Football Governance - Culture, Media and Sport Committee Contents


Written evidence submitted by UEFA

This document contains the submission of UEFA to the inquiry into English football governance currently being held by the UK Parliament: Culture, Media and Sport Committee.

The document contains a brief outline of UEFA and is then structured according to the six questions outlined in the press release dated 7 December 2010. All comments are an objective, dispassionate, external view on the relevant subjects and are intended to be as constructive as possible. It is evident that in a short submission of six pages/3,000 words, only a short summary view can be given on each of these very important questions.

The six questions outlined by the committee are as follows:

—  Should football clubs in the UK be treated differently from other commercial organisations?

—  Are football governance rules in England and Wales, and the governing bodies which set and apply them, fit for purpose?

—  Is there too much debt in the professional game?

—  What are the pros and cons of the Supporter Trust share-holding model?

—  Is Government intervention justified and, if so, what form should it take?

—  Are there lessons to be learned from football governance models across the UK and abroad, and from governance models in other sports?

UEFA's view on many of the questions being considered by the Committee are covered, whether directly or indirectly, within the submission of UEFA to the UK All Party Parliamentary Football Group "Inquiry into English Football and its Governance" (2008-09), and this document adapts many of those responses.

UEFA

According to the statutes agreed by its members, UEFA is an association of 53 national football associations, is the football governing body at European level, and organises competitions for national teams and clubs. It was formed in 1954 and is based in Nyon, Switzerland. It has a structure based on representative democracy whose main organs are the Congress (legislature) together with the Executive Committee and the President (executive). In addition, there are autonomous disciplinary bodies to carry out sports judicial functions. UEFA also has a series of consultative committees and bodies which advise the Executive Committee.

The Football Association is a member of UEFA (and FIFA, the football governing body at world level). As part of its view-forming and decision-making processes, UEFA gathers opinions not only from The FA (on behalf of English football as a whole) but also from European representative bodies of the different stakeholder groups who are organised on a European level, for example:

—  clubs (via the European Club Association [ECA] which represents the top clubs in European football);

—  leagues (via the European Professional Football Leagues [EPFL] which represents the top leagues in European football);

—  players' unions/associations (via FIFPro Europe which represents the players' unions/associations in European football); and

—  supporters (via Football Supporters Europe [FSE], Supporters Direct Europe, CAFE [Centre for Access to Football in Europe] and other supporter groups).

There are also other very important stakeholder groups who are consulted (coaches, technical staff, referees, etc) via the relevant organisations, forums and bodies. In addition to The FA, UEFA also has some direct contact with other main national English professional football stakeholder organisations such as the Premier League, Football League, PFA, LMA, FSF, etc.

1.  Should football clubs in the UK be treated differently from other commercial organisations?

The answer to this question is that professional football clubs already are treated differently from other commercial organisations, in many different ways. For example, the framework governing the employment conditions of the key employees of professional football clubs (the players) is very specific and contains many features (whether of international, European or national origin) which differ from those which would apply to employees of "normal" commercial organisations. The question is more in what way they should be treated differently—and that is the task of the football authorities and the state authorities in their respective areas of competence (and sometimes working together).

The various ways in which the treatment of professional football clubs, and sport in general, is different to "normal" commercial organisations can be classified as part of the "specific nature of sport" (also known as "specificity"). For example, where EU law comes into play and impacts on the activities of sports bodies, Article 165 of the EU Lisbon Treaty now requires that the specific nature of sport must be recognised. UEFA believes that sport is not "above the law", whilst this new provision in the EU Treaty, together with numerous decisions of EU and national bodies over the years, recognise that sport cannot simply be treated as any other "business", without reference to its specific characteristics (ie the specific nature, or specificity, of sport). The first post-Lisbon decision by the ECJ in a sports case (the Olivier Bernard judgement) certainly vindicates the idea that sport cannot be treated like any other industry, because of its specific nature (in this case in the areas of football education and training). Furthermore, the very fact that most states have a sports ministry, and a parliamentary committee responsible for sport, would indicate that sport, as with a small number of other sectors, deserves special treatment.

In conclusion, we believe that sport (and its professional clubs) is and should be treated differently from other commercial organisations in line with its specific nature.

2.  Are football governance rules in England and Wales, and the governing bodies which set and apply them, fit for purpose?

Whilst every country is of course different, there is still the need for a common basic framework. In every country the national association, as governing body, needs to set a framework to ensure coherence across the different levels of the sport and to avoid the unnecessary duplication and layers of regulation, bureaucracy, and red-tape which inevitably results from too many parties trying to control the sport. For example, as regards disciplinary sanctions each league should have the competence to deal with disciplinary issues up to a certain degree of gravity. Nevertheless, to ensure coherence across the sport and the country, uniform sanctions should be fixed by the national association for certain types of offences.

Another key example is youth development—whilst it is clear that professional clubs are involved in, and critical to, élite player youth development, the overall framework and control of overall youth development policy and technical matters should be with the national association for all levels of football in order to ensure a coherent national approach to player education.

It is the experience across European football and sport that, almost without exception, where there is more than one governing body, whether these are formal or de facto governing bodies (who inevitably end up competing with each other), it does not help the overall development of the sport as a whole. The inevitable result is disparity in the standards of governance because this means (by definition) a degree of incoherence and fragmentation, and this is generally not good for the development of the sport.

To conclude, ensuring that there is one single genuinely empowered governing body per sport per country should help to ensure that governance rules are fit for purpose.

3.  Is there too much debt in the professional game?

Debt in itself is not necessarily "bad", and indeed, on the contrary, is often very necessary for sports and their professional clubs to develop. The question that needs to be addressed regards the type of debt, but also how this fits into the overall financial situation of a club (and therefore, in aggregate, into the financial situation of the game as a whole). As the Committee will be aware, UEFA has taken steps to introduce further and more effective financial regulation for clubs competing in UEFA competitions, under the general banner of the "Financial Fair Play" (FFP) initiative.

Back in 2008 when the FFP discussions started, UEFA had to decide on a basic systemic approach and found a lot of concern and confusion around the role of debt in football (eg destabilising football competitions, threatening the financial sustainability of individual clubs, etc). During the extensive consultation process there was considerable opinion frequently voiced that UEFA should centre FFP on limiting "debt", which UEFA more or less resisted. Although debt levels will be taken into consideration, the ability of a club to break-even over a period of time and the ability of a club to service all its debts and future obligations will be of primary concern for FFP rather than simply the level of debt.

To add a European perspective to the discussions, UEFA's annual report "The European Club Footballing Landscape" (which we enclose with this submission) sets out a fairly dysfunctional situation across Europe, not just in England. Amongst the main points are net losses reported by European top division clubs of €1.2 billion (€11 spent for every €10 of revenue) and one in eight auditors of 600 clubs expressing doubt as to whether their club would continue to trade in 12 months time. The report also discusses debt, setting out the relatively large debt burden that English clubs have, underlining the considerable confusion around the term "debt" and also highlighting the fact that a typical set of financial statements includes many more detailed notes explaining the financial position (balance sheet) than the financial performance (profit and loss account). In other words, to understand the debt profile of a club, or indeed the aggregate debt profile of a country's clubs, is not easy and needs context. With FFP in mind, the members of the relevant decision-making bodies will need to consider, amongst other things, not just the size of debt, but the type of liability, any assets secured, the terms of the debt and the maturity of debt repayments against the projected cashflows.

Regarding the relatively high level of debts of English clubs, there would appear to be several different factors and issues at play. Firstly, it is somewhat natural that English clubs report a level of financial debt exceeding their counterparts in other European leagues since the stadiums are generally owned and can provide security to the lender, whilst elsewhere only 20% of European top division clubs own their stadium.

UEFA does not see a problem, and indeed will encourage under FFP, serviceable debt funding for capital projects such as a stadium or training facilities build. Some of the debt in the professional game no doubt falls into this category, either through new projects or a legacy of previous investments. However, UEFA sees a distinct difference between (a) debt financing for such long-term football development purposes and (b) more speculative activities where debt is increased to fund transfer fees or increased salaries (which often has a knock-on effect on most other clubs, as well on the competitions). Economically speaking therefore, "new money" coming into football can be divided into (a) investment and (b) consumption, respectively.

The use of large levels of debt connected to leveraged buy outs is thankfully less common and a separate issue but in general appears to act as a burden, soaking up club's operating profits, whilst offering little merit to the club and their supporters. For football clubs a more common and long standing type of debt arises through the benefactor model, with the build-up of owner debts, sometimes in the form of interest free "soft loans". Putting aside the wider impacts of this business model beyond the individual club, the risks from these situations are certainly less clear cut and are centred around a potential over-dependency of a club on an income stream with the potential to dry up, leaving difficulty meeting ongoing financial obligations.

In general we would categorise the high debt in the professional game as both a symptom and a cause of overheated spending, primarily on players, in the pursuit of success. The various rules within Financial Fair Play will attempt to address this overheating through a systemic approach, indirectly limiting debt taken by clubs for speculative purposes, although UEFA's reach only extends to rules for its own cross border competitions.

4.  What are the pros and cons of the Supporter Trust share-holding model?

All governing bodies, where they are able, have a duty to try to ensure that football develops in a balanced way across the territory that they cover. On UEFA's level, this means to consider whether it is helpful to the balanced development of European football that investment and development funds go to the parts of Europe where they are least needed. While there is no uniform European concept or tradition regarding ownership of football clubs, the fan ownership model seen in certain parts of Europe (eg in Germany or at clubs such as Barcelona and Real Madrid) has many positive features, not least the stronger intrinsic link that this structure creates with local and regional communities and the relative degree of stability that may be achieved as a result of this. Whilst such associative structures bring their own set of challenges, it cannot be denied that such systems do not permit clubs to be "bought and sold" or otherwise "traded", as such clubs will always belong to their fans. For these reasons, UEFA continues to support the Supporters Direct initiative in the UK and also the roll-out of this best practice from England/the UK across the rest of Europe.

5.  Is Government intervention justified and, if so, what form should it take?

Firstly, it should be pointed out that there is a vast amount of government intervention (both direct and indirect) in sport in the UK, including the following:[39]

—  London Olympic Games and Paralympic Games Act 2006.

—  National Lottery Act 2006.

—  Gambling Act 2005.

—  Horserace Betting and Olympic Lottery Act 2004.

—  Communications Act 2003.

—  Licensing Act 2003.

—  Football (Disorder) (Amendment) Act 2002.

—  Office of Communications Act 2002.

—  Tobacco Advertising and Promotion Act 2002.

—  Football (Disorder) Act 2000.

—  Football (Offences and Disorder) Act 1999.

—  Horserace Totalisator Board Act 1997.

—  Broadcasting Act 1996.

—  Olympic Symbol etc (Protection) Act 1995.

—  National Lottery etc Act 1993.

The above list does not include other key legislation for UK, European and international sport such as acts relating to listed events, copyright and patents, ticket touting, and so on.

There are many examples of the football world, working together with government and politicians, achieving improvements for football. For example, together with other football stakeholders UEFA and the European professional leagues, with several government's support, managed to find a balanced and legally sound solution to the international transfer system when it was under threat from the EU in 2000-01. A similar partnership saw big efforts in convincing the EU to permit legitimate central marketing of rights by UEFA and the English Premier League. A current example is that a large coalition of sports bodies from many countries, including UEFA and English football bodies, are asking for government intervention to support the right for sports competition organisers to receive a fair return from betting operators who often pay nothing for using the "organiser's" rights of sports bodies for their own commercial gain, without giving anything back to sport.

Therefore, the question is not whether government intervention is justified, because government intervention in sport is extensive everywhere—and is even often being requested by sports bodies. The question is rather how this intervention takes place.

Therefore, in order to avoid government intervention it might be asked whether The FA could be further strengthened in its role as regulator and governing body in England. In this respect, it may be noted that England (and the rest of the UK) is unlike most of the main European footballing nations in that there is currently no "enabling" sports legislation which:

(a)  defines the limits of governmental intervention;

(b)  ensures coherence in key areas (eg youth education and development);

(c)  eliminates the risk of unnecessary inefficiencies, bureaucracy and excessive red tape which is created through having different controlling bodies; and

(d)  empowers the national governing body to run its sport and fulfill its functions.

Such legislation is relatively simple to draft and implement and can help to protect different sports from the unwanted side-effects of the hap-hazard way that sport has developed—by helping to ensure that sporting objectives are prioritised for example. In certain countries (including England), the absence of a proper legislative framework means that the control and development of top-level sport can simply end up being the outcome of pyrrhic turf wars between sports bodies, with generally negative results for the sport and country in question. It is clear that national parliaments and governments should not run sportsport should run itself. However, the experience of many other countries is that the parliament and government can—and perhaps should—help sport to run itself, in particular by the adoption of appropriate "supporting" legislation and not simply sitting by as sports develop as a function of the outcome of turf wars.

6.  Are there lessons to be learned from football governance models across the UK and abroad, and from governance models in other sports?

One possible area where the football governance model could learn from abroad, is as regards the make-up of decision-making bodies. Actors in professional football are many and varied—the national association, clubs, leagues, players, coaches, supporters, referees and so on. This is reflected in the structures of the decision-making bodies in many of the other main footballing nations where the relevant board will often have representatives of players, coaches and referees, as well as the technical component in some cases—all of whom are football people. One large European national FA now has a supporter representative on its board as well as its congress. Lastly, it may be noted that, in England, organisations such as the Professional Footballers Association, the League Managers Association and the Football Supporters Federation are both representative and respected.

There are of course many other areas where lessons can be learned, and UEFA has programmes such as the Top Executive Programme (for President and General Secretaries) and KISS (Knowledge & Information Sharing Scenario) programme (for middle management) which try to help different European countries learn from the experiences of others.

Relevant background paper:

"The European Club Footballing Landscape: Club Licensing Benchmarking Report Financial Year 2009" http://www.uefa.com/uefa/documentlibrary/index.html

March 2001


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Prepared 29 July 2011