to him, nominally for £1. I showed the FA the share transfer form and they were completely satisfied. Two days after the match, Bobby Brown transferred them back to me. Then I sold them for £29,500."

On the morning of the cup tie, Vaughan had met Keen and two other directors at the Swan hotel near Barrow. There they had agreed to buy Vaughan's shares and debt for £29,500, concluding the deal 11 days later.

"It's just how the rules work: the shares had to be transferred to someone not associated with me, so we did that to get the game played," said Vaughan.

"There's nothing the FA can do – they should tighten up on these situations." He added that he does not, contrary to previous interviews, own another UniBond League club, Droylsden, but the Butchers Arms pub and other buildings adjoining it. His business partner, Dave Pace, a director of Vaughan Promotions (Merseyside) Limited, controls Droylsden, he said.

Keen said Barrow had done nothing untoward over the share purchase: "Stephen said he had the authority to sell the shares to us. He was very co-operative. Any discussions he had previously had with the FA were not our concern."

However, when the Cup tie was played, both clubs were still owned by Vaughan. Any transfer of shares in a liquidated company is void unless approved by a court. When Vaughan showed the FA the transfer form to Bobby Brown, no court application had been made.

But the FA is not concerned by the revelation that the apparent share transfer was merely a device to get round its rules – and was void anyway. "The transfer was less important to our competitions committee," said a spokesman, "than the fact that Barrow's liquidator confirmed that Vaughan didn't exercise executive power over Barrow."

The FA's approach seems to contravene directly its own rule, which states that a person is "interested" in a club if he "holds shares of" or "has lent money to" that club. At the time of the match Vaughan, Chester's owner, also owned Barrow and was owed money by them.

The FA has been urged in two official reports, in 1997 and 1999, to require people who own football clubs to be "fit and proper". Yet it has stubbornly resisted such a move, arguing that such rules would be too complicated to introduce.

This is not to suggest that Vaughan would be stopped from taking over clubs – it is impossible to say who would fall foul of rules which do not exist. But the Barrow saga highlights major holes in the only law the FA currently has.

Bobby Brown was unavailable for comment.

davidconn@freeuk.com