Back in 2004, a fit and proper test was introduced in UK football whereby any prospective football club owner or those who own a 30% or more stake in a football club, would have to be scrutinised to ensure that such person is ethically a sound person and is fit to run a football club.
Owing to the rapid changes that have occurred over time, not just within the sports industry but also outside it, the current criteria have been questioned on whether they are still relevant in today’s world.
This has ultimately led the United Kingdom Government to publish a 99-page White Paper in February 2023 entitled “A sustainable future – reforming club football governance” outlining much-needed reforms to the current fit and proper test.
At the forefront of such reforms will be the introduction of a new independent regulator that will in turn implement tighter financial controls, strengthened ownership tests, and fan empowerment.
The key elements included in the White Paper are as follows; a new independent regulator, licensing system, new tests for prospective owners and directors, football Club Corporate Governance Code, a minimum standard for fan engagement, and rules concerning club heritage.
All elements seek to bring about a much-needed overhaul in the current fit and proper test, taking it to new heights with the aim of adopting same to today’s challenging world demands.
All the proposals that are being made will apply to all English professional football clubs, from those who participate in the Premier League all the way down to the bottom of the English football league pyramid (fifth-tier National League), with the ultimate aim of adding another safety net and protection from clubs going belly up.
At the forefront of the key elements that are being proposed by the White Paper, and the most controversial of them all, is the proposal to introduce a new independent regulator.
According to the White Paper, he shall be vested with a “mandate to intervene swiftly and boldly when necessary” whilst also having the power to impose, as of yet unspecified, sanctions against clubs that do not comply with the regulations.
The expenses incurred for the running of such office shall be footed solely by the clubs themselves, leading many club chairmen to state that the office of the regulator will be a complete waste of funds.
The regulator shall have three specific primary duties; firstly club sustainability, secondly systemic stability (the overall solidity of the football pyramid), and thirdly cultural heritage (protecting the tradition of football clubs).
Independent regulator
Amongst the controversial powers that the legislator is seeking to give to the new independent regulator is the authority to restrict English clubs to only compete in competitions that are approved by the regulator, especially when one considers the ongoing saga in the breakaway European Super League court case.
The White Paper also proposes to introduce a new licensing regime whereby all English clubs will be bound to obtain a license to operate as professional football clubs under four threshold conditions of the license.
The regulator shall also seek clubs to adopt a compulsory ‘Football Club Corporate Governance Code’ in order to address corporate issues in football which have been lagging for quite some time.
Another much-called-for overhaul is the establishment by the regulator of new tests for prospective owners and directors of football clubs, with the aim to avoid any more unsuitable custodians causing or contributing to problems at clubs and risking harm to fans.
The new tests will consist of three key elements; a fitness and propriety test to ensure the integrity of owners and directors, enhanced due diligence of source of wealth for all prospective owners, and a requirement for all prospective owners to provide robust financial plans for the club that they wish to acquire.
Another much-called-for reform that will be implemented by the regulator is to ensure that all clubs have in place a framework to implement a minimum standard of fan engagement, amongst which clubs will be obliged to meet regularly a representative group of fans to discuss key matters concerning the club and other issues of interest to supporters.
The proposals contained in the White Paper ultimately seek to protect the national game going forward by ensuring that football clubs remain financially resilient and ensuring that fans remain at the heart of the game.
To what extent clubs will be willing to take on such proposals remains to be seen. What is certain is that the game we all love is changing radically; whether it is for better or for worse can only be determined in the near future.
Note: Dr Robert Dingli is a Senior Associate at Dingli & Dingli Law Firm and specializes in sports law
