What is the government’s new football governance white paper?
Following anger at the proposed new European Super League in 2021, the government commissioned a Fan-Led Review of Football Governance
Department for Digital, Culture, Media and Sport, Report of the Independent Fan Led Review of Football Governance, 24 November 2021, retrieved 1 March 2023, Fan-Led Review of Football Governance: securing the game’s future - GOV.UK
chaired by Tracey Crouch MP. The review’s November 2021 report recommended establishing a football regulator. The government accepted this suggestion in its football governance white paper
Department for Digital, Culture, Media and Sport, A sustainable future – reforming club football governance, CP 799, The Stationery Office, 23 February 2023, retrieved 1 March 2023, www.gov.uk/government/publications/a-sustainable-future-reforming-club-football-governance
in February 2023 with the minister for sport Stuart Andrew saying that this will “set football on a more sustainable course for the future”.
Several other issues raised in the review, such as player welfare, are not within the scope of this white paper. A separate review into the future of women’s football is also currently underway.
What does the government think is the problem with football governance?
The English football pyramid, led by the top-flight Premier League, has become the richest in the world. 21 Deloitte, ‘Deloitte Football Money League 2023’, Deloitte 19 January 2023, retrieved 1 March 2023, www2.deloitte.com/uk/en/pages/sports-business-group/articles/deloitte-football-money-league.html But despite this overall financial success there have been repeated cases of football clubs experiencing financial distress and even collapse, such as 134-year-old Bury Football Club in August 2019. 22 BBC, ‘Bury expelled by English Football League after takeover collapses’, BBC, 27 August 2019, retrieved 1 March 2023, www.bbc.co.uk/sport/football/49451896
Though the overall rate of club failure is relatively low, the government is worried that this will increase without reform. It argues that English football has an “unacceptably high” risk of club financial failure, caused by incentives to overspend, poor governance and a lack of self-regulation – and that these are worsened by the threat of break-away leagues, such as the short-lived European Super League in April 2021. 23 The Super League, ‘Leading European Football Clubs Announce New Super League Competition’, The Super League, 18 April 2021, retrieved 1 March 2023, https://thesuperleague.com/press.html
The government argues that the football industry is unlike other industries, where failure is a normal part of business. Clubs are important for the social cohesion, pride and identity of local communities and so are more “community and heritage assets than typical businesses”. It also argues that the football industry has had time to regulate itself and failed. A permanent government regulator would be less vulnerable to club pressure and have clearer accountability than the current self-regulation system.
What has the government proposed in its white paper?
The main proposal in the white paper is the establishment of an independent regulator to oversee the top five tiers of men’s professional football in England. The key purpose of the proposed regulator would be to make football more financially sustainable and resilient through improving the way clubs are run.
The strategic aim of the football regulator will be to ensure that English football is sustainable and resilient, for the benefit of fans and local communities. Within this, the primary duties of the regulator will be to ensure financial stability of local clubs and the overall stability of the football pyramid, as well as to protect important parts of cultural heritage, such as stadiums. It would also have regard to three secondary duties: preserving domestic competition, the international competitiveness of English football and continuing inward investment.
The football regulator is conceived as a specialist regulator focused on financial sustainability and funded by levies on football clubs, with the richest paying the most. According to the government’s estimate, this means that the 20 Premier League clubs will cover 80% of the cost, with the richest six clubs covering roughly half.
Does this mean that football clubs will never be allowed to fail?
No. There may be “exceptional circumstances” when clubs should be allowed to fail, such as having no owner or interested buyer for an extended period of time. In this case, the regulator would oversee a proper process for closing the club.
What powers would the regulator have?
The regulator’s chief tool would be a licensing regime, similar to other regulators such as Ofgem and Ofcom. Every club in the top five tiers (116 clubs) would have to apply for a licence to be able to play.
To obtain a licence, clubs would have to comply with four ‘threshold conditions’ set out in legislation:
- having appropriate resources to continue to operate in the future
- having fit and proper owners and directors
- having appropriate fan input
- only competing in approved competitions.
The regulator would then monitor clubs on an ongoing basis against specific conditions within these four thresholds, to be determined by the regulator in the future. Specific conditions may also differ from club to club. The regulator would not act outside of these conditions, for example by interfering in rules of the game or ticket prices.
The regulator would take an “advocacy first approach” to its work, in the first instance to help clubs comply with their licence conditions. If clubs failed to comply after being given an opportunity to do so, the regulator could then exercise enforcement powers. These are likely to include the ability to recommend that the FA apply sporting sanctions, naming and shaming clubs and individuals, financial penalties, suspension or disqualification of controlling individuals, or even the suspension of clubs.
What are the next steps?
A planned consultation will take place this year, with groups such as football clubs. The government has committed to then bringing forward the necessary legislation to create the regulator when parliamentary time allows.
In advance of legislation, the government is considering whether to create a “shadow” regulator that would be non-statutory and therefore not fully empowered. This shadow regulator would be able to research the state of the football industry and prepare the licence conditions and governance code. This would allow the regulator to begin delivering against its duties immediately upon being established in law.
The government also has to decide where the regulator should be located. If it is a new body, it must be located outside London according to current guidance. 24 Cabinet Office, The Approvals Process for the Creation of New Arm’s Length Bodies: Guidance for Departments, Cabinet Office (no date), https://www.gov.uk/government/publications/the-approvals-process-for-the-creation-of-new-arms-length-bodies, p 10
How would the football regulator address this?
|Poor financial governance
Through a licensing requirement for clubs to have adequate financial and non-financial resources and controls in place, to meet committed spending and foreseeable risks.
|Poor corporate governance
The regulator would create a Football Club Corporate Governance Code, with different tiers of complexity and rigour for different tiers of the pyramid.
There would be conditions related to:
|Unsuitable owners and directors
Through a licensing requirement for decision-makers at clubs to be fit and proper custodians. The regulator would create and administer tests that check:
Source of wealth:
Robust financial plans:
Through the previous two licensing conditions, clubs would be less likely and able to gamble through risky spending.
While the regulator will first allow the football pyramid the chance to distribute revenues across the pyramid more fairly, the regulator will have the statutory power to intervene if certain high thresholds are met.
|Lack of fan involvement
Through the licence condition of having appropriate provision for considering the interest of fans on key decisions.
Clubs would also need to comply with the FA’s new rules on heritage assets, which protect representations of a club’s identity, such as a badge.
Every club would have to seek pre-approval from the regulator for a sale or relocation from a club stadium, to check that this is financially viable and supported by fans.
|Threat of breakaway leagues
|Through the licensing condition, clubs will only be able to compete in competitions approved by the regulator. Any new competition would have to meet a set of criteria such as: