FA WRITTEN EVIDENCE TO INQUIRY APFG 2008

1. INTRODUCTION

1.1. The Football Association welcomes the All Party Football Group inquiry into ‘English Football and its Governance’ and the opportunity to contribute by written submission and oral evidence.

1.1.2 This document contains The FA’s response to the inquiry’s Terms of Reference, and is therefore set out in sections corresponding to those terms. We look forward to providing further explanation of any of the points made and answering any questions that the Group may have in a future oral evidence session and, if necessary, in further written submissions.

1.1.3 The FA understands and respects the huge level of interest that there is in Parliament about English football, as there is among the wider public, and in particular in its governance, decision-making and long-term future.

1.1.4 We have recently launched ‘The FA’s Vision 2008-12’, to which we will refer several times in this document, outlining The FA’s aspiration to become ‘A world-class organisation with a winning mentality’. A copy of the document is included with this submission and further printed copies are available on request or the electronic version via TheFA.com.

1.2 English Football - Context

1.2.1 Football is a huge and remarkable sport, loved in England where it was born and worldwide where it rapidly took root. The FA has the privilege and responsibility to oversee football in England as a whole, in all its aspects. We do so in partnership with the professional game, and by leading the rest of the game administered locally and regionally by dedicated people and played in almost every park in the land.

1.2.2 To have the right to this unique role, and to be at the heart of football, we have to meet changing circumstances. Much has been achieved in the past but we recognise that the future brings new challenges which have to be faced responsibly.

1.2.3 Since the first meeting of The FA at the Freemasons’ Tavern in Great Queen Street, London in October 1863, football has grown to be England’s national sport. The FA is extremely proud of the history of English football. Today football is played in England by approximately 7 million adults and children, with 125,000 teams competing in 1,700 affiliated leagues. There are currently 26,000 referees, 150,000 qualified coaches and over 400,000 volunteers helping to run the game.

1.2.4 England matches regularly attract a TV audience of over 10 million, topping the annual viewing charts year-in, year-out. The team now has a world-class home in Wembley Stadium; an iconic, modern venue for football.

1.2.5 The Premier League is rightly regarded as one of the most exciting domestic club league competitions in world football with coverage available in 203 overseas territories reaching an estimated 611 million homes. The Football League has seen attendances reach the highest level for 45 years, attracting over 16 million supporters to live matches last season, thus retaining its place as Europe’s best attended sporting competition.

1.2.6 The FA Cup is the oldest club knockout cup competition in the world, having started with 15 entries in 1871. The FA Cup Final is now broadcast to 160 nations reaching a broadcast audience of 400 million people.

1.2.7 Small-sided (mainly five-a-side) football has also enjoyed rapid growth, reflecting modern lifestyles and time pressures. Over the last five years The FA has made major strides in establishing futsal as a new sport in England and in convincing the wider football community of its benefits.

1.2.8 Women’s football is now the top female team participation sport in the country, currently boasting over 1 million players. The 2008 FA Women’s Cup Final attracted a record crowd of 24,529, and was televised overseas by five major broadcasters.

1.2.9 The FA has raised the levels of football participation amongst disabled people and enabled them to reach their potential either through playing, officiating, coaching or administering. There are currently 270 disabled football clubs in nine Regional Leagues with over 10,000 players. Last year over 38,000 disabled participants took part in FA supervised activity.

1.3 The FA’s Vision 2008-12

1.3.1 The new broadcast deals for England and FA Cup matches have secured £425 million over the next four years, an increase of 42% over the previous contract, and £145 million for the overseas television rights, an increase of 272%. This presents The FA with a unique opportunity to take the game forward and invest in its future development and growth as these resources feed to every level of the game.

1.3.2 Other members of the football family, especially the Premier League, the Football League and the professional clubs, also generate significant income in their own right from hugely successful competitions. The FA’s key partners for commercial success are in professional football. Our commercial success and theirs are integrally related.

1.3.3 The FA has a responsibility to use its resources wisely. Largely they are generated in partnership with professional football and are used to reward success in FA competitions and to grow the game in a sustained manner at the grassroots where, for example, The FA recently announced a £200 million investment over the next five years.

1.3.4 The FA also supports the Football Foundation, the UK’s largest sports charity, with an annual income of £45m jointly funded by The FA, Premier League, Sport England and the Government. Since its launch in July 2000 the Football Foundation has supported 5,029 projects worth over £648m (£312m) and delivered a £5 return on every £1 invested by each funding partner.

1.3.5 Through The FA Vision, The FA aims to achieve three strategic goals:

Goal 1: Trusted to Lead

Goal 2: England Teams Winning

Goal 3: Nation’s Favourite Game

1.3.6 These Goals are explained in more detail in the Vision document itself, but probably the best summary of their meaning is illustrated by the ‘Major Milestones’ that The FA has set for itself over the next five years:

· England’s senior men and women’s teams qualifying for major competitions and reaching the semi-finals at least, by 2012.

· Successfully bid to host the 2018 FIFA World Cup.

· Partnership with the Premier League and the Football League making clear, reported progress on major joint ventures in 2008 and 2009.

· Commercial/Broadcast revenues increased by a substantial amount at the next review date in 2011.

· National Football Centre operating by 2010.

· One million five-eleven year olds trained through The FA Tesco Skills Programme by 2010.

· 125,000 existing teams retained and 20,500 new teams created by 2012.

· 26,000 referees retained and an additional 8,000 referees recruited by 2012.

· RESPECT campaign improves overall disciplinary performance by 25 per cent by 2012.

· Consistently increased distribution to the game by 2012.

· Development and continued success of women’s football.

· Wembley achieving an annual operating profit by 2012.

· The FA’s move to Wembley completed and Investors in People accreditation achieved by 2010.

· Approval rating of The FA shown to improve year-on-year through the strategic period.

1.4 Summary

1.4.1 In this document we have explained developments in football governance since the last APFG Inquiry in 2003. Some of those developments are as follows:

· Increased investment in the regulation of the game

· Improved relationships with the professional game

· Increase in specialist resource at The FA to deal with governance issues such as such as safeguarding children and financial regulation

· Significant changes to the regulatory environment including the introduction of the Agents Regulations

· Improvement in procedures (such as Fast Track) that enhance the credibility of The FA’s on-field regulatory processes

We are however not complacent and still face significant challenges in a fast-moving and high profile environment where we are rightly subjected to high levels of public scrutiny and accountability for the role we play.

2. THE INTER-RELATIONSHIP BETWEEN THE PREMIER LEAGUE, FOOTBALL LEAGUE AND THE FA

2.1.1 The FA, the Premier League and the Football League work closely together at all levels (from the FA Board down to day-to-day contact between the staff) and across a broad range of issues that affect the governance of the game. Whilst there is a significant proportion of this work that is centralised through the FA, there is also a significant amount of delegation to the leagues, e.g. on issues that are competition-specific. Having said that, there have been, and continue to be, certain areas of crossover which we will always seek to minimise whilst respecting the important and valuable work that is done by all three bodies.

2.1.2 We have outlined below some of the key constitutional and executive bodies that demonstrate the close inter-relationship between the organisations. However, we would also draw the Inquiry’s attention to the considerable extent of the informal contact and cooperation that occurs between the bodies, whether in relation to sending joint letters to clubs on certain issues, or meeting to discuss and agree the best way to deal with practical problems (for example in relation to facilitating the process for registering players) or collaborating on joint meetings with clubs and club officials.

2.2 The FA Board

2.2.1 The FA Board manages the affairs of The FA and has wide powers which can be found in The FA’s articles of association. It is appropriate that there is representation from the two professional leagues and from the national game, thereby ensuring a balance of representation between these two key stakeholders. The FA Board is made up of the independent Chairman, the Chief Executive, 5 representatives of the professional game and 5 representatives of the national game. Three of the professional game representatives are appointed by the Premier League and two by the Football League.

Certain powers and duties of The FA Board are delegated to various sub-groups of the Board, the two key ones being the Professional Game Board (PGB) and National Game Board (NGB) (about which more in section 2.4). The FA Council is the body which acts as the “parliament” of football and is outlined in Section 4.1.4.

2.3 The Football Regulatory Authority

2.3.1 In addition, the Football Regulatory Authority (FRA), a division of The FA which reports into The FA Council, is responsible for performing the regulatory, disciplinary and rule-making functions of The FA. This responsibility includes formulating and proposing amendments to the Rules and Regulations, monitoring compliance with the Rules and Regulations and overseeing disciplinary matters. The FRA is also responsible for administering all Regulatory Commissions which hear charges that are brought by The FA’s Regulatory Departments and where a Regulatory Commission’s decision is appealed, the FRA is also responsible for administering the Appeal Board. The FRA’s Terms of Reference are set out in Appendix 2.

2.3.2 The FRA consists of 12 FRA Commissioners: 6 from the National Game, 2 from the Professional Game and 4 independent Commissioners. After the initial three year period (July 2007 – June 2010), the composition of the FRA will change to 4 National Game representatives, 4 Professional Game representatives and 4 independents.

2.4 The Professional Game Board and National Game Board

2.4.1 The Professional Game Board consists of 4 members each from the Premier League and the Football League. The PGB makes recommendations to the main FA Board about matters of importance to professional football. Its remit includes:

· Administrative and operational issues in relation to the FA Cup (but not its rules or its commercial exploitation);

· Administrative and operational issues in relation to the England team (but not commercial/broadcasting issues);

· Deciding on the allocation of monies which are allocated to the professional game under the FA’s Articles of Association and monitoring any conditions attached thereto;

· Making recommendations to the main FA Board about fixtures, medicine and sports science, relations with other bodies such as UEFA and FIFA insofar as these issues affect professional football.

2.4.2 For more detail please see the PGB terms of reference in Appendix 3.

2.4.3 The National Game Board performs the equivalent function as the PGB but in relation to the Football Conference, the rest of the semi-professional game, the National League System and County and grassroots football.

2.5 FA Structures

We set out diagrammatically below the key FA structures:

2.6 Other Bodies

Other bodies which the leagues and The FA have established to assist with overseeing certain areas are:

2.6.1 Professional Game Match Officials Limited, a joint venture company, set up to organise, train and employ match officials at professional football matches in England;

2.6.2 the Professional Game Youth Development Group, which is a sub-committee of the PGB, and which was recently set up to manage and improve the development of young players in the professional game; and

2.6.3 the Professional Football Negotiating and Consultative Committee (PFNCC) which was established some years ago as the forum for collective bargaining discussions around the terms of employment between clubs and players; the two leagues, The FA and the Professional Footballers Association are its members.

2.7 FMT (Football Management Team)

2.7.1 In addition to the discussions which take place at more formal levels, members of the executive teams of each of The FA, Premier League and Football League meet fortnightly to discuss key issues affecting the game and each organisation.

2.8 Working Relationships

2.8.1 Working relationships are strong at all levels between The FA, Premier League and Football League, with all three bodies frequently working together on a range of issues and at different events at all levels of the organisations. The new FA Vision also anticipates a strengthening of these relationships by the appointment of a Director of Football Services who will act as the key point of contact on a day to day basis for the administration of both national game and professional game matters. This person will have a General Manager for each of the national game and professional game reporting into them to ensure a single day to day point of contact with both parts of the game but overseen on a “whole game” approach by the Director.

3. DISPARITIES IN THE STANDARDS OF GOVERNANCE BETWEEN THE

LEAGUES

3.1.1 Many of the Rules and Regulations that apply to participants in the game are broadly similar across The FA, Premier League and Football League. We do not believe there are any disparities in the standards of governance between the two leagues. There will, of course, always be particular areas where the leagues may have rules that address specific concerns of their member clubs that may not apply more widely. Furthermore, there may be areas where the underlying principles are the same across the leagues but where the detailed application of those principles is left to the league concerned in order to ensure that the detail is as appropriate as possible for clubs at the relevant level - an example being the regulations governing transfers between clubs in the same league. In principle and in practice there is nothing wrong with this approach, and it ensures a reasonable level of autonomy and control at league level. In any event it is important to note that both the Premier League rules and Football League rules are sanctioned by The FA and are considered appropriate for the specific leagues.

3.1.2 While there will always be areas where leagues have particular concerns to address for their competitions, The FA and the leagues liaise closely to ensure that wherever possible issues across the game are addressed appropriately and with consistency. A recent example of close liaison between the leagues and The FA is in relation to third party investment in players. Whilst recognising the international nature of this issue which ultimately needs to be addressed by FIFA, the leagues and The FA have explored what steps could be taken domestically. In consultation with the Football League and The FA, the Premier League has introduced a new rule for next season that is a first step at covering this issue. All three bodies will be monitoring this issue carefully and the intention is to introduce an appropriate domestic game rule at the next available opportunity in light of experiences faced by the Premier League.

4. THE REPRESENTATIVENESS OF THE LEAGUES AND THE FA

4.1.1 Lord Burns’ 2004 review of The FA’s structure was aimed at ensuring that The FA was “an effective and inclusive body for the 21st century”. Following the approval of The FA’s new constitution by The FA’s shareholders, modernisation of The FA in 2007 resulted in the appointment of The FA’s first Independent Chairman, an expanded FA Council, a revised committee structure and the semi-autonomous Football Regulatory Authority (FRA).

4.1.2 Two sub-groups of the Board were established to assist the Board in fulfilling its responsibilities:

the Professional Game Board (PGB) – overseeing the professional game in the Premier and Football Leagues;

and the National Game Board (NGB) – overseeing the national game from the Football Conference and the rest of the semi-professional game right through to the County FA’s and grassroots football.

Section 2 of this document sets out the role of the PGB and FRA in more detail.

4.1.3 In 2008 The FA also set up two advisory groups to The FA Board, one for race issues and another for disability issues. Individuals from a variety of different cultural and social backgrounds were invited to apply for the Race Equality (REAG) and Disability Equality (DEAG) Advisory Groups with The FA looking to represent a wider cross section of communities as part of the ongoing strategy. Lord Herman Ouseley was elected to be Chairman of the Race Equality Advisory Group and the group's representative on The FA Council. Colin Chaytors (CEO of the English Federation of Disability Sport) was elected as The FA Council's representative from the Disability Equality Advisory Group.

4.1.4 The FA Council is the body which acts as the “parliament” of football, debating the issues affecting the game in order to inform and advise FA policy. The members come from every level and constituent party of English football and have many years of experience to offer. All members of the Council are democratically elected by the section of the game that they represent.

4.1.5 In 2007 The FA Council was expanded to become more representative of the game. The changes to representation include a supporters’ representative as well as representation on behalf of both the Professional Footballers Association and League Managers Association. A full list of the members of Council for 2007/2008 and who they represent is attached at Appendix 4.

4.2 Supporters

4.2.1. As outlined in The FA’s Vision (Appendix 1), one of the three strategic goals is for football to remain the Nation’s Favourite Game, and supporters have a vital role to play in achieving this goal. As well as contributing to the funding of the Football Supporters Federation, The FA also meets regularly with supporters and supporter groups to discuss fans’ issues. The FA’s new constitution approved in 2007 includes the nomination of a supporters’ representative (Football Supporters Federation Chair Malcolm Clarke) onto the FA Council for the first time. Malcolm Clarke has also been appointed to The FA’s Membership Committee which considers appropriate membership criteria for FA Full and Associate Member clubs.

4.2.2. The FA also jointly funds Supporters Direct (SD) with the Premier League through the Football Foundation and is keen to promote further the Supporters Trust movement, both domestically in England and internationally. The FA works closely with Supporters Direct, sponsoring their annual conference for example, and Supporters Direct have been represented on the Compliance Monitoring Group which reports into the FRA and monitors decisions around whether or not to bring cases before Regulatory Commissions.

4.3 Independent Football Ombudsman

4.3.1 The FA has also helped to create the Independent Football Ombudsman (IFO), replacing the existing Independent Football Commission (IFC).

4.3.2. Operating from the start of the 2008-2009 season, the IFO will have a clear remit to receive and adjudicate on complaints from football supporters and participants which have not been resolved by the football authorities and to raise any policy issues which have been highlighted by those complaints directly with The FA, Premier League and The Football League.

4.3.3 This change, made in agreement with DCMS, recognises the considerable work done by all the football authorities in recent years, since the IFC was formed in 2001. In that time, the football authorities and clubs have become much more effective in the way that they have dealt with their supporters, have adopted customer charters and improved their formal complaints procedures.

4.3.4 In order to provide continuity, current IFC Chair Professor Derek Fraser and IFC Commissioner Alan Watson will take on the role of IFO and Deputy IFO respectively. The creation of an Ombudsman maintains the position of an independent and final arbiter of football complaints. The football authorities continue to be committed to the highest standards of self-regulation that have seen only 26 complaints referred to the IFC since 2001.

4.4 Customer Charter

4.4.1. In 2000, in response to commitments made to the Government Football Task Force on Commercial Issues, The FA created a Code of Practice covering three key areas: establishing a Customer Relations Unit, implementation of a Customer Charter and reporting back on progress in adopting/promoting the first three Football Task Force reports.

4.4.2. The first FA Customer Charter was published in 2001, aimed at reviewing The FA’s performance and its relationship with supporters over the previous 12 months and also detailing The FA’s commitment to improving the relationship with the football public in 2008, with specific reference to:

Supporter Consultation

englandfans

Merchandise

Ticketing

4.4.3. The FA Customer Charter is a combination of The FA’s desire to communicate with supporters and an acknowledgement of the role that supporters have in the formation of FA policy.

4.4.4. The FA fully recognises that football fans are important to the game; we aim to listen to supporters at every level and we are determined to provide a continually high level of service. The FA values the direct relationship we have with supporters and details of what can be expected from The FA are highlighted throughout the Charter. Every aspect of the service we provide is under constant review. Every England home match programme in 2007 made reference to The FA Customer Charter, as did the programmes for The FA Cup Semi-Finals, The FA Cup Final and The FA Community Shield. The Charter is also available on The FA’s website, TheFA.com, along with its 2006 and 2007 versions.

5. THE APPLICATION OF THE FIT AND PROPER PERSON TEST

5.1.1 Following recommendations from the Group's English Football and its Finances report, The FA’s Financial Advisory Committee created a Fit and Proper Person Test (FAPPT) in 2004 which was then implemented by The FA for clubs in the Football Conference and the feeder leagues. The Premier League and Football League also introduced FAPPTs for their respective member clubs.

5.1.2 The Fit and Proper Person Tests set down certain conditions which directors and major shareholders must meet, which relate to issues such as bankruptcy, conviction for a range of offences, disqualification as a director, bans from other sports governing bodies, and involvement in previous club insolvency events. The FA’s FAPPT is set out in Appendix 5.

5.1.3 In summary it covers any individual wishing to take on the role of ‘Director’ (which now includes holders of 30% or more of the share capital in a club) at a club. Such individuals are required to confirm that they satisfy certain criteria. If such an individual does not meet the criteria, then they are not permitted to act as a ‘Director’ of the club. Criteria that are applied include the individual’s previous business record (both in football and outside) and whether they have been convicted of certain criminal offences that the authorities believe should prevent them from owning a club.

5.1.4 The FA and the Leagues are in agreement that the FAPPT is a useful and effective tool in the governance of clubs. It is also important to re-iterate that the FAPPT takes the governance of football beyond the scope of existing legislation set down by Government. The FA and the leagues regularly review the FAPPT; it was following one such review that the FAPPT was extended for the 2007/08 season to include any individual controlling 30% or more of the share capital of a club, regardless of whether they are registered as a director at Companies House.

5.1.5 The 30% level was introduced as this is the level applied by the City Code on Takeovers and Mergers for defining whether an individual/group ‘controls’ an entity. This extension recognises that an individual’s shareholding of 30% or more gives them a significant controlling interest over the affairs of a club, regardless of whether they are taking an active role in its management.

5.1.6 The FA believes that the FAPPT is an appropriate mechanism for improving governance in this area; it is a proportionate measure to address a legitimate concern in the game and reasonably goes beyond UK law in terms of who is permitted to run a company.

6. DISPUTE RESOLUTION BETWEEN CLUBS

6.1.1 The FA, along with all other national associations, is required by FIFA to have a dispute resolution process as part of its regulatory framework. The FA therefore has, as part of its Rules, an arbitration process. This is set out at Rule K of The FA Handbook and we have reproduced the text of the Rule in Appendix 6. The FA’s arbitration process applies to all disputes between participants (clubs, players, agents etc) as well as applying, where appropriate, to disputes between participants and the governing bodies (including the leagues and The FA itself).

6.1.2 The principle that sport should be given a wide margin of appreciation in dealing with disputes within, and in relation to, the sport has been recognised by the English courts in a number of key and high profile cases over recent years. Aside from the fact that The FA is obliged by FIFA to have such a process, The FA believes it to be in the interest of all sports (as well as in the interest of the courts) that the bodies responsible for the administration of sport are able to manage and resolve sport-related disputes effectively and in line with the wider interests of that sport without having to go to court.

6.1.3 Where Rule K arbitration is used to resolve a dispute between a participant or The FA regarding the FA’s regulatory and/or disciplinary decision-making process, its scope is limited to the arbitrators exercising a supervisory jurisdiction over the previous decision. In this way, Rule K does not in such instances act as a further right of appeal to regulatory/disciplinary decisions.

6.1.4 As well as The FA’s arbitration process, the Premier League has a similar dispute resolution processes for resolving disputes between its members and between its members and itself.

6.1.5 It is important to note that when a football related dispute goes to arbitration under the process set out in FA Rule K, The FA is not the arbiter of the dispute, but is merely the body which provides the framework and the procedure for the dispute to be resolved by an independent arbitrators who are in effect appointed by the parties.

6.1.6 The FA has recently revised certain aspects of the Rule K process, primarily to enable a speedier resolution to certain disputes where there is a particular urgency attached to the outcome. Overall The FA’s arbitration process is similar to arbitration processes commonly found in other industries.

7. THE ABILITY OF EXISTING GOVERNANCE STRUCTURES TO REGULATE THE INCREASING DEMANDS OF THE GAME

7.1 General

7.1.1 The FA has consistently recognised the need for an appropriate level of oversight of the game and in particular, more recently, the financial side of the game. Given the changing landscape at the top end of the game over the last 15 years and even since the last Inquiry by the All Party Football Group, The FA has had to move, adapt and expand the work it does in its role as governing body to ensure an appropriate level of regulation and to protect and enhance the standards within the game.

7.1.2 Since 2003 The FA has invested heavily in the governance of the game, and in a number of different ways including:

· Increased and expert resource to deal with the policing, investigation and prosecution of breaches of FA Rules most recently in the area of financial regulation;

· Improved systems to manage the regulatory processes – for example new databases for agents, registrations systems, disciplinary systems, and new payment systems for transfer- and agent-related funds that pass through The FA’s clearing system;

· The commitment to provide funding for external specialists to provide specific support services as required;

· The launch of a number of dedicated customer-facing systems to deal with regulatory issues such as an enquiry line for transfer-related queries and a whistleblower line that enables potentially important information to be provided discreetly;

· A significant increase in the level of guidance provided to participants in relation to governance issues, whether via documents such as The FA’s Guidance for Clubs on Money Laundering and the Proceeds of Crime Act and the extensive Guidance Notes on the new Football Agents Regulations, or via presentations and attendance at, for example, pre-season meetings of managers.

· Establishment of the FRA.

7.1.3 We firmly believe we are in a better position than we have ever been to assess, monitor and enforce standards within the industry. English football is often seen as a world leader in this area and in the last 12 months alone we have been approached by several other national associations looking for advice and guidance on the development of a robust governance infrastructure whether in relation to on-field discipline or the regulation of agents.

7.1.4 In addition it is fair to say that the international game (including the international governing bodies) has looked to The FA and the English game to develop standards in certain areas. This is particularly true in relation to the regulation of agents and the regulations that are currently being developed domestically in relation to third-party ownership of players.

7.1.5 We have provided some additional detail below on some of the areas where we consider that English football has demonstrated its commitment to providing a robust and proportionate regulatory environment which will contribute to preserving the long-term health of the game and the standards within it.

7.2 Football Regulatory Authority (FRA)

7.2.1 We have referred already to the establishment of the FRA at the start of the 2007/2008 season to be The FA’s regulatory, disciplinary and rule-making authority.

7.2.1 Although currently there are more national game than professional game representatives on the FRA, this representation will be equal once the initial three year transitional arrangement has run its course. We have already referred in section 2 to the FRA’s Terms of Reference (set out at Appendix 2). The creation of the FRA provides for the first time a body within The FA that is focussed on the regulation of the game. If required we can summarise in more detail the specific roles of the four FRA subgroups at the time of giving oral representations.

7.3 Judicial Panel

7.3.1 Separate from the FRA, The FA has also established a Judicial Panel. All football bodies recognise the need for appropriately qualified individuals to sit on bodies making decisions on individual cases. There is now therefore a separate Judicial Panel from which the people who sit on Regulatory Commissions and Appeal Boards are drawn. They are a mix of FA Council members, specialists (financial, legal, etc.), and former players, managers, referees and administrators. In this way, importantly the “judicial” function is kept separate from the “executive” and “legislative” functions.

7.4 Agents

7.4.1 New Football Agents Regulations were brought in following extensive consultation with representatives of the domestic and international football authorities, clubs, agents and players, as well as legal and tax authorities.

7.4.2 These Regulations now prohibit activity such as dual representation (where an agent acts for both player and club in a transfer deal), place restrictions on other areas where conflicts of interest may arise (such as the involvement of close family members), provide a clear framework for the payment of agents by their clients, and establish a greater level of disclosure in relation to agency business.

7.4.3 In drafting and implementing a new framework for the conduct of agency business in England, we have had to strike a balance between, on the one hand, the need to bring additional transparency, clarity and regulatory certainty to this aspect of the football industry, and, on the other, the need to recognise legal and commercial realities. It has also meant trying to find a proportionate and effective way of protecting the parties involved (in particular the players) in contractual negotiations that are often complex and multi-jurisdictional. In order to do this, very careful consideration has been given, and will continue to be given, to the legal implications and impact of both domestic and European law.

7.4.4 As part of the consultation exercise in 2007 The FA published a significant set of documents that explained the context in which football had to regulate this area of the game; the particular difficulties faced; the proposed changes to the regulatory framework; and the detailed rationale for the steps that were being proposed. We have attached a copy of the explanatory first section of these consultation documents at Appendix 7 as this provides the clearest summary of the issues.

7.4.5 The introduction of these Regulations was undoubtedly going to cause some problems while the game became accustomed to operating under a new framework and, as with any new set of Regulations, we recognise the importance of reviewing the new Regulations particularly carefully once they have been introduced. Therefore as part of the implementation process, we have invited industry representatives from all stakeholder groups to provide ongoing feedback on the practical workings of the new regulations through a working party, and we will be sharing lessons learned from this group with the game.

7.5 Safeguarding Children

7.5.1 Safeguarding children is also high on The FA's agenda and we aim to have someone at every club in the country aware of safeguarding children, whether a League Academy or a Sunday morning park side. The FA works collaboratively to achieve this goal in partnership with all the football family. The FA is investing in the appointment of full-time County FA Welfare Officers across the country to support the safeguarding children work in grassroots football and we have a rolling programme of Criminal Records Bureau checks to ensure that only the right people are accepted to work with children in football - to date 120,000 people have completed these checks. The FA is guided by legislation, best practice and the Sport England / National Society for the Prevention of Cruelty to Children (NSPCC), National Standards in Safeguarding and Protecting Children in Sport. The FA is committed to demonstrating the effectiveness of our working practices to safeguard children, by achieving all levels of these standards. However from a governmental perspective, it could be argued that safeguarding children is not a football issue (or indeed a whole sport issue) but a social one, and currently football receives no financial support for the costly checks carried out.

7.6 Doping

7.6.1 The FA operates the largest doping control programme in the UK with over 1600 drug tests per season conducted at all levels of English football. Football is well aware that it needs to show that it takes issues of performance enhancement extremely seriously, and that it adopts a proper and responsible approach to social drug use. The issue of doping control is one where the twin roles of The FA as governing the game, and developing the game, come together. We have the largest out-of-competition drug testing programme in world football with random, no-notice out-of-competition drug tests conducted at clubs throughout the year, including the close season. The FA programme is conducted in partnership with UK Sport, the UK National Anti-Doping Organisation. In addition, The FA continues to operate an out-of-competition Social Drugs testing programme, which goes beyond the scope of the World Anti-Doping Code.

7.6.2 The FA also operates the largest and most comprehensive drug and alcohol education and awareness programme in sport, which covers all players registered with professional clubs from the age of nine upwards. The programme educates players on the risks of using performance enhancing drugs, issues relating to the use of medication and supplements, and the risks in using social drugs and alcohol.

7.7 Betting

7.7.1 Integrity is a vital foundation of all sporting competition and the fundamental reason that sports introduce rules and regulations. Leagues, Clubs, Players, Coaches, Officials, Supporters and all External Stakeholders need to have confidence that the primary and paramount objective of every football match is that both the teams and individual players want to win, and that there are no external conflicting objectives (or even anything that might be seen as such, with suspicion and allegations just as easily undermining confidence).

7.7.2 The FA is working closely with other sports on betting integrity issues. We believe that it is important to share best practice and tackle together an issue that is relevant to all of us.

7.7.3 The FA welcomes the Government’s introduction of the Gambling Act and the subsequent establishment of the Gambling Commission. This provides a framework to tackle cheating in sport. Cheating in sport is wrong regardless of any betting issues – but betting brings with it a potential commercial incentive to have a different objective to winning, or to be involved in corruption and cheating, or to providing “insider information”.

7.7.4 The FA is proud of the reputation that football in England has for fair play and integrity. However, we are not complacent and recognise that events in Italy, Germany and other European countries could be replicated in Britain. It is therefore, important that we take this issue seriously and look to further support from the All Party Football Group, the DCMS and the Gambling Commission in order to protect sports integrity.

7.7.5 The FA has worked with the CCPR and other sports bodies to undertake research into the sports betting market and apply a risk profile to different types of sports betting. The research indicates that not only has betting on sports such as football become more prevalent in recent years, but a far greater variety of types of bet is also available. Consequently there is a greater risk of the integrity of football being compromised in some way. This does not necessarily mean the ‘fixing’ of matches and their results, but the outcome of events within the course of a match can be affected.

7.7.6 Sport can only tackle the issue with the assistance of the bookmaking industry. The Gambling Commission is aware of the approach the sports have made to the Association of British Bookmakers (ABB) to encourage a collaborative approach. We hope that the All Party Football Group, like the Gambling Commission, will encourage the ABB and other parts of the betting industry to contribute to this work.

7.7.7 The FA is concerned that at present it cannot act to protect football against a particular betting activity that creates a high risk for football. If football believes, for justifiable reasons underpinned by a risk assessment, that a particular bet should not be offered, then our view is that we should be able, with the full support of the Gambling Commission and the law, to say “you cannot offer these bets on our sport”.

7.7.8 The right of a sport to do this was one of the recommendations of the All Party Parliamentary Betting and Gaming Group report into Sports betting in February 2005, and we believe that this recommendation should finally be acted upon by the betting industry.

7.7.9 The FA is committed to protecting the integrity of our sport and we will of course devote resources to this task. It is extremely frustrating however, that we are incurring additional, and increasing, costs in making sure we are able to deal with sports betting by participants. As things stand, The FA has to divert resources to integrity that could otherwise be devoted to investment in grass roots football, coaching and increasing participation, for example. The FA believes as a matter of principle that if significant amounts of income are generated by the betting industry on the back of betting on football, some of that income ought to be allocated towards the cost of policing integrity in football. We would ask the All Party Football Group to use this inquiry to support that position.

8. THE PROBITY OF DECISION-MAKING PROCESSES

8.1.1 The governance of football requires difficult and often complex decisions to be taken at a variety of levels, from the recently formed FRA which will take decisions on policy matters that affect the game, through to the executive of The FA which will take decisions in relation to a number of areas including, for example, the decisions to bring charges against participants, and then on to the Regulatory Commissions which will take decisions on guilt and apply sanctions.

8.1.2 The FA recognises the need for transparency throughout these processes whilst also respecting the confidentiality of some of the issues that fall to be considered, and the need to protect, at all times, the fairness of the process. Decisions to charge and decisions of Regulatory Commissions are published on The FA’s website and Commissions are now producing written reasons in respect of their decisions which are available to the relevant participants.

8.1.3 We are not aware of any suggestion of a lack of probity in any of the above decision-making processes, and appropriately qualified and expert individuals are involved throughout those decision-making structures. Nonetheless, it is undoubtedly true that people will not always agree with the decisions that are taken, whether in relation to policy, charging or sanctioning. We of course endeavour to provide as much clarity as possible in relation to those decisions.

9. THE OWNERSHIP OF ENGLISH FOOTBALL CLUBS

9.1 One of the major areas of recent public and stakeholder interest has been the ownership and changes in ownership of clubs. In recent years there have been a number of high-profile changes in ownership of clubs.

Current Regulatory Environment – Ownership and Changes in Ownership of Clubs

9.2 Fit and Proper Person Test (‘FAPPT’) Regulations

9.2.1 As set out at section 5 above, the FAPPT currently exists to assess and monitor the probity of those persons who have management or ownership control over football clubs in England.

9.2.2 This is an important part of football’s regulatory framework for overseeing the changes in ownership of clubs; however there are also other important measures that we have set out below.

9.3 Notification of Changes in Ownership in Clubs

9.3.1 The FA and the two leagues have certain notification provisions in their rules/regulations, whereby they are required to be notified of any changes in the ownership structure of member clubs. (See FA Rules A3(j) and I2(d) and PL Rules V and FL Regulation 82.)

9.4 Transfers of Membership

9.4.1 The football authorities fully regulate a change in ownership of a club company when there is a transfer of a club’s memberships (both in The FA and its respective league) to a new limited company.

9.4.2 In such circumstances, in order that assurance is received in relation to future planning and funding to ensure that a club can continue playing at its current level, The FA and relevant league will require a number of criteria to be satisfied before consenting to the transfer of membership, including (but not limited to):

· financial forecasts for the forthcoming twelve months or until the end of the following season (whichever is the longer); and

· evidence of the source and availability of funding to support the financial forecasts above. The Football League specifically requires £1 million, £500k and £250k (for Divisions 1, 2 and 3 respectively) of cleared share capital to be evidenced by the new club.

9.4.3 Transfers of membership most frequently occur when a club enters insolvency, and its membership of The FA and league is transferred/sold as an asset to a new company.

9.5 Statutory Provisions

9.5.1 Clearly the requirements under football rules sit above and beyond other provisions that apply to the sale of companies and the source of funds used for such transactions. For example, any transaction must be conducted in accordance with UK Company law and the Proceeds of Crime Act (‘POCA’) 2002.

9.5.2 The FA has recently issued guidance on the application of the POCA (and money laundering) in a brochure sent to all PL and FL clubs. A copy is attached at Appendix 8.

9.6 Dual Interest Rules

9.6.1 Both The FA and the leagues have provisions in place to regulate individuals taking an interest in more than one club competing in the same competition. The primary purpose of this rule is to ensure that competitive integrity is not undermined by the potential for one person to influence the outcome of a particular match or matches within a competition.

9.6.2 Therefore, where an individual is deemed to have a “Significant Interest” (PL Rule V 5-19) or is deemed to be ”interested” (FL Regulations 81, FA Cup Rule 24) in more than one club, then prior permission from the relevant league or The FA is required.

Some Underlying Issues

9.7 In regulating the ownership of clubs it is important to consider the specific problems that need to be addressed. From time to time a number of issues are raised by people interested in the game regarding changes in ownership of clubs. Broadly speaking, the objections appear to fall into four main categories, namely:

· insufficient regulation of new owners of clubs;

· no regulation of the source of funds used by new owners of clubs;

· changes in ownership that significantly increase the indebtedness of a club;

· the undesirability of non-English investors becoming owners of clubs.

Each of these objections is looked at in more detail below.

9.8 Insufficient Regulation of New Owners of Clubs

9.8.1 One issue that is raised is that football should have a formal approval process for potential new owners of clubs. It is felt that such regulation would help prevent individuals whose interests may not necessarily be aligned with those of clubs or the game as a whole becoming involved. Such individuals are typically identified through media and stakeholder comment via a number of factors that make them “unsuitable” including, but not necessarily limited to, their previous and present business/personal dealings and those of their families, friends and/or business associates including often unproved allegations regarding these dealings.

9.8.2 As detailed in section 5 above, under the FAPPT, any individual seeking to take a role as a Director of a club in the top six leagues will be required to satisfy certain absolute criteria before being able to act in that capacity. As explained in section 5 the FAPPT was also recently extended to owners holding more than 30% controlling interest in a club.

9.8.3 Any regulation in this area must be legitimate and proportionate and with the FAPPT the game has implemented an additional layer of regulatory oversight that applies above and beyond the law and which the authorities believe satisfies the legal requirements that apply to them as regulators i.e. it is based on clear, objective factors and not subjective views or indeed unsubstantiated allegations.

9.9 Regulation of Source of Funds

9.9.1 It is sometimes argued that the football authorities should impose regulation to analyse the source and legitimacy of funding to support the takeover of a club.

9.9.2 There are now extensive money laundering laws in place under the Proceeds of Crime Act 2002 (POCA) that govern this area for all businesses and that will apply to clubs. The FA has made the clubs aware of their responsibilities under the POCA and money laundering legislation. It cannot be the responsibility of the football authorities to police and enforce the law of the land – other authorities exist for that purpose. Not least, the football bodies would very often not have the necessary jurisdiction or powers to investigate sources of funds e.g. from overseas.

9.9.3 It is also important to emphasise that in the event that the football authorities have reason to be concerned over the sources of funding at a club, they (as well as the club’s own professional advisers) would have an obligation to report their suspicions to the relevant authorities (e.g. Financial Services Authority, Serious Organised Crime Agency).

9.10 Increasing the indebtedness of clubs

9.10.1 Some recent club takeovers have seen the acquiring individuals using significant levels of debt to fund the purchase of shares. In certain cases, this debt has then been added onto the club’s balance sheet, along with the associated interest payment obligations. Such treatment is perfectly legitimate under UK Company law and has been used in many other industry takeovers.

9.10.2 Observers have commented that this has changed the capital structure of clubs irrevocably and resulted in money leaving the game to service the debt.

9.10.3 The FA and the other football bodies do not impose restrictions on the capital structure of a club (other than a specified share capital level applied by the Football League for a club transferring its football memberships to a new legal entity) as there is no legitimate basis for doing so. Provided those responsible for the company manage the debt appropriately and in accordance with the requirements for all companies, then it is hard to see how a more interventionist approach might be justified.

9.11 Non-English Investment

9.11.1 The FA recognises that there has been some criticism levelled at the football authorities for permitting clubs to be taken over by foreign owners. Such criticism does not identify what the specific opposition to foreign ownership is. For example, there is no evidence to date that suggests that clubs owned by foreign investors suffer more insolvencies or failures in governance than those that are domestically owned.

9.11.2 The criticisms appear to be largely based on nationality, supposition around the background of the investors and/or their perceived lack of affiliation with the club they have purchased.

9.11.3 Football clubs operate in an open trading environment in which their shares can be bought and sold with anyone wishing to invest in them. This trading environment has brought significant benefit to the game domestically through widespread investment in the professional club structure. It has also brought significant benefit to the supporters of the clubs concerned as such investment has provided an opportunity to create better facilities and improve the competitiveness of the club’s playing squad. To create an artificial distinction between domestic and foreign investors without evidence of a specific reason to do so would clearly be open to legal challenge.

9.11.4 What should matter is whether he/she satisfies the criteria in place to qualify as a controller of the club and that their funds come from legitimate sources of finance. Both of these issues are addressed by a combination of the football authorities and the law of the land.

10. CONCLUSION

10.1 The above sets out The FA’s response to the terms of reference of the inquiry. The FA would be happy to provide further information and looks forward to the oral evidence session. Copies of the FA Vision 2008-2012 are enclosed for the group’s perusal. The FA Vision is also available online at:

http://www.thefa.com/NR/rdonlyres/000220ac/rylcyedwlcqdskrwpxzyggdugzbhpjru/FAVision_200812.pdf

11. APPENDICES

1) The FA Vision 2008-2012

2) The Football Regulatory Authority’s Terms of Reference

3) The Professional Game Board’s Terms of Reference

4) The FA Council

http://www.thefa.com/TheFA/TheOrganisation/Postings/2004/03/The_Council.htm

5) The FA’s Fit and Proper Person Test

http://www.thefa.com/NR/rdonlyres/8CCD0746-2915-498E-9779-A4EDD39A0B5D/120666/FitAndProperPersons_regs.pdf

6) The FA Rule K – Arbitration

http://www.thefa.com/NR/rdonlyres/D698BE9C-12F0-4639-B53C-26833C7E87EF/121454/RulesofAssociation.pdf

7) The FA’s Football Agents Regulations Proposals