A committee of MPs has recommended sweeping reforms to the ownership and financing of football clubs in the UK.
The Culture, Media & Sport Committee, better known these days for custard pies and the grilling of newspaper barons, last week published its report into this country’s football governance structures.
British football has reached breathtaking financial heights. The national game contributed £970 million to the Exchequer in 2009/10 (half the amount collected in Air Passenger Duty and three times the tax take from cider and perry duties). Turnover of Premier League clubs has grown from £170 million in 1992 to £2 billion today. Satellite TV payments to clubs have grown from £42 million to more than £1 billion over the same period. More than £2 billion has been spent on stadia since 1992. But is this level of wealth sustainable? MPs think not.
The report highlights the stark reality that despite the upsurge in income, British football clubs are dangerously indebted. Premier League clubs’ net debt in 2010 was £2.6 billion; the aggregate net debt of Championship clubs (one rung below) was £875 million. The 92 Football League clubs together had collective debts of £3.5 billion. Premier League clubs reckon these debts are controllable. Manchester Utd chief executive, David Gill, said, “We know that the debt is there but it doesn’t impact on what we do.”
But Richard Giulianotti, Professor of Sociology at Durham University, told the committee: “there is clear evidence that there is too much debt. A UEFA report last year indicated that, for the 2007-08 season, English Premier League clubs accounted for 56% of the net debt of all European clubs – a grossly disproportionate figure.”
What does the committee suggest should be done about it? Government should not be meddling in professional sport; however, the FA must be encouraged to perform an improved oversight role. A licensing system, by which all professional clubs are affiliated to and regulated by the FA, is recommended by the committee. The sports minister, Hugh Robertson, is supportive but advises that the FA itself must undergo wide reform to its own governance.
The committee agrees that the FA “needs urgent reform” and recommends the appointment of a ten-strong FA Board consisting of a Chairman, General Secretary, two executive staff, two non-executives, two professional game representatives and two national game representatives. Better strategic decision making for the funding and governance of the sport is demanded.
Most eye-catching for fans are the recommendations for supporter ownership. In February, the committee went on a fact-finding mission to Arsenal Football Club and met with the chief executive, Ivan Gazidis, as well as two supporters groups, the Arsenal Supporters Trust (AST) and Red Action. The AST owns 3 per cent of club shares through the innovative Arsenal Fanshare scheme, in which nearly 2,000 members have invested half a million pounds in less than a year. It is a shining example of community ownership at a club respected for its sustainable financial approach, and which began life in the 19th century as a supporter-owned mutual. However, according to Steven Powell, a member of AST, its work is hampered by legislation that prohibits the AST from issuing club shares.
“[It is] greatly complicated by the inflexible nature of Financial Services Authority regulations... This is a tortuous issue that impeded our efforts for many years and means that we have had to put in place duplicate structures for AGMs, Boards, accounts and even legal advice, with all the effort and expense that entails.”
Similar taxation and regulatory hurdles are getting in the way of other supporter schemes at clubs such as Wrexham, Southend and the co-op pin-up of the moment, AFC Wimbledon.
Hugh Robertson is said to be open-minded to encouraging supporter ownership schemes, as he ought to be, considering the government’s rhetoric about localism and the ‘big society’.
In a rare recommendation for legislative action, the committee asks the government to consider amending the Financial Services and Markets Act 2000, “in order to recognise the special nature of supporters trusts”, and to pass legislation “to protect minority supporter stakes that would otherwise be the subject of a compulsory purchase order.”
The challenges facing football are much like those facing politics. Both the sport and the nation are massively in debt. And both football clubs and Westminster are suffering from disconnect between those at the top and those at the bottom. In both instances, it is the latter who sustain the former: fans pay their TV subs and admission fees, whilst voters pay their taxes.
Football in this country is a long way from the sort of governance structures found in Germany, visited by the committee, where no less than 51 per cent of a club must be owned by club members. Yet this report by MPs is a timely intervention. It should not be down to government to instruct and regulate heavily but it is of cultural importance that we get this right. As the committee says, football “generates strong emotional attachments that are hard to convey in statistics or on the pages of a Report but are nevertheless real and powerful.”
The government should seriously consider the committee’s recommendations, including those requiring (minimal) legislation. Football needs to put itself on a sustainable footing and reconnect with the public. Without fans the beautiful game is no longer beautiful, it is just a game.