CHAPTER 4.
The BSkyB Bid for Manchester United Plc - All the Passion of a Banknote

Simon Lee

It is apt that the tenth anniversary of Hillsborough should coincide with the conclusion of two deliberations which will profoundly affect English professional football during the first years of the new millennium. The government’s response to the Monopolies and Mergers Commission’s (MMC) recommendations, following its scrutiny of the BSkyB bid for Manchester United, and the outcome of the Office of Fair Trading’s (OFT) restrictive practices court case against the alleged cartel formed by the Premier League in its negotiations and deal with BSkyB and the BBC, threaten to unleash an even more frantic wave of commercial machinations upon English football.

In his final report into the Hillsborough stadium disaster of 15 April 1989, Lord Justice Taylor identified five factors responsible for ‘a general malaise or blight over the game’ of English football (Home Office, 1990, para. 26). Four of these five factors (old grounds, poor facilities, hooliganism and excessive drinking) have been largely eliminated from at least the upper echelons of English professional football in the intervening years. Unfortunately, poor leadership remains a blight on the English game. It is worth recalling the late Lord Taylor’s thoughts on this subject:

As for the clubs, in some instances it is legitimate to wonder whether the directors are genuinely interested in the welfare of their grass-roots supporters. Boardroom struggles for power, wheeler-dealing in the buying and selling of shares and indeed of whole clubs sometimes suggest that those involved are more interested in the personal financial benefits or social status of being a director than of directing the club in the interests of its supporter customers. In most commercial enterprises, including the entertainment industry, knowledge of the customer’s needs, his tastes and his dislikes is essential information in deciding policy and planning. But, until recently, very few clubs consulted to any significant extent with the supporters or their organisations (Home Office, 1990, para. 53).

A decade on from Hillsborough, the welfare of football supporters and their legitimate right to be consulted as major stakeholders in the English game remains largely unrecognised in the governance of professional football. The explanation for this oversight is simple. In January 1990, the Taylor Report entreated that ‘now is the moment for the fullest reassessment of policy for the game’ (Home Office, 1990, para. 58) but in its aftermath there was no fundamental reassessment of the future direction and governance of English professional football. The subsequent decade has been characterised instead by increasingly frantic ‘wheeler-dealing’ and the shameful pursuit of ‘personal financial benefit’ by many football club chairmen and their fellow ‘fat cat’ directors. In a move entirely redolent of the political economy and values inspired by Thatcherism, the major clubs have broken away from their Football League brethren to create the FA Premier League in order to enable themselves to appropriate a much larger share of English professional football’s income. In keeping with Thatcherite values, ‘the widening gap (between the Premier League clubs and the rest) was dignified with a philosophy: “market forces”, a philosophy that abandoned the limited notion of redistribution from the richer clubs to the poorer which had characterised the development of the game during its modern history’ (Conn, 1997:152).

The language of football is one of revenue streams, brand loyalty and inelastic demand for tickets irrespective of the price charged or the televised saturation coverage of games. In short, ‘football has changed, from something which belonged to its people, to a business’ where ‘today’s FA Carling Premiership car parks are exhibitions of ostentation, field studies of inequality’ (Conn, 1997:27,152). For its part, England’s premier club, Manchester United, has been tamed ‘into the corset of a middle-class “entertainment industry”’ (Conn, 1997:46). Alex Ferguson recently described the level of support at Old Trafford as ‘awful . . . more like a morgue than a football match’ (United Review, Vol.60, No.16), a sad but apt reflection on a ground now overflowing with the passive, passionless presence of an armchair-, replay- and pundit-educated generation. But Manchester United is not the only major club whose soul has been corrupted by this commodification of the culture of English football.1 The flotation of Newcastle United showed ‘football’s true face in the ’90s, all the passion of a banknote’ (Conn, 1997:62). Indeed, that the dividend from this transaction should be a capital gain of around £100 million to Sir John Hall, one of Mrs Thatcher’s most ardent advocates, and not a single major trophy won for supporters whose great-grandparents last saw the First Division trophy paraded in Newcastle in 1927, is an appropriate commentary on the values and motive force of the Premier League.

From gap, to chasm, to abyss

The condition of contemporary English professional football and its governance are testament to the extent to which it has embraced the values of Thatcherism. Since the early 1980s, the richest English clubs have attempted to secure a larger share of the game’s income, initially by threatening the creation of a ‘Super League’ in 1981 and temporarily settling for an agreement which enabled them to keep all gate receipts from home fixtures and no longer having to share them with visiting clubs. When a further attempt was made to break away in 1985, the top clubs were kept in the fold by the pompously named ‘Heathrow Agreement’, the First Division being awarded 50 per cent of all TV and sponsorship revenue, a larger share of voting rights in Football League decisions and a cut in the end-of-season gate levy to 3 per cent. These demands were made in the wake of the Bradford and Heysel disasters but added to the trend towards redistribution of football’s revenue in favour of the richer clubs (Conn, 1997:140). Subsequently, further threats of a breakaway were diverted by the then ‘Big Five’ clubs (Manchester United, Liverpool, Everton, Arsenal and Tottenham Hotspur) being able to negotiate their own television contract with ITV. This resulted in their receiving 50 per cent of English football’s £44 million income from television, but nevertheless still having to share the other half with the Second Division (25 per cent), and the Third and Fourth Division (25 per cent split between them). When the breakaway from the Football League finally occurred in 1991, the creation of the Premier League was not based on purely commercial grounds since it had been calculated that the existing structure of English professional football could generate £112 million income per year if properly marketed (Conn, 1997:145). The motivation instead was the desire of the leading English clubs to secure control of a larger share of the rapidly growing revenue from television contracts, as was proven with the signing of the five year £304 million deal between the Premier League clubs and BSkyB.

The development of English football in the 1990s has therefore mirrored wider society in its departure from post-war notions of progressive taxation and redistribution towards an enterprise culture which has often confused the opportunistic pursuit of individual self-interest for entrepreneurial innovation and risk-taking (Lee, 1997a). The pace at which societal inequalities in income and wealth accelerated under the Thatcher and Major Governments has been extensively documented (Hills, 1998; Child Poverty Action Group, 1996). Although average incomes grew in Britain by around 40 per cent between 1979 and 1994–95, the richest tenth of the population saw their income grow by 68 per cent, while the poorest tenth saw their income fall by 8 per cent (including housing costs). In fact, the overall distribution of income had rapidly diminished in post-war Britain, and the onset of Thatcherism saw an exceptional growth in income inequalities, both in historic and international terms (Hills, 1998:5). Will Hutton has depicted the resulting income distribution in terms of ‘The thirty, thirty, forty society’, where only a ‘privileged’ 40 per cent of the population enjoy security and affluence while the remainder experience marginalisation, insecurity and poverty (Hutton, 1995:106–8). In English football, the inequalities in income and wealth are even starker. The August 1998 Deloitte & Touche Annual Review of Football Finance documented how, ‘The gap between the Premier League and Football League is turning from gap, to chasm to abyss’ (Deloitte & Touche, 1998:7).

The Premier League’s turnover (up 34 per cent to £463.9 million in 1996–97) now constitutes no less than 68.7 per cent of English professional football’s total income. Thus, English football, according to Hutton’s framework, could be characterised as a 69/31 society where the richest 20 clubs receive more than twice as much as the poorest 72. However, within that gross figure of inequality is concealed the fact that the top five finishers in the Premier League in 1996–97, namely Manchester United, Newcastle United, Arsenal, Liverpool and Aston Villa, had a combined turnover greater than all the 72 clubs in the Football League (Deloitte & Touche, 1998:5). The £23.2 million average turnover of the 20 Premier League clubs is 4.2 times greater than the average turnover of the First Division clubs. Driven by the increases in television revenue, the profitability gap between the average operating profits of the Premier League clubs and the First Division clubs has grown from £3.8 million in 1995–96 to £4.8 million in 1996–97 (Deloitte & Touche, 1998:7). Furthermore, Manchester United’s 1996–97 revenue of £87.9 million meant that it alone had received no less than 13 per cent of English professional football’s gross income and 19 per cent of the Premier League’s revenue. Thus, English football could be described as the 13, 54, 31 society where one rich Premier League club now receives nearly half the income received by no fewer than 72 other professional clubs in the Football League – less a case of ‘All for one, and one for all’, than ‘All for one, and all for one’. As a result of the increasing purchase of players from overseas, and reflecting the trade deficit suffered by the national economy, English football suffered a net outflow of revenue overseas of £100.4 million in 1996–97, following an outflow of £78.4 million in 1995–96 (Deloitte & Touche, 1998:23). Net transfer spending has been most prevalent among Premier League clubs seeking to avoid relegation and First Division clubs seeking promotion. The outflow of income from clubs in the Premier League to those in the Football League via transfer deals was only £14.5 million in 1996–97, compared to £25.2 million the previous year. A loss of £28 million in 1996–97 meant that the Football League had made an aggregate operating loss of £118 million in the five years to 1996–97. In the same period, the Premier League has made an operating profit of £260 million (Deloitte & Touche, 1998:11). There appears to be a ‘trickle down’ effect, but mirroring the wider development of British society, it is one of percolation of poverty rather than the distribution of wealth.

Greed is good: the governing principle of English football

During the 1990s, driven and epitomised by the creation of the Premier League, the traditional, amateurish and increasingly archaic associational model of governance of English professional football by the FA and the Football League has been challenged and displaced by a principal-agent or financial model of corporate governance (Keasey, Thompson and Wright, 1997:3).2 Driven by their desire to gain a tighter control over, and a larger share of, football’s fastest growing income stream, i.e. income derived from satellite, terrestrial and (impending pay-per-view) television contracts, the directors of Premier League clubs have embraced a shareholder-centric, short-termist form of corporate governance which unashamedly assumes that profit-maximising behaviour provides the best means for welfare maximisation, i.e. the good of their respective clubs. A series of Premier League club chairmen and their merchant banker advisers have advocated stock-market flotations as the best means of modernising football stadia and investing in world-class players. This Anglo-American model of governance has been criticised for being excessively concerned with the short-term maximisation of profit, itself the consequence of capital market failure, and the award of excessive remuneration for directors (Hutton, 1995). Critics have also pointed to the fact that investment in stadia modernisation has normally been undertaken (partly with public funds) prior to stock-market flotation, and that share issues have principally been vehicles for a few rich individuals to make spectacular capital gains at the expense of their clubs’ longer term competitiveness. Indeed, flotations have only been possible by virtue of the clubs first becoming subsidiaries of non-footballing companies, thereby rendering inapplicable Rule 34 (a) (v) of the FA which states that ‘if a club is wound up, its property must be distributed to other local sporting clubs’ (Conn, 1997:165–6). At the level of the ordinary football supporter, the corporate rebranding of English clubs has sought to replace the traditional collective intensity, passion and camaraderie experienced by English football supporters on the terraces with an all-seated, passive and individualised experience where the possession of an extensive (and expensive) collection of replica shirts, club merchandise and a satellite dish have become the benchmarks by which an increasingly middle-class audience has expressed its transient enthusiasm for football (Lee, 1997b).

As an alternative to the principal-agent model, the stakeholder model of governance has contended that participation and accountability should be defined more widely than the maximisation of shareholder or owner value and that governance should explicitly recognise and defend the welfare of other groups or stakeholders which have a long-term association with the corporation (Hutton, 1995, 1997; Kelly, Kelly and Gamble, 1997). This model of governance is held by its advocates to be both more equitable and socially efficient than the principal-agent model because it is based on relationships of trust and co-operation (Fukayama, 1995). Critics of the stakeholder model have argued that it is intrinsically incompatible with corporate objectives, and undermines both private property and accountability (Willetts, 1996; Sternberg, 1998). However, English football is a sport that has only recently embraced corporate values and whose continuing health, as the organisation of American football on redistributive principles demonstrates, requires a pattern of governance, participation and accountability which defies the norms of the principal-agent model of corporate governance and which ensures competition between teams in a viable league structure. If ever a business warranted the concept of stakeholding, then a football club would appear a prime candidate given the unique combination of emotion and finance which supporters invest in their clubs.

The relationship between supporters and their respective football clubs is primarily an emotional bond, frequently a matter of lifelong personal allegiance which transcends the impersonal experience of individual consumption and market transactions which the principal-agent model embraces. In England, the importance of football teams to their communities has long been seen as an important source of collective, often civic, identity and pride (Russell, 1997). Identity lies in what the members of a particular community share ‘not individually but collectively, not privately but publicly’, a fact which has given identity ‘an inescapable institutional focus’ (Parekh, 1994:501–2). In England, football grounds have provided the primary and perhaps the only institutions where civic identities have been celebrated en masse by the local population on a regular basis. In an overly centralised British state, which has been reluctant to devolve genuine political power to sub-national English political structures, but instead has devolved managerial and administrative responsibility for the implementation of difficult and unpopular decisions to local authorities (Lee, 1999), football clubs have taken on an additional significance in the expression of civic identity. Thus, for many English people, football has been the source of:

a sense of belonging at the ground, at the game, standing together in communal support for these clubs. In a world which had undermined the old certainties, of community, religion, ritual, football provided all three around its central, indefinable magic (Conn, 1997:132).

This has been ever more so in the materialistic, secular 1990s, and may in part explain the sudden attraction of football to an atomised middle class in search of some form of collective identity and security to transcend their essentially individualistic lifestyles. As recent events in Chester, Brighton, Portsmouth and Oxford vividly demonstrate, this unique status of football in England has been reflected in the sometimes desperate attempts mounted by supporters and the wider community to maintain their clubs in the ranks of the 92 professional clubs, a number far in excess of anything sustained elsewhere in continental Europe.

Unfortunately, the potential of stakeholding for involving supporters in the governance of their national sport was never tapped by the old associational pattern of governance practised by the FA and Football League, and more recently has been actively resisted by the majority of the new corporate élite. Shareholding supporters at the vast majority of clubs remain marginalised and virtually excluded from the corporate governance of their clubs. Given that, prior to the BSkyB bid, shareholder supporters owned no less than 23.4 per cent of the shares in Manchester United, giving them a larger stake in the club than any of the directors or any single institutional shareholder, it might have been thought that they would merit a seat on the board of directors to ensure that their interests were represented in the management and governance of the club (SUAM, 1998). However, this is a demand which has been constantly resisted since the club’s flotation in 1991. Mark Goyder, an Arsenal fan who also happens to be the founder of the Centre for Tomorrow’s Company, an institution concerned with issues of corporate governance, has suggested that shareholder-fans are confronted by a ‘double jeopardy’ because ‘you buy shares in the club and they do horrible things to you, and because they do horrible things to you, your share price falls’ (cited in Harverson, 1998a). The shareholder-fan fulfils the role of shareholder, customer and supporter, three roles rolled into one which Goyder contends should warrant a special dialogue between clubs and their shareholder-fans and special governance structures for football clubs. And yet, Charlton Athletic remains the sole English Premier League club with a shareholder-fan on its board to represent the 17 per cent of shares held by 3,000 Charlton supporters (Harverson, 1998a).

Manchester United: in a financial league of its own

The prominence of short-termist, especially shareholder, financial interests in the governance of English professional football has been most vividly illustrated by the cynical transformation of England’s largest club into a global corporate brand (Szymanski, 1998). At present, Manchester United is in a league of its own when it comes to the finances of English football. The club generates £78 of turnover per spectator entering Old Trafford, well ahead of Newcastle United’s £51 and Liverpool’s £44. In June 1998, United’s share value represented 42 per cent of the £985.1 million of the 18 English football clubs with a share listing. Its net assets of more than £72 million accounted for nearly 30 per cent of the Premier League’s assets (Deloitte & Touche, 1998: 5, 7, 39). Old Trafford’s current ground capacity of 55,300 (soon to rise to 67,400) and its supply of 34,600 season-tickets is nowhere near sufficient to satisfy the demands of its more than 100,000 members. There are more than 200 registered branches of the official supporters’ club in 24 countries (but the club refuses to recognise any others because of its incapacity to meet demand for match tickets). There are also an estimated 17,000 unofficial websites about the club world-wide. The official Manchester United magazine has sustained a monthly print run of more than 100,000.

Manchester United plc’s turnover in 1996–97 was £87.9 million, almost 20 per cent of the Premier League’s gross turnover of £455 million (up 32 per cent on the previous year) and more than double the turnover of Newcastle United, its closest financial rival (by size of turnover). United’s £27.6 million pre-tax profits helped to reduce the Premier League’s overall deficit in 1996–97 to £9.5 million after transfer deals (The Guardian, 16 April 1998). Because United’s response to the implications of the Bosman ruling was to extend and improve the contracts of some of its major stars, its wages bill (already the largest in the Premier League) rose by an explosive and inflationary 70 per cent to £22.5 million. However, both supporters and the City regarded this as a sound investment in the club’s future which still meant that, at 26 per cent, United was the Premier League club devoting the smallest share of its turnover to its players’ contracts. More recently, United’s financial performance has been less impressive. In the financial year to the 31 July 1998, on a static turnover of £87.9 million, United’s pre-tax profits fell from £27.6 million to £14.1 million following net transfer spending of £15.5 million (the acquisition of Jaap Stam, Dwight Yorke and Jesper Blomqvist). More significantly, although television revenues increased by £3.6 million to £16.2 million, income from merchandising fell by 16 per cent to £24.1 million. This was attributed to an overall decline in the market for replica shirts as fashion items, a trend purportedly exacerbated by United supporters waiting for the arrival of yet another new home strip. The rampant wage inflation of recent years continued with the club’s overall wage bill rising 23 per cent to £26.9 million (Financial Times, 29 September 1998).

In presenting its annual results in the year to July 1997, the club chairman Professor Sir Roland Smith announced that a new subsidiary, Manchester United International, had been established with a view to opening 150 shops around the world within three years to sell club merchandise and memorabilia. Merchandise sales during the year had declined from £29 million to £24 million, which Smith attributed to the Asian financial crisis. However, many supporters closer to home would attribute a large part of this decline to their refusal to purchase club merchandise that had dropped the words ‘Football Club’ from the club badge. To many supporters, this decision, which transformed a proud football crest into just another corporate logo, appeared more than any other to symbolise the emasculation of the club’s very identity and raison d’être by corporate greed (The Guardian, 29 September 1998). In a similar vein, the club had also decided to take a 25 per cent share of the £5 million hotel development at Waters Reach, Trafford Park. This has raised the spectre among supporters of a further loss of tickets to a new and highly lucrative extension of the corporate hospitality market.

In September 1997, United announced that it was to launch its own subscription television channel in partnership with BSkyB and Granada. Describing the launch of MUTV as a ‘major milestone’, Martin Edwards also stated that he would be happy for the club to break away from the Premier League and go it alone following the expiry of the existing contract with BSkyB and the BBC in 2001.3 In the interim, Edwards stated that the club needed 300,000 of its claimed 3 million supporters to subscribe to MUTV for it to make a profit. Edwards statement pointed the way towards the possibility of a future breakaway league but again demonstrated the contrast between commercial logic and the traditions of the English game. It might make eminent short-term commercial sense for the top ten English clubs to form their own breakaway league (possibly including Glasgow Rangers and Celtic) and to negotiate their own television contracts. However, it is extremely doubtful whether supporters would wish to watch (either as paying supporters or pay-per-view subscribers) the fixtures of a contrived league abstracted from the game’s historic roots.

From FC to plc to ‘Rupert’s Rovers’

When Martin Edwards agreed to sell his remaining shares in Manchester United plc as part of the £623.4 million BSkyB bid for the club, his decision appeared to be the final betrayal of a legend sacrificed upon the altar of a single family’s financial ambition (Crick and Smith, 1989). It may originally have cost Martin Edwards’s father Louis as little as between £31,000 and £41,000 to secure personal control of Manchester United Football Club. Subsequently, in the late 1970s, in the face of annual losses and because dividends were restricted to a maximum of 5 per cent of the face value of each share, the Edwards family decided to increase vastly the number of shares through a rights issue which would give every shareholder the right to buy 208 £1 shares for every share held. Since this exercise did not involve an injection of external investment, this appeared to be a device for increasing dividend payments, and was bitterly opposed by other shareholders, including Sir Matt Busby and the club secretary Les Olive. In advance of a rights issue which they were planning in 1977, the Edwards family bought up more shares to increase their shareholding to 74 per cent. The £600,000 invested in the share issue by Martin Edwards constituted ‘the sum total of his “investment” in United, ever’. The Edwards family’s total investment was only £740,000. Whereas only £312 was distributed to shareholders in 1978, following the rights issue, the board announced a dividend of £50,419 in 1979 which rose to £151,284 in 1981, the maximum allowable when the FA increased the maximum dividend to 15 per cent of share value (Conn, 1997:36).

When Manchester United was floated on the London stock-market in 1991 at the now paltry value of £47 million, Martin Edwards reduced his shareholding in the club to 28 per cent, realising £6 million from a sale of 1.7 million shares. Subsequently, further share sales have enabled the Edwards family to raise a total of £28 million, while generating an annual income of around £1 million from Martin Edwards’ salary and the dividends from his remaining shareholding, valued at more than £80 million by the terms of the BSkyB bid. Edwards had been approached in mid-June 1998 by Mark Booth, the chief executive of BSkyB, with the view to the sale of Edwards’ shares as part of a take-over bid. If the take-over proceeded, Edwards would join the board of BSkyB and Booth would in turn join United’s board. As the BSkyB offer increased from 217.5 pence per share to its eventual 240 pence, valuing the club at £623.4 million, there was an absence of unanimity among the United board about how to respond to the offer.4 Initially, the offer was opposed by several board members, including Greg Dyke, a non-executive United director and chairman of Pearson Television who ironically had negotiated TV contracts between ITV and the Football League in his earlier guise as head of ITV Sport. Dyke was reported to have argued that United had a strong future as an independent club, not least because of the onset of pay-per-view TV and because the OFT might win its restrictive practices court case against the Premier League, thereby allowing United to sell its television rights to the highest bidder (Financial Times, 16 September 1998). However, once the BSkyB offer reached 240 pence per share, Dyke found himself in a minority of one and therefore decided that further resistance was futile, although he decided to donate the £60,000 profit he would make on his own 80,000 shares (the difference between the BSkyB offer price and the share price beforehand) to Manchester-based charities.

Dyke was not alone. Philips and Drew Fund Management, the club’s largest single institutional shareholder with more than 4 per cent of shares, stated that it was ‘slightly disappointed’ given that it felt United ‘had a very strong future if it remained independent’ (Financial Times, 10 September 1998). The revelation by Sam Chisholm, the former chief executive of BSkyB, that Rupert Murdoch had been prepared to pay double the £304 million it paid in 1992 to win the rights to screen live Premiership football (Conn, 1997:21) is indicative of the degree to which the fate of BSkyB had become inextricably linked, if not ultimately dependent, on its relationship with sports broadcasting, especially live coverage of English football. In 1992, BSkyB had paid £304 million for the exclusive rights to screen Premiership matches. By 1997, the commercial dividend had been a 333 per cent increase in BSkyB’s turnover, transforming its profitability from 1992 losses of £47 million into profits of £62 million in 1993, £170 million in 1994, £237 million in 1995, £315 million in 1996 and £374 million in 1997 (Conn, 1997:21).

The commercial logic underpinning BSkyB’s bid was self-evident. If it could acquire United for around only £200 million more than the value of the club’s shares prior to its bid, BSkyB would have cheaply won control not only of the world’s most profitable football club but also the club with the largest global fan base. If a European Super League was established or further reforms of existing UEFA competitions undertaken, BSkyB would be at the heart of the negotiations. At the same time, BSkyB would also ensure itself a prime position in the Premier League clubs’ negotiation over pay-per-view TV and the next domestic TV contract beyond 2001. Under the existing television contract, the Premier League would allocate 50 per cent of the revenue between its 20 clubs. A further 25 per cent would be allocated on the basis of merit at the end of each season – the top club receiving the largest share. The remaining 25 per cent would be allocated on the basis of the number of appearances on television. In practice, this already meant that the largest clubs received the lion’s share of the television revenue. However, if the Restrictive Practices Court was to rule that the Premier League had acted as an illegal cartel in its negotiation of TV contracts with BSkyB and terrestrial television channels, a BSkyB-owned United would then no longer have to share its revenue. It would be free to secure an even larger share of English football’s TV income by exploiting potential demand for pay-per-view from United’s global fan base.

Ownership and control of Manchester United would provide BSkyB both with an insurance policy against the uncertainties surrounding the future development of broadcasting in Europe and a means to expand demand for subscriptions to its channels world-wide. BSkyB had been profitable with its domestic subscription confined to less than 20 per cent of the population. It was the desire for a greater share of television revenue which drove the creation of the Premier League. It would be ironic, but perhaps in some sense poetic justice, if the League in turn was undone by the same base commercial greed. Furthermore, if the competition authorities decided that there were sufficient anti-competitive grounds for blocking the BSkyB bid, rather than simply laying down some preconditions for the bid’s approval, Murdoch could point to the precedents established in other countries for the media ownership of major sports clubs. For example, Murdoch’s own News Corporation had previously bought the Los Angeles Dodgers baseball team, together with shares in the New York Knicks basketball and New York Rangers ice hockey teams, along with further options on the Los Angeles Lakers basketball and Kings ice hockey team. In the field of football, the French pay-per-view broadcaster, Canal Plus, had bought into Paris St Germain while in Italy, Silvio Berlusconi, the media mogul, owns AC Milan (Harverson, 1998b). In any event, it appeared that the BSkyB bid might have seriously undervalued Manchester United, especially in the context of the OFT court case. Prior to the BSkyB bid, Warburg Dillon Reed had valued the club at £780 million, or 300 pence a share, 25 per cent more than BSkyB’s £623.4 million, or 240-pence-per-share offer (Financial Times, 23 October 1998). David Brooks, an analyst at Nomura, stated that, ‘My gut feeling is that I can’t believe other companies will allow BSkyB just to walk off with the crown jewels’ (The Guardian, 10 September 1998).5 But despite media reports that Salomon Smith Barney, an American investment bank, had contacted HSBC, United’s financial advisers, with a view to making a rival bid (Financial Times, 14 September 1998), it soon became apparent that such a bid was unlikely, at least until the government’s position on competition rules had been clarified.

The Sky’s the limit: a TV cuckoo in football’s nest

On 7 September 1998, Peter Mandelson, the (then) Secretary of State for Trade and Industry, announced that the BSkyB bid would face scrutiny by the director general of the OFT to establish whether the bid should be referred to the Monopolies and Mergers Commission (MMC). In the immediate aftermath of Mandelson’s decision, and in the face of opinion surveys showing 95 per cent opposition among United supporters to the BSkyB bid, Mark Booth and Martin Edwards signed an open letter to supporters in which they claimed that BSkyB understood that United was not just another business but ‘part of the cultural fabric of Manchester and the nation’ and, therefore, the existing management would be left to run the club (The Times, 10 September 1998).6

Edwards asked supporters, ‘Before you string me up, give things a chance . . . I am not about to do anything that destroys the health and tradition of this club. If I do then I deserve to be strung up.’  Furthermore, Edwards reminded supporters that the new owners were ‘an £8 billion company and that gives us the kind of money we never had’ (The Times, 10 September 1998). The implication was that BSkyB would buy big to maintain United’s success on the field, but supporters remained sceptical of Murdoch’s intentions. The spectre of players being sold to alleviate potential cashflow problems in other parts of the Murdoch empire loomed large. For his part, Booth insisted that BSkyB were ‘not going to move the ground, pick the team, change the name, hike the ticket prices or change the club in any way that is not consistent with its traditions’. To supporters, this spin on events appeared to overlook the fact that Booth was to join the United board and Edwards join the BSkyB board – hardly a case of the corporate status quo ante.

Government ministers and opposition politicians were united in their hostility to the announcement of the bid. Tony Banks, the Minister for Sport, reacted to the BSkyB bid by contending that it could not ‘be treated as if it were just a normal take-over of one publicly quoted company by another’. If the biggest football club in England was bought by the biggest broadcaster of live football, ‘then clearly the implications for commercial policy are profound’. In Banks’s judgement, there were ‘concerns held across government about the dangers inherent in allowing football clubs to be bought up as commercial commodities’. His only surprise was that such a bid had not happened earlier given that ‘as soon as football clubs become plcs, they find themselves subject to predatory take-overs’. However, football clubs could not ‘be treated like products in a marketplace as allegiances to them are based on cultural affinities’ (Financial Times, 26 October 1998). If clubs were allowed to own more than one team, Banks thought there was a danger that, when those teams met in competition, a commercial view might dictate which team won the match. The vice-chairman of the Conservative Party’s parliamentary media committee, Roger Gale, asserted that it was not ‘the place of media empires to own football clubs. What it means is that Murdoch will have a vote at the Premiership negotiating table. It is a way of buying a vote around that table.’ This view was shared by a spokesman for the OFT who stated that ‘it is possible there could be competition implications, but there might be a restrictive agreement, in which case we would challenge it’ (The Times, 7 September 1998).

David Mellor, chairman of the government’s Football Task Force (but in this instance responding personally), contended that it would be ‘an act of cardinal folly’ for the Manchester United board to accept a take-over by Rupert Murdoch. For Mellor, the stark choice facing the club was between being ‘a pawn in a global media power play by Rupert Murdoch, who hardly knows where Manchester is’, or still being ‘part of the great city of Manchester – a football club where a clear bond of trust continues to exist between its supporters and the club’ (The Guardian, 9 September 1998). Furthermore, Mellor suggested that the take-over made a more compelling case for a special regulator for football, an issue which he claimed the Football Task Force would address in the coming months. Reaction to the bid from within English football was equally hostile. For Gordon Taylor, the general secretary of the Professional Footballers’ Association (PFA), Rupert Murdoch constituted nothing less than ‘a TV cuckoo in football’s nest’ (The Guardian, 16 September 1998). Addressing the 1998 Trades Union Congress, Taylor argued that the government should introduce new and strict competition laws to prevent television moguls from transforming Manchester United into ‘Rupert’s Rovers’, thereby protecting the integrity of English sport from business monopolies. Taylor warned that ‘football is the people’s game, but the umbilical cord between fans and clubs is being brutally severed’. Indeed, he added that the Labour Government should remember its roots and cease to placate big business interests. Sport could only survive in a competitive environment whereas, Taylor contended, business always sought to remove competition and therefore ‘the two worlds do not fit easily together’ (The Guardian, 16 September 1998).

Resistance to the BSkyB bid among United supporters was led by the Independent Manchester United Supporters Association (IMUSA), (an organisation in which the author must declare an interest, being an IMUSA member), and by the quickly formed Shareholders United Against Murdoch (SUAM). IMUSA organised a rally at Manchester’s Bridgewater Hall which was paid for by a donation of £10,000 from Roger Taylor, the drummer from the rock group Queen. Unfortunately, although this meeting did provide an important rallying point for those seeking to oppose the bid, the rally itself failed to fill the hall’s capacity, a fact not lost on David Mellor who subsequently used his Radio Five 6.06 phone-in show to question the opposition of United supporters to the bid.7 SUAM was established by several United supporters who also happen to be influential people in journalism (Michael Crick, SUAM’s founder, a reporter on the BBC’s Newsnight programme and the author of many books, including biographies of Michael Heseltine, Jeffrey Archer and a seminal work on the history of Manchester United); business (Richard Hytner, former chief executive of the Henley Centre for Forecasting and now head of the Publicis advertising group); and academia (Jonathan Michie, Sainsbury Professor of Management at Birkbeck College, University of London). The fact that, unlike many other supporters’ organisations, SUAM had been founded by people with knowledge of the operations of the media and the City of London, meant that it was able to fight a very effective guerrilla campaign against the BSkyB take-over. One of its first actions was to draw the attention of the Take-over Panel to the fact that the offer document sent to United shareholders was arguably misleading because it failed to inform them that they had the right to reject BSkyB’s offer (Financial Times, 24 October 1998). Although SUAM failed to persuade the Panel that misleading information had been circulated to shareholders, it was able to raise sufficient funding to be able to send its own mailing to the club’s 30,000 shareholders and also circulate a document to institutional shareholders which contended that the BSkyB bid had undervalued United (SUAM,1998).

The triumph of the patron-client model of corporate governance over the stakeholder model was vividly demonstrated at the November 1998 annual Manchester United plc shareholders’ meeting. SUAM members Michael Crick and Jonathan Michie led a sustained attack by shareholders for more than two hours against the board’s decision to recommend acceptance of the BSkyB offer. Michie asserted that ‘it is in the best interests of this company and this football team for the club to remain independent’, but this contention was rejected by both Martin Edwards and Sir Roland Smith, the club’s chairman. They claimed that the club’s prospects would be enhanced if it became part of the BSkyB group because it would have access to the latter’s capital and media expertise. Indeed, Smith perversely argued that, ‘You know what we’re proposing is a good thing because everybody is opposed to it’, to which the response from one shareholder was, ‘Bollocks’ (Financial Times, 20 November 1998).

New Labour’s footballing inheritance

For most of the 1980s, the culture of English football remained refreshingly untouched by the values of the share-owning, property-owning enterprise culture, even if the built environment surrounding many grounds was being transformed (often not for the better) by the wider social and economic restructuring inflicted upon England by Thatcherism. Without doubt, ‘In the Thatcherite lists of “them and us”, football was firmly “them”.’ (Conn, 1997:111.) Although she ‘handbagged’ many other English institutions during the 1980s, Margaret Thatcher was simply not interested in football. The plurality, diversity and strength of local English identities which football demonstrated could play no part in, and indeed contradicted, the certainty of Thatcher’s own conception of British national identity.

If Conservative politics affected football culture, then it was through the medium of the Thatcher Government’s law and order agenda. Conservative politicians, including Luton Town’s former chairman, David Evans, used football opportunistically to promote an agenda that included increased police powers of surveillance.8 The 1989 Football Spectators Bill proposed the introduction of identity cards and a Football Licensing Authority to be headed by a chief executive, John de Quidt, a civil servant experienced in the art of putting down prison riots (Conn, 1997:113). The national identity card scheme was never implemented, having been rendered redundant by the onset of all-seater stadia, closed-circuit television inside grounds and individual club membership schemes. If the terraces had provided a welcome but often dangerous refuge from Thatcherite reforms during the 1980s, the same cannot be said for the increasingly all-seater stadia of the 1990s. Supporters of English Premier League teams have found themselves increasingly regarded by their clubs, not as supporters per se but as consumers, investors and shareholders. Supporters of First Division but especially Second and Third Division teams have found their clubs increasingly financially marginalised and, in many cases, their very survival threatened.

Unlike its Conservative predecessors, New Labour had chosen not to adopt such a passive attitude towards the English game. Instead it has seen political advantage in associating itself with the upper echelons of the professional game that had enjoyed a renaissance in popular culture during the early 1990s. During the 1997 General Election campaign, Tony Blair, a self-confessed Newcastle United supporter, enjoyed photo-opportunities with Alex Ferguson and Kevin Keegan. Building on the Football Charter drawn up in Opposition, New Labour’s General Election manifesto promised to bring an end to the policy of selling off playing fields (to which the lamentable Test match performance of the England cricket team will serve as a lasting testament to a lost generation) and to ‘provide full backing to the bid to host the 2006 football World Cup in England’ (Labour Party, 1997:30). However, any expectation among supporters that the change of government would usher in a radically different approach to the governance of English football was soon dissipated. The newly instituted Football Task Force was given a wide-ranging remit to examine issues (racism, access for the disabled, supporter involvement in the running of their clubs, and ticket and merchandise pricing) but no powers other than moral suasion to raise its status beyond that of ‘the political equivalent of the mid-field player who does a lot of unselfish, off-the-ball running – a lot of energy expended but ultimately a minimal contribution to the game’s overall shape and direction’ (Lee, 1997b:47).

The potential political embarrassment which the BSkyB bid, and the Government’s reaction to it, might cause were vividly illustrated when a House of Commons Early Day motion signed by 39 Labour MPs, four Conservative and three Liberal Democrats, and stating that the bid would ‘create an unacceptable situation’, was signed by Gerry Sutcliffe and Ian Pearson, parliamentary private secretaries to Treasury ministers, thereby breaking with customary parliamentary convention (Financial Times, 26 October 1998). Among the other signatories of the motion were Joe Ashton, the chairman of the parliamentary football committee and Rhodri Morgan, the chairman of the House of Commons Public Administration select committee. The motion also stated that allowing BSkyB to take-over United would ‘create an unacceptable situation’ where BSkyB would own Europe’s largest football club and be the largest purchaser of televised football, a move ‘which would not be in the best public interest of fans, clubs or television viewers and sport in general’ (Financial Times, 23 October 1998). Claiming that their motion was ‘not a protest against Mr Murdoch, but reveals widely felt concerns about a concentration of ownership’, the MPs urged Peter Mandelson not only to establish an inquiry into the funding of football by television but also to refer the bid to the MMC without waiting for the verdict of the OFT’s investigation. In a similar vein, the Foreign Office minister and Greater Manchester MP, Tony Lloyd, had earlier expressed his own concern that a BSkyB-controlled and Murdoch-backed Manchester United might ‘get a degree of control which is unhealthy for the ordinary supporter’. (Financial Times, 8 September 1998.)

The BSkyB bid also confronted Peter Mandelson, the Secretary of State for Trade and Industry, with a potential source of huge personal and political embarrassment. His alleged friendship with Elizabeth Murdoch, Rupert Murdoch’s daughter and managing director of Sky Networks, had been extensively documented prior to the bid. Sky Networks had been a major investor in the troubled Millennium Dome project. A web of intrigue had surrounded the relationship between New Labour and the Murdoch media empire since July 1995 when Tony Blair had flown to Australia to meet Murdoch in person. Following that meeting, the Murdoch press had turned against and away from the Major Government towards active support for Tony Blair. A vivid example of the lengths which the government would go to cultivate its media contacts was provided on 17 July 1998 when Gordon Brown flew all the way to Sun Valley, Idaho, just to give a speech to a News International Conference. Reassuring his corporate audience of New Labour’s good intentions towards the corporate world, Brown began by contending that ‘successful economies in a global marketplace will need more competition, more entrepreneur-ship, more flexibility to adapt. Countries that do not have this are already suffering lost markets, stagnation and economic decline.’ Brown sought to define a ‘new politics of opportunity and responsibility, characterised by the maximisation of economic stability, the promotion of opportunity for all and the reduction of welfare dependency’. The old mantras of ‘Keynesian fine-tuning and rigid application of fixed monetary targets’, which had been designed for ‘sheltered national economies’ had ‘now broken down in our modern, liberalised and global capital markets’ (Brown, 1998).

At an international level, Brown’s speech was in keeping with a broader trend in politics which has seen politicians opportunistically seize upon globalisation as an alibi for inaction, in economic and industrial policy terms, on the grounds that the state is powerless in the face of increasingly integrated global markets and their most important manifestation – the multi-national corporations (Weiss, 1998).9 Indeed, from May 1995, the OECD member states had attempted to negotiate a Multilateral Agreement on Investment (MAI) which, if its completion had not been scuppered by the sudden and unexpected withdrawal of the French Government in October 1998, would have led to a new regime for investment under which the capacity of national governments to regulate corporations would have been dramatically reduced and, by the same token, corporations’ responsibilities, in the field of labour and environmental standards in particular, would have been dramatically reduced.10 At the domestic level, Brown’s speech coincided with the publication of the results of the government’s year-long Comprehensive Spending Review which, in the case of the DTI, had reaffirmed the degree to which New Labour had largely accepted rather than fundamentally challenged the political economy of its Conservative predecessors. The government’s subsequent White Paper on Competitiveness, Our Competitive Future: Building the Knowledge-driven Economy, did claim to have defined a ‘new model for public policy’ in which the role of the government’s industrial policy would be ‘making markets work better’ through the promotion of innovation and entrepreneurship (DTI, 1998:13). In reality, in terms of corporate governance, this was little more than a restatement of the agenda most coherently spelt out in the January 1988 White Paper, DTI – the Department for Enterprise (DTI, 1988) which had based the Thatcher Government’s industrial policy on open markets and the enterprise of individual entrepreneurial initiative (Lee, 1998a).11 The government’s (1998) White Paper did draw attention to the 1998 Competition Act which ‘outlaws cartels and the abuse of a dominant market position’. The government also stated that it had ‘no plans at present to change the merger regime’ but would publish a consultation paper in early 1999 on the case for reform (DTI, 1998:51).

The problem is that there may be a conflict between the desire to promote competition and innovation by new market entrants, which could justify ending the Premier League’s ‘cartel’, and the likelihood that ending the ‘cartel’ might place certain clubs, not least Manchester United, in a position where, even if it did not occupy a ‘dominant market position’, it would nevertheless have the autonomy to generate a disproportionate share of football’s income while still operating within the collective structure of a football league system – both domestic and European. Before his resignation, Mandelson had argued that competition policy should be taken out of politicians’ hands, in a manner similar to the removal of operational control over monetary policy to the unelected Monetary Policy Committee. At the same time, although a new ‘Combined Code’, based on the report from the Hampel Committee on Corporate Governance, had been appended to the Listing Rules of the London Stock Exchange from 31 December 1998 (Clarke, Conyon and Peck, 1998), the Code had done little to redress the imbalance in corporate governance between the rights and representation of the interests of major individual and institutional shareholders, and those of smaller shareholders, whose individual shareholding may be insignificant but whose collective shareholding (as in the case of Manchester United) might be significant.

In his evidence to the House of Commons Trade and Industry Select Committee on the 4 November, when questioned about his stance towards the concentration of media power, such as that generated by the BSkyB bid, Mandelson stated that he was satisfied that the bid did raise competition issues, notably ‘the possible unfair advantage that BSkyB would be able to obtain through ownership of Manchester United Football Club over other broadcasters’, although he acknowledged that the director general of the MMC had also stated that there were other public interest concerns legitimately raised by the bid. Mandelson did not take the opportunity to indicate whether he recognised these concerns. Instead, he stated that he was satisfied the new competition regime established by the government, soon to be codified in the 1998 Competition Act, coupled with existing specific broadcasting legislation, provided ‘sufficient control in this area’. Furthermore, he did not think that ‘there would be justification for different prohibitions for different industries’ for ‘to start picking and choosing and applying different sorts of legislation provision to different industries and different markets will first of all be very difficult to carry out but also will get you into all sorts of difficulties and complications from which it will not be easy to extract yourself’ (TIC, 1998:Q.43–46).

The unique nature of the BSkyB bid, and the problems it posed for the competition authorities in the UK, was demonstrated when, in an unprecedented move, the MMC published the range of issues which it would be examining. The MMC asserted that it had taken this step in accordance with the government’s open government policy ‘in order to allow others to make representations to the commission’ before the submission of its report to the Department of Trade and Industry on 12 March 1999 (The Guardian, 10 December 1998). The reaction from the club to this move by the MMC was to dismiss its significance by suggesting that the club had already addressed many of the salient issues and none should prevent the take-over. In a similar vein, BSkyB stated that it had ‘clear and convincing responses’ to all the issues raised by the MMC. However, Michael Crick, on behalf of SUAM, noted that the MMC appeared ‘to be taking a very wide interpretation of what public interest means’ (Financial Times, 10 December 1998).

English football: a team game?

English football’s governing associations are in trouble. The outcome of the OFT’s case against the Premier League currently being heard in the restrictive practices court could be of equal significance to the future of English professional football as the government’s blocking of the BSkyB bid. Having encouraged clubs to break away from the Football League to create the Premier League in 1991, the Premier League has been faced with the genuine possibility that, should the OFT case be upheld, England’s élite clubs might themselves soon choose to break away from the Premier League to participate in alternative competitions, such as the putative European Super League. The Premier League has therefore mounted a vigorous defence against the OFT. Prior to the start of the court case, it pledged that live coverage of Premier League football would be ‘platform universal’, i.e. available on terrestrial television, as well as other television media, from 2001, if it was allowed to negotiate the next contract with the broadcasters (Financial Times, 23 December 1998). Mike Lee, the Premier League’s spokesman, has argued that, ‘[Collective bargaining] is the product of a democratic agreement’ since the 20 clubs sell their television rights collectively because that is what they want (The Independent, 12 January 1998). The Premier League has asserted that it is only the game’s governing body which takes into account all aspects of the game, not least the need to schedule fixtures in different competitions and to accommodate the interest of all the League’s clubs. In practice, the League’s real concern is that one exercise in the narrow pursuit of financial self-interest is in danger of being supplanted by another narrower project.

The OFT’s rival contention is that the current arrangements result in the screening of only 60 live matches per season out of a total of 380 Premier League fixtures, and therefore supporters are denied the chance to see their clubs on television on a more regular basis, while other broadcasters are being prevented from providing that service to those supporters. Furthermore, the OFT does not believe that the removal of the arrangements would change the role of the Premier League significantly, create chaos or deny clubs their current financial and amenity benefits. Most importantly, the OFT does not believe that ‘the redistributive arrangements provided for by the current agreements are the only means of securing such claimed benefits’ (OFT, 1999). It argues that there could be a very different redistributive settlement, irrespective of whether the Premier League’s television contracts are negotiated collectively or individually, if the clubs were to recognise their obligations to their brethren in the Football League and beyond.

Among those who have supported the Premier League’s defence are the Football Task Force. In its most recent report, the Task Force has contended that between 1997 and 2001 the Premier League will be spending £50 million or around 5 per cent of its income outside the Premier League. However, this transfer of revenue is largely dependent on the level of transfers from the Football League to the Premier League – currently a diminishing asset because of the perception of better value from money from abroad, especially post-Bosman. The Task Force wishes to see an equivalent sum invested in ‘grass-roots facilities and projects’ as opposed to the Football League, noting that one unidentified city council in the north-west has a £2.8 million backlog in maintenance at its 38 sports sites. It is not just the grass roots but the actual subsoil of English football which has been allowed to deteriorate (Conn, 1997:254-279). The sale of an estimated 5,000 playing fields and the often squalid condition of the remainder is in part testament to the recent priorities of national government, local authorities and schools when confronted with the constraints of public spending and the national curriculum. It also reflects the FA’s historical reliance upon local authorities for the provision of pitches to satisfy the requirements of its 43,000 amateur clubs. What the Task Force has highlighted is a long-standing shortfall in capital investment in the infrastructure of the amateur game in England which is unlikely to be remedied either by the terms of the Comprehensive Spending Review (CSR) for the Standard Spending Assessments of English local authorities or by the maintenance of the 16.66 per cent share of National Lottery funding for sport (DCMS) – given the many other and higher priorities for funding from these two revenue sources (Lee, 1998b; 1998c). Many struggling English amateur clubs will have seen a certain irony in the fact that the alleged loan of £3.2 million which led to the resignation of both the chairman and chief executive of the FA was intended for investment in the grass roots of Welsh football.

The Task Force has also called for more community schemes which mobilise football to tackle social exclusion for, at present, it claims players’ contractual obligations to the community are often ‘more honoured in the breach than the observance’ (The Independent, 12 January 1999). This report has vividly demonstrated the limitations of the Task Force’s role in the governance of football. It has resorted to exhortation because moral suasion is its only weapon against the Premier League clubs. In a world of public limited companies and football club subsidiaries, it has no other leverage. At the same time, the strident tone of the criticisms of professional footballers by the Task Force’s chairman and his downplaying of the significance of the community schemes run by the PFA, led to the resignation from the Task Force of Gordon Taylor, the PFA ’s general secretary. Taylor has spoken of David Mellor’s ‘vindictiveness towards players’ and his failure to recognise the £500,000 annual contribution by the PFA to its Football Club and Community Programme (The Guardian, 9 January 1999). Coupled with the resignation of Graham Kelly and Keith Wiseman from the FA, this row demonstrates the extent to which English football is now lacking authoritative leadership at precisely the time when its structures are confronted by some of their most major challenges. Having attempted on three previous occasions during the past decade to streamline its procedures, and having been obstructed by its 91-member Council or its shareholders, the FA will soon attempt to launch its own modernisation for the fourth time.

The Third Way or Third Division for football’s governance?

English football urgently needs a more effective process of governance. However, given its passive stance towards take-overs and consolidation in the electricity generation and water industries (e.g. the PowerGen take-over of East Midlands Electricity and the Enron take-over of Wessex Water) and its guarded and diluted proposals for addressing public concern about the performance of the privatised railways and other utilities, the government has demonstrated that it does not have the stomach for stronger regulation. Recent attempts to define the Third Way have confirmed the marginalisation of the concept of stakeholding in the government’s thinking (Blair, 1998; Giddens, 1998). However, the most important reason why the Blair Government is unlikely to intervene to challenge the privileged role of big business in an increasingly corporate-driven future for English professional football is that it would mean challenging the privileged role of big business in the whole New Labour project, not least the rebranding of British national identity.

When New Labour fashioned the Department for Culture, Media and Sport (DCMS) from the old Department of National Heritage, the Culture Secretary Chris Smith described it as ‘a department of the future’ which would enable the British people to discover ‘a new sense of our culture and our identity’ (DCMS, 1997a). Indeed, Smith has subsequently suggested that cultural activity is a key to a new sense of identity for the British people ‘of who and what we are [and] to set a sense of direction for our society which would otherwise be impossible’. Indeed, the redefinition of British identity will enable the British people to be reconciled with Economic and Monetary Union and devolution (Smith, 1998:22–23). The creation of the DCMS has been part of the rebranding of Britain, a project encapsulated in Mark Leonard’s pamphlet, Britain TM, which portrays Britain as a corporate trademark in urgent need of modernisation. Thus British national identity, or rather UK plc (for national identity is equated with the corporate identity of the multinational) is to be ‘rebranded’ to reflect Britain’s, or rather London’s, renaissance (for Britain is in reality the metropolis, or more specifically its dynamic cultural, media-based and financial service industries) as the coolest capital in the world (Leonard, 1997:12). Chris Smith has himself referred to how, ‘The recent Demos work is frightening in the evidence it amasses, about the way in which as a nation we look backwards – and the impact this has on others’ view of us, as well as on our own view of ourselves’ (DCMS, 1997b). In reality, far from being the heavyweight and scholarly tome Smith implies, Britain TM is nothing more than a mere wafer-thin, 75-page pamphlet from a metropolitan think-tank, Demos. The only frightening aspect of it is the arrogance with which it seeks to impose an inherently and unashamedly top-down project upon the nations and regions of Britain – an exercise subsequently repeated for the European Union (Leonard, 1998).

England plays no part in this rebranding exercise. At club level, English football reflects the expression of a diversity of local English identities rather than a singular British identity. At national level, as Euro ’96 and the recent World Cup demonstrated, the England team provides an alternative focal point for English rather than British national identity. Neither manifestation of English football culture sits comfortably with the Blair Government’s rebranding of Britain, especially at a time when devolution for other parts of the UK could fan the flames of English nationalism (Lee, 1999). Under New Labour, the DCMS, the department primarily responsible for the Government’s contribution to the governance of English football, is preoccupied by a culture-led exercise in British rebranding. It has studiously avoided any references to England or English identity. Sport has become the Cinderella activity of the DCMS as demonstrated by the fact that, after 18 months in office, the government has yet to deliver its strategic vision for sport. Furthermore, funding for sport under the DCMS’s Comprehensive Spending Review settlement is set to increase from a mere £49 million in 1998–99 to £52 million in 2001–2, an increase of only £6 million out of a total increase in DCMS spending of £290 million (DCMS,1998). Despite being essentially an English department, because it co-ordinates policies for England and its regions which have long been devolved to the Scottish, Welsh and Northern Ireland Offices and which are now accountable to directly elected structures, the DCMS has confined the development of a distinctively English agenda to a commitment to tidy up the landscape of unelected quangos which administer sport (and culture too) in the England regions so as to create clearer financial accountability (Lee, 1998c). Consequently, the DCMS has adopted an essentially passive and reactive stance towards developments in English football, as its relaxed attitude towards the recent negotiations over the future ownership of Wembley has demonstrated.

Neither of the competition authorities nor BSkyB would have needed to have been involved in the future governance of English football, had either the FA and Football League (or those associations in tandem with the Thatcher and Major Governments) launched the fundamental reassessment of English football which the late Lord Taylor had called for in 1990. The vacuum which was left by their respective inaction and non-intervention has been filled by the Premier League and BSkyB. For their part, the football authorities are now belatedly showing signs of action, closing the stable door not only after the horse has bolted but after the stables themselves have been redeveloped into exclusive private apartments for a rich élite. The Premier League is vigorously defending the OFT case and pleading that it has acted in the general interest of its member clubs. It has, but its motives acted against the wider interest of English football as a whole. The Premier League is now in danger of being supplanted by a further exercise of corporate self-interest. Whatever the manifest shortcomings of the private associations which have governed English football in the past, one cannot escape the fact that government has a vital role to play in corporate governance because ‘it is the only power in any land which can strike a balance between the conflicting wishes of competing interests’ and is ultimately the creator of the framework within which these interests compete (Charkham, 1995:2). Thus, the fact that corporations now increasingly control football, and have managed and rebranded it as a commercial venture, is not a spontaneous act of nature which the state is powerless to prevent.  The government’s blocking of the BSkyB bid for Manchester United was a welcome demonstration of the state’s continued power over such processes. It is to be hoped that the government’s response to the final reports from the Football Task Force will build on this initial result.

Notes

1 Commodification has been defined as ‘the process by which more and more goods, services or human relationships become tradeable in a market and produced for profit’.  (Abercrombie, 1996:110).

2 Corporate governance has been defined as ‘the mechanisms by which companies are controlled, directed and made accountable’. (Clarke, Conyon and Peck, 1998:22). The principal official reports on corporate governance have been delivered by Cadbury (1992), Greenbury (1995) and Hampel (1998). For a cross-national comparison of patterns of corporate governance, see Charkham (1995).

3 Although under the current BSkyB deal, Premier League clubs receive £247,593 for each of their guaranteed minimum three live appearances per season on Sky, this sum is widely regarded by media analysts as derisory compared with the projections for income which United might derive from pay-per-view, especially if the club was free to negotiate its own television deal.

4 Based on existing share prices at the time of the BSkyB bid, it was calculated that (at least notionally) BSkyB could have bought up to seven other Premier League clubs for its £623.4 million investment in Manchester United. These other clubs were Liverpool (then capitalised at £144 million), Newcastle United (£104 million), Aston Villa (£73 million), Tottenham Hotspur (£64 million), Leeds United, owned by Leeds Sporting (£50.6 million) and Charlton Athletic (£17.4 million). (The Times, 10 September 1998.)

5 On the 21 September, BSkyB announced that it had irrevocable undertakings or owned a total 25.75 per cent of United shares (The Times, 22 September 1998). By the end of October, BSkyB had secured effective control over the club by virtue of its having received acceptances from shareholders representing 33.5 per cent of the shares, including irrevocable undertakings to accept the offer from United directors to augment the 11 per cent of shares it had already bought or was in the process of acquiring on the open market.

6 The propaganda war to persuade supporters of the club’s best intentions was soon initiated. At the first home game following the announcement of the BSkyB bid, the match programme carried the news that a £30 million redevelopment of Old Trafford was to take place to enable the capacity to be raised from its present 55,300 to 67,400. Work would begin on the addition of an extra tier of seating to the Scoreboard End of the ground in May 1999, to be followed by the addition of an extra tier at the Stretford End by August 2001. Supporters’ attention was also drawn to the forthcoming £15 million investment in a new training complex at Carrington and also a Sunday Mirror survey which showed that the club’s admissions prices remained among the cheapest in the Premiership. United’s season tickets were rated the seventh cheapest. (United Review, vol.60, no.4, 12 September 1998).

7 When the Football Task Force had held one of a series of roadshows in Manchester, Mellor was reported to have cried off through ill-health from attending a meeting dominated by demands from supporters for the reintroduction of terracing, not least at Old Trafford. Fortunately, Mellor sustained a miraculous recovery to fulfil a speaking engagement the evening after the roadshow.

8 In the aftermath of the Miners’ Strike and the News International printworkers’ dispute at Wapping, supporters found themselves increasingly subjected to new police tactics and powers developed to control pickets and urban rioters. For example, the tactic of turning back coach loads of pickets en route to working pits during the miners’ strike was later deployed on several occasions to prevent supporters attending potentially explosive end-of-season fixtures.

9 Hirst and Thompson have rejected the thesis that the contemporary world economy is more open and integrated than ever, pointing to the nature of the world economy between 1870 and 1914. Furthermore, because of it being the source of laws and regulations, they have asserted that the nation state has a vital role to play in the governance of markets at not only the national, but also the international, supranational and global levels. (Hirst and Thompson, 1996:192).

10 For an analysis of the MAI negotiation and the Blair Government’s policy towards it, see TIC (1998).

11 For an analysis of the implications of the Comprehensive Spending Review for the DTI, see Lee (1998a).

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