“A new regulatory regime could provoke capital flight and force some clubs to close”.
“Football governance could take a decade to get right.”
“no new regulatory regime ever gets it right from the start. We need to be ready for a lengthy period of adjustment.”
“the industry will not transition to good governance in a single step”
“the Football Governance Bill is promising more than it can possibly deliver”
- CGI welcomes the plan for a new independent regulator in English football which was announced in the King's Speech but we are concerned that expectations of reform are unrealistically high, and that the Football Governance Bill announced in the King’s Speech on 7th November is promising more than it can possibly deliver. The Bill is being accompanied with very strong rhetoric that the new regulatory regime will deliver “financial sustainability throughout the national game” and “safeguard the future of football clubs” but whether this new regime has a net positive effect will depend on very careful design work, an understanding of club economics, and an approach which looks across the range of government activity. No regulator can protect firms which take high risks from the risk of collapse. Our romantic attraction to football should not stop us from being hardheaded about the commercial realities of the game. Football is a ruthless business because it is based on relentless rivalry between clubs.
- According to LCP, two thirds of England’s 92 top football clubs are loss making, and the majority of clubs are heavily reliant on their owners providing regular injections of cash to keep them going. This means that the imposition of a new regulatory regime brings potential hazards. A new regulatory regime could trigger capital flight by spooking investors and thus accelerate the collapse of struggling football clubs by making the industry less attractive to capital. Since many clubs owe other clubs significant amounts of money, the collapse of one club could provoke a series of failures. The challenge of regulation is to make the industry more attractive for fans and local communities without making it less attractive to club owners who are, for many clubs, the only people standing in between survival and collapse. Attracting investment has been one of the successes of UK football, and a new regime should seek to preserve this strength.
- Any new regulatory regime should be regarded as experimental, and subject to regular review. The UK has a poor track record at monitoring the impact of new regulatory burdens, but this will be critical in getting governance right. Governance is rarely got right in one go. Football governance could take a decade to get right, especially as the new regulatory regime requires cultural change to occur, from the current high-risk culture towards a more conservative attitude.
- We look forward to engaging with government over the next few months to help create a regulatory regime which can improve club governance, helping clubs to take a broader view than a purely short-term financial approach. We want our clubs to focus on long term success, to assess and manage risks and cash flow, to exercise more prudence in planning, and to involve stakeholders in decision-making. These are the secrets of good governance, but the industry will not transition to good governance in a single step.
Peter Swabey FCG, Policy & Research Director, The Chartered Governance Institute UK & Ireland
For further information, please contact Daniel Valentine:
dvalentine@cgi.org.uk
07752-218-084
Notes to Editors:
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The Chartered Governance Institute UK & Ireland is the professional body for governance and the qualifying and membership body for governance professionals across all sectors. Its purpose under Royal Charter is to lead ‘effective governance and efficient administration of commerce, industry and public affairs’ working with regulators and policy makers to champion high standards of governance and providing qualifications, training and guidance. As a lifelong learning partner, the Institute helps governance professionals to achieve their professional goals, providing recognition, community and the voice of its membership.
One of nine divisions of the global Chartered Governance Institute, which was established 130 years ago, The Chartered Governance Institute UK & Ireland represents members working and studying in the UK and Ireland and in many other countries and regions including the Caribbean, parts of Africa and the Middle East.
Website: www.cgi.org.uk -
The word ‘Institute’ is one of the ‘sensitive words or expressions’ restricted under the Companies Act 2006. s1194(1) of the Act provides that “A person must not, without the approval of the Secretary of State, carry on business in the United Kingdom under a name that includes a word or expression for the time being specified in regulations made by the Secretary of State under this section.” As a Royal Charter body, The Chartered Governance Institute UK & Ireland is legally entitled to use this term and has no connection with other training providers with similar names, calling themselves an ‘Institute’ without the necessary approval to do so.
