On this day in 1988: The public flotation that almost sunk Hibs

Hibs are rightly proud of their reputation as trailblazers. The first British club to compete in the European Cup, the first Scottish side to feature a sponsor on their shirt and the first to install undersoil heating.

Thirty years ago today, they racked up another first by becoming the first Scottish club to be listed on the stock market. An advert appeared in that day’s Scotsman offering anyone who so desired “an opportunity to share in Hibernian’s future”. Hibernian FC, it declared, “are going public”. The minimum investment was set at £198.

“There are no guaranteed benefits,” it was pointed out. Shareholders, the advert made clear, “will not have a say in the day-to day management of the club” but will be able to attend an annual general meeting where they will be permitted to “put questions to the Club’s directors” and vote on major decisions requiring shareholder approval.

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It felt dynamic and reflective of a club on the up. Hibs had beaten Celtic 3-1 a couple of days earlier with two goals by Steve Archibald to go, as is the case now, second in the league.

David Duff with Jim Gray outside Easter Road. Picture: TSPL.

The advert sought to answer the queries from those understandably unsure about such a step and what exactly it meant. Five years earlier Tottenham Hotspur had become the first British club to be listed on the stock market but concerns were already emerging about the wisdom of this move.

Meeting reporters outside White Hart Lane after being sacked in 1984, Keith Burkinshaw is said to have gesticulated behind him before acidly commenting that “there used to be a football club over there”. The axed Spurs manager was speaking figuratively. At Hibs, such a lament very nearly became literal within 20 months of the club being listed. The seeds of a potentially very dark harvest had been sown.

As much as the flotation was trumpeted at the time by chairman David Duff and his brother-in-law and managing director, Jim Gray, it soon became clear “going public” invited potential oblivion. Hearts owner Wallace Mercer darkened Hibs’ door in 1990. His hostile bid for the club in order to create a joint Edinburgh team had been facilitated by Hibs’ flotation on the Third Market.

“There is no doubt having gone public it made it easier a couple of years later for someone to make an attempt to take the club over,” says current owner Sir Tom Farmer, speaking to The 
Scotsman yesterday.

Farmer helped clear up what he described as the “mess” left by the labyrinthine business dealings of Duff, Gray and David Rowland, the then Monaco-based financier and later Tory Party donor who loaned Duff £800,000 to buy Hibs in 1987. According to Tom Wright in his book, 
Hibernian: The Life And Times of a Famous Football Club, the decision to go public was to “raise working capital to improve the standing of the football club”. More than 1700 supporters took up the offer, raising an estimated £1.6 million.

The club was divided into three sections: parent company Edinburgh Hibernian PLC, Hibernian Leisure and Hibernian Land and Property. “The principle of what was being attempted was I think pretty solid when I look back on it – but maybe the execution could have been a bit different,” recalls Raymond Sparkes, who was the club’s commercial manager at the time before later joining the board.

“Hibs are noteworthy in their history for having been involved in all sorts of firsts and that was another one,” he adds. “I would say in some respects things could have gone a whole lot better. Maybe it opened the back door. It maybe allowed Wallace Mercer to identify a weakness he tried to exploit. Like in any business that has shareholding, it can be purchased and sold almost on a whim. It’s not quite the same thing as someone owning the club, as Tom Hart did and Kenny Waugh did previously.”

Now 59, Sparkes, a Glaswegian who was, in his words, “transported into Edinburgh to work with Hibs,” is a reliable witness to some of the colourful characters involved with the club at the time. “A lot of people were coming and going, especially those we had little knowledge of who were coming up from England introduced by David Duff, so it was very difficult for us to ascertain who it was we were dealing with,” he says. “We were all getting to know each other and it was happening very, very quickly.

“On the surface, going public was innovative,” he continues. “For the likes of Jim Gray and myself and the Scottish-based directors, we were entering into it in good faith. We felt we were being taken in a direction that might have all sorts of benefits for the football club. We were never fully in control. Neither was David Duff, who, truth be told, was being taken on a journey by David Rowland.”

Rowland promised to sell his shares to Mercer, while Duff, to his credit, resisted. It’s said the latter was summoned by Rowland to London to meet the prospective buyer and was convinced he would be shaking hands with the newspaper magnate, and Oxford United owner, Robert Maxwell. In stepped Mercer, wearing his Hearts blazer.

Edinburgh Hibernian PLC went into liquidation in 1991. Farmer reconstituted the club. “The club was on the stock exchange only that one time,” recalls Farmer. “It came back into private ownership when I came along. But what I did, everybody who had shares with Hibs, I gave them equivalent shares in the new format.

“So if someone had bought 100 shares and lost their money, what they got was 100 shares in the new format – the original club people had bought shares in went into liquidation. There was a new club, a new Hibernian. These people may well still have these shares today.

“That was the mess the club was in,” he adds. Farmer doesn’t put this all down to the flotation. “Other strange things happened,” he says. “Assets were bought, such as Avon Inns.”

This was a chain of pubs and hotels in the West Country purchased for more than £5m but later revealed to be a rump business.

Farmer bought the ailing club because he wanted to protect it for the Leith community. “Of course, the moment of glory was the Scottish Cup,” he says.

If someone had told him they would eventually lift this trophy as he surveyed the wreckage of the early 1990s, albeit the club did secure the League Cup in this period against the odds, he would never have thought it possible.

“Rod Petrie, for many years now, is the man who has led the charge, as have hundreds of other people. I knew one day we would win it,” he says.

“It makes it all worthwhile.”