An independent football regulator risks doing more harm than good

An independent football regulator risks doing more harm than good

By Chris Mwabe

The United Kingdom government says it will establish an independent regulator in football after endorsing recommendations made in the fan-led review into the game.

The review was chaired by former sports minister Tory Crouch following a number of high profile crises in the sport, such as the failed European Super League and the collapse of Bury FC. The new regulator will be backed by laws which allow it to hand out punishments and have financial oversight of clubs, meaning it can investigate and gather information.

It will also apply the new “enhanced” owners’ and directors’ test which will replace the current tests carried out by the Premier League, Football League and Football Association. This follows Roman Abramovich’s ongoing sale of Chelsea amid government sanctions and a Saudi Arabian-backed takeover of Newcastle United in October 2021 among others. Both ownerships were criticised by Human Rights group Amnesty International UK. The new test will be implemented before acquisition but also on an ongoing basis. It will include a new ‘integrity test’ for owners and executives and stronger investigations before a purchase, including sources of funding.

Though a noble recommendation, it faces a major hurdle in complying with statute number 15 (a and c) of FIFA which reads:

Member associations’ statutes must comply with the principles of good governance, and shall in particular contain, at a minimum, provisions to be neutral in matters of politics and religion; and independent and avoid any form of political interference.

It remains to be seen how the independent body to be set up will maintain actual independence as opposed to independence on paper. The Football Supporters Association alluded to this fact in their supplementary evidence to fan-led review an independent regulator for English football and FIFA prepared by the regulatory team in the London office of HFW, an international law firm. 

Their subsequent proposal to have the Football Association (FA) delegate some of its roles is not an antidote to the valid problems but rather introduces a potential duplicity of roles and further bureaucracy that might leave out critical facets. The much touted correlation between the FA equivalent in France; Ligue De Football Professional (LFP) and Nationale du Contrôle de Gestion (DNCG) the independent regulator has been called into question.

A comparison can be made between the aforementioned independent regulator (Nationale du Contrôle de Gestion “DNCG”) versus UEFA’S Financial Fair Play. According to published research by  Nadine Dermit-Richard, Nicolas Scelles & Stephen Morrow, “It might be expected that UEFA’s Financial Fair Play (FFP) system established in 2010 would be similar to French DNCG (National Direction for Management Control) regulations. However, while FFP is concerned with profitability, DNCG is focused on solvency. Hence, a French club may be loss-making and not compliant with FFP, while at the same time being solvent in accordance with DNCG rules. Our research confirms that most French clubs do not conform to FFP rules. As such, it provides further evidence that DNCG has not prevented poor financial management within French clubs. The coexistence of DNCG and FFP– or any other domestic financial regulation and FFP –may result in disparities between domestic clubs.” 

Furthermore, the fact that the Independent regulator will be governed by legislation does not take away the probability of political interference. Albeit talking about financial regulation, Marc Quintyn and Michael W. Taylor refer to Nobel Prize winning economist George J. Stigler as he pointed out in a seminal article in 1971,” agencies tend to respond to the wishes of the best-organized interest groups. When regulators are free from political control, the risk of “regulatory capture” by other groups—in particular, the industry they regulate—grows. Agencies that suffer from such capture come to identify industry interests (or even the interests of individual firms) with the public interest. And industry capture can undermine the effectiveness of regulation just as political pressure can.”

We should strengthen the existing football regulators rather than introduce a new layer of regulation. The introduction of measures such as the Financial Fair Play Rules (FFP), new Directors test or proposed Golden share type of shares should be sufficient. 

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