The long awaited white paper on football governance ("A sustainable future - reforming club football governance") was finally presented to Parliament by Sports Minister Stuart Andrew today.
The white paper grew out of the Fan-Led Review conducted by Tracy Crouch MP - a review in which CAST played an important part by outlining both to Stuart Andrew and Prince William (in his role as President of the F.A.) the threatening "shenanigans" surrounding our club in recent years.
CAST welcomes the publication of the white paper and we fully endorse the response of Kevin Miles of the Football Supporters Association with whom we worked closely during the Fan-Led Review:
“The FSA engaged in the Fan-led review from day one and we warmly welcome the historic commitment from the Government to introduce an independent regulator of English football. The football governance white paper clearly addresses our key concerns around ownership, rogue competitions and sustainability and of course we support any proposals that offer fans a greater voice in the running of their clubs. We look forward to engaging with the Government on the next steps.”
The next stage in the process of the paper's proposals becoming legislation will be "engagement and further consultation with selected stakeholders on the key reforms it sets out". The Department for Culture, Media and Sport's press release says, rather worryingly, that plans to bring forward legislation will be announced "as soon as parliamentary time allows."
The executive summary of the white paper reads:
The commercial growth of English football’s top division is an achievement to be celebrated. The Premier League is a global success, attracting more viewers and higher revenues than any of its international rivals. It is a force for good in promoting the UK abroad, and a product that should be protected.
However, English football is currently endangered by the high and growing risk of financial failure among clubs across its top 5 tiers. There exist fundamental problems of perverse incentives, poor governance, and defective industry self-regulation. These, along with the risk of breakaway competitions, threaten the stability of the football pyramid as a whole and risk leaving fans alienated and powerless.
The Fan-Led Review of Football Governance highlighted the need for reform to address these issues. The Review referenced the botched plan for a breakaway European Super League, the catastrophic losses of historic clubs like Bury, and countless more clubs that have come close to liquidation due to mismanagement, as just some examples of why significant change is needed in how football is governed.
The government agrees that reform is needed and that government intervention is needed to effect this reform. The free market does not properly account for the importance of clubs to their fans and communities, and industry self-regulation has remained inadequate - seeing clubs collapse and fans harmed. Therefore, football needs a strong centre to independently apply reformed rules.
The government will introduce a new independent Regulator for English football clubs.
The Regulator’s primary strategic purpose will be to ensure that English football is sustainable and resilient, for the benefit of fans and the local communities football clubs serve.
To support this purpose, it will have 3 specific primary duties:
- Club sustainability - the financial sustainability of individual clubs.
- Systemic stability - the overall stability of the football pyramid.
- Cultural heritage - protecting the heritage of football clubs that matter most to fans.
The final institutional location of the Regulator will ensure independence and proper accountability.
For this reason, the government is not convinced that an industry body would be an appropriate home for the Regulator. However, the government is clear that this should not stop football getting its own house in order. The government will undertake a targeted intervention in football to set up an independent Regulator, but reform is also the responsibility of the industry. Football can act now to address the issues of sustainability, and the government would encourage the industry’s existing bodies to continue to bring in change in the interim, before the Regulator is operational.
The Regulator will operate a licensing system, where clubs will need a licence to operate as professional football clubs.
Legislation will establish 4 Threshold Conditions of the licence and the Regulator will set the detailed requirements under each. The Regulator will have a tightly defined scope and could not act outside of these 4 Threshold Conditions. It will not intervene in, for example, on-pitch rules of the game or ticket prices.
Financial regulation will be the Regulator’s core focus, and will be based on improving financial resilience.
At its most extreme, financial failure can lead to clubs ceasing to exist and so risks causing the most significant harm to fans and communities.
To protect against this, the Regulator will require clubs to:
- demonstrate good basic financial practices;
- have appropriate financial resources or ‘buffers’ to meet cash flows and financial shocks; and
- protect the core assets of the club - such as the stadium - from harm.
To address corporate governance issues in football, the Regulator will establish a compulsory ‘Football Club Corporate Governance Code’.
To date, the poor internal governance at some clubs has allowed owners to act unilaterally, pursuing short-term interests with little accountability or scrutiny. Under the new regulatory system, clubs will be required to apply a new code and report on how they have applied it, to improve transparency and accountability. The code will be applied proportionally, with regard to the size, league and complexity of the club’s business model, and where risk may exist as a result of weak corporate governance.
The Regulator will establish new tests for prospective owners and directors of football clubs.
This will aim to avoid any more unsuitable custodians causing or contributing to problems at clubs and risking harm to fans.
The new tests will consist of 3 key elements:
- A fitness and propriety test, to ensure integrity of owners and directors.
- Enhanced due diligence of source of wealth (owners).
- A requirement for robust financial plans (owners).
The Regulator will implement a minimum standard of fan engagement.
Fans are the most important stakeholder for any football club, and both parties benefit from their involvement in the long-term decision-making process at a club. The Regulator will ensure clubs have a framework in place to regularly meet a representative group of fans to discuss key matters at the club, and other issues of interest to supporters (including club heritage).
The Regulator will also add, and reinforce existing, protections around club heritage.
The Regulator will require clubs to comply with the Football Association (FA) on its new rules for club heritage, which will give fans a veto over changes to the badge and home shirt colours, in addition to the strong existing protections for club names. The Regulator will also require clubs to seek its approval for any sale or relocation of the club’s stadium.
Clubs will only be able to compete in competitions that are approved by the Regulator.
This will allow the Regulator to prevent English clubs from joining breakaway competitions that did not meet predetermined criteria, in consultation with the FA and fans. Crucially, this will safeguard against a future European Super League-style breakaway league.
The Regulator will have a targeted power of last resort to intervene in relation to financial distributions, to deliver a solution if football fails to find one itself.
A mutual agreement amongst the football authorities remains the preferred solution to resolving the issue of insufficient and destabilising financial flows. However, the Regulator will have statutory powers to intervene on this issue, should certain thresholds be met. The Regulator will empower and encourage football to reach an agreement itself first, but provide a crucial backstop to deliver a lasting resolution if the football authorities cannot.
The Regulator will operate an ‘advocacy-first’ approach to regulation, but with the power and mandate to intervene swiftly and boldly when necessary.
This means it will aim to use constructive engagement rather than formal intervention wherever possible, but use its strong powers and sanctions to enforce compliance if necessary.
The Regulator will be proportionate and adaptive in its approach, rather than take a ‘one size fits all’ approach.
The requirements on clubs will reflect their circumstances, meaning they might vary based on criteria like league, club size, and financial health or riskiness. Where clubs are already well run, the Regulator will not look to intervene unless necessary.
The Regulator will ensure the domestic regulatory landscape remains coherent and simple for all involved.
There may be functions that existing industry bodies can assist with, but the Regulator will have the responsibility and necessary powers to manage concurrent regulation to ensure coherence.
Checks and balances will be embedded in the design of the Regulator and its system to ensure it exercises its functions in a fair and appropriate way.
In addition to its duties and principles, the Regulator will be subject to legal processes to govern how it uses its powers, including requirements to consult and to meet legally defined thresholds to intervene. Clubs will have the right to appeal the Regulator’s decisions to a court or tribunal if they feel it has acted unfairly or outside its statutory remit.
The Regulator will take steps to ensure a smooth transition to the new regulatory system.
The proposed reforms are novel and will represent a significant change for the industry, so it will be crucial for the Regulator to be operationally ready and for clubs to be supported in the early years of the new system. As part of this, the Regulator will be able to phase-in rules, and offer clubs ‘grace periods’ to become compliant, as appropriate.
The white paper (below) includes in the second paragraph: "There have been over 60 instances of clubs going into administration since 1992, and we have lost historic clubs like Bury and Macclesfield Town. We have seen fans fighting back against their owners at Blackpool and Charlton Athletic and events at Derby County leaving it on the brink of liquidation in 2022."
The full white paper:
The EFL has published its response to the white paper:
http://EFL Statement: Fan Led Review White Paper - News - EFL Official Website
It hasn't taken long for opponents of the legislation to leap out of the traps. West Ham's David Sullivan was quick to tweet: "A football regulator is a terrible idea. The Government are terrible at running everything. Look at the mess this country is in". To which football finance expert Kieran Maguire swiftly responded: "The man who sold Birmingham City to a person who is now in prison for money laundering says that football does not need an independent regulator in terms of governance and ownership"
Leyton Orient Chair Nigel Travis has said "We have a responsibility to seize this opportunity to shape the future of football for the better". There has been no comment yet from Thomas Sandgaard.
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