By Dr Tom Bason and Dr Andrew Jones, Centre for Business in Society

Football clubs are a central component of the communities they represent, generating civic pride and providing social cohesion. However, the commodification of football has created deep inequalities across the English game, leading to financial instability for many clubs who are unable to access the vast riches provided by the Premier League. In the last three years Bury and Macclesfield Town have ceased to exist, whilst Scunthorpe United, Bolton Wanderers and Derby County came close to extinction. Allied to the proposed introduction of the European Super League (ESL), the UK Government, through its Fan-Led Review has sought to intervene in the sector in order to protect the interests of clubs, supporters, and communities. It is proposing the introduction of an ‘Independent Regulator’ who will seek to ensure that the game is sustainable and resilient. However, the current proposals outlined in the DCMS White Paper may not entirely address the key issues impacting the game.

The Regulator: Key Concerns and Challenges

• Is Licensing Enough?

One of the key areas of focus for the Independent Regulator will be to improve the financial sustainability of clubs across the pyramid. To achieve this goal, additional powers are proposed, focussing on the introduction of a licensing system. However, the Independent Regulator cannot be seen as a ‘silver bullet’ in this regard as the Government acknowledges that clubs may still fail, and take financial risks, even with the implementation of a licensing system and stricter financial controls. Creating a robust licensing system will have benefits, and will enable clubs to be stringently audited, but it will not eliminate financial crisis. For instance, in Germany there are stricter controls on club finances and a stringent licensing system, but this has not stopped clubs such as Schalke and Hamburg being mismanaged over a lengthy period of time.

• Fans’ Golden Share

A key feature throughout the White Paper is the putting of fans “back at the heart of football”. While the Fan-Led Review proposed that fans have a Golden Share, that allows them to veto actions that may damage the cultural heritage of the club, the White Paper stops of short of this recommendation. Rather, it is suggested that current FA rules will be given a regulatory underpinning, and clubs may need to demonstrate fan support for certain changes implemented by the club. This raises a question as to who these fans are; the makeup of fans of clubs, particularly those at the top of the Premier League has changed substantially over the last two decades. Indeed, a key driver behind the ESL proposals was a desire to attract “fans of the future” in favour of “legacy fans”. At present, it is not entirely clear which “fans” will be given a voice.

• Fit and Proper

Another key function of the regulator will be to introduce new tests for owners and directors, which go beyond the current ‘Fit and Proper Persons’ tests utilised by the Premier League and EFL. The Government argues that the implementation of such tests will generate certainty and encourage those with longer-term visions to invest in the game. However, currently what factors determine a ‘fit and proper custodian’ of a football club remain unclear for the most part. Whilst the White Paper acknowledges that those with a criminal record, or engaging in activity such as money laundering, are not ‘fit and proper’ the definition needs to be expanding, potentially capturing aspects that could be linked to other business/financial activities.

• Last Resort

A further critical function of the Regulator will be to ensure that there is a fairer distribution of revenue in the English game, but the role of this body will be as a party of ‘last resort’. Essentially, should the Premier League agree a deal with the EFL to share revenues then the Independent Regulator will not intervene, and the exact model for the last resort powers has yet to be defined. As such at this stage there is little clarity on how the Regulator may intervene in financial distribution settlements, and whether, for example, it will look unkindly at parachute payments for clubs who are relegated from the Premier League to the EFL.

• New Leagues

One of the triggers for the initial Fan-Led Review of Football Governance was the April 2021 proposal of a European Super League (ESL), a breakaway league featuring 12 of Europe’s biggest clubs. The White Paper addresses this idea directly, stating that clubs will only be able to join competitions approved by the Regulator, which meet predetermined criteria (section 4.10). The examples of criteria include a fair and meritocratic competition, that does not undermine the current England football system. As such, this guidance leaves the door open; the first two principles of the current European Super League proposals are for a “broad based and meritocratic” competition, and that “participating clubs should remain fully committed to domestic tournaments”.

• The Women’s Game

Finally, the scope of the Regulator would not include women’s football. A separate Future of Women’s Football review is currently underway. Perhaps a developing women’s sport should be assessed separately from the developed men’s game, and so a dual approach may be sensible. However, at present the two are inextricably linked, and regulations implemented within the men’s game may well have consequences for women’s football. For example, the accounts of both Chelsea Women and Arsenal Women note that these clubs are reliant on support from their parent companies, and these businesses are heavily dependent on their men’s teams. Business practices and decision-making may well be shared across these businesses’ separate teams.

Much More Needs to be Done…

It is clear that greater regulation is needed in English men’s professional football, in part due to the success of the Premier League at the expense of the Football League. A key issue in sport governance is that the regulators are often also commercial bodies who may be in direct competition with the entities they regulate, so an independent regulator is welcome. However, as we have laid out, this is not without issues and challenges. Publishing of the White Paper is likely to be the first step of a long process.

Reference

“Football regulator: UK government confirms new independent body”, Jonathan Jurejko, BBC Sport, 23 February 2023; https://www.bbc.co.uk/sport/football/64536218.

Through understanding the impact of organisations’ activities, behaviours and policies, the Centre for Business in Society at Coventry University seeks to promote responsibility, to change behaviours, and to achieve better outcomes for economies, societies and the individual. 

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