Madejski Stadium, Behind East Stand

A lifeline for EFL clubs; a window for fans’ groups

An important news story for football fans broke Friday 22nd May – and was immediately buried by the Dominic Cummings controversy. It was another political DC, Damian Collins MP and until recently the Chair of the Digital, Culture, Media and Sport select committee, doing the talking.

He sees a massive financial crisis hitting EFL clubs within a couple of months. No revenue coming in from games, 2020-21 season ticket sales hit by Covid-19 uncertainties and the knock-on effects of the Football Creditors rule. He’s not alone in predicting the demise of several, unspecified, clubs.

Collins is proposing a deal. The government is already supporting Rugby League in this crisis to the tune of £16 million. Collins’ six-point plan for football goes further.

  1. He proposes setting up a Football Finance Authority (FFA), under the auspices of the Football Association (FA).
  2. The FFA would assist financially troubled EFL clubs with public money. In exchange for those funds such clubs would surrender a minority shareholding.
  3. Independent directors would be nominated to represent that shareholding. These directors could be nominated by supporters’ trusts or local councils.
  4. These directors would have access to real time financial records and be duty-bound to raise any concerns they have about the club’s financial sustainability to the FFA.
  5. At some future point when the financial crisis has abated these minority shareholdings could be offered for sale to supporters’ trusts or local councils at a discounted rate with the funds raised going to back to the government to repay the public money invested.
  6. The EFL’s financial regulations would be enforced by the FFA (rather than the EFL club owners as at present) and the FFA would include representation of EFL clubs, PFA and the Football Supporters Association (FSA).

The Covid-19 crisis comes on top of examples of creative accounting and unsustainable wages in the Championship where wages exceed revenue. In 2018-19 wages at Reading were double the revenue. Collins argues that Championship clubs should conform to the same Salary Cap Management Protocol that apply in Leagues One and Two (wages not to exceed 60% of revenue).

It might seem to many fans that STAR and the like have been talking about these issues for years and nothing happens. But we’d say, as with safe standing, there is slow and cautious (too cautious) progress being made. This present government has a manifesto commitment to ‘a fan-led review of football governance’ and the FSA has recently, and for the first time, presented strategic proposals to the FA Board. As the old, and questionable, British Rail slogan had it, ‘we’re getting there’.

What does this mean for Reading fans?

Firstly, STAR is backing Damian Collins’ proposals as is the FSA. We believe they will be good for professional football as a whole.

Secondly, STAR encourages individual STAR members and Reading fans to back these proposals by writing / emailing their MP (help on doing this can be found at How to contact your MP).  Or by circulating Collins’ proposals or this message via social media. 

Thirdly, wearing our Reading hats, we simply don’t know how the financial crisis will affect our club. As far as we know the owner is willing and able to continue funding the club even though we are in a period of considerable financial losses and strains. If the club does take public money to help through the short-term crisis then yes STAR would be willing to step up as the steward of any reciprocal minority shareholding. However, it has to be said that the history of independent, or supporter-, directors is not always a happy and glorious one.

Fourthly, we’ve had ten or so weeks of no football and not much news about football. We fear this might be the calm before the storm. This could be a pivotal moment in the game’s survival – or re-birth – on a more sustainable level. At STAR we will try and keep on the case, for the good of our club and the game at large. Please continue to join us at www.star-reading.org

STAR 28 May 2020

 

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