We Need to Talk About The Beautiful Game

“…I don’t care. I’m not English. And I’m not a football guy. What I am is the chairman, and that gives me certain prerogatives.” 
Sheffield United FC Chairman, 25-Nov-2021
“I never went to Bury. It’s not a place I frequented. So for me to walk away from Bury and never go back is a very easy thing to do. I don’t do anything up there. I didn’t even know there was a football team called Bury to be honest with you. I’m not a football fan.”
Bury FC Chairman Steve Dale 28-Aug-2019 (1)

We need to talk about Football

Conceived as the pastime for working people, we have a rich tradition when it comes to football. Teams reflected their communities in which they resided, players played for the badge, rather than the millions on offer. Fans were connected to their teams rather than being a commodity to be milked and whose loyalty is assumed.

Early in 2021, there was much outrage when 6 English clubs announced they were to become part of a European super league which would comprise the most well-known clubs in Europe alongside the 6 English clubs. This was the cause of much hysteria – notably from Sky who in the early 1990s offered large sums of money to a number of First division clubs to break away from the football league and form their own ‘Premier division’.

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So the creation of another elite league is an example of capitalism doing a good job of eating itself. Much crocodile tears were shed and the owners of the 6 clubs concerned swiftly backtracked in the supposed ‘reaction’ of fans. That hides something.

The bitter truth is that football is no longer about the fans, who support their teams and pay the wages of the players. Fans are commodities, whose loyalty is milked for every last pound. How many of today’s football fans get to see a real-life football match, take in the atmosphere of a stadium, the crowd? With ticket prices as they are now, very few.

This is not a new issue, of course. It’s one that’s been playing out for almost 30 years, and it has roots in the Taylor Report and the introduction of all seater stadia.

The creation of the Premier League supercharged that process.

In his 2009 film, Looking for Eric, Ken Loach brought the issue to life in his usual vivid fashion. The film intends to explore the plight of football fans whose team, Manchester United, was sold to American owners, despite the fan protests, in a deal where the club’s own assets were leveraged against loans to purchase the club.  ‘We can’t afford to go to the game anymore’ is an oft repeated line in the film.

That sale led to a split amongst the fan base, with the result that FC United of Manchester (2) was founded the same year. The constitution is better described by using their own words (3):

  • The Board will be democratically elected by its members.
  • Decisions taken by the membership will be decided on a one member, one vote basis.
  • The club will develop strong links with the local community and strive to be accessible to all, discriminating against none.
  • The club will endeavour to make admission prices as affordable as possible, to as wide a constituency as possible.
  • The club will encourage young, local participation – playing and supporting – whenever possible.
  • The Board will strive wherever possible to avoid outright commercialism.
  • The club will remain a non-profit organisation.”

FC United aren’t the only example of a new, fan owned football club. AFC Wimbledon are the highest profile – created in the wake of the owners’ decision to relocate their club to Milton Keynes in 2003, which not unreasonably was something the supporters took issue with.

Football clubs have become gambling chips. An EFL Championship team promoted to the Premier League stands to gain £170m in their first season, and this rises to £300m if they manage to survive a second season. In order to secure promotion, clubs effectively gamble their futures by paying high player wages which the clubs cannot support themselves.

This gambling is not confined to the Championship – it’s also prevalent in Leagues one and two where promotion to an above league generates a higher portion of TV revenues and of EFL central revenues given to clubs (4). Therefore clubs are able to spend more than their income to gain promotion to a higher league. That means they’re reliant upon the personal investments made by their owners to finance this expenditure.

Whilst Football is ‘governed’ by the Football Association (the FA), it operates as a stakeholder organisation overseeing the Premier League, the EFL and the Football League. It’s ability to intervene in an insolvency situation is therefore limited. (5)

The EFL, like the Premier League operates a financial fair play system called the SCMP (Salary Cost Management Protocol). SCMP provides that no more than 60% of the club’s turnover (League One) and 50% (League two) can be spent on player wages.

Other streams of income are referred to as Football Future Income (monies from player sales, cup prize money etc). This is the mechanism by which owners can (and often do) infuse funds into a club to offset any shortfalls which arise.

This is policed by the EFL who require details of player expenditure, estimated turnover and football fortune income by June of each year. These forecasts are updated in December. The EFL regulations require prior approval by them of any items treated as football fortune income. Noncompliance with SCMP triggers a transfer embargo, meaning the club cannot sign players.

Some controls are in place with regard to directors of football clubs too. However this does not prevent unsuitable owners from taking over clubs.

The Bury FC EFL Review expands on this:

  • Under the OAD Test, no one can become (or remain) an owner or a director (in title or fact) of a Club unless he or she has disclosed all relevant facts to the EFL, and the EFL has confirmed (based on that disclosure and its own background checks) that he or she is not subject to any of the following Disqualifying Conditions:
  • Ownership or involvement in the management or administration of another Club or PL club (because of the potential conflict of interest)
  • A ban by a football body or other professional body, or previous failure to comply with the OAD Test disclosure obligations or the football betting regulations
  • An unspent conviction for one of a list of specified offences, or for any offence that results in a prison sentence of at least 12 months, or is subject to a football banning order, or he or she is a registered sex offender;
  • Disqualification from acting as a company director; or
  • Personal insolvency or prior involvement in two football club insolvencies (whether with two different clubs or with the same club twice).
  • A Club may be expelled from membership of the EFL if it fails to remove a person who fails the OAD Test.

The OAD Test therefore applies a limited set of objective criteria. If those criteria are met, the test is passed. The OAD Test does not seek to make any further judgment as to suitability (financial or otherwise) to own or manage a Club. For example, it does not require proof of availability of funds, or experience of running a football club, or a track record of rescuing distressed companies or of running a business as a going concern.

Furthermore, the objective criteria that are applied do not include various criteria that might be considered relevant to financial suitability. For example, the OAD Test does not disqualify where there is a track record of company insolvencies (other than of football clubs), of stripping assets from distressed companies, of failing to ensure payment of creditors, or of failing to file company accounts.”

The most recent club to be expelled from the EFL, Bury FC in 2019 is a sad case in point. Bought by a new owner in 2013 from the supporters trust, expenditure on player wages. After the club went into administration, the EFL commissioned a report into what went wrong (6). It makes sobering reading.

Rise will ensure:

  1. Football stadiums become ‘protected’ assets – in line with Football League and Premier League clubs cannot use their stadiums as security for loans and they cannot be sold by owners leaving their clubs homeless.
  2. That the conduct of potential owners be considered if they wish to take over a club. This includes their business history – insolvency history and any relevant criminal convictions, whether or not they’re spent. 
  3. In the case of the EFL and the Football League this suitability must be satisfied prior to takeover, in line with the Premier League’s approach.  
  4. Additionally, Rise will implement all of the strategic recommendations published in the Fan Led Review of Football Governance, this being a logical starting point to reform the game and ensure its long term future.

References

1. Shocking Comments by Steve Dale. Metro News. [Online] August 28, 2019. https://metro.co.uk/2019/08/28/shocking-comments-steve-dale-made-bury-went-business-10642739/.

2. FC United Manchester Birth. Four Four Two. [Online] https://web.archive.org/web/20160109005607/http://www.fourfourtwo.com/features/glazers-disgruntlement-and-grit-inside-story-fc-united-manchesters-birth.

3. http://www.fc-utd.co.uk/manifesto.

4. The majority of EFL central revenues are distributed to Championship Clubs (59.6% of the first tranche, rising to 80% of the second tranche), with a far smaller percentage going to League One Clubs (23.9%, decreasing to 12%) and to League Two Clubs (16.5%.

5. https://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/digital-culture-media-and-sport-committee/administration-of-football-clubs/oral/106503.pdf (Page 40, Q116-119 of the transcript).

6. https://www.efl.com/siteassets/image/201920/governance-reviews/bury-review..pdf—adobe-acrobat-pro.pdf.

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