• Skip to main content
  • Skip to footer

FRA

Forensic Risk Alliance

  • About FRA
    • What We Do
    • Who We Are
    • International Expertise
    • Corporate Social Responsibility
  • Expertise
    • Forensic Accounting
    • Investigations
    • Corporate Compliance Monitorships
    • Disputes and Arbitration
    • Data Governance, Technology Solutions and Forensics
    • Technology Solutions
    • Digital Forensics
    • Data Analytics
    • Accounting, Audit and Regulatory Advisory
    • eDiscovery Consulting
    • Disgorgement, Gain and Ability to Pay Calculations
    • Compliance and Risk Assessment
    • Restructuring & Insolvency
    • AML and Sanctions
    • Mobile Discovery Solution
    • Securities Litigation
  • Results
    • A History of Success
    • Case Studies
    • Sectors We Serve
  • News and Insights
  • FRA Pulse
  • Careers
  • Contact

Failure of EFL salary cap points to need for cooperation and pragmatism

April 8, 2021

Toby Duthie, founding partner of accounting and consulting firm Forensic Risk Alliance, and Matthew Coomber, associate with the firm, say there is a clear opportunity to change governance in English football and secure the long-term financial health of the game.

Will efforts to implement cost control measures continue in 2021?

Last month, an independent arbitration panel determined that the English Football League (EFL) breached its legal obligations when planning to introduce a new salary cap in League One and League Two back in August 2020. The newly proposed, yet ultimately short-lived, salary cap regulations can now be added alongside Project Big Picture to a growing list of failed English Football proposals. With the recent appetite to reform technical parts of the game, where does this leave financial reform and will efforts to implement cost control measures continue in 2021?

Need for cooperation and consultation

The panel ruled that the EFL was in breach of the Professional Football Negotiating and Consultative Committee’s (PFNCC) constitution by failing to consult or agree its proposals with other PFNCC members. While co-operation and consultation isn’t a guarantee for success, it is a critical step in obtaining a buy-in, so serious reform can’t be achieved without it. Consulting all stakeholders – both within and outside the game – can also be a safeguard against self-interest, with Project Big Picture proposals also falling victim to a lack of consultation across the game.

Equally, external stakeholders should be considered and consulted within football, as well as other sports and the wider corporate world. In Germany, the Deutsche Fußball Liga (DFL) Executive Committee has set up the “Future of Professional Football” task force which sought the views of experts from sport, science, politics and business to oversee ongoing efforts in securing financial sustainability across the sport.

Cost control measures are not a new concept and already exist in sports such as the NFL, rugby and, more recently, Formula 1, and therefore football can look to existing frameworks when formulating regulation. Although caution must be exercised to ensure financial regulation is fit for purpose, noting that there is not a ‘one-size fits all’ approach. The NFL, which operates a hard salary cap, does not operate a tiered promotion and relegation system, with certain revenues centralised and shared equally amongst all teams. In contrast, the risk and rewards in football provide conditions where a hard salary cap is unlikely to succeed.

Financial regulation is only part of the solution

The collapse of Bury and Wigan Athletic demonstrate that any reforms need to encompass a framework that goes beyond tightening financial regulation. Cost control measures alone will not prevent clubs from mismanagement of their finances and therefore stronger due diligence, measures such as monitoring and oversight on club takeovers and a club’s internal controls, need to be considered.

A steering group called ‘Manifesto for Change’, formed of former football players, executives and politicians, have called for wider reforms. These include creating a new independent regulatory body which would oversee the redistribution of funds, implementing a club licensing system, reviewing the causes of financial stress and liaising with internal and external stakeholders. These suggested reforms are included within a new Football (Regulation) Bill which has been brought forward by Helen Grant MP. The non-disclosure of the panel’s reasons behind their ruling against the EFL only adds weight to Manifesto for Change’s argument that greater transparency is needed across the game.

Prior to Covid-19, clubs were struggling to ensure revenues matched the pace of ever-rising costs and now questions are being raised as to whether funding is fairly distributed across the football pyramid. These reasons alone, amongst many others, indicate that the debate around cost control measures will continue into the rest of 2021. It is clear that the immediate focus on stakeholders’ minds will be minimising the disruption of Covid-19. However, there is now a clear opportunity for co-operation and pragmatism in football to prevail by redefining governance, oversight and monitoring procedures to secure the long-term financial and strategic future of ‘the beautiful game’.

Read the full article here.

Matthew Coomber, an Associate on FRA’s Forensic Accounting team, is also contributing author to this article.

Meet the Authors

Toby Duthie Who's Who Legal Award Win

Toby Duthie

Founding Partner

Toby Duthie is a Founding Partner of FRA and head of its UK and European offices. He has more than 20 years’ experience in financial analysis, complex financial modeling, investigations […]

Read Bio

Want to receive updates from FRA?

Join our Mailing List

London

Audrey House
16-20 Ely Place
London EC1N 6SN
United Kingdom
+44 (0)20 7831 9110

Washington, DC

2550 M Street NW
Washington, DC 20037
United States
+1 (202) 627-6580

Providence, RI

10 Dorrance Street,
Suite 700
Providence, RI 02903
United States
+1 (401) 289-0866

Dallas, TX

One Cowboys Way
Suite 470
Frisco, Texas 75034
United States
+1 (469) 604-0925

Paris

44, avenue George V
75008 Paris
France
+33 1 74 88 05 40

Canada

20 Place du Commerce
Nuns’ Island
Montreal, Quebec H3E 1Z6
Canada
+1 (401) 289-0866

New York City, NY

434 W. 33rd Street
7th Floor
New York, NY 10001
United States
+1 (646) 921-1865

Philadelphia, PA

727 Norristown Road
Building 8 Spring House
Innovation Park, Suite 206, Lower Gwynedd, PA 19002
United States
+1 (267) 405-9302

Stockholm

7A Centralen
Vasagatan 7
111 20 Stockholm
Sweden
+44 (0)7747 790232

Zurich Office/Datacenter

Richtistrasse 7
8304 Wallisellen
Switzerland
+41 79 755 4893
  • Privacy
  • Legal
  • Cookies
  • Modern Slavery Statement
  • Sitemap
  • Contact
  • LinkedIn
  • Twitter
© 2021 The FRA group in the UK comprises Forensic Risk Alliance Limited (number 3895636) and FRA Solutions Limited (5863958). Both are limited companies registered in England & Wales, and have their registered office at 3rd Floor, Audrey House, 16-20 Ely Place, London EC1N 6SN. The term partner is used to denote senior employees of the limited companies. All rights reserved.