Genuine football reform needed

MPs have been told to re-consider the football creditors rule as part of any future reforms to the game’s governance.

At a reading of the Corporate Insolvency and Governance Bill, MPs heard how football clubs in the EFL must not be excluded from Government assistance and the creditors rule, which demands clubs settle all football-related debts to keep their place in the leagues, has to be reformed.

Damian Collins MP, former chair of the DCMS Select Committee, told the Commons the COVID-19 pandemic would send more clubs into crisis and reform of EFL regulations was urgently needed.

“These businesses, such as they are, are going to be drained of cash, with no ability to supplement it,” Collins told MPs. “And they will be being asked to compete in sporting competitions and leagues where unless they pay these bills they will be kicked out.

“Administrators and company voluntary arrangements for football clubs have always faced that problem, whereby even if they try to honour all the creditors at the same amount and they do not pay all the football debts in full, the club loses its golden share to play and therefore the business is almost worthless.”

Collins says that the public health crisis, and the cashflow issues it is creating for clubs in the lower leagues, will send many clubs into similar crises seen last summer at Bolton Wanderers and Bury.

“What we saw with Bury last year is that if no one will come and put the money in, nothing can be done and the club is expelled from the league,” Collins said. “That is the position we are going to be in.

“So there are real problems ahead and no ready solutions on the table for these clubs. We do need a credible plan on this.

“The Government could initiate a conversation with the football authorities to say that the suspension of the football creditors rule, to help clubs restructure their finances, alongside some support, would be the moment for genuine reform.”

MPs heard that independent regulation was vital for the future sustainability of clubs in the EFL – and that football’s regime of self-regulation was failing.

“Football probably needs an independent body—an independent financial authority—to oversee these issues,” Collins told the Commons. “One perennial problem in football, particularly in the Football League, is that it is really run by the chairmen of the 72 clubs in it and they are not that interested in having close oversight and scrutiny of what they do.”

“We need to think of a creative solution that will not only provide financial stability, but create reform in the finances of football to put these clubs on a more even keel and create an opportunity for community investment and ownership in the longer term as well.”

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