Regulation – why many football clubs are deluded

WHEN the financial crisis of 2008 hit the global economy, people were quick to blame banks and other institutions for bringing the world to its knees. The consequence for that industry was a wave of stricter regulation, some of which is still being rolled-out. Furthermore, compliance and regulatory jobs became one of the few growth areas in the financial services sector. The pandemic, like the crisis, has exposed certain shortcomings in the macro-economic environment and the football industry, for one, has appeared fragile and unable to provision for a rainy day. It has also opened up cracks in the structure of the world’s most popular game, from ownership to overspending.

The fan-led review of football, headed by UK Member of Parliament, Tracey Crouch, has called for an independent regulator to be established to bring about greater financial transparency as well as better management of clubs’ balance sheets. But there is resistance to the appointment of a regulator that is not affiliated to the footballing authorities and the clubs themselves. What have they got to worry about?

Simple. The game has been overspending for the past few decades and has rarely been held to task. At the same time, while revenues have grown, they clubs have continued to push boundaries when it comes to wages and they have depended on broadcasting income far too much. Clubs have mortgaged their futures and gambled on success. With most clubs struggling to make a profit and many paying out more than they earn, the health of English football is decidedly shaky. Little wonder they do not welcome scrutinisation by a standalone regulator.

The problem with football is in pursuing most clubs’ objective of winning matches, the business element of the game often comes second in the list of priorities, yet a bankrupt club is not in a position to challenge for points and goals. If it was a chicken and egg situation, football has to be financially sound before it is successful on the pitch. The get-out for football, going right back to the game’s origins, has been the owner bail-out to ensure clubs can continue. Invariably, the game has not paid its way naturally, the concept of wealthy owner paying the bills is not a new idea, it is just the scale that has changed. It is no longer the local butcher or mill-owner that foots the cost of football, it is now nation states, oligarchs and e-commerce billionaires.

Yet the financial stability of football is the single most important factor in the modern game and the implementation of an independent regulator would help change the way clubs operate, at least that is the hope. But, be warned – as with all restrictive governance, a sub industry always emerges to exploit loopholes, so we can realistically expect a response if and when the regulator comes into force.

The biggest surprise during the pandemic has been the lack of clubs that have actually folded. Derby recently went into administration and poor old Bury folded, but mostly, it has been a tale of crisis, temporary solutions and hand-to-mouth existence for many small clubs. Meanwhile, the reduced income at every club has meant their wage bills have rockets in terms of the amount of income they have consumed. The Championship in England has long been a basket case in this context and it appears to be getting worse.

Over the past decade, the top two divisions in England have earned more than £ 40 billion, but over £ 28 billion of that has been paid out in wages. Around a dozen of the top 44 clubs have generated a wage-to-income ratio of over 100%, a truly worrying picture. Only 11 of the 44 have made an overall profit during the decade.

There’s also concerns that clubs do not report their finances with much explanation or reason and those that can get away with providing opaque minimal accounts do. As one academic said, financial reporting within football is designed to appease shareholders rather than the fans.

So it is quite ludicrous that big-time football should resist change and the desire to prevent another Bury or Derby. It also reveals how little they respect their supporters who are their emotional stakeholders, economic customers and “investors”. Sadly, the fans never vote with their feet, the FOMO (fear of missing out) aspect of football means they are too fearful of life without their football fix. This addiction has been taken for granted for too long, it is time to call a halt to the easy-win virtue signalling and really take note of what some progressive, far-sighted clubs are doing for the benefit of their fans and the broader community. 

The Generation Cup: The “old boys” and the FA Cup

GIVEN the nation is in the grip of Old Etonian dominance (two or our most recent Prime Ministers were members of the infamous Bullingdon Club), it is worth recalling in this 150th year of the FA Cup, that the competition threatened to become the jealously-guarded property of the privileged classes.

The Downton Abbey-esque English Game, a drama written by Julian Fellowes, gave a somewhat tame and polished view of the early days of the FA Cup. It highlighted the prejudice of the south towards the north – in one scene, a member of the Old Etonians, working for a bank, was asked to go to Lancashire. The look of fear on his face highlighted how people once viewed northern England with great suspicion. At the time, though, the north dealt in reverse snobbery, regarding the well-heeled, well-educated and well-fed southerners as pampered folk leading far easier and safer lives. 

The English Game could not resist a few cliches that underlined that the sport was rapidly becoming the pastime of the sweaty, horny-handed sons of the soil. I experienced this prejudice when I started my career in the mid-1970s, the public school fraternity at my workplace referring to me as “Comp” because I had come from an Essex comprehensive school.

The Old Etonians were one of a number of teams from the Old Boy network who championed the game and made their mark in the early years of the FA Cup. Their first appearance in the competition was in 1874-75 when they reached the final but lost to the Royal Engineers after a replay. The following season, they were beaten finalists again, this time losing to the Wanderers.

The early star of the FA Cup was Alfred Lord Kinnaird, who played in nine finals, winning five with firstly the Wanderers (1873, 1877 and 1878) and then the Old Etonians (1879 and 1882). Kinnaird’s lifetime achievements marks him as a man very much of his time, as well as a prominent figure in the development of football, he was also president of the YMCA, a director of Barclays Bank and Lord High Commissioner to the General Assembly of the Church of Scotland. He was president of the Football Association between 1890 and 1923 and when he studied at Cambridge University, he was a tennis blue and a champion swimmer. As a footballer, Kinnaird was reputed to be the toughest of all tacklers and was not shy in using strong-arm techniques against his opponents. He was, nevertheless, capped by Scotland.

The Old Etonians won their first FA Cup in 1878-79 in what was considered to be the poorest final to date. They had beaten old rivals Wanderers 7-2 away, Reading, Minerva, Darwen (after three meetings) and Nottingham Forest on the way to the final at the Kennington Oval where Clapham Rovers awaited them. The winning goal came from 21 year-old Charles Clerke, another interesting character who became a gentleman farmer in Hampshire. Sadly, Clerke lost his son on the beaches of Dunkirk in 1940.

In 1881, the Old Carthusians became the second OB team to win the competition, beating the Etonians in the final. The Carthusians were old boys from Charterhouse, the school that was the starting point for the rock band Genesis, among other well-known figures. The Carthusians, in 1888, were interested in joining the Football League but were not asked to become part of the competition. One notable Old Carthusian was Andrew Amos, who would play for the first Hitchin football club and also win two caps for England. In the 1881 final, the Carthusians easily beat the Etonians by 3-0.

The day of the gifted amateur was coming to a close, however, although the Etonians won the cup in 1882. The turning point came on March 31, 1883 at the Oval. Blackburn Olympic, a team founded in 1878, beat the Etonians 3-0 to become the first team from the north to win the competition, ending the dominance of southern clubs. The old boys never went close again. Blackburn had professionals in their line-up, which was not to the Etonians liking. This was a seismic moment in the history of the game and prompted calls for the Football Association to investigate the finances of the northern clubs. Success, it would seem, has always been bought!