Premier League clubs should pay a transfer “stamp duty” to support the English pyramid, the fan-led review of football governance has recommended.
The wide-ranging review commissioned by the Government has, as expected, called for the creation of an Independent Regulator for English Football (IREF).
It says this should be created via an Act of Parliament to ensure the financial sustainability of the men’s professional game.
The review has also recommended the granting of ‘golden share’ veto powers to supporters’ groups on key issues such as clubs attempting to enter breakaway competitions, moving stadium or changing club colours.
However, arguably the most surprising and eye-catching recommendation from the panel, led by chair Tracey Crouch, was to provide additional support for the football pyramid via a “solidarity transfer levy” on deals between Premier League clubs or signings from overseas.
The report, published on Wednesday, did not recommend the percentage that the levy should be set at, but stated: “Given the vast wealth at the top of football, the continued levels of investment, the growth of international broadcast deals, and the leadership of the game it provides (domestically and internationally) it is not unreasonable that the Premier League supports wider football to an even greater level.
“The review considered that the most progressive intervention is a new solidarity transfer levy paid by Premier League clubs on buying players from overseas or from other Premier League clubs.
“This would work in a similar way to stamp duty and distribute revenues across the pyramid and into grassroots.”
The report quoted analysis that clubs had spent £9.9billion on transfer fees over the last five years.
“If a 10 per cent levy had been applied in that period, excluding transfers from EFL clubs, an estimated £160 million per year could have been raised for distribution,” it said.
“This level of support, annually, could be game-changing to the pyramid.”
The review said the IREF would be responsible for ensuring fees were paid.
On the thorny issue of parachute payments, the report said the IREF would have backstop powers to “impose a solution” on the Premier League and the EFL if the leagues could not agree one before the IREF had been created. It noted the “poor history” of the industry in reaching such agreements.
The report called for the IREF to be established in shadow form as soon as possible before the legislation to give it full authority had received Royal Assent. Crouch told the PA news agency she hoped that everything would be in place by the start of the 2023-24 season.
Clubs in the top five leagues of the English pyramid would need to be licensed by the IREF in order to operate, requiring them to continually demonstrate the viability of the club and the suitability of owners and directors.
The IREF would take over responsibility for administering the owners’ and directors’ tests from the Premier League, EFL and the Football Association.
There would be separate tests for owners and directors but both would contain “integrity tests” requiring individuals to demonstrate their “good character”.
“A proposed owner be considered as of good character if there is no reliable evidence to consider otherwise and the IREF has no reasonable grounds to doubt their good repute,” the report said.
The report did not specify whether human rights issues would be considered within the test, which has been called for by Amnesty International following the controversy around the Saudi-led takeover of Newcastle.
However, the test would consider “the integrity and reputation of any close family member or business associate of the proposed owner”.
The Premier League has said in relation to Newcastle that it has “legally-binding assurances” that the Saudi state has no direct control over the club, despite the Saudi Public Investment Fund (PIF), which has an 80 per cent stake, being chaired by Crown Prince Mohammed Bin Salman – who US intelligence agencies reported had approved the 2018 murder of journalist Jamal Khashoggi.
PIF governor Yasir Al Rumayyan is understood to have been the only representative of the sovereign wealth fund who was subject to the test, but the new proposal would appear to go further.
The tests would be applied annually to directors as part of the licensing system and on a staggered three-year basis for owners. The outcomes of all tests would be published.
The IREF would also have powers to manage owner subsidies to prevent them destabilising individual clubs or distorting the leagues they play in.
The report said the IREF “should have a proportionality mechanism when assessing owner injections”.
It added: “In outline, this would involve a limit being set on the level of owner subsidy based on the size of a club’s existing finances (which would grow over time if the investment was successful and the club grew).”
It also recommended the introduction of promotion and relegation clauses in player contracts as fixed percentages.
Clubs would be subject to real-time monitoring and be asked to produce emergency “transition plans” which would kick in if certain “triggers” were hit which signalled financial distress, to prevent clubs collapsing.
The IREF would have the power to impose sporting sanctions, though where appropriate the preference would be for penalties to directed at individuals rather than measures which would harm fans.
The report called for the creation of “shadow boards” to give supporters greater decision-making influence and oversight, and said minimum requirements for supporter engagement would be part of the licensing system.
On issues such as relocating a club, changing a badge or home club colours, the club name or seeking to enter a competition not sanctioned by the FA, FIFA or UEFA, a ‘golden share’ power of veto would be afforded to a democratically-run Community Benefit Society (CBS).
The report noted that 73 clubs currently have a CBS in the form of a supporters’ trust. It said if the power of veto was exercised, the IREF would arbitrate or appoint arbitrators to settle the dispute.
The review makes 47 recommendations in all, after hearing over 100 hours of evidence and receiving contributions from supporters of 130 clubs.
Clubs entering the EFL should be given a three-year grace period to lay a grass pitch, and the review also calls for the Government and the UK Football Policing Unit to work on a pilot scheme to allow the sale of alcohol in sight of the pitch at matches in the National League and League Two.
It also called on the game to provide improved mental health support to players released from the game, particularly at academy level, and for a similar review to be conducted for women’s football.
The Government promised a fan-led review as part of its 2019 General Election manifesto. That pledge followed the collapse of Bury, and the decision to bring it forward was influenced by the financial shock caused by the coronavirus pandemic and the short-lived formation of a European Super League in April.
The Government is expected to support the idea of an independent regulator in principle, and a written ministerial statement is expected on Thursday.