Unnerved by the hazardous financial situation of many English football clubsand the attempt to set up a European Super League, the UK government launched review of football administration. Unusually, in a business dominated by international billionaires and sovereign wealth funds, football fans were asked to lead the review.The review’s recommendations of an independent regulator for English football club’s finances and a ‘golden share’ to enable fans to influence major decision sat their clubs would change how English football is governed.
Money can’t buy me love
English football is very popular. The 116 clubs in the three leagues of England’s professional ‘football pyramid’ (the Premier League at the top, the English Football League with its three divisions – the Championship, League One and League Two – in the middle and the National League at the bottom) attract more than 750,000 spectators to football grounds every week. Millions more watch on TV around the world.
Being so popular, English football generates lots of money. How much money a club receives depends on which league and division it plays in and there are huge inequalities. In the 2019/20 season, the average Premier League club’s income was Euro 260m, compared to Euro 32m in the Championship, Euro 8m in League One and Euro 5m in League Two.
These vast differences in revenue are why the finances of many English clubs are a dreadful mess. The potentially enormous rewards of promotion incentivise clubs to overspend to attract the best players. The play-off final for promotion from the Championship to the Premier League is the most valuable single football match in the world. The winning team will earn at least Euro155m over the next three years, even if it is relegated the following season. Winning the League One play-off and promotion to the Championship is worth at least Euro 20m, as much as a team receives for winning the Champions League final. Clubs need to spend money not only to win promotion, but also to avoid relegation. Going down a division can lose a club between 50% to 75% of its revenue. Almost all clubs lose millions of Euros and rely on owners to fund them.
This situation was made worse by the Covid-19 pandemic. Many clubs struggled as they lost revenue because fans could not attend matches. During 2019/20, former Premier League clubs Bolton Wanderers and Wigan Athletic, unable to pay their debts, were rescued from extinction by new owners. Bury Football Club, founded in 1885 in the reign of Queen Victoria, did not survive and went out of business causing anguish in the community and damaging the local economy. Derby County, who lost the Championship play-off final to Aston Villa in 2019, is now in ‘administration’(one step from bankruptcy). It will close if new owners are not found.
Bank job
To ensure financial stability and competitiveness in English professional football the review proposes setting up an Independent Regulator for English Football (IREF) to regulate football clubs like the UK financial authorities regulate the banks. IREF would issue licences for clubs to play in the English leagues. Clubs would have to show that their finances are adequate and supported by reliable revenue streams, good cost control and sufficient reserves to withstand unforeseen circumstances. IREF would have statutory powers to investigate and enforce rules. Club owners could spend to become more competitive, but no longer risk the club’s future. IREF would also test, every three years, how owners recognise their football club’s responsibility to the local community. Directors would have to show every year that they have the skills to manage a football club.
The Review also recommends that the Premier League share more of its wealth with the rest of football. The Premier League already makes ‘parachute payments’ to clubs relegated to the Championship to help them manage the substantial fall in income, but this just increases inequality in the Championship and between the lower divisions. More money, more widely shared would help smaller clubs lower down the pyramid by reducing inequalities and strengthening competition
Let’s stick together
The review believes that closer engagement between clubs and their fans will improve football governance and stability. IREF would require clubs to carry out basic activities to engage with their fans and seek their views. Each club would have a ‘shadow board’ of elected supporter representatives which the club would consult on all important administrative (not playing or team) issues.
Fan power stopped the formation of a European Super League (ESL) in April 2021, which six Premier League clubs were set to join. With its temptations of other big European clubs, lots of TV money and no relegation the threat of a breakaway ESL remains. To counter it, the review recommends that the fans of each club should have a ‘Golden Share’, following a model pioneered by Brentford, a club promoted to the Premier league last season. Fans could block their club selling its stadium, moving outside its local area, changing its name, badge or colours, or from joining any new competition not connected to FIFA, UEFA and the English Football Association, such as, for example, anew European super league. Disagreement between clubs and fans, would be resolved by IREF.
Don’t get me wrong
The review is a considered analysis of the state of English football. Its recommendations are serious. They probably would not have stopped the Saudi takeover of Newcastle Unitedbut they would make a real difference. That is the problem. The Premier League, unsurprisingly, rejected the proposal for a football regulator. Two of its clubs, Aston Villa and Leeds United, were strongly critical. They have short memories. After losing the Championship play-off final in 2018, Aston Villa would have collapsed without an immediate investment of Euro 70m by its new owners. Leeds United almost went bankrupt in 2007.
Many clubs are badly run. The lure of success leads to poor decision-making and the abuse of fan’s loyalty. Other clubs are models of engagement with fans and their local community through fan forums, regular structured dialogue with fans, fan-elected directors, supporter shareholders, multi-sport sessions and training opportunities for young people.
The review provides an opportunity for English football to replace self-interest with long-term benefits. Whether it will, to a large degree, depends on Boris Johnson’s Conservative government. Inviting the views of those for whom football matters more than money was always a risk and now it must decide what to do. The chair of the review was Conservative MP, Tracey Crouch. A real football fan, she is respected by the government and trusted by other fans. The government has said that it will ‘proceed at pace’ on the review. No one will know what that means until 2022.
Football fans will wait for good news, but they won’t bank on it.
