How to regulate football

Published by Agenda Books

I presented a summary of some of the arguments in my recent book Political Football at the online ECPR Regulation and Governance conference.

The European Super League fiasco has revived the debate about the regulation of football. 

The particular challenge in the case of football is that ‘its regulatory and competitive structures were formed in the nineteenth century when the economy in which football operated was totally different to that of today.’   Regulation by the state has been largely absent from football which, sporadic and ad hoc interventions aside, has largely been left to regulate itself despite evident deficiencies in its regulatory arrangements.  Measured against the advance of the regulatory state, it has continued to enjoy considerable autonomy in its governance arrangements.      

Football has largely regulated itself, reflecting the extent to which it is a closed policy community with its own norms, values and largely unchallenged assumptions. It sees itself as a special world that can isolate itself from wider societal trends with external interventions regarded as unwanted and inappropriate

I use a responsive regulation framework in the paper and the book which involves recognising the roles of multiple stakeholders.   One challenge is that fans resent being described as consumers and indeed are not conventional consumers.   Their emotional identification with the club makes them open to exploitation.

The principal preoccupation in demands for the regulation of football is the ‘rogue owner’ problem, someone who by his or her actions, intentionally or not, undermines the viability of a club.  This is not as easy to resolve as might first appear to be the case.   More stringent tests for prospective owners could be devised and applied, but reducing the number of bidders could make it difficult to find owners for some clubs. 

The real challenge arises when an owner deviates from announced plans once ownership has been secured.  One question that arises is how one can test whether there has been sufficient deviation to give rise to legitimate concern.   Fans may be disgruntled with a new owner, but that is not sufficient reason to deprive him or her of control.   Fans often have unrealistic expectations about what can be achieved within a given time period.

The FA and the EFL 

A common complaint by football fans is that the Football Association (FA) and the English Football League (EFL) are not “fit for purpose”. The EFL is a limited company which runs a competition on behalf of its shareholders, the clubs. It is certainly not a fans’ representative body and, although it carries out regulatory functions, it lacks the mission, capacity and resources required by an effective regulatory body.

The Owners’ and Directors’ Test is administered by the FA for the Premier League and the EFL for its leagues, the objective being to enhance the image and reputation of the game. Any person with a disqualifying condition such as a sanction by a professional body is barred from ownership. These are all tests of an individual’s financial probity based on whether they have been caught in some form of misconduct.  It is reasonably effective at detecting potential owners who do not have the resources they claim as in the recent case of Derby County.   These are all tests of an individual’s financial probity based on whether they have been caught in some form of misconduct. It does not relate to their future intentions for the club or what their business plan might be.

The role of the EU

What is the potential and actual role of the EU?  Until the Treaty of Lisbon came into force in 2009 the EU did not have a specific competence that allowed it to involve itself in matters of sport, although the ECJ’s Bosman judgment had far reaching implications.   In the discussions running up to the Lisbon Treaty, EU sporting bodies came to accept that they could not keep the European institutions out of their affairs as they would prefer. Given the impossibility of achieving total autonomy, a second-best solution was to devise a strategy of cooperation with the Commission.

Competition law and policy offered a route for the Commission into football and one that it was prepared to use in the early years of the twenty-first century.   It is still a potential area of contention with some clubs planning an action to test whether UEFA is permitted to sanction them for their Super League plans.   Competition law remains the elephant in the room, for example in relation to financial fair play rules.

Potential solutions

I go on to review various solutions.    The Owners and Directors Test could be strengthened by giving the EFL a separate regulatory department.   .Potential owners should be required to set out their overall strategy and vision for the club, including how they intend to involve supporters. They should be required to lodge a performance bond, a common practice in industries such as construction. It is a surety bond issued by an insurance company or bank to guarantee completion of a project. It is a formula that could be applied to football.

I express some scepticism about the Bundesliga 50+1 model which has many advocates.  There are some downsides to the 50+1 model.  The democratic oversight isn’t quite as strong as it seems. Most clubs make it very difficult for rival candidates to stand for election, for example. They will only put up a single candidate who is then rubber-stamped by the electorate. Taking back real control is therefore quite hard.   When it comes to financial transparency German clubs are decades behind other big European leagues.    Determined individuals and firms have been able to evade the rule and it has not made the Bundesliga more competitive.

Many UK supporters would like to see fan-owned clubs. Some Spanish clubs are owned in this way, but as Maguire observes, such an arrangement can mean that club ‘presidents spend a lot of time campaigning for re-election and making populist promises that are not always in the club’s long-term interests’.   Raising the money to buy a club or create a phoenix club is challenging and there is the question of how the losses are to be met.   Fan owned clubs such as Portsmouth and Wycombe Wanderers have had to be sold to conventional owners.

One response that leading clubs have made to the ESL crisis is to invite fans on to the board, although most usually as observers and without any involvement in team or management matters.  This leaves them with a rather limited range of matters to deal with such as match day catering.   Fan directors are constrained by commercial confidentiality in the feedback they can give to fans.

Another possible arrangement is the creation of a ‘heritage’ or ‘golden’ share that allows fan representatives a veto over some decisions such as name, stadium and colours.

My favoured model is a statutory regulator funded by a levy on the clubs or on transfer fees.    The regulator would face an asymmetry of information problem as much of what she or he would need to know would be in the possession of the clubs and extracting it would be difficult and time-consuming.   Given that an effort should be made to develop a ‘responsive’ form of regulation, the fans would be a challenging stakeholder group to deal with.   They are a long way from a traditional economic model of a rational consumer. The expression of emotion and the renewal of identity lie at the heart of support, but can tip over into obsession and the abandonment of normal or indeed reasonable standards of judgement.

UEFA, other regional football bodies and FIFA have not responded adequately to global challenges. Indeed, in some respects their record has been a disgrace. Faced with other challenges, the EU has stepped back to some extent from its earlier interest in football, having achieved a mutually satisfactory modus vivendi with UEFA. As the home of the world’s richest clubs, the EU needs to step up to the plate once more and develop a more systematic football policy.

New forms of regulation are needed both domestically and internationally, but these need not detract from the unique forms of enjoyment the game can provide.

Comments

In discussion it was suggested that creating a statutory regulator for football would move it from the private to the public sector.  Utility regulators do, of course, cover private companies.   However, I suggested that clubs could be seen as community assets and therefore as part of a third sector between the market and the state which is subject to regulation, e.g., charities.