The Regulators Arrive, and Nobody Has Told Them What Success Looks Like

Independent statutory regulation of professional sport, an idea dismissed as unworkable a decade ago, is now being legislated in several jurisdictions. The instruments vary but the architecture is consistent: a licensing regime for clubs, financial monitoring with enforcement powers, an ownership suitability test with continuing rather than one-time application, and a backstop authority over the distribution of central revenue.

I have argued for years that self-regulation in football had failed on its own terms, so I should welcome this. I find that I welcome it with considerable unease, and the reason is not the powers. It is that nobody has specified what these bodies are for.

Objectives that justify everything

Read the statutory objectives across the regimes now drafted and you will find formulations of remarkable breadth: financial sustainability, the protection of heritage, safeguarding the interests of supporters, and maintaining the stability and resilience of the competition as a whole.

Each is unobjectionable. Collectively they are close to unbounded. A regulator empowered to act in the interests of financial sustainability and heritage and supporters and systemic stability has a justification available for nearly any intervention it might contemplate, and no criterion for declining to intervene.

A mandate broad enough to justify anything is a mandate that provides no guidance at all — and no protection against the pressure to act.Cordelia Bellweather

The measurement problem

Regulators are judged on observable outcomes, and the outcome these bodies exist to produce is the non-occurrence of club failures. Prevented failures cannot be observed or counted. Interventions, by contrast, are entirely visible.

The predictable equilibrium is a regulator that intervenes more than optimal, because the cost of a visible failure it did not prevent is enormous and the cost of an unnecessary intervention is borne by a club with limited public sympathy. Every incentive points toward caution expressed as activity.

This is not a criticism of the individuals who will staff these bodies, who are likely to be capable and well-intentioned. It is a structural observation about what happens when you create an institution whose successes are invisible and whose failures are on the evening news.

The competitiveness objection, and its limits

The objection most frequently raised by leagues is that regulation will damage competitiveness against jurisdictions without equivalent oversight, driving investment and talent elsewhere.

There is something in this and it is generally overstated. Elite competitions derive their value from concentrations of talent, history and audience that do not relocate in response to a licensing regime. Financial regulation has existed in various forms for fifteen years without producing the exodus predicted each time it was tightened.

The genuine competitive risk sits lower down, at clubs for whom compliance cost is material relative to turnover, and where a licensing requirement designed with a top-flight club in mind is applied to an organisation with a dozen full-time staff. That is a drafting problem with a drafting solution, and it is the part of these regimes receiving the least attention.

What I would want to see

Three things would substantially improve these regimes and none of them are in the current drafts. A defined and narrow set of triggers specifying when the regulator may act, rather than an open mandate. A statutory duty to publish the reasoning for each intervention and to report annually against measurable criteria. And a sunset provision requiring parliamentary reauthorisation, which would force a periodic public argument about whether the body is achieving anything.

Absent those, we will have created permanent institutions with expansive powers, no agreed definition of success, and every incentive to grow. Football has spent a decade demonstrating that it cannot govern itself. It would be an unfortunate outcome if the remedy turned out to be an institution that cannot be held to account either.