MPs demand radical overhaul of English football
Friday 29 July 2011
MPs today called for a major overhaul of the way English football is run to ensure the game's long-term future in the face of rising levels of debt and financial instability.
In a hard-hitting report, the Commons Culture, Media and Sport Committee branded the current Football Association Council as not "fit for purpose" and said it was in need of a radical restructuring.
It called for the establishment of a formal licensing system for clubs to help curb the game's "excesses" with "robust" ownership rules and a "strong fit and proper persons test".
The MPs demanded an end to insolvency rules which encouraged "excessive financial risk-taking" and which, the committee said, would be "illegal" in any other area of business.
The committee warned that if the game was not prepared to put its own house in order, the Government should step in to do so, if necessary by legislation.
"As a last resort, in the absence of substantive progress, we recommend that the Government consider introducing legislation to require the FA to implement the necessary governance reforms in line with its duties as a governing body," it said.
The committee said that while it believed the FA was the right body to lead change in the game, it needed "urgent reform" if it was to do so effectively.
It called for a "streamlined" FA board with a membership of 10 and a review of the composition of the FA Council, with members serving for no more than 10 years.
"The principle that the FA Council should act as the parliament of football is a good one. However, the FA Council as currently constructed is not fit for this purpose," it said.
The committee expressed concern at the extent to which clubs were "making losses and operating on the edge of viability" with "escalating wages" driving up the levels of debt.
It said that since the Premier League became the top tier of the game in England, clubs had been "incentivised" to "spend up to the hilt" to win promotion to it or to retain their place there.
"While we acknowledge that financial regulations have been tightened of late, we are not convinced that even the new rules recently adopted by both the Premier League and the Football League are by themselves sufficient to curb English football's excesses," it said.
It called for the introduction of a formal licensing system imposed "rigorously and consistently" throughout the professional game to review performance and promote "sustainable forward-looking business plans".
The committee said that the football authorities had failed to focus properly on the link between the "fit and proper persons" test and the game's sustainability and called for "robust" new ownership rules.
"The FA, Premier League and Football League have spent too long behind the curve on ownership matters," it said.
"Between them they have allowed some startlingly poor business practices to occur, and have tolerated an unacceptably low level of transparency.
"In turn, this has resulted in insolvencies, too many clubs losing their grounds to property developers, and has contributed to high levels of indebtedness throughout the league pyramid."
It said there should be "complete transparency" around ownership and the terms of any loans made by directors, adding that there was "no more blatant an example of lack of transparency than the recent ownership of Leeds United".
It urged the FA to conduct a thorough investigation of events at the club, if necessary calling in HM Revenue and Customs.
The committee also called for the abolition of the Football Creditors rule which requires the new owners of insolvent clubs to repay all the money owed to key "football creditors" before they could return to league competition.
As a result the tax authorities get proportionately less while small creditors such as St John Ambulance can end up with nothing at all.
"The moral argument against it - that it harms the communities that football is supposed to serve - is persuasive on its own," the committee said.
"There is, though, also a compelling systemic argument against it, namely that it positively encourages excessive financial risk-taking, in a system that already offers other inducements to so do, by offering a safety net to those who seek to benefit from such practices.
"It represents a 'post facto' preferential treatment of creditors that would be illegal in the run-up to the insolvency of any business."
The committee said that if the football authorities did not take the initiative to end the rule, the Government should consider legislation to abolish it.
Speaking during a press conference in Westminster, committee chairman and Conservative MP John Whittingdale said: "There is a very serious need for reform of the governance of the game."
He said the committee recognised the game's many strengths, but added that there were "weaknesses" in the game which needed to be addressed.
He said a timetable for change could not be set, but if it became clear that change was not happening, they would look to the Government to "exert pressure".
He added that the committee has been "impressed" by the evidence from the FA chairman and with the new leadership there was a "determination to change".
Committee member and Conservative MP Damian Collins said: "The report makes very clear that no change in football is not an option.
"The report sets out a very clear view on how the management of the game and the management of the FA must change."
Mr Collins said the report also made recommendations on how the financial reporting of football should be altered.
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