The coming days and weeks will bring the moment that sees English football forced to embrace change. The government’s white paper is expected imminently, crystallizing the key recommendations proposed by the exhaustive fan-led review of the national sport’s governance.
Those in power have now concluded that football cannot carry on as it was. Too many clubs have been allowed to unravel. Some irretrievably love. Increased regulation, despite the Premier League’s lobbying, will finally be introduced in 2023.
To what extent remains unclear after 12 months of slow progress, but an independent regulator will be at the heart of football’s reformation. Among the priorities, they will be tasked with ensuring “financial sustainability of the professional game”.
An almighty, nuanced challenge but help – or at least a proposal – is at hand.
Fair Game, a group campaigning for improved governance in football, has published its inaugural Sustainability Index today, a project 18 months in the making that has called upon the expertise of academics, accountants and analysts.
The Sustainability Index, Fair Game argues, is the solution to football’s problems. A grading system by which every club is judged on financial sustainability, governance, fan engagement and equality standards. The higher your score, the greater your reward.
Fair Game, a movement endorsed by 33 clubs, does not expect its radical proposals to be adopted any time soon by an industry reluctant to look itself in the mirror, but the Sustainability Index is an attempt – perhaps an ideological one – for a club’s successes to be measured differently.
“Football needs a culture change,” says Niall Couper, chief executive of Fair Game. “It needs to start celebrating and rewarding good behavior and we believe the Sustainability Index does that.”
So who are the first winners? Liverpool.
For all the criticism leveled at Fenway Sports Group, the American owners who are open to the prospect of selling up this year, there were none deemed to have scored higher on the first Sustainability Index. Nottingham Forest, meanwhile, were placed bottom of the pile after they invested heavily to secure their long-awaited Premier League return.
If you were wondering how it is all calculated, here comes the nerdy bit…
The Sustainability Index was divided into four sections deemed to be valued in the government’s fan-led review published in November 2021: financial sustainability, good governance, fan engagement and equality standards.
Each of those was weighted to present an overall score for every Premier League and Championship club, with financial sustainability carrying the greatest value of the four.
That particular sub-section was calculated by measuring current assets, debts, liabilities, loans repayable within a year and wages as a percentage of revenue. All information was taken from official accounts published via Companies House to create a snapshot of each club’s financial health.
Align that with scores awarded for good governance, fan engagement and equality standards and you will find each club’s ultimate score in the Sustainability Index.
That is where Liverpool came out on top. Their financial sustainability might have been bettered by Arsenal and Manchester City, but Liverpool’s governance score, another complex rating that covers the club’s organizational structure, sponsorships and corporate social responsibilities, was considered the highest in the top division.
The theory says that the better a club’s governance and fan engagement, the higher its standards on transparency and dialogue. Those perceived to be well-run clubs, like Brighton & Hove Albion and Brentford, also both returned high scores.
The dubious honor of finishing bottom went to Forest, whose most recent set of accounts, incorporating the 2020-21 season, showed that £202 was being spent on wages for every £100 of income. Financial liabilities were also twice their assets. Bournemouth were markedly better off but again cut adrift of most other Premier League clubs.
“For the first time we have a measure of what clubs stand the best opportunity of still being here for another century,” says Couper. “But in equal measures, we’ve shown the challenges clubs face to become sustainable to ensure fans don’t lose out.”
The Premier League riches, for most, bring a solid financial sustainability rating and that is again evident in the Championship. Clubs with the highest scores are typically still in receipt of parachute payments when filing their most recent set of accounts, including Sheffield United, Burnley, Watford and Huddersfield Town. Norwich City, who also scored highly for governance and fan engagement, led the way overall as a club that attempts to live prudently within its means.
Luton Town, who reached the Championship play-offs against the odds last year, were the outlier, showing financial sustainability on a limited budget, but at the opposite end of the table were clubs that have gambled in pursuit of Premier League promotion and routinely come up short.
Blackburn Rovers and Middlesbrough both returned a zero rating for financial sustainability, with Queens Park Rangers, Coventry City and Stoke City only marginally better. Fair Game has called them a collection of clubs that have chased the siren call of the Premier League.
“Outside the Premier League, clubs’ finances are a mess,” added Couper. “The Championship has become a casino and at stake are the history and traditions of our great clubs.
“The argument for an independent regulator of football is over. This is more evidence of the need for change. The new regulator needs to take control of football’s financial flow and end the insanity that exists in our national game.
“In the Championship the true winners are the likes of Luton Town, Millwall and Bristol City – clubs that are building for the future and are refusing to put themselves at risk.”
The findings are not perfect. Stoke and Middlesbrough can both call upon local, affluent owners to subsidize losses, while Sheffield United’s current transfer embargo for the late payment of transfer fees hardly depicts Bramall Lane as a scene of stability. Promotion back to the Premier League, of course, would soon see those fortunes turn around.
Everton and Southampton supporters, too, will take little comfort from their high rankings as they live in fear of a fall into the Championship. Everton, in particular, are hardly considered a club that others aspire to be, yet sit second only to Liverpool in the Premier League rankings.
The theory is that any club scoring above 20 on the financial sustainability category is on a sound enough footing, but in the absence of real-time reporting, these measurements are reliant upon accounting figures up to the end of 2021. A new football regulator would likely have those numbers to hand, offering the promise of sharpened regulation within the game.
That fan engagement and governance are placed so prominently alongside financial health is another measure of where football is headed. Two rival fan groups, the Manchester United Supporters Trust (MUST) and Liverpool’s Spirit of Shankly (SOS) joined forces yesterday to call on the government’s white paper to strengthen rules around club ownership.
The two clubs, English football’s most successful, are both up for sale and supporters are eager to see an improved owners and directors’ test along with greater fan involvement.
“Just as the government would not allow our most important cultural or heritage assets to fall into unfit or improper hands, it should not allow our football clubs to do either,” said a joint statement from MUST and SOS.
Football is waking up to its problems and how the government presents the long-awaited solution will shape the financial sustainability debate from this point onwards.
(Top photo: Jack Thomas – WWFC/Wolves via Getty Images)