The Football Sustainability Index

[woodsaint1]

We came third in the PL, not that it will provide much comfort when we get relegated.

https://theathletic.com/4125651/2023/01/26/football-sustainability-index-premier-league?source=user-shared-article

The coming days and weeks will bring the moment that sees English football forced to embrace change. The government’s white paper is expected imminently, crystallizing the key recommendations proposed by the exhaustive fan-led review of the national sport’s governance.

Those in power have now concluded that football cannot carry on as it was. Too many clubs have been allowed to unravel. Some irretrievably so. Increased regulation, despite the Premier League’s lobbying, will finally be introduced in 2023.

To what extent remains unclear after 12 months of slow progress, but an independent regulator will be at the heart of football’s reformation. Among the priorities, they will be tasked with ensuring the “financial sustainability of the professional game”.

An almighty, nuanced challenge but help — or at least a proposal — is at hand.

Fair Game, a group campaigning for improved governance in football, has published its inaugural Sustainability Index today, a project 18 months in the making that has called upon the expertise of academics, accountants and analysts.

The Sustainability Index, Fair Game argues, is the solution to football’s problems. A grading system by which every club is judged on financial sustainability, governance, fan engagement and equality standards. The higher your score, the greater your reward.

Fair Game, a movement endorsed by 33 clubs, does not expect its radical proposals to be adopted any time soon by an industry reluctant to look itself in the mirror, but the Sustainability Index is an attempt — perhaps an ideological one — for a club’s successes to be measured differently.

“Football needs a culture change,” says Niall Couper, chief executive of Fair Game. “It needs to start celebrating and rewarding good behaviour and we believe the Sustainability Index does that.”

So who are the first winners? Liverpool.

For all the criticisms levelled at Fenway Sports Group, the American owners who are open to the prospect of selling up this year, there were none deemed to have scored higher on the first Sustainability Index. Nottingham Forest, meanwhile, were placed bottom of the pile after they invested heavily to secure their long-awaited Premier League return.

Nottingham Forest’s transfer spending is bad news for their sustainability ranking (Photo: Clive Mason/Getty Images)

If you were wondering how it is all calculated, here comes the nerdy bit…

The Sustainability Index was divided into four sections deemed to be valued in the government’s fan-led review published in November 2021: financial sustainability, good governance, fan engagement and equality standards.

Each of those was weighted to present an overall score for every Premier League and Championship club, with financial sustainability carrying the greatest value of the four.

That particular sub-section was calculated by measuring current assets, debts, liabilities, loans repayable within a year and wages as a percentage of revenue. All information was taken from official accounts published via Companies House to create a snapshot of each club’s financial health.

Align that with scores awarded for good governance, fan engagement and equality standards and you find each club’s ultimate score in the Sustainability Index.

That is where Liverpool came out on top. Their financial sustainability might have been bettered by Arsenal and Manchester City, but Liverpool’s governance score, another complex rating that covers the club’s organisational structure, sponsorships and corporate social responsibilities, was considered the highest in the top division.

The theory says that the better a club’s governance and fan engagement, the higher its standards for transparency and dialogue. Those perceived to be well-run clubs, such as Brighton & Hove Albion and Brentford, also both returned high scores.

The dubious honour of finishing bottom went to Forest, whose most recent set of accounts, incorporating the 2020-21 season, showed that £202 was being spent on wages for every £100 of income. Financial liabilities were also twice their assets. Bournemouth were markedly better off but again cut adrift of most other Premier League clubs.

“For the first time we have a measure of what clubs stand the best opportunity of still being here for another century,” says Couper. “But in equal measures, we’ve shown the challenges clubs face to become sustainable to ensure fans don’t lose out.”

The Premier League riches, for most, bring a solid financial sustainability rating and that is again evident in the Championship. Clubs with the highest scores are typically still in receipt of parachute payments when filing their most recent set of accounts, including Sheffield United, Burnley, Watford and Huddersfield Town. Norwich City, who also scored highly for governance and fan engagement, led the way overall as a club that attempts to live prudently within its means.

Luton Town, who reached the Championship play-offs against the odds last year, were the outlier, showing financial sustainability on a limited budget, but at the opposite end of the table were clubs that have gambled in pursuit of Premier League promotion and routinely come up short.

Blackburn Rovers and Middlesbrough both returned a zero rating for financial sustainability, with Queens Park Rangers, Coventry City and Stoke City only marginally better. Fair Game has called them a collection of clubs that have chased the siren call of the Premier League.

“Outside the Premier League, clubs’ finances are a mess,” added Couper. “The Championship has become a casino and at stake are the history and traditions of our great clubs.

“The argument for an independent regulator of football is over. This is more evidence of the need for change. The new regulator needs to take control of football’s financial flow and end the insanity that exists in our national game.

“In the Championship, the true winners are Luton Town, Millwall and Bristol City — clubs that are building for the future and are refusing to put themselves at risk.”

The findings are not perfect. Stoke and Middlesbrough can both call upon local, affluent owners to subsidise losses, while Sheffield United’s current transfer embargo for the late payment of transfer fees hardly depicts Bramall Lane as a scene of stability. Promotion back to the Premier League, of course, would soon see those fortunes turn around.

Everton and Southampton supporters, too, will take little comfort from their high rankings as they live in fear of a fall into the Championship. Everton, in particular, are hardly considered a club that others aspire to be, yet sit second only to Liverpool in the Premier League rankings.

The theory is that any club scoring above 20 in the financial sustainability category is on a sound enough footing, but in the absence of real-time reporting, these measurements are reliant upon accounting figures up to the end of 2021. A new football regulator would likely have those numbers to hand, offering the promise of sharpened regulation within the game.

That fan engagement and governance are placed so prominently alongside financial health is another measure of where football is headed. Two rival fan groups, the Manchester United Supporters Trust (MUST) and Liverpool’s Spirit of Shankly (SOS) joined forces yesterday to call on the government’s white paper to strengthen rules around club ownership.

The two clubs, English football’s most successful, are both up for sale and supporters are eager to see an improved owners and directors’ test along with greater fan involvement.

“Just as the government would not allow our most important cultural or heritage assets to fall into unfit or improper hands, it should not allow our football clubs to do so either,” said a joint statement from MUST and SOS.

Football is waking up to its problems and how the government presents the long-awaited solution will shape the financial sustainability debate from this point onward.

 

[revolution saint]

To be honest that sounds like a load of bollocks.  The financial part is fine and to an extent governance (although not sure how that would be measured) but fan engagement and equality standards don't really have anything to to with sustainability.  

[Saint86]

Everton? What?!? They're a club bankrolled by an owner that has been living well beyond their means and at the limit of FFP spend for consecutive windows. They can't be scoring too highly for fan engagement either.

[S-Clarke]

As soon as you see Everton are second in that table you know it's a load of nonsense.

[Saint_clark]

2 hours ago, S-Clarke said:

As soon as you see Everton are second in that table you know it's a load of nonsense.

No chance the first club to have dugouts goes under. Surprised the entire club hasn't been grade 1 listed to protect it's historical value.

[Holmes_and_Watson]

Good to see SR thinking longer term, offsetting the costs of relegation by... having a fans forum, to boost their sustainability index rating.

Like Revolution Saint, I don't mind the finance bit, but they couldn't help themselves and threw in everything else they perceive a good club should have, weighted or not.

[SW5 SAINT]

Was our 3rd place calculated before or after our recent spending spree….?