‘Sound Financial Governance Key to Competitive Success in English Football’
By Mark Dewell, Managing Director – Public, Private & Third Sector, Advanced
Football is experiencing a reputational crisis. Poor governance has tainted its reputation, and in some cases destroyed clubs and eroded the trust of fans.
In 2019, 134-year old Bury FC was expelled from the English Football league after the collapse of a takeover bid from C&N Sporting Risk, leaving players and fans devastated. Not surprisingly this sounded alarm bells for many other clubs in a similar vulnerable financial position.
But poor governance affects clubs at all levels and is not limited to those with financial woes. Earlier this year, the Premier League was rocked after Manchester City FC was accused of breaking financial rules, with over 100 charges alleged over a nine-year period. The club had previously been banned from European club competitions when UEFA ruled it was in serious breach of Financial Fair Play rules between 2012 and 2016.
The question of governance relates to many areas of football club management including transparency and accountability; stability; protection and safeguarding; integrity and fairness; reputation; and sustainability and ethics. Indeed, the Fan-Led Review of Football Governance published in November 2021 noted ominously, that clubs are all just one bad owner away from disaster.
Playing by the rules
Good governance is therefore critical. This begins with improved vetting processes for owners and investors, ensuring they have a squeaky-clean record in previous business dealings. Demonstrating good financial governance is part of developing an overall culture of responsible ownership and good governance throughout. This should filter into every area of the club’s activities, such as safeguarding young players and their families, and managing threats to players and protecting them from discrimination and racism.
Many clubs are still managing the complexities of organisational-wide good governance using poorly designed, disconnected tools such as spreadsheets, documents, paper files and information saved in email chains. Where once these might have been the best solutions, continuing with outdated systems and processes leads to inefficient and ineffective governance. Ultimately, this equals poor organisational performance, impacting on reputation and profitability, as well as leaving the club vulnerable to investigations and accusations of poor governance – at best irresponsible and at worst, corrupt.
New digital technology is designed with in-built good governance and regulatory compliance, making it easier for club Financial Directors to practise and demonstrate best practice. It is important that organisations adopt a holistic approach to governance and use a single digital solution for the greatest impact. That ensures best practice and that oversight doesn’t just sit with individual directors and functions, but is a responsibility shared by the whole senior management team within a culture that seeks to promote and embrace good governance in every area.
The UK government’s 2023 policy paper, ‘A sustainable future – reforming club football governance’ now proposes an overhaul of the way football clubs are managed and how they demonstrate transparency and accountability across the entire organisation. The paper outlines a commitment to an independent regulator who is backed by legislation, including details of how this process will work in practice. It also aims to give fans a greater voice about what happens in their clubs, ensuring organisational financial resilience for a sustainable future.
Environmental, Social and Governance (ESG) impact reporting is mandatory for all medium and large-sized businesses in the UK, including football clubs, who must report on Scope 1 and 2 emissions. As well as being the right thing to do, many ethical and sustainable practices are also effective for reducing costs. Clubs and players have enormous influence over their fans and by demonstrating good ESG principles they have the power to influence countless numbers of supporters to do the same. Leading by good example is key to maintaining the game’s reputation at large.
The Future of The Beautiful Game
The EFL has a long and proud history and now is the time for clubs to recognise their responsibilities to protecting this, for the sake of their supporters, investors and other stakeholders as well as ensuring their own futures. Good financial governance and widespread dedication to an ethical, responsible culture will help ensure that no more clubs fall victim to a sad, and avoidable demise.
Football is big business. Even in the 2019/20 season when the pandemic stopped play for three months, accountancy firm EY concluded that the 20 clubs who make up the Premier League alone contributed £7.6 billion to the UK economy. The financial success of football clubs affects countless other local and national businesses, from caterers to broadcasters, kit manufacturers to local hospitality venues, and many more. Those who are managing this business need to step up and adopt best practice in every area and function of their activities, with a joined-up approach that will enable more fully resilient organisations for all of their stakeholders and ensure a sustainable future for the ‘Beautiful Game’.
