REGULATION
Whilst most of the debate about this issue talks about “independent” regulation - which Ms. Crouch recommends as the way forward - she actually looks at three other models as well and highlights why she opts for the independent model. Some details are below.
The first such model is a “no intervention” model whereby the market regulates itself.
Is this really an option ?
Not really, and Ms. Crouch is quick to dismiss it
What are the drawbacks of this approach?
There are many, but they can probably be summarised as follows :
• the risk of failure in the market is not mitigated, and thus always possible
• this creates a climate of unhealthy uncertainly
• such failures tend to have a considerable economic impact upon communities
• it does nothing to protect the industry from unscrupulous ownership
The second model is the “football led” approach.
Is this just the status quo?
Yes, and one of the reasons why Ms. Crouch has done the review is that this approach is thoroughly discredited.
Does she say why ?
• the current framework has multiple ruling bodies, with nobody taking an overview
• there is no appetite at any level to tackle difficult issues like overspending, or fairer distribution of revenue
• it is often characterised as being “run by owners, for owners”
• the Leagues administering the system lack many of the key skills needed to be effective
The crisis at Derby County has worsened significantly since Ms. Crouch published the review, but it has exposed many of the problems in the way the current system works. The regulations do not work nearly as well as they should, the leadership offered by the EPL and (in this case) the EFL is very weak ; cases take an age to be resolved and - in this case - it seems clear that clubs have little confidence in the system.
Ms. Crouch also looks at a third model, which she terms “co-regulation”
What is meant by co-regulation here?
This is most commonly self - regulation (in this case by the football industry), within a legal framework set by Government.
Wouldn’t this work quite well?
It might be a modest improvement on what we have now. However :
• it doesn’t deal with the conflict of interests arising out of clubs regulating themselves
• it would be hindered by the sheer numbers and diversity of bodies being regulated. Would one single framework work well for Manchester City, Mansfield and Maidenhead?
• much would depend upon the nature of the legislation - too lax, and it might be ineffective. Too rigid, and it might unfit for purpose if circumstances change
• it does not specifically address the need for specialist expertise
Ms Crouch therefore concludes that the answer is independent regulation.
Why does she believe this?
There are three huge advantages in genuinely independent regulation :
• “independent” means not governed by and dictated to by vested interests
• it allows for recruitment of the people with the specialist skills needed to operate in what is a complex environment
• it can take an overview of the long term interests of the game (not short-term fixes), and deal with the difficult issues that are currently not being addressed
This sounds fine in theory. What about in practice?
The proof will certainly be in the pudding - simply replacing one broken system with another that can’t work effectively would be pointless. The new regulator would need to :
• be nimble, and forward looking
• be properly resourced from the outset
• have real “teeth”, drawn from its statutory powers
• be accountable itself, to fans, clubs, Leagues and (ultimately) to Parliament
Accountable for what?
This depends upon who is asking, to some extent. But the overall objective for an independent regulator would be to act independently, and to promote football as being sustainable, competitive, and run primarily in the interests of supporters.
What would an independent regulator actually do?
Ms. Crouch’s answer to this was to set out a number of principles, and then describe some of the actions that needed to be carry out to support them - in other words to try to deal not only with what the regulator should do, but what they should do it for.
Her key principles included the following propositions:
• that regulation should be timely
• that it should include published assessments of the financial health of clubs (and the game)
• that regulation should have proper regard for English football’s pre-eminence in the international game
• that promoting equality, diversity and inclusion should be a key part of what regulation does
What does this mean in practice?
• strong financial regulation and cost controls
• good corporate governance (considered below)
• running a licensing system for clubs
• creating and then enforcing much stronger tests setting out how owners and directors of clubs should behave
• ensuring clubs raise their game significantly on supporter engagement (more later)
• monitoring compliance with the rules - and enforcing them where needed
• taking a broader view - considering policy challenges facing the game, highlighting areas for improvement and not merely dealing with individual cases
• protecting clubs on so-called “heritage” issues (more later)
• promoting equality, diversity and inclusion in the way that clubs do their business
It will NOT be the regulator’s job to interfere with the on-field laws of the game , or the rights of clubs to take legitimate commercial decisions.
Licensing
The central premise here is that - for the top five tiers of the English game - any club who wishes to take part in any of the competitions the leagues and FA run must have a licence in order to be able to do so.
How would it work in practice?
• Ii will be for the regulator to set the criteria that must be met by any club wishing to have a license
• clubs will need to apply annually for their licence and must demonstrate to the regulator that they meet all the criteria
• the regulator would be able to change the criteria to make account of changed circumstances…
• … and be able to vary the criteria (so that for example, less is asked of smaller clubs with limited resources)
• any decisions taken by the regulator on licensing matters would be subject to appeal and independent resolution
Enforcement
One of the main reasons for creating a statutory legislator would be to ensure that they acted with the full force of the law at their back. We have in recent years seen the harm that weak and ineffectual regulators do, in terms of how they undermine confidence in the fairness of the game, as well as failing to deal properly with individual cases. Their replacement needs “teeth”.
What can we expect in practice?
Good regulation is not merely about waving a big stick - where appropriate, some carrot can be very helpful too. And organisations that are helped to improve themselves are more likely to keep doing the right things if they have had a hand in deciding what they are.
Meaning what?
Clubs will be given a fair chance to set their own house in order. They will also be encouraged to learn from good practice at other clubs, and use it as a blueprint for their own improvement. The regulator will encourage this, and help to make it happen where that seem appropriate. It will also regularly publish inform about what the best and most imaginative clubs are doing.
And what about the worst clubs?
There will be three main guiding principles here, if the Crouch Review is implemented in full :
• the regulator will have a wide range of powers, enabling it to make sure that the punishment fits the crime
• wherever possible, the punishment will be targeted on those who are guilty of wrong doing, rather than on supporters of the club in question
• points deductions and fines will still have their place - but they won’t necessarily be the automatic response where there are problems
Isn’t that a bit weak?
Far from it. Intervention by the regulator should - ideally - be the exception rather than the rule. But in the worst case of failure and / or inappropriate behaviour, the recommendation is that the regulator should be able to :
• take the responsibility for running a club away from the individuals creating the problems, and vest them in someone else of the regulator’s choosing….
• ….. or withhold a club’s licence to compete where appropriate.
These would be very serious powers of intervention. They should not be used lightly. But if we wish to change the culture of English football, then owners and directors who behave badly, or are incompetent, must understand that there will be consequences for them personally.
How can this be made to happen?
Creating an independent regulator with powers such as these will require legislation to create it, and stipulate what it is allowed to do.
Won’t some clubs resist this, or try to ignore it? What if they don’t want to co-operate?
The Crouch proposals make it clear that a failure to co-operate with a regulator exercising its legal powers would not be tolerated and there would be specific provisions in law to deal with it when it happens. She proposes that the regulator could :
• demand information it needs to assess compliance with the law
• take action where attempts are made to obstruct or impede it
• act to suspend any action by clubs that it considered a prima facie breach of the rules, pending a proper investigation
What sort of punishments might result?
The regulator is likely to have a range of sanctions at its disposal, including powers to :
• stop behaviour / activity that it believes to be unlawful
• order the payment of compensation to aggrieved parties
• issue fines
• impose transfer embargoes
• sanction points deductions or even relegation
• in very extreme cases, suspend owners and directors and appoint external bodies to run clubs for a limited period
Who regulates the regulator?
The regulator will itself need a Board, and a Chair, and the recommendation is that these are all initially appointed by an expert Panel. This Panel :
• would be independent and separate from the Government, clubs and the Leagues
• would be recruited in a manner that ensures it has all the skills and specialist expertise it needs
• might include representatives from the FA as observers only
• would be answerable to Parliament with regard to its own performance, the extent to which it delivers value for money, and would be expected to publish a report setting out how it has performed each year
Where would the regulator be located?
Ms. Crouch recommends that, for the time being, it should be a stand alone body. Her view is that the FA, which might ordinarily be the logical home for such a body, currently lacks the experience, expertise and organisational flexibility to perform such a role.
How would the regulator be funded?
Ms. Crouch does not prescribe a model here, but she does set out some important principles which she believes must be followed :
• the model adopted should be agreed by the Government and the football industry
• whatever approach is agreed should be self-sustaining and self-funding
• the football industry - as the prime benefactor - should meet the costs
• those football clubs in receipt of the most broadcast revenue should bear the highest costs
• the licensing arrangements should be drawn flexibly so that demands placed on clubs reflect their size and ability to respond
• any revenue that comes from enforcement action and sanctions should be used to meet the costs of regulation
The Shadow Regulator - what is it ? Why do we need one?
Ms. Crouch acknowledges that the regulator cannot be put in place immediately and even on the most optimistic assessment is unlikely to be able to take up its full functions until some time in 2023.
This begs the question, what happens in the meantime? Some clubs are in serious difficulty now ; some form of policing is still going to be needed and there is less and less confidence in the ability of the EPL and the EFL in particular to do the job necessary.
A shadow regulator is therefore seen as a stop gap to manage the transitional period. Ms. Crouch recommends that :
• the Government should identify high calibre individuals to begin the necessary work to pave the way for the independent, permanent regulator in due course
• that work should include developing policies, guidance and other working documents that the permanent regulator might need….
• …. and monitoring any cases of failure that arise in the meantime
Our understanding is that the process of identifying a Shadow Regulator is already underway.