Football’s white paper: A good start, but will it work?

THE UK government’s white paper on improving governance in football is a step in the right direction, but the roots of the problem are not necessarily being fully addressed. The rationale for the paper is to impose better financial discipline and accountability, pointing to the higher echelons as the guilty parties in the economic mayhem that has become British football. In doing so, the intention to create a better footballing democracy is at the centre of their thinking.  

This could be flawed because football is a free market and runs on the basis of winners and losers, the very essence of the sport itself. This has always been the case, going back to the 19th century when local mill owners and industrial grandees poured money into football teams as an egotistical or philanthropic exercise. The figures have just got bigger, more scary and less transparent as football has become an investor’s asset class. 

We had clubs that rose to the surface on the back of Britain’s industrial power – the Aston Villa’s and Newcastle United’s of this world, who were the first powerhouses. The most recent phase of football’s industrial revolution came with the 21st century billionaires who bought clubs and made them into super clubs. These are primarily the “big six” plus aspiring others in the Premier League, who have left the rest way behind, resulting in the wealth of the top flight, boosted by astronomical broadcasting revenues, dwarfing the rest of English football’s constituency. The next level down spends more than it can afford to try and gain access to the Premier, thus placing their future in danger, while the two lower divisions feed off of scraps. Never has “free market” in football appeared so precarious.

Anything that evens-up the playing field has to be considered, but as Britain has seen, “levelling up” is something that people merely pay lip service to and really, they don’t want it to jeapordise their own position in the food chain. You get the feeling that despite the posturing, those at the top will only go down the road of greater democracy, kicking and screaming.

Any business sector has to have independent governance that ensures malpractice doesn’t take hold of everyday business process and also that rules are being adhered to. In theory, it should have been the Football Association all along, but it has become clear in the past 30 years that the clubs – the big ones – have the power and means.

It is probable that in any other industry, the run-of-the-mill football club would not be considered a going concern. Too many survive because of hand-outs from chairmen or benefactors and there are thousands of people whose very livelihood depends on this rather fragile arrangement. Would you join a company that makes losses year-in, year-out, pays out more in wages than it earns, prevails because of the generosity or obligations of the owner and really only matters to less than 10% of the town in which you work? And why would anyone invest in a football club that offers nothing in return? If it is true that 53% of the 92 clubs are technically insolvent, is there not a possibility the old model of professional football is lurching towards its demise? As it is, more than a third of the 92 have gone into administration at some stage.

If, as fans tell us, “football belongs to us”, then the structure of the entities they feel they own need to be changed from free market businesses to something that has a preservative built into them, such as a trust or charity. They need to be made immune from the whims of owners who thrust their clubs into crisis when they decide to leave, cease funding or reduce their commitment. If they are community clubs, then make them so to ensure they survive and remain relevant. This might mean that some clubs have to consider changing their status from loss-making businesses to sensibly-run, semi-professional organisations rather than clinging to the hand-to-mouth model that is built simply around surviving as professional clubs. Make supporters owners, either as individuals or as a body – spread the accountability beyond the boardroom.

The government’s paper calls the Premier a global success, and on the face of it, there is a lot to be impressed about the way English football has transformed itself from a limping, toxic edifice in the 1980s to the slick, high-quality game we see today. But while making itself the best marketed, most hyped league in the world, the Premier has divested itself from the rest of English football. It is a super league, one that is multi-national, admired and hated but coveted by almost every other major football country. At the same time, it has destroyed the structure of 92 and created obscene imbalances. Perhaps this was inevitable, maybe “the 92” was, after all, a cumbersome body that was a millstone around the neck of English club football. Now it is 20+72.

While there are complaints aplenty about the Premier League, the beast is being fed all the time by the fans, the very people who want change. But do they? Do the fans at Arsenal, Manchester United and Chelsea really care about the fortunes of Rochdale, Rotherham and Reading? And do the spectators at Burnley, Norwich and West Bromwich Albion not hanker for a return to the Premier League? And what about the owners, who lurch from hero to zero and back again with the supporters, depending on the performances of their teams. Does this not tell us something, that popularity is only a solid as the next three points? The fans of clubs without an Abramovich-type benefactor hurl abuse at the clubs that do, but deep down, he was precisely the type of owner they really wanted too. We have also seen how charitable fans can be towards their owners, even if they are from a suspect regime, as long as they are elevating the status of their club.

If the Premier is despised so much, it is not by the clubs that jealously guard their membership or indeed their fans, who form season ticket queues that can last years in their fear of missing out. Basically, football has become like some form of Dickensian plot, the rich and famous sitting in their gilded stadiums, the poor, all gnarled and deformed, locked out of exclusivity and residing in crumbling grounds in front of small, weather-beaten audiences. So much of what you see in football is a reflection of society as a whole.

We need a more sustainable game, but who is going to make the first steps? In the old amateur days, clubs were not supposed to pay players, so they left money in little envelopes in their boots after a game. It eventually led to semi-pro non-league football, where wages have long defied logic. At the end of the day, even the very little guys want to be like the Premier League and even though they know it is a massively flawed economy, nobody wants to make the first move.

The White Paper is the first of many steps, and we should wish it very well. But football fans and their clubs must be under no illusions – they have a part to play in this evolution. They have it in their power and influence to force their clubs to keep on changing for a better football world.

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.