A new fit and proper person test?

Posted by - September 19, 2010 - England, Premier League

Witness the fit(and proper)ness

The current Fit and Proper Person test
A person shall be disqualified from acting as a director and no club shall be permitted to have any person acting as a director of that club if:

• Either directly or indirectly he is involved in or has any power to determine or influence the management or administration of another club or Football League club

• He becomes prohibited by law from being a director

• He is convicted on indictment of an offence set out in the Appendix 12 Schedule of Offences (financial offences including theft, fraud, deception etc)

• He makes an Individual Voluntary Arrangement or becomes the subject of an Interim Bankruptcy Restriction Order, a Bankruptcy Restriction Order or a Bankruptcy Order

• He is a director of a club which, while he has been a director of it, has suffered two or more unconnected events of insolvency

• He has been a director of two or more clubs or clubs each of which, while he has been a director of them, has suffered an Event of Insolvency.

—————————————————–

Perhaps fairly obviously, I propose an enlarged and more encompassing version of the current Fit and Proper Persons test. All propositions are largely drawn from a sense of logic in the attainment of honesty and integrity, first requested by the Football Task Force as early as 1999.

Firstly, I would propose that the current conditions of the test remain in place. The disqualification on grounds of fraudulent behaviour and multiple bankruptcies seems, in the majority of cases, to be practical. However, in response to situations highlighted previously at Rotherham United, I would also recommend the availability of a review panel, in front of which anyone automatically disqualified by the test could appeal the decision, and the case be examined independently.

The main improvement that I would advocate is that the test should not be the only screening process. Upon the submission of takeover bids, it seems necessary that further checks should be carried out. This would, I feel, be attained by a consultation process, in which the potential owner, and advisors, should present information on a number of issues, namely:

• A business plan to ensure the sustainable financial development of the football club, including various contingency plans

• Measures that will be taken to ensure that a stakeholder vision is portrayed (involving local communities and supporters)

• Significant and independent reassurances that financial resources are available for current and any potentially required future investment

The panel should consist not merely of the ‘football men’ that currently utilise a two-sided form to conduct their investigations, but should instead contain experts in the fields of football ownership and, most crucially, finance and economics. I would deem it appropriate to involve several members of the club’s supporters’ trusts, in order to provide a stakeholder view at all stages.

Finally, there has to be an option for independent review when stakeholder groups feel that the club is being mismanaged. At Leeds, Cardiff, Portsmouth, West Ham and Notts County, every time new owners are introduced to deal with financial meltdown, we are told that significant, long-term damage has been done by previous owners. The mechanisms in place to remove football owners that have mismanaged clubs is lengthy and stilted, meaning that destruction can continue to occur long after it has been identified.

This would, I feel, allow for more efficient decisions to be made on club ownership. This test should therefore welcome football club owners, both native and foreign, that have the desire to represent the attitudes of the wider stakeholders of the game, including core supporters, the wider supporters of the game, and local communities.

This is not to say that rich persons wanting to make a club successful would be outlawed, but potential owners with the sole intention of wealth extraction would, it seems apparent, be unable to do so. There would be an increase in the transparency of information to supporters and communities, and the generation of massive capital gains by owners would be obsolete, as their propositions would be rejected.

It may be idealistic to think we can return to the days of ‘local men made rich’ assisting their hometown clubs in their attempts at success and glory, but at least I wouldn’t have to open the paper and see that Portsmouth owe charities significant sums of money.

  • Hawkeye

    Whilst I would generally agree with the aims of your suggestion, I don’t think it’s quite as simple as you have made out.

    You say, for instance, a business plan should be presented. Presumably you mean “and it is considered a good plan by the panel” (or words to that effect) – rather than just having any old plan. But now we get into interpretation… who is to say that any plan is good, or not acceptable? What about a review procedure if the panel say it’s not OK?

    Then what is to happen if the new owners take over, but don’t put into effect their plan, or work towards to their stakeholder vision? You can’t take the club off the new owners. You can’t fine the owners as that’s quite likely to make the financial situation (assuming it to be a problem) worse. What happens if the owners have the money, but don’t spend it?

    The biggest problem is that there is not a queue of people competing to buy a club. So no beauty parade of potential owners is possible. With a club in trouble, and with one buyer on the scene, there is a natural tendency for all involved to ‘approve’ the new buyer with ones fingers crossed, hoping for the best.

    In my view, the best you can really do is to take whatever steps you can to keep “shady” characters out of the picture and to ensure that the prospective owner has funds available to them (i.e. they are not, by default, immediately plunging themselves or the club into an unsustainable debt). Everything else strikes me as being in the “good idea, but fails in practice” category