Reform in Football, Part III – Alternative Structures to Protect Fan Interests

Some ideas for the future of fan involvement. The time is right for change but we shouldn't rush into something nor accept the first thing offered by clubs, the Premier League, the FA or the Government.

Paul The Esk 18/05/2021 13comments  |  Jump to last

In Part II of the Reform in Football series, I explained a structure that gave fans more meaningful representation and, most importantly, power within football clubs, offering a regulated structure with monitored elections, model articles of association and certain powers of veto for fans either through the holding of non-economic voting shares or through a “golden share” with powers of veto written into each club’s own articles of association.

By incorporating these types of arrangements, there’s proper accountability of supporter board representatives back to the fans, but, importantly, much more control over the owner or major shareholders than just having a fan representative on the board as proposed by Chelsea and Tottenham Hotspur plus some no doubt well-meaning, but inadequately experienced and informed pundits.

I will stress again that just having a supporter or fan representative on the board of a football club will achieve very little. What is more, it will provide clubs and owners with a cheap means of presenting a valuable PR point in saying they’ve listened to fans, heard their concerns and reached out offering engagement and influence. As a stand-alone proposal, it should be rejected by all fan groups and fan representative organisations.

Alternatives

With the DCMS (Department for Culture, Media and Sport) “fan-led” review taking centre stage, now is a tremendous opportunity to reshape the game, putting into place measures which protect clubs, retain their competitive advantages with other European clubs but, also enshrine the club’s responsibilities to their fans, their communities and equally importantly the football pyramid all the way down to the grassroots. This is the opportunity to put right the huge disparity of power and resources throughout the pyramid.

Independent Regulation

Whatever the alternative becomes, it must, as I have stated in earlier pieces, start with independent regulation, removing the power to regulate from those that promote, organise, administer and benefit from the various competitions in professional football.

If the Big Picture and The Super League were not enough evidence of the need for regulation and proper governance structures, then a look at the state of the football pyramid – despite a quarter of a century of bull market conditions with untold riches flowing into the game – should convince anyone of the need for change and for the removal of power from those charged with running the game and running the largest clubs.

One of the concerns about regulation, golden shares or changes in voting structures is the potential impact on the attractiveness of Premier League clubs for existing and future owners. Would the Premier League and its constituent clubs be able to continue to attract the levels of investment seen in the last couple of decades?

My answer to that is that greater regulation and transparency of dealings, plus a separation of powers away from the participants, would attract new investors should the existing investors not wish to participate under appropriate and proper scrutiny. Equally, a cleaner, better-regulated Premier League should attract higher-quality sponsors and commercial partners. Why can football not attract the more socially and ethically aware commercial partners of the future rather than relying upon the friends of state/sovereign fund investment or indeed the corporate friends of oligarchs?

Football should have a bigger part to play regionally and locally, not just at grassroots levels, not only at the highest levels, but also across all sectors of the game, incorporating different age groups, different ability groups, women and girls football – independent regulation could enforce participation and funding. The funding should be viewed as investing in the development of the game as a whole, not just a perhaps unwelcome cost carried by the activities of the senior men’s team. Again, a different type of investor than football has typically attracted in the last decades may see greater value and synergies in this strategy.

An entirely different corporate structure, protecting the legacy assets whilst enabling investors to achieve their investment objectives

So far, I have suggested alterations to the capital structure of clubs or changes to articles of association to enable supporters (alongside independent regulation) to have a say in their club’s affairs and a degree of control over key aspects of the club’s future and the decisions of the current owners.

However, there is an alternative structure I think worthy of exploring. Essentially we have two forces at play, both of which should have a common interest in creating more success for their own club and the development of the game more generally. However, as witnessed in recent times, what the owners want, what the owners believe is in their best financial interests, may not be consistent with the wishes of the fans.

Most supporters would accept the right of owners to generate an investment return (usually by means of capital appreciation as the value of a club increases) providing the resources are made available to give the club the best chances of success and that the club is run in a manner that is consistent with the ethos and the culture of the club as recognised (and, to a large degree, shaped) by supporters over many years.

Whilst success on the pitch is important, it is almost equally important that the club remains “true to its roots” – location, stadium, matchday experience, club colours, branding, values, local players rising through the academy to play for the first team, women’s football, commitment to the local economy, the community and commitment to the footballing family etc. These, aside from footballing heritage, levels of success and playing styles, are what identifies each club from another and provides the continuity, the relationship between supporters and the club over generations. For ease, I will call these “supporter legacy assets”.

Owners or investors, on the other hand, will be looking at issues such as the stadium, redevelopment, the amount of capital required to invest in the squad to be competitive, the main income flows of matchday, commercial and broadcasting revenues matched against costs and the ability to trade players profitably to boost playing resources; how to grow the club’s fanbase locally, nationally and internationally, recruitment of the right Director of Football, manager and coaches. That might also involve (in the absence of effective regulation) looking at changing existing competitions and looking outside of the current promoters of competition (the Premier League, the FA, Uefa etc). They will also have different investment objectives to each other, different capital structures, different timeframes to exercise an exit strategy etc – an entirely different set of objectives.

What if there was a structure that allowed for both the interests of the supporters to be protected and the commercial/investment interests of owners to be exploited?

In England and Wales, there is a corporate structure known as a CIC – a community interest company. A CIC is a special type of limited company which exists to benefit the community rather than private shareholders. What if all the supporter legacy assets (as described above) and the control over branding, identity, what competitions the club entered, fixed assets such as the stadium (the freehold at least) where held in a CIC with a board and ultimate shareholders (the fans) entirely different from the current (or similar) shareholders?

What if the CIC provided a licence to the current owners/shareholders and future shareholders that gave them a similar economic benefit as they enjoy under the current traditional structure. The licence would sit in an entirely different legal structure to the CIC. That structure (company) would generate resources in exactly the same way as clubs do now – subject to the wider objectives of each CIC. The licence to use the club name, to acquire and trade players, to generate revenues just as now from broadcasting, commercial and matchday, to run the football club consistent with their objectives and ambitions would be trade-able. It would also, as a condition of the licence, provide the resources for the CIC to function.

It would be the licence that provided the investment return in exactly the same way as club ownership does now. The licence would have a capital value similar to the current valuations of individual clubs. Transfer of ownership of the licence could be conditional on the approval of the CIC.

Critically, the change is that control of all that is really important to supporters (other than winning trophies) remains in control of the supporters themselves – properly regulated and accountable to their fanbases. The economic benefit of club ownership remains (as it should) with the providers of capital – the shareholders.

What I am trying to demonstrate is that there are many different models available regarding the regulation, ownership and management of the game and individual clubs. Whilst the most recent Super League experience may bring about the desire for quick fixes (especially if no suitable punishments are forthcoming) in the Premier League, it is my view that as many options as possible should be explored.

Appetite for change

There is appetite for change in football, seemingly within Government, from many Premier League and Football League clubs and most definitely from many fans, individuals, groups and representative organisations. The six, themselves, demonstrated a desire for change albeit for entirely selfish reasons.

Thus change is likely to happen, but it is worth exploring every available (and perhaps new) model to get this right. Football has huge societal value at every level, we must ensure that that value increases, but that the future of football, especially its soul, is controlled by the fans, the supporters. Accepting what is first and perhaps grudgingly offered either by clubs, the Premier League or any other body would be foolish in the extreme – time for supporters to take a high level of control in the future of the game.

Part I – Background Part II – Governance

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Reader Comments (13)

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Jerome Shields
1 Posted 20/05/2021 at 06:23:09
I don't think there is the appetite for change. We'll see where the regulation goes, but it would take the commitment of the Taylor Report.
Paul [The Esk]
2 Posted 20/05/2021 at 09:22:07
I think you are right, Jerome. I have spoken to numerous people purporting to have an interest in changing the game. At best the changes are tinkering around the edges.

Fans will be sold on fan representation on boards. That's meaningless for the reasons I have already given.

Danny O’Neill
3 Posted 20/05/2021 at 09:27:38
I like the idea of split of control. Supporters (okay, realistically they would still likely be "members" and therefore investors) responsible for the soul. Then as you say Paul, the capital investors responsible for getting a return of investment for their financial provisioning. It's all about balance and football, the Premier League in particular, has gone too far down the route of thinking of the latter only. Not every club is guilty, but in the main those who have been successful have forgotten their roots. They use them as a nostalgic backdrop on which to promote the brand, whilst concurrently keeping traditional punters fairly content in the dressed up belief that their club is still theirs.

I agree on the fan representation but also that it has to be meaningful representation. So there is a meaningful voice and it doesn't just make us think we have a voice, when the reality is we're just being politely nodded at by a patronising board ticking the fan participation box on the check list. Back to my previous points on this and other articles, fan representation really means bringing in supporters who can also invest to a level. And I don't necessarily mean financially, there is a time and commitment aspect to this if you are going to meaningly contribute to running an organisation.

In terms of reform of football, some who may have read my occasional rants on here know my thoughts on this. Rebuild from the bottom up and I suggest streamline the game to give more focus where needed. I would reduce the number of full time professional clubs. I won't dwell on that, I've bored people enough, but it needs to be bottom up reform, not top down.

In terms of a club retaining it's link with it's community, I think Everton do a good job with that but like most English clubs, mostly from a community perspective and not a footballing one.

I've been fortunate enough to visit the Ajax and Schalke academies. Great experiences and both great set ups.At Schalke, you are allowed to walk into the academy and watch the youth teams on a match day morning playing in the shadow of the stadium. What an incentive. Both for young players and watching supporters, many from the local surrounding areas. A key point there is that it's open. The club is accessible and available from the grass roots up to the supporters. Our academy, like most is locked behind the Finch Farm gates. It creates a different world and one that we are not able to access unless we make it to elite levels. We talk about being a community club but where is the connection if it is a closed shop and detached from it's community?

I use those 2 clubs and Schalke in particular as examples of what they mean to their cities and communities. Schalke in particular is intrinsically linked to it's City and extremely passionate following despite not really achieving much success other than what their academy has provided the footballing world. The city of Gelsenkirchen is Schalke (named after the northern district of the city they originate from). Schalke is Gelsenkirchen. A traditionally working class city and with the coal mines gone, they don't have a lot else. But the club is arguably the most vital component of the community.

Ajax are not the European power they were at one point, Schalke have just been relegated. So the point about it not just being about trophies when you talk in the context of a football club is important. They are components of their communities and the local economy as much as they are global franchises in the modern era. Striking the balance between the two interests is the challenge.

I've rambled. Hopefully some of that makes sense however disjointed.

Paul [The Esk]
4 Posted 20/05/2021 at 13:35:08
Not rambling Danny, some very interesting points especially around the academy. Imagine how much more healthy (certainly from a mental health perspective) if the academy players were not locked away, invisible to all but those already within the tent.
Bill Griffiths
5 Posted 20/05/2021 at 14:45:16
Danny (#3),

I find your post very interesting, especially the point about it being not just being about trophies when you talk in context of a football club.

I have supported, lived and breathed Everton for over 60 years and would never dream of supporting any other team. During my time supporting them, I have been lucky enough to have seen them win league titles and both domestic and European trophies. While it was great to see them achieve those trophies, for me, it was not the be-all and end-all.

I'm 70 now but, if anyone had told me at any time over those years that we would never ever win another trophy, it would not have made a blind difference to me as I love Everton unconditionally.

I feel sad and sorry for those fans who continually change their allegiance to whoever is doing well at the time. Some posters continually knock EitC but that and the way the club look after their ex-players fill me with pride.

ps: Paul, I love your articles.

Danny O’Neill
6 Posted 20/05/2021 at 16:07:30
Bang on the money, Paul. It's not just about the supporters. We have to think of the culture we create for the young player that we place in a bubble, detached from real life.

My last trip out to Schalke was great. My son and I wandered around the various academy pitches standing touch close to the dugouts listening to the coaching. The latest Sane brother who was out injured was stood on the sidelines with the supporters talking and chatting, shaking hands and being normal. It was great to see and experience.

Bill, totally. I never knew why I supported Everton, I just did, do and always will. I follow Schalke for very similar reasons. That's my Dad's fault. As a Garston boy serving in Germany in the 1970s without access to English television, he latched onto a German Everton. I thank him for both regardless.

Football for me, both as a player and supporter is much, much more than the result.

Barry Hesketh
7 Posted 20/05/2021 at 16:47:41
The game is going through an unprecedented period of financial and competitive imbalance. Miguel Delaney investigates how we got here and – crucially – whether the dominance of the mega-rich is here to stay

Be warned these articles from February 2020 are quite long, but there is much in them that provide the reasons for what has happened to the game in the last decade.

How Modern Football Became Broken

Solutions

Don Alexander
8 Posted 20/05/2021 at 16:50:05
Another interesting piece, Paul, thanks again. I also enjoyed reading the other posts.

The point about our youngsters being developed whilst confined to Finch Farm, to the probable detriment of developing their innate character in the best way, rings true to me.

I remember Stuart Pearce a few years ago lamenting how pathetic it was for mere apprentice footballers, 'cause that's all they are in the scheme of things, having club staff carrying the players' personal kit bags for them. He said it did his nut in, and being so cossetted was no preparation for life as a full-time pro, and I agree with him.

There's no need to go all Monty Python-esque like in the "Think you had it hard? Let me tell you all about life in MY day!" sketch but so many of our youngsters seem to lack something between the ears, as far as I'm concerned.

Barry Hesketh
9 Posted 21/05/2021 at 22:33:39
It looks as if we are on the verge of massive reforms in football, as the World Cup could move to a biennial tournament as opposed to every four years.

Fifa president Gianni Infantino called it an "eloquent and detailed proposal" at Friday's annual congress, with 166 national federations voting in favour with 22 voting against.

Speaking after the remote congress, Infantino told reporters that the study would look at the competitions within the context of the review of the overall international match calendar.

"It doesn't matter right now what I think, it matters what results the study is coming up with," he said.

"We have to go into this study with an open mind... we know about the value of the World Cup believe me, we know as well about the impact that the World Cup can have."

But Infantino questioned whether the current system of regular qualifiers throughout a year ahead of a continental championships and World Cups was the best model.

"Do we really think this is the right way for football when we are hearing that fans say they want more meaningful games, less meaningless games, all of these points have to be considered.

"We will discuss it, we will analyse it but we will, in all discussions, put the sporting element as a priority not the commercial element," he said, saying he knew that holding twice as many World Cups would not mean doubling the revenue
Fifa president Gianni Infantino said that he wasn't involved in any of the talks to create the 'failed' European Super League.

"The only ones who speak, they speak to protect their own interests: fine, legitimate, perfect. At Fifa we have to protect the interests of everybody. That's why we need to speak to everyone and why we need to speak about everything and I don't close the doors to any discussion with anyone, never - new formats, new competitions, new ideas, I'm ready to listen."

Looking from the outside it would seem that there is a battle for control of the game, whether there will be room for both UEFA and FIFA to handle things is open to question. Having a World Cup every two years will cause havoc with the club game and obviously, something has to give, or a new European League will have to be formed at the expense of the current domestic arrangements.

FIFA denies Collusion

World Cup every two Years

Kieran Kinsella
10 Posted 21/05/2021 at 22:45:20
Barry

Is there no end to the list of money grabbers trying to expand their part of the pie? Euro finals now feature over half the countries in the whole continent, then we have the League of Nations, confederations cup, now they want world cups every two years, European super leagues. Even if we had bionic men who could play to a high level every day of every year, is there the appetite, or endless stream of cash to support all of these ever expanding tournaments?

Barry Hesketh
11 Posted 21/05/2021 at 22:47:32
Matt Hughes For The Daily Mail reports:

Everton, West Ham and Newcastle are leading the push for the Big Six to be punished by the Premier League for seeking to join the defunct European Super League.

While all three are lobbying for points deductions on the grounds that fining a club owned by a billionaire would be an empty gesture, there is an acceptance among the other clubs that such a sanction is not practical as it would lead to a lengthy legal battle.

The Premier League Board are considering their options and are under pressure to get the matter resolved before the clubs' end-of-season shareholders' meeting next month.

As revealed by Sportsmail last month, the Premier League have also launched a new charter that all clubs must sign which commits them to staying in the existing European competition structures rather than forming breakaway leagues.

Points Dedcuctions called for.

Dale Self
12 Posted 21/05/2021 at 23:07:08
Blowing my mind Paul, in a good way. This reminds me of how discussions went following telecom deregulation. There were some great ideas on how to reform the system if it weren't for the entrenched interests who controlled the exchanges that piped the traffic. I can't yet make out the big picture but this scrap between FIFA and UEFA seems significant.

It would be hard to believe that the powers that be would introduce a new regulatory body that weakened their grip on the sport. So I assume this would be achieved through legislation. Perhaps with what has happened to Bury and others there is justifiable need to protect the community from the externalities of a club going into administration and thus a need for the legislation for CIC governance. Fascinating stuff no doubt.

Danny O’Neill
13 Posted 22/05/2021 at 08:32:45
Barry Hesketh, that is a really interesting insight.

There are 2 points that almost contradict themselves, but in this context contradiction is not necessarily a bad thing as it suggests the powers that be are considering different perspectives.

we are hearing that fans say they want more meaningful games, less meaningless games

This talks to the mindset of the Super League concept.

"We will discuss it, we will analyse it but we will, in all discussions, put the sporting element as a priority not the commercial element,"

This talks to the purists who want to focus on the game.

Like I say, they kind of contradict each other but it goes back to the the theme of Paul's article and the point I made above. Striking the balance between football understanding the sporting investment in its core roots, but then facilitating those who do invest to reasonably capitalise on their investment.


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