July 26, 2021
This Independent Review, announced by Culture Secretary Oliver Dowden on 19 April 2021 in response to the attempt to launch a European Super League, aims to be a comprehensive examination of the English football system to explore ways of improving the governance, ownership and financial sustainability of clubs in the football pyramid.
Tracey Crouch MP, who is leading the Review, has written to the Culture Secretary setting out the Review’s interim findings and recommendations. Further work will be done over the summer to feed into the Review’s final report in the Autumn.
The Review has found that there is a need for reform in two key areas:
- finance: in season 18/19, nine Premier League clubs made pre-tax losses and eight clubs operated with a wage to revenue ratio at 70%; in the Championship, only two clubs made both operating and pre-tax profits; Leagues 1 and 2 made pre-tax losses of £22 million and £20 million respectively; the threat of possible future reductions in income expected as the broadcast market diversifies indicates that, without reform, English football could face an existential crisis in years to come unless pre-emptive action is taken now; and
- regulation and governance: the evidence showed that football authorities have lost the trust and confidence of the fans, as have some of the clubs themselves; there is currently no single body responsible for stewarding the game and different organisations have differing views as to what should be done; football authorities have failed to reform themselves, despite many opportunities; fans have been consistently underrepresented in football governance; Ms Crouch intends to work over the summer to address this so that fan influence is an important part of the game’s governance in the future.
Key recommendations include:
- a new independent regulator: to address issues in financial regulation, corporate governance and ownership, including cost controls, real-time financial monitoring, minimum governance requirements (including independent non-executive directors on club boards) and revised separate tests for owners and directors of clubs; the new regulator should not cover “football issues”, e.g. the running of league competitions, video technology, the national game, grassroots strategy, etc, which should remain with the existing bodies;
- protecting heritage assets: develop proposals to offer greater protection to assets, such as club badges, location, colours and competitions, through a “golden share” for fans, giving veto powers over reserved items to be held by a democratic legally constituted fan group; some fan groups would also like the ability to buy shares in their club or for supporter groups to be able to buy their clubs as part of formal insolvency processes;
- deepening fan engagement and transparency: explore measures to mandate greater fan engagement, although fan-appointed directors is not universally favoured by supporter groups;
- navigating financial gaps: more effective cost controls and financial management across the pyramid; encourage clubs to maximise the revenue generation opportunities from their existing assets; remove barriers to revenue generation in lower divisions, e.g., by allowing clubs to operate all weather pitches in League 2; the Premier League and the English Football League should reconsider their approaches to finance flows between divisions and within their competitions;
- football authorities’ governance: the Review received significant evidence of a need for greater independence in the decision-making structures of the existing football authorities: the Premier League, English Football League, The FA and National League; there is a strong case for reform across all of these bodies and Ms Crouch is inclined to direct them to develop proposals; she is also inclined to recommend that at least 50% of the FA Board are genuinely independent non-executive directors and that significant reform of the FA Council is undertaken.
The letter also covers: (i) investing in football; (ii) growing women’s football; (iii) protecting the welfare of young players; and (iv) allowing supporter groups to contribute to the Gambling Review. To read the letter in full, click here.