Government has committed itself to create a new football regulator, which will have the power to sanction poorly run clubs, but it will not be free to ban owners over geopolitical concerns,
Culture secretary Nadine Dorries has set out her views on how football should be run, to protect the game from future power grabs and clubs from a looming financial crisis.
Ms Dorries was formally responding to the fan-led review of football published last year by former sports minister, Tracey Crouch.
Government has set out how a new football regulator will protect clubs like Derby County
The Secretary of State agrees there needs to be much tougher tests for owners and directors, including an ‘integrity test’, but the new regulator will not be able to consider geopolitical concerns when deciding who is fit to run clubs.
PREM ACCEPTS NEED FOR SOME REFORM
Premier League has accepted the need for a stronger regulatory system in football.
The top flight issued a statement after the government set out its position on a new regulator, today.
However, it said ‘we will continue to maintain that it is not necessary for there to be a statutory-backed regulator’.
‘We are reassured that the Government acknowledges the success of the Premier League and the importance of delivering change that also protects the League’s position as one of this country’s most successful global exports,’ said a spokesman.
‘It is this that creates the extraordinary football we see every week in grounds around the country and has enabled our ongoing commitment to support football at all levels by reinvesting an unprecedented £1.6 billion outside of the Premier League over the next three seasons.’
The Premier League said it would announce new fan engagement initiatives before next season.
This issue came into sharp focus during the Saudi-led takeover of Newcastle United, which was eventually approved by the Premier League.
Crouch has been repeatedly asked whether her recommendations would have blocked the £300M purchase of Toon from former owner, Mike Ashley.
The dominant partner in the takeover consortium was the Saudi Public Investment Fund, raising questions over the Middle Eastern country’s human rights record.
In addition, the PIF is chaired by Crown Prince Mohammed bin Salman. The human rights group, Amnesty has said that under the leadership of the Crown Prince, Saudi has covered up the grisly murder of journalist Jamal Khashoggi.
However, the government is keen to avoid giving a football regulator the opportunity to make politically inspired decisions, when it sets out its detailed plans in a White Paper, due to be published this summer.
‘The White Paper will… consider limiting the scope of any integrity test, recognising that, while it is important for the regulator to undertake enhanced due diligence, there is a danger that the regulator could be drawn into issues that are geopolitical,’ wrote Ms Dorries.
‘We do not believe the regulator should get involved in issues of the government’s foreign policy.’
Even so, the integrity test is likely to be far reaching and constitute a much higher threshold for wannabe football club owners and directors.
The Crouch report set a broad definition, which could consider, ‘any relevant information from credible and reliable sources’.
The new body will focus on financial regulation, ensuring clubs are sustainable and able to withstand shocks such as missed promotion, relegation or the loss of a wealthy owner. Typically, these events, or clubs simply living beyond their means, have plunged teams into financial crisis.
Newcastle United’s takeover by a Saudi-led consortium took place last year. The fronted by the minority shareholders Amanda Staveley and Mehrdad Ghodoussi saw Too bought from Mike Ashley for £300M
Culture Secretary Nadine Dorries has given her response to a fan-led review of football. The review was run by former sports minister Tracey Crouch
Derby County was highlighted by Dorries as a typical example. The Rams’ former owner, Mel Morris, gambled on promotion to the Premier League but when it did not happen and the debts piled up, Derby was left high and dry and is still trying to come out of administration. To make matters worse, the Rams no longer own their own stadium.
Dorries laid bare the extent of financial mismanagement in football, driven by high spending on transfers and wages.
In the 2019/20 season, 14 out of 20 Premier League clubs, and 22 out of 23 Championship clubs (for which data was available), reported wage-to-revenue ratios in excess of UEFA’s recommended threshold of 70 per cent. Seven Championship clubs reported ratios exceeding 150 per cent.
And she warned that ‘the failure rate of clubs could soon increase’ without intervention.
Thousands of fans contributed views to the Crouch report on football governance last year
In the details set out today, the government has accepted six of the Crouch report’s 10 strategic recommendations more-or-less in full, and supports four more in principle.
As a result, a regulator will be set up, which will issue clubs a licence in order for them to operate. To obtain and retain their license, they must comply with the rules around financial regulation, a new owners’ and directors’ tests (ODT), corporate governance standards, fan engagement and protection of club heritage, such as the stadium, club colours and name.
Some details will only be finalised after the publication of a White Paper, including whether the regulator will sit within an existing organisation, such as the FA, or be stand alone.
While the Government’s position has been broadly welcomed, there is criticism over ministers’ failure to include legislation in this year’s Queen’s speech and a lack of clarity over when the regulator will be created. It is anticipated before the next election, which expected to take place in 2024.
The aim is to protect clubs from unscrupulous owners and intervene when things go wrong
Julian Knight MP, chairman of the DCMS Committee, which scrutinised the government’s proposals, said: ‘With no firm timescale to tackle the deep-rooted problems afflicting the game and no move to establish the regulator in shadow form ahead of legislation, it feels like the Government has parked the bus, when they should be going flat out on the attack to deliver in the best interests of fans.’
Meanwhile, the Football Supporters’ Association said the government was entering an ‘unnecessary period of extra time’.
‘Time is of the essence – as the Government says there are ‘serious concerns around the fragility of football finances,’ said an FSA spokesman.
‘Since the Government committed to a fan-led review of football governance in its 2019 manifesto we have seen: Macclesfield Town disappear,
”Project Big Picture’, the European Super League, ownership controversy at many clubs, billionaire owners sabotage Premier League reform and existential crises at Coventry United, Derby County and Oldham Athletic, amongst others.
One of the clubs to have gobe out of business due to mismanagement was Macclesfield Town
‘Each day drafting White Papers is another day when a club might cease to exist. Another day for a dodgy owner to get their hooks into a club. Another day for remote billionaires to try and create European Super League 2.0.
‘The FSA urges the Government to move fast and legislate now.’
Niall Couper, CEO of Fair Game, a group supported by more than 30 clubs and 40 experts, said his organisation was ‘cautiously optimistic’ about the Government’s approach.
‘What we need now is a firm timetable for change. We’ve seen multiple football bills sit gathering dust in Parliament before and this can’t happen again.
‘There can be no more delay or dithering if reform is kicked down the road it will represent the death knell for hard-working community clubs.’