Written evidence submitted by Vince Cullen
SUMMARY
— Football
clubs should be treated differently from other commercial organisations
because football is not simply an ordinary commercial business
and a monopoly situation exists whereby fans are at risk of being
exploited. There are responsibilities to local communities, to
cultural considerations and to the good of football overall that
need to be safeguarded. These require a different governance,
and I would argue legislative, framework.
— It
would appear that the governance rules and governance bodies in
English football are not fit for purpose. The situation where
the recommendations of the Burn's report on the structure of the
FA have yet to be implemented fully and the debacle of Premier
League clubs in a financial mess, would suggest that governance
is in need of major reform. It may be necessary to establish a
separate, independent football regulatory authority if reform
to the FA proves too difficult. From a fan's perspective it seems
that the authorities running football lack transparency and accountability.
— There
seems to be far too much debt in the professional game. Spiralling
players' fees and wages and the unbridled ambition of clubs, fuelled
by transient availability of finance through wealthy benefactors
- the so called "financial doping" - seem to underpin
this. This will ultimately lead to lack of serious competition
and diminish football as a spectacle for fans. Even Formula 1
racing has attempted to reform its financial aspects to improve
its appeal for spectators and to make it more competitive.
— The
greater involvement of fans in club ownership in the Bundesliga
in Germany seems to have aided stability and has led to less debt,
and greater profitability, relative to other European countries
with significant football leagues. Criticisms of this model include
the reduced proportion of shares to attract external investment
and the inability to afford the higher wages demanded by the world's
top players. However, the benefits include reinvestment of profits
into the club, consideration of fans in setting ticket prices
(thereby raising match attendance figures) and in negotiating
TV deals. In general, the emphasis is on acting in the best interests
of the club and its fans, and in doing so the integrity and stability
of football itself is maintained. Perhaps a 25.5% proportion of
each club could be allocated to ownership by supporters' trusts
so that the club would be protected from being taken into private
ownership.
— Government
intervention is justified in protecting the heritage of clubs
as national assets and the interests of a significant number of
fans, primarily by ensuring effective legislation is enacted.
It can also be involved in ensuring the processes for governance
are carried out properly, such as providing effective oversight
bodies that have "teeth". These need not be exclusive
bodies just for football but may be a responsibility of a government
department, for example. Government should be involved in a leadership
role to promote the need for reform and to ensure that effective
change occurs.
— One
thing is clear - decisive action is needed. Ideas have been mooted
for years and there has been a lot of talk about good intentions
for embracing fans and so on, but little has changed really. Even
major recommendations have been slow in implementation or in impact.
For example the Burns Report made significant recommendations
for reform of the FA some five years ago now. It is important
that this current investigation does not go the same way in its
recommendations being ignored.
INTRODUCTION
1. I have been an Arsenal fan since I was six
years old. I remember watching Charlie George lying down on the
pitch after scoring the winner in the 1971 FA Cup against Liverpool,
and in 1989 Brian Moore shouting:
"Arsenal come streaming forward now in surely
what will be their last attack. A good ball by Dixon, finding
Smith, for Thomas, charging through the midfield. Thomas, it's
up for grabs now!"
2. I say all this not to practise boring any
future grandchildren I might have, but to give a flavour of one
individual's experience, the type of which is repeated for thousands
of others who love football! It illustrates the impact football
has in people's memories and lives, and the bond that forms between
them and their "beloved" club. This bond is good news
for business for football clubs but it is one that has been systematically
abused by many clubs over the years, and particularly in more
recent times. They have been preying on the loyalty of fans and
abusing their position of monopoly. This includes the financial
demands made by players. Yes, in the past players were not for
the most part rewarded as well as they should have been, but the
situation has moved too far towards the opposite extreme nowadays,
and it is seriously undermining the future of the game.
3. It is ironic that some of my greatest memories
also involve Liverpool FC and it genuinely saddens me to see the
predicament the club seems to have got itself in to in recent
times. It has always been a great rival club and that's the point,
it's what English football is all about. Great rivalry means great
games, classic moments and fond memories. It is also disturbing
to see that Man Utd FC should be saddled with such a large debt
when it is one of the world's most successful sports clubs. What
is happening?
4. I take some comfort in that Arsenal seems
to be run well financially and does not seem to take advantage
of its fans' loyalty. Nevertheless, over the past few years there
have been concerns that a rich majority shareholder might take
overall control and jeopardise the club's sound running and apparently
benevolent approach to fans. With Arsenal it seems that its plurality
of ownership model, with a spread of shareholders, has maintained
stability for the club so that no one person has been able to
embark on an autocratic vanity project. Of course, this balance
depends on the good intentions and integrity of the shareholders,
and who knows what might happen in the future?
COMMENTS
Position of football clubs
5. Fans' and community attachment to clubs transcends
ordinary operational considerations and temporary club ownership.
This means that the clubs effectively have a complete monopoly,
and many abuse this position. There needs to be effective safeguards
to protect fans and club staff from the excesses of some clubs,
such as wealthy owners parachuted in for a short period and then
leaving, causing untold damage in some cases.
6. Fans maintain the identity of the club and
its link to the local communities. The opening up of UK football
to overseas players has been welcome and important, and there
should be no problem with bona fide overseas board members, but
some "globalising influences" have been less beneficial
for the game and loyal fans. A balance has to be struck between
a club's responsibility to its local fan base and its global commercial
aspirations.
Football governance and governing bodies
7. Unfortunately for football, the composition
of the existing English football authorities means that they function
more as members' organisations rather than as a regulating body
- it is like the difference between the British Medical Association,
as a professional member representative organisation, and the
General Medical Council as a regulator. The latter is primarily
concerned with the interests of patients rather than doctors,
but also in contributing to the advancement of the profession
of medicine by ensuring important infrastructure elements like
ensuring high practice standards. An independent football regulatory
authority could fulfil a similar function by ensuring that the
interests of fans and the long term health of football are protected.
Rather than necessarily a separate body, the reconstitution of
the FA may be able to achieve this function. Perhaps the FA's
remit should be more about protecting the integrity and future
of football and less about being a members' association. If this
is not palatable for the FA then an independent body is the only
option for achieving a fair and impartial governing of the game.
8. Coherence in governance is essential. The
English Premier League's operating as a separate entity seems
to have undermined the FA's authority and seems to have contributed
to disharmony and a fragmented governance of football. The relationship
between the governing body of football in Germany, the Deutscher
Fußball-Bund, and the operator of the Bundesliga, the Deutsche
Fußball Liga, would appear to much more successful.
9. Of course in making significant changes in
football governance it is important to recognise the successful
aspects of what has been achieved in UK football and to acknowledge
the contribution of the various bodies. However, simply leaving
these bodies to cooperate with each other, and to manage their
own internal difficulties, does not seem to have worked for the
good of football. The lead needs to be taken by an independent
external influence, and I would suggest that this needs to be
the government because of the inevitable legislative changes that
will have to occur. I believe it is also important that significant
representation of fans should not just happen at clubs but also
in the FA, the Premier League and any future football regulatory
authority.
10. By ensuring effective governance in the top
football authorities, this will set a good example for governance
in clubs and throughout the whole of football's infrastructure.
11. There are many issues that a successful governing
body and system will need to address effectively. Major important
ones from my perspective as a fan include:
— It
is necessary to remove vested interests from the bodies running
the game.
— Effective
test for fit and proper persons in positions of major management
responsibility in clubs.
— Need
to ensure that local talent gets a fair chance to help maintain
a healthy pool of national talented footballers.
— Careful
consideration needs to be given to the development of women's
football, including investment, and to ensure proper representation
of women in the governance structure.
— Wage
structures - the situation across Europe where many clubs are
spending significantly more than they earn is ridiculous. I have
often heard the excuse that players will go elsewhere. With UEFA's
new financial fair play rules coming in. there is a chance to
tighten up the requirements for English football. More effective
regulation of agents is probably required to ease pressure on
inflated player fees and wages.
— May
need some sort of constraint for clubs to stop inflation of player
fees and wages so that the big clubs are not able to create a
huge grip on success in the league simply by their spending power
, to the detriment of smaller clubs. This stifles competition
and could ultimately make watching football predictable and less
attractive for fans.
— Clubs
need to be run with integrity and sound financial management.
— An
effective mechanism of feeding money down to properly support
lower league and grass roots football.
— The
way football managers are treated by major top league clubs is
appalling in many cases. As criticism of managers and their dismissal
is so prolific, has a high media profile and is done in the glare
of publicity, this sets a poor example for employment rights and
for loyalty aspects. It gives the impression that clubs are not
professional.
— There
needs to be a better system of handling TV rights that considers
fans. There appears to be too much of a monopoly by one TV company.
The respect for fans should extend to how football is broadcast
also.
— There
should be reasonable control on ticket prices to ensure that young
people, and those of limited means can afford to go to games,
and on merchandising to protect fans from unreasonable demands
on their finances (such as a too frequent kit change, for example).
— Owners
and boards are custodians of clubs and need to respect the club's
heritage.
— Require
proper business financing for borrowing to purchase or fund a
club.
Debt in the professional game
12. Stricter financial parameters are required
to avoid "financial doping" that effectively is "cheating"
due to overspending by an injection of finance that is not generated
by the operations of the club.
13. This needs to go hand in hand with tight
financial regulations that limit spending to what can be afforded
by income. There should be strict financial parameters for clubs
to operate within that are enforced effectively and not open to
abuse or influenced by vested interest. Even Formula 1 racing,
that leviathan of corporate spending and excess, has curbed spending
in recent years in order to make it more competitive and attractive
to watch.
14. Clubs should be required to break even financially.
Costs should not exceed income and this should be a requirement
of continuing to operate as a football club. We should build on
UEFA's Financial Fair Play initiative to ensure a more equitable
financial situation between clubs. The Premier League would appear
to generate the most revenue in world football and yet its clubs
have financial difficulties. Surely something is not right? This
must be due to uncontrolled costs and if clubs were required to
spend only what they earn, presumably the income generated from
being in such a successful league would be sufficient to enable
the clubs to do well financially with increased profitability.
One is really only financially wealthy in relation to one's expenses.
Supporter trust share-holding
15. There should be a requirement for a proportion
of a club to be owned by fans because many clubs and the football
authorities seem to regard fans very low in their priorities.
The transient nature of football club ownership and the tenure
of operational officers at clubs and football authorities is transient
when compared with the long term affiliation of fans to clubs
and to the game in general. Simply having a fan representative
on club boards is not sufficient any more; there needs to be real,
tangible influence that comes with having a stake in the club.
16. There will be difficulties in choosing a
model for this to operate but there are apparently successful
models elsewhere, such as in the Bundesliga and the Green Bay
Packers NFL team. I am sure there will be obstacles to overcome
but the anticipated cry that it will stifle Premier League development
does not seem credible. It is not simply down to the Premier League
that England's top league is so popular - there is a heritage
in English football going back decades to point towards the current
success of the top league. Besides, fan ownership in the examples
given above does not seem to have hampered success.
17. Giving a fans' trust a proportion of the
shares would ensure effective fan representation. While 51% of
the shares, as in the Bundesliga, is a mouth watering prospect
for a fan, I think around the 25% proposed by the last Labour
government would be a good balance. It enables a lot of potential
investment opportunity in the club by the business sector but
crucially enables fans to have an influential voice and, to ensure
that the club cannot be made private by an individual, I would
have thought 25.5% should be the figure for fan ownership.
GOVERNMENT INTERVENTION
18. In a Utopian moment I think it would be great
to let everything be open and liberal so that everyone could benefit
from less constraints, but I fear that, like banks in the recent
financial crisis, football institutions will not curb excesses,
nor taking unreasonable risks, of their own volition. Stifling
of innovation and opportunity is often cited by the "business"
world as resulting from government interference. However. I would
point to an example of how government and public sector "interference"
laid the necessary foundations and infrastructure for a subsequent
huge success - the internet. I believe government has a role to
play in acting as a catalyst for changes that ensure the long
term success for football in the UK.
19. FIFA rules seem to prohibit too much government
interference, but they would say that wouldn't they? If any body
was particularly in need of reform it is FIFA. Nevertheless, government
"interference" is surely justified when it involves
the rights of consumers? Legislation is evidently needed as collectively
those running football have mostly demonstrated that fans are
not regarded with the respect they should be. The government could
prepare the way for much needed change by forging a legislative
path to enable a more democratic model of football governance
to emerge. The Premier League is evidently wedded to its free
market model. Ideally there should be as much freedom as possible,
but history has shown that some people seem to exercise their
free rights to the detriment of others'.
OTHER GOVERNANCE
MODELS
20. The football governance model in Germany
stands out to me as one that warrants careful scrutiny. With its
blend of significant fan ownership, coherent regulatory governance
structure and tight financial rules, the Bundesliga appears to
be successful in terms of numbers attending matches and profits
earned by clubs.
21. Also (and of course I have to declare an
interest here!), Arsenal FC seems to have developed an effective
financial operating model, and its approach to respecting fans
seems to be good. Perhaps this needs further study also.
January 2011
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