The Commons Culture, Media and Sport Committee called for the establishment of a formal club licensing system, overseen by the Football Association, to help curb the game’s “excesses” with “robust” ownership rules and a “strong fit and proper persons test”.
The committee’s much-heralded report on football governance also demanded an end to football’s insolvency rules which encouraged “excessive financial risk-taking” and which, the committee said, would be “illegal” in any other area of business.
All football creditors, including very well paid players, are entitled to receive 100 per cent of what they are owed when a club goes into administration. Conversely, the taxman, small businesses and charities, including the likes of St John Ambulance who provide first aid cover at matches, often end up with just a few pence per pound owed.
The report said if the football authorities did not end the rule, the Government should consider legislation to abolish it.
The committee said while it believed the FA was the right body to lead change in the game, it needed “urgent reform” if it was to do so effectively. This included a “streamlined” FA board with a membership of 10 and a review of the composition of the FA Council with members serving for no more than 10 years.
“The principle that the FA Council should act as the parliament of football is a good one. However, the FA Council as currently constructed is not fit for this purpose,” it said.
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.
“While we acknowledge that financial regulations have been tightened of late, we are not convinced that even the new rules recently adopted by both the Premier League and the Football League are by themselves sufficient to curb English football’s excesses,” the report said.
It called for the introduction of a formal licensing system imposed “rigorously and consistently” throughout the professional game to review performance and promote “sustainable forward-looking business plans”.
The committee said the football authorities had failed to focus properly on the link between the “fit and proper persons” test and the game’s sustainability and called for “robust” new ownership rules.
“The FA, Premier League and Football League have spent too long behind the curve on ownership matters,” it said. “Between them they have allowed some startlingly poor business practices to occur, and have tolerated an unacceptably low level of transparency.
“In turn, this has resulted in insolvencies, too many clubs losing their grounds to property developers, and has contributed to high levels of indebtedness throughout the league pyramid.”
And the report warned: “As a last resort, in the absence of substantive progress, we recommend the Government consider introducing legislation to require the FA to implement the necessary governance reforms ...”
Committee chairman, Conservative MP John Whittingdale, said a timetable for change could not be set, but if it became clear change was not happening, they would look to the Government to “exert pressure”.
The FA declined to comment but the Premier League said: “We, along with the other football authorities, will now consider the report’s contents and await the Sports Minister’s response before taking a view on the recommendations.”