Out-Law / Your Daily Need-To-Know
The football industry will be watching closely when the UK government sets out its legislative proposals for establishing an independent regulator in English football.
What the proposed structure will yield and what it will seek to achieve is currently unclear.
The football industry is arguably one of the things the UK is best known for, a patchwork of clubs from the very biggest commanding global attention to those amateur teams in the smallest villages – yet all embedded and whose existence has resulted from being at the heart of their communities. The hopes, aspirations, fears and concerns amongst stakeholders, however, rest in just what the government, a political body, will impose on a sport that is carried with such a profound importance across the UK.
It is not the first time that government has sought to intervene and shape the structure of football. Back in 1997, I spearheaded a fan takeover of my local side, AFC Bournemouth. It led to the creation of Supporters Direct, a government-convened body to increase the voice of supporters through ownership and involvement in clubs. Now in 2023, the main themes for a regulator appear to be directed toward seeking improvements to the sustainability of football club finances, to weed out perceived malevolent actors before they become involved in the game, and give fans a greater say when major changes are proposed affecting their club’s heritage.
Trevor Watkins
Partner, Head of Sports
A regulator will need to embrace stakeholders, to have force but be understanding of the nuances across the game as a whole, to have a clearly defined role, and to act in a manner that both respects differences but has the ability and aim to benefit the game overall at all levels
With little detail released so far, a perceived fear is heavy-handed intervention that could create imbalance in the factors that make football so popular – the essence of competition and the aspirations of supporters and owners to succeed.
The UK government confirmed last spring that it would legislate to establish a new independent regulator in English football. In doing so, it endorsed the 10 central recommendations arising from a fan-led review of football governance in England, chaired by former sports minister Tracey Crouch, which flagged concerns with the sustainability of football finances and existing corporate governance in the game. Prime minister Rishi Sunak pledged to implement the Crouch review recommendations during the Conservative party leadership contest last year.
While the government has confirmed that the new regulator will be tasked with overseeing the financial sustainability of clubs, it hinted that it was willing to leave the football authorities to agree a new model for the distribution of finances throughout the football pyramid – from the riches of the Premier League to clubs in the Football League through to grassroots development – with ‘backstop’ provision only for regulatory intervention.
Detail on the scope of the regulator’s powers in relation to financial sustainability will be closely scrutinised. Powers of intervention on the split of lucrative commercial revenues, primarily from broadcasting would, for example, be extreme; being able to assess the suitability of potential owners and impose conditions will in itself create significant potential challenges.
Similarly, there is likely to be close attention paid to the mechanism the government intends to provide for when and how the regulator might intervene on matters of distribution of finances – with the threshold for when the regulator’s powers shift from being merely consultative and advisory to being able to compel and impose change. We know the regulator is to be given statutory powers to licence and sanction clubs, but the white paper should offer more detail on that.
The government has also previously said that the new regulator will be responsible for scrutinising club takeovers and the ongoing activity of directors in line with a newly configured owners’ and directors’ test. In principle, this is a step clubs may welcome – an opportunity for a costly and lengthy exercise to be divested to an independent body. It envisages that there will be a more stringent, objective assessment of changes in club ownership, but club owners will be nervous about regulatory interventions that impact on the value of deals or on whether they even go ahead – there is potential for litigation if the regulator cannot substantiate decisions or fails to follow due process.
Currently, investors from all over the world are attracted to put their money into English football. The Premier League is a global brand and a UK export success story. Their investment and the value of it has driven much of the success. As an AFC Bournemouth fan, like no doubt those of clubs such as Brentford, Brighton & Hove Albion, Norwich and other “smaller” clubs, moments in the Premier League offer thrills and enjoyment.
We dream, as do the likes of Grimsby, Fleetwood, Bristol City and Blackburn who are soon to compete in the last 16 of the FA Cup, of achieving success, however fleeting. If new regulation enables those clubs to do so within a fair, reasonable and objective system of controls in certain limited areas, where the system’s aims embrace the values of stakeholders across the game, then a new regulator could be a significant success. Yet the shift to independent regulation of football in England will be a fresh consideration for prospective investors and makes it vital that the government strikes the right balance with the new regulatory model.
Ironically, much of the proposed changes reflects the thinking and practise of clubs across the UK. Few would argue against giving supporters a greater say over moves to change their club’s name, logo or historical playing colours or on plans to relocate the club from a town or sell the stadium.
Fundamental change has, however, taken place within the game – from the scrapping of northern and southern regional divisions of the then Football League to the creation of the Premier League in 1992. A regulator will need to embrace stakeholders, to have force but be understanding of the nuances across the game as a whole, to have a clearly defined role, and to act in a manner that both respects differences but has the ability and aim to benefit the game overall at all levels.
It is a delicate balancing act that the government will have to strike, but implemented successfully, the independent regulation of football could become a blueprint for the future governance of other sports.
Co-written by Craig Turner and Matthew Berrick of Pinsent Masons.
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