As long ago as 2005, the Football Association developed a Fit and Proper Person test to ensure the effective governance of the clubs in its charge. Developments since then suggest that even at the highest reaches of the Premier League, the issue remains a dilemma
Tudor Rickards & Leigh Wharton
A glance at the top of the English Premiership [September 25th, 2010] suggests that the FA still has to deal with governance issues five years after the development of the Fit and Proper Person Test (FPPT). At the time of writing, the most recent troubles have included salacious stories of England playing stars. A range of Premier League clubs face embittered fans over takeovers which they consider to have involved include individuals who may have passed the FPPT, but whose business models are seen as contrary to the interests of the fans, and arguably to the well-being of the clubs.
The highest profile clubs include Manchester United (fans at loggerheads with its American owners). Liverpool FC (ditto). Manchester City was rocked in 2008 by the drama of the exiled political figure Thaksin Shinawatra before being swallowed up by allegedly one of the wealthiest of backers from Abu Dhabi. Arsenal appears to have gained some financial security but faces the distinct possibility of another disruptive takeover. Chelsea seems to have stablised through on-field success leading club after too many changes of manager under its billionaire Russian owner.
The Finance Advisory Committee, chaired by the economist Kate Barker, is pledging to introduce the test for next summer’s FA AGM. The reform has long been urged on the FA by supporters’ groups, who have been bemused by the way in which crooks and bankrupts are allowed to take over the nation’s football clubs, with no questions asked.
The “fit and proper person test” will be only part of the work that the new committee will be expected to lead and oversee, which will include trying to encourage a more responsible approach to clubs’ financial management.
“This is a very important development in an overall approach by the FA,” promised Nic Coward, the FA’s director of corporate and legal affairs.
Barker, a member of the Monetary Policy Committee of the Bank of England, will be able to appoint other independent members, to join on the committee the representatives of leagues from the Premier to the Isthmian, together with Coward and the FA’s new chief executive, the former insolvency accountant Mark Palios.
Some work has already been done, by the FA’s Financial Advisory Unit and by Matthew Holt, of Birkbeck College’s Football Governance Research Centre. [Later to become a a leading sports administrator.] The test is likely to apply to directors, not to shareholders, because of the legal difficulty of regulating who can own shares in a football club. It is likely the FA committee will recommend that so-called “shadow directors” be vetted, too, but it is notoriously difficult to prove that somebody is acting as a director if they are not officially on the board.
Governance Issues since 2005
Since 2005 the Football Association has itself struggled with a whole range of governance issues. Football fans and pundits alike have considered the FA itself to be in disarray after a series of crises of governance involving its own directors, employees, the football clubs, the England National team, and media scandals.
Students of business leadership and governance will find much to evaluate in assessing the dilemmas facing the clubs and the FA into the forseeable future.
Matthew Holt, the consultant to the 2005 FPPT initiative subsequently propered a comprehensive document on the topic. In it he reviews the wider complicated issues of governance facing the FA.