ENGLISH football is set for a new financial regulator after a Government-commissioned review into governance of the beautiful game slammed current safeguards as insufficient.
The review, written by Tory MP and former sports minister Tracey Crouch, recommends the creation of a new independent watchdog which would oversee financial regulation across football.
Last night sources close to the Culture Secretary said the Government was “in principle” behind the idea, which Crouch told City A.M. would operate in a similar way to the Financial Conduct Authority.
Crouch’s review also calls for a levy on transfer fees paid by Premier League clubs which would be distributed further down the football pyramid and for a fan veto on major structural change – effectively shutting down the prospects of English clubs joining any European Super League.
The review was commissioned after six English clubs attempted to break away from the domestic game to form a cross-continent competition in part masterminded by JP Morgan in an effort to guarantee future revenues.
But pressure had also built after the collapse of Bury FC, a club founded in 1866 but which fell into administration last year after what most observers agree was poor financial management. A number of other clubs have flirted with administration and winding-up orders, including historic clubs Derby County and Wigan Athletic.
The new regulator would ensure clubs had financial buffers in place in case of shocks and have the power to step in if a club does not demonstrate, when asked, sufficient liquidity or effective risk management.
Clubs would also only be able to invest in improving its “competitive position” on the pitch but money would “need to be in the club upfront and committed,” and the watchdog would also have the power to block owner subsidies if one or a small number of clubs were “assessed as being destabilising to the long-term sustainability of the wider league” through “profligate” spending.
A number of clubs including Chelsea and Manchester City have engaged in spending sprees after new ownership, and many expect Newcastle United – recently taken over by the Saudi Arabian-controlled Public Investment Fund – to do so in the near future.
A new, beefed up ownership and directors’ test would also be put in place, with clubs at the top level being obliged to invest in mandatory training of independent non-executive directors and a new stewardship duty placed on board members.
The regulator would look at metrics like the wage to turnover ratio. According to analysis by The Athletic, Sheffield United spent as much as 195 per cent of its turnover on wages in the 2018/19 season, with a financial loss on the year of £21.3m. Analysis by the Financial Times suggests Manchester City lost £125.1m in 2019-20, whilst Everton lost £139.9m.
Premier League clubs together reported revenues of £4.8bn in 2019/20, despite the pandemic hitting gate receipts. Much of the revenue comes from TV rights, with the amounts paid expected to go up.
Last week American network NBC paid $2.7bn (£2.02bn) for the rights to show six seasons-worth of Premier League football in the US, a growing international market.
Crouch told City A.M. last night that in the same way as financial regulation in the City was revved up after the global financial crisis, so should football’s be after Covid-19, the European Super League fiasco and the liquidation of Bury.
She told City A.M. that it was about creating a “level playing field,” and would not stop owners investing for success. She hopes a “regulatory-minded” individual would take the reins of the regulator, perhaps indicating a City figure may find themselves in charge if the watchdog gets the go-ahead.