Opinion

Reform in Football, Part II, Governance

  • Independent regulation
  • Full engagement, decision-making and degrees of control for fans

Football needs reform at every level, from FIFA, UEFA, to the Premier League, The EFL and the Football Association, to individual clubs at professional level, all the way to the core of the game, grass roots. As an opening statement it is as obvious as others stating we need to solve global warming or world hunger.  The question is (i) what form of reform and  (ii) what are the real issues at levels where reform (and thus a change in outcomes) is possible?

Enforced reform in corporate life can only arise from proper systems of governance, imposed by statute or independent regulators as necessary.

Governance is the system by which entities are directed and controlled. It is concerned with the structure and processes for decision making, accountability, control and behaviour. In the case of football I would add it has to include the structure, process and powers of independent regulation.

Let’s start with the domestic game, in particular the Premier League, The Football Association (for reasons I will explain) and individual clubs. The EFL I imagine, falls under the general new regulation of the game.

Independent Regulation

For a multitude of reasons it is obvious that self-regulation isn’t working in football. The fact that the game as a whole can go through such an extended bull market, a period of huge growth over more than two decades yet be in such a perilous and one might argue rogue state speaks volumes. Whilst the game is more popular than ever, the resulting riches poured into the game are controlled by a few all of whom having no interest in the wider game, leaving the footballing pyramid wholly unbalanced financially and from a control perspective. The two most recent attempts, Project Big Picture and The Super League demonstrate the inadequacies of the current governance structure as well as the naked, self-serving greed of those at the top of the game.

Thus backed by legislation, the football regulator would be totally independent of the game. By independent, I mean having no individuals, organisations, or financial contributors with an existing commercial or ownership interest in professional football.

The regulator would have three key areas of responsibility

  • Be the sole licencing authority for the professional game – all clubs would be subject to the licencing requirements of the independent regulator
  • Be the sole provider of governance within the professional game at League, competition and club levels (as part of their licencing requirements)
  • Manage and protect the role of supporters in the game, providing the framework for fan engagement, involvement and degrees of control over certain aspects of the professional game including critically, degrees of fan control at individual clubs (more below)

Licencing would work in a similar manner as to how licencing at UEFA works. Simply without meeting the conditions of the licence you don’t qualify. The conditions would be wide and considerable including the suitability of the owner of a club, proper financial regulation around expenditure, debt and source of funding, a commitment to various elements relating to the well-being of the game, academies, football schools, community involvement, grass roots support and critically fan engagement, involvement and the ceding of control to fans over various elements of the game.

The governance responsibilities would start at the top of the game with the Football Association, the Premier League and EFL having direct reporting and accountability to the regulator. Each organisation would have to conduct itself in line with the framework provided by the regulator with complete transparency by the organisations. The framework would provide the structure and processes for decision making, accountability, control, behaviour and importantly (i) the relationships between each organisation and (ii) the relationship between the professional game, the amateur game and grass roots football.

The role of the fans

The third area of control from the regulator would concern the role of the fans. Engagement and communication (both ways) would be a critical part of any new structure across the footballing organisations focusing on the game in its entirety (i.e. not partisan or individual club focused) but most fundamentally at individual club level.

Any future governance or regulation model has to include the involvement of fans in decision making generally but specifically control or the power of veto over certain decisions (mainly surrounding ownership, change of control, ability to leave or later the game’s structure and competitions).

How would that be best achieved?

I have seen many advocates for fan representation on the board of clubs. Whilst I understand the immediate appeal of that, in practice, in itself it is not enough. Firstly, what authority does one board member have? One director would itself not stop boards from making decisions. Secondly how do the fans ensure that the fan representative has the necessary experience and will represent the collective opinion of fans? Additionally, confidentiality constraints would make the position impossible to be effective. How can a fan report on board activities if the board meeting remains confidential?

I have an alternative structure.

A proper fan’s trust that holds sufficient voting shares (or owns a “Golden share”) to block certain activities. The key point here is the class of shares. Clearly given the size most Premier League clubs economic ownership of a significant block of ordinary shares is not possible. A 25% block of shares in Tottenham Hotspur would cost more than £500 million, way beyond the means of ordinary fans .

However, control is the key, not economic ownership. Thus create a single class of shares that has sufficient voting rights to block certain activities. Manchester United has two classes of shares, one class (wholly held by the Glazers) which has 10 times the voting rights of ordinary, non Glazer held shares.

A fan or supporter’s trust could hold a block of voting shares (different from the ordinary shares owned by the owner) which confers voting rights (say 25.1% for example) but no economic ownership of the club. The owner owns the financial interest (and value) in the club but is restricted by statute (Company Law) or the articles by the block of voting shares.

What decisions the trust could block would either be enshrined in law, be part of the regulatory framework of the regulator and/or be an integral part of the football club’s Articles of Association.  Typically they would include veto over change of ownership, control, stadium and location plus other key aspects relating to the club’s relationship with the community, city, region etc.

Alternatively, the Golden or Special share model.

This is the model used by the Premier League and the Football Association. Within the Articles of Association (the document that governs how a company is run), the 20 clubs in the Premier League have granted the Football Association the “Special Share” which gives the Football Association veto over certain decisions ( extract from articles of association below)

Why a fan or supporter trust?

A fan or supporter trust would have a proper legal structure, important if holding voting shares in the football club. It would have its own board with elected members accountable to the fans. It would have its own reporting structure back to fans. Importantly, the trust could also appoint independent directors with wider business and board experience to advise the trust and also represent the trust on the club’s main board.

Whilst the degree of control an owner would have to cede under these regulations may be problematic for some and thought unnecessary by the “good” owners, it is a mechanism that protects the interests of individual clubs, their fans and thus football generally without removing the economic and status benefits of ownership.

It would ensure continuity for the game. As a result it may attract new investment from those who perhaps are currently interested in investing in sports but see football, particularly English football’s very weak governance as a major barrier to entry. A regulated and stable background with strong governance and financial controls should promote longer term more stable investment perhaps attracting longer term, institutional funding rather than the diverse range of oligarchs, billionaires and individual States which are causing such havoc in the game at this most difficult of times.

To conclude, governance can be improved across the game through independent regulation, strong licencing and governance plus most importantly a proper structure for fan engagement, decision making and control.

Done properly not only would the game be more secure at the highest levels but the benefits could flow through the pyramid in a far more equitable and beneficial manner for all.

Part I Introduction

Part III Alternative structures to protect fan interests

 

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