‘The Battle of the Deplorable Owners’ took place on 13 March 2022 – a Premier League match between Chelsea, owned by oligarch Roman Abramovich and Newcastle United, owned by the Public Investment Fund of Saudi Arabia. (The fund’s chair, Mohammed Bin Salman has been unable to distance himself from the premeditated murder by Saudi security services of journalist Jamal Khashoggi inside the Saudi Consulate.)
Concerns about the stewardship of football clubs are not new. Tomorrow’s Company produced a stewardship ranking of Premier League clubs in 2009. Now with the sanctioning of Roman Abramovich, they demand attention. The implications go far further than sport. Our response will say much about the kind of society we want and the role of businesses within it.
The Premier League operates an Owners’ and Directors’ Test but this has not excluded deplorable owners. This is just one consequence of the Premier League being both rule-maker and trade association for the 20 participating clubs.
There are other problems. Journalist Philippe Auclair has researched the scale of the covert involvement of the Asian gambling industry:
Far Eastern gambling operators …have become ubiquitous presences in the English game… Mysterious brands invest millions in shirt sponsorships and commercial partnerships each season… before disappearing and being replaced by other operators which are just as mysterious… These companies, predominantly operating from the Philippines…are widely suspected to be used for money-laundering schemes on a bewildering scale…
Other problems include conflicts of interest involving football agents; the late rescheduling of matches to suit the pockets of TV companies regardless of the convenience of fans, and Insufficient money trickling down into grassroots football whose wellbeing will nourish the elite football of the future.
The short-lived attempt by six clubs to break away into a European Super League finally provoked the UK government. It set up the Fan-Led Review of Football Governance led by respected football fan and backbench Conservative MP Tracey Crouch.
The review concluded that football needs an Independent Regulator for English Football (IREF) using the Financial Conduct Authority as a model. It recommended a strengthened ‘fit and proper persons’ test for owners and directors; regulatory intervention in recklessly run clubs and better corporate governance, including an explicit duty of stewardship. An owner/director would be required to operate to ensure the club should exist long after they have departed.
To prevent owners from relocating the club and/or selling its stadium there would be a ‘Golden Share’. The power over for this share would be vested in the supporters and the community. All clubs would be required to develop their own diversity plans. Women’s Football was to be examined in a separate review.
All this is sensible. Full credit to Tracey Crouch. But what about football’s tainted inheritance? What does football do with the deplorable owners it is currently stuck with?
Here is a solution that has relevance not only to football but to companies generally.
Listen to the 2013 testimony to the UK Parliamentary Commission on Banking Standards. of one of Europe’s most resilient and successful banks. In the 1970s, Handelsbanken’s CEO, Jan Wallander
‘set out a single, simple corporate target that each year the bank would attain a better return on equity than its competitors. Wallander believed that employee commitment was the central factor in achieving this target, and this confidence in individual employees created Handelsbanken’s unique spirit.
‘Where Handelsbanken successfully achieved this new target, it was reasonable that all employees share some of the profits, since all had contributed to this positive outcome. Thus, in 1973, all employees received their first equal ‘unit’ in the newly formed foundation, named Oktogonen. The board decided to continue making allocations to Oktogonen for every year the company target was achieved, with a limit set so that allocations could not be unreasonably high….
‘Oktogonen operates on a very long-term basis; no employee is able to withdraw his or her units before the age of 60. This ….encourages a long-term approach to profitability.. It fosters a culture of “lifelong” employment and increasing staff commitment and ownership. The Oktogonen Foundation holds more than 10% of Handelsbanken shares, which indirectly makes Handelsbanken’s employees one of the two largest shareholders’.
Note the phrases ‘all had contributed to this positive outcome’ ‘unique spirit’ and ‘long-term basis’. Football clubs need to make their supporters owners with a voice that could in time be represented on the board. The best football clubs already have supporter shareholding. Until the latest owners took over and compulsorily purchased those shares, the Arsenal Supporters Trust facilitated such a scheme. Collective supporter ownership should be the rule, not an exception.
It is impossible to wash football immediately clean of deplorable owners. It is entirely possible to introduce a steadily increasing element of supporter shareholding operated by the same supporter/ community trust that the Crouch Review suggests will hold the Golden Share.
The new rules should require clubs to make an annual payment into the supporter shareholding trust. The annual amount might be calculated as a proportion of profits. An additional sum might be triggered where clubs spend big on transfers and agents’ fees. Thus extravagance in the transfer market would hasten the growth of fan ownership. (Where, as in the case of Manchester United, new owners had saddled the club with debt then perhaps the creditors might be required to divert a small proportion of debt repayments to the supporters trust).
The beauty of the Handelsbanken approach is its long term nature. Deplorable owners of football clubs may come and go, but if the supporters’ trusts have begun to become significant owners, at first they will have a proper voice and later an influential holding. The government has a stewardship innovation opportunity: bring the supporters into ownership and reinvigorate football clubs.
Mark Goyder is Founder of Tomorrow’s Company and Senior Advisor to the Board Intelligence Think Tank. He is the author, with Ong Boon Hwee, of Entrusted – Stewardship for Responsible Wealth Creation, published by World Scientific in 2020. He is also an Arsenal Season Ticket holder.