The European Super League - governance lessons?
Date: 28 April 2021
Author: Craig Beeston, The Chartered Governance Institute UK & Ireland
Last week’s announcement by twelve (self selected) clubs that they had decided to create the European Super League brought together pretty much everyone else across the football and political worlds. The backlash was fierce, united and prompted the swift collapse of the initiative.
So how could those behind the project seemingly get it so wrong?
The most sympathetic reading of the venture would be to say that the boards of the clubs involved were merely doing what they are supposed to do under s. 172 of the Companies Act: promoting the success of the company as a whole. They identified a model which would generate increased income for member clubs of the ESL and would do so in a more predictable way.
Whether they were in actuality promoting the success of the company when they risked alienating so many is another matter. And given how many felt that they had been thrown under the bus, opposition could perhaps also be found to the notion that they had sufficient regard to the interests of employees, the need to foster the company’s relationship with customers and others, and the impact of their operations on the community.
The predictability that the clubs, as businesses, crave is anathema to the sporting ethos of competition, success and reward, and the ebb and flow of fortunes. Establishing a permanent membership would have ossified, potentially permanently, the ‘them’ and ‘us’ groups. In a different conversation, of course, the Premier League and the Champions League are the insatiable behemoths whose revenues have widened the gulf between the richest clubs and the rest. For many, last week’s move has been on the cards for a while – and may yet return.
What equally irked fans was that these clubs had chosen themselves and had done so irrespective of whether their sporting (as opposed to commercial) success warranted it. The current league positions of several of them at least suggests that perhaps they aren’t Europe’s elite after all. Meanwhile, Manchester City, Arsenal and Tottenham combined boast the same number of European Cups as Preston North End (which is to say, zero). The Deepdale outfit’s invitation, however, was seemingly lost in the post.
If nothing else, what the whole project represented was a colossal failure of stakeholder engagement. Consider the groups who voiced strenuous opposition to the move: fans, other clubs, domestic leagues, the Champions League, national governing bodies, supranational governing bodies, governments, managers, players, pundits. It begs the question, who on earth did they consult?
The answer seems to be: each other. Plus JP Morgan and perhaps no doubt a potential broadcaster. That’s it. According to Florentino Pérez, the ESL has been three years in the planning. However that time has been spent, it wasn’t in preparing the ground for the launch. While the listed companies among them could perhaps point to market rules in terms of keeping the plan under wraps, in presenting their fait accompli it seems that the twelve either massively miscalculated the strength of resistance, didn’t care and assumed they would still get their way, or saw it as a way to plant a flag and thereby improve their bargaining position within existing structures and competitions. It was surely no accident that the plan was unveiled just as Uefa were announcing their own reforms of the Champions League.
As various sanctions are considered by the folds to which the clubs now return and the owners issue uncomfortable mea culpas, the venture has re-introduced a number of governance debates.
The obvious one is that of club ownership. The price that is paid for floating on the stock market or being bought by billionaire owners or sovereign wealth funds that pump millions into squads and facilities is that control of the club goes to where the money comes from. Owners often have little understanding of local cultures, history and tradition, and their motives for involvement in the club are markedly different to those of fans (or, in the clubs’ parlance, ‘legacy fans’!)
It has escaped no-one’s notice that while clubs from England, Italy and Spain were announced as founding members of the ESL, those from Germany – including the current European champions, Bayern Munich – made it clear that they would take no part. The reason? Well, at least one is that German clubs know that the level of fan control would not allow it. Most German clubs operate under the ‘50+1’ rule. In order to be able to compete in the Bundesliga, clubs and their members hold a majority of their voting rights. Investors can thus never seize control and take the club in unwanted directions. The 50+1 rule is often raised when arguments over unpopular owners rage. How practicable a solution it would provide in England is debatable. The fan controlled model may now be unattainable, priced out by the value of top football clubs. This obstacle may perhaps in part be negotiated by another avenue mooted by the prime minister, who declared that no action is off the table as the government awaits the outcome of a fan-led review: the introduction of golden shares, giving fan groups vetoes over certain board decisions.
The terms of reference for the review include assessing whether existing Ownership and Directors’ tests are fit for purpose; appraising the flow of finances through the football pyramid; and assessing scrutiny of club finances and administrative reporting.
Another route which the review, chaired by former sports minister Tracy Crouch, may look to explore is that of introducing an independent regulator for the game. Calls for such a body were made loudly last year in the manifesto of Our Beautiful Game, a group whose number include Gary Neville; the Mayor of Greater Manchester, Andy Burnham; David Bernstein, former chair of the Football Association, and Lord Mervyn King. Football, the proponents of such a move argue, needs saving from itself and currently lacks the structures to do this.
There will no doubt be future attempts to revive the ESL or something similar. As chastened as most of the twelve owners may currently profess to be, it is perhaps just a matter of time before Europe’s elite clubs put forward another plan. What should worry those who celebrated the victory this week is that the next one will surely be less catastrophically handled.
Meanwhile, spare a thought for that handful of mayflies that lived and died only ever knowing a world with a European Super League in it.
Craig Beeston is the SGA Programme Manager at The Chartered Governance Institute UK & Ireland