Governance has become a hot topic in the world of football - and not only because of the beloved Ted Lasso and his AFC Richmond. The Football Association’s suspension of Ivan Toney following 262 breaches of Rule E8 (a rule related to betting) has dominated sports news in recent weeks; the administration of more than 60 football clubs since 1992 has not gone unnoticed either. Good governance is crucial to the proper functioning and long-term success of any organisation. But what is governance? Where have there been failings in football? And what reforms are being put in place?
Governance may be defined as the system of rules, practices, and processes that direct and command an organisation. Its primary function is to ensure ethical conduct and long-term success. This is achieved by outlining best practice, balancing stakeholder interests, demanding transparency, and demonstrating accountability. In the context of football, governance aims to establish financial stability, protect the interest of stakeholders, ensure sustainable growth, and preserve the integrity of the game.
Since the inception of the English Premier League in 1992, over 60 football clubs have fallen into administration. Leeds United, Coventry City, Middlesbrough, Darlington, Bolton Wonderers, and Maidstone United have all been subject to this fate. For a particularly poignant example we can look to Portsmouth FC who entered administration twice in three seasons. In the first instance, it was revealed that Pompey owed approximately £2m to business creditors, a similar sum to the Inland Revenue in unpaid Tax, and £78,000 to Portsmouth City Council. Financial mismanagement, overspending, and inadequate governance structures were cited as contributing factors to these unfortunate outcomes. Such alarming statistic highlight the urgent need for improved corporate governance structures within the football industry.
Recognising the pressing need for change, the UK government ordered a review on the subject. It concluded that ‘English football is currently endangered by the high and growing risk of financial failure among clubs across its top 5 tiers. The free market does not properly account for the importance of clubs to their fans and communities, and industry self-regulation has remained inadequate - seeing clubs collapse and fans harmed. Therefore, football needs a strong centre to independently apply reformed rules’.
The proposed reforms to governance include introducing a new independent regulator who will operate a licencing system where clubs will need a licence to operate as professional football clubs; set basic financial requirements to operate, establish a compulsory “football Club Corporate Governance Code”; create new test and onboarding processes for prospective owners and directors of football clubs, alongside a number of other measures.
Corporate governance is indispensable in preserving the integrity and sustainability of all organisations, including football clubs. By prioritizing transparency, financial stability, and the welfare of stakeholders, these reforms aim to safeguard the future of the beautiful game we all cherish.