Timothy Alderslade: Ministers should do more to allow supporters to own a financial stake in football clubs

Timothy Alderslade is Research Assistant to a Conservative MP and a proud member of AFC Balham football club.

“The coalition government has a clear commitment, laid down in the DCMS business plan, to make progress on the reform of football governance by May next year. We intend to carry out that commitment.” - Sports Minister, Hugh Robertson, 4th December 2010

England’s abject performance in Zurich last month was a humbling experience for the whole country. Football isn’t coming home – not for several decades at least. 2030 is the earliest that we can hope to stage the World Cup - once Russia, Qatar and in all probability China have had a go.

But some good does seem to have come out of the whole experience. The defeat appears to have focused some minds about the urgent need for reform within English football. The statement above from the Sports Minister, Hugh Robertson, suggests that the Coalition has decided, at long last, to take a proper interest in the governance of the game. 

This will be music to the ears of the vast majority of football fans. They have been begging Ministers to intervene for years, having long ago given up on the ability of the Football Association to oversee the game properly.

If the Government is serious about changing things for the better, though, it needs to resist the temptation to just tinker around the edges. Wholesale change is required. It should start with the two most pressing issues affecting the game – ownership and debt.

To say that English football has been living beyond its means would be an understatement. It has been truly haemorrhaging money over the past decade or so. Domestic teams now owe more than £3.65 billion between them – a little over half of the total debt built up by European clubs. Fourteen of the twenty clubs in the top division operate at a loss and over half of all professional teams have been in administration at some point over the past eighteen years. 

Manchester United, the most successful English club of the modern era, have spent an estimated £325 million on debt interest alone since being bought by the Glazer family in 2005, whilst Liverpool were spending £25 million a year on interest payments before being bought last year by the owner of the Boston Red Sox.

Controversially, would-be owners have also been taking advantage of lax rules which allow them to buy clubs by borrowing against their assets. A recent investigation by Panorama found that the Glazers funded their takeover of Manchester Utd by borrowing £388 million against the family’s shopping mall business and £66 million against their American football team, the Tampa Bay Buccaneers. Tom Hicks and George Gillette funded their 2007 takeover of Liverpool in a similar way.

It's little wonder that the average supporter has become disillusioned with the game. They do not enjoy seeing their clubs being run like banks and are fed up at having to fork out more and more money for tickets, programmes and memorabilia. Most fans are resigned to the fact that following their favourite team can be an expensive business. What they object to is this money being used to service astronomical debts that have been run up by foreign-based owners or pay for ever higher wages for the players.

Football salaries in this country are now completely out of control. Premier League clubs spend, on average, more than half their total income on paying the players. Manchester City made a loss of £121 million in the 12 months to 31st May, largely because of an annual wage bill in excess of £133 million. That was £8 million more than their entire turnover for the year! Transfer fees are equally ridiculous and the problem is getting worse. 

Ministers now have a great opportunity to step in and sort all this out. This does not involve bailing out irresponsible owners or using taxpayers’ money to prop up indebted teams. It means giving football supporters a far greater say in how their clubs are run and allowing them the opportunity to own a stake in their teams. Before the last general election, the Labour Party touted the idea of forcing clubs to hand over 25% of their shares to supporters’ clubs. Fans would be given first refusal on the purchase of shares in the event of them being put up for sale by the club’s board. Inexplicably, the idea was dismissed by both the Conservative and Lib Dem front benches, and was never properly championed by the government.

The Coalition should look again at this. Fan ownership has been seen to work in other European countries. The German Bundesliga, for example, has its 50+1 rule. This stipulates that at least 51% of a club must be owned by the supporters, to prevent any one person or business from gaining a majority stake. German supporters, as a result, wield far more power than their English counterparts and are better able to use their position to keep the cost of the game to a minimum. The league might not be the most fashionable in the world, but it has the highest average attendances in Europe and some of the lowest ticket prices, whilst the number of season passes allocated each year is kept to a minimum, so as to increase the number of people able to attend the games. It is also in great financial health, posting a profit of €30 million last year on a turnover of €1.7 billion.

Barcelona and Real Madrid are also run on similar grounds. Barcelona have 175,000 registered members, or socios as they are known. They effectively govern the club, electing a president of the board of governors every four years. The last election took place in June of last year, when Sandro Rosell was elected with over 60% of the vote on a record turnout of over 45% of eligible members. The majority of supporters in England could only dream of this kind of power. Moreover, because of the way the club is run, season ticket prices are kept as low as possible (£75 for the cheapest adult season pass at the Camp Nou) and profits are reinvested back into the club.

There is absolutely no reason why the English game cannot go down this road. The majority of supporters are in favour - a YouGov poll published last April found that 56% of fans would support being able to take control of their clubs. For Manchester United supporters this figure rose to more than 80%. The average supporter would also be prepared to invest an average of £600 each to seize control of their club, according to the same poll. All they’re waiting for is the Government to take the lead. The full details can be worked out at a later date but for now David Cameron and Jeremy Hunt should signal their support in principle. In doing so they would become the unlikely champions of millions of football supporters up and down the country. Even without the World Cup, that’s not a bad position for the Government to be in.