English football needs a major overhaul to the way it is run in order to tackle the levels of debt and financial instability that threaten the game’s future, a parliamentary report found on Friday.
The report on football governance said clubs “spend up to the hilt” to get into the Premier League and remain there, while insolvency rules encouraged “excessive financial risk-taking”.
The report was produced by the Culture, Media and Sport Committee of parliament’s lower House of Commons, a 10-strong scrutiny panel made up of lawmakers.
The committee expressed concern at the extent to which clubs were “making losses and operating on the edge of viability” with escalating wages driving up debt levels.
Several witnesses who gave evidence highlighted the extent to which the financial benefits of being in the Premier League had the effect of encouraging “reckless financial speculation”.
“No one doubts the success of the Premier League in revitalising English football. But it has been accompanied by serious financial problems throughout the football league pyramid,” said committee chairman John Whittingdale.
“Significant changes need to be made to the way the game is run to secure the future of England’s unique football heritage, and the economic and community benefits it provides.”
He said the Football Association, the game’s governing body in England, was the right organisation to do it but the governing body had to get its own house in order first.
“We need a reformed FA to oversee and underpin a rigorous and consistent club licensing system and robust rules on club ownership, which should be transparent to supporters,” Whittingdale said.
The committee recommended establishing a formal licensing system for clubs, stronger ‘fit and proper persons’ tests for owners, and changes to FA structures.
“Almost all our recommendations could be achieved without legislation, through co-operation and agreement between the football authorities, and we urge them to respond positively with an agreed strategy and timetable for change,” Whittingdale said.
“Legislation should considered only as a last resort in the absence of substantive progress.”
nordozzz
Roar Guru
i have a similar worry for our league with its salary cap, which enforces a sort of elite with a massive gap to the next tier. Not healthy in the long run. Even among the A-L sides there is little room for deviation from the cost base for the leading sides. (Ie 80pc of whatever it is of the cap must be spent.) Hope the game here develops naturally to the point where smaller clubs can move in and out of the first tier without having to 'go under' like NQF.
Futbanous
Guest
It was always going to happen once the EPL became a seperate entity from the rest of the English professional divisions. Allowed to chase the big TV dollars for the EPL,stuff the rest of the divisions. A dog constantly chasing its tail for any but the big boys. The more you make,the more you make. Slip back into the championship,bread & drippin instead of caviar & champagne. Under the old 4 division system everybody found their niche over a century of tradition. Clubs that had never been near the old first division like Wigan,Hull got a sniff of the caviar & didnt want the bread & drippin. Keeping up with the Jones's is virtually impossible for smaller clubs. Even bigger clubs who graced the old first division more often than not,find it impossible to keep up once they dropped off the EPL gravy train. for a couple of seasons. Unless theres somehow a socialisation of TV money whereby its distributed more evenly throughout the 4 professional divisions it cant change. IMO it will be difficult to acheive this as the big clubs have other" money making irons in the fire" like competing in the ECL. Maybe the idea of a European Super League isnt such a bad idea.. Then the domestic competitions could be more like the old days. Then again history tells us that very rarely is there a reversal of a trend naturally. Its usually revolution not evolution that does that.
nordozzz
Roar Guru
somewhat true yeah ... though the bubble hasn't quite popped here yet like it has elsewhere. I'm currently wading through George Soros' theories on reflexivity ... i think our bubble is just a little different in shape. Beware the 'super-bubble' ;) A bit of lag time here insulated by our mineral wealth and other factors. Our "resilient" banking sector isn't in the clear yet... if residential property ever loses its supporting factors, like i dunno a favourable currency situation for arriving migrants (check), low unemployment, choking off supply at the planning level to force FHBs to buy into the bubble. (I sound like Steve Keen LOL.) agree with the point about western gov'ts and economies more generally bingeing on debt ... its a nice sideshow for a parliamentary report to focus on football clubs. :)
David V.
Guest
Part of the problem lies in the careless deregulationist policies of Thatcher, Blair, Reagan and Clinton who abolished all regulations in the financial sector. Notice how Australia, NZ, Canada and South Africa have resilient banking systems due to more conservative regulation. Reagan and Clinton made it easy for Americans to get into trouble.
Fussball ist unser leben
Roar Guru
Yes, I don't want to give the impression that there is no problem with debt levels in Football clubs. But, let's face it, the whole corporate world - and, based on our credit card use in Australia, the private world - has a debt problem. I just shake my head at the point of wasting money on such an enquiry at time when the world is on the brink of a financial collapse that will make the Great Depression seem like a minor economic blip. If the US Government defaults on its debt obligations - it's unlikely, but the fact it's even being discussed by the financial markets makes me extremely nervous - then, in my opinion, the world will face financial Armageddon. Simply, the world credit markets will freeze since no rational investor will want to lend money (or, if they do they'll ask for an exorbitant interest rate) knowing that the biggest economy in the world cannot repay money that it was loaned.
Realfootball
Guest
Yeah, Fuss, but this was a football enquiry, to be fair. Agree on all your points, though. The whole thing is looking like a house of cards.
Fussball ist unser leben
Roar Guru
Don't you love the way Governments commission Reports to identify problems and provide instructions on how to better manage business affairs, yet they fail to notice the massive issues staring at them from within? How about this ... ...before we worry about overhauling the way English Football is run, let's have the UK Government - and each government around the world - look within its own corridors of power and lead by example and overhaul the way Governments are run, in order to tackle the levels of Public Debt that has created financial instability and seriously threatens the future of the economy of every single country in the world? The UK's Public Debt is £920.9 billion (i.e. heading towards £1 TRILLION!), which is around 60% of GDP and it is estimated that UK's National Debt will approach 100% of GDP next year! The USA - the biggest economy in the world - has Public Debt in excess of US$14 TRILLION, which is 95% of the USA's GDP and interest payments on this debt are in excess of $400 BILLION every year - that's just INTEREST without eating into the principal!! So, how about Governments focus on the real debt issues that threaten the financial stability of the world, before they concern themselves with the English Football Leagues?