David Conn: FA stays silent over York affair

Governing body fails to enforce rule protecting clubs against asset strippers as debt-ridden Third Division side prepare to face London fat cats

In the week when a children's story won the Whitbread Prize for fiction, anybody trying to make sense of the grown-up world of English football would find a knowledge of fairy-tales and fables quite useful. Alice in Wonderland and the Emperor's New Clothes would be particularly handy.

After sundry recent embarrassments, the Football Association announced it was to clean up the game, that its chief executive, Adam Crozier, would "crack down" on hooliganism and campaign for better standards from football's overpaid young players.

Yet faced with the York City chairman, who in 1999 formed a holding company specifically to bypass an FA rule designed to protect clubs from asset strippers, Crozier's FA is silent. The chairman, Douglas Craig, is now demanding £4.5m for the club and ground – for which he and fellow directors paid around £200,000 – or he will sell the ground, probably to property developers. If no buyer is found for the club, he will withdraw it from the Football League on April Fool's Day.

The FA's rule deters financial exploitation by providing that if a club is wound up and its assets sold, any surplus is not paid to shareholders, but to other sporting or charitable institutions. In 1999, Craig wrote to all York City shareholders asking them to approve a transfer of their shares and the club's Bootham Crescent ground to a holding company, Bootham Crescent Holdings, because, he argued, the FA's rule made York insecure, and could "adversely affect" their ability to remain at Bootham Crescent. The transfer went ahead and earlier this month Craig, citing mounting debts at the club, revealed his £4.5m asking price. The avoidance of the FA rule means that if the club is wound up and the ground sold, the estimated £3.5m surplus after paying off the club's creditors would be shared by Craig and his three fellow directors, John Quickfall, Colin Webb and the former playing stalwart Barry Swallow, who together own 94.1 per cent of the holding company.

This week I asked Paul Newman, the FA's head of communications, a series of questions about the FA's rule, sent also to Adam Crozier and the FA's lawyer, Nic Coward. I asked whether it is correct that their rule, 34 (b), is designed to protect clubs and their grounds and why Coward recommended only three years ago that the rule was necessary and valuable enough to be retained. I also asked: "What, in general, is the FA's view on clubs forming holding companies which take charge of all the club's assets but are free of your rules? Does it not make your rules effectively impossible to maintain?" These questions were not deemed worthy of a reply, of any kind. York supporters appealing for help have met the same silence.

This bizarre regulatory vacuum in football has been widely condemned. Alan Keen MP, chair of the All-Party Parliamentary Football Group, said: "Football's biggest challenge is to protect clubs from asset strippers. The FA needs clear, strong, watertight rules, and to enforce them. This is ludicrous." Malcolm Clarke, chair of the Football Supporters' Association, said: "The York affair confirms our worst fears. We call upon the FA and the Minister for Sport to protect clubs – at least the FA should enforce the few rules it has."

The threat to York came in the same week as the first meeting of the Independent Football Commission, the game's new self-regulatory body. This follows the Government-appointed Football Task Force's tortuous inquiry into the running of the game, which produced a majority report in December 1999 calling for more robust regulation and a strengthened "Rule 34" to protect clubs. The football authorities refused to sign, and presented their own report, suggesting an IFC.

Now, over two years later, the IFC has finally met. Its remit is to report on how the authorities govern the game. There are five members, the Conservative peer Lord Taylor, Labour MP Ann Taylor, Alan Watson, the deputy parliamentary ombudsman, Julian Wild, a commercial lawyer at Northern Foods, and John Willis, the former Channel 4 director of programmes and Ombudsman for The Guardian. The chairman, appointed after a controversial process – by a panel including the Premier League's own chief executive, Richard Scudamore – is Derek Fraser, the vice-chancellor of the University of Teesside.

Fraser said he understood that the IFC faces considerable scepticism, but said all the members are committed fans and none are being paid, and therefore have no vested interests. The IFC will report first on ticket prices, then merchandise, followed by a review of the FA's Financial Advisory Unit.

He said he could not comment on York City or on the formation of holding companies to avoid FA rules, but said the IFC would look generally at the FA's governance of football. He said: "I've heard all the criticism and people asking who this Derek Fraser is. But self-regulation works in other industries and we're determined to make a difference."

In York, fans have reacted with great purpose and will formally launch a Supporters' Trust a week today. The following day, 2 February, they have called for a "fans united" show of solidarity at the home match against Lincoln.

Already, together with the local council and a group of local businessmen, they have made an intelligent, constructive offer to Craig and his fellow directors. Councillor Alan Jones, the executive member for leisure, revealed that the group's offer does not approach £4.5m, but will repay the directors what they paid for their shares, possibly with some additional amount to recognise their work. The consortium will also clear York's debts, and guarantee running costs at least for next season, a total offer probably around £1.2m.

"We see it as community leadership to help maintain professional sport," Jones said. "It's very important that any new structure recognises the Supporters' Trust – the club belongs to supporters and the community."

Craig has spoken to two potential buyers, thought to be a housing developer and sports management company. But fans hope the local council's involvement with their bid will ward off developers, who will need planning permission if they want to demolish Bootham Crescent. Fans are still hoping Craig will listen and, as one said, "leave with honour intact".

He has not been contactable because, yet more bizarrely, he has been deciding the fate of another club, Wimbledon, whose request to move to Milton Keynes was turned down last August by the Football League.

Such is Craig's status as a football stalwart that the League chose him to sit on the three-man arbitration panel, effectively an appeal by Wimbledon, alongside David Dein, the vice-chairman of Arsenal, and Douglas Hollander QC.

The case, which turns on the fairness of the League's refusal, has been argued by QCs on both sides since Monday – legal costs are expected to exceed £500,000. The League steadfastly opposes "franchised football", but Wimbledon has pleaded that it needs the "revenue streams" from the move. The ruling is expected today.

Into this morass yesterday stepped Mohamed Al Fayed who has shrewdly exploited through Fulham the PR value of appearing as a football philanthropist. He has pledged to waive Fulham's share of the gate receipts from Saturday's FA Cup fourth-round tie at York, potentially worth £50,000. Craig turned him down.

Fayed offered the money to the Supporters' Trust, whose spokesperson, Sophie McGill, said: "In this era when football is often viewed in purely commercial terms, it is good to see there are individuals who still have the game's best interests at heart."

Which brings us back to Alice in Wonderland and the Emperor's New Clothes. On second thoughts, you couldn't make this up.

davidconn@freeuk.com