(Reposted with permission from Martin Cloake, original article https://martincloake.substack.com/p/the-fab-files-2-strategic-business)
With the Football Governance Act (FGA) now law, fans of every club in the top five divisions of the English men’s game have a chance to take a seat at the table when the club’s strategic business plan is being written. In this second in a series of articles that aims to explain in plain English the opportunities the FGA offers and how fans can make the most of them, we’ll take a look at what a strategic business plan is, and why it matters that you are part of putting it together. (You can read part one in the series here).
The trouble with strategic business plans are that they sound like the worst kind of corporate jargon, the sort of thing we want to get away from when we go to the game. But these plans are an important part of ensuring that you still have a club to go and watch – not just now, but for years to come. The Independent Football Regulator (IFR) – whose job it is to ensure clubs meet the requirements of the FGA – has the power to withdraw or deny a licence to play from a club that doesn’t have a strategic business plan, or that has a plan that doesn’t meet minimum standards.
So what does a strategic business plan have to tell you?
You’ll need to go to Section 16(5) of the FGA to find the definition. The words in the legislation are in italics, and a short explanation of what they mean follows in ordinary type.
(5) A “strategic business plan” is a document containing –
(a) information, in respect of the relevant period, about –
The “relevant period” means the day from which the club applies for its licence to play up until the end of the next football season following the application date. This is to ensure the club is looking ahead, and not just planning for now.
(i) the proposed operation of the club,
The club board must explain how it intends to run the club day-to-day.
(ii) the estimated costs of that operation,
The club board must explain what it is going to cost to keep the club competitive.
(iii) how those costs are to be funded, and
(iv) the source of such funding, and
The Club board must explain where the money is coming from to stay competitive.
(b) such other information as may be specified by the IFR in rules.
This gives the Regulator wide powers to demand to view any other information it sees fit in order to support or expand on the information provided above. This is intended to ensure clubs aim for maximum standards of compliance, not minimum. It is also designed to assist the Regulator in taking an overall view of the level of risk at any given club.
So why is the regulator asking for this information?
In simple terms, because the Regulator wants to ensure the club has enough money to do what it says it wants to do, and the organisation to achieve that. It’s called ensuring the club is “financially sound”. How the test of financial soundness is identified and judged is set out in Schedule 4, paragraph 2 of the FGA.
This is given extra weight because the Regulator sees football clubs not just as any other business, but as a community asset. So it is important that it can decide if a club has the “appropriate” resources to ensure that community asset is not at risk.
As explained in the first article in this series: “The Act has been carefully designed to be holistic in nature, ensuring that different parts of it reinforce one another. Any club that seeks to view its provisions as a menu it can choose from is likely to quickly find compliance with the Regulator’s expectations is hard to achieve. As fans, remembering this key principle will help you in properly holding your own club to account.”
Financial planning is tied directly to a club’s right to exist, and its long-term sustainability. And if you need to know why that is important, read up on the many cases of clubs that have gone to the wall or faced threats to their very existence. The FGA puts fans at the table while the strategic business plan is being drawn up because fans see our clubs as more than just a business, we understand their value is drawn from their status as a community asset.
Once drawn up, the strategic business plan is effectively a contract between the club and the Regulator, and it cannot be departed from on a whim. This is specified at Schedule 5, paragraph 2. The plan is a “condition” of getting a licence to play; it is a de facto contract between club and Regulator and if a club wishes to depart from it it will need compelling reasons to do so.
Isn’t all this too good to be true?
Football fans have been promised a lot over the years, so it is understandable that many are cynical when told they finally have some power. So what is different this time?
Well, Schedule 4, paragraph 4, says a club cannot meet its Fan Engagement Threshold unless it consults fans on “relevant matters”. And these relevant matters are defined as;
• the club’s strategic direction and objectives;
• the club’s business priorities.
So when a club writes its business plan, it is legally obliged to take the views of fans into account when setting strategic goals. Consultation doesn’t mean an optional chat. It cannot be emphasised enough that proper discussion with fans about the strategic business plan is a condition of the club’s licence. We will say more about the nature of these discussions in a future paper on fan engagement.
What this also means is that fan groups need to up our game. We need to take a more professional and confident approach, knowing when to push to hold clubs to account, and knowing that we need to have a good grasp of the facts needed when we do so.
Fans can no longer be told the business side of the clubs we support is none of our business. Because the FGA makes it our business. So we need to be asking questions such as “How does our feedback on strategic direction match the business plan you submitted to the Regulator?”
In the next article, we’ll look at Corporate Governance – the “behind the scenes” rules that ensure the club actually follows its own plan.