Is government control of sport a good idea? I don’t think so. Nor for that matter does FIFA or the IOC, both of which have regulations which threaten to expel nations whose governments impose political control over national sports federations. FIFA recently explained what they mean by political interference:
“The most common case of political interference is when a government perceives that the Executive Committee of the national association is not performing well enough and decides to take action. Often, because the national team is losing too many games, they decide that changes must be made and want to put someone else in charge.”
So why is Britain, a nation with proud tradition of sporting independence, threatening to impose legislation on English football? A Parliamentary Select Committee published a report yesterday threatening that if the Football Association did not bend to its will then Parliament would draft legislation.
Their report makes interesting reading, though sometimes you have to pinch yourself; here are some of the causes for concern:
– Rangers (a Scottish team not regulated by the Football Association) collapsed
– “vested interests” are too powerful (what is a sporting association other than a collection of vested interests?)
– There is too much consensus (we need more dictatorship?)
– The FA Board has not reduced the number of its members from 14 to 10 as the committee wants (how do politicians know the right number of board members?)
Behind this flim-flam lies a very specific agenda:
– The committee wants more fan involvement in club management
– The committee wants tighter financial regulation and less debt
Now, I’m not against fan involvement- I admire examples like FC United, AFC Wimbledon and Swansea City where fans have shown commitment and enterprise to play a significant role in shaping a club. I also admire Supporters Direct, which does a great job promoting fan involvement and can point to a string of achievements (and only a few failures) over the last decade or so. They use the grant they receive from the Premier League very wisely.
But legislation to mandate fan involvement? Surely experience shows that this kind of interference only leads to cronyism and corruption? For example, at one point the Committee seems to suggest that the fans should have a say in setting prices- presumably at lower levels than currently set. If this were to happen in the Premier League, where most games are sold out, there would be excess demand and a lively secondary market- lining the pockets of those who can control ticket distribution.
As for financial regulation, I’ve probably said enough about the problems of Financial Fair Play elsewhere on this blog for people to know where I’m coming from.
I’m not sure why this government committee thinks it’s such a good idea to impose legislation – it’s not as if the government can point to a fantastic track record in those industries which it already regulates – notably financial services. I think the answer is that in a world where they seem powerless to do much to save the economy (as it enters a triple dip recession) they think that at least here they can do something. I also think that they get bombarded with complaints from a vocal minority of constituents who do want tighter regulation.
I’m not sure if FIFA would expel the FA if it were subject to government regulation, but it ought to. But even more salient, even the committee recognises that any problems that currently beset English football arise from its very success, rather than failure (“in many ways the need for reform is a reflection of success, not failure”). Maybe legislation can turn a success into an even bigger success: but how likely is that?
Considering the economic mess that football is in surely something needs to be done and given the fact that the football/FA/club business model contravenes a lot of business and competition law surely government has a right/mandate to intervene to do something about it? If regulation is a bad solution (and I agree that it is) then surely the problem is the reason why the government has chosen it and that is down to the way it sees football (economically, legally and socially) and that’s what needs to be changed so that the real problems can be indentified and the real solutions can be tabled.
I think “mess” is a little vague. English football has never been more popular, so something is going right. Government has the power to intervene if it chooses, but the question is whether a state regulated game is likely to serve consumers better or worse than a competitive business model. Note this is not a question of absolutes – the issue is whether regulation would be better or worse than the current “mess”. My view is that intensity of competition for success in English football is what has made it so successful; regulations that reduce the intensity of competition will only introduce corruption and cronyism.
I think you’ve misconstrued my point; I shouldn’t have been so vague. What I meant by “economic mess” is that football is basically one giant cartel. A cartel might I add run for the benefit of the larger clubs who threaten to breakaway and form their own separate cartel (European Super League) which has lead to rules (financial fair play) and the competitions (Champions League, Premier League) being structured in a way which help to funnel the vast (and collectively created) revenue into the coffers of said larger clubs so that they don’t breakaway leaving the smaller clubs behind. The debt, wage inflation, cash flow problems, insolvency, manic sugar daddy spending etc is all a result of this. This is what I meant by economic mess.
The number of Champions League qualifying teams, the number of teams that play in the Premier League, what/how much revenue is shared and various other decisions are all down to collusive decision making which is heavily influenced by what the stronger clubs want. These decisions then influence the economic incentives of the clubs. For example if Champions League money (prize, TV, sponsorship and gate) was shared equally between all Premier League clubs then the incentive to overspend to qualify for the competition would be much reduced and thus would be the demand which drives up player wages and the profits of the larger clubs. This means that the ability of a club to generate revenue (to compete) or grow its fan base is restricted by a competition structure controlled by the clubs (businesses) already at the top, even if it is not explicit.
Your argument seems to be that because English football is more popular than ever (although I don’t think it’s necessarily down to the efforts of English football) and because there is intense competition (for players/on the pitch??) government shouldn’t regulate as it would do more harm than good. My argument is that whilst government shouldn’t regulate, it only wants to because it sees football as “special” and seeing it this way is what is clouding its judgement of it. Therefore if the government only saw football as what it is (business) then it wouldn’t let it get away with half the stuff it does and I believe it would eventually force football to move towards what I believe would be a better business model.
Yes, no vagueness allowed on the blog 😉
I think I see your point. The cartel issue is the central one. Competition law prohibits agreements among firms to restrain competition (e.g. share markets, raise prices) but sports are special because a league cannot exist without agreements among clubs that restrain competition (to take a facile example, only 11 players on the pitch). The question is how far these agreements should be allowed to go. When the Commission consents to certain aspects of FFP (not all) and when the UK Parliamentary Select Committee encourages financial regulation (somewhat vaguely) they encourage the sorts of problem you identify.
I think you’re right to say that their vision is clouded, but I don’t see a contradiction between caring about football and wanting it to be as competitive as possible. If you study the facts, these lead you to the conclusion that to the extent that English football has improved, it has been to a significant degree because of its extreme competitiveness. At least that’s my opinion. While there are collusive elements, I think for the most part there is cut-throat competition. I fear that the would-be regulators will do away with this and in so doing achieve exactly the opposite of what they intend- they will line the pockets of wealthy owners and reduce the quality of the game for the fans. But that is a common theme in economic analysis- policymakers often achieve the opposite of what they intend.
I’m going to disagree that “cut throat competition” is what the football consumer wants or needs. Firstly, because in my opinion football is relative, by that I mean a mid table team is a mid table team regardless of perceived quality. It is winning and the importance of the matchup (with regards to its relevance, the competition it’s in and who it’s between) which drives interest regardless of who plays for the team. This means that although hyper competitiveness may have “improved” the standard of the Premier League (at the expense of other leagues) by forcing clubs to find value in the market and improved scouting networks, it hasn’t altered the relative standard of clubs or led to more enjoyable (winning) football for those who aren’t fans of top sides. To me all it has done is increased the cost of competing for the sake of doing so, whilst giving the illusion of a better product.
Secondly, because (from what I can see) it has led to clubs competing for their share of the pie and for the most part trying to block growth if it isn’t in their own self interest. Take English football it is clear leagues and cups aren’t organised to maximise revenue. Everything from the way Champions League places are allocated to the number of promotion/relegation slots and the lack of relegation playoffs suggests this. The big clubs don’t want or need the race for the Champions League to be any more exciting than it is because any increase in excitement increases the risk that they might not qualify. And it’s not just English football it’s everything, from the way European football is organised, to international football and even the fact that leagues are drawn along arbitrary (in an economic sense) lines. To me it’s clear that because football is a product of cooperation the amount of revenue that it generates as a whole is the greatest indication of it satisfying the market. This is because (most) consumers give money voluntarily (as football isn’t a necessity unlike some other things) and therefore football is regulated by market competition between it and other goods/services competing for our disposable income. This means that if football doesn’t give the consumer what will satisfy our wants then it will generate less revenue from us. So the fact that doing away with the current form of hyper competitiveness might” line the pockets of wealthy owners” isn’t necessarily a bad thing.
Now as you say when lawmakers approach policy surrounding football they do so with the belief that “leagues cannot exist without agreements among clubs to restrain competition”, however just because leagues might not be able to exist doesn’t mean clubs can’t. As you know prior to their existence clubs played friendlies and entered cups and it was the disruption caused by the latter which led to the creation of leagues. Therefore if clubs were forbidden for colluding to create competitions whether they are leagues or cups, then they wouldn’t cease to exist they’d play friendlies against one another. However the fact that clubs wouldn’t be able to enter into agreements to create leagues doesn’t mean leagues wouldn’t prohibit them, after all leagues are about competing teams and there is no rule saying that those teams can’t all be owned by the same entity. This means that if cartels were excluded then surely it would incentivise football to consolidate into one business and from what I can see in this instance a single entity is a more favourable model. This means that in my opinion the theory that these separate businesses need to collude to generate revenue is false, as is the rationale used to let football get away with what it does.
Wow, long answer! I wouldn’t go so far as you as outlawing leagues- I think league play offers a context that enhances the fans’ enjoyment. As is generally the case with competition law, all agreements need to be analysed to see if they are on balance beneficial for consumers. And I think they benefit from competition. It’s true that you could replace the present stars with cheaper players and still have a contest, it just wouldn’t be as good. Even if the outcome depends on relative inputs, quality is still an absolute concept.
I didn’t say that I would outlaw leagues, I said leagues organised between “independent” competing firms/businesses should be outlawed because they contravene competition law, aren’t necessary for leagues to exist and aren’t beneficial to consumers as the politics that comes with the negotiation stops the most optimal structure from being chosen. That’s why I favour a single entity set-up.
I disagree that “contests” wouldn’t be as good if the present “stars” left, then again I don’t know what you mean by as good. If you mean that matches wouldn’t be as good then I disagree, after all you get stinkers between great teams, and amazing games between average/bad teams. A good game is about entertainment and that isn’t linked to the quality of players. However if you mean aesthetically good, you don’t need great players for that either (Swansea, Athletic Bilbao etc). My opinion on what draws people to contests is “the importance of the matchup (with regards to its relevance, the competition it’s in and who it’s between)” and surely when you say “league play offers a context that enhances the fans’ enjoyment” you kind of co-signs this. Context is what matters. Therefore if current top 3 were weakened to the standard of say Arsenal interest should increase because of a more open title race.
With regards to quality being an absolute concept, I agree. However I believe it’s quality relative to the competition that matters, defined by winning. That’s why as long as a team keeps winning, even if stars leave, new stars will be born. Out of sight, out of mind, just like at present when players get injured, sold or retire. The real “stars” in football are the teams.
Hi Stefan, Can I just say that I think all of your blogs are well written and very thought provoking. But I must confess that I disagree with the conclusions laid out in this particular entry.
Firstly can I tell you that it isn’t a Government Committee but a Parliamentary Committee in that it is cross party and while it is dominated by members of the governing parties, every Committee does that to reflect the House of Commons and parties share of the vote.
Nothing in that report binds the Government to do anything, that is why the report recommends legislation if the FA and the other footballing authorities refuse to make the changes they suggest.
The FA is the oldest footballing association in the world, it should be the most proudest but it isn’t. It has very much lost its way and you should know better than me in that it should be more than just an association of interests. Since the EPL was formed over 70 clubs that have played in the four professional leagues have filed for insolvency, more and more clubs are on the verge of financial collapse and people like Milan Mandaric who ruins every football club he touches is still around without a care in the world. The FA have done nothing, they have indirectly transferred their powers to the PL. The fit and proper persons test has proved to be ineffective and there has bee no tight grasp on finances.
Because of the situation regarding the power that the wealth of the PL has consumed from the FA, the comments on consensus was because the original report was answered by the football authorities as a whole and not seperately, and while the CMS committee did think it was encouraging to see the FA, EPL and EFL (football league) working together an individual response from each body would have been more suitable because the FA has to show that it is still the ‘home’ of football and it simply cannot do that without exerting pressure on the commercial playground the EPL has become.
The FA Board reduced its numbers in members because it was not re-presentable. As you are no doubt aware the customers in football ie the supporters are the biggest stakeholders in the game. They pay directly for the ticketing prices, indirectly for the TV rights and commercial revenue the game brings and do you know how many people on that Board represented the fans? One. The CMS committee originally recommended it did this because the FA was, in-particular, broken, and it needed to make changes at the top to work down.
On your topic of fan involvement I do think you are over reacting here, the trust/co-operative movement is growing. Fans have got to the point where they are sick of seeing their football club crippled and the only ones who could help them was millionaires and in some cases billionaires and this is wrong. The CMS Committee weren’t/aren’t demanding Shiek Mansour hands Man City over to the fans and leaves, what they are recommending is the opportunity for fans to become involved (if they want) through a licensing system that says is a Supporters Trust is doing certain things which require levels of investment, buying shares, operating efficiently and accountable then certain ‘powers’ should be given to them such as regular meetings with club officials or in some cases a supporter (non-executive) director. Attendances are on the decrease for the majority of the 92 professional clubs in England and Wales. My own football club Doncaster Rovers, of which I am a Director of the Supporters Trust (Viking Supporters Co-operative), last season launched the most widespread and thorough fan engagement project titled “In Rovers We Trust” which included a huge survey sent out to fans with over 70 questions asking supporters about how the club can improve the off the pitch experience because we realize that the quickest way to filling your stadium is to be successful, but only a handful of clubs manage that each season, so like in any aspect of business you need to improve everything else that is in your control.
Fans make the game what it is today, they provide the atmosphere that the players love to play in and make the game much more marketable to broadcasting companies around the globe. They talk about the club they support as “our club”, “my club”. But too often have they been effortless to help the club they love be destroyed by a lack of financial security and it is only when the club is on the brink of extinction, when there is no other option that the fans can become involved in one last attempt to save the club. That is what is happening at Portsmouth, there fans have raised a staggering amount of money to try and seize control of their club after it has been ripped apart. Unlike any other business, supporters/customers show loyalty to their football team, normally if the product becomes sub-standard you go and buy from elsewhere, but through some (maybe misplaced) loyalty football fans will continue to come in numbers to watch their team lose every week and the price increasing, loyalty should be respected, rewarded and encouraged, not exploited. It is ironic but true, that supporters are treated so badly because they show such loyalty.
On the face of English football, watching the likes of Manchester United, City and Arsenal sell out stadiums week in week out fielding teams full of superstars in a league that is probably the best in the world, it is easy to say that there is nothing wrong. But I grew up watching my team Doncaster Rovers tore apart by our then owner, who was only ever concerned in selling the lease for the ground. It even reached a point where he plotted to burn down the main-stand in an insurance scam (which he later got 5 years imprisonment for). I saw (at only 6 years old) our final game before being relegated to the conference, our fans running on the pitch, tying themselves to the goalposts, screaming in protest to our board of directors to sell the club. To many it was the last game our club would play because we wasn’t even sure the conference would accept us as in the end we didn’t even have a set of goal nets. We walked with a casket around our town center with an undertaker to match, to signal the death of our football club.
We were lucky, in that we had a savior in the wings who has since rescued us, and unfortunately it wasn’t the FA. Its been nearly 15 years since that fatal day, and if the same thing happened today I don’t think the FA would intervene until it was too late, and that is why I believe in tighter regulation, its why I believe that the FA should grow a backbone and stand up to the powers of the EPL and it is why I think fans should have an influence in their clubs, because I never want to witness what I witnessed 15 years ago, ever again and I wouldn’t wish it on our greatest rivals.
Thanks for commenting Lee. As I said in the post- I admire supporters’ trusts and the work that organizations like SD do- if every club in England came to be fan owned because the fans showed as much commitment as you have at Doncaster then you wouldn’t get a peep out of me. What I’m against is regulation. Here may be the real difference between us- I think water companies have to be regulated because they are “natural” monopolies- economists use this term to denote cases where there is no plausible alternative to a single supplier. I don’t think football clubs are natural monopolies- and I also know many fans disagree with me about that, maybe that’s a post for another day.
As for whether fans are entitled to representation on the board because they are the customers that keep the company going- well, why doesn’t the same apply to motor cars. or chocolate bars, or DIY stores? Generally speaking the economic system works best when competing firms have to make an effort to meet the needs of their customers or the customers go elsewhere. It may be that established fans stay loyal to a club- but generally speaking clubs lose support when they perform badly, which is as it should be. Fans on the board have to face the same economic reality – and in some cases they do well (Swansea) and in other cases they do badly (Notts County).
I do understand where you are coming from, but I am simply not asking fans should be granted a seat on the board for being simply customers, I am saying that fans should be entitled to some kind of communication with the club on a regular basis if they are showing the willingness to become involved.
For example I know that some clubs arrange to have monthly meetings with members of supporter clubs or trusts in exchange for the money these groups put back into the club, but the reality is all supporters group raise finance and put it into the club directly or indirectly, if all clubs did the right thing and let the fans have some say in the club (even if it is just keeping them informed with what is happening in the background) then regulation wouldn’t be an option. Too many clubs have been liquidated because the fans were kept in the dark untill the owners had no where else to turn and demanded money to keep the club afloat. This cannot continue and that is why the Committee’s proposal are the way forward, the football authorities have had the chance in the past to do this themselves and they still can, without legislation (the Government probably won’t want to go down this rotue either as it will take more resources and funds from the taxpayer. But if they refuse to accept the blame then without legislation the English game will die.
I agree that any well run club should maintain a dialogue with the fans- and I think the better clubs do. but by the same token the fans should maintain a dialogue with the club- obviously not happening at Manchester United.
But the possibility that “the English game will die” is so remote as to be irrelevant. The problem that fans who attend the games face is the reverse- English football has become so globally popular that your interests are only a part of the whole equation.
When I referred to the English game dying I never meant in a context of a fan but in the context of today’s market. Football clubs are no longer sustainable because the governing body FA doesn’t do enough (which is why they need to get a tighter grip, either through legislation or choice) in terms of ensuring that those running the club are the fit and proper persons to do so and they will serve the club with the best interests, and that they are performing well in financial terms and not success on the field. It will only take one reputable club in the PL to be liquidated and the value of the EPL will fall, that is the reason clubs like Portsmouth, Luton, Rangers and Gretna were pushed as far down the footballing pyramid as possible when they got in financial difficulties so that if they have to be liquidated it is out of the eyes of the world watching the PL. Frankly I want to see the FA take control of English football again, nobody wants legislation as I have previously pointed out, but the PL has too much influence and sadly I don’t see any other way at the moment.
Anyway in the risk of going round in circles I have nothing more to add, despite me disagreeing with you on certain aspects of this article I still understand what you have wrote and I respect your views. What you write is very intuitive and I have enjoyed reading many of your blogs and look forward to reading some more (and I have just ordered the Soccernomics book as I believe it will help me on my own studies as a Student currently doing a Dissertation on the differing ownership models and the relationship between power and wealth).
I’m glad you’re find this useful. But you really need to be more realistic. No PL club is going to be liquidated. Indeed, hardly any clubs in the top four divisions are liquidated- I think you’re confusing a football club with the limited liability company that owns it – the latter may be liquidated, but the former almost never is. And when you say you want the FA to take control again then you would have to go back to before 1888- in the days when Eton could still win the FA Cup and those working class chappies knew their place- they were good old days, eh?