ENGLISH FOOTBALL TO BECOME FIRST GOVERNMENT-REGULATED FOOTBALL INDUSTRY, WHITE PAPER REVEALS
After weeks of procrastination and hesitancy, the much-anticipated UK government white paper, otherwise named “Fan Led Review White Paper” on football is here. The UK’s House of Commons finally received details of the possible trajectory of English football last week, more than three weeks after a “leaked version” hit the tabloids.
The biggest shake-up in English Football since the formation of the Premier League in 1992, the road to this proposed piece of legislation was mapped when Hon. Member for Chatham and Aylesford, Tracey Crouch MP, published a Fan-Led Review of Football Governance on November 24, 2021. The UK government would commit to implementing it in full but came back around on their decision five months later, announcing that they would only commit to a white paper.
A document of proposals and recommendations that lays out the base of future legislation, this particular white paper lays out the base of future legislation in regard to English football. The need for reform in English football has recently become a pressing matter following the financial problems and/or insolvency and ejection of multiple clubs within the football pyramid over the past four years, including, Derby County FC, Wigan Athletic FC, Bolton Wanderers FC, Bury, and Macclesfield Town FC. There’s also the ever-looming threat of a ‘Super League,’ a breakaway league planned to be formed by the ‘Top Six’ English clubs and other giant European football clubs in April of 2021.
The new white paper proposes among many things an independent football regulator and a new owners and directors test. The independent football regulator will govern the entire English game, from the Premier League to the National League, and will require clubs to show a sustainable financial model and good governance before being allowed to compete.
A stricter test on club acquisitions, the new owners and directors test will aim at achieving strong due diligence on the sources of funding during the purchase of a club and the owners/directors’ plan going forward. This follows an incredible 64 scenarios in the past 31 years, going back to the birth of the Premier League in 1992 when clubs have gone into administration due to negligence and mismanagement within the club’s hierarchy.
As for how the regulator will be paid, the white paper proposes that the richest clubs in the pyramid subsidize its operations with the “Top Six” clubs covering 50% of the total cost of regulation. The total cost percentage of all 20 Premier League clubs is expected to be approximately 80%.
Within the roles and responsibilities of a regulator, the white paper states that, in extreme circumstances, a regulator could also limit a club’s spending if it threatened the sustainability of the league. The white paper falls short, however, of describing the scale of the organization that will be in charge of managing and licensing a meaningful review of 116 clubs up and down the pyramid, but one could imagine a large operation.
The white paper also demands clubs to declare an ‘Ultimate Beneficial Owner,’ a rule that might compel clubs linked to largely discrete owners such as Newcastle United to say that Mohammed bin Salman, the Saudi Arabian Crown Prince is the ultimate beneficial owner of Newcastle.
Under The Regulator’s System, the paper reads: “Clubs have often complicated ownership structures and may be owned by a chain of companies or hedge funds. Fans have expressed concerns at this opacity, and not knowing who controls the club they support. Requiring clubs to declare their Ultimate Beneficial Owners (UBO) will identify who ultimately owns and controls clubs, improving transparency and accountability.”
As proposed by the original Fan-Led Review of Football Governance publication by Tracey Crouch MP, fans will also have a greater say in the running of clubs and key heritage such as team names, badges, and stadia at the core of new plans. The white paper, however, falls short of proposing mandatory equality, diversion, and inclusion plans for all clubs as proposed in the November 2021 publication.
While solving a litany of issues is always a positive, one major concern would be the net debt of clubs in the Premier League and the Championship, approximated at an astonishing £5.9 billion. The wage-to-revenue ratio within the Championship is as outrageous as the total net debt of clubs, sitting at 125% meaning that the league’s wage bill is basically what they earn and a quarter more.
In response to the released government white paper, the EFL said it was “pleased” regarding the proposal of an independent regulator who could intervene if there ever was a lack of consensus between it and the Premier League in the future. The EFL and the PL have been at loggerheads over the past three decades regarding a trickle-down of cash and the sustainability of the English Pyramid.
A statement from the EFL read: “After an extensive period of consultation, the EFL is therefore pleased to note that the Government’s announcement regarding an Independent Regulator proposes to “oversee the financial sustainability of the game” and we welcome that a Regulator will have “targeted powers of last resort to intervene and facilitate an agreement as and when necessary, should football be unable to find a funding agreement that safeguards the future of our pyramid for the long term.”
“A landmark moment for the future of our game, we now await to review the White Paper in its entirety and will consider our position in full,” the EFL added. “The Fan Led Review White Paper represents a once-in-a-generation opportunity that must be seized to address the systemic issues that football has been unable to sort itself over the last 30 years.”
The Premier League, however, was not as enthusiastic about the news of a possible independent football regulator. They said in a statement: “The Premier League and its clubs will now carefully consider the Government’s plan for England to become the first major nation to make football a government-regulated industry.”
“We will work constructively with stakeholders to ensure the proposed government regulator does not lead to any unintended consequences that could affect the Premier League’s position as the most-watched league in the world, reduce its competitiveness, or put the unrivaled levels of funding we provide at risk.”
“The Premier League recognizes the case for change in football governance and continues to implement stronger and more independent regulation,” the statement went on. “We are strengthening our ownership rules and are already providing £1.6 billion in financial support to the wider game in this current three-year cycle.”
Money is almost always a major factor to changes in legislation in every industry, and transfer spending amongst clubs in the past decade has quietly grown into one of the major factors behind the draft of this recent White Paper and the proposal for an independent football regulator. In just this season alone, Premier League clubs have spent €3.075 billion on transfers, which is significantly higher compared to other leagues such as the German Bundesliga and Spanish La Liga who have spent just over half a billion euros at €556 and €558 million respectively.
With the disparity in revenue between the Premier League and English Football League continuing to grow, more and more people feel as though regulation is not only a good move but is in fact a “needed one.”
English Football League Chairman Rick Parry clarified the EFL’s stance on Thursday. “Well, from our point of view, our purpose is making clubs sustainable,” he told Sky Sports News. “Two things are needed to do that… redistribution of revenue to make clubs solvent and better regulation to make sure the money isn’t wasted. That they [the clubs] are not profligate. Both have to go hand-in-hand. You can’t have one without the other… We don’t need a tinkering. We need a fundamental rethinking. A reset.”
“Looking back to when we formed the Premier League in 1993, the gap between the Premier League’s turnover and the EFL was £11 million. It’s now £3 billion. So, the gap has become a yawning chasm and that’s a challenge for us all. That’s a problem we have to address.”
Leyton Orient FC chairman Nigel Travis echoed the sentiments of fans all across the country, using his own club as a teachable example. “Many football clubs have failed, as indeed, Leyton Orient did back in 2017 when we bought the club,” said Travis. “We bought a club with no players, no training ground, no cash, no bank account, and this is what happens when the game isn’t properly managed. Leyton Orient was in a state that was marred by financial mismanagement.”
“I think people tried to run the club in a way that wasn’t consistent with sustainability and the result was that we went down two levels to the National League. We’ve got clubs out there struggling. Southend [United FC] is a good example at the moment. Scunthorpe is another one and we all know about the Burys (FC). That’s why today is very important.”
-Maher Abucheri
Twitter: @pabloikonyero
Photo: Alvesgaspar. This file is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license.