Code of Governance for Football Clubs (England):

Introduction

1.     The government White Paper ‘A sustainable future - reforming club football governance’, issued on 23 February 2023, includes the following statement:

To address corporate governance issues in football, the Regulator will establish a compulsory ‘Football Club Corporate Governance Code’.
To date, the poor internal governance at some clubs has allowed owners to act unilaterally, pursuing short-term interests with little accountability or scrutiny. Under the new regulatory system, clubs will be required to apply a new code and report on how they have applied it, to improve transparency and accountability. The code will be applied proportionally, with regard to the size, league and complexity of the club’s business model, and where risk may exist as a result of weak corporate governance.

2.     The Fair Game Governance Working Group has been working on developing a code of governance for clubs since February. A number of meetings of the group have been held as the document has proceeded through a series of iterations. The aim has been to prepare a code to cover all men’s clubs from the Premiership to the National League North and South, which can be presented to the Department for Media, Culture and Sport, and to the regulator (when established) on a ‘here is one we prepared earlier’ basis, as a code with rigorous and robust requirements, and with significant support among clubs.

3.     The draft code has been compiled with assistance from a number of experts from the regulatory, academic and sporting world including Greg Campbell of Campbell Tickell – a governance consultancy with decades of experience working with many industries’ governance codes, Dr Mark Middling of the accounting department of Northumbria University, and a number of other experts who have requested to remain anonymous.

4.     The code reflects the requirements of other governance codes for other industries. In particular, the group based the code on the UK Corporate Governance code to allow for an entrepreneurial and commercial underpinning. This was enhanced with consultation of A Code for Sport Governance by Sport England and UK Sport, the EFL Trust’s Capability Code of Practice, the National Housing Federation Code, and the Wates Corporate Governance Principles of Large Private Companies.

5.     The draft requirements are challenging but we argue that they need to be, so as to address the widespread concerns about football governance. We recognise that clubs (especially those in Bands 2 and 3) will need help and support in getting compliance-ready and will not be expected to achieve full compliance on day 1 of the new regime.

6.     Three documents have been produced by the group:

(a)           A draft Code of Governance sets out different requirements according to the size of clubs, based on their annual financial turnover: Band 1 – turnover of £10.2m and above; Band 2 – turnover between £2m and £10.2m; and Band 3 – turnover up to £2m.

(b)          An addendum setting out a summary of the key provisions and principal different expectations between the three Bands.

(c)           A code compliance assessment framework for Band 1 clubs.

7.     The code has been considered by the Fair Game Advisory Council on 22 June (which looked at the first draft) and 14 September (full draft), and by the Fair Game Board on 4 October. While support has been expressed for the documents, it has been recognised that there should be further consultation with football stakeholders to make sure that what we are proposing can reasonably be delivered in practice.

The issues

8.     At present, we are awaiting the introduction of legislation to establish an independent regulator of football. Realistically, legislation is likely to take a minimum of six months from being introduced to parliament to achieving the Royal Assent – even with substantial cross-party support – and it could well be longer than that. Once the legislation is in place, there will be a period of very likely a year (and potentially longer) to establish the regulator, with premises, staffing etc. and the development a regulatory framework. So it is likely that the earliest that regulation could be in operation is for the 2025/26 season.

9.     As regards implementation of the new Code of Governance, it is reasonable to expect that there should be a phasing in of the requirements, recognising that full compliance will prove challenging for all clubs, but especially the smaller ones in Bands 2 and 3. One suggested approach might be to expect compliance on the basis of:

(a)      Band 1 – within one year of the regulator introducing the Code;

(b)      Band 2 – within two years;

(c)      Band 3 – within three years.

10.  It is worth noting that the draft Code is based on the well-established principle of ‘comply or explain’. See Provision 1.18 of the document.

11.  As well as a phased introduction of the Code, there should be consideration of support and training being provided for clubs on a continuing basis to assist their compliance with the Code, especially Bands 2 and 3. The new regulator should be taking this into account. In the context of a more appropriate financial flow between clubs at different levels of the football pyramid, financial support for Bands 2 and 3 to assist in their code compliance, as well as with other regulatory requirements, would be highly appropriate.

12.  At the same time, FG recognises there are elements in the draft Code that would merit further consultation, in particular the stipulation in Provision 3.8 needs wider consideration in the context of different approaches to fan engagement by clubs:

Supporter directors

The board should include a minimum of two directors appointed by a recognised democratic supporters trust (where this exists) or otherwise elected by accredited supporters of the club. The board should consider specifying a gender balance in the appointment of supporter directors.

This consultation

13.  Fair Game is opening this consultation to all key stakeholders within football. We are looking for your views on:

(a)      Whether the draft code will do the job it is designed for;

(b)      Resources (training/staffing/funding) required to enable clubs to implement the Code;

(c)      Timescales for clubs to comply with the Code;

(d)      Fan engagement options – including the potential for supporter directors; and

(e)      Any other comments on provisions in the draft Code.

14.  If you are answering on behalf of a football club please follow this link. For other stakeholders please use this link. The deadline for responses is Friday 8 December 2023.