Dermot Desmond’s Control of Celtic is Finally Under Threat
Dermot Desmond’s long-standing influence over Celtic Football Club is now under serious scrutiny from shareholders.
Desmond’s Decades-Long Power Base at Celtic
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 took the club public as a PLC after wresting control from the Kelly and White families.
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% to his portfolio. He became the biggest individual shareholder but was still well short of McCann’s previous level of control.
The 2001 Share Issue
In 2001, following the success under Martin O’Neill, a further share issue raised £25m. The Guardian reported at the time:
“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 then owned just under 20%, took up his rights and could see his stake rise to the high twenties. He famously said: “The more successful the club, the more I can step back.”
It seems incredible now that a Champions League semi-final place was once featured in a Celtic share prospectus. Since beating Barcelona in the 2004 UEFA Cup, Celtic have not won a single knockout tie in any European competition.
How Dermot Desmond Built His Celtic Power Base
In 2005, Celtic had another share issue (the last one to date). Desmond underwrote £10m of the £15m issue. As part of the announcement, the board revealed plans to de-list from the London Stock Exchange and move to AIM.
The underwriting had the potential to push Desmond over the 30% threshold that would normally trigger a mandatory offer for the rest of the company. However, the board sought (and received) approval from independent shareholders to waive that requirement.
From that moment on, Dermot Desmond has been firmly in control.
Significant figures like Brian Quinn and Patrick Sheehy departed the board shortly afterwards.
The Rise and Influence of Peter Lawwell
Since Gordon Strachan’s appointment in 2005, CEO Peter Lawwell’s profile and power grew dramatically. After 17 years in the role, he took an 18-month break before returning as Chairman. During that time, his son was appointed Head of Scouting and Recruitment.
Almost anonymous alongside Martin O’Neill initially, Lawwell gradually took control of day-to-day operations, filling key positions with underwhelming appointments. Twenty years later, many fans see the club as a monument to laziness and cronyism.
Dom McKay’s fresh ideas in 2021 lasted just 72 days. Michael Nicholson has been CEO ever since, reportedly earning £17,000 per week while wielding limited influence.
Shareholders Start Asking Questions
After last season’s shambles and the prospect of another difficult campaign, some shareholders are now raising serious concerns about the club’s direction and governance.
Celtic, Kerrydale Street: “Over the course of time Desmond has evolved into being referred to as the owner of Celtic. He isn’t.”
Martin O’Neill and Robbie Keane both had discussions reportedly led by Desmond. Even when O’Neill was reappointed as manager, the call came directly from the Non-Executive Director.
Undue Influence on a PLC?
A public limited company should not operate this way. Directors set policy while the CEO executes it. Best practice suggests board members serve 5–8 years before fresh voices are brought in.
Yet at Celtic, once you’re on the board, you tend to stay for life. Tom Allison served 25 years. Brian Wilson has been on the board since 2006.
It is widely understood that every significant decision requires Desmond’s approval.
The recently formed Celtic Supporters Limited published a 64-page Paradox – A Strategic Review of Celtic, raising multiple governance and strategic concerns. Those issues are now reportedly being raised by shareholders.
While this could bring a period of uncertainty, after more than a decade of standing still in Europe, many believe it is healthy that these questions are finally being asked.
What do you think — is change coming to Celtic? Drop your thoughts in the comments below.