Expert questions Government's appetite to regulate football

Sports law specialist Trevor Watkins of Pinsent Masons, the law firm behind Out-Law.com, said that the Government may be put off from legislating on the way football in England should be run because of the "complexities" of doing so and the significant risk of negative publicity it may bring by alienating league administrators.

Watkins, a former chairman of AFC Bournemouth and divisional representative to the Board of the Football League, was commenting after a Parliamentary committee of MPs criticised the football bodies' response to previous recommendations it had made to reform decision-making processes and curb expenditure in the game. In a new report the House of Commons' Culture, Media and Sport (CMS) Committee reiterated its call for the Government to legislate to drive through the reforms it thinks are required to deliver improvements if the football bodies do not themselves deliver reform soon.

The Committee said it was particularly concerned about the power the Premier League (PL) has to influence decision-making at the Football Association (FA) and said other stakeholders' interests were not being properly represented within FA structures. It said that the main board at the FA should take more of the decisions on football governance matters instead of delegating those decisions to committees dominated by representatives form PL and Football League (FL) clubs, and said the FA had failed to bring "greater financial stability" to the game in England.

The Committee said that the Government should "introduce legislation as soon as practically possible" if "significant progress" was not made by the football authorities towards delivering reforms on those issues. In October 2011 the Department for Culture, Media and Sport (DCMS) said it would regulate football if the football bodies did not implement the recommendations the CMS Committee made in its original football governance report.

However, Watkins said he "very much doubts" whether the various football bodies would be able to agree on a way forward that would get the necessary approvals to deliver the sought-after changes. He said it would fall to Government to intervene with reforming legislation, but questioned whether the Government would be willing to follow through on its threat to do so.

"Change is definitely needed," Watkins said. "It has been the case since I first became involved in football in 1997. The competing tensions within stakeholders, vested interests and lack of cohesion makes it extremely difficult to find a clear, progressive solution. What we need is an independent body with the power to make decisions that apply across all levels of the game for the sustainability of the sport."

"That is really the job of the FA but to a large extent the blurring of interests now demands that, for a successful outcome, there is a realignment of interests with each stakeholder concentrating on what their real role is. That needs clear definition and arguably some would demand the PL giving up a bit of control over some areas it currently has influence over. The PL's commercial operation is the most lucrative in the world and in that sense it has been a huge success. Essentially an association of clubs they trade together with the primary purpose of protecting the commercial interests of its members. Its job is not to lead on the development and betterment of football as a whole but equally it shares a desire to achieve both," he said.

"The FA has had to balance the competing interests of the PL, FL and other bodies. In many regards, the current web of relationships needs to be broken down and reconstituted. There must be a strong relationship between the amateur and professional, domestic and international game with each recognising the value of the other and then the stakeholders need to agree on how to give up power on matters where there are overlapping responsibilities," Watkins said.

"The only organisation that has the independence and could drive reforms is Government. However, I very much doubt whether they will ever act on their threat to legislate football because it will fear the complexity of the issues and any potential negative rebound effect of it doing so at a time when an election is approaching," he added.

Watkins said that "strong leadership" is required in order to bring about a more sustainable future for football in England. He said it may require new powers to be handed to "an independent body such as the FA" on issues such as financial regulation in order for clubs to finally address overspending.

"The pressures within the game to compete are such that decisions are often made that put the very existence of a club at risk," Watkins said. "We continually look to find the formula that enables us to have prosperous clubs with sound business sense because currently there are too many clubs expending large sums of money for little return because of the pressures they are under to try to compete."

"One single body, probably the FA or perhaps a new independent commission, should have jurisdiction above all others to administer punishments to clubs that overspend and to investigate and rule on issues such as whether prospective new owners of clubs are financially responsible enough to run those clubs. The responsibility for this should not be fragmented between three of four different organisations," he added.

"Only when the issues over power balance, division of responsibilities and cost control measures are implemented is it realistic to expect the price of tickets for matches to be addressed, as some supporters groups have called for," Watkins said.

Football finance specialist James Earl of Pinsent Masons said that recent action by four leading Premier League clubs on the issue of 'financial fair play' could bring an increasing focus to the treatment of debt owed to club owners rather than how clubs themselves borrow that debt.

Earlier this month four clubs, Arsenal, Liverpool, Manchester United and Tottenham Hotspur wrote to the PL to outline their collective view that proposed new PL rules on financial fair play should extend to "include meaningful measures to restrict the owner funding of operating losses", according to a report by the Daily Mail. However, other PL clubs have questioned the need for new regulations given their view that each club should be left to its own devices.

"If club owners are going to treat football clubs as an artificial business and fund spending beyond a club's means, then there is an argument that those owners should bear responsibility for doing that," Earl said. "New investors should not be put off from putting money into football clubs, but some focus should be given to the treatment of debt owed by clubs to their owners."

"There has to be some control over how that debt is managed whilst club owners are incumbent and, perhaps more importantly, over what happens when an owner exits from a club and in what circumstances," he said. "It should, ideally, not be the case that a club could face an insolvency event because of debts run up by a previous owner. As the recent internal debate within the Premier League has shown, however, it is increasingly difficult to find consensus, particularly when so much is at stake and particular given how some clubs are owned, funded and operated when compared to others."

Earl also questioned the likelihood of the Government delivering on its threat to take action if the stakeholders in English football do not do so themselves.

"It is certainly the case that excessive debts and unchecked spending continue to cause difficulties for some clubs in the Premier League and below, and it is also fair to suggest that limits need to be imposed at some level because clearly in certain cases clubs are not able to control themselves. However, is it the place of Government to determine how much debt for a football club is too much, or when those debts are ‘bad’? The sentiments of the Government are admirable, but it remains the case that the responsibility for finding a solution should lie with the clubs and governing bodies," he said.