Review of Football Governance issue interim findings and recommendations

England and Wales

Over the last few months, a panel of experts have been involved in setting up and running an independent review of football governance. The Government led review Panel have heard over 100 hours of oral evidence, reviewed 16,000 responses, and considered over 70 documents of written evidence and responses.  On 22 July 2021, Tracey Crouch MP, the chair of the Panel, provided an update by way of a letter to the Department for Digital, Culture Media & Sport (the “Letter”).  The Letter, sets out the Independent Panel’s interim findings and recommendations.

The “headline recommendation” is for English football to introduce a new Independent Regulator for English Football (“IREF”).  Addressing the need for independent regulation, Crouch recognised that despite the current issues, football clubs play a “critical social, civic and cultural role” in their local communities.

Background

The review, which was initially launched in April 2021, aims to address the concerns around the financial vulnerability of clubs in light of the collapse of football clubs such as Bury.  The failed attempt to launch a European Super League also no doubt hastened the formal launch of the review. 

The Letter addresses the financial position of the sport, highlighting that the current financial challenges have not only surfaced as a result of the pandemic.  The 2020 Deloitte Review of Football Finance, detailed that in the 2018/19 season, nine Premier League Clubs incurred pre-tax losses, and eight clubs operated with 70% or more of their turnover being spent on wages.  The Deloitte report showed that the financial situation for those clubs below Premier League level is even more challenging, with only two Championship clubs making both operating and pre-tax profits and clubs incurring (on average) annual operating losses of £16m.  Leagues 1 and 2 clubs were reported to have made pre-tax losses of £22m and £20m respectively.  With many clubs already operating at a level of consistent losses, the interim findings of the Independent Review provide that  without reform, “English football could face an existential crisis in years to come unless pre-emptive action is taken now”.

Regulation and governance

The Letter suggests there has been a reduction of trust in football authorities from fans and even some clubs. Currently, various different organisations are involved in the regulation of the sport, which the Panel considers has resulted in a variety of opinions and more generally a lack of coordination on what needs to be done. The Letter explains that the football authorities have had numerous opportunities to reform, backdating to 2011, where the DCMS highlighted many of the concerns still apparent today.  The Panel also point to a lack of effective fan engagement and transparency with governance issues meaning that the need for reform is even more apparent.  The Letter sets out that now is the time for this reform to occur, which would allow football to address and deal with the present structural problems, while also building on the strengths of the game to make it stronger.

Independent Regulator

As above, the “headline” recommendation provides that there is a need for a new independent regulator for football, whose role would be to oversee/address the biggest risks to the game, particularly financial regulation, corporate governance, and ownership.  However, the Panel do not consider “football issues” such as the running of league competitions, the delivery of a grassroots strategy, Wembley Stadium and video technology should form part of the IREF’s remit and should instead remain with the relevant existing bodies. 

Legislation or detailed guidance will no doubt be required to set out exactly what would fall under the IREF’s jurisdiction and what would remain with the current football authorities.   No doubt such a division of duties will be far from straightforward to implement. 

The Letter does recognise that if the English FA were to substantially reform, it may be possible for IREF matters to be transferred back to the governing body. On that note, the English FA’s proposals that at least “50% of the FA Board are genuinely independent non-executive directors and that significant reform of the FA Council is undertaken” are welcomed by the Panel. 

There is also a recommendation that EFL/National League club directors should be removed from their respective League Boards, with the selection of new directors and urgent reform of the National League Board voting structures also suggested.

Finally, the Letter recommends that that the FA, Premier League, English Football League, National League, and PFA consider their roles in protecting the welfare of young players, suggesting the bodies cooperate to develop a joined approach to player development and player care.

Comment

Whilst some of the recommendations provided for in the Letter are likely to be accepted by the football authorities, it is likely that the introduction of the IREF will prove to be most controversial.  It is unlikely that any of football authorities will welcome handing over decision-making power to a wholly independent body for external regulation.  Football is notoriously keen to ensure football matters are dealt with “in-house” and the IREF would clearly be a substantial change from the present regulatory landscape.  There are also significant questions as to how the IREF would interact with UEFA and FIFA.

It is worth nothing that these findings are only interim recommendations at this stage and further research and scrutiny of the findings and recommendations will occur in the upcoming months, with a final report for the Government to consider expected this autumn.

Article co-Authored by Hannah Torpey.