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 fanledreview@bluestrust.org with subject “Srutiny of Club Finances”, no later than 9 June 2021.
Blues Trust
4 Comments
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I agree with your opinions and clubs should monitored as much and frequently as possible.
Finances and money is the route to all the problems in football.
As well as having a proper fair distribution on money to stop clubs having to gamble everything to get promoted. We need wage caps on players & Agents.
The more money clubs have been getting just go straight into agents and players pockets and it makes no difference how much clubs get paid. They just give it away to the greed of the agent & player.
These ridiculous wages and fees at the top of the game has driven the wages up lower down the pyramid and made the money clubs can earn outside the PREM so much less than what the club’s actually need to just survive.
A wage cap and a fair distribution is a must if you want the game to survive outside the premier League.
Along with this please take a look at the American Baseball Luxury tax system as this is the only one that would work across all football in all countries.
As much as I agree that finances and regulations need much tighter rules I do see a lot of these ideas making it much harder for smaller clubs with smaller budgets to perform in the transfer market.
If everybody knows what money you have everybody knows they can buy your players because you need the money and also everybody knows you can’t afford their player and they can say we want such as such knowing full well you cannot afford it.
Or this would push you over the limit. Leaving you in a state of non competitiveness Financially or otherwise.
I feel it would be better to put in place fair spending caps across-the-board slightly higher for the Premier League working down the leagues.
I don’t agree if a club wants to make sales of the stadium or any other asset that they should have prior plans to do so you never know when someone comes along and makes you a good offer and then you would have to turn it down because you have not made prior plans to do so.
That is like cutting your legs off and sliding round on your backside.
So I think spending caps on wages transfers and a maximum amount spent in any one season set across-the-board is fair and would not hinder any other clubs and would not make them Open to abuse from other clubs knowing their budgets. Because every club would be in exactly the same boat.
Just an examples
Championship spending In any one season.
For clubs with excellent finances. 30 million
Premier League spending In any one season.
For clubs with excellent finances. 65 million.
A full financial audit before the transfer window opens.
The outcome of such should be listed as The following or something similar.
Excellent = A
Good = B
Fair = C
Adequate = D
Poor = E
NP = non-professional
Caps would be set accordingly to the clubs rating which would not be disclosed to any other club.
Clubs that rank in the poor category would have to sell before they can buy and would be resigned to a tight wage cap And a Financial plan to bring them back online.
All clubs should pay into an insurance policy which protects them against relegation parachute payments should be removed and more of the TV money can be shared out between lower league clubs.
Obviously I am not a professional I sell security operating systems for a living I am not a financial advisor of any type but I could see this working there may be flaws in it and anyone who feels there are flaws feel free to say so.
Richard and Waycool make great comments and well thought out. In particular Richard’s point about surviving outside the Premier league can only be achieved by wage caps and fairer distribution of money. Can only echo this. Premier league is basically a status thing for the fans whose club manages to get in. When we were there it was just that and what used to sadden me was should we go 1-0 up after 5 mins.or so, we would willingly liked the game to end there and then. Irrespective of the cost of our ticket. No value for our money but elevated status of being in the Premiership. Sad really.
Also agents fees should be looked at I’ve heard rumours of them being 46% in some cases. May be a Of 10% would be fair.