What Is ‘Fit And Proper’?

With the recent MP’s debate on Coventry City football club, I thought it would be interesting to discuss practical ways in which football governance can be improved and ‘bad owners’ could be held to account. It’s not that the existing framework of the ‘Fit and Proper Persons Test’ and Financial Fair Play isn’t fit for purpose, it’s that it has little scope to hold football club owners to account in a meaningful way.

The ‘Fit and Proper Persons Test’ looks into whether potential football club owners have been convicted for corruption, been involved in multiple insolvent business or more generally have been involved in criminal activity. It’s not about preventing what might be described as ‘bad owners’ from taking control of a football club, but stopping clubs falling into the hands of business people who are proven to have been corrupt or criminal.

If SISU were subjected to the ‘Fit and Proper Persons Test’ today, they would pass it just as much as they would have done back in 2007. They haven’t engaged in criminal activity during their time at the club and they have kept it afloat, it may be in a terrible state but it is still afloat.

Despite the exile in Northampton and relegation from the Championship, they haven’t fallen foul of any rules that would disbar them from owning this, or any other, football club. It’s not that the ‘Fit and Proper Persons Test’ is inherently wrong or fails to achieve its purpose, it’s what comes after that to regulate what could be deemed ‘Fit and Proper’ behaviour and management of a football club.

There is an increasing tendency among football fans in general to blame the owners when things go consistently wrong on the pitch. Sometimes the criticism is justified, often it’s fairly reactionary and doesn’t take into account the bigger picture. The authorities have to find a way of defining ‘bad’ ownership of a football club that is fair and impartial and doesn’t just devolve into a kangaroo court at the any sign of grievance from fans.

Football is a zero-sum game, your team wins because the other one loses, one team wins the league and everyone else doesn’t. For every good period for your team, there’s usually a similar or longer period where things just don’t go right. You can’t blame owners for everything that happens on the football pitch, especially over a short-term period, when luck is often a big factor in the outcome of football matches. Sometimes you just have to accept your team is a bit shit and be patient enough to allow those in charge to try and sort things out.

You can’t solely judge the competence of an owner on results, but the level of investment in the team is something easier to measure. However, it’s something that needs to be defined because opinions may differ on what is an acceptable level of investment. Otherwise, it’ll just be reacting to the capriciousness of results on the pitch.

Finding a definition of what is acceptable is going to be difficult. Let’s say we got £3 million for James Maddison, what is a fair proportion of that money to reinvest in the team? 50%? 75%? 100%? How do you define reinvestment into the team? Is it transfer fees? Is it wages? Do you include the coaching budget or the cost of maintaining the academy and training ground?

SISU could say that they’ve invested what they feel is a reasonable amount of that money back into the football club and you could say that they haven’t, and you would both be right by your own definition. It’s harder for fans to judge what is an acceptable level because we don’t have hard figures for the costs of running the club, nor do we know how much was actually received in the James Maddison deal. Which takes me to my two suggestions for improving the governance of football club ownership.

The first suggestion is to end the practice of undisclosed transfer fees and to institute a system by which football clubs publish annually a public list of what each player is paid. Although, in itself, it doesn’t stop owners from under-investing in the squad, it means what they do spend isn’t subject to speculation and that they would have to explain to the fans why money incoming may not match what is outgoing, we could then judge whether that’s fair.

My other suggestion is to have a minimum spend rule, in addition to the current maximum spend rules under Financial Fair Play. Just like the maximum spend rule, it would be based on a percentage of the club’s turnover and it would be made public knowledge when clubs fall foul of the rule.

What the consequences of failing this rule would be, I’m not entirely decided on yet. It would either be a fine, which should put a financial imperative on owners investing an adequate level of money in the squad. Or it would put the owner’s ‘Golden Share’ in the club (which entitles the club to membership of the Football League) at risk if they fail to bring the spending up to the required level within a certain time frame.

Although both suggestions may be difficult to get football clubs to agree to, having clear rules on what is an adequate level of investment and a means of holding owners to account within an agreed upon framework would be beneficial to both fans and to owners. For fans, we would gain a greater understanding of how our clubs are run rather than having to judge it almost purely on results on the pitch. For owners, being judged by fans on a less reactionary basis should make it easier to ride out the rougher periods and to assess what is required of them as owners of a football club.

A greater level of transparency and accountability in the game benefits everyone.

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