Written evidence submitted by the Foxes
Trust (Leicester City Supporters Society Limited)
CONTEXT
1. As the most-followed sport in the UK, football
has a unique role in local communities and as part of the news/media
agenda.
2. At a minimum, major football clubs occupy an important
role influencing the "morale" of local communities.
In addition, at their best football clubs can also add further
value to their communities through their activities and individual
projects.
They act as a "hub" for involvement of
many sorts, particularly for young people.
3. The assets of a football club include a number
of intangibles which together form the "heritage" of
the club. This heritage has a social benefit far wider and, arguably,
more important than the clubs financial assets. It is also this
heritage which provides a strong degree of monopoly power for
major clubs - fans generally do not switch allegiance between
clubs.
Against that backdrop, football is undergoing significant
change, with recent trends including:
— increasing
levels of debt. The cumulative balance sheet of major clubs, together
with increased leverage and lack of profitability of very many
football clubs suggests a very strong chance of a bubble which
will have to burst at some point.
— regular
"scandals" of financial or other malpractice (proven
or unproven).
— increasing
overseas ownership of major clubs - not, in itself a bad thing,
but often accompanied by lack of transparency about ultimate ownership
and priorities.
— widening
gap between "rich" and "poor" clubs, emphasised
by TV money.
— spiralling
increases in the wages of top players, often supported by increasing
debt. This is taking place at a time of so-called "austerity"
in most aspects of the economy.
— Like
it or not, top footballers acquire role model status, yet stories
of misdemeanours (and worse) are very regular.
POSSIBLE PUBLIC
POLICY OBJECTIVES
Items (1) to (3), above, together provide a prima
facie case that the ownership and running of football and of major
football clubs is a valid subject for public policy.
Football is a part of the private economy, and it
is unlikely that a "heavy-handed" regulatory approach
would be beneficial to any stakeholders. However, there are a
number of possible public policy objectives for the framework
which government/regulators apply to football. These include:
(1) Ensuring that the intangible "heritage"
and its associated positive impact on community well-being is
sustained and, where possible, increased for all major football
clubs. In particular, that the financial (or other) objectives
of a club's owners are not achieved at the expense of that heritage.
(2) Ensuring that football, as a whole (and notably
the major leagues) is run in a sustainable way, not allowing a
financial bubble to build and then burst.
(3) Ensuring that individual football clubs are
run in a financially sustainable manner.
(4) Encouraging the actions of clubs, their agents
and players, in aggregate, to provide positive role models, particularly
for young people.
(5) Providing some means to ensure that the "heritage"
of clubs can be reflected in the business decisions of clubs'
owners.
PROPOSED ACTIONS
We would recommend the following actions:
(1) Stronger "fit and proper" person
tests, coupled with increased transparency re ultimate ownership
of football clubs.
(2) A requirement for increased transparency
about the business plans of individual football clubs, coupled
with restrictions on significant activities which deviate from
those published plans. (These "significant issues" might
include, for example, significant changes in the amount or structure
of debt, the sale or purchase of a new stadium, etc). Such a model
would not in itself preclude significant actions taking place,
but would provide a framework for legitimate public comment and
challenge at the time plans are announced and also a means by
which concerns could be raised if the activities were thought
to breach the legal/regulatory framework applying to clubs.
(3) Introduction of financial or other incentives
for clubs which have governance structures which include an empowered
representation of the views of supporters (as advocates for the
club's "heritage"), for example, Board position for
supporters Trusts.
(4) A stronger FA, with a more explicit objective
focussed on the sustainability of football and its role in national
life.
(5) Limits on the amount of financial leverage
which major clubs can operate with.
(6) The possibility of including some element
of licensing for football clubs, providing a means by which the
public policy objectives can be monitored and enforced.
January 2011
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