Every club set to beat Independent Football Regulator’s new offside trap
THE proposed new licensing regime operated by the Independent Football Regulator (IFR) includes a requirement for every English football club to publish a corporate governance statement (“club code”) bi-annually but only from October 2027. The measure is among the key proposals in the IFR’s recently released 245-page consultative interim draft State of the Game report, ahead of publication of its final report in December.
I am sceptical about whether this proposal will have a meaningful impact in English football club boardrooms. If we take preventing another Manchester City as a topical litmus test, I would question whether requiring clubs to publish and adhere to a corporate governance statement can be used effectively as either a preventative, licensing or disciplinary measure. Tutting about and then trying to punish the horse after it has left the stable does not usually work, particularly if the aim is to change board cultures, behaviours, administration and composition for whatever ‘greater good’ the IFR deems needed.
Even if we ignore the naïve conception of how corporate governance works, its limited discussion in State of the Game is concerning given the importance it, apparently, has for the IFR’s future regulatory work. The lack of real teeth for the new ‘club code’ means it won’t corral reticent or recalcitrant clubs into a brighter, more stable football future. Shortfalls in corporate governance within professional football stem from a more complex set of interrelated issues than the IFR’s ‘club code’ addresses.
Research by Henley Business School into corporate governance across several sectors, including professional football in England and Scotland, undertaken for my book The Independent Director in Society, found disconnects between input quality and director effectiveness. Input quality issues included director time, information quality, engagement, tenure and board experience. While director effectiveness issues included failure to articulate different perspectives, contribute to a shared purpose and ineffectually undertaking monitoring and stewardship responsibilities.
Irrespective of IFR plans, fierce advocacy of its decision-making independence and its laudable advocacy of the benefits of improved equality, diversity and inclusion, what makes the current composition of English football club executive suites less future-proof is that recruitment and appointment processes are often basic, who you know or ad hoc. Some 26% had no formal process for appointments to board roles. Henley also found that 62% of respondents had less than three years’ experience in their role, while half held no similar board position elsewhere, meaning their experience was extremely limited. More than 10% had received no induction training. Nonetheless, many were sufficiently overconfident to rate themselves as doing a good job or better, so may find future career opportunities at the IFR.
Improved EDI transparency and/or a corporate governance statement does not address these needs for education, training, experience and certification. The IFR’s ‘club code’ rightly suggests that non-executive directors and independent non-executive directors would benefit corporate governance but, again, these roles remain unspecified while the benefits that accrue remain assumed rather than stated, let alone enforceable or regulated.
If the IFR’s remit is to address potential financial instability, sudden revenue shortfalls, improve fan engagement and/or protect community heritage assets while improving board performance, no one is going to be caught offside by them. Indeed, benchmarking and adjudication based on bi-annual club corporate governance statements after next season has already started is likely to be benign, ignored, unenforceable or simply bypassed in a fast-moving and increasingly complex English football club market. Asset-strippers, sports-washers and ineffective boards can continue to act as they please with relative impunity for some time yet. There will not even be any need – as regularly happens elsewhere - for the football industry to capture this particular regulator given what this State of the Game draft report reveals about the IFR’s plans for a weak, almost homeopathic, approach to very slowly improving corporate governance.
Notes
Other Henley Business School sports sector findings contained in The Independent Director in Society include: Sports non-executive directors give the least time commitment to the role when compared to other sectors studied (Health, Charity and Education) with just 14.1 days per year on average (roughly one day a month). Its research also found significant number of directors (17%) do not agree that good data/evidence for decision-making is either made available or can be easily obtained. About 44% say they do not “visit operations and talk to other layers of management”; 22% don’t have “regular updates and presentations on the board from other internal/external experts apart from management”; 14% don’t believe they are “given the right quality of information for the board agenda to play an effective role during meetings”, and 10% don’t think they have “effective dialogue with other independent members”.
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