Fan-led Review: Scrutiny Of Club Finances
Football in England and Wales has grown to be a multi-billion pound industry which is currently regulated by organisations that have successfully administered football over many years.
The FA, the Premier League and the EFL are great at dealing with fixture lists, player registrations, the rules of playing football, diversity awareness and so forth, but do they have the propensity to regulate the finances of our football clubs? Indeed, is there also a conflict of interest in them trying to do so in a free, self-regulating fashion?
The analysis of financial information undertaken by the current regulatory regime is focused on ensuring clubs pay all their bills on time, play all their matches and fulfil their broadcasting commitments. That’s about it.
Under the present rules of regulation, clubs are required to submit full end of year or interim financial accounts by the 1 March each year. Yes, just once a year; and then the financial analysis must be rushed through by the regulators before the season ends with little time to apply any penalties or sanctions to the season in question. It is quite normal for some financial/points deduction sanctions to be settled many seasons later.
As a minimum, we suggest aligning clubs’ financial reporting to the regulators to significant events in the football calendar such as the start of the playing season, the end of the summer transfer window, the end of the January transfer window and the end of the playing season. This would allow the regulators to identify financial irregularities and intervene in a time appropriate fashion. It might also stop clubs “gaming” the system and achieving promotion with little regard to future financial sustainability of the club.
There is also a requirement for clubs to additionally submit “Future Financial Information” which is in essence, revealing what the football clubs plan to do financially in the future. Do clubs willingly provide full and accurate details of their future financial plans to the current self-regulatory bodies or do they take an undisclosed course of financial action like selling the stadium without regulatory intervention until much later after the event?
There is little requirement for clubs to report on an immediate basis to the regulator any material breaches of the limited financial rules in existence. This means if such a serious event happened on the 1 April, it is possible the football regulators would not be aware of such an issue until 11 months later on the 1 March. We believe this is unacceptable. Currently, only a period of insolvency requires an immediate notification by a club to the regulator.
We suggest that there are many other areas of significant financial change at a football club that should require immediate notification to the regulator. These could include significant increases or decreases to revenue, overheads, assets, liabilities and senior management personnel.
No doubt other non-financial aspects of running a football club could be included in this list to give regulators an improved and up to date insight into both the financial sustainability of all football clubs along with the culture/ethics of the senior managers/owners and the general direction of financial sustainability of all football clubs. It may be that some potential significant changes require pre-approval from the regulator.
Truly independent regulation, to save the integrity of football and all its stakeholders, comes at a cost and we believe this should be paid for by all professional clubs and suggest a percentage of total revenue of each individual club is the fairest way of funding this.
What are your thoughts?
We would like to know what you think about scrutinising club finances and whether more can be done.
Please send your thoughts to email@example.com with subject “Srutiny of Club Finances”, no later than 9 June 2021.