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Cross-border COVID Challenges

You think your business has cross-border regulatory challenges? Then spare a thought for Chester Football Club โšฝ๏ธ whose stadium is located on the English-Welsh border. That's relevant because COVID regulations are currently different in the two countries โ€” in England ๐Ÿด๓ ง๓ ข๓ ฅ๓ ฎ๓ ง๓ ฟ you're allowed to have spectators and in Wales ๐Ÿด๓ ง๓ ข๓ ท๓ ฌ๓ ณ๓ ฟ you're not.

Chester had, for obvious reasons, assumed that since they are an English Club โ€” and the stadium entrance is in England, so anyone entering it has done so under English law โ€” that those rules would apply. So they hosted several games with crowds present, which was permissible under English law but not under Welsh Law. They've now received a letter warning them that they risk being prosecuted under the latter.

Since their income is heavily dependent on ticket receipts, the club's future could now be in doubt โ€” as the Sky News video below highlights.

It's an extreme example of where being subject to two regulatory regimes can cause real problems for the regulatee. Of course, one solution would be to go for the 'highest common denominator 'โ€” in this case, applying the stricter Welsh rules โ€” but that can be expensive, and in this case, life-threatening for the organisation. And sometimes, what Regulator A wants is the opposite of what Regulator B wants.

Unlike other businesses โ€” I'm thinking particularly of banks here โ€” football clubs can't easily move their place of business to remove the regulatory risk. Or, indeed, to take advantage of regulatory arbitrage.

I understand that the rules are the rules โ€” and sometimes you need to be seen to be strictly enforcing them 'pour encourager les autres' โ€” but I've got some real sympathy for Chester FC here. If the Club was registered in Wales, or the entrance to the stadium was in Wales โ€” or they'd temporarily moved the entrance to England to get around the rules, I'd probably take a different view.

Of course, that parks the bigger question of whether crowds should be allowed in football stadiums at the moment โ€” I'm not sure they should โ€” but that's one for the government, and Chester can only work within the rules that are set by others. As the video highlights. there don't appear to be any subsidies from the Welsh government to make it financially easier for clubs to close stadiums to crowds, and even if there were, it's not clear that an English business would qualify.

I've also got huge sympathy for the Welsh police, who are having to divert resources to deal with this issue. It's a great example โ€” admittedly extreme, but businesses that straddle country borders aren't uncommon in Europe โ€” of where regulatory regimes that look simple in theory can be challenging in practice.

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