Paid in Full: A Critical Look at the Law and Economics of the Football Creditors Rule

The Football League has recently modified its Football Creditors Rule. Once the sport’s financial regulatory bête noire, the changes met with little fanfare. However, these amendments do not fundamentally change the essential structure of a regime that has seen criticism from the media, the judiciary, academics, and indeed has been subject to litigation by the British tax authorities. This paper examines the law and economics of insolvency in English football, framing the case of HM Revenue and Customs v. The Football League Limited & The Football Association Premier League Limited in its prevailing economic context and considering the particular legal challenge brought by HM Revenue and Customs, which was ultimately unsuccessful. Moving beyond the decision in the above cited case, a critique of the underlying cogency and validity of the Football Creditors Rule is provided, which is centred on the views espoused by Michael J. Sandel in What Money Can’t Buy: The Moral Limit of Markets. Particularly, it is posited that the nature of the rule has served to debase the norms that should govern football clubs’ financial management and has instead abetted a climate of free spending by systemically diminishing the downside risk of insolvency between football clubs.