Why government's failure to introduce football regulator can be good thing long-term

For now, at least, the idea of a government-backed independent regulator for English football remains dormant. Proposed by the recent Conservative government, the bill which introduced it was killed off when the general election was called, leaving insufficient time for it to go through the Commons ‘wash-up’ before parliament was dissolved. The next government is likely to return to the concept before too long – but should things be taken even further?

In a column for The Guardian, Grimsby Town vice-chairman Jason Stockwood makes the case that the bill being put on hiatus is a good thing, despite the breathing room it offers to the biggest and richest clubs as they prepare to push back. Part of Stockwood’s reasoning is that it also affords the next government the opportunity to strengthen it, particularly by tightening its grip over the distribution of broadcast income.

“The independent regulator must be able to set the financial parameters any broadcasting deal must meet, including distribution among all clubs and terms of parachute payments,” Stockwell says. “Without clear upfront specifications, we could see a prolonged process whereby the Premier League challenges the regulator in eternal legal reviews.”

The latter point is likely to prove prescient. When the law to introduce a regulator was first proposed, Premier League clubs immediately discussed mounting a legal challenge, anticipating – probably correctly – that a regulator would weaken their financial stranglehold on the game and impose a new deal with the EFL which would see more money trickling down from the top flight.

And when the regulator eventually comes to pass (which is all but assured given the cross-party support the initial bill garnered), any elements of its remit which are not explicitly backed up by the wording of the law creating it will inevitably be seized upon by the wealthiest teams and their lawyers. One way or the other, a lengthy series of court battles is inevitable, but the initial bill only offered a relatively loose definition of what the regulator would and wouldn’t be allowed to do – making it ripe for challenges where decision it made appeared to contradict existing business laws.

It’s often forgotten that the FA, Premier League, EFL and other governing bodies are not able to act outside of the existing framework of the law – that’s why, for instance, the owners and directors tests are so timid. If a prospective club owner would be legally permitted to purchase a club (which at the end of the day is typically a regular public or limited company), then it’s nearly impossible to prevent it even when the potential owner is patently unsuitable for one reason or another.

That is another area in which a strong regulator, backed up by clearly-worded law, would be able to intervene far more effectively. Football’s governing bodies can’t supersede the law of the land, but an independent regulator could be backed up by laws which give it a far stronger arm, resistant to high court challenges. The original Football Governance Bill included a clause allowing the independent regulator to rule on the fitness of prospective owners and directors, and that will likely be included in the new draft bill whenever it emerges.

The bill being put on ice until the next government can get round to it does, however, afford the opportunity for clubs to lay the groundwork for a new paradigm which reinforces their position first – and it’s no coincidence that Manchester City have announced their challenge to the Premier League’s associated party transaction rules (which govern how much money sponsors affiliated with a club can pump into it) in the downtime.

City’s case - already supported by Newcastle United, Chelsea and Everton - in the private hearing which begins on 10 June will likely claim in part that the current regulations, which force companies and states which own clubs to pay no more than fair market value for their sponsorship deals, contravene the laws governing fair competition in business. Whether they have a case or not goes beyond a football journalist’s pay grade, but if they can demonstrate that the Premier League’s bylaws contradict the actual law of the UK then they may very well win and place the league at the mercy of petrostates and the hyper-wealthy.

Over the course of the past season, there has been a battle brewing over the game’s finances which amounts, in many ways, to a battle for the soul of the game. Is it an entertainment product with the primary aim being bums on seats and expanded broadcast rights? Or is it a community sport in which fans and smaller clubs get a seat at the table? Premier League clubs, who benefit enormously from the current situation, believe the former, and are fighting tooth and nail not just to avoid sending money down the ladder but also to increase their grip on the football economy.

Hence we end up with clubs rejecting the Premier League’s own new deal with the EFL out of hand, as it would involve giving up profits to the benefit of others (and the fabric of the entire league system, not that the top clubs are interested in that). The biggest teams in the land are now all owned primarily by foreign investors with no interest in propping up the traditional structure of the league or in ensuring a relatively level playing field.

The independent regulator was intended to break the impasse and force clubs up and down the ladder to co-operate in a (hopefully) sustainable, reasonable and equitable manner, but it will inevitably start its life being dragged backwards through the court by the top clubs.

The original bill empowered the regulator to “make provision about the distribution of revenue” in order “to protect and promote the sustainability of English football” – but the means by which it was to do this, outside of stricter licensing of clubs and better regulation of who could own teams, was largely unclear.

The structure of the bill made allowances for the regulator to moderate in disputes over distribution of footballing wealth, such as the ongoing battle over the EFL deal, but didn’t provide a clear objective as to what a suitable deal should achieve, the extent to which wealth should be distributed and smaller clubs protected, or give necessarily it the legal grounding to impose rulings. The wording needs to be tightened up and a clear final aim for all moderation has to be found, ideally one which genuinely protects the entirety of the football pyramid.

Perhaps the next government will take the time to do that, and that would likely be for the better – but the break will give the top clubs more time to dig their trenches and draw up their battle plans. Even if the regulator emerges before very long, it will likely be years before the boundaries of what it can and can’t do are definitively laid out. The more groundwork that can be done to strengthen the regulator before it is finally formed, the better.