Health check

Steve Menary assesses the debts of clubs in the English league and discusses whether the goverment should intervene into football politics

Since the turn of the year, a committee of MPs from across the political spectrum have been interviewing football administrators to work out whether the game’s governance is “fit for purpose”. The hearings are over, the committee’s recommendations are due in June and the case for reform is compelling.

At the end of the 2009-10 tax year, Premier and Football League clubs owed £22 million in tax and National Insurance – a figure that hit £27.4m by early June 2010. During 2010, HM Revenue & Customs issued 40 petitions over unpaid tax against limited companies owning clubs in the Premier League, Football League, three divisions of the Conference and Welsh Premier League.

On top of the “fit for purpose” probe, the MPs sought to answer five other questions, including: “Is there too much debt in the professional game?” Football everywhere is awash with debt. UEFA’s head of club licensing, Andrea Traverso, recently admitted that total losses at Europe’s leading clubs surged 50 per cent over the last year alone to €1.8 billion (£1.6bn).

MPs also asked if clubs should be “treated differently from other commercial organisations”. To sustain losses racked up by inflated wages, UK clubs already are. A preferential rule allows those directly involved in the game, so-called football creditors, to be paid before anyone else when a club goes into administration.

The committee also looked into: “Is government intervention justified and, if so, what form should it take?” The case for intervention was surely answered when sports minister Hugh Robertson branded football the “worst governed sport in the UK” and HMRC is already challenging the football creditors rule in court.

The final question for the MPs was: “What are the pros and cons of the Supporter Trust share-holding model?” Yet no one from AFC Wimbledon and FC United of Manchester – two clubs pioneering that model – was even asked to testify. More than half the written submissions to the select committee came from fan-led groups; the people who buy the tickets and satellite television subscriptions without which football surely cannot function. But research by found just five per cent of the first seven sessions between February 8 and April 5 involved supporters. Those hearings lasted 1,025 minutes and 47 minutes were devoted to the people that make professional football in this country viable.

Unlike Leeds Utd chairman Ken Bates, Dave Boyle, the chief executive of Supporters Direct, the quango supporting the trust-owning model, actually turned up to give evidence. He calls time allotted to fans “disgraceful” but is “cautiously optimistic” about the outcome.

Recommendations are rumoured to include two non-executive directors at the FA and a club licensing system. First advocated by the Chester Report in 1969, this system would apparently include criteria such as identifying club owners, an improved fit-and-proper persons test, restriction on the ratio of club’s debts to assets and increased supporter involvement. These could be enshrined in a law guided by another question from the committee on what lessons can be learned from other models both here and overseas. In Spain, national associations must comply with the laws on sports governance or face isolation from any state assistance, such as help in bidding for major events.

FIFA members subject to government interference are routinely suspended. If governments do not back down, FIFA dispatches a “normalisation committee”. This occurred in Bosnia & Herzegovina and Indonesia recently (and is similar to being invaded by FIFA) but another select committee witness suggests this is highly unlikely in the UK.

“It’s entirely fit and proper for a government to be interested in a country’s biggest sport,” says Sean Hamil, founder of the Birkbeck Sport Business Centre. “It’s too early to judge the outcome,” he continued, “but the committee went about this seriously and were terrier-like in their pursuit of the football creditors rule and non-payment of tax. It’s only right these people come and justify themselves. It’s absolutely critical that the leagues know who controls clubs.”

Hamil argues that what makes British football popular across the globe is “hard work, honest endeavour and uncertainty of outcome at different levels” and this is being “endangered by people ripping clubs off”. The ownership of Leeds was a focus of the hearings. Ken Bates’s decision to buy out the mysterious trust that controlled Leeds solved that mystery, but the owners of at least one other Football League club are still likely to be unknown next season. If ownership becomes increasingly opaque, collusion between clubs becomes easier. And the end of that road is something that supposedly only happens elsewhere: corruption and match-fixing.

From WSC 292 June 2011