Deeming a club owner ‘fit and proper’ is harder than it sounds

Photo: Joe Shlabotnik

Photo: Joe Shlabotnik

What makes a suitable football club owner? Fans think they should be financially sound, have the club’s interests at heart and keep the heritage and history of the team. But the rules say otherwise.

Birmingham City owner Carson Yeung has been found guilty for money laundering, which could lead to 7 years in prison in Hong Kong; a huge blow to football club ownership in Britain. Despite resigning from board positions, he is still the owner. He was approved to be ‘fit and proper’ to own the club when he took over in 2009, yet he was arrested in 2011 for charged during this time, and even now he has been found guilty he is still entitled to part-own the club, under guidance set out by football governing bodies.

David Deakin, a Birmingham City season ticket holder for over 20 years, says this shows the structure of football governance needs an overhaul. “How did they not find out about his finances?” he said. “More rigorous testing needs to be done, and if that takes longer, so be it.

“If an unknown guy is taking over, I want to know his intentions are good, that he’s got the money, and he’s not buying it as a toy to play around with.”

This example is part of numerous widespread problems with club ownership in football:

  • The rules and ‘test’ surrounding who can and cannot own a club are not sufficient to stop improper people taking over, and usually focuses solely on financial conduct.
  • Some owners do not take into account the interests of the club before making decisions.
  • Governing bodies do not take appropriate action when owners are under scrutiny.

In January 2013 a parliamentary inquiry ruled that governing bodies should bring about self-reform in the interests of supporters within 12 months, or face legislation to enforce the relevant and appropriate changes. Over a year later, no changes have been made.

The ‘fit and proper’ test

Rules surrounding club ownership, which underpin law, are based on financial checks prior to the purchase of a club.

According to rules established in 2004, anyone who takes over as the director of a club or owns more than 30% of one must pass an Owners and Directors Test (previously the ‘fit and proper’ test) to ensure candidates who present a risk to the club’s financial position cannot take ownership.

Someone can fail for a range of reasons, such as having an ‘interest’ in multiple clubs, having unspent convictions for corruption, spending over 12 months in prison, or being director of a club who have gone into administration twice.

Only three people have ever failed this. The first was Denis Coleman, director of Rotherham United, on financial grounds in 2006. The current administration was Rotherham’s second insolvency while he was a director.

Stephen Vaughan, then owner of Chester City, became the first owner to fail the test – he was disqualified from being a director of any company until 2020 as a result of a £500,000 VAT fraud during his previous ownership of Widnes Vikings. He was forced to sell at least 70% of his shares in Chester City in 2009.

In March 2012, Rangers owner Craig Whyte was found not to be a fit and proper person to own the club, after an inquiry by the Scottish Football Association. It was claimed that Whyte was refusing to pay taxes or insurance on the club, and he failed to inform them he had been banned from being a director for seven years in 2000.

It is clear, therefore, that the Owners and Directors Test is not sufficient in determining whether an owner is financially capable of owning a club.

Coventry City

Conflicts with club owners on similar issues are widespread.

Coventry City Football Club are also in a state, but in this case the issues are cultural too. In the past 20 years, they have been relegated twice, have gone into administration, and been booted out of the Ricoh stadium in Coventry and moved to a ground 35 miles away in Northampton, after an extensive rent stand-off.

Fans are not happy. They’ve started a petition to get the government to reopen the parliamentary inquiry into football governance, called ‘Without Fans There Is No Football’. They are asking for Coventry to be used as an example to demonstrate the failing in governance procedures, in particular failing to consider the club’s interest. If re-opened, all parties involved in the dispute, including Coventry’s hedge-fund owner Sisu, would be called before the committee to answer questions on how the situation has occured.

David Johnson, one of those campaigning for the reopening of the inquiry, is unsure that they will get the 100,000 needed to debate the issue in parliament, but is happy that the 16,000 people who have already signed are raising awareness.

“The situation is awful. We want to hold Sisu to account; as owner they should be transparent. But we know little about them,” he said. “How can you make a decision based on an owner when you have no idea who they are?”

He thinks the test should be about more than whether a club is capable of proving that they are financially stable. “They only look at financial backing, and they can’t even get that right,” he said.

The interest of the fans

Other fans take issue with their owners’ lack of concern for cultural traditions, who do not take the interest of the club as part of their role.

The Football League commented that it is only in their remit to operate within the framework of UK company law, and pointed to other regulations surrounding supporter engagement.

“The Owners and Director Test is not a subjective judgement of an individual’s character but a regulation to ensure that any person owning or exercising control over a club is qualified to do so.”

Football Correspondent for The Times, Oliver Kay, wrote about club traditions being disregarded when owners make changes. He expressed anguish that: “owning a majority stake in a club should not give anyone the right to trample over tradition,” and urged the Football Association to show leadership in conflicts by setting out a framework to preserving the heritage of clubs after they have taken over.

Cardiff City’s owner, Vincent Tan, ignored the protest of his club’s supporters and changed the team’s colours from blue to red; he believes that it will sell more merchandise. Cardiff fan Matthew Mills said, “It feels like we are in a dictatorship,” and another commented “I just want my club back.”

Assem Allam is trying to change Hull City into Hull Tigers, which is strongly opposed by some fans. He has threatened to quit if the FA rejects his claim, which he says will make the club more attractive around the world.

These cases pave the way for other owners to follow suit. “When a club’s colour or name is changed once, it can easily happen again,” Kay warned.

Guardian journalist David Conn calls for governing bodies to ban anyone under investigation, to have a requirement to include supporters in running the club, and for all owners be made to complete a course in football heritage.

“The owners haven’t got any right to mess around with the colour and the name,” he said. “Governing bodies should not allow owners to do what they want if they have the money. They are privileged to have been allowed to buy in to this amazing heritage.”

Ultimately, clubs are largely self-regulated. Supporters Direct, a football fans association, are drawing up plans for an annually renewable licence for clubs to try and protect them from such changes.

They say the “test has failed”.

“We can no longer assume that a club owner cares for it, or understands why it’s important. Until [regulation] changes we’ll continue to see owners doing things that appear in opposition to the ‘wider interests’.”

(I wrote this a while back for my Masters degree, and have been meaning to put it up for months. Pleased to say since then Coventry has been signaled to return to the Ricoh – well done to the campaign who fought for it).

Photo: Joe Shlabotnik

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