Is the Premier League ready to reassess its relationship with money?

Andy Burnham called on football to "reassess its relationship with money" and asked the FA, Premier and Football Leagues to consider whether:

Question 1

The rules governing finances can be made consistent between the leagues

Premier League's answer

The Premier League did not offer an answer to this question.

What this means

Burnham invited the three football bodies to come back to him with a joint response. The FA and Football League are understood to have wanted to do so but the Premier League did not, arguing that it wanted to present its own proposals. That meant there was no work done to harmonise the approach to finances, as Burnham requested.

Question 2

There can be greater transparency and scrutiny of clubs' ownership, including the amount of debt used to finance a takeover and whether that debt is "sustainable and in the wider interests of the game".

Premier League's answer

The Premier League proposed:

– requiring clubs to make public any shareholding above 10%;

– requiring clubs to publish group accounts every year if the club itself is owned by another company.

What it means

These are modest reforms. There is, in reality, no huge problem with the transparency of clubs' ownership – it is well known who owns most clubs and they all declare in their annual accounts what the ultimate holding company is and where it is registered. Increasingly clubs are owned outright by one individual, so there are often no other shareholders holding above 10%.

Clubs already do publish group accounts if the club itself is owned by another company, so that proposal is not new.

The Premier League did not address at all Burnham's question about the debts used to finance takeovers, most notably at Manchester United and Liverpool, where the new north American owners' combined borrowings of over £1bn have been loaded on to the clubs.

Question 3

The rules which penalise clubs falling into insolvency can be reviewed.Premier League's answer

This is perceived to be a question for the Football League, over 40 of whose clubs have been insolvent since 1992. Many have suffered financial collapse after being relegated from the Premier League, partly because of the huge financial divide between the Premier League and the Championship. No clubs have gone into administration while in the Premier League, and the league did not offer a response to this question.

Question 4

The rule which requires insolvent clubs to pay football debts in full, unlike other debts, should be reviewed.

Premier League's answer

Again, this question is seen as most relevant to the Football League, where a series of clubs have gone into administration. Football's rules, controversially, require clubs coming out of insolvency to pay other clubs to which they owe money in full, and players' wages up to the end of their contracts, while other, "ordinary" creditors can be paid a fraction of what they are owed. HM Revenue and Customs bitterly opposes losing out in that way but has not been successful in court challenges to the "football creditor" rule.

The Premier League did not answer this question specifically but did offer proposals in relation to debts generally and financial management:

• Clubs' annual accounts are to be independently audited by accountants who must consider whether the club is solvent, a "going concern" and can fulfil its fixtures for the season;

• Clubs must submit to the auditors future financial information to show they are not taking on "undue financial risks";

• Clubs must demonstrate every year they do not have outstanding debts to other clubs;

• Clubs must demonstrate they are not in debt with regard to income tax or national insurance payments.

What this means

Without further detail it is difficult to see how the "going concern" scrutiny goes beyond what accountants must do already, assessing clubs' financial solvency. All Premier League clubs are likely to pass this test; the ones with the highest external debts, certainly Manchester United and most probably Liverpool, earn enough to pay the interest.

The requirement that clubs show they are not in debt to other clubs or the tax authorities is a significant reform and will encourage clubs to be up to date.

The proposals show a willingness to respond to Burnham and to the general concern, highlighted by the FA chairman, Lord Triesman, about the levels of debt being carried by Premier League clubs. But "undue financial risk" is written into English football's structure: the financial gap between the Premier League and Football League, where clubs receive on average almost £40m less TV money. Severe financial collapses have usually happened when clubs are relegated. None of the proposals addresses that divide.

Question 5

The fit and proper person test for club directors and 30% shareholders needs to be strengthened.

Premier League's answer

• The "fit and proper person test" will be extended: people will not be able to serve as directors or buy 30% or more of a club if they have been convicted of a range of criminal offences;

• Individuals prohibited from entering the UK or whose assets are frozen will not be "fit and proper";

• People will have to show they are "fit and proper" before they take over a club rather than, as now, when they have already taken charge.

• Directors will be given a guide to their obligations when they take over at clubs.

What this means

These changes do represent a tightening of the "fit and proper person test" and Burnham will count that as progress. The second reform, that people will be barred if their assets are frozen or if they are refused entry to the UK, clearly targets the remarkable situation at Manchester City, where the ousted Thai Prime Minister, Thaksin Shinawatra, took over in 2007 despite having his assets frozen. He was also charged with corruption offences and had been criticised by Amnesty International and Human Rights Watch for alleged abuses, yet the Premier League has not suggested people should be barred in those circumstances. The league argues it cannot go too far beyond the law of the land and Thaksin was, at the time he took over City, allowed to settle here and buy UK property and businesses.

Overall the response tightens the technical test but does not address general concerns about the motives, or competence, of people who take over clubs when, as most do, they pass the fit and proper person test.

The provision of a guide to directors is a positive idea which could be extended to include information about the history and culture of clubs and what is expected of directors.

Question 6

"Competitive Balance" can be promoted, "preventing the game becoming too predictable."

Premier League's answer

The Premier League offered no proposals on this, although it will argue that encouraging more young players in club squads may have a levelling effect.

The Premier League argues it shares TV money between its clubs more equally than any other league and that it distributes £125m elsewhere around football, although around half of that is in parachute payments to individual relegated clubs, not to the Football League as a body.

Richard Scudamore acknowledged yesterday: "I would like other clubs to win the Premier League and to qualify for the Champions League but that is different from saying there are artificial things we can do to encourage that."

The four top clubs earn between £10-£20m each from the Champions League every season, which cements their dominant position, but Scudamore was not prepared to say that system should be changed. The huge financial gap between the Football League and Premier League, which began when the top clubs broke away to form the Premiership in 1992, is still a major sore with the Football League, which can be expected to suggest more equality in its own response to Burnham. The FA, too, is expected to make the financial divide an issue and press for more even distribution.

Burnham himself has always believed there should be more competition within the Premier League, and a narrower financial gap with the Football League, but he has said this is a matter for the football authorities to thrash out. In effect that means the FA has a huge opportunity in its response to assert itself as the governing body and address football's rampant inequality.

Question 7

"Everything possible is being done to bolster the national side" and there is "a case for introducing a specified number of homegrown players" into club sides.

Premier League's answer

The League has pledged to introduce a rule by 2010-11 requiring clubs to include a set number of "homegrown" players in its squads or teams.

What this means

A major reverse of policy, which Burnham can count as progress. It is also a response to pressure from Uefa and Fifa and, Scudamore said, a genuine acknowledgment by the clubs that young players have difficulty breaking through into first teams at 18.

It is, though, questionable how much difference it will make: most clubs already comply with Uefa's proportion, for eight "homegrown" players to be included in 25-man squads. Scudamore rejected the idea that the national side has suffered due to Premier League clubs fielding too many overseas players. Statistics show that of 531 players to feature in the Premier League this season, 203 (38%) have been English. Scudamore accepted that the top four clubs do not include as many, and said the England team in future is more likely to come from players at clubs outside the top four.

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