I have been invited to speak on Monday evening on a panel about ethics in football and, specifically, the Owners and Directors Test: in short, how we get the “right” type of owners into the game. The mini-budget announcement last week by the government has made me think tangentially about this issue and what place regulation has in football.
Liz Truss and Kwasi Kwarteng have been nothing but clear about what they stand for – we are in an era of deregulation, tax cuts and growth at all costs. I understand the logic of trying to get the economy growing and using the resulting income from taxation for societal investment. The problem is this is an amplification of the existing model of the past 50 years of capitalism where we have been concentrating wealth in fewer and fewer people. The UK Gini Index, which measures inequality, has risen steadily since 1977, from 25% to 36.3%, and a House of Commons Library study shows that, globally, the top 1% of earners are on track to control approximately 64% of global wealth by 2030. Both are corrosive for our democracy and a sense of fairness. In society relative inequality matters not just on a moral level but because it creates political instability. We have doubled down on that in the past week.
The current ideological shift towards deregulation would also be a disaster for the English Football League and broader football pyramid. In 2021 the diagnosis and recommendations set out by Tracey Crouch in the Fan Led Review were crystal clear; free market ideology and untethered globalisation puts the national game at risk and devalues the communities that clubs are rooted in. While at an aggregate level the game is increasing its global reach and wealth, it is creating market distortions for all those outside the top of the Premier League. The global growth of the game attracts the type of investors who are prepared to take high risks and underwrite massive losses, investors with no relationship to the local communities in which their assets are based. Local supporters have a decreasing relevance as matchday revenue is dwarfed by the potential of global TV audiences.
The same logic and free-market failure was evident in the European Super League debacle. International investors at the economic top of the pile tried to embed and enrich their financial interests further, and all done with no regard for those in the pyramid who over the past 100 years had collectively created the conditions of their current success. Football is the failure of trickle‑down economics made manifest as those at the top pay out dividends and create equity value while those lower down look to benefactors to underwrite losses out of passion and often irrationality. One has only to look at Derby, Bury and Wigan for recent examples.
As we went through the process of buying Grimsby Town last year my business partner and I were subjected to the Owners and Directors Test by the EFL, primarily to try to test our ability to underwrite the losses and take on the debt of our local football team. The framework and conditions of the test are set out publicly and are often criticised after the fact, when an owner performs badly and post hoc – the EFL is accused of being unable to weed out unsuitable candidates for football ownership. We should never see regulation as the way to own entirely the burden of policing our game. The role of a regulator and the tests of ownership are about eligibility to be an owner rather than suitability. In reality suitability can only ever be known once someone gets the keys.
The EFL has the impossible role of not wanting football clubs to go short of investment while at the same time having access to objectively identifiable data on the background of potential investors. Any test of character and the moral fortitude for the journey ahead are difficult at best and impossible at worst. Importantly, by focusing on the test it sets out an unrealistic expectation that the Owners and Directors Test test is the ethical border we can use to stop the “wrong” type of people crossing into ownership.
There are many practical recommendations on how we can optimise the O&D process, a number of which have been made by the FairGame coalition of which Grimsby are proud to be a member alongside 30-plus other clubs. We must not be distracted, though, by endless attempts to enhance the administrative regulation as we will miss the most important recommendation of the Fan Led Review, which is the need for an independent regulator. The sustainable distribution of cash through the pyramid and fair boundaries on salaries and expenditure are the priority so that we can entice a more rational, long‑term, community focused investor to the game. When the only people who can own football clubs are by definition those who are prepared to lose money, then clearly there is something wrong.
It has been suggested to me, and only half-jokingly, that anyone who wants to own a club on those terms is probably not “fit and proper” already. If there is a way to address financial sustainability we would be able to attract a broader group of potential investors and potentially get more clubs into fan ownership.
The main way to solve the issue of getting the right investors into football is not by trying to find an objective measure of character but by creating a sustainable financial framework that works for everybody. The current model creates a level of inequality and high‑risk behaviour that attracts many owners prepared to gamble vast fortunes on the chance of achieving Premier League status. This, in turn, distorts the economics for those clubs trying to build within their means. This inequality matters profoundly in football for more than sustainability reasons; it is the extractive version of capitalism that over time depletes the ecosystem on which it is built.
All markets operate within some constraints and laws to make them endure. This is an important moment for football and an independent regulator is needed more than ever.
Jason Stockwood is the chairman of Grimsby Town.