Football clubs are not like other businesses. Their primary objective is not to make a profit, but to win matches.
Research shows that this creates a conflict between the goals of the game on the one hand and the logic of the business on the other. This in turn may have resulted from a study referred to as a “gambling culture” in which “clubs spend more on playing talent in the hope of achieving sporting success”.
The financial impact could be devastating for clubs and fans. While the English Premier League (EPL) is the highest-grossing football league in the world, with domestic TV rights deals worth more than £1.5bn annually, the leagues below have seen significant reductions in revenue for life – and promotion. intense competition.
To address this, a fan-led review into the game listed no less than 47 recommendations aimed at the defense of English football.
Ideas presented include the creation of a new regulator to oversee financial governance, better financial distribution and more power given to fans. The fundamental issue addressed by the review, which was published in late November 2021, is financial mismanagement.
The review, led by MP, football coach and Spurs fan Tracy Crouch, with the help of former England manager Roy Hodgson, said the long-term financial stability of the clubs is the “single most important factor” facing English football.
It suggests that a new regulator oversee the financial management of clubs by having the power to demand improvements in business plans, monitoring costs and club finances. This would take financial governance away from leagues and clubs and allow a regulator to intervene before issues become serious.
These suggestions have not been universally well received, with the owner of Leeds FC comparing them to the Maoist regime in China. But the argument in favor of better regulation can be illustrated by the fate of two English clubs: Derby County and Bury FC.
own goals
In September, Derby went into administration after years of failure and failure to gain promotion to the Premier League. This prompted an automatic points deduction which saw the derby drop down to the championship (the second tier of English football).
Meanwhile, Bury spent more on players, which led to promotion to League One, but also serious financial problems and eventually expulsion from the English Football League.
It is likely that the measures suggested in the recent review may have prevented both of these conditions. Clubs would not have been allowed to spend that much on salaries, and the regulator would have taken steps to get their finances under control before administration or expulsion took place. The review’s recommendation for more involvement by fans in the way their clubs are run could also highlight issues too soon.
In general, if the recommendations are taken up, there could be an end to the institutional over-spending of clubs. This is most evident in the Championship, where wage spending can be as much as £2 for every £1 of income.
But there are also two important areas where the review can move forward.
First, although the review suggested that a transfer levy of 10% on Premier League transfer fees be distributed to lower league clubs, this leaves the distribution of funds to the current authorities – the Premier League and the English Football League. Some have argued that this is not a solution to the difficulties of poor clubs, partly because the current system of distribution has seen every lower level of distribution drastically decrease.
For example, Championship clubs receive approximately £4.5 million per season (excluding parachute payments for relegated teams), while League Two clubs receive approximately £450,000. There is nothing to suggest that this will change.
Second is the lack of focus on transparency. The review recommends that clubs “publish high quality easy to understand financial information” and highlight Plymouth Argyll as good practice. However, my own work with fans of lower level clubs shows a significant difference between what happens now and actually holding the clubs accountable.
The current reporting is not fit for purpose as it is designed for shareholders, not fans. Specific, fan-focused reporting must be developed.
Overall, the reviews go a long way toward protecting the people who matter most – the fans. If implemented properly, independent regulation can save teams that are dear to supporters. It can stop the heartache that closing clubs can bring to communities, and help them focus on the difficult business of playing football.
This article is republished from – The Conversation – Read the – original article.
