Football Governance - Culture, Media and Sport Committee Contents

Written evidence submitted by Dave Boyle


—  Debates about poor governance in football, and concern over clubs poor performance have proven intractable for almost 20 years.

—  In response to that intractability, government has been consistently prevailed upon to intervene, sometimes to resolve the impasse within football, sometimes to bypass the game altogether through creating an independent regulatory authority.

—  Sport in the UK had developed in such a way as to leave Ministers or Parliament without any specific powers to guide their response. As a result, they would first have to create the means by which they would then act.

—  Much of the criticism of the FA fails to account for the lack of legal power for its actions, especially when set against the legal basis of clubs as sovereign enterprises.

—  By following the example of other countries - and more recently the EU - Parliament could legislate to finally provide a framework for football (and indeed all sports) to better navigate their way in the 21st Century with tools designed for the task, rather the 19th century structures they currently have.

—  Parliament could pass a Sports Act which:

—  Recognised that sport was a specific and discrete sector of cultural life which was in crucial areas free to be treated differently than other commercial sectors.

—  Provided legal certainty to governing bodies for their regulatory role, whilst providing the means to ensure those governing bodies were acting properly, proportionately and in the wider public interest.

—  Created specific legal vehicles for sports clubs that enable them to better balance their commercial activities with their sporting and social purposes.

—  By doing so, they would unjam the debate in football by ending a shadow debate about whether the FA can act, freeing it to debate the more relevant issue of whether and how it should.

—  Individual clubs and communities would be able to - over time - transform their clubs into enterprises with asset protection, transparency of operations and stakeholder involvement as they saw fit.

—  Parliament and Government would have the means in future to act in limited and proportionate way to resolve issues when called upon by stakeholders, with clear understanding of their powers to act.


1.  In my professional capacity I am Chief Executive of Supporters Direct, where I have worked for 10 years. This is a personal submission covering issues beyond the immediate purview of the evidence submitted by Supporters Direct.

2.  Discussion about what to do about football must eventually become discussion about how to do it. Identifying things the FA should do presupposes that it has the ability to do that, so matters of policy inevitably become governance issues.

3.  Over the past 15 years or so, the issue of governance—and by extension, ownership and financial management—has been a perennial issue. In 1997, the incoming Government formed a Football Task Force, responding to public concern. The outcome of that process on these key issues was unsatisfactory, notwithstanding the creation of Supporters Direct and the Football Foundation and their excellent work.

4.  In the same period, the FA has had six Chief Executives, as is now on its 4th Chair. The issues present in 1997 are essentially the same in structure and cause as those we face today.

5.  Throughout the period, advocates for change in football have looked to Government for assistance because the closed governance of the structures of football leave no avenue for change. It is impossible to attend, place items onto the agenda of or lobby, at any of the governance fora of the authorities, which are private limited companies in law.

6.  However, the demand for government action was often ill-matched to the policy apparatus investigating its achievement. In short, government has been unclear as to what it might want to achieve, and therefore unclear as to how to do it.

7.  Sitting behind this has been a wider view in politics and economics disinclined to interfere in the conduct of legally-private enterprises, a view overlaid with the not unreasonable hope that football could and should be able to resolve these issues of its own accord.

8.  It is clear that as much a factor as the political will within Government and Parliament to act is the need to identify an action that either can or should take.

9.  As a legislature, Parliament can enact provisions governing the conduct of life in this country, within a framework managed by the various treaties the UK has acceded to.

10.  It is in this area that action is needed, and only Parliament can take it.

11.  Whilst there are a number of lawyers specialising in sports law, there is no such thing as Sports Law in the way we might speak of Charity Law, or Corporate Law.

12.  Parliament has created a legal framework for enterprises under the company law framework, and updates it every 20 years or so. Charity law has a similar body of statute. To a lesser extent, statues also recognise the special status of educational institutions, railways, co-operatives, hospitals and pubic bodies and others.

13.  These statutes provide a framework for registration and operation of the entities so registered, committing them to running their affairs in a way consistent with the wider good conduct and performance of those sectors.

14.  In return, all provide certain boundaries of law, and means that other statutes that operate more widely might operate differently, if at all, in that area, recognising their special circumstances.

15.  For example, those on the governing council of a Charity cannot be paid for their time, even if though the charity might be a company allowed to pay Directors under company law.

16.  No such provisions exist for sport. Sport operates according to its own internal framework, which is in turn managed by the statutes governing whatever corporate vehicle the entity in question happens to be.

17.  Governing bodies are private companies, mostly limited by guarantee with members, rather than shareholders. Aside from basic provisions, their role as institutions which can set criteria that members must comply with is backed up by their legitimacy as a governing body (and thus the willingness of the community of the governed to assent). There are some precedents that give comfort to governing bodies, but these are vulnerable to new case law.

18.  For example, the Meca-Medina case sent shockwaves through European sport. Prior to this case, precedent held that as long as sports bodies pronounced regulations to achieve sporting goals, the economic consequences of those rules on participants was secondary and not normally actionable. In finding against two swimmers banned for substance abuse, the European Court of Justice nevertheless conceded that the sporting cause was not sufficient in itself to override Treaty provisions relating to economic matters.

19.  As football has become increasingly commercial, the potential threats clubs have seen to those revenues from regulation has grown, as have their resources to fight such rules. The impact on regulators has been to make them fearful of regulating in certain ways lest they invite a legal challenge which if lost would undermine their entire basis of authority.

20.  For example, when Wimbledon FC wished to move its stadium from South-West London to Milton Keynes, the Football League refused to sanction this as it deemed football clubs to be traditionally associated with particular geographic communities, links that would be threatened by such relocations. They were also mindful of the possibly of clubs being destabilised (and gaining unfair advantage) if areas incentivised teams to relocate using tax advantages, new facilities and so on. The rules were designed for purely sporting reasons.

21.  However, Wimbledon FC lobbied fellow clubs that the league was unfairly prohibiting their right as a sovereign business to trade wherever it best saw market opportunities and that they were prepared challenge the League in the courts on this point.

22.  The League's funds were already in jeopardy following the collapse of their TV partner, ITV Digital, and nervous clubs worried about the potential costs they would be asked to pay should the case be fought and lost. As a result, they lobbied the Football League to revise their position, and the result was that the matter was referred to a FA Commission who ruled in the club's favour.

23.  The key point here is that the League had a long-standing sporting tradition, underpinned by their authority as competition regulator, but they were unwilling to take the risk of losing, unsure as to how a given judge might proceed on so fundamental a matter.

24.  Whilst the idea that unhappy clubs could use law to overturn regulation is probably more rhetorically invoked than real, it acts as a serious disinhibitor to action.

25.  Another threat often levied at regulators is the threat of a breakaway, where disgruntled clubs form new leagues without those rules causing the unhappiness. As regulatory bodies derive their power from membership, rather than Parliament, this is a serious threat.

26.  The net effect of this is to emphasise the commercial operation of a club over its sporting and social roles, as the former has a body of law in its favour, whilst the latter must be enforced by unconfident and often comparatively poorer regulatory bodies.

27.  The situation elsewhere is instructive. Many countries legislate to enshrine their governing bodies as the legally-binding authority on sporting matters. They are not exempt from legislation governing employee rights, or health and safety and such like, but the designation allows the special character of sport to be protected and regulated for. The new Lisbon Treaty recognises the specificity of sport for the first time, building on previous declarations by the Member States in Helsinki and Nice.

28.  As an example the Bundesliga has exemption from German anti-trust law (similar to exemptions given Major League Baseball in the USA). In Spain, the national governing bodies are licensed by the Higher Sports Council, which is an agency responsible to the Government but at arms length from it.

29.  In other countries, specific legal vehicles are provided for clubs; again, in Spain, a Limited Sporting Company (SAD - Sociedad Anonima Deportivo) which is built on standard Spanish corporate vehicles but enshrines certain provisions to reflect the specific nature of sport.

30.  This form was created in 1992, when chronic debts of Spanish clubs meant that all hitherto-member-owned clubs with debts to branches of the state had to raise equity through these bodies in lieu of those debts being waived. However, as the clubs had traditions built on representation and accountability, specific clauses giving small shareholder powers to require independent audit were added.

31.  The sport law was recently reviewed by the Spanish Parliament and changes proposed included allowing the clubs to choose to revert back to member-associations if they wished.

32.  There are provisions in Norwegian and French law to provide specific legal personality for sports clubs.

33.  By contrast English clubs are overwhelmingly private companies. This is essentially an accident of both the professional understanding of its earliest directors, who were familiar with joint-stock companies, and their urgent need to raise capital for constructing stadia for the enjoyment of the burgeoning crowds for those clubs.

34.  They are unable to become charities due to the nature of charitable objects, and whilst some have lately converted to Community Interest Company status, this is a small handful set amongst hundreds of senior clubs.

35.  As detailed in Supporters Direct's evidence, the private limited company route is easily bought and sold, and has facilitated the acquisition of many clubs by individuals who have had personal interests to serve rather than the clubs.

36.  In some case, those interests might be temporarily aligned, such as in achieving greater playing success, but unless the issue of the subsidy (and later debt) is resolved, at some point interests will diverge, and the legal position allows for that tension to be only resolved in the cause of the owner, not the stakeholders.

37.  Clubs structured as companies increasingly have boards of Directors who are the shareholders (or their agents) and if Annual meetings and accounts are a part of governance arrangements (and increasingly, they are not), are often cursory and ill-suited to holding the board to account.

38.  The other mechanism supporters can employ is to withdraw their custom to the extent that it acts as a check on the executive of the club, who relent and change tack.

39.  This is flawed in football, because before the shareholders are damaged, the club will be damaged (eg players will be sold or not acquired, the facilities used by fans will not be maintained) but before that point is reached, withdrawing custom is simply antithetical to most fans' self-identity as a supporter.

40.  Indeed, there is a masochistic streak which is often even more tolerant of poor management as to continue to attend and pay money over is a sign of even greater fidelity to the club.

41.  As a result, club directors are to all intents and purposes unaccountable, except when the mass base of supporters becomes mobilised (as witnessed late last year at Liverpool FC). Even when this happens, the damage is often already done to a club, and the process of such confrontations is usually costly, unproductive, unedifying and time consuming.

42.  Ensuring that the public character of clubs is recognised is not concern for company law designed to facilitate efficient operations of private concerns.

43.  The only stakeholder group to whom clubs must respect are their regulators, but this is not a real power those regulators have proven able to deploy in reality.

44.  These are issues Parliament can remedy. It need not do so by compulsion as in the Spanish case. It could first legislate to provide a specific legal status.

45.  That legal status could enshrine obligations upon clubs registered to be owned in the UK, with full disclosure of controlling entities. They would be required to hold open annual meetings and publish full accounts and have stakeholder representation on their boards. They would also be required to demonstrate their activities each year which supported the community in their localities, and called upon to account for those.

46.  In return, they could be given special privileges to provide protection from statutes relating to commercial activity, such as allowing collective sale of pooled media rights, as they would now be legally required to provide wider benefit as opposed to this being a matter for voluntary consideration).

47.  They could be exempted from VAT on ticket sales, or perhaps investment in them attracted reliefs not available to clubs registered as normal private companies. They could also be given special rights in planning law to enable local authorities to treat development issues differently, as well as being eligible for rate reliefs, or stamp duty on asset transfers.

48.  At a governing body level, authorities could be invited to register to receive legal backing for their efforts. If they were registered, they would be protected from challenge on economic grounds as long as they could demonstrate the motivation was sporting or social in purpose. This is essentially a codification of the current precedent position in UK law, but once legislated for would lead to greater confidence.

49.  Registration would require the authority to be subject to regular review to ensure its processes were sound and its decision-making was fit-for-purpose, including ensuring all stakeholders were represented fairly in its deliberations. Government could link support for any governing body—such as financial support or assistance with bidding and hosting tournaments—with being a registered body, in order that the public interest can be satisfied.

50.  Having passed such a Sports Act, Parliament would have given governing bodies the ability to act with greater legal certainty (or to run the risk of not doing so at their own choice) as well as ensuring that public support in given to institutions in whom the public can have confidence.

51.  Similarly, clubs can choose to acquire a corporate form more suited to their status and so move away from vehicles which have proven to ill-serve the responsibility of clubs to take the needs of their stakeholders into account and act as a sustainable enterprises within their communities and within their sports.

January 2011

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© Parliamentary copyright 2011
Prepared 29 July 2011