The best way to ensure you don’t get re-elected…

The government claims it is poised to act.  The recommendations in the follow up report by the Department of Media, Culture & Sport DCMS on football governance are absolutely clear.  Failure of the footballing authorities to act efficiently and effectively to press through the necessary reforms that are expected will be met with the most serious consequence.

We recommend that the DCMS make it clear to the football authorities that further progress on these issues is expected within twelve months. In the absence of significant progress, the Government should introduce legislation as soon as practically possible.

The report has considered aspects of the governance of the national game.  The inherent problem in the term governance is who decides what an institution does and in whose interests.  Those that govern football have to balance the interests and considerations of a multitude of stakeholders and the government have suggested the balance needs to be redressed.  These competing stakeholders include and range from the owners of football clubs and club officials; governing bodies at European and international level; the national team & management; the range of sponsors and official ‘partners’; TV and media outlets; agents; players & management, both at elite and grassroots level; sports goods manufacturers; the EU; to the government and of course the supporters.  The supporters often appear last.

The report was very specific regarding one of the issues – that of licensing of clubs.

We specified that the FA should have a strong scrutiny and oversight role and make the final decisions on controversial licence applications 

and goes on to state

The proposed FA Club Licence would constitute an undertaking by clubs to comply with FA rules and regulations, legal and club-to-club obligations, and owner and director commitments. The new body, the Football Association Regulatory Authority (FARA), would monitor and, as a matter of last resort, enforce, FA rules and regulations if it judged that a league was not following its own rules. 

The Report is not asking for the world, just that the relevant regulations and laws that are in already in place be followed.  Comply with the regulations already in place. The proposed new owners of Coventry City Football Club Ltd, Otium Entertainment Group Ltd are in breach of company law and yet the FL have issued a statement clarifying its position.

The League will now work with the administrator and the proposed purchaser with regards to the fulfillment [sic] of the requirements of The League’s insolvency policy.

The ultimate owners, Sky Blue Sports & Leisure Ltd SBSL and other subsidiaries in the same group, CCFC Ltd and CCFC Holdings Ltd are also failing to comply with the laws by failing to file the latest set of statutory reports on time.  The companies have directors and a company secretary in common.  It is not the first or only offence either.  CCFC Ltd did not submit a change to its Memorandum of Association within the 15 days of the motion being passed by the board.  It took over 15 months.  Not the most heinous crimes, admittedly, but regulations are being broken.

The ultimate owners are unknown.   The DCMS report highlighted that

A strong case can, therefore, be made that because more owners from different backgrounds—both domestic and foreign—are looking to purchase English football clubs, particularly robust criteria for ownership need to be applied before they are allowed to own a club in English competitions. 

The club and companies named are all controlled by SISU, ultimately based in the Cayman Islands for investors in funds that have never been publicly named.  How can we be sure the criteria will be robustly applied if details are not released?  If there was an opportunity for the FA and FL to show they are serious, now could be the time.

The FA regulations for 2012/13 season showed that Football Association Regulatory Authority (FARA) will be set up to issue and oversee the FA Club Licence with the following remit – to be responsible for monitoring and enforcing FA, Premier League and FL rules. FARA will be established to act in the ‘last resort’ in relation to suspected breaches.  The regulations that it must ensure are complied with include:

  •  set out an express director/owner commitment to adhere to the FA and relevant league rules and obligations.
  • require express confirmation that Club is not in breach of any legal obligations or club to club obligations.

Will this case be the first opportunity for FARA to fulfil its raison d’etre and consider Otiums licence application as controversial?  Throughout the administration process, Tim Fisher, a director of all of the companies involved in SBSL Ltd, including CCFC Ltd, repeatedly made claims that CCFC Holdings Ltd operated as the football club and were the ‘beneficial owners’ of the Golden Share that allows a club to perform in the league.  The FL have yet to issue a statement on the matter, but both press and the Administrators reports have suggested that the golden share resides with CCFC Ltd.  The Administrators report stated that all players registrations now reside in CCFC Holdings Ltd. The FA has strict regulations about third party ownership.

The holding of the economic rights in a player by third parties may be allowed in other countries.  The FA’s Regulations do not prohibit the signing of a player by an English club where third parties hold an interest in a player.  Before a player can be registered to play in England the Regulations require the English club to buy out any interests that may be held by third parties in the player.  

The main aim of this rule was to ensure fair competition, to try to eliminate any conflicts of interest where players are owned by a third party that is not a football club.  There is the possibility of a risk to the integrity of the competition if players are playing for different clubs but working for the same company.  According to the Administrators report, all of the Sky Blues players are now registered at CCFC Holdings Ltd.  The company that held the Golden share was CCFC Ltd.  It would appear that the club fall foul of this regulation, either by design or by error.  CCFC Holdings Ltd was the sole shareholder in CCFC Ltd before going into administration.  If Otium are successful in purchasing CCFC Ltd, the players registrations will still be held by the third party, further removed from the company that has historically held the rights to play in the football league.  Does this constitute ‘third party ownership’, albeit a possible unforeseen or unintended consequence, but if so, contravenes the regulations?  Will FARA be compelled to step in and enforce the regulations that DCMS expect?  What will the outcome be should they fail to and the government press ahead with legislation?  If the government decide that the newly established FARA is not performing to the standards expected, the report claims that legislation will be passed to force the authorities to act.  How will this be received by the ‘football family’?

In FIFA’s opinion, football and politics are, and should remain, separate.  FIFA receives no direct funding from any government or state, which guaranteed a degree of autonomy to assure freedom from direct political interference.  Article 58 of FIFA statutes seeks to place FIFA beyond the reach of court of law or law of any country.

 Art 58

The provision to hear appeals is subject to Article 60, stating that the process should be heard through the Court of Arbitration for Sport.

FIFA based in Zurich has a ‘Headquarters Agreement’ with the Swiss Authorities, which gives a status of an international legal entity, bringing diplomatic privilege and tax breaks in the form of an exemption from import duties, which is advantageous when the majority of income is derived from multination corporations and media outlets.  FIFA currently has reserves in excess of $1 billion.

The organisation imposes heavy sanctions when governments intervene in the business of football.  Togo were represented at the African Cup of Nations in Angola in 2010 when terrorists targeted the team bus on the way to their opening game, killing three people and injuring several others.  This resulted in the Togolese government calling the national team home after concerns about their citizens safety.  A decision was taken by the football authorities to then ban the nation from the next two tournaments, after deeming the decision to be a political intervention.  The ban was eventually overturned on appeal but highlights how serious the authorities regard their autonomy.

Nigeria were also banned from membership of FIFA and lost the ability to participate in international competition in 2010 after the Minister of Sports attempted to restart the national league ignoring the relegations from the previous season.  Thailand are currently facing a ban due to a case regarding the recent elections to the national governing body being referred to the civil courts.  ‘Appropriate measures’ will be taken should the case be allowed to continue.  But just how independent from national and international law is FIFA?

FIFA’s autonomy and authority was challenged at the European Court of Justice over restrictive employment contracts that prevented Jean Marie Bosman’s freedom of movement as a worker under EU law.  Bosman was out of contract at Liege, yet the club were able to block his proposed move to Dunkerque.  FIFA were forced to comply with the ruling that removed the restrictions, initially implementing the findings in EU leagues which was then extended to cover all contracts in all Associations.  During the World Cup in France 98, FIFA had accepted £20 million from the brewer Anheuser-Busch for rights to perimeter board advertising for the Budweiser brand but were forced to comply with French law which bans alcohol advertising in sports stadiums and then return the money.

When awarding the rights to stage World Cup final games, each city must sign ‘host city agreements’ that ensure that public bodies underwrite any investment requirements so that stadiums are completed on time and to the standard set down by FIFA.  In the run up to South Africa 2010, Cape Town authorities were coerced into building a brand new stadium after FIFA deemed the original venue, Athlone Stadium in the township of Cape Flats, did not present the image that would satisfy media audiences and the expectations of FIFA’s partners, even though upgrades had already been completed that met with FIFA’s own standards in the original agreement.  The local authorities also introduced a program of mass housing relocation in deprived areas of Cape Town to beautify the towns for foreign visitors.  Residents were forcibly removed from the Athlone district to Blikkiesdorp, Tin Can Town, a temporary camp consisting of tin huts set up on the outskirts of the city, placing people miles from work and family networks, in an attempt to beautify the city for the foreign tourist gaze, to ‘clean up’ the shanty towns visible from the main road into the city from the airport.  The town still exists some three years later.  The South African government had to implement laws which exempted FIFA from paying VAT and income tax on its earnings.  The host nations pay for the tournament and are allowed to retain only income from ticket sales and merchandise.  The very generous TV rights and massive partnership deals flow back to FIFA, hence the healthy financial situation at FIFA.

The same activity has taken place in Brazil in preparation for next years finals, in FIFA’s name, with tensions rising amongst large sections of the population.  FIFA president, Sepp Blatter, has recently called on the protestors in Brazil to refrain from linking their protests to the forthcoming World Cup, in 2014.  The protests are linked to the lack of benefits that normal Brazilians feel they are gaining from the hosting of the tournament.  The improvements promised have yet to materialise.   A large proportion of investment made by the government is in infrastructure, which has seen vast sums of public money redirected to ensure stadiums are completed in time for the competition.  Brazilians were assured that private money would be used to build the stadiums but when this failed to materialise, the costs fell to the government, resulting in a lack of funds to pay for other projects promised and so badly needed.  But FIFA, football and politics don’t mix.

If the FL and FARA do not respond in the manner expected and the government do decide to take action in the case of Otium and the Sky Blues and press ahead with legislation, the repercussions could result in the national team being disqualified from next years world cup tournament.  FIFA requires state interference in order to host events but does not take lightly to state interference into areas it considers are ‘football matters’.  This can be used as a useful tool for the football authorities here in England to limit the actions taken on enforcing their own regulations.   The options that then remain open to the politicians are restricted, as no-one wants to enter a general election on the back of missing out on another, no doubt woeful, English world cup campaign.

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One Response to The best way to ensure you don’t get re-elected…

  1. Dave says:

    FIFA’s ability to move against the UK would be heavily conditioned by the fact that a) the other home nation FAs would be dragged in too as the act would be by the UK Govt and b) everyone knows FIFA are corrupt kleptocrats and they have no desire to incite the British media into covering them in detail and c) their continental confederation would be entirely happy with the UK government actions and d) it’s not a challenge to FIFA per se, but FIFA’s doctrine’. Anyone who’s seen what happened in both Ireland and Australia in relation to government intervention knows that they’re a paper tiger on this.

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