Best league in the world? Liverpool saga highlights desperate need for reform

The Liverpool case once more highlights the need for reform to the regulation of football club ownership in England, reports Liam Thompson.

The case of Liverpool Football club, its ownership decided in a bizarre inter-continental court case, once more highlights the need for reform to the regulation of football club ownership in England. With Premier League debts at an all time high (more than the rest of European football combined), and ticket prices and wage bills rising exponentially, questions need to be asked about how to reform English football – into something that is healthier, sustainable and places fans at its core.

Campaigners told Left Foot Forward this week that the Liverpool case represents a complete failure of regulation, or lack thereof, and said that such a scenario would never be allowed to develop in countries such as Germany – where more rigorous regulation, with its emphasis on financial stability and transparency, exists.

Antonia Hagemann, Head of European Development at Supporters Direct, told Left Foot Forward that the takeover of Liverpool by New England Sports Ventures did not represent a significant step-forward.

She said:

“Generally, single ownership is one of the big problems in football across Europe. The Bundesliga is a good example of how it can be run differently as well as clubs such as Barcelona – which are member run clubs.”

The Bundesliga is often held up as an example of how football can be properly regulated – without big clubs being propped up by largely unaccountable, single owners, often based abroad. The German league has strict licensing conditions, which promote sensible financing and a 50+1 rule, which requires that 50 per cent plus one vote of a club and its limited companies must be owned by the members’ association.

In contrast to England, Ms Hangemann told us, Germany recognises the important social value of a football club, as a community asset, that means football clubs cannot be run like a conventional business.

She added:

“It’s a cultural thing, the philosophy of the Premier League is that they see themselves primarily as profit makers for their clubs and get the best they can for them. But clubs like Liverpool and Manchester United show huge risk.”

So, what affect has this “burden of regulation” had on the Bundesliga? The German league is one of only two leagues in Europe that actually makes money, along with the Swedish Super League. It is the most profitable league in the world, according to a Deloitte study, and its clubs, even big clubs such as Bayern Munich, are completely debt free.

There have been no bankruptcies in the Bundesliga for 40 years, it has recorded the highest stadium attendances in the world for the sixth consecutive year, and it has some of the lowest ticket prices – the average ticket price in the Bundesliga in 2008/2009 was €21 (£18), compared to €43 (£38) in the Premier League.

2008-09-average-ticket-price-across-Europe

Director of Policy at the Football Supporters’ Federation, Steven Powell, said that despite the German model’s imperfections, it was “immeasurably better” than the Premier League.

He said:

“A court battle between two different continents, over one of the world’s great football clubs just simply wouldn’t happen in Germany. There were siren calls in Germany saying ‘look at England, look at the money they’re making’ – but the wiser heads have prevailed. The wiser heads said look at Portsmouth, Man Utd and Liverpool.”

In Germany, football fans resemble engaged citizens, having a much greater role compared to the Premier League where fans are regarded as consumers of a product. Recently, German fans took action over ticket price hikes in the Dortmund-Schalke derby – marching to protect “fankultur”.

Mr Powell said the FA had failed to regulate properly, and that it had been left to fans to search for alternative models of ownership:

“It’s a shame that it’s been left to the fans to explore alternatives – the Premier League and the Football Association are sitting there saying ‘it’s nothing to do with us governor’.

“Before the 1980s, with Rule 34, the FA recognised that the job of a football club was too put a football team on the park every Saturday for the community it serves, but they kind of ‘reversed into’ clubs being quoted on the stock exchange. But now even UEFA appreciates that members’ associations are the best model.”

A change in the culture at the boardroom was also detectable, Mr Powell argued, where previously directors got involved with their local clubs they did not regard it as a money making venture. Now English clubs are run like multi-national corporations – Christian Aid recently highlighted in a report into financial secrecy in football, which disclosed that 25 UK clubs are registered abroad in countries notorious for their opaque tax and business regulations.

Mr Powell added:

“Hicks and Gillett said they would not load the club with the acquisition debt. And what did they do? We all knew this would happen, Liverpool fans, like the Spirit of Shankly group, and national organisations like the FSF, knew this would happen, but I take no pleasure in saying ‘I told you so’.”

6 Responses to “Best league in the world? Liverpool saga highlights desperate need for reform”

  1. JC

    RT @leftfootfwd: Best league in the world? Liverpool saga highlights desperate need for reform //bit.ly/c7aerM

  2. Paul Dickin

    RT @leftfootfwd: Best league in the world? Liverpool saga highlights desperate need for reform //bit.ly/c7aerM

  3. Mr. Sensible

    Liam I completely agree with you, and am pleased to see this issue being covered on here.

    I regularly catch the BBC’s Football Phone In, 606, and it seems like in each one over the last few weeks this issue has been talked about.

    It is clear we need action; Liverpool nearly ended up calling in the administrators, Manchester United have nearly £800 million of debt and last year several clubs across the piece faced financial problems, including Portsmouth becoming the first Premier League club to go in to administration.

    Indeed, the team I support, Notts County was at the centre of this too; we made national headlines last year after appointing Sven after being taken over by Munto, but by February we had been served with a winding up petition and, were it not for our new owner’s ability to nigociate with creditors we could have ended up in administration.

    So, what do we do about it?

    Well, first and foremost, it is clear that the current ‘fit and proper persons’ regime is not fit and propper for purpose. This is demonstrated by both my own team, and by Portsmouth, who I believe had 4 different owners before going in to administration. Also, 1 pundit said that, despite what’s happened Hix and Gilette could actually take over another premier league club. I also completely back the call for a German-style system with a minimum number of seats on the board reserved for the fans.

    Second, we need controls on the amount of debt, particularly in the top flight. I think it unacceptable that someone like Hix and Gilette can effectively take out a lone and secure it against the club.

    Thirdly, we need to scrap the ‘Football Creditors Rule.’ I think it is wrong that, when a club enters administration, someone like Manchester United can get all moneys owed to them, meanwhile the local sponcer, or St. John’s Ambulance, or HMRC can only get 1/5 of moneys owed to them, as I think was Portsmouth’s CVA.

    And I think the previous government made a mistake here with the 2002 Enterprise act, as they removed the Crown’s right to be the first creditor or something if a business fails.

    Sorry for the essay on this, but I really think it is time for change. And if the football authorities won’t act, which they don’t seem to be showing much sign of, the British Government should.

    Interested in peoples’ thoughts on this.

  4. David Ward

    RT @leftfootfwd: Good piece on the need for reform in football. //bit.ly/c7aerM

  5. Lessons from the NFL: There is a better way of running our football clubs | Left Foot Forward

    […] this with the prevalent trend in North American sport (and English Premier League football): • Expensive season tickets funding overpaid stars and crippling club […]

  6. Lessons from the NFL: There is a better way of running our football clubs « Martin Tiedemann

    […] this with the prevalent trend in North American sport (and English Premier League football): • Expensive season tickets funding overpaid stars and crippling club […]

Leave a Reply