Football Governance Bill
Tuesday 23rd April 2024
(3 weeks, 3 days ago)
Commons ChamberRead Full debate Football Governance Bill 2023-24 Read Hansard Text Watch Debate Read Debate Ministerial Extracts
The Secretary of State for Culture, Media and Sport (Lucy Frazer)
I beg to move, That the Bill be read a Second time.
Football is part of our national life. Over the years, English football has become a universal language. Wherever you are, whatever country you are in, you are never far away from a fan of one of our great clubs. We are a global football powerhouse and our economy benefits: billions for the economy, investment in towns and cities across the country, and tens of thousands of jobs. Our premier league is world leading. And the strength of our national game goes far beyond the top tier. Hundreds of thousands of fans turn out every week and come together to support teams up and down the football pyramid. Football clubs are at the heart of our communities. Each and every Member will be able to testify to that. Each Member will also be able to testify to the fact that we have the best fans in the world.
Unfortunately, too many of those very same fans have been taken for granted. Too many fans have seen their team’s owners change club badges and colours without any fan input, or have seen their club sell its stadium and up sticks. Too many fans have watched on as their clubs tried to join closed-shop breakaway leagues against their wishes. And too many fans have seen their club struggle and even collapse under the weight of mismanagement and poor ownership. There have been 64 instances of clubs falling into administration since the Premier League was founded in 1992. Clearly, not all clubs are feeling the benefits of English football’s global success and something has to change.
We all want to see our national game prosper for generations to come, but if we want our clubs to thrive, fans have to be at their heart. If we want English football to remain a global success story, we have to ensure our pyramid is financially sustainable. I am proud to say that the Football Governance Bill will do exactly that.
Sir Jeremy Wright (Kenilworth and Southam) (Con)
I congratulate my right hon. and learned Friend on bringing forward this Bill. As she says, football goes all the way down the football pyramid—not just in terms of its quality, but in terms of the entertainment it offers. Does she agree that a classic example of that is the fantastic entertainment that Coventry City provided in the FA cup semi-final on Sunday? Despite the club temporarily not being part of the premier league, it is none the less clear not just to the Coventry City supporters in my constituency but to everyone that the financial health of clubs that are further down the football pyramid matters for the entertainment they can provide. Does she agree?
Lucy Frazer
My right hon. and learned Friend is absolutely right: that was a tremendous match. It shows the importance of the football pyramid, and how it delights and disappoints fans across the country to see clubs go up and down.
Mr Toby Perkins (Chesterfield) (Lab)
I thank the Government for bringing forward this overdue Bill. Chesterfield has seen the worst of football, with the former owner Darren Brown ending up in jail for his crimes against the club, which almost took it out of existence. Under the ownership of the Chesterfield FC Trust, Chesterfield are now back where they belong—in the football league—after becoming champions of the national league this year. Is it not the case that what our football clubs really need is to be run by people with a commitment to those clubs and a passion for them, rather than by people who are trying to make a quick bob?
Lucy Frazer
To address the point about the Bill being long overdue, the Labour party said for some time that it would do something about this issue but did absolutely nothing. Since I have been Secretary of State, we have had a White Paper and a response to it, and we have drafted a Bill at speed. We have introduced the Bill, and I am delighted that it is having its Second Reading today. I recognise that the Labour party supports the Bill, and I am very grateful for its collaboration. I am very pleased that Chesterfield are in a good place. We want to see ownership that works across the field.
Steve Brine (Winchester) (Con)
I am very proud that our Government are bringing forward this Bill. Others had opportunities to do so but did not, and it is very important. I shall support its Second Reading tonight, because it is important to protect the football pyramid. The Bill talks about guaranteeing that fans will be consulted on key decisions that impact on them, which it will do in one respect, but fans of teams lower down the pyramid will be affected by the decision last week to get rid of FA cup replays, which are a lifeline for many clubs by providing opportunities to get a big draw at Anfield, Old Trafford or even Tottenham Hotspur Stadium. Obviously this Bill will not touch on that, but does the Secretary of State have any comments on this issue?
Lucy Frazer
My hon. Friend is absolutely right, because those David and Goliath fixtures are part of the magic of football. I know that replays have been a welcome source of income for smaller clubs throughout the years. I spoke to the FA about this issue at Wembley on Saturday, but as he will know, these are decisions for the football authorities. This Bill will ensure that we have appropriate financial regulation in place.
Valerie Vaz (Walsall South) (Lab)
I am not going to mention my local football clubs—oh, all right, I will: Walsall football club and Darlaston Town 1874 FC, which is celebrating its 150th anniversary. The shape of the Bill at the minute is due to the Minister sitting next to the Secretary of State, the right hon. Member for Pudsey (Stuart Andrew), who has engaged with all Members. I pay tribute to him for including all of us. It is a pity that the Secretary of State is looking at the Bill in a party political way, because the Government have been in power for the last 14 years. Let us all pay tribute to the right hon. Member for Pudsey, who has done a fantastic job.
Lucy Frazer
In the next part of my speech, I am going to pay tribute to a large number of Members who have played a considerable part. My right hon. Friend the Member for Pudsey (Stuart Andrew) has done a tremendous amount, as have many Members from across the House, but I pay particular tribute to my hon. Friend the Member for Chatham and Aylesford (Dame Tracey Crouch), without whom we would not be in this position today.
I was responding to a point about the delay. Those on the Opposition Benches might criticise us for the delay, but the truth of the matter is that they cannot legitimately do so, because they had an opportunity to take action and failed to take it. That is why we have taken the action that we have.
I agree with the right hon. Member for Walsall South (Valerie Vaz) that we should recognise that many people have played a considerable part in bringing this Bill to fruition, because many people have championed these reforms. I would like to mention again my hon. Friend the Member for Chatham and Aylesford, who was recently awarded a damehood. Her voice and her work have been instrumental in getting us to where we are today. As well as being chair of the fan-led review, she has helped lay the foundation. She has worked very closely with me, and in particular with my right hon. Friend the Member for Pudsey, to make sure that this Bill is in the shape that it is as it comes before the House today.
My hon. Friend the Member for Gosport (Dame Caroline Dinenage), who is Chair of the Culture, Media and Sport Committee, has worked with us in Government throughout the development of this Bill. My hon. Friend the Member for Carlisle (John Stevenson) has been a powerful voice in this debate and pressed hard, along with other members of the Northern Research Group, to change the status quo. I would also like to recognise the hon. Member for Bristol West (Thangam Debbonaire), who is my opposite number, and the hon. Member for Barnsley East (Stephanie Peacock), both of whom have been engaged throughout. I know that they are supportive of the ambition behind introducing a new regulator.
Particular thanks should be extended to my hon. Friend the Member for Southend West (Anna Firth), the hon. Member for Reading East (Matt Rodda), my hon. Friends the Members for Hyndburn (Sara Britcliffe) and for Folkestone and Hythe (Damian Collins), my right hon. Friend the Member for Ashford (Damian Green), the hon. Member for Eltham (Clive Efford), the right hon. Member for Walsall South, the hon. Members for Sheffield South East (Mr Betts), for Liverpool, West Derby (Ian Byrne), for Nottingham East (Nadia Whittome) and for Gateshead (Ian Mearns), and many others in this House.
I also thank the relevant all-party parliamentary groups, the football authorities, the Football Supporters Association, the FA, the Premier League and the EFL. Everybody has played their part in making sure that this Bill is in the shape that it is as we bring it forward today. Everybody knows it takes a village to develop a Bill of this size and scope, and credit is due to parties across the House, across football, across academia and across business. Hundreds of people have given us their time and their insight to help get the regulator right, and for that I am extremely grateful.
As Members will know, the centrepiece of this Bill is a new, independent regulator with a clear and unambiguous purpose: to protect the game that we all love. The way to do that is by getting football’s house in order. To that end, the regulator will not interfere with matters on the pitch. Instead, it will be focused tightly on governance, finances, ownership and fans. It will help clubs to build their resilience, while preventing teams from falling into the wrong hands to begin with.
Paul Bristow (Peterborough) (Con)
The mighty Bristol Street Motors trophy winners, Peterborough United, contacted me today to express their support for this Bill, but they suggested that it is vital that the independent regulator has the powers and the ability to intervene on financial model arrangements. Can the Secretary of State guarantee that the independent regulator will have those powers?
Lucy Frazer
The regulator will have significant powers in relation to individual clubs and, when triggered by either the Premier League or the EFL, to the leagues themselves. It will have backstop powers in order to look at the pyramid as a whole.
Kirsten Oswald (East Renfrewshire) (SNP)
I am always delighted to hear conversations about football taking place here or anywhere else. The Secretary of State talks about clubs getting their house in order. Does she agree that an important part of that would involve clubs looking at who their shirt sponsors are? Does she agree that shirt sponsorship by disposable vape companies is wholly unacceptable, has no part in modern football, and sets a really bad example to all our children? We want them to love the game that matters so much to all of us.
Lucy Frazer
I am sure that over the course of this debate many Members will raise issues of concern to them and their constituents. I emphasise that the Bill is about financial regulation, although I am very pleased that the Premier League has taken action on gambling advertising on the front of shirts, which is something we looked at very closely, and that the Government are taking action on vaping and smoking more broadly. The Bill is tightly defined and addresses financial regulation, and I am very pleased that we have introduced this legislation.
Dr Luke Evans (Bosworth) (Con)
The Secretary of State is exactly right about the financial aspects of this Bill, but we have to make sure that we get the balance right. We do not want to kill the golden goose that is the Premier League, and we want to make sure that we have growth in the sport, through the championship and the EFL. We have to consider the crowded calendar of European matches, too. Does she believe that the regulator will have the ability to chart that very fine line between UEFA, FIFA and her proposal? That is going to be pretty tough.
Lucy Frazer
We do not want to do anything that damages the world-leading Premier League, which is worth £7 billion. People across the world look to the Premier League, and we have worked very closely with the Premier League, the EFL and others to try to get the balance right. I have met the executives extensively during this period, and I have met all the clubs in the Premier League and the EFL to try to get the balance right. We are trying to get a light-touch regime that allows the leagues to do what they are already doing, but with a regulator. The Bill is all about financial regulation.
Bill Esterson (Sefton Central) (Lab)
The Secretary of State will understand that many of my constituents who support Everton are greatly concerned about the eight point deduction applied by the Premier League for breaches of its profit and financial sustainability rules. Nottingham Forest face a two point deduction for similar breaches, and other clubs have yet to face any sanction.
Can the Secretary of State reassure my constituents and many other football fans that her commitment to support the Premier League does not mean that the Bill will not have sufficient strength? Does she share my concern that my constituents and many others are worried about a lack of transparency, consistency and fairness in the case of Everton and other clubs? Will she give reassurance on that point?
Lucy Frazer
As I am making clear, the Bill is about financial regulation. I know that many fans are concerned about issues within the game itself. The Bill will not regulate how football is played, which is a matter for the footballing authorities. This is about ensuring that clubs up and down the pyramid are financially sustainable under a regulator. If no deal is agreed on distributions, the regulator can step in. This will protect the pyramid overall.
Clive Efford (Eltham) (Lab)
I am grateful to the Secretary of State for mentioning me earlier. Does she accept that one of the biggest drivers of financial stability is the parachute payments in the championship? Does she think it is a flaw that the Bill excludes parachute payments from the regulator’s powers?
Lucy Frazer
We understand that parachute payments have a role to play. There is provision in the Bill to deal with parachute payments, but that provision relates to the consideration on a club-by-club basis in the licensing regime itself.
James Wild (North West Norfolk) (Con)
When clubs like Norwich City are promoted to the Premier League, those parachute payments give them the confidence to invest, which drives competition in football. Are they not a good thing that we should be supporting?
Lucy Frazer
We believe that parachute payments have a role to play, although I know people have concerns about distortion. Under the Bill, if there is any issue relating to the finances of a particular club, particularly by reference to the parachute payments it might have received, the regulator has an ability to look at that within the licensing regime as a whole.
Mr Clive Betts (Sheffield South East) (Lab)
I have read the Bill, but I wonder whether the Secretary of State has read it. Under clause 55(2)(b), the regulator is not allowed to deal with
“revenue that the specified competition organiser distributes to a club by virtue of a team operated by the club being relegated from a competition organised by the specified competition organiser.”
In other words, parachute payments are deliberately excluded from the remit of the regulator. Why has that been done when it is one of the most distortive elements of the current arrangements?
Lucy Frazer
I have been very intimately involved in this Bill, having put together all the policy recommendations and had discussions with all the parties. I encourage the hon. Member to read all aspects of the Bill, not just the provisions in relation to the backstop, which he quoted. I know many Members feel that parachute payments are very important, so let me try to explain again.
I know that many stakeholders have concerns about the impact of parachute payments on financial stability, sustainability and resilience, and I know that parachute payments can play an important role in softening the financial blow of relegation at all levels of the football pyramid. Given the complexity of the issue, the regulator will need to undertake an holistic, evidence-based assessment of the system of financial distributions as part of its state of the game report, and this will include an assessment of parachute payments.
Parachute payments have been specifically excluded from the backstop mechanism to ensure that the two final proposals from the Premier League and the EFL are easily comparable. The impact of parachute payments on financial sustainability and resilience could be a relevant factor in both the decision to trigger the backstop and the final choice in relation to a proposal. More generally, the regulator can look at the impact of a parachute payment on a particular club when it comes to the licensing regime.
Lucy Frazer
I will press on, as I have now answered five times on parachute payments.
We will achieve our goal through the new licensing regime, under which all clubs in the top five tiers of English men’s football will need a licence to operate as professional football clubs. The regulator will have powers to monitor and enforce requirements on financial regulation, club ownership, fan engagement and club heritage protection, as well as setting a corporate governance code of practice and having the power to prohibit clubs from joining breakaway competitions.
Dr Luke Evans
It is fantastic that the top five leagues will have to have a licence. Will the Secretary of State comment on the resources that will be necessary to put that in place for the season? This is a big undertaking, and considerable resources will be needed to monitor what is going on.
Madam Deputy Speaker (Dame Rosie Winterton)
Order. I know that some colleagues who are intervening might not be seeking to catch my eye later. I remind colleagues that if they do intervene, it is customary for them to stay for the entire speech.
Lucy Frazer
The Government are very conscious of the impact on clubs, which is why we are giving them time to prepare for the measures we are bringing into play.
On top of the new licensing system, the regulator will introduce a new strengthened owners and directors test to make sure that a club’s custodians are suitable, and to protect fans from irresponsible owners. This responds directly to growing concerns about financial mismanagement in football, particularly illicit finance, as well as to fans fighting back against owners at clubs like Blackpool and Charlton Athletic. The regulator will also bring in new, robust financial regulation to improve the financial resilience of clubs across the football pyramid.
As members of this House will be all too aware, a lack of financial resilience is one of the key risks to clubs’ futures. Giving the regulator powers to oversee financial plans and to step in to require clubs to beef up their financial resilience, where it has concerns, will prevent clubs from facing cliff-edge situations like we recently saw at Southend United. That will not mean that all clubs have to break even. We know that striving for success can come at a cost and that this ambition makes the game so exciting, so we welcome sustainable, sensible investment. What we cannot have is reckless overspending, irresponsible risk taking and inadequate funding. That is why the regulator will look at each club’s plans and how they are funded, and ensure that clubs have the resources to manage their risk taking. No longer can we have short-term actions jeopardising a club’s long-term sustainability.
Ashley Dalton (West Lancashire) (Lab)
The Secretary of State has mentioned fan engagement a couple of times. Fans increasingly feel as though they are not being listened to by their clubs. The fan-led review, which she has also referred to, made a series of recommendations in 2021 to give fans a real say in how their clubs are run. Will she be clear as to how the Bill will ensure that clubs are effectively and properly engaging with their fans and that fans’ voices are not being ignored?
Lucy Frazer
The Bill identifies a number of things that we know are important to fans, including heritage assets such as the colour of shirts, badges and the location of a club’s stadium. We know that those are the things fans care about. The Bill ensures a proportionate approach, because we know that engagement with different fans at different clubs, which have very different measures in place, will require us to take a proportionate, case-by-case approach. The regulator must ensure a level of engagement with fans, particularly on the issues that I am identifying, but we also want to ensure that it works for the clubs. Therefore, it will be for the regulator to ensure that a proportionate approach is taken.
I was about to go on to discuss that aspect, because we will be setting a minimum standard of fan engagement, and requiring clubs to seek the approval of their fans for changes to those things I mentioned in order to comply with the strong existing protection for club names. We know that most clubs have a strong relationship with their fans, consciously engaging them in decisions about the club’s heritage. However, there have been some notable exceptions, as we have seen at Cardiff City and Hull City, whose fans have had to battle to bring back or keep their club’s colours, badge and name.
As I said, the regulator will also protect fan interests with the requirement for clubs to seek its approval for any sale or relocation of their home ground. The stadium a club plays in is not only of significant value to fans; it can be the club’s most valuable asset, and it is only right that a club seeking to relocate has to demonstrate that such a move would not significantly harm the heritage of the club.
Damian Collins (Folkestone and Hythe) (Con)
The regulator is asked to balance the financial sustainability of the club with heritage concerns and to make an either/or decision, under its purposes. In that scenario, could the regulator decide to allow a club to move if it felt it was best for the club’s future sustainability, even if the fans objected?
Lucy Frazer
Yes, that is right; the regulator has to take into account the views of fans and look at the proposals. If it considers the proposals to be good, that change can take place.
Under the new regulator, fans will no longer face the prospect of seeing their club signing up to ill-thought-out proposals, such as the European super league, which several Premier League clubs tried to join in 2021. The House was united in recognising that those proposals for the new competition were fundamentally uncompetitive and would have undermined the football pyramid, against the wishes of fans. This regulator will prevent that kind of closed-shop league from ever getting off the ground.
Andy Slaughter (Hammersmith) (Lab)
I respect what the Secretary of State is trying to do, but there is a huge inequality of arms between billionaire owners of clubs and fans’ organisations. I have been the MP for Queens Park Rangers for nearly 20 years, but my small borough also contains Chelsea and Fulham, and in my political lifetime all three of those clubs have faced either being folded up by greedy owners or losing their ground in perpetuity. I do not see what in the Bill is going to prevent that from happening in the future.
Lucy Frazer
All the measures in the Bill, cumulatively, will ensure that clubs are well managed and run; therefore, they will be there and will not go into financial insolvency and administration, which decimates communities. All the measures we have set out, be it the owners and directors test, or the measures to ensure that clubs have a financial plan, will ensure that clubs are properly run. We are introducing the Bill to ensure that the situation whereby we have had 64 administrations since the Premier League was founded in 1992 is not continued. We are not saying that clubs are never going to get into financial difficulty, but we are saying that we are going to put a strong framework in place to ensure that all constituents can be confident that their clubs will have a certain level to which their business is run—that they will be run well.
John Cryer (Leyton and Wanstead) (Lab)
Leyton Orient, in my constituency, with which the Secretary of State is familiar, now have owners who are genuinely dedicated to their welfare. Previously, they were owned by somebody on whom the fit and proper person test had no effect, and that person nearly destroyed the second oldest club in London. Is she confident that the Bill will ensure that such people will not get their hands on clubs such as Orient in the future?
Lucy Frazer
Yes. This Bill is all about ensuring that the owners and directors of clubs are fit and proper people, so that what happened to the hon. Gentleman’s club, which I was at just a few weeks ago, does not happen again.
Mr Robin Walker (Worcester) (Con)
I will support this legislation because many of the steps it takes are very necessary. I hope it will mean that Worcester City will never leave Worcester again. Much of what I am hearing about the need to protect the financial sustainability of clubs and leagues also applies in the smaller but still important world of rugby union. As the Secretary of State will know, and as the Under-Secretary of State for Culture, Media and Sport, my right hon. Friend the Member for Pudsey (Stuart Andrew), who is sitting next to her, knows very well, Worcester Warriors are currently without a place in professional rugby. If this legislation succeeds, will she consider applying it to other sports, or introducing legislation for other sports, where that is required to sustain opportunities in the professional game?
Lucy Frazer
As my hon. Friend knows, the Under-Secretary of State for Culture, Media and Sport, my right hon. Friend the Member for Pudsey (Stuart Andrew), and I have spent time looking at the issues in rugby, and continue to do so. We are setting out what we hope will be a strong financial framework for football. This is being watched closely by other countries that are looking into what they will do in football. Of course if other sports want to look into this, they can.
I move on to the backstop power. Obviously, broadcast revenue is a hugely important source of income for clubs up and down our top-tier football leagues, but the current distribution of revenue across the top five divisions is not sufficient, and football has not been able to come to a suitable new arrangement. Not only does that contribute to problems of financial sustainability, but it can have a destabilising effect on the sport. To avoid that in future, the regulator will have new, targeted backstop powers to help ensure a sufficient flow of money. However, those powers are intended only as a last resort, and can be triggered only if certain conditions are met. The backstop mechanism has been designed with the industry and leading experts to give football incentives to reach a timely compromise, thereby delivering the right outcomes while minimising costly regulatory involvement.
The final part of the regulator’s job is improving the corporate governance of clubs. We will establish a football club corporate governance code, and will require clubs to report regularly on their corporate governance, setting out how they have applied the code and why that is suitable for their circumstances.
Damian Collins
The language in the Bill reflects the language on corporate governance in the Companies Act 2006, but there “corporate governance” includes the relationship that a board of directors has with not only the component parts of the business, but the employees. Should it not be inherent in the Bill that the corporate governance code should suggest how clubs can maintain high player welfare standards?
Lucy Frazer
We looked closely at precedents elsewhere, particularly in regulatory fields, when forming the basis of the Bill. We have always been conscious that we are regulating in a commercial space, and that football clubs are businesses. The premier league is world leading. We are regulating because football clubs have failed to solve these issues themselves. What we do not want to do through this Bill is over-regulate, including in areas in which we would not be regulating but for this Bill. We are trying to strike the right balance. That is why the Bill, notwithstanding questions that have been put to me in this House, focuses on financial regulation. Importantly, it does not interfere with the game, or with how players are looked after. The leagues have a role to play, and they should be primarily responsible for running the game.
Valerie Vaz
Do the regulators have sufficient power to intervene if some of the owners are servicing debts in other areas of their company?
Lucy Frazer
The regulator will have strong powers to look at owners and directors tests, and at financial plans. They will have powers that are designed to ensure the financial sustainability of football. The question that would arise, I suspect, in the right hon. Member’s case is whether that issue was interfering with a particular football club.
Kevin Brennan (Cardiff West) (Lab)
The Secretary of State is being very generous with her time. I thank her for mentioning Cardiff City. I hope to catch Madam Deputy Speaker’s eye later and talk some more about them.
One reason why the Government regulate in the commercial space and in business is to promote competition. In the White Paper, the Government said that the scale of parachute payments can distort competition in the championship and encourage greater financial risk-taking by clubs not in receipt of them. If the regulator has no power in this sphere, how will we ensure that the pyramid is a reality, rather than it becoming ever more difficult to climb?
Lucy Frazer
I recognise the concerns raised about parachute payments and the distortion of competition. On the backstop powers, parachute payments have been included because of the way that the backstop mechanism works; two offers are made by the Premier League or by the English Football League. However, that is not to say that parachute payments are completely ignored. The regulator will look at the state of the game in a holistic way. Also, it is not to say that if the parachute payments affect the running and finances of a club, the regulator has no ability to look at those payments.
Robin Millar (Aberconwy) (Con)
The Secretary of State said something very important about looking at precedents for regulation in other areas. Certainly, one reason why I am in the Chamber today is my love of the game; although I recognise that there are financial matters that need regulation, that is not the whole of the issue. My concern, and that of many of my constituents, is about the matter being treated simplistically, as if there was just one set of financially related problems, without consideration for community ties, the involvement of fans and so on. When she looked at other examples, did she find anything that managed to crack that nut, or that captured that nuance?
Lucy Frazer
There does not need to be a nuance. The whole point of this legislation is to protect fans, communities and clubs. At the heart of that is making sure that clubs are financially sustainable. None the less, in the legislation, we also have measures to ensure fan engagement on the things that fans care deeply about—the heritage, for example. I cannot overstate the point that although we want to protect the premier league, which is an important, world-leading asset, we also want to protect fans and communities, and that is what this legislation is all about. Taken together, the new measures and the carefully considered remit of the regulator will help us to safeguard clubs, protect the interests of our fans and avoid unnecessary and excessive regulation.
The vast majority of our clubs are run well and live within their means. I am confident that those clubs and their owners will recognise that the Bill, and the new regulator, will allow us to put football on a solid basis for years to come. The Bill will preserve and enhance all the things that we love about our national game, and I commend it to the House.
Thangam Debbonaire (Bristol West) (Lab)
May I start by saying how good it is to see the Bill receive its Second Reading? Many people have been campaigning for it for many years, and as the Secretary of State has acknowledged, it has strong cross-party support. A lot of people—both inside and outside the Chamber—have put in a lot of work. Sadly, weeks, months and, I am afraid, Secretaries of State have gone by, but I am glad to see it here at last.
Since I was given the honour of serving in this role, I have met fans, clubs, representative leagues, governing bodies and special interest groups, and I want to thank them all for their time and expertise. I know that they are following our proceedings closely. I also thank the civil servants at the Department, who I know will have put in painstaking work to get us to this point. They deserve our appreciation, and I hear that same point being made by those on the Government Benches.
This new law will not fix all of football’s problems, nor is it designed to. I believe that it can be transformative, if things are done right both during its passage through Parliament and in the crucial implementation phase. The prize could be greater financial sustainability across the whole football pyramid, and, crucially, fans having a greater say in how their clubs are run. It could be those things, but it is up to us to make sure that it is. That is what fans deserve, and what Labour has called for in our last three election manifestos. We Opposition Members are therefore absolutely committed to passing this Bill into law, and to making it work. It is a once-in-a-generation chance to change the game that this country loves for the better. We must all realise the responsibility that we have to make a success of it.
Football is part of what it means to be British. It reaches across borders. It is part of our global brand. It brings us together. Yes, it sometimes brings crushing disappointment, but it also brings us joy. We watch with our families and friends at the local, in the stands or in our living room. We cheer and chant with strangers in stadiums, and together, we sit on the edge of our seat with nervousness. Labour will never take the magic of football for granted. It deserves our attention and our hard work.
Football is also an economic powerhouse. As my right hon. and learned Friend the Leader of the Opposition has clearly set out, Labour’s No. 1 mission is to go for growth. The premier league and its clubs contributed more than £4.2 billion in tax in 2021-22 and supported more than 90,000 jobs. The English Football League clubs contribute so much to our country’s finances, to jobs, and also to joy. The next Labour Government want to invest—in hospitals, in schools, in repairing the damage done by the last 14 years, and in making sure that every child gets a great experience of sport and physical activity at school. That is why football’s contribution to public funds is so important to us, and it is why we will focus on economic growth. Labour will support football up and down the pyramid to grow sustainably, and to create even more jobs, as well as joy. I say “sustainably”, because Labour believes it is important that the whole football pyramid shares in the success of the game.
England leads the world in its system for football. The English pyramid is built on competition. The fans’ love of the game was never more clearly demonstrated than when they overwhelmingly rejected the close competition model of the proposed European super league. That set in train the fan-led review by the hon. Member for Chatham and Aylesford (Dame Tracey Crouch) and led to where we are today, but there is so much more work to do.
Valerie Vaz
My hon. Friend mentioned the fan-led review. Does she agree with me that the women’s game, which is out of scope of the Bill, is growing exponentially, and that there is scope for the hon. Member for Chatham and Aylesford (Dame Tracey Crouch), in a new role, to look at the women’s game and see whether we could have some regulation there?
Thangam Debbonaire
I thank my right hon. Friend for that intervention. She rightly pays tribute to the hon. Member for Chatham and Aylesford, although Karen Carney has also made a substantial contribution in leading the Carney review. I read the review with interest—it was great—and I believe my right hon. Friend may be aware of it. It is certainly worth Members giving it a detailed read; it deserves all of our attention. I am really proud of the fact that the English women’s game is growing so strongly and so well, and that it is inspiring so many women and girls to get active and get fit. The work of the hon. Member for Chatham and Aylesford, combined with the Carney review, sets in train exactly what my right hon. Friend is looking for: strength in our women’s game, which deserves it and deserves our admiration. It is bringing in new audiences all the time, which I think is fantastic.
Thirty years ago, English Football League revenues were 75% of the Premier League’s; today they are just 6%. The gap then was £11 million; it is now £3 billion. It is not that that income is not distributed from the Premier League—it is. It is because increasing amounts are spent on parachute payments, which are made to clubs relegated from the premier league for up to three seasons. I respectfully remind the ministerial team that it was the Government’s own White Paper that recognised the scale of these payments and that they can have unintended consequences.
Sir Mark Hendrick (Preston) (Lab/Co-op)
My hon. Friend referred to parachute payments. Does she feel that the inclusion of the clause that prohibits the parachute payments as “relevant revenue” is already prejudging the outcome of the state of the game review? It is excluding them to start with, rather than leaving the question open until the review is done.
Thangam Debbonaire
My hon. Friend raises a really important point. It is so important that the state of the game report leads the way, and that the regulator is allowed to look at the evidence and have the scope to intervene where that is necessary. I fear that the Secretary of State may inadvertently have confused the issue in her earlier remarks, although I think she began to clarify it. I would be grateful if the Minister could further clarify it in his summing up, as there is some remaining confusion.
Mr Betts
I certainly think that if we do not sort this issue out today, we must at least have some time in Committee to try to untangle what clause 55 actually means. I thought the Secretary of State said that the parachute payments were in play in the discussions about distribution of funds within football until it gets to the backstop, when they are taken off the table. It is almost being said that if the Premier League does not reach an agreement with the EFL until the point of the backstop, the Premier League will in effect have a veto over parachute payments being changed. That is what is being said, and I think that position really needs to be changed when we are in Committee.
Thangam Debbonaire
I thank my hon. Friend for that intervention. Like other colleagues, he is so knowledgeable about the detail of this Bill. I urge the Government to consider what has been said in a constructive spirit. Everybody present wants to get to the bottom of this confusion. We want to make sure that football and the regulator have the tools they need to grow sustainability—a key word which the Government have themselves used. The confusion about parachute payments is worthy of further attention, because there is so much money involved. They also have the distorting effect that the Government’s White Paper rightly identified.
If we do not look at this issue, we risk distorted competition in the championship by encouraging greater financial risk taking by the clubs that do not receive those payments. We know that that can result in an over-reliance on owner funding, which again is simply not always sustainable. As my hon. Friends have mentioned, clause 55(2) excludes parachute payments from any order by the regulator on revenue distribution. I gently say to the Government that, as there seems to be some contradiction or possible confusion, we would like that cleared up. I would be grateful if the Minister could say more in his summing up about how the money currently used for parachute payments could make more impact and perhaps be shared more widely, whether he has examined that in detail and to what extent he feels the current terms of the Bill are satisfactory.
Dr Evans
Part of the problem is that football is inherently risky; the very nature of what a club does is in order to get promoted. If, in trying to engineer some sustainability from the point of view of people investing in a club, Derby County had been promoted, the model would have been deemed to have worked, but it failed and so did the club. How would Labour facilitate individuals from across the globe investing in the best leagues in the world, while making sure that clubs such as Derby County were protected?
Thangam Debbonaire
I gently point the hon. Gentleman to his Government’s White Paper, because the Bill comes from there. Yes, of course the game is inherently risky—that is part of what makes it thrilling—but we need to be thinking about whether that is a calculated risk that is part of the thrill of the game, or an unintended consequence of a possible market failure. We really need to look at whether there is distorted competition. I gently suggest that, if the hon. Gentleman has not read his Government’s White Paper, he should.
Thangam Debbonaire
Then we really need further discussion in Committee on this issue; it is worthy of such consideration. On calculated risk taking, we need to be clear about when we are taking unnecessary risks and when there are unintended consequences of the way finance is distributed.
Mr Perkins
Surely football club owners should be able to spend the money they have to take such a risk. However, if they are spending money from the future, as Derby County and Glasgow Rangers did, and the risk fails in the current year, they will inevitably go bust. Glasgow Rangers disappeared altogether, and Derby County almost disappeared. Football fans do not want clubs to take that risk, and surely the regulator should be preventing that.
Thangam Debbonaire
My hon. Friend raises the most important point, which is about how fans feel. There should be no taking of reckless risks and there should be no jeopardising of a club’s future, and that is important. Any business owner—the hon. Member for Bosworth (Dr Evans) mentioned businesses—knows that they have to think about what level of risk they are going to take. Fans are at the heart of football, which is one of the things that makes football special and unique, and what fans want is such an important feature of our discussion.
Steve Brine
I will ask the same question that I asked the Secretary of State, because the hon. Lady could be the Secretary of State this year. I do not know whether she goes to watch football—perhaps she goes to watch Bristol Rovers in her own city—but she will know that, earlier this year Bristol Rovers had the mighty Norwich City at its stadium. It had 10,000 fans for a mid-week FA cup replay, which was really important to the club. Bristol Rovers has called on the FA to reverse its decision to scrap FA cup replays. This Bill is about financial resilience and viability throughout the pyramid, so what is the Opposition’s view of the FA’s decision last week?
Thangam Debbonaire
I am grateful to the hon. Gentleman, who says that the Bill is about financial resilience. Obviously, Bristol Rovers is my local club, and I listen to what it has to say, but I also listen to what fans across the country have to say, and they are clearly very upset about that decision. My right hon. and learned Friend the Leader of the Opposition has made his views on this extremely clear, because we really think that replays are part of the game. [Hon. Members: “Hear, hear.”] He has said that replays are an important part of our game, and we can hear that in the reactions of my right hon. and hon. Friends behind me. However, as the hon. Gentleman says, replays are not part of this Bill, and we are focused on financial resilience. He will know how much I have enjoyed being at Bristol Rovers. I was on the terraces only the other week watching them lose to Reading, but that is part of the joy of football—that and the pies—isn’t it?
I want to talk about how revenue is distributed throughout the football pyramid, because that is an important consideration of this Bill. One of the many ways the Bill sets out a future for the regulator is on financial distribution. It is down to the leagues themselves to reach a deal on broadcast revenue distribution, but it saddens us all that, at the moment, a deal still seems a long way off. It seems that there has been something of a breakdown in communication. I have met many of the interested parties and listened to concerns, and I appreciate that this is complex and not easy, but I urge both sides to come to an agreement.
However, if those negotiations cannot result in a deal once the Bill is enacted and the regulator is in operation, the regulator will have the power to select one of the two options put forward by the parties. That important backstop power should be used as a last resort, but it is clearly important that such a power exists. Given how important the backstop is, will the Minister say what work has been undertaken to ensure that that specific part of the Bill works in practice? Is it legally watertight? Are there questions that still have to be answered? From my engagement with stakeholders there seem to be many important questions that still need to be answered and we will be exploring them further in Committee, but will the Minister give us a bit more of an indication at this stage regarding what work has been done and what that will mean in reality?
Proportionality will be key for us all. As many Members across the House have said, we want the game to succeed and to continue in the great future that it has for the whole country. Proportionality is important. With all legislation and regulation we must strike the right balance, and nowhere more so than with the licensing scheme for clubs. That is the mechanism through which a majority of the regulation and enforcement will be delivered, and it is right that the regulator will be able to tailor a club’s obligations proportionately, especially when it comes to clubs in the national league—many hon. Members represent constituencies in which there is a national league team. We support an appropriate transition period, to enable clubs to prepare for this process. We must bring clubs of all sizes into the system in an appropriate way.
Colleagues have also mentioned sanctions. As the Bill stands, the regulator will not be able to impose points deductions on clubs that break the rules. Labour backs that decision, but I know how much this issue matters to colleagues across the House and to fans up and down the country who are understandably devastated when their clubs are hit with points deductions as a result of decisions that the fans have no power over. After the formation of the regulator, the leagues will continue to have their own financial rules, and there is nothing to suggest that points deductions for breaches of the league’s own rules will not continue. Nobody wants to see points deductions for corporate or financial mismanagement, least of all fans. I hope, and I know fans hope, that the regulator and licensing scheme will mean that clubs are more financially sustainable, and that breaches of league rules and the associated points deductions are much less likely. Again, if the Minister would like to address that when summing up the debate, that would be helpful.
Football clubs are the pride of our towns and cities. They are an important part of our civic identity and the heart of our communities. New owners often bring important investment, but I know from speaking with clubs that it is about more than that. It is a big responsibility and honour to be the custodian of a football club, and owners should take that seriously. I know that is how it feels for the owner of my local club, Bristol Rovers.
Andy Slaughter
My hon. Friend is making a very good speech. One other thing that clubs do through their community arms—in the case of QPR that is QPR in the Community Trust—is regenerate an area. In one of the poorest communities in the country we have Andy Evans and his team. It is big business, and they make a massive contribution to the local community. However, they and the club fear that the poor governance and financial inequality of football puts all that at risk. Is that what is at stake in the Bill?
Thangam Debbonaire
My hon. Friend is exactly right. So many things are at stake in the Bill, which is why it is so important we get it right. I know Fulham well, and the important work done by football community trusts, supporters clubs, and so many people involved in the game who help to regenerate their communities. However, they cannot do that on their own, or if their club is not sustained financially. That is what is at stake, my hon. Friend is absolutely right. Indeed, I have seen that for myself in what Bristol Rovers does for our local community. I met the owner of my local club recently. It was a pleasure to meet him and to hear from him and fans about the importance of growing the club sustainably and investing in the local community. I was impressed to hear the number of ways that the owner, management and fans have engaged with each other and learned from each other. There is always more to do—I am sure all clubs would acknowledge that there is always more they can do to hear what fans have to say, and what their community trusts are doing, as well as how they can be enabled and supported to do more of what they do so well.
Although the vast majority of owners act in the best interests of their club, some do not. That is why Labour has been calling for new checks on owners and directors. The Bill stipulates that those checks will: look into whether prospective new owners have sufficient financial resources to be a suitable owner; review their finances to ensure they are sound; check whether prospective owners behave with honesty and integrity; and assess officers’ competence and whether an owner’s source of wealth is connected to serious criminal conduct. Again, will the Minister address those points when summing up the debate? What does all that mean in practice? The Bill is not clear whether the tests will be objective or subjective in nature, and some of them appear to be distinctly subjective. How will the tests be conducted and what will the criteria be? Will that issue be addressed in Government guidance or the regulations? Does the Minister expect it to be addressed in the code? I would be grateful if he clarified that.
Damian Collins
The Bill is reasonably clear that the regulator considers not only those rules, but any other rules that it wishes to write into the rulebook. This will give us for the first time ever a subjective test set by the regulator, which can be enforced with statute backing it up.
Thangam Debbonaire
The hon. Gentleman seems to be saying that it is a subjective test. I was asking whether there are any objective tests, because I think that is important in terms of fairness. Where are they objective, where are they subjective? Concepts such as competency can be interpreted both objectively and subjectively, and I would appreciate the Minister’s clarification of what he views as the Government’s position.
Mr Robin Walker
One issue we came across in the huge difficulties that Worcester Warriors went through was that it had a director who was approved on the basis that he had been approved by the footballing authorities. He was approved because he was a practising solicitor, but it turned out he was a disbarred practising solicitor. Is it vital that a regulator has the ability to check information given to it, so that even if people provide misleading information to a regulator, it has the ability to intervene and strike those people off as appropriate directors where necessary?
Thangam Debbonaire
The hon. Gentleman explains exactly why it is so important that the owners and directors test will work. That is why I am addressing these remarks to the Government—it is, after all, their Bill. I would like to know substantially more from the Minister in answer to the questions that I and others have raised.
Fan engagement is crucial and we back fans having a greater say in how their clubs are run. Therefore it is right that the Bill requires that if a club proposes changes to club crests or colours, it has taken reasonable steps to ensure that those changes are supported by a majority of fans. Fan engagement should not be reduced to a box-ticking exercise, and neither should it be one size fits all. Engagement must be meaningful and appropriate, and suitable for each club.
The women’s game is not explicitly mentioned in the Bill, but we would all agree that it has had a stellar few years. It is growing quickly, bringing new crowds to stadiums, and introducing lots of girls to the joys of physical activity. I am determined to see the women’s game grow even more. I have already mentioned that proportionality is a key principle that must be considered during the passage of this Bill. Having listened to what representatives of the women’s have to say, I do not think it wise to introduce regulation to the women’s game before it is ready or unless it is necessary. It is right that there are powers in the Bill to introduce regulation to a league designated by the Secretary of State that could, if necessary in future, include the women’s game. I will be monitoring that closely, in collaboration with representatives from women’s football.
The governance of English football is in a position of uncertainty, and on this Government’s watch that uncertainty has been allowed to carry on far too long. That has been, and continues to be, to the detriment of clubs and their finances. After the passage of this long-awaited Bill and the establishment of the regulator, I hope that football will be able to enter a new period of governance stability. As the Bill progresses, that is what Members across the House should be aiming for, and what fans across the country deserve.
Dame Tracey Crouch (Chatham and Aylesford) (Con)
I rise, unsurprisingly, in support of the Bill. I am pleased to see you in the Chair, Madam Deputy Speaker, because I know you take a keen interest in Doncaster Rovers, and although you are not able to speak in the Chamber on these matters, you have been a fine advocate for its views during this process. May I congratulate the hon. Member for Bristol West (Thangam Debbonaire) not just on completing the marathon on Sunday, but for standing up and sitting down without an audible “oof”? Two days after, that is pretty commendable.
I thank the ministerial team and the long-suffering officials at the Department for Culture, Media and Sport who have worked exceptionally hard on bringing forward this Bill. This detailed piece of legislation has been well worked through to ensure that it moves smoothly through Parliament and is in place as soon as possible. I also pay tribute to those who have campaigned on this issue for many years. I may have chaired the fan-led review, but the truth is that a blueprint for reform was created long before. I went down a Hansard rabbit hole, thanks to James in the Official Report team, and read some fabulous references from days past, including a glorious contribution from the much-missed Alan Keen in 1997 that highlighted:
“The Premier League and the Football Association govern themselves with no appeal beyond their confines.”—[Official Report, 27 June 1997; Vol. 296, c. 1094.]
Given last week’s furore over FA cup replays, that still seems apt.
There are too many to list, but the likes of Richard Caborn, Andy Burnham, my hon. Friend the Member for Folkestone and Hythe (Damian Collins), Kevin Miles and his team at the Football Supporters Association, David Bernstein, Gary Neville, Henry Winter and Peter Crouch—no relation—have been vocal campaigners for change. The truth is that for many years, Sports Ministers, including me, have stood at the Dispatch Box with crisis after football crisis and pleaded with the authorities, “Reform yourselves, or Parliament will”, and here we finally find ourselves.
The Secretary of State has already set out the context of this Bill. It is always important to remember that the Premier League asked the Government to intervene when six clubs sought to join the European super league. The pleas led to the then Prime Minister Boris Johnson promising a “legislative bomb”. That came on the back of high-profile financial problems in the football pyramid, including the demise of Bury, which my hon. Friend the Member for Bury North (James Daly) has spoken about many times in this Chamber. The fan-led review was the outcome of the request from the Premier League and the regulatory failings to prevent clubs from disappearing from our football landscape and the subsequent massacre of the community ecosystem that supported them. The review was a deep dive into the issues, and I shall remain forever grateful to those who participated in it.
In preparation for this speech, I re-read some of the submissions to the review. It was interesting to read in its submission that the Premier League thought that there could be a use for an institution with “step-in powers” and “a capacity to intervene” should it
“manifestly have failed to uphold rules”.
The submission went on to say that
“such a body could also set the general principles required for standards for governance and transparency, including for financial regulation; strengthen the independent operation of the OADT; support the principles of standards for owners’ responsibilities as custodians; and protect decision making over key issues for fans”.
The same paragraph continued:
“Provided it operated in a proportionate way that respected the benefits of permitted well-run clubs and leagues to be nimble in their decision making and encouraged to innovate and take properly assessed risks, then this could make an important and positive contribution to maintaining and enhancing what is the world’s most dynamic and attractive football environment”.
This Bill is all those things, shaped brilliantly to reflect the words of the Premier League itself about what a great regulator could look like. It leaves many of us scratching our heads as to why the Premier League has spent the past few weeks lobbying to stop the Bill progressing.
I will say a few things about some of the specific clauses in the Bill. Clause 3 sets out to define an “ultimate owner” of a club. That is important, as part of the challenge in the past has been that that has not been as clear as it should. Clauses 5 to 8 set out the objectives and principles of regulation, making clear that the regulator should be nimble in its approach and can oblige good governance and real-time interventions, but is not obliged to guarantee zero failures. However, the Bill makes it clear that the regulator will be time-efficient, consistent and transparent. That is a departure, some might argue, from the current regulation.
Clauses 12 and 13 are key to how the regulator will evolve. Good guidance will be essential to its success, as we have heard in contributions and interventions. I already foresee strong guidance required on the role of fan advisory boards and on fan engagement, such as that set out in schedules 4 and 5, along with certain technical challenges, such as pitch ownership if that is different from club ownership. Timely but thought-through guidance done in consultation with key parties will be much needed if the regulator is to hit the ground running. Equally important is the need not to overload on guidance and create regulation by proxy. The whole point of the regulator is to improve governance and to be open and transparent, yet agile in relation to change.
Clause 26, and in particular subsections (7) and (8), which I refer to in my notes as the Martin Samuel measures—Martin is a journalist, but he would regularly ask me whether the honesty and integrity test would prevent Boris Johnson from running a football club—clarify that the test is defined by crimes under the Serious Crime Act 2015. Offences covered by fixed penalty notices are therefore not relevant, which will be a relief to those involved in football who might have been issued with a speeding fine or other such fine.
Clause 37(2) relates to the regulator having regard to foreign and trade policy objectives. That has become a slight distraction from the argument on the independence of the regulator. With that in mind, I suggest an amendment to the clause to change the word “must” to “may”. It is boringly technical to the outside world, but incredibly important if we are to impress on it the value of the regulator’s independence.
Part 5 of the Bill is an important aspect for the domestic fan base, covering prohibited competitions and the protection of club heritage, including ground disposal. For the fans, it is the soul of the Bill. When we published the review, I explained that its order was crafted like a good album. We put all the chapters about governance first, before we got to the redistribution of revenue. The way I see it is that the Premier League gives a substantial amount of money to the wider pyramid, but without the necessary structures of good governance. It is akin to having the heating on with the windows open. Putting in proper regulatory structures should give the Premier League and its clubs confidence that its money is going to good owners with proper business plans in place and real-time financial monitoring that gives significant protection. The Bill follows that same mindset. We get the structure right, then we distribute the finances, and that is what part 6 of the Bill does.
On part 6, I have some key points to make. First, there is an argument to be had on whether the regulator should have the ability in principle to trigger the backstop. I am sympathetic to that, but it needs to be done carefully. Secondly, although colleagues have focused on parachute payments, clause 55 is drafted so broadly that both domestic and international broadcast revenue could be deemed “relevant revenue” and available for distribution. That is not the case at the moment. I am slightly surprised that the Premier League has not included that in its list of things that it wants to amend. It is important that we seek to clarify precisely what is considered “relevant revenue” at the earliest opportunity. Thirdly, it is essential that we define, either on the face of the Bill or at some point in parliamentary proceedings, the definition of “material change”. What might seem material to the EFL might not seem material to the Premier League.
Fourthly, the powers of the regulator will extend to the national league, as presumably will the redistribution of funding. However, I note that the National League has said that it opposes the regulator. It is in the gift of the Secretary of State to define the reach of the regulator, so she could, if she felt it necessary, remove the national league from the Bill, and in so doing, remove it from the redistribution of finances and instead allow it to continue its existing arrangement via the Football Association.
It is right that we put these powers in the Bill, but it is disappointing that, two years on from the review, the football authorities have not done a deal on distribution. The solid recommendations in the review would have moved this debate much further forward than it is now, but they were ignored, so here we are, with the regulator requiring powers to intervene that were promised over and over again.
Clause 94 means that all fines received are paid into the consolidated fund. Although it may not be popular with the Chancellor, I propose that, in order to ensure that the regulator is deemed independent of Government, that clause be amended so that moneys raised above and beyond the regulator’s costs are diverted directly back into grassroots football, which I am sure would be much appreciated as we look to continue the growth in participation and investment in facilities in the run-up to and long after the Euros in 2028.
I do not wish to test the tolerance of the House, Madam Deputy Speaker, so I shall wind up. I love football, and although the Premier League continues to cast me and others who support the Bill as the enemies of success, investment, growth and international competitiveness, I would argue that quite the opposite is true. The premier league is one of our finest exports, and nothing in my review or in the Bill changes that. Instead, the Bill protects the pyramid from the vulnerabilities and fragilities that have challenged football over the years. It protects football clubs from owners who forget that they are merely custodians of something greater than a trinket. It serves to protect fans, clubs and entire communities from losing their heart and soul. For those reasons, I hope that the whole of Parliament will come together to support the Bill and get it into statute as quickly as possible.
Several hon. Members rose—
Madam Deputy Speaker (Dame Rosie Winterton)
Order. I thank the hon. Lady for her kind words about Doncaster Rovers. I get the feeling that I speak for the whole House in saying how pleased we are that her work in this area has been recognised appropriately. [Hon. Members: “Hear, hear!]
Before I call the next speaker, a great many right hon. and hon. Members wish to contribute, so my first advice to Members is to try to confine their remarks to about seven minutes. I call Kevin Brennan.
Kevin Brennan (Cardiff West) (Lab)
Thank you, Madam Deputy Speaker. I also broadly welcome the Bill. May I add the members of the Culture, Media and Sport Committee to the list of people whom the Secretary of State praised? I was a member of that Committee until the end of last year, and I am glad to see several of its members in the Chamber for Second Reading.
It is a pleasure to speak directly after my hon. Friend the Member for Chatham and Aylesford (Dame Tracey Crouch)—I think I can call her a friend after all these years. I commend her for her work in this area and the terrific speech that she has just delivered. I found myself agreeing with pretty much everything that she said. I know that we are in favour of replays, but it would perhaps be wise of me not to repeat everything she said, so I will try not to, although I commend her for what she had to say.
There are still some who question whether Parliament should be regulating in this area at all. Why should we legislate to regulate football? After all, we do not do that in every sport—although, as the hon. Member for Worcester (Mr Walker) pointed out, there is perhaps a strong case for doing so in rugby union after what happened to his local club and other English premiership rugby clubs. However, in reality, Parliament has a long record of legislating specifically in lots of different areas of football. In fact, my private Member’s Bill—the Unauthorised Entry to Football Matches Bill—will have its Committee stage on 8 May, and will, I hope, given its widespread support, make its way into law if we have time before a general election is called. There is a long record of football-specific legislation, so this is not that unusual. Football plays such a huge part in our culture.
Let me say, as the Member of Parliament representing Cardiff West, that although we talk about the English football pyramid, it includes Welsh clubs of course, and has done for well over a century. Football is a huge part of our culture in Wales. In fact, a lot of hon. Members will not know that it is the most popular sport in Wales—more popular even that rugby—helped greatly by the success of our Welsh men’s national football team in recent years, including their reaching the semi-final of the Euros.
Of course, as hon. Members have pointed out, we would not be legislating if football had demonstrated the ability to regulate itself, which many of us—including the late Alan Keen, whom I am glad got a mention in the speech of the hon. Member for Chatham and Aylesford—have called on it to do for many, many years. It is telling that the Bill is now widely welcomed in almost all tiers of football except, as has been mentioned, the Vanarama national league and the higher echelons of the premier league. I completely acknowledge not only that the premier league is the world’s most successful club competition, but that its existence has brought benefit down the football pyramid.
In the first 25 years of the premier league’s existence, its revenues grew thirtyfold while revenues in the second, third and fourth tiers grew more than tenfold. That is the nub of the issue: if we go on as we are without effective redistributive methods, the inevitable consequence is that that the gap between the top and lower tiers would gradually make the pyramid untenable and unworkable. Without a long-term viable pyramid, football at the top will become even more of a cartel than it currently is.
The Premier League’s chief executive told the Culture, Media and Sport Committee earlier this year, that he was
“totally accepting of the Bill and the regulator coming in after that Bill.”
As the Bill progresses we should bear that comment in mind, which he said on the record to the Select Committee. We should hold the Premier League to that.
As we have heard during the debate, football should be about competition. Business should be about competition, and regulation is about helping to promote fair competition. That is the role of Parliament, Government and the state in this sphere. In the absence of an agreement between the Premier League and the English Football League, the backstop power of the regulator is an essential tool to ensure fair competition, and so that smaller businesses are not ultimately wiped out by the gradual concentration of resources at the top of the game and the impossibility of making progress in the game without taking the sorts of risks that undermine local clubs, and ultimately led to a number of situations that we have heard about. I do not see how Ministers will be able to convince right hon. and hon. Members that that is possible without the regulator having any powers to deal with pyramid payments. As we have heard, the Government’s own White Paper acknowledged the distorting impact that they have on competition. If the Bill is about fair competition, that has to be dealt with.
I want to mention my own club Cardiff City—hon. Members would not expect anyone not to mention their own club. Its stadium is located in my constituency and its recent history has contributed to some of the clauses in the Bill, particularly around fans’ rights. Cardiff City has been very successful during my 23 years in Parliament. It has been in the premier league twice, reached the FA cup final, and lost to Liverpool on penalties in the league cup final, but as is well known, some years ago a new owner, Vincent Tan, decided to change the club’s colours from the traditional blue to red, believing it to be a colour that brought good fortune. If hon. Members can imagine, for a football club universally known as the Bluebirds, the switch to red was somewhat problematic for the fans.
I welcome the fact that the owner changed his mind, and that the Bill would not allow that sort of thing to happen without the involvement of the fans. I can confirm that Cardiff City football club welcomes the Bill. I thank the club’s director Steve Borley, who wrote to me about the Bill. He said that
“the game’s fractured governance model and the inequitable distribution of finances”
is increasingly putting the game at risk. That is why the Bill is so important.
The Bill does not make any reference to the players. That is a missing part. The players’ union, the Professional Footballers’ Association, wrote to hon. Members about that, to say:
“As drafted, there is currently no reference to players within the Bill. We think this is a significant omission”.
I would like to hear from the Minister why that is the case, whether the Government would consider the representations from the players’ union to ensure appropriate references to them in the Bill, and reassurances about some of the existing structures that protect the rights of players, which the union is concerned about.
No one here wants to damage the premier league. I simply want my club, Cardiff City, to have a fair chance of playing in the premier league again. I hope that the Bill will go some way—hopefully improved, strengthened and amended—to ensure a healthier future for football.
Madam Deputy Speaker (Dame Rosie Winterton)
I call the Chair of the Culture, Media and Sport Committee.
Dame Caroline Dinenage (Gosport) (Con)
I also rise to welcome the Bill and congratulate the Government on bringing it forward. I have to admit that we on the Culture, Media and Sport Committee were wondering whether this day would ever come, but the Government appear to have been inspired by the mighty Portsmouth football club, who last week secured victory and promotion to the championship with a last-minute goal. It is edge-of-the-seat sporting drama like that that makes British football the best in the world, right from the very bottom to the top—from the millionaires at the top of the premier league to grassroots clubs such as Gosport Borough, who have treated fans to a romping season. They play in the southern football league and sit tantalisingly in the promotion zone. Of course, there is also Fleetlands FC, who are pushing for promotion in division 1 of the Wessex league.
Here in Parliament, we have also been kept on the edge of our seats, eagerly awaiting this Bill that could potentially reshape the landscape of football governance. Over the past few years, instability off the pitch, not the action on it, has increasingly grabbed the headlines. Soaring levels of debt have led to the collapse of clubs such as Bury and Macclesfield, an experience shared by so many fans in communities up and down the country devastated by the demise of their beloved clubs. The debt problem is getting worse: premier league clubs have reported staggering losses of over £1.2 billion over the past 12 months alone, and the figures in the championship are looking just as shocking, with Leicester losing £90 million in 2022-23.
Fans of clubs such as Everton and Reading are sick of seeing them mismanaged through the reckless decision making of irresponsible owners. Just last week, the House heard of the pain of Torquay United fans, whose club has entered into administration following years of flawed business plans. Unreliable owners who do not have the interests of their club or its fans at heart, and are prepared to play fast and loose with their finances and their future, should be held accountable. As a lifelong Pompey fan, I feel their pain: after a series of disastrous owners, it took a fan-led buy-out in 2012 to save our club, demonstrating that our fans were literally prepared to pay up in order to stay up—or, in fact, to stay afloat—such was their dedication and commitment.
The failure of English football’s wealthiest clubs, those in the premier league, to agree a financial distribution deal is putting the fabric of our national game at risk. This situation has dragged on for far too long, and it has been especially disappointing to see the Premier League spending time and money lobbying MPs and peers against the Bill, rather than lobbying its clubs to secure a fair deal for English football. Decisions are repeatedly being made in the interests of the top of the football pyramid without a thought for the vital ecosystem that generates its lifeblood. Scrapping FA cup replays may be welcome in some quarters, but once again it is a characteristically messy number, denying lower-league sides that all-important financial boost. We need a change of tactics, so I know that fans across the country will welcome these plans to introduce a regulator and attempt to bring some stability to the game.
Of course, that is not to say that the new independent regulator will be the silver bullet that the Government have sometimes presented it as. The problems faced by football are extensive and complex, and there are still some areas where I would like to see more clarification and further work as the Bill progresses. I will talk through a couple of those now.
Widening financial distribution across the football pyramid will be the ultimate test of the Bill. Last year, our Committee urged the Premier League and the EFL to urgently agree a new deal to redistribute a higher proportion of revenue throughout the football pyramid. We recommended that in the absence of such a deal, the Government should expedite their plans to establish a regulator with the power to mandate a solution. I am pleased to see that the Bill aims to address this issue by giving the independent regulator the backstop power to intervene in the distribution of broadcast revenue, but that power is subject to certain thresholds being met, and it excludes the controversial parachute payments within the pot that we have already heard about. We need reassurance that the regulator has the teeth to trigger its own backstop powers and impose a fair settlement, when and where it deems necessary and without any undue delay. We also need an indication from the Government of how the regulator will curb the reckless spending of clubs trying to keep up with those in receipt of parachute payments.
Enhanced financial regulation across the football pyramid is really welcome. It will improve the resilience of clubs, encourage sensible financial decisions and ensure that risks are mitigated. However, given that the regulator will not oversee regulations such as the Premier League profitability and sustainability rules or the squad cost controls that are set to replace those rules, the Government need to provide clarity on how both systems will work alongside each other and reassurance as to why they deemed it unsuitable for the regulator to take on this responsibility.
When it comes to owners, I am really pleased to see that the regulator will establish a new, strengthened owners and directors test to ensure that a club’s custodians are suitable for the role. I welcome the fact that the Bill confers enforcement powers on the independent regulator to protect clubs from any harm that an irresponsible owner or officer might cause and to be able to remove them, but we need further detail on what precisely will happen to those clubs that have an unsuitable owner removed. We need to understand how the regulator would remove another potential Dai Yongge from Reading without compromising the future of the club and ultimately punishing its fans. I would be grateful if the Minister could explain how the Bill will safeguard clubs that find themselves in the position of having no owner, no financial safety net to keep them going and potentially no prospective buyers on the horizon.
We have already heard from Members that football is nothing without its fans, and I am pleased to see the Bill placing fan engagement requirements on the clubs as well as requiring them to comply with heritage protections and to seek approval for the sale or relocation of their home ground. But the Bill does not go quite so far as requiring fans to have a golden share, as recommended in the excellent fan-led review led by my hon. Friend—and real-life friend—the Member for Chatham and Aylesford (Dame Tracey Crouch). At this point, it would be terribly remiss of me not to add my congratulations to her and the whole team who have put an enormous amount of brilliant work into getting the Bill to this stage. As the Bill progresses, I want to be sure that it provides a way for fans to share their concerns about their club with the regulator and to know that they will not be dismissed. The Culture, Media and Sport Committee has agreed to hold a pre-appointment hearing with the chair of the independent regulator once the Government have a preferred candidate, and I expect that this will be one of the first questions we will be asking them.
Ultimately, there are two main questions that I want to see answered by this legislation. First, does it deliver for football and its fans? Secondly, to what extent will it prevent some of the distressing times that clubs like Reading are currently undergoing? There is more to be done on the Bill—and indeed the guidance that goes alongside it—to ensure that it fully meets those aims. We cannot overlook the huge economic value, the sense of community cohesion, and the moments of both local and national pride that football gives us; nor can we ignore the vital importance of a football pyramid that delivers at every single level. I know that some, including the Premier League, have concerns about unintended consequences, so the Select Committee has written to them to give them a chance to set out exactly what they would change—because there have been plenty of chances for the sceptics to prove that this Bill is not needed. Given that this is one of the biggest overhauls in the history of English football, we must do it right.
I congratulate Ministers, particularly the Under-Secretary of State for Culture, Media and Sport, my right hon. Friend the Member for Pudsey (Stuart Andrew), on getting the Bill to this stage. I look forward to his responses and to hearing what more can be done to secure a clear win—and, just like Pompey, can we do it well before the end of the season?
Madam Deputy Speaker (Dame Rosie Winterton)
I am putting in place a seven-minute time limit to ensure that everybody gets as equal a chance to speak as possible.
Sir Mark Hendrick (Preston) (Lab/Co-op)
It is a pleasure to follow the Chair of the Committee, the hon. Member for Gosport (Dame Caroline Dinenage). Following the fan-led review by the hon. Member for Chatham and Aylesford (Dame Tracey Crouch) in 2021, I spoke in a Westminster Hall debate on a petition on this issue. I said in that debate, and I reiterate today, that the current disparity between the rich and poor and the selfish nature of the elite clubs need remedying. This Bill does not do justice to some of the issues that the hon. Member for Chatham and Aylesford raised in her report, particularly with regard to grassroots football, women’s football, anti-discrimination and equal opportunities, but I am sure that those issues will be covered by later legislation in due course.
Football in this country has become a story of the haves and have nots, and regulation is desperately needed to ensure the health and prosperity of the game at all levels, not just in the premier league. I therefore welcome the Bill, and support the creation of a single, independent football regulator. At a time when the game has become an international sporting juggernaut and a global commodity with revenues greater than ever before, the financial and long-term sustainability of the football pyramid has never been more at risk. Too many historic clubs are on a cliff edge, about to fall off it and face the fates of historic clubs like Bury, which has disappeared, and Bolton and Wigan, which have struggled since.
This is why new legislation is crucial. Fans need a greater voice in the running of their clubs, and there needs to be a better means test for owners and directors to ensure fiscal sustainability and to root out the financial mismanagement that has plagued too many clubs, through the actions of foreign investors or those of domestic owners who have done the same things. An independent football regulator should ensure that English football continues to serve the interests of regulated clubs, while also contributing to the economic and social wellbeing of the local communities associated with those clubs. However, a regulator should also be a watchdog, and a watchdog without any teeth will not be much of a regulator, which is why it is essential for this regulator to have the powers to do its job properly.
The financial gap between the Premier League and the English Football League has reached a critical point. Thirty years ago EFL revenues were 75% of the Premier League’s, but today the proportion is just 6%. The gap then was £11 million; it is now £3 billion. At this pace, the football pyramid is untenable and the financial gulf between the two leagues—and across all levels—continues to worsen, but there is no doubt that there is enough money in the collective pot to achieve sustainability at all levels if the game’s revenue is distributed in the right and fair way, coupled with proper governance and organisation.
As it stands, the Premier League continues to rule the roost when it comes to English football, but some top-flight clubs have shown that they are incapable of self-regulation. We need only look at some recent financial breaches to see that the Premier League is nowadays not in a position to self-govern and regulate the sport when it struggles to keep its own house in order. Some have reaped the financial rewards without showing any concern or desire to preserve the health of the sport outside their own needs and ecosystem. Only an independent regulator will be able to provide proper oversight, regulate clubs’ behaviour, and intervene when necessary to ensure that they act responsibly.
The Bill also provides targeted backstop powers to allow the regulator to step in when it comes to the allocation of broadcasting revenue between the Premier League and the rest of the football pyramid, if needed. On the face of it that is fine, but clause 55 requires the “specified competition organisers”, the Premier League and the English Football League, to enter into a period of
“mediation in connection with the distribution of relevant revenue received”
by one of them, and if they are unable to reach agreement, the independent regulator
“may make an order as to the distribution of that revenue.”
However, in the Bill as drafted, that does not apply to certain circumstances in which the relevant revenue referred to in clause 55(2)(b) does not include parachute payments, which are defined as payments made directly to newly relegated clubs.
As was mentioned earlier, this cannot be fair, and it deliberately excludes the English Football League from making its case that the parachute payments are disadvantaging and distorting the revenues of championship clubs as a whole. The payments are not just a parachute meant for a soft landing; they are a ladder leading back to the premier league for most of the clubs that have already been relegated. That is clear from the current position of the championship division: Leicester City, Leeds United, Southampton and Norwich City occupy four of the top six spots. Incidentally, Norwich has been relegated from the premier league six times since its formation in 1992. This exposes the fact that the payments are a ladder back to the premier league, to the disadvantage of others elsewhere in the championship division.
Preston North End, my constituency club, which has its own place in history as a founding member of the football league, joins me in believing that a regulator is the only option to underpin both sustainability and competitiveness within the financial distribution of the football pyramid. As we speak, Preston are sitting in 10th place in the championship table. They have never played in the premier league—the only former top-flight first division champions never to have done so. They have a wage bill in the region of £16 million. How can they compete against the likes of Southampton—a club that was relegated in 2023 with a wage bill of approximately £88 million, which is six or seven times that of Preston North End?
As a lifelong football fan, I believe that this House not only has the opportunity but, more importantly, the obligation to create much needed reform in the game through a transformative Bill that safeguards all clubs for decades to come.
Martin Vickers (Cleethorpes) (Con)
I rise to support the Government’s plans, although until fairly recently I had considerable reservations about them. It took some time for me to come round and accept the fact that we should have a regulator. On balance, I think that is the right thing to do, as long as it is done in a limited and careful way. I have asked myself if we really want a Government-appointed regulator to oversee our national sport, or indeed any sport. Will other regulators follow? Will there be mission creep? Very probably. Will the Government of the day get the blame for the decisions of the regulator? Almost certainly. That said, we must ensure that our clubs, which are a much valued part of many of our local communities, continue.
It is undeniable to fans who have loved football for as long as I have that the game has changed since it became truly commercialised in the 1980s and, particularly, the 1990s, with the arrival of the Premier League. The scale, particularly when considering the money involved, is difficult to comprehend. Given this trend, the type of individuals and organisations we see taking ownership of clubs has changed dramatically. As the game has become a truly global phenomenon, some owners have become somewhat detached, to say the least, from their club’s supporters. As fans know, that is one of the biggest mistakes any owner can make. We saw that with the proposals for the Euro super league, not that that concerns a Grimsby Town fan such as me. We need to preserve the pyramid that ensures the Grimsby Towns of this world, whose Blundell Park ground is in my Cleethorpes constituency, are allowed to continue.
I will break off from talking about the Bill to have my say on the replay issue; it would be remiss of me not to. To me, the magic of the FA cup goes back many years. I can remember, as I am sure one or two other Members can, when the draw was always at lunchtime on a Monday. The BBC football correspondent, Bryon Butler, would speak in a hushed voice and we would hear the rattle of the balls as the numbers came out. Replays are part of the same magic as the draw. We have heard much about the game between Coventry and Man United on Sunday; that it was decided on penalties was rather sad. Would it not be great if they were playing again on Wednesday evening, or whenever?
Perverse incentives in modern football structures can lead to poor governance and unstable clubs. Many clubs are now making regular losses and borrowing at debt levels that they cannot afford. These are not the indicators of a healthy sport and only serve to make clubs financially vulnerable, worsening the environment they operate in and creating uncertainty for fans. As Kevin Miles, the Football Supporters’ Association’s chief executive, said, the Government’s proposals represent a
“once in a generation opportunity to reset the finance and regulation of football”.
As I mentioned at the start of my comments, I approached the issue with some reservations, but having studied the Government’s proposals, I think they have struck a fine balance between the benefits and potential costs of introducing such a regulator. Mind you, I am sure that there will be some, perhaps minor, changes as the Bill goes through Committee, but I now support the main thrust of the Bill.
On balance, the Government have been careful in their approach to how they intend to regulate, ensuring that it will be proportionate to the clubs’ individual circumstances according to factors such as league, club size and financial health. By empowering the regulator with a narrow focus, we can prevent overreach while ensuring that clubs remain financially stable. I welcome the fact that the regulator’s powers to ensure financial sustainability through redistribution of broadcast revenue, for example, will apply only in extremis.
Fans are highly attached to their club’s image, whether that be the name, the badge or the colours. It is therefore welcome that owners will have to consult on such changes. We heard earlier about the incident at Hull City a few years ago when the owner tried to change the name and so on, which certainly did not go down well with fans. That was just one controversial element of the Allam family’s ownership of the club, with a frequent trend being the owner’s inability to understand traditions, which are so important to fans.
The Secretary of State actually came to Blundell Park in Cleethorpes to launch the policy, which was only right given the true status of Grimsby Town, who thankfully have been saved from relegation to the national league yet again. As she rightly noted:
“Football is nothing without its fans.”
I applaud her determination and that of the Sports Minister, my right hon. Friend the Member for Pudsey (Stuart Andrew), to put fans back at the heart of the game. The Government’s proposed regulator will ensure the sustainability of our nation’s favourite sport and that the connection to fans is maintained, while not changing the fundamentals of the game itself. On that basis, I am happy to support the Bill.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
There is much to welcome in the Bill, which builds on the excellent fan-led review conducted by the hon. Member for Chatham and Aylesford (Dame Tracey Crouch). It will give fans more of a say in how clubs are run and the wider premier league redistribution of broadcast revenues—what is not to like? The core of the Bill is financial stability. We do need an independent regulator to stand up for the interests of smaller clubs and the EFL against globalisation, which is seen in not just Americanisation but oligarchs and sportswashing. I welcome the Bill, but, of the Crouch recommendations, the Government have regrettably opted out of action on equality, diversity and inclusion.
Against a backdrop of Bury going under, a pandemic that no one predicted and the spectre of the European super league thwarted for now, it is notable that, since 1992, 16 clubs have gone into administration. How much will the Bill address? It is too late for Bury; will Reading, on the brink of extinction, be next?
We need a regulator with appropriate teeth to take away licences from rogue owners—those venture capitalists who think about balance sheets, profit margins, asset stripping and destroying clubs—because football clubs are so much more than simply businesses. I know that from the work done locally by QPR and Brentford, and the email that I got from Professor David Gilbert of Ealing. He described how his family have been Reading fans since 1871 and told me how Dai Yongge is not co-operating with the fans and has destroyed clubs in China and Belgium. After the pitch invasion against Port Vale, he said:
“I was at the game and the protests that led to the abandonment…I was watching from the seats that my late mother and brother watched from until they died…my grandfathers supported from the 1920s…I have been going since 1969. That experience is not atypical of supporters in many towns and communities across the country, who have little or no say in the fate of their clubs.”
The club may be saved—I think there is an American bid at the moment—but that is a perfect case study or a textbook example in the future of why we need more protections, because of the collective social and cultural heritage of our clubs. However, the relationship between the English Premier League and the EFL and the distorting effect of parachute payments, which have massively unbalanced the beautiful game, are not addressed in the Bill. Although there are clauses on regulatory powers to force a financial redistribution of revenue, the Bill seems to think only of broadcast revenue.
It would be easy to knock the Premier League for its hospitality towards MPs—it was in here late last night, wining and dining people—and its attempts to push the free market, but in recent years our clubs have done us proud in Europe, in all-England finals in 2019 and 2021, and in 2023. They have changed football’s reputation from how I first remember it in the 1980s, when it was synonymous with fans behaving badly, racism, hooliganism and violence. They have cleaned up their act. Football brings soft power and tourism, but I worry that the value of the FA cup, which used to be such a big thing, is being lost with all these European competitions.
We need some sort of transparency and consistency, and a clear system on points deductions: why are Everton falling foul repeatedly, and not Man City? Why the mismatch between different systems and different leagues? I welcome the focus in this Bill on the football pyramid, which often seems, as Diana Ross would say, “Upside Down”. My son gave me a figure of £1.7 million a day generated by Man United, but that is not finding its way down to the bottom of the pyramid.
As the hon. Member for Chatham and Aylesford said in chapter 6 of her review:
“Football needs to improve equality, diversity and inclusion in clubs with committed EDI Action Plans”
regularly addressed by the regulator, but that is completely missing from this Bill. We know there are gaps in leadership, ownership and management—and who would benefit from reform? Players, parents and referees would benefit. The figures speak for themselves: the higher up we go, the boardrooms become almost a white male preserve. We know women’s football is increasingly expanding. We could also look at the issue of social class as well. How else will we Kick It Out, as the name of the racism charity demands? Even from a business point of view, in every other sector—civil service, local government, banks, wherever we go—EDI is central. It should not be seen as an add-on, with this patchwork of different systems and plans; we need a level playing field. Kick It Out figures show that racism and misogyny, offline and online, are all up. We need a proper regulatory framework for dealing with those, and I feel we have missed a trick.
The word “fan” appears only 16 times in this 140-page Bill. The Bill stopped short of the golden share veto power that the hon. Member for Chatham and Aylesford recommended. This legislation is fundamentally about finance, but we have heard about the ending of FA cup replays. Brentford, a local team, did well out of them a few years ago, yet now that they are in the premier league, they are all for banning replays. That needs addressing, because it is a big financial incentive to the smaller clubs.
There is also the problem of top teams in tournaments—and it is a problem. Let us not kid ourselves that the FIFA club world cup expansion did not have super league-style motives at its heart. Although that is gone, I think it is trying to come back in disguise, like the proposed champions league reforms. Those have been rejected for now, but let us be wary of all these things.
There will be resistance to change, but we need a truly independent regulator as the Football Supporters Association tells us. I welcome this Bill, but when we have Joey Barton saying women pundits should be banned from ITV, and the awful things that John Yems said, such as the N-word and “curry munchers”, there is a bit missing. The Sports Minister is excellent on this issue—he went to Qatar with a rainbow armband—so perhaps he could tell us in his summing-up what he will do to address it.
Sara Britcliffe (Hyndburn) (Con)
I refer the House to my entry in the Register of Members’ Financial Interests. I want to put on record how proud I am of how hard the Minister has worked on this Bill. He is an absolute credit to this Government with what he has done here. The recent events around changes to the FA cup show just how pressing this Football Governance Bill and the establishment of the independent regulator are.
As we consider the implications and potential of this legislation, it is crucial that we approach the task with urgency, recognising how important it is for football clubs up and down our country. Football is not just a game in our country; it is woven into the fabric of all of our communities. The clubs that dot our landscape, from the grand stadiums of the premier league to the intimate grounds of the lower divisions, serve not just as teams to support, but as community hubs and sources of local pride. Yet, despite the critical role that these clubs play, the sustainability of the football pyramid is under significant threat.
The crux of the issue lies in the financial disparities that have grown ever starker over the decades. The Premier League, while a global success, has seen its financial might grow exponentially, far outpacing the rest of the pyramid. That imbalance is not merely a matter of elite success, but a structural issue that endangers the viability of clubs across all levels. Today, EFL clubs operate at a massive loss, collectively losing £471 million during the 2022-23 season alone.
The establishment of an independent regulator, as proposed in the Bill, is a measure long overdue. The regulator would have the authority not just to oversee but to intervene and correct the course, ensuring that financial sustainability is not a mere aspiration but a reality. It would have powers to impose financial solutions that ensure the viability of clubs, reflecting the needs of community clubs across England.
We must also address the need for fair distribution of revenues. As it stands, the financial gulf between the Premier League and the EFL has become a chasm. Reforms in revenue sharing and financial regulations are necessary to prevent smaller clubs from financial catastrophe when they fall from the Premier League, or attempt to compete without adequate support.
In supporting the Bill, we are acting to preserve the soul of football in England. This is about more than business; it is about ensuring that the joy, excitement and community spirit that football brings are not lost to financial mismanagement and unchecked commercial appetites. The Bill presents an opportunity to reform our football pyramid to be both competitive and sustainable. It ensures that clubs can continue to thrive for the benefit of their fans, local communities, and our national game. It aligns with the recommendations of the fan-led review, and responds to the clear need for greater fairness and foresight in our approach to football governance.
It would be remiss of me if I did not mention my local club, Accrington Stanley, which is one of the 12 founding members of the football league. Although it is famous for the milk advert, what people also remember is that in 1962 it had to resign its position from the football league and subsequently went into liquidation in 1966. That was not common then. Unfortunately, we are now seeing it happen with many of our clubs. I have spoken with the owner of my club, Andy Holt, about this legislation more times than I can remember. He is clear, as am I, that if we are to protect clubs lower down the leagues, we need not only to give them a level playing field, but to provide them with the space to invest in their communities, whether through investment in facilities or working with children and young people. This legislation is required.
I want to talk briefly about the suggestion from my hon. Friend the Member for Chatham and Aylesford (Dame Tracey Crouch) on redistributing fines to grassroots communities. I think that is a very good idea. I have seen the impact Accrington Stanley has locally. It really is the heart of the community. It brings the community together and I would hate to think of the counterfactual, where it was no longer viable for the club to continue serving my constituency in the way it does.
I therefore urge my fellow Members to support the Bill, and to stand for fairness, sustainability and the long-term health of English football. Let us ensure that the game we love is protected for future generations not just as a spectacle of sport, but as a cornerstone of the communities we serve.
Matt Rodda (Reading East) (Lab)
It is a pleasure to speak today. I thank the Secretary of State, the Minister, the hon. Member for Bracknell (James Sunderland), who has been a superb campaigner for Reading football club, and other Members from across the House.
Broadly speaking, I welcome the Bill, but at the outset I would like to pay tribute to our wonderful club, Reading football club, its players and its fans. The men’s and women’s teams were both relegated last year. As was referred to earlier, that was through no fault of their own. The crisis at the club was due entirely to financial mismanagement by the current owner, Mr Dai Yongge. Despite being relegated, and with the risk of further relegation hanging over them, players and fans have battled through and we hope they have sustained the future of the club.Thankfully, Dai Yongge now appears to be selling the club, and we hope that a brighter future lies ahead. I hope that this Bill will ensure that other clubs do not have to face what Reading have been through, and that football can move on to a brighter future.
When Reading were in the championship, Dai Yongge started his period as the owner of the club by investing in their future. However, his behaviour changed over time, and the story we face is one of a failure to pay wages and, indeed, national insurance. This led to a series of winding-up petitions from His Majesty’s Revenue and Customs, and ultimately to 16 points being deducted. That, rather than anything that happened on the pitch, determined the situation at Reading.
This season, the financial problems have continued. Unfortunately, further points deductions have been made, although we are grateful to the EFL for its decision that they be suspended. In an incredible effort, the players have battled hard and avoided relegation from league one, and we hope they have secured the future of the club. However, the pressure on players, fans and the whole town has been absolutely awful. We have been through, and are still going through, the worst crisis in our club’s history. Reading football club were founded in 1871 and are one of the oldest members of the football league, and their proud history includes getting the highest number of points in the championship—106—having three seasons in the premiership and going on a glorious series of cup runs, including winning the Simod cup in the 1980s and several impressive FA cup runs.
During this period of great difficulty, emotions have run high. Some 1,400 people, including the hon. Member for Bracknell and me, joined a march to the stadium in October, and there have been numerous other protests. Fans simply want their Reading back, and I would encourage Dai Yongge to speed up the sale. As I said, we must ensure that what happened at Reading never happens again. We need a better test for owners and a better assessment of club finances, as mentioned earlier. Above all, we need to ensure that clubs, players and fans are not penalised for the actions of owners, however irresponsible they are.
I have some points to make to the Minister and the Secretary of State. Although I welcome the Bill, I would like far more detail on a number of key areas that I hope we will explore in Committee, particularly the test for owners and directors, the assessment of financial resilience, the oversight of financial plans, and the protection of grounds and training grounds, which is another problem we might face. In Reading’s case, the sale might separate the training ground from the ground, which has caused a great deal of concern and has, I hope, now been resolved.
I hope the Minister will address some of those issues and that they will be explored more fully in Committee. I believe that the Bill is a real opportunity for English football, and indeed for football in Wales, and I hope that we can all look forward to a brighter future for all our football clubs, particularly Reading.
Damian Green (Ashford) (Con)
It is a pleasure to follow the hon. Member for Reading East (Matt Rodda), as I have been watching Reading since 1965 and the last two years have been as miserable a time as any—even if supporting Reading is often through thick and quite a lot of thin.
Like everyone else in the House, I welcome the eventual arrival of the Bill. I pay tribute to Ministers for finally getting to this point, and I thank my hon. Friend the Member for Chatham and Aylesford (Dame Tracey Crouch) for her work on the fan-led review. Much of the Bill is welcome and necessary, but it is worth putting it into a historical context. As I say, I grew up watching football in the ’60s, ’70s and ’80s, when it was terrible. It was described at the time as a slum game in slum facilities. Grounds were crumbling, the fan experience was terrible and there was a huge amount of violence. Because some football fans behaved like animals, all fans were treated like animals, and it was altogether miserable.
Today, however, the top end of football is regarded around the world as one of the best things about this country. I remember a former tourism Minister telling me that the three things that make people like Britain and want to come here are the royal family, the BBC and premier league football, so it is important to put the various legitimate criticisms of things that happen in football into that context. The premier league has done some great things for English football, but this Bill comes from a fan-led review, and every proposal should be assessed as to whether it serves the interests of fans at all levels of the game. We need an independent regulator because the leagues, and therefore the clubs, cannot be trusted to regulate themselves.
Sir Oliver Heald (North East Hertfordshire) (Con)
My right hon. Friend and I were both there in 2006 when Reading won the championship, putting four past Derby. What a moment that was. I do not know whether he agrees, but I think the current players and manager are doing a cracking job just to keep the club alive.
Damian Green
I echo that. The fans, the players and the staff have formed a bond of survival against Dai Yongge, which shows the strength of feeling that all football fans have for their club. That is what we want to enhance.
There have been debacles such as the European super league and the increasing number of clubs whose fans have suffered—it is not just Reading, although Reading has featured a lot in this debate because it is the latest example. We hope that no more fans will have to suffer in the way that we have suffered.
The question is whether the Bill will be effective in practice. One issue at the heart of the Bill is financial distribution. How do we distribute the enormous sums generated by the Premier League without killing that golden goose? It is a difficult balancing act. The regulator cannot be a panacea, and it will have to be both tough and smart.
There are specific questions that need answering. First, are the backstop powers sufficient? In the end, the regulator has to choose between a Premier League offer and an EFL demand, and there is certainly an argument to be had about whether the regulator should have powers to make its own settlement, possibly involving other bodies in deciding on what the settlement should be.
We have debated parachute payments, and I confess that I am still slightly confused as to the Government’s attitude and desire towards parachute payments, which are the key to why the championship is a very skewed league. I have been looking at the figures provided by Fair Game, a very good lobbying group. Currently, for every £1,000 of the broadcasting deal, £882 goes to each premier league club, £73.48 goes to championship clubs in receipt of parachute payments and £32.85 goes to championship clubs not in receipt of parachute payments. More than twice as much goes to the clubs with parachute payments as goes to the clubs without parachute payments. That is how we got a skewed league.
The great disparity between the premier league payment, which people might say is fair enough because it attracts the broadcasting money, and the championship payment does not reflect attendances. For every 1,000 people who attended football matches in the 2022-23 season, 497 attended premier league matches and 234 attended championship matches. Championship crowds were just under half of premiership crowds, but the distribution of money to premier league clubs is more than 10 times as much, so it does not reflect what fans are doing.
The next question is how we solve the problem of people like Reading’s owner. He is a reckless owner who is immune to sanctions because he is not in this country. He spent money, broke rules, incurred penalties, lost interest and went away. The only penalties left, because he is ignoring the financial penalty, are points deductions. I agree with the EFL on parachute payments but, frankly, it has been a bit of a chocolate teapot on protecting Reading’s interest. All the EFL has done is deduct points, which just punishes the fans.
What in the Bill will help that? I think the licensing regime will help, because a competent regulator clearly would not let someone like Dai Yongge own a football club in the first place, even though the EFL did. The question still remains of what happens if an owner’s circumstances change, such as if they lose a huge sum of money and cannot afford to support their club any more, or if they just lose interest. They might die, and their family or business associates who take over might not care about the club. What happens then? I would make one suggestion to Ministers, which would involve only a small tweak to the Bill: clause 52 allows the regulator to levy money from every licensed club, so why should some of that levy money not be used to set up a survival fund? Where a completely reckless owner is walking away and leaving a club to go out of business, as Dai Yongge has done in two other countries, such a fund would allow the regulator, over the few months when a club needs to find a new owner, to pay things such as the national insurance that has not been paid at Reading or the wages that were not paid for a couple of months. I accept that would not be a long-term solution, but having a short-term solution would make a huge difference. As the Bill already sets up the possibility of a levy, I suggest extending its possible uses to set up this survival fund, so that if something like this happens again, the new system of regulation will explicitly be able to cope with it.
The introduction of the Bill marks a big step forward and I hope that it survives largely intact. As I, like others, have said, there are improvements to be made, and I urge Ministers at all times to keep the interests of fans at the front of their consideration, because without the fans, there is no point to professional sport.
Tim Farron (Westmorland and Lonsdale) (LD)
I declare an interest, as a lifelong Blackburn Rovers fan and a supporter of Kendal Town, who are in the North West Counties football league—I am beginning to fear that one day we might end up playing each other at this rate. To prove that football is more about uniting us than dividing us, I have, accidentally, worn claret and blue today, as a nod to our dear friends Burnley. [Laughter.]
I was at Grange Church of England Primary School last week, where a bright year 5 lad asked, “Tim, what sport do you enjoy the most?”. I nearly said football, but then I realised that I do not enjoy football at all; it makes me completely frustrated and miserable, but it does rule my life and occupy most of my waking moments. It is a hugely important thing, as it binds and creates communities, it creates shared experiences and it helps to build what it is to be English and to be British. So I am a thoroughly proud football fan. I love the game and want to stand in solidarity with all other football fans, even those of teams I do not approve of.
I pay tribute to the hon. Member for Chatham and Aylesford (Dame Tracey Crouch), who is back in her place, and the fan-led review, which has underpinned the Bill. My party and I welcome the principles behind it and the independent regulator. We acknowledge that football is integral to our culture and that the whole pyramid is vital to the game. Michael O'Neill, the chairman of Kendal Town—his is an unpaid role at a wonderful club that is doing incredibly well at the moment—has said that the
“top of the pyramid would not exist without the foundations”.
He is absolutely right about that, but the foundations include not just the clubs lower down the pyramid, but the youth game and the Westmorland County FA, and what it does for young people, supporting mental health, building resilience and teamwork, and creating community.
I am supportive of part 3 of the Bill, on licensing, although it is an important moment to do some redistribution, taking a proportionate share from each of the clubs to ensure that we fund the additional requirements of meeting the licensing. Part 4 of the Bill, as we have heard, is about owners and directors. I express my solidarity with the supporters of Reading—we think of Dai Yongge and what he has done to that club and community. Not yet so awful—but watch this space—is what has happened with Venky’s, who own the Rovers. Blackburn Rovers is a club in limbo and the question is whether or not we are a going concern, because of the owners’ plight in the Indian courts. We have to ask ourselves the extent to which part 4 will give the regulator power to deal with the Dai Yongges and Venkys of this world and make them put up, pay up or sell up. Nothing more underlines the powerlessness of the fans than situations such as those, and fans of Bury, Bolton, Hull City and Cardiff City would concur.
Part 5 deals with the duty on clubs and competition organisers. I am going to table an amendment, if I am permitted to do so, to bring back the replays in the FA cup and to restructure things so that all competing teams get an equal vote in deciding the organisation and rules of that cup. This situation is an outrage and nothing more underlines the arrogance and complacency of the Premier League than its thinking it can dictate to the rest of the league and the non-league how that glorious and almost ancient competition will be. If my amendment is successful, the Premier League might get away with one year of no replays, but we will get them back the year after when the whole of the footballing establishment actually gets a vote.
My main concern is on part 6—I will not go through every part of the Bill—and the powers of last resort. I am deeply concerned that we have only partial financial oversight. This is where football fans feel a sense of disappointment, and the Government have been a little weak in this regard. It feels like they have listened to the powerful few rather than the clubs, the fans or the volunteers. The financial powers seem to be restricted to simply being a mediator between the Premier League and the English Football League, and actually the Premier League and the championship when all said and done.
The right hon. Member for Ashford (Damian Green) has talked about some of the financial division, and let us look at the allocation. Of every £1,000 received in broadcast revenue, £882 goes to premier league clubs and £32 to championship clubs—that is about enough for Blackburn Rovers to buy another pair of goalkeeping gloves and, by golly, we could do with them. If you go down further, 15p goes to national league north clubs, and a fat zero to anything below the national league. If the pyramid is important, then the foundations are important. I want the regulator to have the power to make sure that the Premier League and the championship do not hog all the money, and that they distribute properly and effectively down the division.
I want to pay tribute to Kendal Town—the mighty Mintcakes, as we are known—because they speak for and represent so many other non-league clubs. Five hundred people a week watch the great team managed by Jimmy Marshall. Everybody at that club is a volunteer. What good could be done by a relatively small amount of redistribution of that money down to that level. Kendal Town have hosted 12 cup finals of various kinds at the Parkside Road ground this year. It costs them £8,000 to maintain that ground, and they get nothing for it. A fairer deal is absolutely essential, and, so far, this Bill is the weakest on that fair financial flow. It is important that the Government get that right beyond Second Reading.
At a time when the division between the divisions has never been greater, I think it is worth paying a bit of attention to the parachute payments. There is a widening not just in quality, but in resource between the premier league and the championship, between the championship and league one, between league one and league two, and between league two and the national league. That reduces competition, entrenches privilege and squashes ambition. One key driver—perhaps the key driver to this division, certainly at the top end of the tables—is the parachute payment, which is a completely unjustifiable disgrace. It is the greatest financial distortion in the game. This Bill ducks that distortion—every football fan has noticed that the Government have ducked that distortion. Therefore, people are deeply sceptical about whether the Government are serious about fairness in the game—
Sir Mark Hendrick
The Government have not only ducked this issue, but the Bill itself contains something explicit that precludes a discussion of parachute payments when it comes to the regulator’s powers.
Tim Farron
The hon. Gentleman makes an important point and I agree with him. That explicitly needs to be mentioned in the Bill, and we need to recognise that that is one way to allay the fears of those people who are sceptical about whether the Government are serious about this—as serious as the hon. Member for Chatham and Aylesford clearly is. Have the Government got the interest of the fans at heart? Will they do stuff that is difficult and challenging for those people at the top of the game, or will they have just listened to lobbyists rather than the fans?
In closing, Blackburn Rovers were owned by Jack Walker, the greatest owner of any football club ever. We say that we do not want billionaires in the game, but we will have people like that any day of the week—not just at Rovers, but anywhere else. He loved his club, loved his town and made a massive, massive difference. Today we are owned by Venky’s. It is alleged that, when it took on Blackburn Rovers, Venky’s believed that it was impossible to lose premier league status. It did not realise that a club could go down. Gutted though I am that we went down and got relegated, I am nevertheless glad that Venky’s were wrong: there should be movement between the divisions; there should be competition; and there should be fairness. Football is for the fans, not just for the powerful few. Let us make sure that this regulator, in its financial oversight, is able to ensure that there is genuine fairness from the top to the bottom.
Brendan Clarke-Smith (Bassetlaw) (Con)
This debate about a football regulator is quite interesting for me because, in all honesty, when I first heard about it I did not really want one. I did not believe in one from an ideological perspective, or see why we need to regulate sports at all. I always thought the Football Association should be doing that, but I think we have seen—certainly in recent weeks, but really over quite a sustained period of time—that it simply has not done its job, and that also true of the Premier League, the EFL and so on. That is why I think we now have some proposals I can certainly support, and I think they actually strike a very good balance. I pay tribute to the Minister for his work, and to my hon. Friend the Member for Chatham and Aylesford (Dame Tracey Crouch), who did such a fantastic report in the first place.
I am another one of those who are very angry that FA cup replays have been scrapped. Growing up, we always used to dream of lifting the FA cup at Wembley. We would watch the teams in the morning with the buses arriving, and it was a whole-day event. We would have the terrible cup final songs and the story of the non-league clubs in the early rounds, and that is really what it was all about. The diminishing pull of the FA cup for many of the teams at the top has been very sad over the years, but it is still very special for many of our smaller clubs.
We have just heard about Kendal Town, and we have Worksop Town in my constituency, which made the first round of the FA cup this season for the first time in a very long time. We played Stockport County in the first round and did manage to get an equaliser, although we let a few more goals in after that, unfortunately, and never got the replay. That was a special moment, and something many people will remember for the rest of their lives. I will mention the other football clubs in my constituency so that I do not get some stick or a lot of angry emails. We also very proud to have Retford United, Retford FC, Harworth Colliery and SJR Worksop as well.
I am hoping that licensing agreements for clubs are not too onerous and do not place too much of an unfair burden, particularly on smaller clubs, and it is the smaller clubs I am thinking of. They are the ones who maybe cannot afford to employ extra members of staff or will struggle with some of the extra bureaucracy. I think we should give them some time and make sure we do not make any unreasonable demands of them. We do not want mission creep, with the almost public sector-style equality and diversity targets, requirements and endless things that we do not actually need in football. I am very much in favour of light-touch regulation, and I do not want to be putting our teams at a competitive disadvantage to other teams in Europe.
As has been said, the Premier League does do a lot of wonderful things. I have been one of its harshest critics over the years, being a Notts County fan. I cannot see us ever winning the premier league as it stands now. In fairness, we never won the old first division either. In fact, I think we were a founder member of the premier league when it first came to fruition, so we are the only founder club—since Luton Town got back there —that has never been a member of the premier league. So I was heartened to hear what the Secretary of State said today.
We have had the situation with Gateshead this week, which very sadly have not been able to take part in the national league play-offs. If we look at some of the requirements of the EFL—this has been going on for many years—I remember when we had champions of the conference that were told they could not get promoted. Sutton United, which went up not too long ago, had a very sustainable business model, with a 3G pitch, but it was not allowed to go up with that, and I think it spent about £500,000 getting rid of it. It is second from bottom at the moment, and it may go back there. Yet at the same time, we all have teams playing on artificial pitches, and I think there is a bit of a competition issue. Worksop Town has one of these pitches, and it has really helped locally in making the club sustainable. I think where we can actually help here is that we actually talk about that competition issue. We could have better relationships between the Premier League, the EFL and the national league, and that is something to which I think a regulator can really make a good contribution.
This would not be the first time a Government have stepped in. I remember the Taylor report, and what we did with stadiums at the time. There has been a huge improvement in safety, attendances have gone up and people can bring their family without some of the fear that used to be there in the 1980s. As a Notts County fan, I suppose I did have a bit of an interest in the three up, three down from the national league, as we did spend four years there, so I will declare a bit of interest. Likewise, on the fit and proper test, we have also been a victim in the past, where the fit and proper test simply has not been fit and proper itself, and we ended up with owners that have not had the best wishes of the club at heart. Thankfully, we have excellent owners now, and this is the kind of thing we can help them to get right. We do not want mission creep, or to be interfering with VAR or things to do with players, or fiddling with the club. We are not there to be micromanagers, and it would be a terrible shame if that happened.
I am glad the Secretary of State mentioned trying to avoid excessive costs and ensure that we are focused on the mission of the Bill. I think the balance is absolutely right, and I congratulate the Department on its work. Football is not the banking industry. I know there are some things that we could take as lessons, but the Bill is about football. We need to keep it about football and realise the unique position of football in our society. Likewise, we are not Germany. Our leagues are much deeper and we have more of them, and the ownership structures are difficult. It would be wrong to copy another model. On involving fans, I was a member of a supporters trust, and the supporters trust ran Notts County, and Stockport is another great example of a supporters trust. Supporters generally do not have the finances, which can sometimes cause its own problems.
I will finish with one of Ronald Reagan’s most famous quotes when he said that the
“most terrifying words in the English language are: I’m from the Government and I’m here to help.”
In this case we do not need to be terrified. These are sensible proposals. I am looking forward to the Bill progressing and to hearing a bit more about it, but from what I can see, this is positive for the game and I congratulate the Minister on that.
Jeff Smith (Manchester, Withington) (Lab)
I rise to do something I am unaccustomed to do, which is warmly welcome a piece of Government legislation. At the outset I declare an interest as a season ticket holder at and lifelong supporter of Manchester City, the world champions. Not for the first time, I congratulate the hon. Member for Chatham and Aylesford (Dame Tracey Crouch) not just on her excellent speech—I agreed with every word—but because as the Secretary of State said, she laid the foundations for the Bill. We are all grateful to her.
Football brings communities together, but for too long decisions affecting our game have been made without reference to those communities and to the fans, without whom football would be nothing, and without regard to the long-term interests of individual clubs and the wider game. Indeed, some historic clubs have collapsed because of the owners’ reckless actions, and the perverse incentives created by the pyramid’s finances. The longer we have waited for change, the more clubs have been brought to the brink. Football has been in need of reform for some time. Labour has committed to that reform, so we are glad that this much-delayed Bill has the potential to address that. I am pleased it is here. The Bill is mostly well thought through, and the licensing regime and regulated powers are mostly well framed, tightly drawn and positive. I congratulate the Minister on his hard work.
We have heard a lot in recent weeks about unintended threats to the premier league, but not a single one of us in the Chamber wants to threaten the sporting and economic success of the premier league. I love watching premier league football. I watch too much of it. It is the most exciting, high-quality league in the world. It is one of our great exports and cultural strengths. Nothing in the Bill will jeopardise that success. We have heard a fair amount of scaremongering in recent weeks about the Bill’s unintended consequences, but without any evidence.
Frankly, I more concerned about the unintended consequences of the Premier League’s financial success, and consequent financial dominance. Clubs are spending unsustainably to get into and stay in the premier league. As we have heard, EFL clubs lost £471 million collectively during the 2022-23 season. EFL clubs are gambling everything to get into the premier league, failing, and facing financial crisis as a result. All that puts the sustainability of our teams and game into jeopardy. Those are the unintended consequences we should be worrying about, and which the Bill can help to address.
In warmly welcoming the Bill, I wish to make a few comments about areas where it can be improved and strengthened. The regulator’s objectives—rightly, I think—are to protect the financial soundness of clubs, to protect and promote the financial resilience of English football, and to safeguard the heritage of English football—excellent. There was a reference in the White Paper specifically to protecting and promoting the financial resilience of the pyramid. It might be that the phrase “financial resilience of English football” is enough, but perhaps the Minister will explain why that reference, which was in the White Paper, did not make it into the Bill.
On the proposed financial redistribution powers, it is obviously important that the regulator has backstop powers to intervene in financial distribution between leagues where necessary. It is right that the regulator will be able to step in in circumstances where the Premier League and the EFL cannot agree a deal. For that to happen, one of those parties has to initiate the process, and the regulator makes the decision based on the proposals put forward by each party. That seems a reasonable enough system, but I agree that there is a question about whether the regulator should also have the power to put forward its own proposals, if they are deemed to be beneficial to the football pyramid as a whole.
I do not understand why parachute payments are specifically excluded from the scope of the regulator, as appears to be the case in the Bill. We have heard a lot in the past few weeks about the money that the Premier League gives to the rest of the EFL. According to the FSA, between 2019 and 2022 the Premier League shared £887 million in what is termed “core funding”, but £663 million of that went to relegated clubs via parachute payments. As I understand it, 92% of the TV income went to 25 clubs—those in the premier league and those in receipt of parachute payments. The other 67 clubs get just 8%. It is obvious that parachute payments are a significant distorting element of the system. If we are to have a dispute resolution mechanism between the two bodies, it is difficult to see how that will work effectively when such a large chunk of the money for redistribution is excluded from scope.
Finally, on redistribution, I would be pleased to see more opportunity for the regulator to step in to determine further redistribution to grassroots football, community spending, women’s football, youth development, player pensions and those sorts of things. That is not to be done without careful consideration, but as a backstop provision for potential problems in the future.
I am running out of time, but I will mention football fan engagement and decision-making powers. It is good to see the setting of a strong minimum standard for fan engagement as part of the thresholds for clubs getting a licence. The original fan-led review went further with the requirement for a golden share. I am not suggesting that we must have that, but I urge the Minister to look again at those areas of the Bill to ensure meaningful fan consent. Whether we are talking about regulated colours of home shirts or the ground, clubs should demonstrate that the fans have a significant say.
Finally, there are some elements missing from the regulator’s remit that were recommended by the fan-led review. It is a missed opportunity that the Government have not taken on board the recommendation for a transfer levy to help redistribute resources. It is also disappointing that the requirement for club equality, diversity and inclusion action plans has not been progressed. The Government will say that that should be part of the annual licensing process, but I would welcome ministerial assurance on that, probably specified during the Bill’s passage. I would have liked to see some reference to environmental sustainability. We all need to play our part for the future of the planet. I also wonder whether the Bill would benefit from further clarification on what support is available if a club looks to be at risk of being unable to meet the conditions of a permanent licence.
I have run out of time. I look forward to the Bill’s passage, and I hope that the Minister will take on board the comments made today. This is an opportunity to put our football pyramid on a sustainable footing for years to come; I look forward to supporting it this evening.
Shaun Bailey (West Bromwich West) (Con)
It is great to be able to contribute to this debate, because although they say the Black Country was built on coal and metal, we were also built on football. I straddle the two clubs at the heart of the Black Country derby—namely, West Bromwich Albion and Wolverhampton Wanderers.
This is a pertinent Bill and a pertinent debate for my communities in the Black Country. We went through absolute hell with the financially precarious situation surrounding West Bromwich Albion. At one point, the club was having to borrow £20 million just to keep the lights on. An independent regulator stepping in to ensure ultimately that fans of football clubs—cherished parts of the community—can keep that club and that entity there, can enable that sustainability and can put these people, who are often behind the scenes, under the cosh and under scrutiny is absolutely the right way forward.
I commend the Under-Secretary of State for Culture, Media and Sport, my right hon. Friend the Member for Pudsey (Stuart Andrew), for his work on the Bill, and my hon. Friend the Member for Chatham and Aylesford (Dame Tracey Crouch), who has been an absolute champion in this space. She should be so proud of what she has achieved; the Bill is a real testament to her work.
We have covered a plethora of issues in the debate, not least the football pyramid. What I perceive at times is the inequity of the system we have got. I deal a lot with fantastic grassroots football clubs, which many Members have talked about. Sometimes the narrative and discourse about the need for regulation involves a top-down approach, and of course we must highlight the important work that our premier league clubs do, but let us not forget that the pipeline to many of those clubs is first and foremost through grassroots football, which a lot of the players we talk about—those stars and talents—come through. My fantastic local football clubs, such as Tipton Town football club in my constituency, constantly share their frustration that they are ignored, left out or put under ridiculous burdens that they often have to meet without resources.
Everyone has touched on the replay issue. I say to my right hon. Friend the Minister that it is a complete kick in the teeth, particularly for clubs that are further down the pyramid and rely on the revenue from getting people through the gate. Again, it just seems that the FA is only listening in its echo chamber, quite frankly.
Dr Luke Evans
The Government have a tricky line to tread in ensuring that football is independent and adheres to UEFA and FIFA rules on Government interference. On FA cup replays, does my hon. Friend believe that there is a role for a reconsideration mechanism, so that Government can bounce the decision back to the regulator and ask, “Have you potentially got this wrong, and will you think again?”
Shaun Bailey
My hon. Friend is almost asking for a replay of the replay—that is sort of where the question is. I get the point that he is trying to make about balance and the fine-line argument on Government interference. The point has been made quite strongly, as we have all seen—the FA’s own survey found that 70% of fans wanted to retain replays—and with that level of public pressure, there is a role for the Government in facilitating the pressure on the FA. I think that that is the point that he is hammering down on, although obviously the FA must ultimately be independent.
Rehman Chishti (Gillingham and Rainham) (Con)
I represent Gillingham, which has an amazing football club: the Gills. The club was in administration in 1995 and was bought for £1 by the then chairman, Paul Scally. Now it is doing exceptionally well and going up the league, but it is a small club and it relies on FA cup replays. If we are really passionate about supporting smaller clubs in the community, and about ensuring that the FA does the right thing by supporting them, we need the Government to work with the FA to ensure that we get this right.
Shaun Bailey
Just like my hon. Friend’s club, Tipton Town in my constituency got through on FA cup replays and benefited from that opportunity. The fact that so many Members have voiced that concern, as he has done so eloquently, highlights the strength of feeling about it.
Let me move away from that issue to look at the Bill operationally. I welcome the licensing regime; the provisional and permanent licences are a pragmatic way to do things. I will be interested in seeing, in Committee and in the secondary legislation that follows the Bill, the detail of the regime. I appreciate that there is quite often flexibility and gaps in primary legislation to allow for a more pragmatic approach, but it is important to ensure that we build structures for fan consent and support so that clubs are doing things properly, particularly when it comes to moving stadiums and grounds. That will be a really important thing for us to work on to ensure that when the legislation is implemented, it is done in such a way that people cannot circumvent and dodge its intentions, as so often happens with such legislation.
In supporting the Bill, I want to touch on the important community impact that many Members have highlighted. At the core of this Second Reading debate are the principles behind the Bill and the importance of what it seeks to achieve. My nearest club, West Bromwich Albion, does fantastic community work through the Albion Foundation. It was a pleasure to meet its representatives only a few weeks ago, and to see that the legend that is Blind Dave Heeley received an award at the EFL Awards. Dave has raised £3 million on his own for the Albion Foundation to support vulnerable people in our communities to get into sport. I am proud to support the Albion Foundation’s six town strategy in Sandwell to reach out to communities that often are disconnected and ensure that they benefit from the positives of football. Without that important financial stability, which the Bill tries to ensure through its regulatory structures and regimes, organisations like the Albion Foundation would not be able to do their work.
I want to touch on the issues of West Bromwich Albion. To be quite frank, the previous owner used the club as a piggybank, borrowing money from the club to take it elsewhere. That is not on. It is an example of someone who does not love their football club and has no understanding of the emotional attachment that a community such as mine has to it. The Bill’s transparency provisions try to stop that. We must also ensure that the corporate structures surrounding that work too. We cannot have shady or opaque ownership structures, such as what we saw with West Bromwich Albion—I am glad to say, no more—which enabled a situation like that to occur. I pay tribute to the fantastic Action for Albion group, which did amazing work to highlight the club’s issues, and fought tooth and nail for the club. Down to its work, we were able to save the club and ensure its future longevity. No politician can take credit for the work of Action for Albion; it was a truly community-led campaign to safeguard our club.
I am conscious of the time I have remaining, and I do not want to be too repetitive. I have a few asks of the Minister, which I am sure he will really appreciate. We talk of the pyramid model, which I like to refer to as aspirational. Can he ensure that, as we build out some of the requirements, clubs further up the pyramid will not have in-built advantages over clubs further down, particularly given some of the disclosure and paperwork requirements? The clubs higher up can afford savvy lawyers who can try to get around those requirements, but the clubs further down cannot necessarily do that, particularly if they are having a meteoric rise up through the league, as some have in recent years. We need to ensure that there is no disparity. I appreciate that financial provisions are in place for that, but we need to ensure that the requirement is not too onerous. I highlight to the Minister the need to ensure that consultation is meaningful—not just for the sake of it—and that the relevant structures are built in.
I support this Bill; it is the right thing. It is what communities like mine in the Black Country—football is at the heart of who they are—have been calling for. It is now imperative that as we build out the Bill, we get it right operationally. I commend the Minister for his work on it.
George Galloway (Rochdale) (WPB)
The measure is necessary but woefully insufficient. The regulator is vitally necessary but the idea that the danger is over-regulation is wholly misconceived. The danger is that the regulator will not have the power or the ambition to take on board even the excellent proposals brought forward in the fan-led inquiry led by the hon. Member for Chatham and Aylesford (Dame Tracey Crouch).
Many times during the early part of the debate it was said that football was a business, but to paraphrase Bill Shankly, it is much more important than that. I was sat in the House of Commons Celtic supporters’ club—a surprisingly large and august institution in this place—when the club’s then chairman repeatedly referred to us as customers. I pointed out at the end of the meeting, “With all respect, sir, we are not customers. Customers shop around; if they do not like what is on your shelf, they will go across the road and try someone else’s. We are here because our fathers were here, and our sons and now, thank God, our daughters will be here for the very same reasons.”
Speaker after speaker has adumbrated the local cases of their football clubs and the centrality of those clubs to their communities. Recently, Rochdale football club—which, sadly, is now in the national league—ran into real danger of hitting the wall.
Jim Shannon (Strangford) (DUP)
I commend the hon. Gentleman on the points he is putting forward. The consensus of opinion in this Chamber seems to be that every MP supports their club and their fans and wants to see a difference. Does the hon. Gentleman agree that the Bill that will have its Second Reading today will be to the benefit of all the clubs, the fans and their MPs? Does he also agree that Northern Ireland should also have some of the improvements and guidelines that are in the Bill, so that we in Northern Ireland can have the same guidelines and the same way forward?
George Galloway
If the hon. Gentleman will forgive me, as a supporter of a united Ireland I will not follow him down that path. I look forward to him thriving in an Irish football environment and asking the Taoiseach for the necessary support, rather than Mr Deputy Speaker.
I want to make a point about the gall of the Premier League lobbying us yesterday, saying that all these matters should be left to the free market. What kind of free market is it when at least three premiership teams are owned by foreign countries? Some are more thinly veiled than others, but there are three foreign countries in the premier league right now, and what countries! They are not countries that would be allowed to buy The Daily Telegraph, but they are allowed to buy top blue-chip football clubs in England. What is local about that? Why would we allow foreign states to buy pieces of our national treasure that are also of extraordinary importance to local communities?
I was just talking about the funereal atmosphere there was when it looked like Rochdale AFC, having fallen out of the league into the national league, might go out of business altogether. Hopefully, that problem has been at least partially resolved.
Rehman Chishti
I remember many great matches between the wonderful teams of Rochdale and Gillingham in the lower leagues. In 1999, Gillingham were playing Manchester City in the Wembley play-offs for the second division, and now Manchester City are in the premiership. The hon. Gentleman’s point is absolutely right: the success of football clubs should not be down to the investment of foreign countries. It should be about regulated investment in smaller clubs such as Gillingham and Rochdale, enabling them to go up, rather than relying on the investment of international sovereign wealth funds in our football league. He is absolutely right that the Premier League has a role and responsibility to support smaller clubs.
George Galloway
I am grateful to the hon. Gentleman, who has made a very important point. As Members can imagine, we in the Workers party want to save football for the workers: for the working class who gave it birth and were its mainstay for many, many decades—for a century—before the premiership even existed, and who are now priced out of the game. It now costs £60 to attend a premiership match. For a man and wife going, it costs £120. A woman and her son, with a burger and a cup of Bovril thrown in, are spending £100 to go to a football match—all to fund the fantastic profits that are being made in the premiership.
I declare an interest: I have three sons in youth football, all of whom I think have the capacity to make it. I will be their agent, so that is a future pecuniary interest. My sons are playing not on plastic pitches, which were disparagingly referred to earlier, but on grass that has not been cut all year, with humps and bumps and hills and hollows. By definition, a pyramid has a very, very large bottom, and that bottom is where we need to filter the money—not to agents, not to premiership players on half a million pounds a week. I am not making that number up. Some players get half a million pounds a week for playing—looking at Manchester United at the weekend—not very well or even very energetically at all. Football is in a terrible state.
The Workers party has a policy. I do not have time to discuss it, but I commend it to the House. Our policy on football is this: we believe not in fans having a golden share, though that would be a big step forward, but in fan ownership of football clubs—[Interruption.] I see some scoffing, and to those who scoff I say that German football is fan-owned. The great Bayern Munich, the next champions of Europe—who have won the championship of Europe 10 times, I think—are 51% supporter-owned. Borussia Dortmund, another power in Germany, are 78% fan-owned. Would not that solution end the problem of foreign states or these rum foreigners buying our top clubs? Johnny Foreigner has been mentioned several times. They live outside our borders, cannot be reached by sanctions and walk away from fines. Would not this solve that problem? Of course, we also have our own rum owners from our own land who own football clubs and run them into the ground. If the fans owned the team, would not that be a better solution?
Someone said that Parliament should not be regulating whether there are replays on a Wednesday. Why not? If it is the people’s game and we are the people’s representatives, we are absolutely entitled to have a view on the cheating of lower division supporters of the chance to take a big premiership club to a lucrative replay. We have every right to be outraged by that. If the Football Association is listening to this debate, we should tell it that it will be forced to reinstate replays. If not now, then soon.
My final points concern the two teams with which I am most closely associated: Glasgow Celtic in Scotland and Manchester United in England. Manchester United have foreign owners who have looted the club of billions of pounds. They did not even buy the club. They bought it, then borrowed against the club’s assets to cover the money that they paid to buy it, and they have paid themselves a king’s ransom in dividends. The Glazers must go—that is the feeling of 99.9% of Manchester United supporters—but how can we make them go? Well, we got rid of Celtic’s board. I was one of the proud members of the Sack the Board campaign and my good friend Brian Dempsey led it. We sacked the board by popular pressure, and popular pressure will have to be maintained on the robber barons from New York, the Glazers, before they destroy Manchester United altogether.
James Sunderland (Bracknell) (Con)
It is a huge privilege to speak on the long-awaited Football Governance Bill. Not only is this a matter of great importance to sports fans across the UK and beyond; it is also a personal passion and I commend everybody that has been involved in getting the Bill this far. Locally in Berkshire we have a proud football pedigree. Reading FC is the only league club in Berkshire. It has a proud history and has done brilliantly this season to survive in league one against all the odds. In my constituency, Bracknell Town and Sandhurst Town have also enjoyed strong seasons, and across the border in Hampshire, Aldershot Town are back on the map after their most exciting season for years. Well done to Tommy Widdrington and his players. I was at the Dagenham game on Saturday, which was brilliant. It was a pity that Dagenham did not quite make the national league play-offs, but next season will be even better.
As the father of two young sons who play to a decent level, I know that better regulation of the game is essential to their future, and to the future of all our clubs. This is the beautiful game, and it does need better regulation to ensure that football always comes home. We know what the Bill does: it seeks to establish an independent football regulator, and includes provisions that seek
“to protect and promote the sustainability of English football”
for the benefit of fans and local communities. That is very important, but I say to the Minister that regulation must be light-touch. Given the pre-eminence of football in the UK, we must not throw the baby out with the bathwater by inadvertently making the Premier League, the English Football League or the national league less attractive to owners, potential investors, the media or the fans. As we know, the Premier League is also the world's leading football brand, and is worth billions to the UK. If it ain’t broke, please don’t fix it.
Regulation, then, must be just enough. It must be balanced to protect clubs and fans from rogue owners, but without jeopardising the game. Recent history is littered with examples where it has gone badly wrong: Southend United, Wigan, Portsmouth, Bury, Colchester, Sheffield Wednesday, Hull, Derby and several others, but most recently and perhaps most spectacularly of all, Reading. For a fan such as me, the last few years have been galling. We have seen freefall from the premier league, 18 points of deductions, huge fines, players not being paid, bills not being settled and fans in despair, and I feel their pain. Let me put this on the record: I personally commend every single Reading fan. They have been magnificent, and they have supported the club through thick and thin. I should also mention the brilliant Sell Before We Dai group, which has been so instrumental in this regard.
Does lobbying work? Absolutely yes, and I give credit to Members as well—my right hon. Friends the Members for Reading West (Sir Alok Sharma) and for Ashford (Damian Green), my right hon. and learned Friend the Member for North East Hertfordshire (Sir Oliver Heald) and, in particular, the hon. Member for Reading East (Matt Rodda), with whom I have worked very closely in connection with Reading football club. Members have leant in, in respect of Reading and many other clubs. Pressure has been brought to bear on owners, and a cross-party approach really does work: politics is always at its best when MPs work together. As for the question of a pilot for the new regulator, I cannot think of a better example than Reading. The new regulator must cut his or her teeth on that particular club—and the Bill itself must have teeth, because a regulator without powers is of no use whatsoever. Let me say to the Minister that I look forward to seeing the terms of reference for the initial incumbent.
The aim of the Bill is to put fans back at the heart of the game. It is about running clubs and putting them back on their feet, and about heritage and future direction. As we have heard, it is also about sustainability, and about ensuring that we lay the foundations for clubs as we go forward in English football. It must apply across the whole pyramid, and not just to the top five leagues. It is right that new owners and directors will face stronger tests to stop clubs falling into the wrong hands, and will face the possibility of being removed and struck off from owning football clubs if they are found to be unsuitable—and much more; but the devil will be in the detail.
As for Reading football club, I have learnt several lessons this year. First, fans do matter and fan power does work. Fans have a voice, and they have used their voice this year and before in relation to Reading FC. Secondly, Reading Borough Council’s decision to list the Select Car Leasing stadium as an asset of community value under the Localism Act 2011 was a masterstroke. Dai Yongge is unable to sell the stadium, and rightly so. Lastly, I give full credit to Wokingham Borough Council for a little deed for the Bearwood Park training centre. If a club cannot legally sell its assets to another club, that club lives on. Once again, these measures have effectively stopped further asset stripping by Dai Yongge, and will lead to the successful future of Reading FC. Reading is now moving in the right direction. Bills are being paid for March, April and May; new owners are believed to be interested in the club, and we could yet survive. I thank everyone at Reading FC, and all the fans, for making this happen.
So what is not in the Bill? First, punitive action for owners who fail the test. I say to the Minister that they need not just to be banned from football but to be banned, full stop. They need to be banned from being directors, or banned by HMRC. The Bill does not address welfare provision for players. What are clubs doing to soften the blow for players who get rejected or suffer mental health issues? The Bill affects the top five leagues only; it needs to affect national leagues south, north and below because they are all worthy. The women’s game has been mentioned, but I feel strongly that the Bill needs to go further on the women’s game in due course.
Lastly, the FA cup decision on replays being stopped from round one is outrageous. It is nothing less than cultural vandalism of the world’s greatest cup competition. If the larger clubs have to play replays with the huge resources they have got, so what? I have no sympathy whatsoever. Having watched so many FA cup exploits over the years, not least at Sutton United and Woking, I do not buy the FA’s logic. These cup ties are the stuff of legends. Magic does exist in sports. Admittedly, no Government can regulate this, but if FA officials are watching, I urge them to rethink that appalling decision.
Dame Tracey Crouch
There is a larger point about FA cup replays. Those lucrative replays are once in a lifetime opportunities, but the fact that there are clubs that are relying on those lucrative replays demonstrates why we have a problem with finances in the football pyramid. Although my hon. Friend says that the Government cannot regulate on the matter, the Bill gives the Secretary of State some amazing powers to bring the FA cup into conversations. Does my hon. Friend agree that while it is not something that I particularly favour, it is something that can be done?
James Sunderland
I agree wholeheartedly. Anything that we can do in terms of the regulation is worth pursuing. I was at the Aldershot-West Brom game earlier this year, which was an incredible day out. That could have been a third round replay. The money raised from such occasions is extraordinary. While clubs cannot depend upon that lifeline, it is a fantastic bonus when it happens. Certainly, it helped Aldershot massively with its finances this year.
To conclude, I strongly support the Bill. I commend the DCMS, the Minister, the authors of the Bill and my fantastic hon. Friend the Member for Chatham and Aylesford (Dame Tracey Crouch). The Bill is long overdue, but it is here now. I am also reassured that the Conservative Government have done this. It will make a huge difference to all clubs and fans—let’s bring it on.
Mike Amesbury (Weaver Vale) (Lab)
Like many across this Chamber, I thank those from across the political sphere, those within the footballing community and those who led the fan-based review because their work is finally coming to fruition with the Second Reading debate of the Bill. The referee, in the shape of the independent football regulator, will finally be on the pitch. We are beginning that journey. It is particularly fitting that this takes place on St George’s Day, as the English nation gave the world the beautiful game. That nation now needs to put its house in order, for the many and not the few, to ensure that the pyramid effectively works for leagues across the beautiful English game.
As has been echoed across the Chamber, by Members of all political persuasions, we are only in this space because the premier league and those who govern our beautiful game have not got their house in order. That hands-off the pitch and that laissez-faire approach certainly has not worked for our fans, our clubs and, importantly, our communities. That has been mentioned in reference to Bury FC, one of our oldest football clubs in the country, certainly in the north-west of England where I represent. They were expelled from the football league amid rising debts and financial problems. There have been other notable and documented examples at clubs like Bolton Wanderers, Derby County and, recently, Reading football club.
These, and other clubs—we reckoned there were around 60 such clubs—had a number of common factors: unfit owners, greed, asset selling, poor governance and long-standing alienation of the fan base. There was total disregard for history, identity, emotions and communities. This laissez-faire, anything goes approach—the wild west of football—must be brought to a full stop. To drive that, the new, independent football regulator must have teeth, with strong rules to ensure that our great footballing clubs have fit and proper owners. I would certainly like to see more clubs owned and controlled by their fanbase. We have great examples of that in my constituency, including Northwich and Runcorn Linnets, who only this weekend I saw beat our rivals Widnes.
We want to see sustainable financial plans, with fans at the heart and soul of those clubs to protect assets such as stadiums and historical identities. People have referenced that—it is certainly in the Bill—in regard to kits and badges; those things are vital.
I am a long-standing Manchester United fan, so I am familiar with problems of ownership. The Glazers, who have already been referenced, bought the club on the never-never. They were one of the richest football clubs in the world; they are now one of the most indebted, and that really has affected our performance on the pitch, which has been pretty woeful this year, including in the FA cup semi-final. I pay credit to Coventry, who played incredibly well, while we played incredibly badly. But the problems on the pitch come down to some problems with the ownership.
I gave up my Manchester United season ticket long ago—it was a difficult decision to make—because of the Glazers. I echo the clarion call—I did so at the time with my protest scarf and all the rest of it—that the Glazers really must go. Perhaps we are on the start of that journey, with some new ownership.
I am a Cheshire and Merseyside MP, and quite a number of my constituents are Everton fans, who have been aggrieved by recent point deductions. Some of those have been on financial issues—the purchasing of a stadium, and certainly players—but fairness is a real bone of contention. Everton have been deducted 10 points —a high number. That has gone to appeal and so forth, yet they look at other clubs across Britain, such as the Manchester Cities and Chelseas of this world—by the way, Manchester City have had 115 breaches—and see that those who have incredibly deep pockets, financed by sovereign wealth funds, seem to get away with it because they can afford the litigation. Of course, Manchester City are not the only ones—I have referenced Chelsea, and there are certainly others.
We have mentioned fit and proper ownership for our clubs. How can it be right that sovereign wealth funds of foreign states with woeful human rights records own Great British—English—football clubs such as Newcastle United? It has been fairly well documented that one such nation state had managed to execute more of its citizens than a striker for Newcastle United had put balls in the back of the net. That is horrendous.
James Daly (Bury North) (Con)
The hon. Member—as he knows, I am from the same part of the world as him—is making some excellent points. He touched on Bury FC in my constituency. I am interested in fairness in football. In the FA cup semi-final at the weekend, we saw Manchester United—the winners as a result of about 1 mm in a video call—get £1 million, while Coventry City got £500,000. For all that we in the Chamber talk about fairness in a general way, does he believe that that is a fair share of the moneys in the circumstances?
Mike Amesbury
Clearly not, and I think that there is space for the regulator to intervene. As has been referenced, the FA cup can be a lifesaver for grassroots clubs. The hon. Member for Gillingham and Rainham (Rehman Chishti), who is no longer in his place, mentioned Gillingham, and I think that Bristol Rovers were also mentioned. Again, the issue is financial sustainability. The regulator should intervene to ensure that the FA makes the right decisions for all our clubs, right across the pyramid.
Like many Members across the Chamber, I think the Bill is great for the football community, and I credit all those who have been involved. It is very important that we have the fans at the heart of this. There are some issues, which hon. Members on both sides of the House have mentioned, to do with competition and the parachute payments, which are distorting the footballing community, but overall I very much welcome and support this Bill.
Chris Green (Bolton West) (Con)
It is a pleasure to follow the hon. Member for Weaver Vale (Mike Amesbury), who touched on the important issues in this debate. I particularly appreciate the way he very gently touched on the cost of the kit and of the badge, which I think follows on from his campaign to make school uniforms affordable. That is such an important issue.
I also appreciate how the hon. Member for Rochdale (George Galloway) captured that sense that football fans are not just customers who can go to one supermarket or another. There is so much more about football. It is not just about a strong fan base, the acquisition of the right players, having good management and other things that we would associate perhaps with a corporation; it is about the family, the next generation, that sense of community and wellbeing, and people going to the stadium, walking together in solidarity to see their club. That is what football is about for so many communities up and down the country.
When Bolton fell into very difficult times recently, and—looking not too far away—when Bury went into administration in 2020, it was a traumatic experience for many football fans, even those watching an opposing team. Bolton came very close to being in that position, but since then we have regained our strength and improved our position. At the moment we are third in league one. We are in the play-offs—and if Peterborough and Derby do the right thing and lose very badly with a huge goal difference, we might be in the automatic play-off position.
James Daly
My hon. Friend makes a sensible point, which not many people will know: Bury and Bolton were in essentially the same financial situation. Both had gone into administration at the same time. The regulator decided to expel Bury from the EFL and keep Bolton in the league. The suspicion was that, with Bolton being a bigger club than Bury, the regulator did not want to get rid of them, but poor little Bury could be used as an example. I think that is an example of why regulation is needed in this sphere.
Chris Green
I share my hon. Friend’s concerns. The idea of one club of the status of Bury tumbling out of the English football league was pretty grim, but to have two clubs do so would have been catastrophic for the EFL.
I welcome the fact that the Government have listened to fans and clubs and brought forward this Bill to secure the game’s future in England. The game’s fractured governance model and the inequitable distribution of finances are increasingly putting the future of the sport in England at risk. In the coming debates on the passage of this Bill, Parliament has the opportunity to give the new independent football regulator the right powers to ensure the game’s sustainability for the good of the football pyramid, from the grassroots to the heights of the premiership.
Any attempt to weaken the IFR’s powers or to make it a passive and ineffective entity should be strongly resisted. A particular concern, brought to my attention by Ian Bridge of Bolton Wanderers Supporters Trust, relates to part 6 of the Bill on financial distribution, where questions over parachute payments have not been ruled out, and to whether the Bill in its current form can deliver on its objective of protecting the financial sustainability of English football.
I look forward to supporting this Bill throughout all its stages. I think the debate has been incredibly constructive. The Bill may need a little further refinement, but I welcome the work and efforts of my hon. Friend the Member for Chatham and Aylesford (Dame Tracey Crouch) and of the Minister, my right hon. Friend the Member for Pudsey (Stuart Andrew) .
Mr Clive Betts (Sheffield South East) (Lab)
First of all, we are here today because football has failed to regulate itself over many years. It is our job as parliamentarians to ensure that, in the end, we regulate on the behalf of football fans for now and for the future, and for the communities where our football clubs are based. That is our job. I will just begin by thanking those who have got us to this position: the hon. Member for Chatham and Aylesford (Dame Tracey Crouch), certainly; the Minister for sticking with it and bringing the Bill before the House today; and the EFL, the PFA, the Football Supporters’ Association and Fair Game for their advice. I even had a conversation with the Premier League, but let us say that that conversation did not lead to as much agreement as other conversations I have had with other football organisations.
This is not a Bill to destroy the Premier League, as some have tried to present it, including the Premier League itself. The Premier League has been a massively successful organisation. It has brought unimaginable wealth into football and into this country. The legislation is not here to destroy the Premier League, but to ensure that its great strength, its financial resources, can be used as a basis on which to strengthen the whole of the football pyramid. It is just a pity that the Premier League itself does not see it like that. It does not see its responsibility to the wider football game, but instead so often seems intent on narrowly focusing its attention on supporting the handful of clubs that are within the Premier League.
We just have to look at the other successful brand in English football: the pyramid. There is no other football pyramid like it in the world. The championship has the fifth-highest attendances of any league in Europe. Where else could you go on a Sunday afternoon to a second-tier relegation game and get 7,500 fans not in the home end but in the away end? Sheffield Wednesday did that at Blackburn on Sunday—and won, I hasten to add, giving ourselves hope of salvation. That is the strength there, but the incredible power of the Premier League’s resources is slowly beginning to corrode and erode the basis of the whole football pyramid. That is what we have to stop and what we have to act on.
In very simple figures, 25 clubs—not just the 20 clubs in the premier league, but the other five that are in and out of it on a regular basis—get 92% of the distributed resources within football. The other clubs in the EFL get 8%. That simply is not sustainable, and we have seen that gap grow and grow over the years. It is not just a static problem; it is an increasing problem that undermines the whole of the football pyramid.
Does the Bill, as it stands, deal with that fundamental challenge? The process for a review of football finance is far too bureaucratic. Why not give the regulator the up-front power to come to a decision about the distribution of football’s resources that makes individual clubs sustainable, and competition within and between the leagues sustainable? That is a simple remit. Let them get on with it, rather than going through this process right the way through to a backstop, knowing that the leagues have already had a chance to reach an agreement which they have signally failed to do. The Premier League never made a single offer right through the process from the very beginning.
With the parachute payments excluded from the backstop, the Minister risks destroying his own Bill. If the Bill remains as it stands, we will not achieve a sensible and appropriate redistribution of revenue. I think that has been said right across the House and we simply have to change it. I am happy to table an amendment in Committee. I hope the Minister might think about how the Government might accept such an amendment, because it will be needed to strengthen the Bill.
Is the distribution of resources simply a matter for the EFL and the Premier League, or do the fans, players and grassroots not have a view? Should there not be a wider process, at least a consultation, so that the regulator has the up-front power and also consults those groups in reaching a final conclusion? It is just strange that something that began with a fan-led review does not mention fans in that very important part.
I welcome the general approach of the licensing system. As has been pointed out, we have had too many bad owners and directors in football, and we still have some around.
James Daly
I am very interested in what the hon. Gentleman says. There are some very important points regarding redistribution, but there is also a very important point about the competent management of football clubs. The Derby County situation is an example, because the owner had £400 million in cleared funds when the club was bought. What happened to Derby was a result of how badly it was managed after the initial test. That is a real challenge for this Bill.
Mr Betts
My understanding is that it will be a test of the licensing system. It is about ensuring sustainability, and not just when an owner comes along and says they want to buy a club. They need to show that they can actually sustain that ownership going forward. That is the difference between the current rules and the rules that are being proposed, which we can test further in Committee.
Can the regulator really regulate sovereign wealth funds that own clubs? I have asked the Minister about that before, and it is something else that we have to look at, because it is a challenge to the system. I welcome the fact that fans will have a veto over their club changing its colours or name, but there is nothing in the Bill that says that fans have to be consulted about a change of grounds. The regulator has to approve it, but there is no right for fans to be consulted. We need to have a look at that.
I come back to my own club, Sheffield Wednesday—I have mentioned them once, and I will mention them again. They welcome the proposals and the EFL’s approach to the review, and they recognise the need for a change in the distribution of resources. I am not sure that the owner will be that enthusiastic about the change to require him to consult the fans properly. Many owners are like that—they want to go through the motions. Are they really going to engage in a meaningful way? That will be a real challenge for the regulator at a number of clubs. I understand why the form of consultation is not specified, but it will still be a challenge going forward and we need to keep an eye on it.
Finally, I come back to the FA cup. The Minister said it is not our job to get involved in football competitions, but the fan-led review was triggered by some clubs wanting to change the competition they play in by going to the European super league. That involved a handful of rich clubs deciding that they could be better off there. We now have a handful of rich clubs deciding that European games are more important than FA cup replays—that is what is happening.
When Arsenal won the FA cup in 1979, they had five replays, four of which were against Sheffield Wednesday in one round. I remember it all these years later, because it was a great achievement. Three of those replays were at the old Filbert Street ground. We remember those things as football fans, and we should not take them away from the game. I say to the Minister that one of the requirements of the regulator is to ensure that the heritage of English football is safeguarded. Will the regulator have the power to do that under the Bill’s rules, and is the FA cup and its replays not part of the heritage?
Damian Collins (Folkestone and Hythe) (Con)
It is a great pleasure to follow the hon. Member for Sheffield South East (Mr Betts), who has done much work on this issue, and to follow the wonderful speech earlier from my hon. Friend the Member for Chatham and Aylesford (Dame Tracey Crouch), who has done such fantastic work on the important fan-led review. It builds on work done over many years by Members and Committees of this House.
When I was a new MP, I took part in the 2011 football governance review undertaken by the Culture, Media and Sport Committee, which was chaired by my right hon. Friend the Member for Maldon (Sir John Whittingdale), and this issue has been a recurring theme of interest for the House. The reason is that when clubs get into distress, it becomes evident very quickly that the competition’s primary interest is protecting the competition, not individual clubs.
When a club goes into administration, it can be too late to solve the problems. The actions of the league are to protect the integrity of the competition and to complete the season, rather than to save the individual clubs. Because the leagues are effectively governed by the collective views of the chairs of those clubs, they are often not very sympathetic when one of their own gets into trouble, particularly if they think the clubs have got into financial trouble because they have been overspending or, as the leagues would see it, cheating in some way. As we saw with Bolton and Bury—Bury failed financially and were expelled from the league, and Bolton very nearly were—and as we have seen with clubs like Derby, had there been an intervention and had it been made clear that the clubs were already playing and trading in breach of league rules, as they stood, the situation could have been avoided. There could have been an earlier intervention, rather than waiting until the last minute when nothing more could be done.
It is in response to those concerns that the fan-led review was triggered and this Bill has come forward today. We have seen numerous cases of bad ownership. Massimo Cellino acquired Leeds United a few years ago, and the football league did not think he was a fit and proper person, which demonstrates that there was no fit and proper person test. If a person was qualified to be a company director in the UK, they had as much right to be a director of a football club as any other entity, and he defeated the football league in the courts. We desperately needed a test in which somebody could stand up and say, “We are not convinced by this person’s track record. They cannot own the club.”
Coventry City were owned by an investment fund at one point, and nobody knew who the investors were. Leeds United were owned by somebody we did not know, and Sheffield Wednesday were almost bought by somebody who did not exist. It was the wild west, and the Bill seeks to address this by having a regulator that is required to license clubs and has the power to say to a potential owner, as Ofcom does to broadcasters when it is not happy with how they execute their licence, “We are not convinced that you have met the tests, so you can’t be the owner of this club,” or, “You must demonstrate and prove who you are if you are investing in this club. And we must have a robust business plan that demonstrates that you can run the club sustainably, meeting its requirements for this season and future seasons.” That does not require the regulator to invent new rules for football. It simply requires an independent body to enforce the competition rules that already exist. If we had that transparency and that ability to tackle rogue owners, many of the game’s problems would be resolved.
I do not believe that this form of effective regulation will deter people from investing in English football. If anything, it will encourage them. If someone is looking to buy a club in the championship or league one, with the hope of investing in that club and getting it into the premier league, having proper governance and enforcement of the rules will attract better owners into English football, which will be good for everyone.
I seek the Minister’s advice on a few specific points. As I said to the Secretary of State, the Bill’s structure is very interesting. The primary purpose of the regulator is to ensure sustainability, alongside which it has three objectives to consider: soundness, resilience and heritage. In making a determination, the regulator should always act in a way that is sustainable and that supports at least one of the three objectives.
This raises a question where, say, a club does not own its own ground. The ground might be owned by a private third-party entity that is seeking to push up the rent by an extortionate amount that the club cannot afford to pay, so it has to move to a new ground. The fans might be against the move, and the heritage test might say that the club should not move, but the soundness and resilience tests would say that, no, the club should move. The Secretary of State said earlier that the regulator could set aside heritage concerns and make that decision.
The regulator needs to establish some guidelines and principles that it will follow in making such decisions, so that there is proper consideration and so that it does not always defer to the financial case but considers the other points in the round. It is important that the test for directors is subjective and that the regulator can say when it is not satisfied, rather than the test simply being a tick-box exercise in which people may own a club if they can demonstrate that they do not have live convictions for particular offences. The regulator should have a robust power to say no.
The licensing conditions say that a club has to produce a corporate governance report, and the Companies Act 2006 sets out the sort of criteria that a company has to include in its report. And the Bill’s explanatory notes say that a corporate governance report should cover
“the nature, constitution or function of different parts (‘organs’) of the club; the manner in which those parts conduct themselves; the requirements imposed upon them; and the relationship between them.”
That would exclude the players and any relationship, responsibility or obligation that the club has to them. I agree with Ministers that the regulator should not be writing welfare standards and policies for football, but it could act as a guardian in making sure they are being properly enforced. It could use its investigatory powers, if it feels that there are grounds to investigate, to make sure that welfare standards are being properly maintained. This is important because where this idea has failed in football and other sports in the past, it has been because of the power structure within a sporting organisation, whereby the coach and team doctor often have huge influence over the athletes and it is difficult for people to know where they can safely blow the whistle. A backstop guardian, through the regulator, on welfare standards would be totally consistent with the requirement on the clubs to produce a corporate governance statement to the regulator every year. I urge the Minister to consider that.
Several hon. Members rose—
Mr Deputy Speaker (Sir Roger Gale)
Order. So as to accommodate everybody, I am going to have to reduce the time limit, after the next speaker, to six minutes. I call Charlotte Nichols.
Charlotte Nichols (Warrington North) (Lab)
It is a pleasure to speak in this debate. Although Warrington is known primarily as a rugby league town, we also have many thousands of football fans: those of our nearby premier league clubs, Everton, Liverpool, Manchester City and Manchester United; those of our fantastic non-league clubs, Warrington Rylands and Warrington Town; and those involved in our vibrant and diverse grassroots, amateur and Sunday league scenes.
Across the board, there are deep concerns that the beautiful game is becoming ever more distant from the communities it should be rooted in; and that decision making is made in the vested interests of the biggest clubs with the most resources, and is not about fairness and strengthening the sport right through the football pyramid. There are the obvious indicators of that: extortionate prices of season tickets and replica kits; and a lack of rigour in fit and proper persons tests for directors and owners. Even before this weekend’s controversy, I have heard from many constituents: about how the use of VAR is killing the game; that the decision to abolish replays after the first round of the FA cup will mean fewer moments of magic like those we saw at Marine AFC versus Tottenham, will make it less financially viable for smaller clubs to participate, and risks undermining the FA cup’s reputation as the most egalitarian competition in world football; that there is a concerning lack of transparency about points deduction decisions—something that I have received much correspondence on from Everton fans in my constituency, but which has also affected a number of other clubs in recent years; and, of course, about the disaster that is the proposed European super league.
In whose interests are those decisions being made? It is certainly not those of the fans. I therefore welcome the establishment of the independent football regulator, although there are some areas I think it can be strengthened through, which I will address. First, I want to see a regulatory structure that not only acts in the interests of supporters and protects their clubs, but acknowledges and prioritises the role of players and staff at the clubs. When we think about footballers and their working practices, it is easy to think about some of the huge salaries and transfer fees in the premier league, but most players are not on anything like that kind of money and can be in very precarious and short-lived employment. Career-ending injuries that take place on the pitch or illnesses that leave them unable to compete can leave them cut completely adrift, and in many cases without some of the skills and qualifications they need to find alternative employment easily because they invested everything into a footballing future that did not pan out. Just as football is nothing without its fans, it is nothing without its players either.
The Professional Footballers’ Association has pointed out that nowhere in the Bill, as drafted, is there any reference to players, and that that is a significant and serious omission, as they are the primary employees of the industry. There are potential direct impacts on them from decisions taken by the IFR, with no mechanism for consultation with them. There is no mention in the IFR’s regulatory principles of the need for the IFR’s decision making to recognise existing and successful mechanisms that have been developed to encourage co-operation between stakeholders, including the Professional Football Negotiating and Consultative Committee—a crucial backstop that has been effective in ensuring that substantive changes to player contracts and conditions cannot be made unilaterally. That is a straightforward thing to fix, and doing so would strengthen the Bill and ensure that there are no unintended consequences of its implementation. The Bill should acknowledge the existence and validity of these non-IFR mechanisms within the new regulatory ecosystem and formalise the responsibility of the IFR to work in a way that recognises them.
Secondly—and vitally—the Bill currently gives the IFR only partial oversight of financial sustainability, with no authority or oversight of profit and sustainability rules. The IFR should therefore have full authority for financial sustainability, including the oversight of profit and financial sustainability rules, in line with the recommendations of the fan-led review. This should include: full authority in applying sanctions; published guidelines on how sanctions will be applied; a guiding principle that sanctions do not unfairly impact fans but instead target club ownership, leadership, and management; and full consideration and involvement of fan representation as part of any sanctions process. Hopefully, this would help to prevent the scenes that we have seen at Everton this season, which have caused real distress to many fans in my constituency and in the wider region, and which have also meant that I have not had a moment’s peace since from my Everton-supporting family members.
As I said in opening my remarks, we are a town that has much to be proud about with our football clubs—something that the brilliant Warrington Football Podcast does so much to highlight with “More Than Just A Rugby Town!” Warrington Town have just secured their highest ever league finish in the club’s history in the national league north, while fans are having to fundraise to make the costly improvements to meet onerous FA ground grading criteria to allow them to continue playing at this level. That does not feel right when we see how much money there is swirling around the game at clubs just a few miles up the road.
The Premier League’s domestic TV deal alone is worth over £6.5 billion, and it is a shame that the recommendation of a transfer levy from the fan-led review has not been taken up. The better redistribution of some of these funds throughout the rest of the football pyramid is crucial for the financial sustainability of the wider game.
Warrington Rylands have made it into the northern premier league play-offs this weekend, after a successful few years, including lifting the FA vase at Wembley, and have just launched their first deaf football team, making the game ever more accessible to more players and fans; and women’s football in Warrington is coming on enormously.
There is plenty to be optimistic about for the future, but we know that we need a regulatory framework for the game that puts more power and resource into the hands of supporters and clubs, sees a fairer distribution of wealth across the game, and increases sustainability, transparency and accountability to get there. I hope that the Government will commit to a constructive cross-party engagement as the Bill makes its way through the House and on to the statute book.
James Wild (North West Norfolk) (Con)
I declare an interest as a Norwich City supporter and a King’s Lynn Town FC fan. As has been mentioned, it is fitting that on St George’s Day we are talking about our national game, which is loved by millions of people in our country. As we have heard, the premier league is also the most watched league in the world, and last year the EFL had the highest attendances for more than 70 years, with over 21 million supporters passing through turnstiles, so football is a great success story. It is in that context that we consider the Bill and the proposals to create a new regulatory structure for the game. As the explanatory notes set out, football was
“previously not regulated by statutory provisions”
and the measures are “unique” and “unprecedented”.
My first point is the one that I made a year ago when the Government published their response: we need to ensure that this is a truly proportionate regime and be mindful of the success of the game. That means having a light-touch regulator, which Ministers have committed themselves to. The Government response set out that the regulator would operate an advocacy-first approach to regulation, meaning that it would use constructive engagement rather than formal intervention wherever possible. However, that could be better reflected on the face of the Bill in the objectives and duties of the new regulator, otherwise the risk of mission creep is more likely to materialise. We have heard a number of contributions already this afternoon in which the regulator is being actively encouraged to expand its scope even before it has been set up.
I support the objectives of financial soundness and resilience, as well as safeguarding the heritage of football—the ground, the crest, the shirt colours and the name of a club are all part of its DNA. Incidentally, Norwich City can boast the oldest song in world football: “On the Ball, City.” I will not sing it. Football is competitive—it is about promotion, play-offs and passion—so the regulator must also understand the essence of the game and not reduce it to a dry, technical analysis of profits and losses, and impose a banking-style straitjacket on clubs.
As a member of the Regulatory Reform Group—I see the chairman, my right hon. and learned Friend the Member for South Swindon (Sir Robert Buckland), entering the Chamber as I speak— I welcome the principles set out in clause 8. However, they can certainly be strengthened to deliver that light-touch regime that is so important. The scale of the task that we will be asking the regulator to undertake will be considerable. It will have to review detailed business plans of 116 clubs and reach agreement on them.
In addition to the mandatory licence conditions, the regulator can impose discretionary requirements on any or all of those clubs. Such requirements would have to be bespoke, and they would then have to be monitored. Clearly, that comes at a cost, which has not really been discussed in the debate so far. The impact assessment estimates that the new regime could cost £132 million over 10 years. Admittedly, there is a lot of uncertainty, because we do not know precisely what conditions the regulator will put in place. That is money spent by clubs on football that in future will be spent on the costs of regulation. The national league is not the only one that has warned about the risk of the burden on smaller clubs. On licensing, the regulator must avoid duplicating existing requirements and ensure that it adopts a proportionate approach to the levy.
Clearly, a key driver of the legislation is money and how revenues are distributed through the pyramid that is so essential to the health of the game. This has been agreed on a voluntary basis to date, and it would be better if football came forward with its own solution. However, if that does not happen, there is part 6 of the Bill, which sets out the backstop mechanism. Either the Premier League or the EFL can trigger it, and if mediation does not work, a committee of experts drawn from the regulator’s panel will consider final proposals from both.
I have to confess to finding the decision process curious at that point, as rather than looking at each proposal and then adjudicating and determining what is the best overall approach, which could be between the two proposals put forward, the regulator can only opt for one of them. In any negotiation, if both sides feel a bit disappointed with the deal reached, it is likely to be fair. In this scenario, however, only one side will win, so I ask the Minister: why create an expert panel and a regulator if they are not able to apply their own judgment? Given the importance of that provision, I hope the Minister will outline the Government’s thinking. What consideration has been given to how that could be gamed, and will he look again at those provisions as the Bill goes forward?
On revenues, I will briefly focus on parachute payments, which are important elements in enabling clubs promoted to invest and, yes, to take calculated risks so that they can compete. If parachute payments were removed, clubs like Norwich City that are run sustainably and can get promoted—I am optimistic for the play-offs this year—would not have the confidence to invest, knowing that if they go down this path and get relegated, there would be no smoothing of their income. I therefore support the approach in clause 55.
Finally, I return to where we began, with the fan-led review. During covid, clubs were not able to let fans in, and King’s Lynn Town and others had to take sports survival loans—£13 million of them were issued—and their repayment threatens the viability of some clubs. As we look at financial resilience, I encourage the Minister to consider allowing clubs to convert, say, up to 49% of the loans they have taken out and give them to supporters’ trusts as shares. That would create a legacy of community ownership, which would be very worthwhile and would reduce the burden on clubs.
To conclude, football is an important part of our national character, and as the Bill proceeds it is essential that the regulator works with the game, the clubs and the league to ensure that football continues to flourish.
Navendu Mishra (Stockport) (Lab)
I start by placing on record my congratulations on the success of my local club, Stockport County football club, in its elevation to league one. On top of that, it has topped the table in league two. I use this opportunity—shamelessly, one might argue—to encourage Members on both sides of the House to sign my early-day motion celebrating the success of Stockport County football club in recent months? This is the first EFL title that Stockport County has won since 1967, and it is an important occasion for me as the MP who represents the club in the House of Commons.
Before I go into the main points of my speech, I join other Members on both sides in thanking the hon. Member for Chatham and Aylesford (Dame Tracey Crouch) for the work she has done, as well as the members of the Select Committee and the Minister, who has returned to his place. I have done some work with him on grassroots cricket, and I know he takes time to engage with Opposition MPs and MPs from his own party. He has a long-standing record of working hard on this issue, so I wanted to place those words on the record.
Premier league teams need to pay a fair share of the revenue to ensure that all fans can continue to enjoy the sport of football. Clubs like Stockport County football club in my constituency make a valuable contribution to the lives of supporters and countless others in the local community. However, as many have highlighted, the game’s fractured governance model and the inequitable distribution of finances are increasingly putting that risk.
Stockport County football club, and many other clubs, are an important part of England and Britain’s sporting culture, and we must do a lot more to ensure that the model is sustainable. Currently, English football is nowhere near meeting its objective, with EFL clubs losing £471 million during the 2022-23 season. With the shortfall having to be met by club owners, those are serious numbers. Football has failed to take the collective action needed to protect clubs due to the number of vested interests in its governance model. That has been echoed by representatives across the House. The English Football League wants local clubs to prosper as beacons of community pride in towns and cities throughout the country. I know that many fans of all football teams, and other sporting teams, take a lot of pride in and cherish the history and culture of their local team. I am glad that the English Football League welcomes the Bill and this parliamentary scrutiny and discussion. This is a good opportunity to reform the football pyramid—a lot of MPs have made points about that, so I will not repeat them.
Labour has long supported football reform. Our last three manifestos committed to reviewing football governance, giving fans a greater say in the way their clubs are run, and calling for the Premier League to redistribute more of its television rights revenue to the wider game. Labour also supports the implementation of an independent regulator, and we urgently need to bring in new laws to prevent further clubs from going bust or being used as playthings for the wealthy. Sadly, since 1992 more than 60 clubs have gone into administration. Although the Bill is welcome, it is likely to be too little too late for several clubs that had to witness their structures collapse, with fans left disappointed and angry. The fan-led review was published in 2021. Why has it taken the Government so long finally to act? Labour welcomes the Bill, but several issues need to be addressed and I am critical of the time it has taken the Government to come forward.
Several hon. Members rose—
Mr Deputy Speaker (Sir Roger Gale)
Order. I make no criticism of the fact that Members are using the time made available to them, but we will have to reduce the time limit again I am afraid. After the next speaker it will go down to five minutes.
Robin Millar (Aberconwy) (Con)
May I add to the many thanks already offered to the Minister and my hon. Friend the Member for Chatham and Aylesford (Dame Tracey Crouch) for the considerable work that has gone into this issue? Many others have rightly been mentioned, but time does not allow me to say anything more.
I stand in support of the Bill despite, as my hon. Friend the Member for Cleethorpes (Martin Vickers) said, having come to it with a degree of reluctance. I say that because I stand for the love of the game. This has been a fascinating debate, but in one sense it has been characterised by the many different perspectives that people have offered and, with the greatest respect, they have all been partial perspectives. No one person has held a complete and perfect view of football in this country, or the impact of this regulation, and that is vital. Those listening who may be questioning our right as MPs to be talking about the game they love should be reassured that we are just like them—this is a game that we love too.
I am a terrible fan and make no claim to stand here as a fan. I have never held a season ticket in my life, but I do stand here as a player, from my early days at Bangor Juniors—many of my school friends will remember me playing then—through to playing in the Suffolk League in Sporting 87 football club. I joined it when there were about 14 of us fellas from across East Anglia kicking a ball around, and left it when there were more than 600 members, many of them youth players, and we had won a couple of Suffolk fair play awards. I now play—my colleagues might say that is a loose description of the word—on a Friday afternoon for the Dyffryn Conwy Amateurs in Llanrwst. That is a different kind of club. It started for people just to have fun kicking a ball around, to work through some of the things that we pick up during the week, such as issues of mental wellbeing, and for building friendships in the community. I have been very appreciative of that support, in particular the work of Ian in setting up the club.
It would be remiss of me not to mention that I chair the all-party football club group, and I know that hon. Members are sitting here wondering how we got on today against the Lobby. Well, suffice it to say that at half time it was 3-1. It was a closely fought game, played well, but I think I ran out of fingers towards the end. Congratulations to the Lobby on that one; we will be back again next time to even the score.
The aims of this Bill are worthy, and putting the fans’ voice at the heart of football is vital. I grew up in Bangor. In 2019, I saw the club fall from the heady heights of 1985-86, when it played in the cup winners’ cup against Atletico Madrid, to seeing its Farrar Road ground turned into an Asda supermarket through mismanagement and many other episodes. Bangor City Supporters Association formed a breakaway club in 2019. What it stated at the time captures the essence of the Bill. It said:
“We want fans to reconnect with each other and restore the pride and feeling of being a supporter of our historic club. The new club is a creative and positive solution for an ever-changing and precarious situation. We are not disowning Bangor City FC or its history, the club is OURS, it belongs to the fans and local community. ‘Owners’ will come and go but the people remain. Keep the faith.”
There is much in there and much more history than I know—I have been away from the area for many years, so I am not familiar with all the steps in that journey—but it speaks to the concern that people have felt and that constituents have written to me about. I stress that those are constituents of the hon. Member for Arfon (Hywel Williams), but that is my home, and they have written and spoken of those concerns.
Importantly, this Bill recognises that community ties, sustainability and ethical governance are right at the heart of things and are essential. I would argue that those things resonate with the very Conservative values of heritage, community and sustainability.
Having described a rather unfortunate episode in the history of Bangor City, I can contrast that with the lessons I have learned from watching Llandudno football club, the Seasiders, where the work of Doz and her family over the years has made sure that the club is viable. Rod, Dave Guinn and others on the board at present are seeking to take the club forward.
This Bill makes the point again, as my hon. Friend the Member for Chatham and Aylesford said, that structure is important. We have to put in place these structures so that the money can flow. I argue that the Bill sends a signal that the era of opaque and unchecked ownership is over. Football is no longer just a plaything for those who see it only as an investment class. It is important that the backstop is in place. It is essential that the potential to fine clubs is retained, so that the regulator has some teeth. I question the scalability and applicability that are mentioned in the Bill.
I felt a chill when I heard some speak with an ambition to interfere with matters of football and apply preferred political agendas or even create a game in which everyone wins a prize. That is not the sport I know or love. I urge the Minister to give time at later stages to clarify some of the points being made and to make sure that while the Bill will deal with bad actors and bad management, it will not remove elements of bad luck.
Mr Toby Perkins (Chesterfield) (Lab)
First, I welcome the Bill. As others have encapsulated, our football clubs in this country are unique. They are institutions at the heart of their communities with long, long histories that far outlast whoever might be the chairman, the manager or the players in any period of time. That is why this regulator is overdue, and I very much welcome the work done to get us to this stage.
The regulator has an unenviable job. The number of things that people want to see addressed in football is huge. I am sure there will be all kinds of calls for the regulator to take action on things that fall outside its remit. The Secretary of State was at pains to clarify the regulator’s limited role around football. It is not about a new organisation running football; it is about ensuring that football is sustainable in the future. As my colleagues have said, this legislation has been introduced because football has been unable to break the logjam itself. It will be important for some of the remaining uncertainties in the Bill to be worked out in Committee.
Football is a business—generally a privately owned one—but it is also an institution. As we have heard from many speakers, one of the main reasons for that is that the fans remain. However, it is also a different kind of institution because of the rewards available to those who are successful and the appalling failure that happens when gambles go wrong. Many of us remember the Aston Villa versus Derby County play-off final. It was widely believed that whoever lost that game would end up going bust. Derby County, as we know, went into administration and is now in league one, while Aston Villa is fourth in the premier league with untold riches. For the sake of 90 minutes, those were the differences on the line that day. We cannot have a situation where one person’s gamble leads to that kind of success and another person’s gamble leads to the club almost ceasing to exist. We need the regulator to balance an individual businessperson having a go and the endangering of the cultural institution that is a football club, so that it is does not mean disaster if those having a go fail.
The success of the Premier League has been spoken about many times. My hon. Friend the Member for Sheffield South East (Mr Betts) was right to say that the championship is the fifth biggest division in Europe. In addition, league one is the tenth most-watched league anywhere in Europe. Right down the pyramid, this country has a thing of unique strength. My club, Chesterfield, which is in the fifth tier, attracted 10,000 fans on Saturday. Its history is informative. Darren Brown almost bankrupted the club and ended up in jail because of the way he conducted himself as the head of Chesterfield. The fans had to step forward and save the club back in 2001. Then, we had Dave Allen as chairman. He got the new ground built and got the club to the edge of league one, but found that, with every further league the club went into, the losses grew.
It is a unique business in that losses grow as the club moves from league two to league one, and from league one to the championship, so there is a perverse incentive. Until the club reaches the promised land of the premier league, the losses grow all the time. Look at some of the losses that championship clubs are experiencing—it is just appalling. Dave Allen lost interest and the club was on the verge of bankruptcy again. The Chesterfield FC Community Trust stepped forward, and the passion, commitment and professionalism that the trust board members have introduced got Chesterfield back into the football league, now with the help of the Kirk brothers—local fans who have their heart in the club. The club is looking much brighter.
The truth is that almost all our premier league clubs are owned not by people with that kind of history and passion for the club, but by foreign-owned institutions and foreign Governments who do not have the same understanding of and commitment to what football is about. I welcome the fact that the Government have introduced the Bill, which enjoys cross-party support. Now, we need to ensure that it works.
Peter Gibson (Darlington) (Con)
I congratulate the Under-Secretary of State for Culture, Media and Sport, my right hon. Friend the Member for Pudsey (Stuart Andrew), and pay tribute to my hon. Friend the Member for Chatham and Aylesford (Dame Tracey Crouch) for her tremendous work in this area.
Football is a vital part of our communities, bringing people together in support of their much-loved clubs. Since 1883, Darlington has been home to Darlington football club, known as the Quakers or simply Darlo. It is the team that Arthur Wharton, the world’s first black professional footballer, played for. I declare my interest as an individual shareholder of that fan-owned club.
As a fan-owned club, Darlington’s profits are reinvested back into the club. Following the financial collapse of the club some years ago, it is building back and has ambitious plans to secure its own ground to further sustain its financial future—an ambition that I am proud to support. A club with close links to the community has the potential to develop deeper, longer-term partnerships.
Community-owned clubs offer greater protection and transparency within their constitutions, which appeals to partners, funders, and sponsors. Giving people the chance to have a stake in their club can increase their connection with it. People can share the responsibility of sustaining their club, unlocking more volunteers and participation. If supporters know that the money they spend will be reinvested in the club, they are more likely to spend and donate more.
I welcome that, in the face of the gaps getting bigger, the Bill seeks to overhaul the football finance system to protect and promote the sustainability of English football for fans and communities like those in Darlington. I want to put on the record my thanks to David Johnston at Darlington football club for his engagement on the Bill in recent weeks. The Bill puts fans back at the heart of the game. With no fans, there is no game. Sadly, Darlington football club has suffered in the past, and its future has hung in the balance, causing uncertainty for the club and the community at large. That is why I applaud the stronger tests in the Bill for prospective owners.
Findings from the report by Fair Game show the disparity in the distribution of TV income. For every £1,000 in the broadcast deal, a premier league club gets £882.42, whereas Darlington FC, as a national league north club, gets merely 15p. That is simply not right, and focuses on protecting the bigger, wealthier clubs as opposed to the smaller ones that are so integral to their communities. I must recognise the wonderful work of the Darlington FC Foundation, which does so much good in my constituency.
I take this opportunity to thank the Government for their support of sports more generally in the community. Darlington has received over £900,000 for a new pitch, running track and changing pavilion at Eastbourne sports complex. Firthmoor community centre received over £90,000 for its multi-use games area, and there has been much needed investment in football across Darlington. All that helps inspire people and ensure that children can stay fit and healthy. Yet again, it is an example of the Government investing in football in our communities for people of all ages and abilities.
Finally, the Bill recognises that major changes must occur to keep our grassroots sports alive. I welcome the Bill, which is much needed for our fantastic football clubs to ensure that fans are put first and our clubs can not only survive but thrive.
Clive Efford (Eltham) (Lab)
For those who have opposed the Bill, particularly the Premier League, it is worth pointing out a few facts that the English Football League has provided. In the four years that the deal between the Premier League and the Football League was negotiated, wages in the premier league have gone up by £800 million—from £3.2 billion to £4 billion. In 2022-23, premier league clubs spent £2.8 billion on player transfers, and in 2024 the premier league spent £410 million on agents’ fees. Anyone who says that the Bill will damage the viability of the premier league needs to look at those figures.
We must remind ourselves of why we are here. As everyone has, I rightly pay tribute to the hon. Member for Chatham and Aylesford (Dame Tracey Crouch), but the arguments from the fans go back many years. I know that because I wrote Labour’s manifesto on football back in 2015, and we spoke powerfully about the need for fans to have a say. Fans are of the communities where the clubs are situated; they have sustained those clubs through generations, and they are an early warning system when there are problems in those clubs. One of my criticisms of the Bill is that it does not say enough about consulting and empowering fans. It could go further in those areas,
The legislation on the regulator is defective in two ways. It does not give the regulator step-in rights to settle a deal between the various organisations in the football pyramid. More importantly, the regulator is not empowered to deal with the issue of parachute payments. We are told that that issue is going to be dealt with through the licensing system; I would like to know how that is going to work, because that is about individual clubs. The impact of clubs having parachute payments is that other clubs are enticed to try to compete with them financially. Are we going to say to clubs that are receiving parachute payments under the licensing scheme, “You can’t spend that money”? That just does not make sense, so how will we be able to deal with this inequality of arms for clubs with parachute payments under the licensing system?
We are also told that through the licensing system, clubs that are overspending and perhaps overstretching themselves will be dealt with by the regulator. That seems to put the disparity in wealth and resources into legislation—actually to legislate to keep those clubs in abeyance, way behind the clubs that receive parachute payments. We know that parachute payments are the driving force behind many of the problems that exist in the financial arrangements of many clubs in the football league. That has led to difficulties, so how can we possibly have a regulator to deal with the issue of football finance that does not have the right to step in and deal with parachute payments? That has to change—it cannot be accepted.
On the issue of assets, Charlton Athletic do not own their ground, and they do not own their training ground. The training ground is in my constituency—it is metropolitan open land. The former owner has kept the rights to, and ownership of, the stadium and the training ground. I can only assume that he has done so out of spite, or perhaps he thinks there is going to be a payday down the road where he can develop those assets. As I say, the training ground in my constituency is metropolitan open land; he will develop that over my dead body. Perhaps he is going to arrange that—I do not know—but the stadium will not be given planning permission for development by the local authority in any case, so I think the former owner needs to think again. He should deal with Charlton even-handedly and hand over the rights to that ground.
Lastly, as other Members have said, there is the issue of sovereign wealth funds owning football clubs. The regulator must be given powers to get to grips with that, because the current situation is unacceptable. I support the Bill, and I hope I will get on the Bill Committee.
James Daly (Bury North) (Con)
This is a unique regulatory Bill, in that it regulates the preservation of football clubs—in my view, it is regulation to save something, rather than regulation regarding competition. It is illogical to suggest that anything could level the competition between Bury football club and Manchester City, in terms of their assets or in terms of anything else.
When Bury FC were rejected from the EFL, at the heart of the matter were the serious concerns that Jonathan Taylor KC raised in his review: the owner and director roles that were being enforced by the football league, especially in relation to leagues one and two. In that report, he said that
“There is no doubt that the EFL applied the OAD”—
owners and directors—
“test properly in relation to Mr Day and Mr Dale”,
the two owners of Bury football club.
“The question is whether the test as currently written is fit for purpose. In particular, it only looks at a narrow list of objective criteria, and does not take into account various other factors that speak to whether a new owner or director is a fit and proper person to own/run a member Club.”
When Mr Dale bought the club for £1, the fact that he had numerous previous failed businesses was not taken into account. The owners and directors test did not require that Mr Dale provide proof of funds—proof that he was able to sustainably run the football club—prior to purchase. That is utterly ludicrous and something that has to change, so I hope the Minister will touch on how the Bill will ensure that the regulation and the fit and proper person test are robust enough to keep people such as Steve Dale out of the ownership of clubs.
I find myself asking time and again how a regulator will be able to intervene in the running of football clubs, unless they have a huge amount of support staff. I accept fully that a business plan is put in place, but business plans can change. The situation at Bury was virtually criminal. On the car park at Gigg Lane, which was built in 1885, the previous owner sold 250 car parking spaces in a Ponzi scheme, some of them to poor Bury fans. These were essentially sold as a financial product that people would get a return from. He was selling these things to people around the world, and when the money ran out, the whole thing went boom. Nobody did anything about that. That was a unique situation, but would the regulator have the powers, the understanding and the knowledge to be able to intervene in acts of complete criminality such as that? I hope that it will, and I would very much welcome the Minister’s response to that.
Speaking of my experience of Bury Football Club, I was at Ramsbottom United on Saturday and 2,000 people were there. It was a North West Counties Premier League match between Ramsbottom and Bury. Bury bringing the best part of 2,000 people with them gave Ramsbottom United 25% of their total annual income. When we look at what it is about clubs that matter—the history, the heritage and everything else that we have talked about—we have to get to the heart of how clubs are run. After somebody gets through the fit and proper person test, after the first business plan fails and after the ambition comes in, how is the regulator going to be able to control that unless they have a massive amount of staff?
In my view, football clubs throughout the pyramid system are incredibly badly run. Most of them are subsidised by multimillionaires, and in any other way, shape or form they would not be businesses; they would be insolvent. They exist off largesse. We have seen some really great examples of clubs coming through the football pyramid that are completely and utterly reliant on one person’s millions. If that one person’s millions disappear, there is no football club. How do we regulate that in a way that allows for sustainability? Bury was badly run. It was badly let down by the EFL. I think and hope that if this legislation had been in place when the club was expelled from the league in 2019, it would have put the club in a better place. I will put a question mark after that, and I look forward to hearing my right hon. Friend the Minister’s comments.
Ian Byrne (Liverpool, West Derby) (Lab)
First, I place on the record my thanks to the hon. Member for Chatham and Aylesford (Dame Tracey Crouch), who has always listened to supporters, and will be sorely missed. Much of this legislation comes from the efforts of the fan-led review. I also pay tribute to the FSA, to Kev Miles and to the Minister, who bear the scars of getting us here today.
This legislation has come about because football supporters have lost trust and faith in the current custodians of the game to protect football for the people who really matter, whose loyalty is often taken for granted. Football supporters, along with the working-class communities the game originates from, are too often now an afterthought, if indeed they are considered at all. At the bottom of the pyramid, there is a shocking, criminal lack of investment in the grassroots game, which should be accessible to all. This is something that the wonderful stalwart campaigner Kenny Saunders does so much to highlight via his Save Grassroots Football campaign.
At the top of the pyramid, clubs continue to price out working-class supporters and the next generation of their own support. This poses an existential threat to the very strands of the game that give English football its authenticity, passion and worldwide popularity. Football must therefore be very careful not to kill off the golden goose that provides these riches—the loyal supporter. It is worrying to see significant price rises again for next season at many clubs amid the cost of living crisis. Some lessons are not being learned, and the clubs must take heed.
The Premier League has done much good for the beautiful game, with stadiums now a world away from those in the ’80s and earlier, where in some cases horrific tragedies took place. English football is now seen as world-leading, and the Premier League’s community work is beyond reproach and actually world-leading. I have worked with the team at the Premier League on the issue of tragedy chanting, and I would like to put on record my thanks to Richard Masters and his team, the LFC Foundation, the Manchester United Foundation, my hon. Friend the Member for Weaver Vale (Mike Amesbury) and Joe Blott representing the FSA.
However, despite its perceived success, the Premier League was powerless to prevent the attempted European super league breakaway in April 2021, with six of the 12 clubs coming from its ranks. The actions of those six clubs that attempted to end football as we know it and place the entire football pyramid in peril in their rush to form a European super league showed exactly why we need a football regulator to protect the interests of all. Shamefully, my own club, Liverpool, was part of that, but the collective fightback from supporters halted it in its tracks.
From the flames of that chaos, Liverpool fans then created what we hope is an exemplar model of fan engagement and influence to prevent clubs from making the same mistakes again. I am delighted that elements of this structure appear in the Bill: that is a tribute to the actions of Spirit of Shankly and the associated fan groups, and to the engagement of the UK-based element of Liverpool’s board. Fan engagement and influence must be in the heart of the Bill, because fans are the true custodians of the game, not the rogue club owners who will destroy the fertile ground that nurtures its roots. That is surely more of a commercial threat than a Bill that seeks, as the Premier League admits, only to embed normal business practice within the game. A good footballing organisation should not fear regulation; rather, it should welcome it.
The Bill currently gives the independent football regulator only partial oversight of financial sustainability, with no authority or oversight in respect of profit and sustainability rules. Football supporters are rightly demanding a transparent, proportionate, fair and timely system. The chaos and confusion caused by the Premier League’s handling of PSR has proved that it has not met these requirements. Many supporters, including Dave Kelly of Everton’s fan advisory board, are now calling for the football regulator to have full authority in relation to financial sustainability, in line with the recommendations of the fan-led review. They believe, and I share their view, that trust matters. The vast majority of this legislation will, I believe, begin to restore that trust, but it must go further.
Worryingly, given the importance of fan engagement, it is notable that the word “fan” appears only 16 times in the entire 140-page Bill. The interests of supporters must be adequately factored into governance and strategic decision making at the highest levels of the game, and the Bill must reflect that I would like to see independently elected fan representatives on the regulator board, the expert panel and the Premier League board. The expertise and experience of supporters must be hardwired into the decision making of the regulator and the Premier League. It is greatly missed, and it needs to be added to the Bill in Committee. Let us never forget what the great Jock Stein once said, which has resonated through the Chamber today: football without fans is nothing.
Anna Firth (Southend West) (Con)
I welcome the Bill, and thank the whole ministerial team, particularly the Under-Secretary of State for Culture, Media and Sport, my right hon. Friend the Member for Pudsey (Stuart Andrew). I also thank my hon. Friend the Member for Chatham and Aylesford (Dame Tracey Crouch). Their commitment has been fantastic, in respect of the fan-led review and all the other work that has been done. I would love to say more about that, but time does not permit it.
Occasionally people ask me whether this job is stressful, and my reply is always the same: it is nowhere near as stressful as 90 minutes on the terraces at Roots Hall. Although Southend United always give us a thundering performance, it is often not until the second half that they show their full skill and dominance of the game. However, the stress of being a Shrimper has been taken to a whole new level in the last two years, which is why I welcome the Bill.
For too long, football clubs like my own—Southend United—have been left at the mercy of unscrupulous owners who are either unwilling or unable to fulfil their obligations to the clubs and the fans. For too long, fans have suffered the making of vital decisions on their heritage with little or no consultation. For too long, there has been no focus on sustainability and future planning, which has left many clubs just one season away from insolvency. While I would normally be completely against the regulation of a successful industry like football, in this case I welcome the proposal for an independent regulator, which is absolutely necessary to put fans back where they belong—at the heart of English football.
To date, I have mentioned the plight of Southend United no fewer than 11 times in this place. Had it not been for the heroic actions of those at the club—the chief executive Tom Lawrence, the manager Kevin Maher, the players themselves who have somehow delivered week after week, the fans who cleaned and repaired the stadium so that we secured our health and safety certificates to start the season—we could well have lost 117 years of history. Against the instability of that background and the background of an outgoing owner who has been subjected to 19 winding-up petitions in 25 years, I welcome the strengthened owners and directors test. I particularly welcome clause 37 and the fact that the Bill removes any minimum number of bankruptcy events to disqualify a future owner.
However, instead of just punishing poor owners, I hope that the regulator will have a mechanism to reward the good owners who are making a positive and tangible difference to their club and community. Southend United Community and Educational Trust’s social value to the city of Southend and south-east Essex communities is measured at over £10 million a year. It gives back and encourages, so if there were a way for that to be rewarded, that would be a good improvement.
Southend United have a remarkable fanbase, so of course I welcome the detail in the Bill about engaging more with fans and hearing their voices. I would also mention supporters’ trusts. Almost every club will have a fantastic supporters’ trust. We have the Shrimpers Trust, ably led by Paul FitzGerald and James Schooley. I understand why supporters’ trusts are not named specifically in the Bill, but it would be nice if there were a way for such trusts to be recognised because of all their hard work and the engagement they have had with the ministerial team to make the Bill as good as it is.
I hope the regulator will be given the power it requires to mediate in all matters between the Premier League, the EFL and the National League, not just financial ones. Of course, I refer to last week’s concerning news regarding the unscrupulous scrapping of FA cup replays. Everybody knows the magic of the FA cup—every single person hearing those words will have a memory. For Southend United, the magic of the FA cup is best shown in 1979, when 31,000 spectators crammed into Roots Hall to witness their heroes taking on European champions, Liverpool. To put that into context, more than 11% of the entire city of Southend was engaged on that day. That is why it is so important we preserve the replays.
I appreciate the Bill has its sceptics, but I say there is not a moment to lose. Let’s get on with it. Let’s bring this Bill home.
Rachel Hopkins (Luton South) (Lab)
I am very pleased to finally be able to speak in today’s historic debate. A new independent football regulator is an important development, coming as a result of dysfunction in the game. I thank those who have worked hard to improve how football functions, including the hon. Member for Chatham and Aylesford (Dame Tracey Crouch) for producing the fan-led review, the Football Supporters’ Association and Fair Game. I thank Luton Town’s chief executive, Gary Sweet, for sharing his views on a number of occasions and, importantly, I thank members of Luton Town Supporters’ Trust and Loyal Luton, who have always been willing to meet me and tell me their views, because ultimately football is about the fans.
However, the status quo is failing fans across the country. While the premier league is arguably the most globally popular and commercially successful sporting competition, more than 60 clubs throughout the English league system have gone bust since it was established in 1992. The financial power at the top of the English game has distorted competition and powered unsustainable business practices as clubs scramble to be one of the elite 20 clubs at all costs. We all agree that the future sustainability of the pyramid is heavily reliant on securing a fair financial distribution deal between the Premier League and the pyramid system, not to mention preventing any potential re-emergence of the European super league plan.
We also have a multitude of examples that demonstrate the owners and directors test has not stopped dubious owners buying clubs and running them into the ground. We Lutonians sadly know the ugly side of the beautiful game better than most. Back in 2003, in response to Luton fans wanting to save their club, the previous Luton Town chairman, John Gurney, disgracefully said:
“If they expect me to walk away from Luton with nothing, I’ll make very sure there’s nothing to walk away from”.
This was from a person who had already recklessly suggested renaming the club, pushing for a merger with Milton Keynes-bound Wimbledon FC and, wait for it, attaching a Formula 1 circuit to a new 70,000-seat stadium on stilts. My personal favourite, which did see the light of day, was suggesting selecting the club’s next manager through “manager idol”, with texts costing 50p. That was all in the face of clear and vocal opposition from the fans. Thankfully, due to the work of a group of fans creating Trust in Luton, including one of its founding members, Gary Sweet, who is now Luton Town chief executive, control of the club was wrestled away from that disastrous ownership.
However, that was not the last time that fans had to step up to protect the club, as the fan-led 2020 consortium bought them out from yet further mismanagement after they went into administrative receivership in 2007. Unfortunately, the previous mismanagement led to a huge 30-point deduction and ultimately relegation to the national league. While it has not always been plain sailing, successes on and off the pitch since have enabled Luton Town now to compete at the pinnacle of English football—from non-league to the premier league. How did Luton Town do it? They ensured that they were a unified club from top to bottom, with a clear vision rooted in our Luton community.
Mr Deputy Speaker, if I may, I will take the opportunity to celebrate a significant part of our Luton football heritage through the period by wishing Alison Taylor, the landlady of the Bricklayers Arms, a well-earned and relaxing retirement at the end of the season after 38 years of service.
I fully support the creation of the new independent football regulator to protect and promote the sustainability of English football, and particularly to safeguard the traditional features that matter most to fans and communities. I will put on the record a few initial concerns with the functioning of the regulator, as set out in the Bill. First, the regulator will have the backstop power to intervene in the distribution of broadcasting revenue between the Premier League and the wider pyramid if needed. It is important that we explore that to ensure that the regulator can facilitate a just and fair financial distribution deal, including parachute payments, and including the ability to initiate any regulation.
The regulatory principles in clause 8(b) do not make reference to fans or fan groups—or indeed players or employees—as groups that the regulator should proactively and constructively engage with. When I worked for a regulator in the health sector, we directly engaged with patients, so why would the regulator not directly engage with fans, who are the beneficiaries of football? I also have reservations about whether the Bill is sufficiently free from any vested interests. Further clarity may be needed to ensure that a person with a conflict of interest cannot be on the expert panel board.
The Bill is supported by so many of us on both sides of the House, and this is a historic moment. The game is not just a business, but one with deep roots in the nation’s identity and communities, which is central to our global appeal. I look forward to supporting the Opposition Front-Bench team in taking the Bill forward.
Stephanie Peacock (Barnsley East) (Lab)
I am pleased to be here to welcome the Football Governance Bill. Football clubs sit at the heart of communities up and down the country. Family, friends and neighbours come together to watch games, win or lose. While providing role models as well as infrastructure, football clubs also inspire the next generation of footballing talent across every town, village and city. At the same time, English football is world leading. English clubs have fans on every continent, and the players and managers they attract are admired from all corners of the world. That combination of local togetherness and global acclaim is the envy of many.
As the shadow Secretary of State set out, the Premier League and its clubs have contributed billions to the economy and supported more than 90,000 jobs. This worldwide success has seen bigger revenues than ever coming into the game. But despite that, the financial sustainability of the English football pyramid is at risk.
As my hon. Friend the Member for Luton South (Rachel Hopkins) member for Luton South just outlined, along with my hon. Friend the Member for Preston (Sir Mark Hendrick) and many others, too many fans are having their attention forced away from the pitch and into the troubles of malicious ownership, mishandled finances and poor management. That could be Bury fans, who witnessed their club being expelled from the football league almost five years ago or, more recently, Reading fans, who shared with me their deep concern over the future of their club when I met them just a few months ago. I pay tribute to my hon. Friend the Member for Reading East (Matt Rodda), and indeed the hon. Member for Bracknell (James Sunderland), for their campaigning work on this issue.
There are clearly structural issues in the pyramid that must be addressed. Indeed, the fan-led review shone a clear light on the issues within the game, and I pay tribute and thanks to the hon. Member for Chatham and Aylesford (Dame Tracey Crouch) for all her work. As my hon. Friend the Member for Weaver Vale (Mike Amesbury) noted, the debate is taking place on St George’s day, so I take the opportunity to wish the whole House a happy St George’s day.
I am supportive of the Bill and the principle of an independent regulator for football, with a strict and focused remit on the financial sustainability of the game and the ability to act with proportionality. Labour supports giving fans a greater say in their clubs, ensuring that owners and directors are stringently tested on their integrity, competence and financial soundness, as my hon. Friend the Member for Chesterfield (Mr Perkins) spoke about. It is also important to prevent any further attempts at a breakaway league, which puts financial gain before the all-important principles of competition and qualification based on merit.
In preparation for the Bill, I have met representatives from across the industry: from the Premier League and its clubs, the English Football League, the National League and the FA to the Football Supporters’ Association and supporters groups, including the Barnsley FC Supporters Trust. I know how important Barnsley football club are to my town, and I was pleased to watch them at Oakwell just a few weeks ago. While not everyone agrees on every detail of the Bill or with the shape that the regulator will take, there is a lot of agreement that English football offers something world-beating and special that must be protected for years to come. That is what I believe the Bill seeks to do, and I look forward to helping to shape it with careful scrutiny.
The regulator does not address all the issues facing football today, nor is it meant to, but some of those issues have understandably been spoken about in the debate. For example, my hon. Friend the Member for Cardiff West (Kevin Brennan) gave a thoughtful speech, and has brought forward a private Member’s Bill, on unauthorised entry to matches. His Unauthorised Entry to Football Matches Bill is a proportionate intervention, designed to ensure the safety of fans by creating a specific offence for those attempting to enter stadiums without a ticket, and it has my support.
Over the weekend, we all saw the news that FA cup replays will be scrapped. That has understandably featured in this debate, with a number of Members raising their concerns. I believe it was the wrong choice, and fans will rightly have questions about how decisions are made that affect clubs all the way down the pyramid. The magic of the FA cup is that clubs from right down the football league, and indeed some non-league clubs, can compete with those at the very top.
At the moment, however, grassroots clubs across the country are facing difficulties, while contributing so much to communities, as the hon. Member for Westmorland and Lonsdale (Tim Farron) said. The hon. Member for West Bromwich West (Shaun Bailey) highlighted how important they are to the football pipeline. The clubs in my Barnsley East constituency—Wombwell Town, Worsbrough Bridge AFC and Wombwell Main—all contribute so much to the community. Hundreds of young people and adults play there every week, but the latter two face flooding issues at their facilities. In the case of Wombwell Main, which I visited a few weeks ago, flooding is causing multiple game cancellations. That is sadly typical of grassroots football across the country, which provides the foundations for both players and fans.
It is right that the regulator is strict in scope, covering the financial sustainability of the top five leagues, but a big part of that is to give fans a meaningful say in their club. I would therefore like to hear from the Minister on the strength of the measures for fans within the Bill. There has been a lot of rhetoric about how football must be for the fans, but is the Minister confident that the Bill’s provisions will live up to expectations and give fans the voice they deserve? I welcome the contribution from the hon. Member for Gosport (Dame Caroline Dinenage), the Chair of the Culture, Media and Sport Committee. I thank the Committee for its work and the fact that it has agreed to hold a pre-appointment hearing with the new chair of the independent regulator once there is a preferred candidate in place.
My hon. Friends the Members for Sheffield South East (Mr Betts) and for Eltham (Clive Efford) both spoke about this issue, and I pay tribute to both of them for all the work in this area, as well as to my hon. Friend the Member for Liverpool, West Derby (Ian Byrne); I know there has been keen interest in the issue of the so-called backstop powers and the ability of the regulator to intervene in the distribution of broadcasting revenue throughout the pyramid. That is an unprecedented power and must be carefully crafted in order to achieve its aims. Can the Minister assure Members across the House that the regulator will be given all the targeted powers it needs to secure the sustainability of the pyramid, as per its primary purpose?
Given that players and staff at clubs are often the first to notice that the club is experiencing financial difficulties, and that their livelihoods will be directly impacted, it seems odd that they are not mentioned once in the Bill, as my hon. Friend the Member for Warrington North (Charlotte Nichols) pointed out. Can the Minister explain why that is? The hon. Member for Folkestone and Hythe (Damian Collins) also made some important points on that subject.
I ask for a little more detail on some of the work being undertaken to ensure that the regulator hits the ground running. For example, what progress has been made on the shadow regulator, and is there any more detail on how the expert panel, which will be responsible for much of the regulator’s decision making, will be appointed? My hon. Friends the Members for Ealing Central and Acton (Dr Huq) and for Manchester, Withington (Jeff Smith) brought up the issue of equality, diversity and inclusion in football clubs. It will be for the regulator to decide what is contained within the corporate governance code of practice, but that is one of the issues that I would expect it to consider.
Before I conclude, I would like to touch on women’s football. There is widespread agreement that placing the women’s game in scope of the regulator would not be right at this stage. The Carney review revealed a number of pressing issues in the women’s game, including poor pay, professional standards, mental health support and union representation. It is important that we take them seriously. It is crucial that we ensure the financial sustainability of the men’s game, but that should not result in resources being stripped from the women’s game. I would therefore welcome an update from the Minister today on what progress has been made on implementing the recommendations of the Carney review, and on the Department’s plans for protecting the future of women’s football as part of the Bill.
To conclude, I thank all those involved in the Bill: my opposite number, the Under-Secretary of State for Culture, Media and Sport, the right hon. Member for Pudsey (Stuart Andrew), the civil servants, the clubs and, of course, the fans. Labour has long committed to reviewing football governance. This is a once-in-a-generation opportunity to preserve the future of our nation’s favourite sport. We can and must get it right.
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Stuart Andrew)
I thank all Members for their thoughtful and wide-ranging contributions, and I am grateful for learning about the first black professional footballer, Arthur Wharton, from my hon. Friend the Member for Darlington (Peter Gibson). I am pleased to hear the broad support for what the Government are proposing, and I am grateful for it. I am also grateful for the continued engagement with colleagues as we have prepared for the Bill.
My right hon. and learned Friend the Secretary of State rightly pointed out the successes of English football, and the contribution it makes to our economy and the pride of our nation, but it is important to remember why we are here today. My very first meeting when I was appointed as Minister was with fans’ groups. I heard at first hand their experiences of when it all goes horribly wrong—even to the point of having to boycott their own club for five years, in one instance. The fans felt unheard. We know that clubs are more than just football clubs. When they go into administration and are run down, the fans are obviously in despair, but that also has a significant impact on the wider community because they are more than football clubs; they are community assets.
That is why we committed to the fan-led review. Like everyone else, I want to put on record my thanks to my hon. Friend the Member for Chatham and Aylesford (Dame Tracey Crouch) and to the people who helped her, including Kevin Miles from the Football Supporters’ Association. The review was the foundation for the White Paper, and now we have the Bill today. I thank all those who engaged with us for all they have done: the FA, the Premier League, the EFL, the National League, the FSA and the Select Committee. I also want to put my particular thanks on the record to the officials in the Department. I cannot tell the House how many hours they have put in; they have been first rate and I thank them a great deal.
I want to focus, in the short time I have left, on some of the points that were raised. Many issues were raised and I will try to get through as many of them as I can, but I am happy to engage with colleagues afterwards if need be. When constructing the Bill, we have been careful to ensure that it is carefully drafted, considered and proportionate, and that it provides an advocacy-first approach; and that there is focus on the clubs where it is needed, and we make sure it is proportionate to their place in the pyramid.
A number of Members raised the owners and directors test. Too many clubs have been brought to the brink with unsuitable owners taking over, stripping them of assets and refusing to adequately fund them. That is why we are bringing in strong statutory tests to help prevent unsuitable owners at the point of entry, before they can do harm to clubs. Prospective individuals will be prohibited from becoming club owners unless the regulator has determined beforehand that they are suitable. They must pass a fitness test, which means: they have the requisite honesty and integrity; are financially sound; have passed the source of wealth test to ensure that their wealth is not connected to illicit finance; and have a plan and the resources to run the club.
Even once an owner is in place at a club, the regulator will still be able to make sure that they continue to be suitable. If it has grounds for concern about their suitability, it can test them on their fitness and their source of wealth. If it finds them unsuitable, they will have to sell the club. To prevent further harm being done to the club during the sale process, the regulator will have the powers to limit the owner’s involvement in the club, and if the unsuitable owner ultimately refuses to sell the club, the regulator will have the powers to step in and force a sale as a last resort. Strengthened tests and robust powers to remove unsuitable owners will mean that fans have the suitable owners that they deserve.
Hon. Members asked about what would happen if a club’s owners were forced to divest. Let me be clear: we hope that such a circumstance will be incredibly rare. The regulator’s objective is to promote clubs’ financial sustainability, and it will introduce tests on governance and financial oversight, which will greatly reduce the likelihood of financial distress and make football more resilient in the long term. For example, we will ensure that the regulator is able to look at a liquidity buffer, which could provide the club with time to seek a new owner, and the regulator will have the power to test an incumbent owner where it has grounds for concern about their suitability.
Almost every Member mentioned the backstop, and I repeat that we want football to come up with a deal itself; it is the best option, and this delay serves no one. We need to remember that we are talking about a commercial arrangement—businesses giving businesses money—which is why we believe it is best that football does it, but we recognise that there is no deal at the moment. That is precisely why we have put provisions in the Bill for a backstop—something to fall back on—so that they can consider the relevant revenues.
Dame Tracey Crouch
Does my right hon. Friend agree with my interpretation of clause 55, which is that international broadcast income is included in the relevant revenue for redistribution? That is currently not the case for solidarity payments. If it is the case, has this issue come up in his discussions with the Premier League?
Stuart Andrew
My hon. Friend raises an interesting point. I have had dozens of meetings with the Premier League, but as far as I can recall, I do not think that it has raised carving out international broadcast revenue in those discussions, which have always revolved around the net media revenues and the aggregate revenue received by both the Premier League and the EFL; she raises a very interesting point.
Some say that the regulator should be able to trigger the backstop right at the outset. Frankly, that would just be a frontstop, and it may hinder a deal being struck by football itself, but the Bill provides that if there is no deal because one has not been offered or one side cannot sign it because it is not a good deal, that side can ask the regulator to trigger the backstop.
Members have mentioned parachute payments, and I am always happy to meet colleagues to discuss and look at that matter further, particularly in Committee. I am also happy to organise a briefing, if that would be helpful, because it is quite a complex issue. Parachute payments play an important role in the sustainability of the system by softening the financial blow of relegation, and removing them could have adverse effects. Look at Bradford City: when they were relegated from the premier league in 2001, there were no parachute payments, and the following season they went into administration.
Stuart Andrew
I literally have two minutes. I have offered a briefing, and we can have this debate afterwards.
We realise that parachute payments can have a distortive impact, particularly in the championship, which is why the regulator has the power to address any structural or systemic issues through its licensing regime. Any distortion created by parachute payments also has the potential to be addressed through distribution to non-parachute payment clubs; that is exactly what the regulator will be able to look at as part of the backstop. Leading experts have advised us to keep the backstop targeted and simple, which we have done, and to design it so that it may never need to be triggered, which we have also done. As such, we do not think it is appropriate to include parachute payments in the backstop, nor we do think it is necessary to do so, as we have ensured that the regulator will be able to address any distortive effects that they cause via the licensing regime.
I am running out of time to answer more questions. This is a landmark Bill for football. It has been carefully designed to celebrate the sport’s success and encourage investment, but it is about providing stability for clubs, sustaining the pyramid and putting fans at the heart. We recognise that there are many successes, but it is important that we tackle the issues. The IFR will be focused on football, focused on financial stability and focused on fans.
I close by playing on the iconic words of 1966. Too many fans have seen their club on the brink, and they think it’s all over. Well, it’s not now.
Question put and agreed to.
Bill accordingly read a Second time.
Football Governance Bill (Programme)
Motion made, and Question put forthwith (Standing Order No. 83A(7)), That the following provisions shall apply to the Football Governance Bill:
Committal
(1) The Bill shall be committed to a Public Bill Committee.
Proceedings in Public Bill Committee
(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 6 June 2024.
(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.
Consideration and Third Reading
(4) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and Third Reading.
Other proceedings
(7) Any other proceedings on the Bill may be programmed.—(Joy Morrissey.)
Question agreed to.
Football Governance Bill (Money)
King’s recommendation signified.
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Football Governance Bill, it is expedient to authorise the payment out of money provided by Parliament of any expenditure incurred under or by virtue of the Act by the Secretary of State.—(Stuart Andrew.)
Question agreed to.
Football Governance Bill (Ways and Means)
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Football Governance Bill, it is expedient to authorise:
(1) the charging of a levy by the Independent Football Regulator in connection with the exercise of its functions under the Act; and
(2) the payment of sums into the Consolidated Fund.—(Stuart Andrew.)
Question agreed to.
Football Governance Bill (First sitting)
Tuesday 14th May 2024
(3 days, 8 hours ago)
Public Bill CommitteesRead Full debate Football Governance Bill 2023-24 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 14 May 2024 - (14 May 2024)
The Chair
Before we begin, I have a few preliminary announcements. Hansard colleagues will be grateful if Members email their speaking notes to hansardnotes@parliament.uk. I also ask everybody present to switch any electronic devices they have to silent. Tea and coffee are not allowed during sittings, although, obviously, water is provided on the tables. Members who may wish to take off their jackets are free to do so, because it is getting a bit warmer nowadays. Date Time Witness Tuesday 14 May Until no later than 10.10 am Mr Kieran Maguire, Senior Teacher in Accountancy, University of Liverpool; Dr Christina Philippou, Principal Lecturer in Accounting, Economics and Finance, University of Portsmouth Tuesday 14 May Until no later than 11.00 am The English Football League; The Premier League; The National League Tuesday 14 May Until no later than 11.25 am The Football Supporters’ Association Tuesday 14 May Until no later than 2.30 pm Solihull Moors F.C.; Dagenham & Redbridge F.C Tuesday 14 May Until no later than 3.00 pm Cambridge United F.C.; Bolton Wanderers F.C Tuesday 14 May Until no later than 3.30 pm Brighton & Hove Albion F.C.; Crystal Palace F.C. Tuesday 14 May Until no later than 3.50 pm The Football Association Tuesday 14 May Until no later than 4.10 pm Women in Football Tuesday 14 May Until no later than 4.40 pm The Football Foundation; Fair Game Thursday 16 May Until no later than 11.50 am The Professional Footballers’ Association Thursday 16 May Until no later than 12.10 pm Kick It Out Thursday 16 May Until no later than 12.40 pm Action for Albion; Supporters Trust at Reading: STAR; Arsenal Supporters’ Trust
We will first consider the programme motion on the amendment paper. We will then consider a motion to enable the reporting of written evidence for publication and a motion to allow us to deliberate in private about our questions before oral evidence sessions. In view of the time available, I hope that we can take these matters formally and without debate. I first call the Minister to move the programme motion in his name, which was agreed yesterday by the Programming Sub-Committee for this Bill.
Ordered,
That—
(1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 14 May) meet—
(a) at 2.00 pm on Tuesday 14 May;
(b) at 11.30 am and 2.00 pm on Thursday 16 May;
(c) at 9.25 am and 2.00 pm on Tuesday 21 May;
(d) at 11.30 am and 2.00 pm on Thursday 23 May;
(e) at 9.25 am and 2.00 pm on Tuesday 4 June;
(f) at 11.30 am and 2.00 pm on Thursday 6 June;
(2) the Committee shall hear oral evidence in accordance with the following Table:
(3) proceedings on consideration of the Bill in Committee shall be taken in the following order: Clauses 1 to 3; Schedule 1; Clauses 4 to 5; Schedule 2; Clauses 6 to 9; Schedule 3; Clauses 10 to 18; Schedule 4; Clauses 19 to 20; Schedule 5; Clauses 21 to 24; Schedule 6; Clauses 25 to 66; Schedule 7; Clause 67; Schedule 8; Clauses 68 to 74; Schedule 9; Clauses 75 to 80; Schedule 10; Clauses 81 to 92; Schedule 11; Clauses 93 to 95; Schedule 12; Clauses 96 to 98; new Clauses; new Schedules; remaining proceedings on the Bill; and
(4) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Thursday 6 June. —(Stuart Andrew.)
Resolved,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.— (Stuart Andrew.)
Resolved,
That, at this and any subsequent meeting at which oral evidence is to be heard, the Committee shall sit in private until the witnesses are admitted.—(Stuart Andrew.)
The Chair
Copies of written evidence that the Committee receives will be made available in the Committee Room, and will also be circulated to Members by email. We will now go into a private session to discuss the lines of questioning.
The Chair
We are now sitting in public and the proceedings are being broadcast. Before we start hearing from the witnesses, do any Members wish to make a declaration of interest in connection with this Bill?
Dame Tracey Crouch (Chatham and Aylesford) (Con)
I want to declare that I was chair of the fan-led review that led to this Bill.
Ian Byrne (Liverpool, West Derby) (Lab)
I sit on the management committee of the Spirit of Shankly football union for Liverpool football club.
Damian Collins (Folkestone and Hythe) (Con)
I am a trustee of The Sports Trust in Folkestone, which has previously received funding from the Football Foundation.
Robin Millar (Aberconwy) (Con)
I am chair of the all-party parliamentary football club group, and we too receive sponsorship.
Mr Clive Betts (Sheffield South East) (Lab)
I am chair of the all-party parliamentary group on football. I do not think it necessary to declare, but at least it is there on the record in case anyone wants to know that.
The Chair
We will now hear oral evidence from Kieran Maguire, senior teacher in accountancy at the University of Liverpool, and Dr Christina Philippou, a principal lecturer in accounting, economics and finance at the University of Portsmouth. Before calling the first Member to ask a question, I should like to remind all Members that questions should be limited to matters within the scope of the Bill. We will stick quite strictly to the timings in the programme motion, which the Committee has agreed. For this panel, we therefore have until approximately 10.10 am. I will give warning before this session finishes. Would the witnesses like to introduce themselves and say a few words before fielding questions from the Committee?
Kieran Maguire: Hello, ladies and gentlemen. I am Kieran Maguire from the University of Liverpool. I have specialised in football finance there for the last 11 years. Along with Christina, we have been asked to submit two research papers to the Department for Culture, Media and Sport; first, in respect of the state of finances of the industry during covid, and subsequently coming out of covid. I think we last produced a paper around 12 months ago.
Dr Philippou: I am Christina Philippou from the University of Portsmouth. I do a lot of work around sport finance and sport governance. Prior to academia, I was a forensic accountant.
Stephanie Peacock (Barnsley East) (Lab)
Q
Kieran Maguire: If we take a look at the history of both the Premier League and the English Football League, they have been successful in generating revenue. Since the Premier League was formed in 1992-93, its revenues have increased by 2,857%, whereas the Championship is at just over 1,000%. Given that prices have doubled, from a consumer price index perspective, that is absolutely fantastic. However, that has gone alongside an inability to control costs. The most significant costs in the industry are wages—while Premier League revenues are up by 2,800%, wages have increased by over 4,000%. Similarly, as far as the EFL Championship goes, if we take just one division, wages are up 1,400% compared with revenue of 1,000%. Profit is revenue less costs, and there has been a struggle to control costs.
As a consequence, if we look at the figures for 2022-23, which is a post-covid year—no ramifications—the 20 clubs in the Premier League lost a collective £836 million. In the Championship, on average the clubs were losing £20 million: League One, £4.1 million, League Two, £1.4 million; and in the National League, £970,000. All those clubs have been part of a spectacularly successful industry, of which we should be proud. It has globalised the game of football as coming from the UK. There has been a collective inability to control costs.
Dr Philippou: That summarises it pretty well. There is a general issue in relation to that, apart from that of cost control. We have also seen lots of administration, which has impacted on local communities over the years. Roughly two in five of the clubs in the top four leagues have gone into administration in the last 30 years, which is not a great stat. If we look at the post-covid years, as Kieran said—even putting into perspective what is happening at the moment—average losses in the Premier League were about £42 million, compared with its own cost controls, which are roughly £35-million losses per year. If we look at the Championship, it is roughly £20-million losses, where its own cost control saved around £15 million per year. Even by their own standards, they are not doing particularly well.
Stephanie Peacock
Q
Kieran Maguire: As far as the potential changes are concerned, the ability to have a regulator which can do real-time monitoring in respect of finances, so that it can identify potential problems at an earlier stage, would be beneficial. That would diminish the chances of a club getting into a more long-term financial crisis, where the only solution would be administration. The ability to have a regulator with a set of financial rules and observations, where you can nudge people in the right direction—I do not think that the regulator should be telling clubs how they should behave, but should be able to help the club itself to identify problems—would be beneficial.
Dr Philippou: Absolutely. Another strength in the Bill is that you can request information. One of the issues we have seen, which some of the leagues also struggle with, is the ability of the clubs to provide information in ways that are accessible and usable. That is something in the Bill which should help.
Stephanie Peacock
Q
Kieran Maguire: Owner funding is critical. We have ended up with the scenario where many clubs are what one could describe as trophy assets, where the ambition of the owner is not one of profitability but of soft power or kudos—the ability to say, “I own a football club”. Some of those owners are fantastic, as they want to repay the local community, which they have been brought through, and they have turned out to be successful. We tend to see commercial banks being reluctant to lend to the football industry because of the level of losses that we have previously described. From a lending position, a bank would always do a risk assessment in respect of any moneys that would be forwarded. My background, before going into academia, was as an insolvency specialist, and I did one or two investigations into football clubs where the bank’s response was: “We don’t want to be seen as the bad people in making this decision.”
Stephanie Peacock
Q
Kieran Maguire: Since the inception of the Premier League, the original wage-to-revenue percentage was around 45%, but that has now increased to the mid-60s. If we take the EFL Championship, for 10 years out of the 11, wages have exceeded revenue. Before they invest in the transfer market, before they switch on the floodlights, and before they put petrol in the mower, clubs are already losing money. Unless there is owner funding, there is no logic in keeping those businesses running, but football is a unique industry. If I was running a nightclub, a garage or a launderette, I would simply have closed the business down.
Dr Christina Philippou: More than half of the clubs in the top five leagues are technically insolvent, so if they were any other business, they would not be in existence. The fact that they are still standing is partly linked to how monopolistic the structure is. Obviously, fans find it quite hard to move from one club to another, and clubs tend to be a bit more resilient in keeping the fans than other businesses. However, that also has the knock-on effect of it being very community-based, and there are further knock-on impacts when those clubs go into administration.
The Chair
Stephanie, if you have any other questions, I will bring you in a bit later. There are a lot of Members who have indicated that they want to ask questions.
Damian Collins
Q
Kieran Maguire: When we had the introduction of solidarity payments from the Premier League to the EFL, which started to become index-linked to the growth in the Premier League broadcasting, exactly what you suggested tended to be the case. Any redistribution plan has to go hand in hand with a more nuanced and affirmative cost-control measure. Otherwise, you are simply transferring money from the wages of a footballer in the Premier League to the wages of a player in the Championship. I do not see how that benefits the game on a holistic basis.
Dr Christina Philippou: As we have seen, the cost-control issues are still there. The point is to try to fix that concern, rather than just to give more money to be spent poorly, which is not going to fix the problem. Fixing corporate governance and the cost controls will have a much better effect.
Damian Collins
Q
Kieran Maguire: Historically, the authorities, given the mandate that they currently have from the clubs themselves, have tended to be looking in the rear-view mirror. Therefore, they are playing catch-up. One of the advantages of having an independent regulator would be the ability to do real-time investigations and also potentially either to offer advice or, in extreme circumstances, to look at some form of regime change that allows the appointment of trustees and advisers to assist clubs in precarious financial positions.
Dr Christina Philippou: That is the whole point of something like an advocacy-first approach: you can work with the clubs before you get to the problem. Before you get to administration or those serious financial problems that we are seeing, if there is real-time monitoring, if you see the problems ahead of time, and if we have some proper budgeting and corporate governance in football clubs, that should mitigate the problem to a large degree.
Damian Collins
Q
Kieran Maguire: In an ideal world, yes. I do not think that the regulator can convert us into a zero-crisis environment. It is a case of turning down the dial. In the case of Everton, there was no doubt that money was spent in a similar way to what we saw with Roman Abramovich and Chelsea, and with Sheikh Mansour and Manchester City. There was an investment in talent and options in terms of infrastructure as well. The problem is that if you have any business that is living beyond its means, and is reliant on third-party or ownership funding, I think you have to very carefully monitor the ability of that funding to be maintained on a medium to long-term basis. We have seen, sadly in the case of Everton, that that does not appear to have been the case.
Dr Philippou: That is the importance of looking at the sources of funding, which is part of what is in the Bill, in relation to the owners and directors test.
Mr Betts
Q
Kieran Maguire: I think they do both. The intention of parachute payments when they were introduced, which was around 2006, was to address the possibility of clubs going into administration, because of the significant step-downs between the Premier League and the Championship. At the same time, it does mean that you have created a new benchmark in levels of spending that clubs in receipt of parachute payments can achieve, and therefore those clubs in the Championship that want to be competitive are incentivised to overspend, so I think we have a problem. Parachute payments are a clumsy solution to the bigger problem, which is the significant difference between the revenues of not just the Premier League and the Championship, but also between the Championship and League One.
Mr Betts
Q
Kieran Maguire: If we are going to look for a 92-club solution or, if we are including the National League, an 116-club solution, then the regulator should be able to deal with parachute payments, otherwise you are not dealing with the whole issue. If you have a redistribution model that does not involve parachutes, the Premier League’s position would be advantageous, and I do not think that would be in the best interests.
Dr Philippou: You need to have access over the whole of revenue, and that forms part of the revenues of Championship clubs. It would not make sense, in that sense.
Mr Betts
Q
Kieran Maguire: One would imagine that you would look at parachute payments from two angles. First, the quantum—the actual sums involved. Secondly, the length of parachute payments. They have been reduced from four years to three years, in recent years. I think there is a third issue, in respect of those clubs that are in receipt of parachute payments and are then promoted back to the Premier League. The parachutes that are not received are kept by the Premier League and distributed between the 20 clubs. That does seem very harsh, given that clubs are losing more money in the Championship to begin with.
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Stuart Andrew)
Q
Dr Philippou: It is fairly light touch from a compliance background, if you look at the financial implications and what is being asked for. In summary, you are effectively asking for some budgeting, some basic risk assessment, and knowing the roles of your senior management. It is fairly light touch, if you are running the club properly. From my perspective, it does not look particularly over-regulated. Certainly, from a compliance perspective, I would expect that if you are running the club properly, a lot of that information should be there anyway, and should be easily reportable without adding much burden to clubs.
Stuart Andrew
Q
Kieran Maguire: As far as the National League is concerned, I think the average losses were £970,000 a year. There are no cost-control measures as far as the national league is concerned, so that is why we have seen the recent arrival of owners who have transformed individual clubs, because they have been allowed to achieve effectively unlimited levels of loss. That potentially has implications when those clubs are promoted to League Two, although again they have tended to do very well.
The National League has been intriguing, and certainly issues arose with governance during covid, such as the grants that were given to support those clubs, which proved to be quite contentious. Like both the Premier League and the EFL, there appears to be some form of civil war taking place within—or between—clubs. We talk about the Premier League, the National League and the EFL, but I do not think there is a collective viewpoint within those institutions themselves from an individual club basis.
Dr Philippou: From a financial profile point of view, the National League shows very similar financial issues to League One and League Two. It is not as if National League clubs are free from problems, and the reason why they are in here is because they are pro clubs—it is professional football.
Ian Byrne
Q
Kieran Maguire: The Premier League has been successful because it has gone out to an audience and it has sold its services. There is no reason why the Premier League will not be competitive on a European basis in recruiting players, in respect of these rules. On attracting investment into the Premier League, part of the reason for its success is that we have moved effectively from a duopoly, which is where we were in 2005, to a more competitive product. In my view, if I was an investor, I would like to be able to invest in an industry where the opportunity to break even becomes greater, and I think that is more likely with the regulator than not.
Dr Philippou: We are not seeing much investment from certain areas that you would expect in most businesses. Part of that is the loss-making and the difficulty in conducting due diligence around football clubs. What we see in the Bill should fix that, and therefore we would expect to see more of a certain type of investment. Yes, perhaps there will be less investment from those who would rather not be in a more regulated environment, but that is not the overall picture.
Ian Byrne
Q
Kieran Maguire: If we look at the Premier League, when it was formed in 1992-93, 43% of revenues came from matchday tickets. If we move to 2022-23, we are now down to £1 in every £7 being generated from those. That can be slightly higher for the bigger clubs, and we are not denying that. The success of the broadcasting deals has very much meant that the broadcasting revenues are now dominant, and they now constitute more than half of the total revenues. As far as prices are concerned, it is a sensitive subject. Clubs will say, “We’re still losing money, so therefore we need to target revenue streams. We’re not getting that from broadcast, because the broadcasting rights—”
Ian Byrne
Q
Kieran Maguire: They are. During covid, we saw football matches with no fans and it was a sterile, glorified training exercise—there was no emotion. Having full stadiums is critical.
Ian Byrne
Q
Kieran Maguire: As a football fan, I would say yes. Looking at it purely from a business perspective, if you are selling 100% of your tickets at the current price, economics would say that they should be allowed to charge what they want.
Dame Tracey Crouch
Q
Dr Philippou: That is a very good question. I mean, how long is a piece of string? It depends on what you are looking at. We know what the issues are, so it depends on how targeted what you are asking us to look at is. The issues are pretty well known, so it is about how deep a dive you require—you can tell I worked in forensic accounting, with my “It depends!” But it would take months. It is not something that can be done quickly. It would require proper review to get it right, because if you are basing something on the information in a report, one needs sufficient time and access to be able to provide that information.
Kieran Maguire: The information we have put out in the reports to date has been on the basis of the financial reports published at Companies House. Therefore, we are reliant on clubs producing them on a timely basis and with a level of detail that we can make meaningful conclusions about. I used to do investigations into companies, and it is always nice to have more inside information or management information about budgets and so on, because that allows you to look forwards as well as in the rear view mirror. I think it would be a time-consuming exercise, but it is not an insurmountable one.
Matt Rodda (Reading East) (Lab)
Q
Kieran Maguire: The issues with owners are that if an owner’s personal circumstances or intentions change and they have been subsidising or funding clubs, however you want to describe it, it means that under the current environment, things are very precarious. I do not think that the football authorities themselves have sufficient powers to go in and effectively do an Ofsted to the extent that they would perhaps like to at times. That is where the regulator could be broadly more of a benefit than a cost, because it would have regulatory powers and the ability to send in a forensic team to take a look and offer guidance to clubs that may not be willing to listen to it under other circumstances. There is also the stick as well as the carrot in terms of issues with licensing or ownership, which are very much a last resort. That would perhaps focus some minds where people have historically tended not to listen and take no advice.
Dr Philippou: A lot of the issues we have seen with ownership have been in relation to sources of income. I am from the University of Portsmouth, and Portsmouth has unfortunately had two of its former owners jailed for various things relating to fraud and money coming from sources that it perhaps should not have come from. That is quite difficult if you do not have deep access to do proper due diligence. What appears to be in the Bill is access to that information and the ability to request that information, which should hopefully mitigate against some of these issues.
Matt Rodda
Q
Kieran Maguire: As an investigator, you would always want more powers than less, so I think you have to be honest there. At the same time, in terms of protecting the game from over-regulation and being mindful that FIFA does not allow government interference in football, I think we have probably hit a reasonably good sweet spot with regard to the proposals to date.
Dr Philippou: I agree with that.
Robin Millar
Q
Dr Philippou: I think it is a combination of various things. Ultimately, what you have is poor cost control and poor monitoring. Owners have to be mindful of that because, ultimately, at least half of them are putting money into football clubs every year to keep them running, so they are aware that there are cost problems there. You cannot be propping up a technically insolvent club and not know that you are propping it up, so there is that element there. You also have general cost controls —people are aware that they are losing money. It is not something where you can say there is a lack of awareness there; it is a lack of a willingness to do something about it. We saw UEFA bring in financial regulations back in 2010-11. The Premier League brought them in around about 2014. But we are still seeing these problems, even with the financial regulations in place, which tells you that there is an ongoing issue.
Kieran Maguire: What we have in terms of the present model is one of self-regulation, and self-regulation is normally walking hand in hand with self-interest. As far as owners are concerned, and I can understand this from an owner’s perspective, if I bought a football club as a trophy asset and I have unlimited funds, then why should I not spend as much money? What there has been is a trade-off between those owners willing to put in unlimited amounts, those owners wanting to put in limited amounts, and those owners wanting to put in nothing because they see the football industry as an extension of the entertainment industry, with a view to making it profitable on a longer-term basis. That is where we are at present.
The rules have effectively failed to address the loss-making in the business. Loss-making is sustainable until it is not sustainable—until those owners, either individually or collectively, decide to change the rules. Without any form of assistance from the regulator, that would mean that the industry is naturally precarious, because you only have to have, as we said earlier, a change in circumstances, as we saw with Chelsea. We have seen a club such as Bolton Wanderers have a very beneficial owner. His personal circumstances changed due to illness, and then you have a crisis for the club.
Robin Millar
Q
Kieran Maguire: I think it does deal with the financial issues. Effectively, if the regulator becomes the Martin Lewis of football in giving appropriate advice, that can benefit the industry. Many people enter the football industry with very good intentions. They have been successful in their own roles in their own businesses and think they can replicate that in football, and then they are seduced by the nature of football. For example, you run a club on a sustainable basis, and you are in seventh in the Championship in January. Your manager comes to you and says, “I’ve spotted this centre forward—costs £8 million, wants 30 grand a week, can get us into the play-offs. We can be in the Premier League in six months,” and all your common sense goes out of the window. That is part of the joy of football, but it is also one of the reasons why we have resulted in a loss-making industry. Provided the owner is aware of the consequences of their decisions, all you can do is give advisory assistance, rather than telling them what to do.
Dr Philippou: But there is an element of investment fatigue. We see all these great things, it is all going well and people are pumping money in, and then something happens in their other businesses or they lose interest, and that is when things start going wrong in the industry. I guess that is why there is also the non-financial side of the Bill, which looks at the corporate governance and fixes that side of the game too.
Stuart Andrew
Q
Kieran Maguire: In terms of the issues at the bottom of the Premier League, three clubs have just been promoted and have almost been relegated. The three clubs above them—excluding Everton, because if it had not had a points deduction, it would have been on 48 points—have been in the Premier League for two or three seasons, so there is an acclimatisation issue. There is also an issue at the top of the Championship. The clubs that have just been relegated have greater resources than their peer group, and that is going to have a yo-yo effect, which we appear to be locking in on a greater basis. That tends to be more of the case in the Championship and League One, where some clubs are moving. That is driven by the culture of the owners. The system at present encourages overspending. We have not seen that in respect of the three clubs that are being relegated, but we did see it to a greater degree with the clubs that were promoted in 2022.
Dr Philippou: Absolutely, there is that competitiveness issue, which we have seen diminish over time. That has a long-term impact on the commercial side and on broadcasting rights, because the less competitive a league becomes, the less likely people are to watch it and the less likely broadcasters are to put money in, so that can also have an impact.
Mr Betts
Q
Kieran Maguire: You would hope that the parties would be able to sort something out between themselves. If we did not have a regulator, we would be in a very similar position to the one we have at present. The Premier League has no incentive to be more beneficial, in terms of the distribution of money. It would have to be dragged to the table by the regulator, so that is why the backstop powers are important. The EFL is a fantastic league in its own right. The chances are that anybody who has supported a club in the Premier League have also supported it in the EFL.
When it comes to the regulator using last resort powers, it is effectively the same as the Bank of England. The Bank of England is the lender of last resort, but there are alternatives. Surely the same should be true in football. It is testament to the intransigence of the Premier League, in particular, which is unwilling to look at the broader football issues in the country.
Mr Betts
Q
Dr Philippou: I think a lot of the parts of the Bill that look to fix issues relating to the financial sustainability of clubs and corporate governance should in the long term negate the need for intervention, because stuff will be run in a much better way. The issue at present is that if there is no money forthcoming into the EFL, that creates a huge potential financial problem. That is why the backstop powers are there. It is one for the lawyers to debate, really.
The Chair
If there are no further questions from Members, I thank the witnesses for their evidence, and we will move on to the next panel. Thank you very much indeed.
Examination of Witnesses
Richard Masters, Rick Parry and Mark Ives gave evidence.
The Chair
Welcome to the new panel. We will now hear oral evidence from: Rick Parry, Chair of the English Football League; Richard Masters, Chief Executive of the Premier League; and Mark Ives, General Manager of the National League. For this session, we have until 11 am.
I call the first Member who wishes to ask questions, Stephanie Peacock.
Stephanie Peacock
Q
Richard Masters: We obviously support very strong ownership tests; we believe we have one at the moment. With the Bill, in terms of the way it describes the owners test, I think there are a lot of questions that still need to be asked and we may ask them in our written submission to this Committee. Thank you very much for giving us the opportunity to speak to everyone today and to put our perspectives across.
We very much support a strong ownership test. The question about whether it has been successful—I believe it has been more successful over time. Obviously, an ownership test is relatively new in football. Football has been around for centuries; the ownership test is a relatively recent intervention. Football has responded to issues—regulatory issues—as all regulators do. Football is already a highly regulated industry. We—the Premier League—are already regulated by the FA, by UEFA and by FIFA, and we are a regulator ourselves. So, the Bill and the new independent regulator for football are going to be an additional regulatory layer.
In all of our discussions with the Department for Digital, Culture, Media and Sport, we have been quite clear that we would like to continue with our own test and obviously the closeness of those two tests is quite important, and the consistency of results that come out of them is quite important as well.
When you read the Bill, one of the things that you probably notice in comparison with the Premier League’s current test, which is very similar to that of the EFL, is that it will probably capture a broader group of people and it is more subjective. One of the things that we have been quite careful about over the years is to make sure that the test is as objective as possible, because that creates more certainty and less legal challenge. We would like the Committee to think about that as they observe the Bill and to give as much clarity as possible to competition organisers on the issue of ownership.
Rick Parry: Where the regulator can help is in bringing greater transparency. Football does not do transparency very well; it likes to live in the dark. Greater consistency across leagues and statutory powers will be extremely helpful in terms of capturing information. The threat of criminal sanctions for failing to comply is pretty potent and pretty powerful—something we cannot compete with.
We will certainly not be having a parallel test; we do not want duplication. We are very happy to throw our support behind the regulator and recognise that a better test is something that we will be very happy with.
Mark Ives: First of all, thank you for allowing us to be here today; I appreciate that.
From an owners and directors test point of view, we are—from the National League—in a slightly different position than our colleagues in the Premier League and the EFL, in that the National League is governed by the FA regulation for the owners and directors test. I have spoken before about the powers that this Bill will bring with the ODT and I welcome that. I think it will give us, or give you, greater ability to be able to get access to information that we do not have. Although the current test is being reviewed from the FA’s position, it is primarily a self-assessment, which, of course, comes with many problems. I welcome the owners and directors test. I would urge Government to ensure that speed of operation is good, because the time it takes to get somebody approved is really important for takeovers and everything else.
The other challenge with the ODT relates not only to when owners come into a club, but to the question of when, during their lifetime within a club, their suitability changes. We need greater detail on how that will look. When does someone who is a good owner at the start of their tenure suddenly turn out to be a bad owner halfway through that tenure? Of course, it will be difficult, once somebody is in, to make a substantial change—not impossible, but it will be difficult. We need to think how we manage that from a National League perspective. We do not have a queue of people waiting to take over clubs, so we need to think about the consequences of the test on existing owners. Again, I would share the views that the leagues’ action to sense-check that as we move forward and make sure that clubs are compliant is really important.
Stephanie Peacock
Q
Richard Masters: I will do my best—thank you for the opportunity to do so. In general, I think we are supportive of the objectives of the Bill, and we want to see those objectives work. We are obviously concerned that what is, to all intents and purposes, a very successful industry is not harmed. It is very important that the Premier League, at the top of it, is able to continue with its success and growth—not just for the sake of the Premier League, but because that success and growth helps to fund the rest of the pyramid. We are happy to share our success, and we have a strong track record of doing so.
We would like this Committee to look at the unintended consequences of regulatory interventions that are unnecessary—proportionate regulatory interventions dealing with the issues that are arising. To use a motoring metaphor, we agree that if you are speeding, there should be regulatory tools to intervene, but we would not want to see the speed limit reduced from 70 mph to 50 mph to keep everybody safe. We think that would be a step too far.
As Mark alluded to, our core concerns are always about increasing the pool of investment that comes into football. The Premier League is successful because it has been able to create an atmosphere where people want to invest and buy football clubs and put their money behind the aspiration of moving up the pyramid. We see examples of that all the time, and we think that is really important. We need a strong and vibrant pyramid. To us, it is about long-term certainty and proportionate intervention. If those things are not correct, we might see some of the unintended consequences that I have explained.
Stephanie Peacock
Q
Richard Masters: The Premier League has a number of financial regulatory tools at the moment, such as our PSR regulations, which you will all be aware of. They are really about competitive balance, but also have an aspect of sustainability to them—essentially a limited loss situation. Where clubs are loss making, they have to provide two years of financial information to the league, and if they are loss making beyond a certain threshold, they have to stand behind the business plan of the club and provide a secure owner funding commitment to the league. The Premier League does have sustainability rules in place, as do the EFL and the National League. Perhaps it would be good for the Committee to hear about how all that works. There are measures in place, but they will be different.
What we are seeing in the Bill is prudential regulation, which is born out of the financial services industry—obviously there are not many parallels between banking and football. We are worried that prudential regulation could be too interventionist and could tie up or deter investment to the detriment of the whole football pyramid.
Stuart Andrew
Q
Richard Masters: It is unclear—a lot of this depends not on the technical drafting of the Bill, but the personality of the regulator, who we are yet to meet. Now the appointments have been made, it depends upon how the regulator and its powers are going to be utilised. For example, if the regulator wishes to put financial controls on virtually all the 116 clubs that it wants to license, I believe that will stop investment into football squads and football in general, and will slow down the growth of English football. That is the principal unintended consequence I would be concerned about.
Mark Ives: On unintended consequences, there are a couple of things, particularly when you consider the size of the National League clubs and how they are staffed. The Bill is written in a way that sets out what it intends; it does not give how it is going to achieve those aims. As far as the clubs are concerned, there is massive uncertainty.
As we see it, one of the unintended consequences is the drain on the resources of those clubs because of the duplication of work and the over-bureaucracy that there may be. For example, we already have a licensing system. Our system includes our football finance regulations, which have been activated since 2013. It is worth noting that we are talking about improving the sustainability of our clubs—but the National League, which is the only division that I can talk about, has not had a club going into administration since 2013, since it brought in its financial regulations. That is not a bad record. Our concern is the duplication of that licensing scheme. As the Minister rightly says, there is a referral back to the league regulations. We had hoped that that would go further and put the onus on the league, on the competition, to be the first to react. If that does not work, then the regulator steps in—rather than create a lot of duplication of work for our clubs, as we see it.
The other issue is costs. The Bill is intended to ensure financial sustainability. Yet the concern of this is that, as with all regulators, the people who pick up that bill are those who are being regulated. I am not sure that the clubs fully understand that. When you are at the bottom level of what is being regulated, the fear is the quantum of those costs. If you have a challenge that goes to judicial review from one of the National League clubs, I suspect that the financial cost on that is not going to be too great. However, if one of the top clubs in the Premier League challenges the regulator, the costs on that are going to be really significant. Those costs get passed on to those being regulated, and they could run into millions of pounds, when the cost of those are being borne by clubs at the National League level. In our view the Bill is not strong enough in clarifying what proportionality means. We have been given assurances: we have had some good meetings with the Department for Culture, Media and Sport, with the Minister and the Secretary of State, where assurances are that it will be proportionate. However, we do not understand what “proportionate” is. So, one of the unintended consequences is the financial and human resource burden on our clubs.
Rick Parry: It is incumbent on us to work with the regulator to make sure that this works for the good of the game. We see big pluses in terms of the regulator bringing independence, transparency and consistency across leagues, which is a bit of a disaster area at the moment. We view it positively: everything we have found so far in terms of engagement with DCMS and in terms of the shadow body that is the regulator is that all these concerns can be addressed. It is going to be a tougher environment, but football needs a tougher environment. We have had 30 years to get this right and we have failed.
Richard Masters: Just to answer your question about what plans the bodies are making to adjust to the regulatory world, we will all have to adjust to the new environment that is coming. I am very happy to do so. Like Rick, we are already meeting with the shadow regulatory team on a regular basis and have had good conversations about how it might work in practice. In reality, I think the performance of the regulator can be managed. We will meet that obligation head on and ensure that they get all the information they need, and we will respond at all times.
The issue that we are most concerned about is what impact that might have on the wider system—beyond the very positive objectives of the regulator to give fans a stronger voice—to improve the sustainability of the pyramid and individual clubs, and to avoid some of the issues we have had in the past. We agree with all that, but it is important to make sure it does not impact on the very good success story that we have at the moment.
Mark Ives: Can I echo that and clarify some points about where we stand on the regulator? From day one, and from when Tracey started the fan-led review, we met the review and we were asked whether we wanted to be part of the regulator. We said yes we did, on the understanding that it would not be too onerous for our clubs, and we would keep a mind on the costs. So we are mindful of that. We embraced the regulator. Our position was always that if there is a regulator, we thought it should be the FA, but for well-documented reasons, we know why that cannot happen. So we move on and embrace the regulator as it is.
Our challenges are not about having a regulator; they are about understanding and clarifying how the regulator will work. We embrace it and we will work with it. We have had some very productive meetings with DCMS and discussions all the way through. All we are trying to do is make sure that it is not too onerous and too costly for our clubs, because we have to protect the interests of those clubs, and they need clarity.
Damian Collins
Q
Richard Masters: Let me be clear about what the Premier League’s role in this is. As regulator, it is to perform the test. It is not to decide who the current owner wants to sell this club to. That is his decision. At the moment, he wants to continue to have discussions with 777 about it. The Premier League has made very clear the conditions that have to be met by 777 if it wishes to become the owner of Everton. At the moment, obviously, because the takeover has not been confirmed, I will leave it to the Committee to make its own conclusions about where we are with that.
Rick and Mark have talked about some of the benefits of the regulatory ownership test, in the sense that they will get access to more information that we can have, because we are not a statutory body. So we can only get the information that we are provided with and we have strong investigatory powers.
The other thing that Mark talked about was speed. I accept that takeovers that carry on for a very long time are not good for fan certainty. That is why we have a very big team of people who do nothing else in this. All I would say is that over time, particularly in the Premier League, takeovers are becoming increasingly complex. It is not a small undertaking on the part of the regulator to take this burden on. That is why we want to remain involved with it as well. This is very complicated, and we need to make sure that all those decisions are correct, even if that means taking a little more time to make sure that a decision is correct.
Damian Collins
Q
Richard Masters: It may be that they could come to conclusions quicker. I would imagine that that is possibly correct in that circumstance, but obviously, I cannot imagine what the situation would be like if we had a regulator in the current example that you raise. Obviously, I know a bit more about the background to it all. I cannot say too much about it, but I do think there are some benefits to the regulator working in tandem with leagues on this particular topic. That is true.
Damian Collins
Q
Richard Masters: Maybe a bit like “The X Factor”, you need two green ticks to get in. That is it, and in terms of the Premier League operating its own test, in the unlikely event that the regulator said yes and we said no, that person could not take over that club, and vice versa.
Matt Rodda
Q
Rick Parry: I think so. I do not think there is any reason to be doubtful at this moment, and within football we have been refining the tests that we apply over time. A decade ago, I think the tests were probably inadequate and overly simplistic. We have definitely refined them. We take a closer look at people’s track records, and I am not fearful that the regulator will be unable to do the same.
Brendan Clarke-Smith (Bassetlaw) (Con)
Q
Richard Masters: As you know, professional football exists in a global marketplace, and the Premier League is, by most available metrics, currently the most popular in the world. We want that to continue, but it is a competitive marketplace. You could not say that 20 years ago, but it is true today, and we would like it to be true in 20 years’ time. We have been able to do that by collective effort, and the clubs continue to invest in creating a really exciting football competition.
I think the key difference between the Premier League and its other European competitors is the competitive nature of it. We can talk about full stadiums, home and away fans, fantastic brands, and the history and tradition of the English game—all those things are incredibly important, but the key difference between us and the Germans, the French, the Spanish and the Italians is that you have jeopardy from top to bottom. That goes to the funding of football and the financial mechanics behind it, and the key ingredients that go towards that competitive nature and the jeopardy in English football. We do not want to damage that jeopardy at all.
In order to be able to better fund the pyramid, we have to be successful, and to be successful, we have to be able to continue to find football-led solutions to the problems we have. The regulator has a specific role, which is to step in when individual clubs have problems and to oversee certain aspects of the game, but I still believe that football needs to be football-led. The three bodies—or four, if you include the FA—can do a good job of that in the future, in the same way that they have done a good job of it so far.
Brendan Clarke-Smith
Q
Rick Parry: We think that in a better regulated environment, where there is more clarity and certainty, we will get better-quality owners—there is no reason to believe that we would not. There has been a lot of talk about investment, which is a curious word in football. To me, “investment” means sensible investment in assets that generate returns in football, but it tends to mean excessive spending and then owners moving on. What we are trying to do, in making clubs sustainable, is reduce the dependence on owner funding—as we have heard previously, owner funding is fabulous, until it is not. We have seen it with Mel Morris, we have seen it with Bolton, we have seen it with Reading: owners come in with high ambitions, but either get fed up, run out of money or become ill, and then the clubs fall off a cliff. If we have a better system of redistribution, making club solvent, then we are not dependent on that ownership culture.
Brendan Clarke-Smith
Q
Mark Ives: I think that, from a National League perspective, we are in a fortunate position. We run a licensing programme, and part of our ethos anyway, without the regulator, is to properly prepare our clubs to go into the EFL, whether they come from step two, National League North or South, into step one, the national division. If you look at the history of our clubs that have been promoted into the EFL, the vast majority of them have succeeded and continue to do so—this year you have only got to look at Wrexham’s story and everything else. That touches on your issue about foreign investments. Our challenge is to make sure that clubs that come up from step two are suitably prepared, through our licensing programme, to step into being regulated.
Equally, when somebody who is being regulated falls out of step one, sometimes because they have challenges, the issue for us is to ensure that they continue to get the support that the regulator may have given. As they go into step two, it is incumbent on us—it is still our competition—to ensure that they get the same checks and balances, to try to turn around whatever issues are there and give them a chance to grow again.
Ian Byrne
Q
My question is about financial sustainability, the profit and sustainability rules, and the lack of authority within the scope of the Independent Football Regulator. All supporters want a predictable, transparent, principled, proportionate, fair and timely system. Richard, from a Premier League perspective, I think that if you speak to the supporters of the clubs—Everton or Forest—they do not feel as though they have had that. There has been lots of confusion about the whole process and how punishment has been meted out. Then there is what happened with Manchester City—115 charges, but nothing as yet. Why would we not want to protect the integrity of the process—and the Premier League and, when it comes to that, the EFL? Why would we not want to give to the Independent Football Regulator the ability to mete out punishment in a fair and transparent manner?
The Chair
Order. While cases are pending, I ask Members to be careful about naming individual clubs in matters that may be sub judice.
Ian Byrne
Noted, Sir Mark.
Richard Masters: Thankfully, the cases you referenced have concluded now, before the end of the season, which at least gives some certainty. It has been a difficult period. This season has been the first time that the PSR rules have been activated—if we may call it that—in the Premier League. It has been a difficult experience, although Rick has more experience of it, and it is a difficult situation for fans of those clubs to live with, but if we have financial rules, we have to enforce them. I think that most people accept that, if they take a step back.
The question is: does the system work? Is the system transparent? No. The question you are asking is: should the regulator not look after all that? I think that the decision that the Government have taken, which is the correct one, is that this is for football bodies to look after. They are essentially getting involved in the running of the sport and the sporting competitive issues that exist within the game. I would not support, Ian, the regulator looking after those rules. The regulator has a clear remit to look at the sustainability of football clubs.
Ian Byrne
You think it is down to the leagues.
Rick Parry: It is the boundary of where football authorities deal with the rules that govern the competition. As Richard said earlier, part of the role of the PSR rules is competitive balance, rather than the sustainability of individual clubs. There is an element of crossover, but I do think that PSR squad cost control rules, or whatever replaces PSR, should fall firmly with the leagues to operate. We agree on that.
Mark Ives: May I add to that? I think it is important. We have our own financial regulation. If there are gaps in the financial regulation, then challenge the league —tell us where you think those gaps are for us to change. I would argue, as I said earlier, that the history of the clubs at our level is that our financial regulation works. As Richard said, it is it is only as good as ensuring that those regulations are applied, and we have applied them.
Two things about applying the regulations are that it is not just about sanctions, but about helping the clubs to make sure that they do not fall off the edge. In a few high-profile cases in the National League, we have actually been able to save some of those clubs and ensure that they do not go to the wall—I will not name them, but you know who they are. We have been able to assist those clubs to make sure that they survive. To come back to what the Minister said earlier about passing some of the issues over to the leagues, this is one example where we should have total autonomy to do our thing, and for the regulator to step in if we are not doing it.
Robin Millar
Q
Richard Masters: I am probably going to start repeating myself. I think that light-touch, proportionate regulation can work, and when the Committee is scrutinising the Bill, it should try to ensure that that is the case—that the regulator has the powers to intervene at the right moment. One of the things that we have argued for—
Robin Millar
Sorry, just to be explicit, my question is whether you think that the regulator is there to control bad actors or whether the regulator is there to intervene when it sees that somebody is about to make a mistake.
Richard Masters: I think they are both the same thing. I do not think that we should put in place broad protective measures to ensure that nobody can ever hurt themselves. What I do think is that the regulator intends to be preventive, and we will be supportive of preventive regulation to stop bad things happening, and of the regulator having the power when bad things are happening. I think those three things are subtly different and quite nuanced, and I hope that the Bill can reflect that.
It comes back to the personality of the regulator itself, which has not been formed yet; key appointments have not been made. If the Bill is structured in a particular way, and the personality of the regulator is such that it enforces on a proportionate and light-touch basis, I think that it can be made to work and will help football.
Robin Millar
Mr Parry?
Rick Parry: I would like to broaden the conversation and touch on the regulator’s systemic responsibilities, which we think are really important. The purpose of the EFL, which we defined four years ago, is to make clubs sustainable. As I said earlier, that means reducing the dependence on owner funding. To do that, you need redistribution to make them solvent and better regulation to make sure they are not profligate; the two must go hand in hand.
We think that the Bill goes a very long way towards addressing the regulatory aspects properly. What it does not do is address redistribution properly. It has ducked the key issues on that. The danger is that, if it is completely effective on regulation but ineffective on redistribution, it will just be failing to license clubs, and we will have many EFL clubs not being licensed and going out of business. That cannot possibly be the objective of the regulator.
Robin Millar
Thank you. Mr Ives?
Mark Ives: It is an interesting question. As you say, the differences between the three competitions are striking. If I understood you correctly, the question was about there being failings in all three. If we are talking about financial sustainability, I am at a loss to see where that failing has been from a National League perspective, for the reasons that I outlined before. That is one of the reasons why I support a lighter-touch position from the regulator, but we need to ensure that there is a safety net there for the sport, so that you to step in when that is needed. As I say, from a National League perspective, the record has been quite strong. When the fan-led review first kicked off, there was a misunderstanding as to what the financial regulations in the National League are, and it was not until, I think, the second meeting that we had with the fan-led review, when that was explained, that people understood and realised what steps are being taken by the National League. That is the background as to why we think there is a lighter touch.
Mr Betts
Q
Richard Masters: We do not think that parachutes should be part of the backstop power.
Mr Betts
So you lobbied to have that included.
Richard Masters: Well, when asked for our opinion, did we express it? Yes, we did, and I am very happy to repeat it here, Clive. The backstop power is a very novel power, and it should remain so. It should incentivise football-led solutions, which I believe it intends to do. It drives mediation and negotiation. At the very end, if the people at this table cannot come to an agreement, it is able to impose a solution in one specific area, which is solidarity—the funding of the rest of the pyramid, normally from the Premier League down. Any party has the ability to trigger that mechanism once every five years. All of that has been discussed with all of the people at this top table along the way, and it is right that it was, and right that everybody had their opportunity to express their views. Solidarity, parachute payments, is part of the football pyramid and has been for over 30 years. This is not just between the Premier League and the EFL, but intra-EFL and from the EFL into the national league as well, where there is a generous parachute system for clubs coming in and out of the national league and into league two of the EFL.
Solidarity is relatively new. It came around in 2007 when Lord Mawhinney, once of this parish, agreed a small deal with Richard Scudamore, the then chief executive to the Premier League. Over the past many years we have agreed a number of different arrangements. The current arrangement—which is still in existence; there is no cliff-edge—was agreed in 2019. At the moment, the amount of solidarity that comes out of the Premier League to the EFL is around about £130 million a year. This is the part that we think should be adjudicated on if there is to be a backstop power, not parachutes. Why not parachutes? Because they are a competitive balance tool. They obviously have an impact on sustainability as well, as all financial regulations do. Without parachute payments, the Premier League would not be competitive at the bottom end. You will hear from clubs this afternoon that will be able to talk about parachutes from their own perspectives. One is Brighton, which came up without a parachute.
If a club wants to be competitive within the Premier League, which is a brutal meritocracy and that is why people love it, then you have to be financially supported. That is the principal purpose of it. If you want the Premier League to be competitive and to be the economic powerhouse that it is, and to continue to redistribute its success, then we have to have parachute payments and I do not believe they should form part of this regulatory regime.
Mr Betts
Q
Rick Parry: Yes. First of all, we think that the way the clause is drafted is intellectually incoherent because it says that parachutes cannot be included in the definition of revenue—they are not revenue, they are distribution. To take Richard’s point that they should be used separately from solidarity, it is interesting that solidarity payments to championship clubs are literally pegged to parachute payments. They are defined as being 11% of a parachute payment, so they are intertwined.
In terms of the practical effect of what the clause says, if we look at the 2021 figures, five parachute clubs received £233 million between them and 19 championship clubs received £79 million in solidarity. So what we are saying is that we can apply the backstop and all its might to the £79 million, but we cannot touch the £233 million. That seems to be the ultimate definition of fiddling while Rome burns. Why you can view one without the other, I do not even begin to understand.
In terms of the effect of parachutes, just in case people are not across it, if we go back to 2010-11—which is not that long ago—they totalled £30 million. They represented 7% of the aggregate turnover of all championship clubs. By 2020-21, they had risen to £233 million and 39% of the aggregate turnover of the championship clubs. They have become the cuckoo in the championship nest. They are enormous. So if you exclude them from the backstop, you might as well not bother with a backstop, frankly.
Mr Betts
Q
Richard Masters: Sorry, Clive—
Mr Betts
The EFL have given us their understanding of the current distribution of funding within the Premier League and the EFL, particularly around media funding, and what sort of changes they would like to see. I do not think we have had a submission from the Premier League identifying what your understanding of the position is and what changes, if any, you would like to see.
Richard Masters: We have our current agreement and it was agreed in 2019.
Mr Clive Betts (Sheffield South East) (Lab)
Q
Richard Masters: It is a perfectly legitimate debate to be had—is the funding of football correct? That should be reviewed on a periodic basis. We have an agreement that stretches out way into the future and either party can terminate it after three years. The current agreement is about to become five years old, so once the state of the game report is done, the regulator will turn its mind to other issues. We are very happy to express our views on the distributions within football; we are not shy of doing that.
Dame Tracey Crouch
Q
Mark Ives: We are talking about the backstop?
Dame Tracey Crouch
Q
Richard Masters: I had not likened it to nuclear armageddon but it is an important issue. We have made attempts to come to a new deal but it has not worked yet. As I have said repeatedly, football solutions are the right way forward and the best solutions. I do not wish to be in a situation where the backstop power is being activated by any party, so I agree with you in that respect.
Rick Parry: We take a rather different view inasmuch as we do not see it as being armageddon or catastrophic. Football has manifestly failed and it will because the market forces are such that it is not an equal negotiation. We have very little negotiating power. We cannot threaten to leave and attach ourselves to the Bundesliga or La Liga, so we are basically stuck.
We think that if the regulator has clearly defined objectives, in terms of systemic sustainability, then as the fan-led review said, as the “One Year On” report said, as the White Paper said, and as the Government response said, it is the regulator that should have targeted powers of intervention. Intervention implies doing something positive. At the moment, the regulator is not actually allowed to do anything at all because it is reliant on the two leagues—the bodies that it is regulating—to step in. We believe the regulator should have those powers. The fan-led review is an enormously important and extremely helpful piece of work—an independent, objective, transparent study that has never been done before. The review will have a view on parachute payments and we are not, by the way, saying there should be no parachutes; we are discussing their level and the ability to fix them independently. We believe that, to make the Bill work, in the event that the fan-led review highlights problems, the regulator should be able to institute the process. We do not think it is armageddon. We do not think it is nuclear. We think it is logical.
Dame Tracey Crouch
Q
Rick Parry: No, we do not see it that way because so much hinges on the fan-led review—on the objective study. If the EFL were to trigger the backstop—and we hope we would not need to, or we never would—we would actually see that the EFL position would be something very similar to the fan-led review. It is the fan-led review that will inform the regulator as to whether it is able to meet its strategic objectives. It is not for the leagues to decide whether the regulator can meet its objectives; it is for the regulator to decide. If we were pushing forward a solution, I think the likelihood is it would be extremely close to what the fan-led review recommended. Why would it not be? It is not Russian roulette at all.
Richard Masters: Mark should definitely speak, but the only thing I would say is that you can observe the difference in incentives that now exists because of the regulatory power—the backstop power. It is the third person in this discussion. One of the issues that I would like to highlight to the Committee is that the backstop power creates different incentives because there is a third person who will adjudicate in the end. Since 2007, we have been able to come to agreements bilaterally, away from the gaze of the public eye, and do increasingly generous deals and share our success. We are happy to continue in that vein. I would like to point that out.
Mark Ives: There is an additional dimension for me, as far as the backstop is concerned. The backstop is really important to our clubs. We are at the base of the system, as I said earlier. We only get money from the Premier League. The solidarity payments we get from the Premier League are extremely helpful. However, there is a gap between our clubs and the EFL clubs. We could come to an agreement with the Premier League over our next round of solidarity payments. It is extremely helpful and, as it looks on the surface, it is very good. We could accept that. However, then there could be a deal between the Premier League and the EFL that has an impact of widening that gap, and that is not good for the game because the gap is already very wide.
I urge you to look at the difference in the solidarity payments across the game, including ours, and where that difference is. It would seem to be difficult, then, for us to be able to activate the backstop. We hope we never need to do it. However, it is an important aspect of the game to enable us to make sure that that gap does not get wider.
We know where we are; we know where we sit in the pyramid, and we are proud to sit there. However, we cannot afford for that gap to get wider. I would urge the wording of—
Rachel Hopkins (Luton South) (Lab)
Q
Richard Masters: It is critically important and we look forward to playing our part in it. The key issue we have is in relation to its regularity. It should come as quickly as it can, and be done properly and efficiently. However, after that, we believe it should not be at three-year intervals, which would lead to almost perpetual discussion about the state of football. There should be a longer period of time. We are suggesting that five years is the appropriate time for the regularity of those reports.
Football has had a lot of uncertainty—through covid, and through the regulatory interventions that we are now talking about. I believe that football does better when it has certainty. Our commercial deals are becoming longer, so we are doing four-year commercial agreements. I think the EFL’s are five years. Most of our international revenue is tied up over six-year agreements. If you look at other industries, Ofcom’s review is every five years. I think the telecoms industry review is every 10 years. Three years is incredibly short. It would be like painting the Forth bridge—once you have finished one report, you will have to start another. It is great for the economists and the consultants; it is bad for the competition organisers and the clubs.
The Chair
Q
Rick Parry: I echo what Richard said in terms of the report being incredibly important. It is important that it is comprehensive and able to address every issue facing the game, including parachute payments. The big point we would like to make is that we think the three-year interval for the first report to be completed is much too long. We think that should be a maximum of a year. We see no reason why it cannot be completed within a year. We actually think three years is fine, inasmuch as eight of the last Premier League TV deals have been on a three-year cycle; the champions league TV deal is on a three-year cycle; parachute payments operate on a three-year cycle. Football operates on a three-year cycle. However, the big report is the first one, and we think that the subsequent ones would be fine-tuning; they are not going to be a complete reinvention.
Mark Ives: I will be quick. I echo the importance of the report and it will address things that the regulator does not cover. It will address things that are important to our game and that the fan-led review spoke about, things that are outside the scope of the regulator—and I understand why they are outside its scope—such as three up, three down, protection of players, and all of that sort of stuff. It is really important that the emphasis on those things is not lost, and we have the ability to deal with that. The report is there to highlight the wider issues within the game.
The Chair
We will now hear oral evidence from Kevin Miles, Chief Executive of the Football Supporters’ Association. Could the witness please introduce themselves for the record.
Kevin Miles: I am indeed Kevin Miles, Chief Executive of the Football Supporters’ Association. I am very pleased to have been involved in the fam-led review process up to this point.
Stephanie Peacock (Barnsley East) (Lab)
Q
Kevin Miles: The succinct answer is, generally, yes. We are very supportive of the Bill and the reforms it sets out to achieve. We sadly drew the conclusion a few years ago that football has proved incapable of regulating itself, and it is interesting to hear Rick Parry drawing exactly the same conclusion.
We very much support the establishment of the independent regulator and the three primary objectives of sustainability, resilience, and heritage. There is a lot to like in the proposals—the enhanced owners and directors test; the club licensing system, which we think is proportional and puts advocacy first, which is a positive approach; the oversight of financial distribution; and the backstop powers which, indeed, I think are very important. Clearly, as the national fans’ organisation, we are also particularly pleased to see the provisions requiring clubs to meet the fan engagement threshold. We do have some concerns about the strengths of those requirements, and we think perhaps the Bill is not perfect, but that is part of the process, and is why we are here.
I would like to say that we have been involved in discussions with DCMS officials and ministers in preparation for this, and I would like to take the opportunity to pay tribute to their work, particularly the officials. Ministers are wonderful as well, but the team at DCMS have been excellent in their rigorous examination of all the points that we put forward. Their response has been—where necessary—challenging and combative, but it has been thorough and very well-applied, so thanks to them.
Stephanie Peacock
Q
Kevin Miles: I do think it is important that supporters trusts, their role and their position are recognised in this process. We are not expecting exclusivity for supporters trusts as the vehicle for fan engagement, but we do think that those trusts—based as they are on one-member, one-vote, and themselves regulated through the Financial Conduct Authority—are effectively reflective of fan engagement when it has not always been welcomed by clubs but been deemed necessary by fans. This is self-organisation by fans on a democratic and constructive basis.
Those organisations have earned their spurs; that was not a football team reference, by the way. They have done the preparatory work, and made large contributions to the process of the fan-led review as well, and it is important that the existing supporters trusts do have that recognised, and are taken seriously. It is important that the fan engagement process, as it is developed under the oversight of the regulator, is not used by clubs as a means of sidelining supporters trusts and the work that they have done. They need to be included and involved in that process.
Stephanie Peacock
Q
Kevin Miles: We have had a long discussion with officials about exactly what the scope of engagement with fans should be. We think the fan engagement regime needs to be robust, it needs to be appropriate to the circumstances of all the regulated clubs and it needs to be based on democratic principles, with the composition of the fan representatives being determined independently of the clubs themselves. We have had some conversations about what the particular terms of the content of fan engagement should be and we have been talking to officials and Ministers about that. The list includes strategic direction and objectives of the club, the club’s business priorities, operational matchday issues, the club’s heritage and the club’s plans relating to additional fan engagement. That is as it currently stands.
When we have asked officials about specific examples of that, they have come back, for instance, on ticket pricing, saying “We expect those to be included in business priorities and operational and matchday issues.” However, there is currently a set-up in the Premier League of fan advisory boards that are required, under the Premier League’s rules, to engage with clubs. It seems to officials in the DCMS, as a matter of common sense, that ticket pricing would be one of the things that fans would discuss with their clubs. It seems to me a matter of common sense that ticket pricing is one of the things that fans would discuss with their clubs.
Yet, in the Premier League system, our members tell us that at Newcastle United, the fan advisory board was given three days’ notice of the ticket price increases without any consultation. At Fulham, there is no fan advisory board, but the supporters’ clubs there got four hours’ notice with an embargo before the announcement of ticket price increases. Nottingham Forest announced its prices without any discussion with its fan advisory board or the trust. Similar representations have been made to us about similar experiences at Bournemouth, Tottenham, Arsenal and Liverpool. That is happening already, and that is why we think that perhaps it would be useful to have in the Bill the additional words “including ticket prices”, just to make it explicitly clear.
The general point is that there is a lot in the Bill that depends on the view the regulator takes about what is included and the guidance that is given to the regulator. We would appreciate really strong statements from Ministers in the course of this process. That might help us to avoid the necessity of amending the Bill, but a strong direction from Ministers about what should be in scope and what is required of fan engagement to fill some of those gaps would be really useful.
Stuart Andrew
Q
I remember when I was first appointed, the first meeting I had was with you and with other fans. It was clear from that meeting that some clubs do engagement extremely well and, as you have just alluded to, there are others that do it differently. Given that fan engagement is part of the licensing regime, do you think that that is going to be sufficient to bring about a significant impact on the quality of fan engagement that we are currently seeing across the board? That is, are we levelling up, to coin a phrase?
Kevin Miles: I very much hope so, and I am optimistic in that regard. It is the first time that we will have had a requirement from clubs to engage with the fans and, to use the Prime Minister’s words, to put the fans’ voice “front and centre” of all those discussions. I do think, though, that there are a lot of details still to be worked out about how that actually looks.
There are some clubs, as you say, that are very good, but one of the illustrations of the limitations of self-regulation has been that when the leagues have been trying to put together their own requirements on fan engagement, because it has to be voted on by their members and agreed by their rulebook, the lowest common denominator tends to be put into the rulebook. We know that there are clubs that will resist the idea. There are owners who think they have nothing to benefit from in listening to the fanbase—their customer base, if you like. We know from experience that there are some who will do everything that they can to get around this. We will need to have an underpinning of that in the regulatory system, and some monitoring of it through the club licensing system. We recognise that this is challenging, because it cannot simply be a look at what structures are put in place. The regulator will have to do more than just monitor that there is a fan advisory board notionally in place. There will have to be some evaluation and examination of the content and spirit of the fan engagement. We are not expecting a fan veto on club decisions, but we are expecting that the fan voice is not just heard but listened to and given due consideration.
Evaluating that is a more complex process. Somebody referred earlier—I think in the first witness panel—to the possibility of Ofsted-type investigations. Maybe in some cases it will require the regulator to be able to consult the fan groups to see how they think it has been done, and to make its own evaluation about whether the spirit of what is intended here is actually being carried forward. That will need to be underpinned by requirements in the licensing condition.
Ian Byrne
Q
Kevin Miles: Absolutely. If you look at that clause, you see that it is about the principles of the regulator. It currently reads that the regulator should,
“so far as reasonably practicable, co-operate, and proactively and constructively engage, with
(i) clubs,
(ii) owners, senior managers and other officers of clubs, and
(iii) competition organisers”.
We think that it is in the spirit of the rest of the Bill if a further provision is included that says “supporters and supporter organisations”. If the Bill really is about giving fans a voice at the heart of the game, the regulator should have that as part of those regulatory principles.
I cannot help thinking that this is an oversight rather than a conspiracy. Actually, the spirit of all the engagement we have had with the Department and with Ministers has been precisely that the supporters’ input into the regulation of the game would be an important component. But I think there’s a requirement for it to go on the face of the Bill in that clause.
Ian Byrne
Q
Kevin Miles: Again, what I do not want to do is put a whole shopping list of items into the Bill, because I think that is problematic. We would support some clear direction in the guidance notes about what should be required from clubs. You have identified another important issue. It is a complicated issue, and it is not likely to be solved on a club-by-club basis. However, the idea that we could face a situation where a club declines to discuss with its fan advisory board as part of its fan engagement process an issue as important and impactful as supporters being able to turn up to the games and support their team—which is so important to so many people—seems to me to be absurd. It is common sense that those issues should be part of the discussion, and it is sad to think that there are clubs that do not approach it with common sense and want to discuss it. I think it should be required.
Damian Collins
Q
Kevin Miles: Yes. One of the ideas that we are quite keen on is that, as part of the corporate governance code, there could be a requirement of clubs to have independent directors. In many other aspects of corporate governance codes, there is a particular responsibility on independent directors. Independent non-executive directors do have consideration for the views of other stakeholders in the work of a company. The idea that an INED in a football club could be required by a governance code to have particular responsibility for making sure that fans’ views are taken into consideration would be a very useful addition.
Damian Collins
Q
Kevin Miles: Yes, I think that that is one of the few gaps in the Bill. On the heritage items around playing name, shirt colours, club badge and that sort of thing, there are clear FA rules, and it was clear that the fan voice on those issues will be very important. The FA’s heritage rules do not cover grounds. They have found that difficult to tackle from the point of view of their rules. But the idea that the fan view on some of these issues should not be taken into consideration is an omission. We appreciate that there are other issues involved in staging a relocation. There are big economic issues et cetera. We are not necessarily saying that fans should have a veto over a business decision, but certainly they should have a level of consultation and input into that process.
As an aside, I think we should clearly define the UK-based supporters. It is entirely possible that with some of the clubs these days, given their international fanbase, you could find a huge majority of the football club’s supporter base in Shanghai quite ambivalent about whether the stadium moves 40 miles down the road. There would be a very different feeling among the people who have an extra 40 miles to travel to their home game. So I think it should be the UK supporter base that is consulted in those cases. That consultation should be enshrined.
The Chair
We move from the fans’ views to the person who started all this with the fan-led review—Tracey.
Dame Tracey Crouch
Q
Kevin Miles: Clearly, I have been sat listening with a great deal of interest to what has gone before. The organisation has a view on the issue of parachute payments. We think they need to be in scope for consideration. We are also convinced of the need, in extremis if required, for the regulator to be able to trigger their own backstop powers. That is important. I am sure this will come up in discussion later, but I understand that you, Tracey, have tabled an amendment to adjust the wording about taking cognisance of Government foreign policy, and changing that from something that the regulator “must” do to something that the regulator “may” do. That is important because it would underline the independence of the regulator, which I think will be an important issue.
I could talk all day—I know you will not allow me to do so. The Bill is not perfect. There are areas that we would love to see strengthened, but if this Bill goes through entirely unamended, it is a huge step forward from the point of view of football. This is an important process for us. On a lot of what we have been seeking to get football to do itself, which it has failed to do, this Bill provides a solution. It fills a space and provides a regulatory function that has been lacking. Clearly, there are elements that we will continue to engage with Ministers and officials on, particularly the fan engagement stuff.
A lot of what we are talking about here is clarifying and nailing down. I am going to speak bluntly to people who understand this. At the moment, in a parliamentary process, we are aware that we have a little bit of leverage here. I would like to pin down as much of this as we can in the process of drawing this together, rather than just hoping for the best later. I think a lot of Members will share our concerns about the fan engagement. We want to make it meaningful; it must have a lasting impact. We do not want to be coming back to this and looking at the limitations—let’s get it right now. It is in that spirit that we are raising all these issues around fan engagement.
Robin Millar
Q
Kevin Miles: It takes us a long way in the right direction. I think that if fans have a meaningful voice in every club, and the clubs are the ones who cast the votes in the leagues and their decision-making processes, the fan view should start to filter its way through. Clearly, we are never going to be completely satisfied.
I would also like to say that I am sitting here as the fans’ voice. I speak not just as an individual, but on the basis of the input that we have had from fans’ groups up and down the country. I need to thank my team from the FSA for the work they have done in getting this far. They work in a vary variegated landscape. There are some clubs that are really good at engaging with their fanbase and the local communities, and they deserve the credit for that. There are others where, sadly, it will need some sort of intervention to make sure that they are dragged up to at least the minimum standard. I hope we are in a process now where we can achieve that.
Brendan Clarke-Smith
Q
Kevin Miles: To be honest, I think anyone running a club who does not want to engage with their fanbase is making a misjudgment. Even from a business point of view, I cannot imagine any other sector of the economy where a business has a customer base who are this incredibly brand-loyal. They are not going to wander off somewhere else. They want to see the business thrive and succeed, and will volunteer expertise and experience of opinion in how that business could be improved and taken forward. It is a customer base that is aware of the importance of clubs to communities and local areas. In any other sector of the economy, people would bite your hand off for the opportunity to have that sort of ingrained and free-of-charge input from a customer base. I find it partly incredible the idea that football clubs would have any different approach to it.
It is absolutely true that football fans can be fickle, extremely vocal, and very passionate about some of these issues. We must find the mechanisms for constructive engagement to harness that, but I would honestly say to anybody who thinks this will be a problem that they are misjudging their own fanbase. One of the things that came across in the fan-led review was the quality of the input and understanding from supporters’ organisations. They do not have a particular financial vested interest, but they are hugely invested not only in their own clubs, but in the pyramid of the game as a whole. That is a huge asset to the game.
The Chair
That brings us to the end of the time allotted for the Committee to ask questions in this morning’s sitting. On behalf of the Committee, I would like to thank all our witnesses for their evidence. The Committee will meet again at 2 pm this afternoon in the Boothroyd Room to continue taking oral evidence. I ask Members to turn up five to 10 minutes early, just to sort out the lines of questioning.
Ordered, That further consideration be now adjourned. —(Mike Wood.)
Football Governance Bill (Second sitting)
Tuesday 14th May 2024
(3 days, 8 hours ago)
Public Bill CommitteesRead Full debate Football Governance Bill 2023-24 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 14 May 2024 - (14 May 2024)
The Chair
We will now hear from Darryl Eales, chairman of Solihull Moors football club, and Steve Thompson MBE, managing director of Dagenham & Redbridge football club. We have until 2.30 pm for this panel. Would the witnesses please introduce themselves for the record?
Steve Thompson: Good afternoon. My name is Steve Thompson and I am the managing director of Dagenham & Redbridge football club. I have been at Dagenham & Redbridge—well, it was Dagenham football club when I was first there, 41 years ago. I have seen Dagenham go from the Isthmian League to League One, and back down again to the Conference. I was involved when we had the merger with Redbridge Forest in 1992. I hope I will be able to answer some of your questions.
Darryl Eales: Good afternoon. I am Darryl Eales, chairman and majority owner of Solihull Moors football club. Prior to that, I owned Oxford United from 2014 to 2018 in the English Football League.
The Chair
Before I ask Members to put any questions, I declare an interest: I am the patron of my local football club, Southall football club.
Stephanie Peacock (Barnsley East) (Lab)
Q
Steve Thompson: In my opinion, I am worried about clubs at our level being over-regulated. Most of our clubs work on one or two full-time staff. Some of them are run by volunteers. We already do an awful lot of financial regulation reporting. There is reporting to the National League and a licensing certificate that we get from the Football Association. Many of us took advantage of the Sport England winter sports loans. The quarter reporting on that—I appreciate that it is public money—is so onerous, and I am really worried that the extra reporting that will be required by National League clubs will be more than a lot of them can manage without taking on extra staff.
There is also the cost of the regulator. We are not 100% certain how much a National League club will have to pay for their contribution. Those are some of the concerns with the set-up of the regulator. The support we need is a better understanding of how that will work.
Darryl Eales: I agree with Steve. I think this is about proportionality and reflecting the resources available to clubs at our level. That is simply because we do not have the financial resources or the distributions from central funding that, obviously, English Football League clubs have to support the growth of an administrative function to support the information requirements of the regulator.
Stephanie Peacock
Q
Steve Thompson: It is imperative that the amount in fees charged to National League clubs is really proportionate, for example, between us and English Football League Two clubs. They receive 14 times the amount that a National League club receives in central distributions and solidarity money. Leaving aside the central distribution—because it could be argued that that is what the league itself raises—with the Premier League solidarity money, last season an EFL club received £519,000 each whereas a National League club received £69,000. Next year, the Premier League solidarity money for an EFL Two club will go up to £550,000; for a National League club, it will stay at £69,000—that is an eight times difference.
When Dame Tracey set up the fan-led review, I was lucky enough to be on one of the calls to present on behalf of National League clubs. One of the things that clubs at our level want to get out of this is a better financial package. The gap is going from seven and a half to eight times; we should be reducing that, not increasing it.
The other thing that the Bill does not address completely is three up and three down, and artificial pitches. As far as I am concerned, the majority of my supporters and people around my club believe that the regulator is going to deliver that. I understand why it is not in the Bill, because there are bigger things, but there is definitely a perception from supporters that three up and three down will be on the table, and artificial pitches will be allowed into the Football League. It is not there.
In the last three years, we have had three clubs promoted that had artificial pitches, and another one with Bromley this summer. Those pitches have mainly been funded by Football Foundation grants. They have been put in to support their local communities, and they have got to be ripped up. What a complete waste of money. It deprives their communities of those pitches.
With three up and three down, Darryl will speak for himself, but unfortunately last week Solihull Moors lost out in the play-off final. We have one club going up automatically and then another club—it is the only league in the pyramid where that happens. Last season—or the season before the one just finished—Wrexham won, and Notts County went up via the play-offs. Had they not won the play-offs—they nearly did not get to the final—they would have not gone up, and they had over 100 points. That would never happen anywhere else in the pyramid, but it happens in the National League.
The problem we have is that the last time a second promotion place was given was 2001. Some of the Committee might be old enough to remember that that was related to the ITV Digital collapse, when the FA stepped in and paid an extortionate amount of money to keep League One and Two clubs running. In return, we were given a secondary promotion place. My opinion is that we will only get a third promotion place if someone buys it. The only people in football these days that can buy it are the Premier League. That should be a condition of any new solidarity funding between the Premier League and the EFL. Sorry—I am talking too much.
Darryl Eales: To pick up on what Steve said, having read the Bill, for me there is not enough focus on the regulator contributing to ensure that there is a level playing field across the pyramid—I do not even think the pyramid stops at the National League—and there is not enough focus on the crucial value of grassroots football to the whole pyramid and to communities. One of my friends runs a step nine team, and it costs him £50,000 a year to run that club. We get £60,000 a year of solidarity money in the National League.
For me, the regulator has to understand the philosophy of English football and the value of grassroots football. That seems to be missing. Obviously there is regulation, but it needs to understand that most owners at our level are stakeholders for fans and just want to move the club forward sustainably to the next owner. I would question the ownership motives of a lot of owners as you go up the pyramid, because we strive every day to look after the best interests of our clubs and generally we are not paid.
Stephanie Peacock
Q
Steve Thompson: We have a fan representative on our board; the season ticket members elect a representative on our board, so I hope that we try to be in tune. We have at least two fans’ forums, where anybody is invited along and they can ask questions of me and of the manager. But at a small club, you are walking around the ground and the bars before and after the game and talking to people, and if there is a problem, they soon come up and tell you.
Darryl Eales: Similarly at my end, we have a monthly meeting with the SMSA—Solihull Moors Supporters Association—and we work very closely with them. From a personal perspective—this is just me—I go for a beer before every game, both home and away, with the fans in the bar, exactly as Steve says, because people will pick up on their concerns. From a community perspective, we run about 65 youth and junior teams; every weekend, they are running around in Solihull Moors shirts.
Shaun Bailey (West Bromwich West) (Con)
Q
Darryl Eales: The interesting thing for me is that the Bill does nail a few points that are very, very important from my perspective. The stadium and the club should be umbilically linked. There should be, for every club, something that prevents owners from separating out the ownership. In our division this year, Gateshead did not make the play-offs, because they did not have tenure of their ground. To me, that seems to be fundamental. Where I echo Steve is that I think there are an awful lot of information requirements in the Bill. When I talk about proportionality, the reality of life at our level is that it will be us doing those things, and without being too rude, I have better things to do with my life than fill in forms.
Damian Collins (Folkestone and Hythe) (Con)
Q
Steve Thompson: Sutton United are a prime example from a couple of years ago. They went up and had to dig up their pitch. It was very much part of their community and their academy structure. Bromley are in the slightly fortunate position in that they have some land behind the stadium, where they are going to transfer the artificial pitch to, but it will still cost them several hundred thousand pounds. The annoying thing is that Sutton played Arsenal in the FA cup a couple of years back, and Arsenal, who are in the Premier League, happily and readily played on Sutton’s artificial pitch when they were at the National League side—no complaints. Every year, EFL clubs in the FA cup will play on artificial pitches, so that does not seem logical.
There are some arguments about how good the football is on such pitches and things like that, but the majority of young players at the top level now are coming through the EPPP—elite player performance plan—academies, and they all play on artificial pitches. It does not make sense. We have had this happen to four clubs in the past few years, and it is stopping other clubs that have the ambition to be promoted considering putting down an artificial pitch. That might help their community and their academies, but they think, “We can’t do that, because we can’t afford to put it in and then dig it up again.” Supporters are almost turning around and asking, “What’s your ambition?” The ambition of most clubs is to win their league, whatever league they are in, and to go forward.
That brings up another thing about academies at our level, and making certain that clubs at our level get the proper compensation for players that they have developed. At the moment, there is not that—National League clubs are not allowed to register a 16-year-old. Such things are not addressed in the Bill. Whether they should be, I do not know.
Damian Collins
Q
Steve Thompson: Since 2001, when the second promotion place was introduced, some clubs have gone up and down, but before the end of this season just gone, 40 different clubs will have been promoted, and 29 of them are still in the Football League and one is in the Premier League—Luton Town. For teams that are struggling in the Football League, when they get relegated, the National League is a fantastic league for them to reorganise and to come back. There has been a number of them: Stockport and Wrexham, to name two. The football pyramid needs the National League. We have developed lots of players on loan from the Premier League, the Championship and other Football League clubs, and we are there to help support clubs.
Darryl Eales: To pick up on what Steve said, for me, the distribution of economics is completely inequitable between the two leagues above us and our league—so much so that other than the promotion from the Championship to the Premier League, the next most valuable promotion is from the National League to League Two, which I think drives Steve’s point, but we are entitled to only two promotion places. Fans, when I talk to them—from every club—say, “We don’t understand this.”
Damian Collins
Q
Steve Thompson: We were the first league to introduce reporting to His Majesty’s Revenue and Customs. About 20 or 25 years ago, a lot of football clubs were basically using HMRC as a bank, and HMRC was reluctant to take football clubs to court. The National League—the Football League has followed us—introduced the rule that HMRC reports to the league if a club is behind with its HMRC or VAT payments, and the league will immediately put them on a registration embargo, which concentrates people’s minds. Since then, we have not had a problem, because when a manager comes and says, “I want to sign a new player,” and you say, “You can’t, because you haven’t paid HMRC,” they look a bit silly. We have quarterly reporting to our league and an annual licence with the FA. That is why I worry that this will just be another layer of bureaucracy.
Ian Byrne (Liverpool, West Derby) (Lab)
Q
Darryl Eales: To me, it just does not start off in the right place from a contextual perspective. It tends to be completely focused on money, rather than the English game in its broadest context. You have only to go around your own local community to see the number of kids—girls and boys—now playing on local parks that have been funded by parents or local businesses. There does not seem to be anything in the Bill that reflects the community aspect.
Ian Byrne
It is, yes.
Darryl Eales: It is quite complicated. If you asked me about sanctions—I am probably going off-piste here—I would say that financial sanctions and points deductions do not work. The only sanction that will stop clubs flouting rules is relegation—three or four leagues. Even this season—and I know this is nothing to do with this Committee—the points deductions in the Premier League meant absolutely nothing. The clubs flouted the rules, but there was not a big enough points deduction to affect their league status. I am a Birmingham City fan by background, and we had a 12-point deduction a few years ago. I thought it was a joke, because we did not get any penalty from it other than the 12-point deduction.
Ian Byrne
Q
Steve Thompson: We work with supporters and have different supporters’ groups. We also work in our community; all our clubs have a community trust, and all the Football League and Premier League clubs will have a community trust. Everybody does lots of work in the community. As parliamentarians, many of you will know that at the 2010 election there was a big British National party problem in Barking and Dagenham, and as a football club Dagenham & Redbridge stood up and made a big thing about that. A couple of months before the election, there was a big game, and McDonald’s was selling burgers for 99p, so I said, “We’ll let everybody in for 99p, with kids in for 25p.” We had the managers of small local football teams buying all the players a ticket and it costing less than a fiver.
That put out a message, and it was an important message. At the time, I was reported as saying that we are in a white working class area, as it was in 2010, that the majority of our supporters are white males, and that if there are 10 BNP councillors out of 50 in Barking and Dagenham, some of the supporters must have voted for them. We had a really multiracial team at the time: we had a Barbadian international, a South African player and a Muslim player. We had several. I turned around and said, “You’ve got to show them that you can’t be cheering on a multicultural team on a Saturday and then expect them to all go home on a Monday.” That took traction. We stood up. Darren Rodwell, who might be part of this establishment within the year, will turn around and say that “he”—unless I am in the room, in which case he will say “we”—kicked the BNP out of Barking and Dagenham. That is the power of your local football club. We can stand up and do things like that, and it is important that we can. The supporters will go with you.
Stuart Andrew (Pudsey) (Con)
Q
If the Bill goes through, there will be a statutory regulator. What discussions have clubs had with the National League about whether it will row back and allow the statutory regulator to do the work so that there is no duplication?
Secondly, the independent experts we had in this morning said that clubs are looking in the rear-view mirror at the moment and that the advocacy-first approach means that there will be a real-time approach to analysis of clubs, which would be helpful for clubs. Do you agree?
Steve Thompson: I was quite hoping that the regulator would work with the National League, the EFL and the Premier League, allow them to continue with their reporting, and step in only if there was a problem with particular clubs. It would be a much more light touch. We have discussed that before. I understand that that will be down to the regulator, but I was hoping it would be more like that.
Darryl Eales: I think the forward-looking approach is to be welcomed. I am an accountant by background, and I am very happy to share my ideas on how that approach can put more pressure on owners to be financially responsible. The only reason football clubs get into trouble is their playing budget, so there needs to be some linkage between your playing budget and the financial resources of the owner.
Robin Millar (Aberconwy) (Con)
Q
I am interested in how clubs fail, too. This touches on what the Minister was just saying: where should the balance of the regulator fall? Should it simply issue licenses, have a fitness test for owners, and so on—take more of a “control the bad actors” approach—or should it be more interventionist and say, “We think there’s a problem here; we think there’s a mismanagement. They’re going to make a mistake, and it’s going to cause problems”? Where does the balance properly fall?
Darryl Eales: That is quite a toughie.
Robin Millar
Q
The Chair
We do not have much time left. Please be brief in your answer.
Darryl Eales: For me, a critical part of the fit and proper person is: what is the motive of a person who is taking over a club? As you go up the pyramid, it is not clear to me what the motives are, beyond financial. My concern, looking at other sports, is that it is missing the fundamental trick that clubs in the UK are stewarded for the benefit of the fans. They are not franchises.
Steve Thompson: I agree with that. Even at our level, there is not a big queue of people trying to buy a football team. It is about being involved with your community, and that is what is important.
The Chair
Order. I am afraid that brings us to the end of the time for this Committee to ask questions to this panel. I thank the witnesses on behalf of the Committee. Thank you very much.
Steve Thompson: Thank you for the opportunity.
The Chair
Q
Ian Mather: Hello. I am Ian Mather, and I am the director of Cambridge United. I was on the board in 2018, and prior to that I was a solicitor in private practice for 35 years. In that time, I spent a period doing insolvency work, which was good training for looking at football. I became chief exec in 2019 on an interim basis while we did the change of ownership, and we moved from 705 owners to one. That was meant to last for a season but then covid hit. I stayed for another season, and then we got promoted, so I stayed for another one. I have a good insight into how the world of football works and the economics of football.
Sharon Brittan: Good afternoon, everyone. I am Sharon Brittan, the chairwoman of Bolton Wanderers football club. I came into football five years ago, having only been in the game from the perspective of being a fan of Burnley football club all my life. I had not worked in football before. Prior to that, I worked in industry, which I still do alongside football.
Stephanie Peacock
Q
Ian Mather: I can give you a real-time answer to that. We are currently at the point in the season where contracts come to an end and we renegotiate new contracts with players. Without giving you the names of individuals, the pressure is on for a 30% pay increase for players who have been under contract for two years. That is a sense of entitlement. Where is that coming from? It comes from the level of money in the football league above us, which has a wash-down effect.
I will specifically address the point of parachute payments: if you pump £100 million into the top of the pipe, that is bound to start appearing at the bottom. Therefore, the pressure on us, as a League One club, is ratcheting up each season. We were in League Two in 2019-20, and every year since we got promoted, the owners are being asked to pay more money. We have a brilliant lead owner, Paul Barry, who is absolutely Cambridge United through and through. He went to Seattle and made money through a business, but he loves Cambridge and will be there any time he can be. His mum and his brothers are season ticket holders, and he supports the foundation in Cambridge.
As Cambridge United, we are in one of the poorest parts of Cambridge. If you follow the inequality of the UK, the Gini coefficient says that Cambridge is the most unequal city in the country. We are in the poor bit, and our owner really wants to do what he can to help that community, and we do loads. However, the effect of consistently having to put more money into the hopper to have any hope of staying in League One—and then staying in League Two—is just more and more pressure. The risk is that it affects the owner model, which is broken. If our wonderful owner were to move on, which is unlikely—it is more likely that his heart gives out under the pressure—who will replace him? In 2019, 2018, we were looking at alternative buyers for the football club, because Paul was not sure at that stage if he could commit the whole lot; I would describe them largely as tyre kickers and property speculators, and we had had enough of those.
The club went into administration in 2005 because it was badly run, but a lot of people out there are interested in owning football clubs for the wrong reasons. We have an owner who really wants to own it for the right reasons, but increasingly revenue does not equal cost, and that gets bigger and bigger and bigger each year. On your point, if that carries on, eventually it is our owner or some other good owners who will say, “I cannot do it any more.” We then populate our football world with owners who are not motivated in that way.
Sharon Brittan: Can I give you a bit of preamble before I answer your question, if that is all right? I came into football five years ago for two reasons: one, because I love the game, and two, because I wanted a platform to do good. Having worked in industry, I wanted to come into football and run a football club the way that I work in business, which is by having the right people in the right way doing an honest, transparent job and coming together as a team and about the impact that that would have on the community.
I cannot explain the pitiful situation that I walked into at Bolton Wanderers in 2019. The previous owner had left the club—I cannot even say on its knees, because it was beyond that. There were staff and people in the community who had not been paid and were eating from food banks. People had not paid their mortgages or their rent. Their mental health and wellbeing, which I do a lot of work in, were beyond catastrophic. I have seen at first hand the impact of having the wrong owners at football clubs and the effect that that has on the community. I have worked with Rick Parry over the last five years, and I cannot stress enough that the owners’ fit and proper persons test must be stringent.
Football in the UK changes people’s lives. We have the ability, as owners of these football clubs, to make change, give people hope and help them. More so than ever now, even since I came into the football club, people have very difficult lives, and it is about not just money and what we must pay in League One as the salaries, but the impact that the whole football pyramid has. That is why the financial distribution must be fair to give us as owners the opportunity to continue the work that we are doing. I still go into Bolton on a Saturday afternoon and have grown men crying to me, “You saved our football club. God, my family and you are up there with what you have done.” It is not just for the 300,000 people in Bolton: there is a wider impact than that. As good owners, a good owner will work with another good owner to ensure that that extends out further.
I am sorry that I am outspoken, but I work in an honest, transparent way with a good, clean heart, and people need to do the right things. This is a pyramid. It is not just the Premier League: it is the Premier League, the EFL and the National League. It is a travesty that it has got to the stage where all you very important, hard-working people must be involved and spend your time dealing with this when the football authorities have been unable to resolve it themselves. I am sorry to go on, but I have been at the heart of it for five years, and I am passionate about where this is going. The pressure has got higher and higher and higher in terms of what we must spend to remain sustainable.
Bolton is a big club, but I love sporting jeopardy; I think it is brilliant. I think the pyramid is absolutely brilliant. The promotion and relegation all add to the excitement, but the financial distribution will make a difference to every single club, regardless of its size. We have to seriously consider this if we get promoted on Saturday. I am a custodian of the football club—that is clear. This football club is owned by the fans, and to keep fans happy is a full-time job. I have to trust the fans—I work with them, I am there day to day, on the ground, with the fans on a Saturday afternoon. I also think that British owners understand English football—I was brought up in English football from zero to now—but we are losing that as well. That is another conversation, but we are losing that as well. But yes, it does cost more and more.
Stephanie Peacock
Q
Sharon Brittan: All I would like the Bill to do is to bring in—it is just about doing the right thing. It is not even complex. That is what baffles me; it is actually relatively simple to do the right thing. Let me give a brief example: I have five original investors in Bolton Wanderers, who have bought into this journey and have done incredible things, supporting me as the chairman all the way. If we get promoted this Saturday, if we get into the Championship, everyone—our fans—will say, “It’s incredible, marvellous, wonderful—just fabulous!” and we will move into a world where it is not a competition any more. How can we compete with the clubs that have come down from the Premier League and have the Championship payments?
I am hugely respectful of money. I would have to go back to our investors to say, “We need £20 million a season to try to be competitive”—but we would not really be competitive. If you look back over the past six years, the chances are that you will see that the three that have come down, because they have the parachute payments, go straight back up. I want to go higher up the pyramid; the higher up the pyramid I go, the more good I can do for this country, the more impact I can have and the more I can help people who are less fortunate and who need help.
For me, the question is: do I get to the Championship? I have to be responsible to my investors. I have to be responsible to the fans who, if we are not competitive, will not be happy. When I moved to Bolton, the fanbase was finished, it was over, and now we get 25,000 coming to the home games, so you can see the impact of running a club properly and where that gets you to. But my dilemma is, do we continue in the Championship when we know that it will cost us £20 million a year? That £20 million a year could be put to doing other, really good things. I have to be a responsible human being and decide, “Do we want to remain there? Do we want to take that risk?” but it is impossible to take that next step.
The Chair
With respect, we have many questions, so may we have brief answers?
Ian Mather: I have a very short response: we need better financial distribution, and rules that bite to stop money being wasted through the game, so real-time regulation.
Chris Green (Bolton West) (Con)
Q
Sharon Brittan: How delightful to have you here to endorse what I am saying!
Chris Green
I have some sense of this already, but does the Bill go far enough to empower the regulator in the distribution of funds?
Sharon Brittan: As things stand, the EFL would like to have some areas of the Bill looked at. I will not go into the detail, but I have a request. To me, Rick Parry, with what he has done over the past five years, is a man who has led an organisation in the right way. I am sorry, but I do not think that the Premier League have done the same. I would say that to them—anything I say, I will say to the person’s face; I do not talk behind people’s back and I do not gossip. Rick Parry has done a superb job. I have read through the Bill and we have talked through the areas where he thinks that the Bill needs to be amended. It is important that those areas are understood and agreed, and the amendments made. At the moment, the Premier League are not working with us, so if, after going to all this effort to get the Bill, we do not get the Bill quite right, it will cause further problems. I would like to see a Bill go through that is absolutely effective, so we can all move forward in a really excited way with our football pyramid. Football is global, and there is so much good we can do for this country, for the world.
Ian Mather: This Bill is really good in many ways. A lot of work has gone into it, and it is a thoughtful Bill, but there are flaws. One of the flaws, to answer your point, is the inability of the regulator to act if he or she sees that something is happening that makes football not sustainable. We are going to have the state of the game review, which definitely needs to be done quickly. Let us say that the state of the game review says that parachute payments, to pick an obvious one, are bad for the game. At the moment, it requires the EFL or the Premier League to trigger the backstop powers. You might say that the EFL would definitely do that, but actually, with the voting structure in the EFL, it might not. There are powers within the Premier League to coerce and influence clubs in the EFL so that that backstop might not be triggered. Why create a power for a regulator but not give the regulator the power to intervene if he or she definitely sees something is wrong? I think that is a fundamental flaw in the Bill.
Chris Green
Q
Sharon Brittan: It absolutely brings trauma, for the reasons that I gave before. I have to behave as a responsible human being, and it is whether I can then go to my investors and say, “Would you like to commit £20 million a year?” The reality is that you will fail. I want to be progressive every season, because like I said, when we are progressive, that gives me a bigger platform to do good. In the Championship, however, because of the parachute payments, it makes it almost impossible.
Chris Green
Q
Sharon Brittan: I completely agree. May I just say that in football, generally it can be a non-trusted environment? I have a football manager who has stayed with me four years and who has turned down three jobs in the Championship that would have given him three times his salary. I have a CEO who has stayed with me three and a half years. I have built a team of trusted people, because we are working in a culture where everybody has bought into the journey to where this football club is going. You can see that after five years, we are a differentiator in what we are doing in Bolton, and if more football clubs worked in that way, I am absolutely positive that it would enhance the economy and life for the 65 million people who live in this country, and beyond. I am on a mission.
Mr Clive Betts (Sheffield South East) (Lab)
Q
Sharon Brittan: It is a very good question. Football has—or has had—a habit of bringing semi-maniac types of people to the table. I think it is driven by ego. In those situations, it comes down to the fit and proper persons test. The previous owner at Bolton spent £180 million. He was a very good man, but a huge amount of that was spent trying to get out of the Championship. If you have someone who is hellbent and comes in just wanting to spend, I do not know if you can actually stop that, per se.
Ian Mather: Can I come in on that point? I think real-time monitoring would have been really helpful with a lot of the problems we have seen with football; Bury was a really good example. You look back over time and you think, “Well, that wasn’t very good. In fact, it was terrible,” but that was years ago. Actually, the ability to look at what is happening in real time is really important.
I know one of the criticisms is that that will be an expensive item for small clubs. As a small club, our turnover is £7 million. Let me put that in perspective for you. We have a Man City supporter in the room; Erling Haaland earns about £7 million in eight weeks. That is equivalent to our turnover. Nothing in this Bill causes me any trouble at all about form filling or submitting accounts. If you want to see our accounts—they might be four weeks out of date, but that is as much as you are going to get—our cash flow forecasts, forecast profits and losses, which are done every month, or our business plan, that is not a problem. I would not buy the argument that this is all cumbersome and difficult, because it just is not. That sort of monitoring would have helped to prevent problems like Bolton, Derby, Bury and a whole lot of other clubs experienced..
Mr Betts
Q
Ian Mather: That is a really great question, and one that would keep me awake at night. There would be lots of people who would want to come in and own Cambridge United. We get approaches all the time, and we just bat them off like flies, because none of them is particularly well motivated. When we last looked seriously, in 2018, there were a lot of poor owners. I know that some went on to other places, and I bet those clubs wished they had never seen them. Their interest was in property and profit, not in football.
Sharon Brittan: People go into owning football clubs for the wrong reasons, which we discussed earlier. That is why you have to have people who go into owning these football clubs for the right reasons—people who understand that the responsibility that goes with these clubs is enormous. I invite any of you to come to Bolton Wanderers and see what we have created. The work that goes into it is non-stop, every day. If you cannot deal with stress, you should be nowhere near owning a football club.
Dame Tracey Crouch (Chatham and Aylesford) (Con)
Q
Ian Mather: The thing that I fear is that it does not work in key places. On the parachute payment clause, protecting that does not work. I know that Rick has made the point, but I would endorse it: we are not against the concept of parachute payments if they are right. I do not believe that they are right, but let’s have a state of the game review and find out whether they are right, or whether they are an impediment to fair competition in the football world as we want it. But do not then hamstring the regulator so that it cannot deal with that problem, if indeed it is a problem.
The problems here are few: they are about who can trigger it, the parachute payments and how often you do a review. Those are the key issues. It comes down to the money. The other bits in the Bill, such as those about protecting heritage, are really good. We were looking at introducing a golden share in Cambridge United to give fans protection against things such as stadium moves and so on, but the Bill probably makes those redundant.
Sharon Brittan: Tracey, what you said about unintended consequences is really interesting. I have looked at the situation closely, and I like to look at both sides of the story, so we get a clear, honest picture from the Premier League side and the EFL side. I do not even understand unintended consequences; I cannot work out what he is referring to, unless I am missing something. I can understand the EFL’s argument, which is very clear and concise. From the Premier League’s point of view, I have so far not been presented with anything or read anything that has made me think, “What they are saying actually makes sense.” They have put together a very weak argument —I do not think there is an argument—and have conducted themselves poorly. I do not think they have presented themselves in the right way. They are arrogant. They think they are an island, on their own, sailing off and forgetting that 14 of the clubs in the Premier League have come from the EFL.
On how the pyramid works together, we loaned two players over the last two seasons. Both of them—James Trafford and Conor Bradley—went back to their respective football clubs, and they are absolutely flying in the Premier League and talking about their time at Bolton Wanderers. I could bring players to the table who will say to you that they have never worked in such a culture. People need to work in the right culture to bring out the best in them. There is enough stress in the world today.
On unintended consequences, I would love to sit down with Richard and for him to explain it to me because I do not understand it. They are just words, and there is no substance or arguments behind the words. I have not yet come across a cohesive argument to which I can say, “Actually, that’s a fair point.” I am not going to talk about the numbers—we all know the numbers. In my opinion, that this goes back to greed, envy, jealousy and thinking about me, myself and I. I cannot comprehend how someone can view this through that lens when we are a football pyramid, and what we do as custodians affects this country and beyond. We should be cherishing what we have here.
Matt Rodda (Reading East) (Lab)
Q
Sharon Brittan: I completely agree with that. Even in the five years that I have been involved, I have seen better owners coming into the game because the EFL has changed the rules. You cannot having a bankrupt owning a football club, and you cannot have somebody who has been struck off; the rules are much more stringent. I do not want to talk about the numbers, and I do not like talking about them, but the problem we have is that in five years we have put a huge amount of money into the football club. Any sensible businessperson probably would not do that, because they would look at it and say that it does not make any financial sense.
Ian Mather: In direct answer to your question, I would say that it is the numbers. If an owner can look at a football club and think, “Broadly, if I run that club properly and well, with the income I get from running a football club and the sustainability payments from the Premier League, I can roughly break even. I may want to be ambitious and build a new stadium here, or improve the training ground, but broadly I can balance the books.” If you cannot balance the books, or worse, the books get more unbalanced each year, you are reducing the pool of people who can buy into being a football owner.
Sharon Brittan: I agree with Ian.
Damian Collins
Q
Sharon Brittan: Isn’t it fabulous? That is what I love about football: the near impossible can happen.
Ian Mather: I would also answer it by saying that a North American pension fund has provided—
Sharon Brittan: I did not want to say that!
Damian Collins
Q
Sharon Brittan: The Premier League has allowed 13 of our precious 20 football clubs to be owned by Americans. Lose one more and they make the vote. How has that been allowed to happen? The Premier League stops the FA cup replays without even consulting us. How has that been allowed to happen? The Premier League is not fit for purpose, in my humble opinion.
Damian Collins
Q
Sharon Brittan: If this Bill goes through, I would love to fast-forward three years and see where Bolton Wanderers are. Then, you guys can see where a football club gets to when it is run properly in the right way, with the right people doing the right job in an honest, transparent and reasonably sustainable way. There is money, and obviously that helps.
Ian Mather: It is largely to do with money.
Sharon Brittan: But that is their good fortune.
Ian Mather: And Luton has come down again. You need money to drive success, and there is quite a clear correlation between league position and how much money you have, which explains why Cambridge United keep on cheating relegation. We are roughly around where we should be, and it is about the money.
Sharon Brittan: I am looking to get longevity of success; I am not looking to bounce around the pyramid. To get longevity of success, you have to create a culture that people buy into, so that they stay on the journey with you. So far, it looks like we are delivering, but we will see. I think that there are so many unscrupulous things that happen in football. Let us try to prevent those things from happening so that we can enjoy the game and the jeopardy.
Damian Collins
Q
Sharon Brittan: Please do not quote me as saying that! If we get rid of the parachute payments, that might be possible. Thank you—I am really appreciative.
The Chair
Order. I am afraid that brings us to the end of the time allotted for the Committee to ask questions. I thank our witnesses on behalf of the Committee.
The Chair
We now hear from Tony Bloom MBE, chair and owner of Brighton and Hove Albion Football Club, and Steve Parish, co-owner and chair of Crystal Palace Football Club. We have until 3.30 pm for this session. Will the witnesses please introduce yourselves for the record?
Tony Bloom: Good afternoon, everyone. I am Tony Bloom. I have been chairman and owner of Brighton and Hove Albion Football Club since 2009. I will give a brief introduction about how I got to that position. I have been a fan of Brighton since I was very young: I was born and brought up in Brighton. My grandfather was vice-chairman of the football club in the ’70s, until he passed away on the team bus in 1980. My uncle has been on the board for almost 40 years. The football club and football is in my blood.
As some of you may be aware, we had some rogue owners in the 1990s. They sold our stadium, the Goldstone Ground, without a stadium to go to. We were really struggling. The owners did not keep the fans informed at all—in fact, they lied to the fans on an ongoing basis. It was the fans who saved the club.
The Chair
Thanks.
Tony Bloom: I will be quick. The point is that there is no doubt that the club almost went out of existence because of what happened. The owner of a football club should not be allowed to sell the stadium.
Steve Parish: I am Steve Parish, co-owner of Crystal Palace Football Club and also the chairman. Fourteen years ago I bought the club out of administration. It was its second administration in a period of 10 years. Since then we have been fortunate enough to have a level of success against what I think everybody agrees is a difficult backdrop and industry, where for some to do well others, unfortunately, have to do badly. It is very enjoyable, although as Sharon pointed out it is also very stressful. It is very much about the local community and the fans who we serve.
Stephanie Peacock
Q
Tony Bloom: The Super League was a dreadful idea; in my opinion, it never had a chance of being allowed to go forward in this country. Apart from the owners of the six English clubs—it is different on the continent, where there was a bit more support—everyone was dead against it. Even the fans of the clubs by and large were completely against it: it never had a chance. I do not understand it, apart from not wanting to miss what they thought was the gravy train. It would have been terrible for English football and for Brighton and Hove Albion Football Club. Because of what those six clubs did, it has brought a bad name to the Premier League, which is such an amazing product. It certainly does not help clubs like mine.
Steve Parish: We believe that the effect of it on the Premier League would have been catastrophic as the top four positions would not really have mattered. The race to the Champions League and relegation are obviously the two things that preoccupy most football fans, and obviously there is the Europa League and other things as well. However, if there was no consequence to getting into the top four—in fact, if you could finish 10th and still qualify for a European competition—that would obviously make a mockery of all the domestic leagues and the whole meritocracy of football. Sadly, that still goes on.
A stealth version of the super league is gradually coming into operation. If Aston Villa are fortunate enough, as it looks like they will be, to qualify for the Champions League, which would be fantastic for all of us and for football, they will not enjoy the same money for doing exactly the same thing in the Champions League as an Arsenal or a Liverpool will, because the amount of money you get is based on your five-year performance.
We are constantly fighting to have a meritocracy. As the manager of Atalanta said when they succeeded in Europe, seeing a club like that that does not have the fanbase or fan size do well gives hope to all the clubs, but there is a continuing move from clubs in Europe to pull the drawbridge up and create a permanence around qualification for Europe, which is something that we all have to be careful of.
Stephanie Peacock
Q
“Not a lot irritates me in football...Maybe the governing bodies of FIFA and UEFA, who both regulate the game but also run tournaments. There’s a big conflict there.”
Steve, in 2023 you were reported as saying:
“The people organising the tournaments and the people regulating them, and taxing those tournaments for the greater good, should be two different people.”
In the context of those quotes, are you pleased to see an independent regulator established that can help regulate football finances without a conflict of interest?
Tony Bloom: I was talking with FIFA and UEFA because they are always looking to create more tournaments and more revenues for themselves, such as the FIFA club championships. They were looking to have a World cup every two years. UEFA now have an expanded Champions League, which is in direct competition with the Premier League.
The domestic competitions are of the utmost importance to the country and to domestic football in this country, although the other ones are fine. What I think is absolutely wrong is that they regulate the game, yet they can distort it against the interests of the domestic fixture list and the domestic tournament. The FA is not looking to do that. It has one tournament—the FA cup. The FA works very well with the Premier League and the Football League in terms of that tournament, so they are very different things. I was talking about UEFA and FIFA, and for me that does not relate to the FA. That is why I do not think that the two things go hand in hand.
If you are asking me about a regulator, obviously a regulator is coming in. From my point of view as an owner of a football club, I am concerned about a lot of things. I do not think that anyone in industry is a great fan of having external regulation. If it is light touch and on things about sustainability and ensuring that clubs cannot sell stadia, their chance of going out of business is reduced and they cannot change their club crest or colours without discussions with fans, I am in favour of that, but I have significant concerns with a lot of the other things.
Steve Parish: FIFA controls the world calendar, so it takes first crack at the calendar. It is pretty clear that FIFA wants smaller, 18-team domestic major leagues and one cup competition, so there is a huge difference between the scope creep of their tournaments and the governance role that they should have in the game.
The issue is certainly not about distributions. In fact, if you are going to compare the distributions, I think UEFA give something like 5% of their overall income to solidarity payments, whereas the Premier League give 16% of their overall income even now to solidarity payments down the pyramid, so I do not think that you can compare those two things. In so far as you touch on somebody to adjudicate or the right person to adjudicate or look into whether the distributions down the pyramid are at the right amount or right level, there may well be some role in that, and it looks like that is where we are heading.
When we sit in the much-maligned Premier League, where we are all tarred with the same brush as being just full of self-interest, I can certainly speak for Tony and myself and say that we understand the position and obligation we have to the greater game. We also do not feel like we are permanent members of the Premier League—certainly not. Far from it, we know that pretty soon we could be back in the Championship. I am pretty sure that Sharon would agree with a lot of the things that we stick up for and advocate in the Premier League if she was in the Premier League. It is interesting that Sharon wants the ladder up and she wants to get there, but I am also pretty sure that, once she gets there, she does not want to just go straight back down again. She wants the possibility of staying there.
We have heard about parachute payments and all this distortion, but Palace did not get promoted with parachute payments, and nor did Forest, Brighton, Wolves, Brentford or Luton. In fact, Bournemouth did not get promoted the first time with parachute payments, and nor did Fulham or Burnley. There are a lot of prosperous clubs in the Premier League that did not get promoted with parachute payments—the average is one club a year. There are these causes célèbres, where everybody looks at things through their own individual lens. I understand that, and it is important that we have a broad perspective; my concern is whether the regulator will have that.
We are talking about a system that, at the moment, has served us incredibly well. We have got a democracy, really. Football is run by the clubs and their various governing bodies. Over the last 150 years, we have managed to make it the world’s most popular game. Within that, we have managed to make the Premier League the world’s most popular league. Of course, if we had a regulator that made all the right decisions all the time and was not lobbied by the big clubs more than maybe the smaller clubs, then of course that might be of benefit, but I am severely worried about the potential unintended consequences and the power of the big clubs to dominate the debate.
Stephanie Peacock
Q
Steve Parish: The problem with football is that there are so many moving parts. Competitive balance and sustainability in some ways go hand in hand. If you look at Bolton as an example, there was a lot of money invested in Bolton. The infrastructure was massively improved. Yes, it got into financial trouble, but it did end up a lot better off, with a lot of investment over that period, and it enjoyed a sustained period in the Premier League.
My big concern is that if you only focus on sustainability, the biggest businesses can always cope with regulation the best. There is another chasm, which is between the top clubs in the Premier League and the rest of the clubs. If you look at the Bill, it classes relevant revenue as the broadcast income, but broadcast income is 75% of Tony’s and my revenue, and about 20% of the bigger clubs’ revenue. So straight away, it has the ability to competitively disconnect the league even further.
That is just one concern I have. Of course, if the regulator is well informed, lobbied by all the right people and comes to the right decisions, which create the right platform for football to continue to thrive, it will be a good thing. But when I read the Bill—when I see how, frankly, imprecise it is; when I see areas where the Secretary of State can interfere or where the rules can be changed; or when I see 116 different licences or each club being treated differently—I do see a lot of worrying issues that could arise.
Damian Collins
Q
Within the Premier League board, you have all those big clubs. Would it be more effective to allow some of the enforcement and supervision of the league’s rules to be done by an independent regulator that is, if you like, separate from the politics of football? It is set up by Government, it is not open to being lobbied or cajoled, and it is not making decisions on the regulation of clubs that it has to trade off against other decisions that are taken by Premier League clubs about how they organise the affairs of their league.
Steve Parish: If the Bill looked at the whole of football, that might be the case, but we are looking at it in a very myopic way. We are not looking at all the European revenue, the growing scope creep of European fixtures, the increase in the size of UEFA club competitions, or the gerrymandering of coefficients, so that even if we qualified, we would not get anywhere near as much money as a club that has been in the league three years previously. Within the Premier League itself, the top clubs have got—what is it?—four times our income. That is probably going to head towards five or six times our income.
The Bill, very narrowly, looks only at the Premier League media money. Actually, the Premier League is the most egalitarian by distribution in Europe by far. Where it is heading to right now is 1.8:1. Although that is worse for Tony and me, this is still by far the fairest league in Europe: in Germany, the ratio is about 3:1—the top club to the bottom club. So actually, in terms of distributing the revenue that it gets, the Premier League has done a very good job of making it fair and maintaining competitive balance.
The problem is that such huge revenue is now pouring into these clubs from European competition, and from the commercial deals that that gives them, that it is creating a massive distortion. What I fear this Bill will create is a permanent top six or top seven and then a kind of washing machine of clubs that will rotate between the two divisions below. That may well be what some people want as a vision for football. It is not mine. Mine, like Sharon’s, is to try to get into the Premier League and stay there. I accept it comes with jeopardy every year. I accept there are three relegation places. I accept that everybody is trying to stay in the league and it is highly competitive. But the aim, I think, of most clubs is to try to stay there, ladder up and improve.
Damian Collins
Q
Tony Bloom: Obviously I have had many years in the Championship and League One, and we have had many discussions there. The relationships between the Football League and the Premier League, I think, have got a lot worse since there was talk about regulating football. Overall, although there have been difficulties over the years, it has worked very well. But ever since the Football League has realised that there is going to be a regulator and, “If we can’t get a deal, there may be something from that,” things have not worked out so well, so I think there are, again, unintended consequences.
I think it is much better for football—the Football League, the Premier League, the National League and the FA—to work things out itself. Without it being perfect, I think the fact there have been three liquidations since 1992, despite the fact that, as you say, so many clubs are in financial distress—most clubs lose a lot of money every single year—is a very good result. You can look at other businesses. I know we do not want to compare businesses to sport; it is a completely different stratosphere. But I do worry about what will happen if you put in lots of extra regulation and lots of extra cost for the clubs, even though I am sure the Premier League will pay the vast majority of the regulator bill. I am just worried about future investors. That is absolutely critical.
Damian Collins
Q
Tony Bloom: I think it would be disastrous for the Premier League. The Premier League has done an amazing job to make it far and away the strongest domestic league in the world, and that is where we want it to stay. It is so important for this country. If that was to happen, then outside the biggest five or six clubs, which may think their chance of relegation is tiny, the clubs could not invest the money in players. And then what would you have?
In countries like France, with Paris, and also with Juventus and Munich, there is domination between the top one or two clubs and there is frequently only one winner in the league. The middle and bottom clubs would not be able to invest, and the differential between the top clubs and the middle and bottom clubs would be so big that it would not be so competitive. Then people would not want to watch it; the broadcast money would not be there; and we would veer towards Spain, Italy, Germany and France. I think it would be an absolute disaster. Clubs could not invest because of the worry about relegation. As it is, with the parachute payments, clubs still have to sell players, typically. Often, they get into serious financial problems even with the parachutes.
Mr Betts
Q
Steve Parish: The reality is that all around Europe and probably the world, football is a billionaire or millionaire-funded industry. That is the reality of it. It does not make money anywhere in the world. We are not unique: this is not a country where uniquely we lose money in football. It is not a business with a profit principle; it is a business with a winning principle. Whatever rules you put in place, people’s desire to win will always trump their desire to make money. So the problem is that if you restrict our league so much that we are taken out of that game, you very quickly could make us very uncompetitive in terms of a European landscape.
Mr Betts
Q
Steve Parish: I have put more money into my club in the Premier League than I used to in the Championship. I write bigger cheques in the Premier League than I did in the Championship. It used to cost me a lot less money to run in the Championship.
Tony Bloom: The reality is that across the world in sport—but particularly in football—clubs everywhere lose money every year. People put it in because they want to be competitive, and they want things for their community, and so the problem you have for every single owner in this country is that they want to be competitive, and they want to spend money, but they want to try to be sustainable—and the two are not compatible. Almost every club—and certainly every league—loses a lot of money. The Premier League loses a lot more money than every other league, and that is true on the continent as well. To be competitive, that is what you need to do—spend money. That will never change, whatever happens with the Bill. You will always have that, and you need to accept it, because that is the reality. Without that, or if you try to stop that, the Premier League would not be the best league in the world.
Mr Betts
Q
Steve Parish: That is not what we are saying at all. We are representative of every club like us; what I—quite clearly—said to you is that I believe that if Bolton were in the Premier League, they would believe what I believe, which is that yes, the pyramid should have a sustainable amount of money, or more money so it can better compete—as Tony says, it is very unlikely, in a normal business case, that any of these things will ever look sustainable; there are a lot of people putting a lot of money into football from their own pocket for the enjoyment of the public and their fan base—but there is another problem, and that is the growing wealth of the big clubs, and that has to be identified. What we need to do is make sure that when we pass these distributions down the league, they come from the right place and are fairly apportioned. That is not me being selfish—that is me being sensible.
Mr Betts
Q
Steve Parish: As I said, if you had a regulator that we all believed would uniquely make all the right decisions for football, of course we would be in favour of it. What you asked me is what my concerns about the Bill are; my concern with the Bill as a starting point is that relevant revenue is only broadcast income, which would be 75% of Bolton’s revenue should they get into the Premier League, and it is about 20% of the top six’s revenue. That straight away is an example of an area of concern.
I just want to come back on parachute payments, because I need to give you some numbers. In the Premier League, if you finish around midtable, you will turn over about £180 million—it is not an unreasonable thing to budget for. The first year in the Championship, with parachute payments, is about £70 million—so you have about an £110 million drop in revenue, which is pretty catastrophic for any business to try and contend with if they get relegated. Many clubs manage to get back in the first year—on average, it is about one a season for the last 10 years—but the average finishing position of a parachute club is eighth. Many clubs, like Stoke or Sunderland, disappear from the Premier League, and that big gap and big drop gets them in a lot of financial difficulties. This is why parachute payments are so important for the sustainability of football.
Tony Bloom: You talk about self-interest: that is not the case at all. I care about every football club in this country. I am not worried about the top six—I have not said anything about the top six. We have regulations in the Premier League, and if something is going to be changed, you need a two thirds majority; if they get two thirds majority, and the top six vote, and get a few more people, that is the way it is. I am not complaining. Football needs to vote, and the Premier League has its constitution; I have no issues with that.
I used to be in the Championship, and we had parachute payments. I was not complaining—we just worked away to try and be the best we could for our football club. I was never in favour of parachute payments when we went and won the Championship; I never voted for that or discussed that. All I was asking when I was in the Championship was for there to be a bit of sustainability so clubs did not lose an average of £10 million a year, which was voted against because clubs wanted to give themselves a chance to get promoted to the Premier League. I am saying exactly the same in both divisions.
Stuart Andrew
Q
Tony Bloom: Because of the talk of a regulator, as I said—
Stuart Andrew
Let me finish my question. There has been talk of a regulator for a much shorter period than there have been issues relating to the historical problems in football; this has not just happened since the publication of the White Paper or the fan-led review. The reason why the fan-led review was brought in the first place was that a solution had not been brought by football. My question again is why that has not happened, because that is why we are here today—because football has not stepped up.
Turning to another thing that I want to talk about, I agree with you and I am glad to hear that you want to see the sustainability of clubs within the pyramid. The independent experts who we heard this morning said that the problem in the past was that too many clubs were looking in the rear-view mirror, whereas this Bill presents us with a real-time approach that will identify problems much earlier so that they can be addressed. Do you welcome that?
My final question is about fan engagement—to change the subject completely. I am interested in whether you think the Bill hits the right notes on that and what you do there, because I hear that you have an interesting approach as a club.
Tony Bloom: In terms of fan engagement, we are a club that regularly engages with the fans. Even before talk of a regulator, we had many fan forums with a broad range of our supporters’ clubs. I do them, as do the CEO, the head coach and so on. We have seen in the last couple of years that we have a fan-led board and we have many meetings as well. Our relationship with our fans is really good. I can talk only about my football club, but if you speak to our fans, they would be very happy with the engagement. What was the second question?
Stuart Andrew
Q
Tony Bloom: When I was in the Championship about 10 years ago, there were big discussions, big debates and big negotiations with the Premier League. For sure, as you can imagine, the English Football League wants to have more revenues and a bigger percentage of the Premier League revenues. A deal was done—it was not easy, but it got done.
Of course the lower league clubs always want more money. As Sharon was saying, if she gets promoted, she is going to have a much bigger bill. If there was more money going into Bolton, no doubt for that season and the season after, things would be a bit easier, but have no doubt that when more money goes into the English Football League—the vast majority of it will go to the Championship—it will go on player salaries. That is what happens, so there will still be issues. Unless you have sustainability levels where there are caps on spending, and clubs have their money there, there will always be such issues.
On your first question, regardless of the Bill, the English Football League and the Premier League are becoming much more forward thinking in the way they have the football regulations for finance. Regardless of what is happening with the Bill, that is what the Premier League and the English Football League are looking to do, which I think is a positive thing.
Steve Parish: The implication is that nothing is being done. Profit and sustainability rules were the first step in trying to control spending. People have to realise that we are subject to competition law as well, and we are being challenged on some of these things within the league. Some of the things that the majority of clubs would like to do—salary caps in some instances, which some people would like to do, or the cost caps that we are working on at the moment, which are broadly salary caps—are challengeable under competition law, so we have to get advice and be very careful that we are proportionate in the things that we undertake.
In terms of why a deal has not been done, I think it is quite simple: it is the backstop. It was made quite clear in the last panel that view of people at the EFL is that whatever deal is given to them now, they will pocket it and then go and see the regulator to get a much better one, because they do not think it will be good enough. I genuinely think that is the reason that a deal has not been done so far.
Ian Byrne
Q
The Chair
I ask the witnesses to send their responses in writing, as I am afraid that brings us to the end of the time allotted for the Committee to ask questions. I thank our witnesses on behalf of the Committee.
The Chair
We will now hear from David Newton of the Football Association. We have until 3.50 pm for this session. Will the witness please introduce himself for the record?
David Newton: Thank you, Chair, and thank you for the opportunity to speak to the Committee this afternoon. My name is David Newton. I am head of football operations in the FA’s structure, with responsibility for player-related matters, competitions and professional game relations.
Stephanie Peacock
Q
David Newton: The state of the game report will be a valuable asset to us as a sport, because it will draw on the widespread aspects of football, not just the narrow responsibility of the regulator, so it will reflect the whole football pyramid. As you know, the FA is responsible for 16 million or 17 million players and all the money flows within football. It is important that the work of the regulator is set in the context of the wider game. That is where we feel that the report could add value. As previous speakers have alluded to, football is a fast-moving industry, so three years seems about right.
Stephanie Peacock
Q
David Newton: The short answer is no, we do not believe that competition format matters should be an aspect for the regulator to consider. In Dame Tracey’s report summaries, competition format was not part of that, and I think we feel that competition format matters should remain the province of the football authorities, whether that be ourselves or the leagues. There are specific football-related matters that should remain in our ambit, and this is certainly one of those we feel quite strongly about.
Damian Collins
Q
Football clubs are not only licensed by the regulator. They are licensed by the Football Association as well. There are articles of association of the Football Association, which place responsibilities on all clubs. Do you think it would be good and proper due diligence for clubs to have to demonstrate through their corporate governance reporting how they meet all their obligations within football—to the FA, to their players and to the welfare standards they are expected to follow?
David Newton: It is an interesting point. It is not one that we have necessarily considered in detail. I do not see any reason why, in good corporate governance practice, you would not refer to your corporate governance standards with all employees, whether they be players or not. From that perspective, on the face of it, it would seem a reasonable assessment.
Damian Collins
Q
David Newton: I guess it depends what you mean by checking up on the clubs. We have quite a strong structure of engagement with the players: the players’ union, and the Professional Football Negotiating and Consultative Committee, on which both leagues and we sit with the PFA to discuss on a quarterly basis every aspect of players’ employment by clubs. We would certainly consider that to be the appropriate avenue for those things to be dealt with. I would not necessarily advocate the regulator having formal step-in rights in respect of players as you have outlined, but reporting standards on employees I can see.
Damian Collins
Q
David Newton: I guess it depends on what you mean by good standards. If you are talking about things like national minimum wage or employment rights, then absolutely, those things would be expected. In football, we have our own structures, as you say, for dealing with player-related disputes, or players not being paid—the leagues have very strong rules on that—so those things are dealt with in the structure. Sharing of information with the regulator will obviously be something that may come into focus, once it is up and running, because it is important that there is not duplication of requests for information and that those information requests are shared efficiently.
Mr Betts
Q
David Newton: Absolutely, the FA Cup is an essential part of our football heritage. We reflect that and take the FA Cup extremely seriously. It is a fantastic competition. Everyone cares passionately about it within the FA, me as much as anyone else. Prior to Dame Tracey’s report, we had already established heritage assets in protection of club playing names. Since the report came out, we have also established rules in the FA on club crests and club colours, so we are very aware of heritage responsibilities in that respect.
Mr Betts
Q
David Newton: We are very aware that FA Cup replays are a hugely emotive subject. The FA Cup as a whole is a hugely emotional subject for football fans. We took a decision based on an extremely congested football calendar with which, as has been referred to previously we are very much in the hands of the world and European governing bodies and the fixture list. We took a decision that, in such a congested calendar, certain difficult decisions had to be made. But in doing so, we also preserved other elements of the FA Cup that we think are equally strong things, such as exclusive weekends for the FA Cup, which sends a strong message. A stand-alone Saturday for the FA Cup final and things like that also play into the whole narrative. We are particularly keen for the David and Goliath aspect of the FA Cup to continue. Many historic FA Cup games have been decided on the day, and that will continue.
On the financial side of things, we are very keen to emphasise that no lower league club will lose out as a result of the loss of replays. We would rather see clubs budget sustainably for revenue in the FA Cup on a consistent basis, rather than for the one-off potential replay chance. We realise we cannot budget entirely for hope, and every football fan—I am no different—loves replays in the sense of the hope, but unfortunately difficult decisions have to be made and that is where we have got to.
Mr Betts
Q
David Newton: I do not think that is necessarily a fair characterisation. The fixture calendar is extremely complex. We sit down two years prior to the season with our colleagues at the Football League and the Premier League and discuss how we are going to best fit in the games we have. We are the only major European footballing nation with three domestic cup competitions: the EFL trophy, the Carabao cup and the FA cup. We have 20 teams in the top league and 24 in each of the other three leagues, and the calendar is extremely congested. It is not just as a result of European ties. Each of those is a fantastically vibrant competition in its own right. Each of those competitions has a heritage and importance, and it is about a balance between all those competitions, as well as the European ones, that allows them to be fitted in.
Stuart Andrew
Q
David Newton: It is common knowledge around the room that UEFA and FIFA have statutes of their own, which basically prevent state interference in the running of football and football competitions. We have worked closely with UEFA and FIFA, and with the DCMS staff who have worked so hard on this Bill. They have been taken through where we have got to. Although we have not had a definitive view as such, it is reasonably clear that a tightness of the Bill relating to football governance is not likely to present huge or significant problems, subject to any changes that may occur. However, anything wider would increase the risk of FIFA or UEFA intervention. That is obviously a place we do not want to be, because of the sanctions that may flow, in theory, from that. We continue to work closely with both those bodies and keep them abreast, along with DCMS, of where the Bill has got to, but I think the narrowness of scope is very important.
Matt Rodda
Q
David Newton: The decision has been signed off, effectively, by the FA board for next season. Indeed, the fixture calendar is so full that the spare slots, if you like, have already been allocated. At the moment, there is no review of that position. We are obviously aware of the strength of feeling, and I hope I have gone some way towards explaining how we take that decision. We take the custody of the FA cup extremely seriously.
Matt Rodda
Q
David Newton: In fairness, I do not think the calendar shows any let-up. As has been mentioned, we have a FIFA Club World cup involving 32 teams in the summer next year. That will continue to sit in the calendar, as will the expanded Champions League format, with extra midweek matches. We still operate three domestic cup competitions, which all have to be accommodated as well.
Robin Millar
Q
David Newton: I can completely understand fans’ passion for the FA cup. People who work in football—all of us in football—have that same passion for the FA cup and our other competitions. We have all done those things that you talk about. Competition formats have changed over the last 30 years in a variety of the different competitions in English football that I have referred to, and that has been the way. I guess, as the game evolves and different demands are placed on it, that will continue to happen. As I have explained, the decision taken was based not just on one set of circumstances. There is a huge number of factors relating to the fixture calendar, which is an extremely complex piece of architecture. As I say, the decision was a necessary consequence of that, but, absolutely, we understand the passion and the interest that is involved in the FA cup.
Rachel Hopkins (Luton South) (Lab)
Q
David Newton: Correct.
Rachel Hopkins
Q
David Newton: In club playing names?
Rachel Hopkins
Yes.
David Newton: We introduced the rule about 10 to 15 years ago, and the rule actually gives the FA Council the final approval of a name change to a club in the top tiers of English football. As part of that, we conduct an extensive consultation. Thinking about one in particular, there was a significant amount of consultation with local stakeholders, the local MP, the local fans’ groups concerned, and so on. The decision was voted on by the FA Council, which also has supporter representation on it, so supporters are very much part of the stakeholder community that will consider those changes in names.
Rachel Hopkins
Q
David Newton: As I say, the most recent one or two that I can think of were some time ago and were probably quite well publicised. The consideration of those decisions would have been accompanied by all the relevant submissions made by the various stakeholders and considered in the round, and the weight given to those views.
Dame Tracey Crouch
Q
David Newton: On the first point, as I outlined at the start of this session, the FA is responsible for the whole of English football, ranging from grassroots right the way up to the international team. The Bill is concentrated, as we know, on a small—but none the less very important—subset of that. Our role as an observer on the board is extremely helpful to that. I am confident that with the work we do—whether that is in grassroots, on and off-field regulation, disciplinary matters, the national teams and that sort of thing—our position as the governing body of English football remains.
Regarding the women’s game, you are absolutely right. We raised the potential concern of the unintended consequences of investment in the women’s game being affected by their co-dependency in some situations on the men’s game, and with funding being removed or reduced as a result of decisions by the regulator. It is important that the regulator, in exercising its powers, does so in a proportionate and reasonable fashion and bears in mind that co-dependency, where it exists.
The Chair
Q
Jane Purdon: I am Jane Purdon. I have worked in football and elite sport for about 22 years, starting as the in-house lawyer at Sunderland football club. I went on to do 10 years at the Premier League, rising to become director of governance. I then went to UK Sport, where I co-authored the code for sports governance. More recently, my work has been with Women in Football. I have just stepped off the board, but I remain an ambassador; I think that means I have the privilege of rocking up to events like this. Thank you for having me. I also have another chair role in football and a quasi-board role with Premiership Rugby, so I now have a portfolio career.
Stephanie Peacock
Q
Jane Purdon: Women in Football does not have a corporate view on this, and we do not have a view on the regulator at all. The reason for that is that opinions vary, so I cannot answer for Women in Football. A lot of our focus—we have put in a written submission to the Committee—has been on the effect on the football workforce and the women in it as a result of this legislation.
If I can give you my personal opinion, the Government launched and backed Karen Carney to write a review on the future of women’s football, and it really was a privilege to be an independent expert on that. I am still working with Karen on what is called the implementation group, run under the auspices of the Secretary of State and the Minister.
A lot is going on in women’s football. It is fast evolving and the needs are huge. We need innovation. Not all the solutions that have worked for men’s football will work for women’s football. The Government are—I do not know what the word is—managing the process, or putting the right amount of pressure on the stakeholders, to see where we get to. But at some point, we may need to review those processes, how they are working and whether women’s football is landing in the place where we want it to land. Whether when we get to that point we say, “Gosh, we have a regulator here. The regulator has a role,” I do not know, but it is an open question and one that I think we ought to keep asking.
Stephanie Peacock
Q
Jane Purdon: As I say, we have this implementation group run under the auspices of the Secretary of State and DCMS, and there are some real, chunky issues there. Where I am right now with it is allowing that group, which I think is due to meet again in July, to continue its work, but we must keep this under continuous review and not feel complacent that we have sorted women’s football.
Stephanie Peacock
Q
Jane Purdon: One of the classic models at the moment, as you have heard, is that the women’s team sits within the same legal entity as the men’s team, and there are pros and cons to that. The pros are obviously that the club has the brand, the IP and the infrastructure. The cons are that it can make the women’s team very vulnerable to what happens in the men’s team. I saw that with my own club, Sunderland, which 20 years ago was so ahead of the game, but the men’s team fell down two divisions. I understand that it is a cost centre and tough decisions must be made, even if they are not the decisions that I would make.
I have actually posited the question before of what happens when women’s football begins to make money and becomes profitable. What are we going to do with that profit, and how much will go back into the men’s game and how much stays in the women’s game? I think that would be a great question for football to debate.
Dame Tracey Crouch
Q
Jane Purdon: There are some statistics and research showing that, I think, 10% of current Premier League directors are women. That research was done earlier this season, but the key thing is that it has not shifted since somebody last looked at it in 2019. The answer, with a very broad brush, is that it would appear not. I have to say that there are some clubs doing fantastic work, some of whom have given evidence today. If you want a great exemplar, take a look at Brentford football club, but as a whole, I do not think the industry is moving fast enough. We need to look at not just boards but executive committees—the lead executive decision-making body within the club.
We speak to our members a lot about this. We have 9,500 members, 80% of whom are women—we do welcome men into our membership—and we talk to them regularly about how they are feeling. We are getting a very mixed picture. We are told that 89% of them feel optimistic about the future of football, but at the same time, again, getting into 80% say that they have experienced sexism in their football careers. A minority of them feel that they are supported to get to the highest path. I would say that things are changing but not quickly enough.
To the second part of your question about what the regulator could do, we have a proposal for a code of governance practice. What concerns us at Women in Football is that both on the face of the legislation and through discussions we have had with the Government in our lobbying activity leading up to this point, there is an indication that it will not include any provisions about diversity. Having co-written the code for sports governance in 2016—under your maestro-ship, Tracey, if I may say so—and having seen how that really shifted the dial, I am really concerned about this. I think it is a poor vision of corporate governance if you do not address equality and diversity. You are not actually writing something about governance. You are writing something else.
To really shift the dial on this, you need three things. You need to make the business case and win hearts and minds. People need to understand and not be frightened, and realise that there are really sound business reasons for doing this. You need to give them support, but you do need to have a bit of a lever—whether that is a funding consequence or a “comply or explain” consequence and the transparency that comes from that in the case of the UK corporate governance code. That is one thing we would like more assurance on and express reference to in the legislation.
Dame Tracey Crouch
Q
Jane Purdon: This is such a tough question, because that money has to come from somewhere, and what do you cut? Do you cut funding to your academy? It is so tough. The real answer is that we have to get women’s football independently standing on its own feet and turning a dollar in its own right.
Damian Collins
Q
Jane Purdon: I think transparency is a great thing, as is transparency in sport. If you have ever read the code for sports governance, it kind of flows through that. We said to the sport governing bodies who were not as well resourced as many football clubs, “Tell the world what you are doing. Even tell them when you don’t hit your targets and then explain what you are going to do, because it breeds trust.” Against that, we do need to be proportionate and make sure that we are not asking organisations to report for the sake of reporting, and that there is real value that comes from the onerous work that reporting involves.
Damian Collins
Q
Jane Purdon: In the legislation there is provision to say how you are meeting this code of practice. I do not have a problem with that in theory. As with all these things, the devil is in the detail, but I think that is right. I have talked about not making it too onerous, but on the other hand it can be a very simple measure to engender trust, and fan trust as well.
Damian Collins
Q
Jane Purdon: As I say, Women in Football does not have a position on this, so I have to be quite careful. If I am brutally honest, my personal opinion—and this is not shared by all by Women in Football colleagues—is that I am not convinced by the intellectual case for an IFR at all, particularly financially. I would need to be persuaded on that one. Maybe it is something we need to think about going forward in the game, and look at the fact that the two teams, the two set-ups, sit in one legal entity. The plus side is when you have a club like Chelsea or Manchester City, which get it and back its women’s team and provide the spectacle in the women’s game that we are used to seeing in the men’s game, that is fabulous, but there is risk as well. Maybe how we manage that risk is something we need to take forward.
Damian Collins
Q
Jane Purdon: There is a proportionality. One of the other bodies I chair is PGAAC—the Professional Game Academy Audit Company—which is the academy quality assurance body. It is a joint venture between the FA, the Premier League and the EFL, and there is proportionality in what we do. We quality-assure all the academies, and we have just started doing the girls’ game as well. We are not taking what we apply to Manchester City to what we apply to a League Two community organisation that happens to run a girl’s elite training centre. It has to be proportionate and you have to make sure that you are adding value all the way.
In fairness, for full disclosure, I have spoken to people in the women’s game who disagree and say that if this if this is coming in for the men’s game, it ought to come in for the women’s game. I look at things like the owners and officers test, which we have written to the Committee about, because we think there are real problems in the drafting. I think that is going to be incredibly onerous for clubs. If you then put that into the women’s clubs as well, many of them who are running on much lower resources, it is an unintended consequence of bureaucracy to what end.
Robin Millar
Q
Jane Purdon: By the way, hearing where you are from, may I sound a note of congratulations to Wrexham FC? I saw it had an attendance of 9,500 for one of its women’s games—wonderful.
What are the barriers? We need the role models. We have those. Our Lionesses are wonderful. We need infrastructure. We need more, more, more, more, more. It is as simple as that. We need more pitches, we need more people, we need more coaches. I sometimes say to people if you want to know what needs to happen in future, take a walk around your town and count up all the football pitches you come across—the ones down the park, the ones in the school, the ones for the professional football club. Now double that. If we are serious about opening up football to the other half of the population, it will look something like that. So, yes: more, more, more.
There has to be some rate of organic growth in this. We cannot do everything at once. Many of the people looking at this, the people at NewCo, the people at the FA and, in fairness, the Sport Minister, have taken a good interest in this. There is good work happening, but we have a long way to go.
The Chair
If there are no further questions from Members, I thank the witness. We will move on.
The Chair
We will now hear from Robert Sullivan, CEO of the Football Foundation; Niall Couper, CEO of Fair Game; and Simon Orriss, head of legal at Fair Game. We have until 4.40 pm for this session. Will the witnesses introduce themselves for the record?
Robert Sullivan: I am Robert Sullivan, chief exec to the Football Foundation, an independent charity that has been going for 23 years to fund and transform the state of grassroots football facilities in England. We are funded directly by the Government through Sport England and from redistributions from the Premier League and the FA. We work in each of your communities and across England to improve grass pitches, build new artificial pitches, and change the community stock of clubhouses and changing rooms. We think we make a real social difference across England.
Simon Orriss: My name is Simon Orriss. I am a solicitor specialising in corporate law and sports law. For the last couple of years I have been working with Fair Game, which Niall will speak about in due course, as the head of legal providing general legal support.
Niall Couper: I am Niall Couper, the CEO of Fair Game. I was a former fan-elected member of the Dons Trust, owners of AFC Wimbledon. I was a sports journalist at The Independent for five years and I have published a number of books on football, which you can get on Amazon.
Stephanie Peacock
Q
Robert Sullivan: We have communicated and I hope we have been helpful. I think it is generically equivalent across the country, but obviously there are local differences according to specific football needs and socioeconomic conditions in each part of the country.
The state of grassroots facilities has always been one of the biggest strategic challenges facing English football. When the FA conduct its annual survey where it asks grassroots players, coaches and participants the No. 1 thing they would like to improve and change in the game, people always say the state of grassroots pitches. We are in no doubt that the primacy of what we do and the importance of the work and the investment of the Football Foundation is fundamental to the future of English football and how we can improve it all. We recognise that there is a huge amount of work to do. The more we can receive support from all parts of the game and from the Government to do that, the better. We are part of the Carney implementation group. It is worth dwelling on what Jane told you a few moments ago, which is that demand for high-quality pitches across this country is set to double over the next 10 years, because of the rise and growth in women’s and girls’ football. That is a massive challenge and a brilliant opportunity for all of us.
That is why I would like to make a specific point about the Bill and some of the provisions in it. The way in which the backstop is currently drafted as part of this potential legislation places primacy on the funding decision between the Premier League and the EFL. Effectively, that means that the Premier League will not be able to work out its other distributions to other parts of the games until it has confirmed the amount of money it will have to give the EFL through the arbitration and backstop process.
As the head of an organisation whose responsibility is grassroots football, I would say that that is a subjective choice: subjectively, I would choose that the Premier League puts the primacy of funding grassroots facilities—it could be women’s football, or whatever your organisation cares about most—at the front of that queue. I do not want the Football Foundation to wait to receive its funding distribution once other causes have been settled first. I believe that our cause, for some of the reasons we have discussed, is the most important in English football.
Stephanie Peacock
Q
Robert Sullivan: I am the chief executive of a charity and my charitable purpose is to raise as many funds as I can to reinvest in grassroots football—all of our funding is welcome. We believe that at the moment we are well funded and well supported by the Premier League, the FA and the Government: I want to stress that. If I may use the term of the day, we are more concerned about the unintended consequence of how the legislation may be written and whether that has a negative impact on what funding may come through to grassroots football from those football bodies once everything else has been worked through.
If I may make a second point about what other changes should be considered, the experience of the Football Foundation and the Premier League Stadium Fund, which we operate on behalf of the Premier League to invest in national league system grounds—and I know a lot of you have national league system grounds in your constituencies—is that investing in facilities, in sustainable assets for clubs, is really important. I would be concerned that money that is passed without requirements to put that money into sustainable facilities that can generate future investment and support future revenues, and instead is just passed over as cash to be spent on running the clubs, without those requirements, would be a missed opportunity to send some of the wealth at the top of the game to the things that will make the game sustainable for the future.
Stephanie Peacock
Q
Robert Sullivan: As I tried to highlight, if the backstop makes the funding of the EFL the primary budgeting step of the Premier League—all other distributions are whatever is left—that is a subjective choice, which may not be meant by everybody in Parliament. Every single Member of Parliament has lots of grassroots community football clubs. Not all of them have an EFL club which they need to support. There is a choice about what is more important. What is the first choice of where the distribution of Premier League money goes—is it to the grassroots or is it to the EFL pyramid? They are both very valid causes. I represent an organisation which is here to represent the voice of grassroots football.
Stephanie Peacock
Q
You have been campaigning for a long time on many of the matters that are addressed in the Bill. As a way of giving a view, are you pleased overall with the independent regulator that is proposed in the Bill, and do you have broader comments to add?
Niall Couper: There are a few things that are missing. When we look at the financial flow within football, the difference is dramatic. We have done studies, and there is a written submission that I hope the Committee has received. At every single level, those gaps are getting wider. At the moment, the decisions are being made by the Premier League, and to some extent by the EFL as well, and that is not actually benefiting those clubs. It is making it harder, and more of a gambling culture, for every single club throughout the pyramid. That is putting clubs in serious jeopardy.
In the very latest statistics, we are aware that 58% of clubs in the top four divisions are technically insolvent. Brighton and Crystal Palace are both technically insolvent as well—I heard them earlier on. There is a real fundamental issue there.
What we want is to see more of that revenue redistributed down the pyramid. At the moment, for every £1,000 that a club in the Premier League gets in the broadcasting deal, 14p goes to a National League North or South club, or 57p to a National League club. Those differences are dramatic. That is why we really need to look at it.
I go on to what the Football Foundation is saying. We want to see the money invested in the right way. We want to encourage and incentivise well-run clubs. We want to see sustainability. That means investing in infrastructure. It means making grounds a 24/7 operation and making them the hubs of the communities that we all want, with the kind of things that we want to see, such as dementia clubs, working groups, walking football and community programmes, which are all are embedded in those local clubs. That is where we should be looking to encourage investment. That is where the investment in lower clubs goes—that is the difference they make.
Combined with what the Football Foundation does, and looking at the parameters of what a Bill should be about, that should be the first thing. When we are looking at a television distribution deal, we need to be thinking about the parameters that deal should be meeting and what it should address, such as closing the gaps that are causing insolvencies and heartache.
When a club goes into administration, we all know the consequences. That is the loss of your local plumber, caterer or whatever. They are the ones that lose when a club goes into administration. It is not some harmless thing. This was talked about earlier on. If it is liquidated, yes, it goes, but if it goes into administration, there is a lot of pain that goes with that. Those things need to be addressed. If we have the correct parameters to define a distribution deal, the hard-working community clubs can thrive and the grassroots can thrive. That is ultimately what we want to see. That is the growth of the game.
You talked about girls’ football. I have got two girls who play football. The issue of pitches that you talked about is a big problem. A lot of the local big National League and National League North and South clubs really want to invest in that as well and give that, but the money is not there. They are struggling to survive day to day. They live hand to mouth. Those are the clubs that fold. Those are the clubs that disappear, because they are not in the public eye.
In the broadest sense, for all the politicians around the table, those are the clubs that we should really be looking to cater for. That is what the Bill can look at: changing the parameters of what it looks like in distribution.
Stephanie Peacock
Q
Niall Couper: You probably spoke to a couple this morning. I saw the panels and I am aware of some of those people. You have an issue here. Where does the investment come from? Who are the people making the decisions? Where is the funding coming from for some of these people who will be putting their names forward? We have to look at making sure that people who perhaps work for the Premier League or the EFL, who have been making an awful lot of these decisions, are not allowed to be on those boards, or that those organisations that are majority funded are not on those boards.
It is really difficult. I would like to see a whole load of organisations get independent funding. It would be really beneficial to allow them to have that free voice that football really needs. At the moment, the Premier League is the de facto regulator of football.
Robin Millar
Q
DCMS has done a brilliant job in making sure that money gets out to grassroots clubs. I have seen some in my own constituency, even though that is over the border in north Wales and comes via the Football Association of Wales.
You have just said something that I have written down—every MP has grassroots football clubs in their constituency. Potentially, every single MP here has an interest in voting to see money vired directly to grassroots football.
You make the point about the key transaction between the Premier League and the English Football League. I am curious, however, about how that might happen. Is the structure in place to cope with, suddenly, tens of thousands of projects across the UK? Is the FA—I will use the phrase— fit for use, in terms of distributing and monitoring that? What do you think needs to be done from your end of the telescope?
Robert Sullivan: Let me pick through that carefully. The way in which projects are identified to invest in grassroots football is done by the Football Foundation, who fund us alongside the Government and the Premier League. In Wales, their money goes straight into the FAW, who have set up their own equivalent of the Football Foundation. Without passing comment on whether the FA were fit to do it, which I am sure they would have been, they tasked us with doing it.
I am delighted to say that we worked really hard to build what we call a local football facility plan for every local authority in the country. If any of you go on our website—I am seeing some nods; it is good that you know about your local football facility plans—there is effectively a shopping list of all the projects that we want to do in every part of England. We have built a team and we are building in the investment from our partners to go out there and deliver those projects.
Robin Millar
Q
Robert Sullivan: Yes, because it would 100% be my job to build the operation or structure to do that. To give you some comfort that we can do that, we have basically doubled what we have done in the last three years. If the Minister responsible for the future investment of any Government of any colour said to me, “You need to double it again,” that is what we would set out to do.
Robin Millar
Q
Niall Couper: I am very much in favour of more investment going through to the Football Foundation. If we are looking at a body that could potentially help to deliver that infrastructure and that way of doing it and ensure that clubs are investing in the right ways, which I am also in favour of, it is a good thing. We need to look at those lower levels of football and how that comes in. It goes back to that parameter question. When you look at how a distribution deal is decided, having an independent regulator to say, “These are the parameters that that deal must reach” is where you can see a real, fundamental difference.
When we look at the Football Foundation, I think you get 2.5% of the £3.19 billion that is there. What would happen if that was 5%? How many extra pitches would there be? What extra stadiums would we see? There are crumbling stadiums that are outside the Premier League. The extra facilities that could be changed and used for all the community clubs and community assets there, to use a very good Conservative phrase, is levelling up. That is what you could see in all those grounds and areas. That is what you could do, but it comes about only if the parameters of that distribution deal are robust enough and set by the regulator to deliver the change that is needed.
Robert Sullivan: I want to put it on the record that the Premier League has been far and away the most supportive and consistent funder over the 24-year period of the Football Foundation, and it is really important to say that. I am not sat here in any way saying that we do not feel well-supported by the Premier League.
Robin Millar
If I ask more questions, the Whip will start getting nervous about amendments that I might want to lay down. I will just say that every community has churches, pubs and football clubs, and there is a good reason for asking these questions.
Rachel Hopkins
Q
Niall Couper: When we look at that area, when Tracey Crouch wrote that original fan-led review it was one of the key recommendations. When you go to our clubs and look at them, the clubs that thrive and are actually forward thinking are the ones where you see that diversity put into the boardrooms and staffing structures, and where they actually try to address it.
It is a travesty of justice when you look at a football ground at a men’s match and it is 80% male. When you go into the club’s shop, nearly all the merchandise is for men. When you look at the toilet facilities, they are pretty poor for women. All those things are naive both financially and in terms of actual gender representation, and those are the things that need to change. The clubs that we have in Fair Game, which are across the pyramid, are the ones that are more forward thinking and realise that actually we cannot live in the dark ages.
A proper code of governance needs to have EDI embedded in it. It needs to be part of the way forward and part of how we look at football holistically, and that has not been the case. Having been a board member of a football club and sat there, there have been far too many instances where unfortunately it has been an awful lot of people looking an awful lot like me being the entire representation. That is not really appealing to wider society. If we want football to grow and thrive, ignoring vast sections of society is completely remiss.
Rachel Hopkins
Q
Niall Couper: When you look at it, there are a couple of things that clearly can be part of the Bill, such as the governance code. When you look at the governance code, that needs to include EDI representation, as you would see in nearly all other sports governance codes that exist. That is an obvious place. The other thing is the state of the game report, and I think we need to look at having proper benchmarking and seeing where we can improve. Fair Game has looked at a lot of this—we have done a lot of stuff on the gender divide and we are doing a lot of research on that—but we need to look at this issue as constantly going forward and improving. We cannot perform just tick-box exercises; it needs to be about developing real outcomes so that women and people from ethnic groups can feel safe within a football ground, and that is not the case.
On a side point, we have been doing some work on the women’s game and there is a significant difference in how that operates compared with the men’s game. The issue we have seen is that women are not feeling safe, and that is an area that we really need to address. Until we get to that position, we will have loads of steps and things we need to improve. Every single element in the Bill needs to address that and ensure that that goes forward and improves what we have. Going back to the Bill, I would say that 90% of it is pretty good, but there are bits that can be improved, and that is definitely one area that can be.
Brendan Clarke-Smith (Bassetlaw) (Con)
Q
Simon Orriss: I don’t think it has. I have discussed it with a couple of colleagues—barristers and other people that I know in the profession—and the general consensus is that it is unlikely that some of the FIFA statute articles that prevent Government interference in the governance of the game would be enacted. In particular, we have looked at institutions in France and Spain, which don’t have a completely identical remit to what the IFR is proposed to do, but they have some role in regulating the sport in those countries, and FIFA has largely left them to that. Although it has been noted, as you have just done in your question, it has not been something that has got people terribly agitated.
Brendan Clarke-Smith
Q
Robert Sullivan: To be honest, I am not sure yet. I would be cautious about passing a judgment on that. If you pull back a level, what does the Football Foundation need? It needs two things really: it needs a very healthy and thriving elite end of the game that generates lots of excessive revenues that can be distributed back into the grassroots; and it needs the grassroots of the game to be excited, growing and wanting to have lots of kids getting out there and playing. To answer in a very broad sense, if the regulator is allowing that ecosystem of English football to continue to thrive—not only at the top end with more sustainability, and all the things that people talked about today, but with the game still generating crazy passion and demand from kids getting out there— that is brilliant for English football and the Football Foundation. There are going to be lots of people needing great pitches, and we are going to get out there and give everyone a great place to play.
Matt Rodda
Q
Niall Couper: I think there are gaps. We heard of one earlier, about the club heritage and the name. To my mind, these are simple amendments. Making sure that there is a proper fan consultation about a proposed name change is, to me, important. You strike on a cause that is close to my heart—I am an AFC Wimbledon fan. Today, 14 May, is a significant day for me: in 2002, the three-man FA commission began its deliberations about moving the club to Milton Keynes. I have had loads of messages about that—they all knew I was coming here—and for me, making sure that a club cannot move from its area is fundamental.
At the moment, that is not clear enough in the Bill, and I think it needs to be made fundamentally clear. It talks about financial considerations still being part of the conversation. As a Wimbledon fan, it was the financial considerations of a three-man commission that allowed us to lose the club. We would describe it as our place in the Football League being given to a town in Buckinghamshire. Effectively, that is what happened. For any other club, that needs to be addressed, and fans need to have their voice heard first in that particular conversation. At the moment—I will use this phrase, although I was trying desperately not to say it—the unintended consequence of the Bill is that it legitimises franchising. That is the bit that needs a red line put through it.
Matt Rodda
Q
Robert Sullivan: It is a huge challenge for the game, but we are definitely on an upward trend. For the first time, we have been able properly to map and record, and to improve grass-pitch quality by use of digital data. That has been a big change, because with 30,000 grass pitches in England, it is hard to get out to reach them all, but we can now use technology through phones, so we can assess those pitches remotely and help clubs to improve them, to do the simple things, and give them funding that can address some of the waterlogging situations.
We now have more than 8,000 of what we have rated as good-quality grass pitches. That is a big step forward on where we were five or 10 years ago, but we are perhaps only halfway through that journey. We are going to do everything we can to escalate that number as quickly as we can, and to build many more artificial grass pitches, because of the difference. On a good grass pitch that does not waterlog, we get maybe six hours of play; and on a good artificial pitch, we can get 60 hours of full-on community usage for kids, disability or vulnerable groups, older men who are coming for dementia classes, and whatever it might be. Those artificial grass pitches, which is what we want to invest in, are the game changers that will help us to support that growth in the women and girls’ game and all other parts of grassroots football.
Dame Tracey Crouch
Q
Niall Couper: Yes is the answer. I think it is something that we need to look at, considering that—in my mind—a lot of it depends on what happens with this Bill. It is important, because it is about redistribution and giving support to a lot of the clubs that are trying to do the right thing in the right way. Again, to go back, it needs to be caveated to make sure that it is ringfenced where possible to support the grassroots pitches.
I talk to clubs like Tonbridge Angels, Maidstone United, Sutton United and so on. Those clubs will talk about wanting to have the 3G pitches and their training pitches in there so that they can be put to community use—those 60 hours a week. That is really what they want, because that is where they see the big growth. That is where your club becomes a community hub. That is where it makes the difference.
For me, the money that you talk about from the transfer levy, if you give it to those sorts of pitches and so on, is where you can make a real fundamental difference. Where it will go, I do not know, Tracey. It is one perhaps that we can talk about once we are post the Bill. It was something that I was really excited about when you proposed it—it really appealed to me. It is something that came a bit from left field, but it is something that we should look at in the months and years ahead.
Ian Byrne
Q
Robert Sullivan: It is a big challenge, Ian. When we fund a site, we will put in terms and conditions on such sites that should provide a check and a challenge on the affordability. So, if that is happening on a site that we have funded, we should pick that conversation up separately, because when we provide a grant, it comes with terms and conditions: we need to see, basically, an income and expenditure plan that has sensible and appropriate pricing policies with it.
If I may go back to pick up on Tracey’s offer—
Dame Tracey Crouch
For the money—
Robert Sullivan: For the money. I am agnostic about where the money comes from, but we have a massive challenge, and we need as much as possible going into grassroots facilities.
To make one supplementary point about what Niall said, he alighted on a really interesting example. Sutton had a fantastic 3G pitch that was doing brilliant community things, but when Sutton went into the EFL, it had to pull that pitch up. That is an interesting question, although it is inadvertent. I understand all the competition reasons why that might be the case in the EFL, but Sutton went from having a very sustainable community asset to one that was not when it moved up into the EFL pyramid. That is an issue that I would potentially raise as well.
The Chair
As there are no further questions from Members, I thank the witnesses on behalf of the Committee. Thank you very much for coming.
Ordered, That further consideration of the Bill be now adjourned.—(Mike Wood.)