Supporters from every level of the game have welcomed proposals for a new regulator of football, tougher financial controls and the redistribution of money from the top flight to the EFL.
The Government’s fan-led review of the game has strongly recommended a regulator, with extensive powers to tackle reckless owners who risk the future of their clubs by spending beyond their means.
The review, which was led by former Sports Minister and Conservative MP Tracey Crouch, has concluded football is on a ‘financial precipice’ due to huge imbalances in wealth and irresponsible owners.
The review recommends a regulator should strictly monitor clubs’ finances and oversee a much stronger owners’ and directors’ test
Fans support for reform of football has increased after the European Super League fiasco
In addition, the document says fans should have a greater role in holding clubs to account through shadow boards and golden shares, which would allow supporters’ trusts to veto specific decisions such as moving ground, changing badges, home colours or selling stadiums.
Crucially, Crouch and her panel of experts has concluded more money should be diverted from the Premier League to the EFL and football pyramid and parachute payments need to go.
And there are some radical proposals, including a new 10 per cent levy on transfers between Premier League clubs and signings from abroad to be given to clubs in the EFL and powers to stop owners’ spending and reduce clubs’ wage-bills if the regulator considered it reckless.
The review was prompted by repeated failures within football including the emergence of the European Super League and the demise of Bury, a club founded in 1885, which ceased to exist in 2019-20.
Bury went out of business due to poor financial management and overspending on players
‘The message from Bury supporters is that you don’t know what you have until it is gone,’ said Phil Young, chairman of Shakers’ Community, the supporters’ trust that owns Bury AFC, a phoenix club, which emerged from the ruins.
TOUGH ON FINANCES
The Crouch Review proposes financial regulation based on the idea of ‘resilience’, ensuring clubs have adequate finances in place and sufficient controls on costs to not go bust.
The regulator would analyse these plans and could demand an injection of cash or reduction in wages, if it is not satisfied.
Clubs would be allowed to invest to improve their competitive position, but the money must be put in up front to prevent any more ‘gambling’ with a team’s future.
One recommendations is to allow the regulator to block investment ‘if the activity of one or a few profligate clubs driven by owner subsidies are objectively assessed as being destabilising to the long-term sustainability of the wider league in which it competes’.
‘The most important thing for us is that what happened to Bury does not happen to other football supporters.
‘This is about keeping clubs in good health. At Bury, [the owner] was borrowing money at Wonga-style rates he could not afford and spending was out of control.
‘I am confident if [these proposals] are enacted properly and there is a regulator with teeth the situation that happened at Bury would not happen.’
Government will now have to decide which recommendations to accept, but a regulator is looking increasingly likely after the EFL acknowledged it would be supportive of the move.
The creation of a new body would require legislation and it could be in place for the 2023-24 season. It would be paid for by professional clubs.
The review is a strong statement in support of change and in keeping with the tone, Premier League clubs have been given 18 months to agree a new funding deal with the EFL, and an alternative to parachute payments, or have a deal imposed on them by a new regulator.
Currently, parachute payments are huge boon to clubs relegated from the Premier League, worth up to £90M over three years, and distort competition, encouraging others to spend more to have a shot at promotion. The overspending knocks on down the leagues in wages and transfer fees.
Derby County are currently in administration after experiencing financial collapse under the ownership of Mel Morris, who spent heavily to achieve promotion from the Championship, while competing with clubs receiving parachute payments.
Not surprisingly, Rams’ fans are among those who support Tracey Crouch’s findings.
EFL clubs are warning more teams will go bust if financial distribution is not reformed
‘A regulator would allow someone to look at the books, flag problems and not let a situation like Derby occur,’ said Nigel Owen, from Black & White Together fan group.
The proposals now going to government seek to create a system in which there is more money for the lower leagues coupled with greater financial controls for all.
MP Tracey Crouch leads the government’s ‘fan-led’ review of football
Two years ago, Bolton Wanderers almost went bust after financial mismanagement.
Neil Hart, the new chief executive at Bolton, agreed the measures proposed by the Crouch Review could have prevented Bury going bust, but also saved Bolton from the need for an eleventh-hour rescue.
‘This feels fairer,’ he told Sportsmail. ‘It brings more stability and sustainability to the game. And it makes a huge difference to sustainability in the EFL.
‘You look at where Bolton have been, where Derby are and what happened to Bury. With these measures in place these things would not have happened. That is the key point.’
Teddy Sheringham of Nottingham Forest fires past David James of Liverpool to score the only goal in a 1-0 win for Forest in the first Premier League game to be televised on Sky
Premier League is expected to remain a dominant force in Europe since it is the wealthiest
The cost of screening Premier League football at home and abroad has rocketed since 1992
The review also recommends extensive changes to the governance of clubs ensuring the right people are running them, but also giving fans a say in off-pitch matters.
TOUGH OWNERS’ AND DIRECTORS’ TESTS
The Crouch Review recommends there should be separate tests for owners and directors and they should be beefed up.
In the owners’ test, there would be ‘due diligence checks on source of funds to be developed in accordance with the Home Office and National Crime Agency’.
Owners and directors could also be subject to a much stronger ‘integrity tests’. They would seek to establish if a person is of ‘good character’ and take into account any criminal or civil matters not covered by existing disqualifying conditions’.
It would look at past business dealings, including refusal of licenses and dismissal from employment and any ‘relevant information from credible and reliable sources’, which cast doubt on an applicant.
In the Premier League, the Arsenal Supporters’ Trust is pleased to see the recommendations around governance after playing a key role in the opposition to the European Super League, including meeting with Prime Minister Boris Johnson.
‘We told him about our concerns as Arsenal fans under the ownership of Stan Kroenke and asked for his support and commitment to reviewing football ownership and governance in England,’ said a spokesman for the trust.
‘During this meeting Boris Johnson was amazed to learn that the AST had spent more time discussing our club with him than with Arsenal’s owner Stan Kroenke in the previous ten years.
‘The Prime Minister committed to undertaking this fan led review saying that he saw football fans and their clubs as part of the country’s ‘social fabric that needed protecting’
‘We now call on the Prime Minister to carry through on his commitments to fans by speedily implementing this report so that fans once again have a greater say in the game they love.’
If government implements the recommendations, it will transform English football and over time could enhance opportunities for lower league clubs to climb towards the top of the game.
‘That dream is always there in football, but in some cases, it has meant overstretching finances,’ said Dr Dan Plumley, an expert in football finance at Sheffield Hallam University.
The Crouch Review recommends governance is strengthened in football clubs. There would be a demand to appoint qualified directors, based on skills and experience, as we well as independent, non executive directors.
There would be a requirement to dramatically increase supporter engagement through measures such as town-hall meetings, fan-elected directors, shadow boards and supporter shareholders.
A ‘golden share’ would be recommended, often to be held by a supporters’ trust, which would be required for selling the stadium, moving ground, joining a new competition not affiliated to FIFA, UEFA od the FA, or changing the club’s badge, name or home colours.
‘In the last 25 years, competitive balance has been declining over time. One big factor has been the financial gap between leagues and clubs. Reducing that financial gap should have a positive impact on competitive balance, all things being equal.
‘These proposals are about closing the financial gap. It means you do not only keep that dream alive but you increase it for a number of clubs because they are not faced with a proposition of risking it all to get there.’
The review was headed by Crouch, but run by a panel of experts, including Kevin Miles, chief executive of the Football Supporters’ Association.
‘This is potentially a huge step forward for football governance – the Government committed to a fan-led review which has listened to the voice of fans. It’s now up to the Government to deliver upon the recommendations,’ said Miles.
‘The review’s proposals to strengthen the voice of supporters in the game, protect football’s heritage and the pyramid, and provide genuine independent regulation, lay the basis for a prosperous and sustainable future for football at all levels.’
The review took 100 hours of evidence, from the representatives of more than 130 clubs, as well as the football authorities and surveyed 20,000 during six months of intensive work.
Within the findings were the low levels of confidence among fans in the ability of the FA, Premier League and EFL to regulate the game. Some 56 per cent thought the Premier League did a poor job, compared with 49 per cent expressing a lack of confidence in the EFL and 44 per cent in the FA.
Clubs that receive parachute payments are twice as likely to be promoted to the top flight
The review has ‘concluded there is a strong case’ for more money to flow from the Premier League to the EFL, and to remove parachute payments.
Tracey Crouch and her team are determined to see these issues addressed but they still hope that the football authorities can come to agreement themselves.
The review has proposed that a regulator be given the power to impose a solution on football, if it cannot sort one itself within 18 months.
The review suggests a pragmatic solution to the financial implications of promotion and relegation is to increase and decrease player wages by a set percentage as clubs climb and fall within the pyramid.
In addition to the money the Premier League will be expected to pay to the football pyramid, the review proposes a transfer levy. It would be paid by top flight clubs when they buy players from over seas of other Premier League clubs. A 10 per cent levy over the last five seasons would have raised £160M.
In a statement the Premier League said: ‘We recognise the vital importance of fans and the need to restore and retain their trust in football’s governance. We also acknowledge the call for some form of independent regulation to protect English football’s essential strengths and the Premier League has already undertaken our own governance and strategic reviews. These will continue to progress together with the ongoing work of the Fan Led Review.
‘The Premier League, alongside English football as a whole, is a global success. We have an outstanding track record on and off the pitch, including the positive impact on youth development, communities and the wider game, of which we are proud. It is important to everyone that any reforms do not damage our game, its competitive balance or the levels of current investment.’
And the chairman of the EFL, Rick Parry, said: ‘While we may not always agree on the best approach to take, we believe that the vast majority of clubs and supporters want the same outcome which is a sustainable and competitive pyramid in which any club can prosper.
‘Having been consistent in our view that professional football requires a fundamental financial reset in order to deliver sustainability across the pyramid, we are happy that this is a key recommendation in the Fan Led Review of Football Governance published today.
‘In particular, it is pleasing to see the review conclude that additional distributions from the top of the game are needed alongside appropriate cost controls to support football in this country, and we look forward to advancing discussions with the Premier League regarding a restructure of the funding model that works for the whole game.’
With respect to an independent regulator, Parry said ‘the EFL will continue to engage in a constructive debate about the breadth and scope of regulation required’.