Football Governance Bill (Third sitting)
Thursday 16th May 2024
(2 weeks, 2 days ago)
Public Bill CommitteesFootball Governance Bill 2023-24 View all Football Governance Bill 2023-24 Debates Read Hansard Text Amendment Paper: Public Bill Committee Amendments as at 16 May 2024 - (16 May 2024)
The Chair
I invite our first witness, Ben Wright, the director of external affairs at the Professional Footballers’ Association, to start his evidence. Can you introduce yourself, please?
Ben Wright: Thanks very much for the opportunity to come and speak to you this morning. My name is Ben Wright, and I am the director of external affairs at the Professional Footballers’ Association. The PFA is the trade union for all current professional players in the Premier League, the English Football League and the Women’s Super League. We have approximately 5,000 current members, and provide support to approximately 50,000 formers members as well.
Stephanie Peacock (Barnsley East) (Lab)
Q
Ben Wright: Thanks for the opportunity. First, I will say that we have really appreciated the opportunity to engage throughout this process, from the fan-led review and then all the way through to the publication of the Bill. We welcome the support of the Minister and his officials, who have been very willing to listen to our views on this.
On the Bill as a whole, we have always taken the view that, if football was able to show that it can regulate itself, the Bill should not be necessary. I think it has been said to you before that we should view it ultimately as a failure of football that it has got to this point. However, we are broadly supportive of the way that the Bill has been presented. The fact that it is light touch and contains a relatively tight and focused remit is the right approach at this stage. We believe that a proposed code of governance, which can be established by the Independent Football Regulator, rather than being specifically set out in the legislation, is the right way to go.
We do think that the omission of any mention of players in the Bill, which you nudged towards, is significant. I am paraphrasing something that our friends at the Football Supporters’ Association said to you the other day, but we certainly do not view it as a conspiracy to make sure players’ voices are not heard; I think it is possibly a result of a perhaps understandable determination to reduce the amount of specification and detail in the Bill and to keep it very tightly framed. However, the Bill mentions a lot of things—leagues, governing bodies and all the rest of it—and we always take the view that there are only two groups without which professional football cannot exist: those who play it and those who watch it. If you take football out of the Bill—this is not intended as a criticism of other regulated industries, but I would imagine there is possibly slightly more scrutiny of this Bill, because it is football—the Bill is ultimately about enabling the regulation of an industry. We think that there is a need for the employees in that regulated industry to be recognised as a group who have a degree of importance that perhaps elevates them above other stakeholders. Their views should be sought and heard.
Stephanie Peacock
Q
Ben Wright: In terms of the Bill itself, we would like to see it reflected in the regulatory principles. The PFA and I think that there is almost a philosophical need for players to be identified and for their importance in the game to be established in the regulatory principles.
There are other aspects, though. There is a provision in the Bill about the ability of the regulator to pass views on new competitions and applications for new competitions, but it does not specifically mention that players should be consulted about that. There are two reasons for this: the slightly philosophical and then the practical. In a lot of the things that the IFR could have the capacity to do, players are one of a very small group who could be substantially and substantively impacted by the decisions it makes. From a trade union point of view, I am talking about their contracts, which will be explicitly linked to the competitions they play in, the financial security of their owners, and what any decisions by the IFR might mean for their employment contracts. That is why, from a practical reason, I think they need to be recognised.
With things like new leagues, the obvious and clear reference point is the development of European Super League proposals, which is understandably very much framed around the fan opposition there was to that. It often gets forgotten that there was also a huge backlash from players towards that—it developed to a point where players were finding out about it by hearing reports on Sky News, or wherever it might have been, on a Sunday afternoon. As the union, you are getting calls from players saying, “What’s all this about?”. Some of them may have moral reasons—to term it loosely—why they might have a problem with where competitions are hosted, and they might have practical reasons for wanting more information, based on their employment contracts.
Stephanie Peacock
Q
Ben Wright: Again, that is possibly an area where the code of governance might be useful. We had long conversations at the outset of the fan-led review, and the White Paper does actually reflect quite a lot around player welfare. There were specific mentions—I know officials at the Department for Culture, Media and Sport are still working on this, and have taken it seriously —of player welfare within club academies and the right for independent support to be offered to those players.
I think the code of governance is absolutely a discussion to be had. What I would point to, though—I think the FA talked about this when they spoke to you the other day—is that there are well-established mechanisms in place around a lot of player welfare issues that have been very effective. A lot of those are actually enshrined in their contracts. One of the things that we, as a union, always slightly guard against is the idea that while football is not a normal profession, it is a normal job, and you have the rights to the same employment protections and rights of protection from your employers and expectations as anyone else should have. That is fundamentally where they should be enshrined. We would support that remaining the case.
Robin Millar (Aberconwy) (Con)
Q
Ben Wright: You will probably be unsurprised to hear me say no. I think there is—
Robin Millar
It is not just me; there are a lot of people who will be interested.
Ben Wright: I absolutely understand, and I heard the evidence the other day as well. We have always taken the view that financial sustainability in football is fundamentally based on sensible, long-term club ownership decisions that are properly regulated and properly scrutinised. There is always a tendency, when that fails —when clubs potentially spend beyond their means, and when a market does arguably and potentially get inflated—for that to roll downhill, and it always ends up that the problem is the money being paid to the players, rather than the decisions that are being made to pay those players that amount of money.
A player has a right, like any other employee, to negotiate within the market that they exist in. We have always taken the view that it should not be the responsibility of the employees to ultimately become part of an artificial restraint on a market. Markets can be shaped, restrained and managed organically. A lot of Premier League clubs, for example, will have stipulations written into contracts that mean if they get relegated, players’ wages naturally go down. That, as far as we are concerned, would be a sustainable ownership decision, but it is something that has to come from the clubs and the owners themselves, rather than that kind of rolling down towards the players.
You make the point with someone like Haaland. We are always at pains to point out that very obviously, our most high-profile members will be people who play for the biggest clubs, but they are not reflective of the majority of footballers. I understand the reference that was made to the evidence that was given the other day, but most footballers do not live in those circumstances where they are on inflated, long-term contracts. It can be an incredibly insecure career, and I think that that needs to be recognised.
Robin Millar (Aberconwy) (Con)
Q
Ben Wright: The first point I make about players wanting to disassociate themselves; one of the reasons we want players represented in the Bill is for the exact opposite of that, it is so that players do have a voice in this, which at the moment they would not necessarily be guaranteed. Could you repeat the second question?
Robin Millar
Would the introduction of a regulator would actually help owners to manage players’ wage expectations?
Ben Wright: I do not necessarily know that I would accept the premise that a regulator would help owners manage player’s wage expectations. What a regulator can do is make sure that the decisions clubs are making as private businesses about what to pay their employees are sustainable decisions. Ultimately, as we said at the start, this is something that football should have been able to do, but a regulator’s job as far as we understand it, is not to come in and, we would argue, artificially suppress wages. A regulator’s job is to make sure that when clubs write their budgets, and their payrolls, that they can fulfil them. Clubs as private businesses have got to be allowed to do that.
Rachel Hopkins (Luton South) (Lab)
Q
Ben Wright: We have been heavily involved in the Karen Carney review: obviously it is a different strand of work at the moment. We have taken the view that it is probably correct at the moment that it does not fall within the Bill. They are businesses, and leagues, that are at very different stages of development with very different issues. The stage we are at with women’s football and the professionalisation of women’s football— obviously, we speak representing every player in the WSL—is a very different stage of the professionalisation journey. I think it is right that the new structures being put in place around NewCo and the professionalisation of the Championship is allowed to be developed and owned in its own way before direct regulatory involvement. That is not to say that in the future there may not be a requirement or a need for a regulator to get involved. Given the scale and scope of the leagues, and their differing stages of development, we are happy, or comfortable, at the moment, that it does not fall under the auspices of the regulator. But that should not something that should be a sealed deal, and maybe that is something ready to be developed.
Rachel Hopkins
Q
Ben Wright: We always bang the drum bout not making the same mistakes as the men’s game, particularly in areas such as fixture congestion in the calendar. What drives fixture overload and player workload overload? It is money. There is suddenly a realisation that people can invest and make money from holding competitions, and then, as there is in the men’s game, there is a race for space. So they try to fill the calendar. It has not worked in the men’s game and it will not work in the women’s game. That is something we watch very carefully. For it to be sustainable there has to be a proper balance with international football, which until this point has been the most high-profile format for the women’s game, particularly for an English audience, but it also has to allow the space for the domestic leagues to develop. That is something we are seeing play out in the men’s game, where there is a conflict between international scheduling and international competitions, and domestic competitions. You have to give our domestic game the room to grow and the space to do that without it being in competition with national and international formats.
Anna Firth (Southend West) (Con)
Q
Ben Wright: I do not necessarily know if “unintended consequences” is how we would frame it; it is more about the need for awareness by the regulator of those consequences. A lot of them come down to practical impacts on players, and their contracts, rights and conditions. I believe that this is referenced in one of the amendments that you will consider, but where at the moment there is an outlining of the IFR’s ability to make decisions that impact clubs, whether that is sanctioning measures or things like that, there is not necessarily a huge amount of detail about what that might look like for the players, who almost inherit the decisions that are put on to clubs. That is not something that needs to be laid out in detail within the Bill, but we would argue that that is why it is so important that players and the potential consequences—unintended consequences, if you like—are reflected in the work of the regulator and in why it has that engagement with players and their representatives.
Anna Firth
Q
Ben Wright: With the National League, the PFA has members who are constituted as current members of the Premier League, EFL and the WSL, then we have former members—approximately 80% of players in the National League are former PFA members, so they retain all that access and can come to us for support. At the moment, it is not constituted as a professional league. That may change and it might be that the regulator has a role in changing that, because it brings it closer to the EFL and the Premier League. But that is always something we will look at closely, ultimately.
Ian Byrne (Liverpool, West Derby) (Lab)
Q
Ben Wright: In terms of regulation of agent payments?
Ian Byrne
In terms of regulation.
Ben Wright: We take a principled position on this. Ultimately, these are usually our members who are employing agents. We are very careful never to immediately jump on this idea of “Agents, bad”, because there are some good agents—it is like any other industry. Some of our members feel they get enormous value out of their agents. I would argue that it is almost exactly like what I described with the role of the IFR, in that the role of agents needs to be properly regulated and properly licensed. I think moves and measures are being taken to do that.
Ian Byrne
Q
Ben Wright: I think it is already happening. I am sure that this is work that the Department will have done, but the IFR has to be very careful about the legalities and where its scope can end. If they are licensed agents who are being paid in open transactions by their clients, we do not philosophically have a problem with that, but that regulation of agents is important, yes.
Matt Rodda (Reading East) (Lab)
Q
Ben Wright: Absolutely, I have an example. It was mentioned by the FA when they gave evidence the other day. There is in existence a committee called the Professional Football Negotiating and Consultative Committee—football is full of acronyms, so I am sorry about this, but the PFNCC. It is something that has worked well, essentially to stop leagues, clubs and unions making unilateral decisions that might have wider impacts. It is important that the regulator, when it comes in, understands the role of those bodies and hopefully acts in a way that complements them. But again, it is important that the stakeholders within those groups act in a way that shows respect to their functions, and make sure that they function properly so that the regulator would not need to get involved to supersede them.
The Chair
I am afraid that brings us to the time limit; I have no discretion to extend it. Thank you very much for your help.
Examination of Witness
Sanjay Bhandari gave evidence.
The Chair
Welcome, Mr Bhandari. Could you introduce yourself briefly? Then we will have the first question.
Sanjay Bhandari: I am Sanjay Bhandari, the chair of Kick It Out, an equality and inclusion charity. It is the leading inclusion charity in football. We have been around for 30 years and our mission is to eradicate discrimination and make football a game where everyone feels they belong.
Stephanie Peacock
Q
Sanjay Bhandari: Last year, we had just under 1,000 reports. We have had steadily increasing numbers of reports for the last four seasons. Racism is always a steady high, and we have had increases over recent years in sexism and misogyny, in homophobia and transphobia and, over the course of the last year in particular, in Islamophobia and antisemitism. That is what you would expect with what is going on in the outside world, but each year we have increasing numbers of reports, and of reports per incident. That tells us that fans are doing their bit and sending a message that they are not tolerant of discrimination.
Stephanie Peacock
Q
Sanjay Bhandari: There is an opportunity to be more front-foot on equality, diversity and inclusion that the Bill could have taken. Wearing my hat as having 30 years in the regulated industries, part of the challenge is: what is the purpose of a regulator? What harm are you guarding against? How do you craft that?
You could argue that football is different. Football is not banking; it is not like any other industry. In football, clubs will routinely project that they represent their local communities, but do they? There are several clubs that actually represent the local communities that lived there 40 and 50 years ago. When those people come from outside to the stadium, the locals go in their homes. So actually, who is holding them to their promises? You could argue that the Bill should go further because clubs are heritage community assets.
There is also another way in which football is not like banking. A banking regulator can take action that will put you out of business. No one has ever put a football club out of business from a regulatory perspective, and no regulator will. Everyone knows that the political ramifications and the impact on communities are so large that it would never happen. Football gets a benefit that no other industry gets. That is because it plays such a significant part in its community, with the link to community and the creation of community cohesion. What price should it pay for that? The price is that it should be held to account on representing those local communities.
Stephanie Peacock
Q
Sanjay Bhandari: There are lots of really worthy initiatives and lots of good intentions, but the road to hell is paved with good intentions. Good intentions are not enough. Intentions do not change outcomes. It is outcomes that we want, and it is actions that change outcomes, not intentions and rules. There have been lots of things: the Premier League equality standard is a really good development; the football leadership diversity code had noble ambitions. But those are all members’ organisations with members’ rules. The rules can be changed by the members. They are not regulators: they are administrators. The leagues are just like your local golf club management committee. If the members of the golf club do not like the rules, they will change them if they think the members of the management committee are overstepping or overreaching, and that is the position we are in.
As an example, when we were creating the football leadership diversity code, one of the weaknesses we saw was that you do not have whole-workforce transparency. All you are doing is looking at the new hires. Say you hire five new people, and one is from an ethnic minority and two or three are women, you look like you have met the football leadership diversity code standard. But you have 500 employees. You have no idea how representative your entire workforce is. We feared at the time that that would be the weakness, and those fears have come to pass. Why could we not get the mandatory workforce transparency that we asked for during that process? The clubs would not agree to it. It is the golf club members agreeing the rules of the committee. That is why you need third-party regulation, to impose that from above.
Brendan Clarke-Smith (Bassetlaw) (Con)
Q
Sanjay Bhandari: Just before I answer that, I should have said thank you for the opportunity to speak and for inviting me. I thank the Minister and the teams for their support and engagement throughout the last three years.
I think quotas are actually illegal in this country, because positive discrimination is illegal under the Equality Act 2010. You can have positive action, so you can have differential investments in talent, and leadership and talent programmes, but you cannot have quotas. What you can have is representation targets, but in practice, the way people may execute them is to see them as quotas, which can be quite negative. Ultimately, it is down to the regulator. It is down to the current flavour of what is going on in governance.
I was in one organisation where we set targets that actually helped to increase its performance. We were 17,500 in the UK and 300,000 globally, and in the business units that executed best on diversity, we could point to a one-point difference in margin. We could go to our partners and say, “Would you like more profit?” Funnily enough, they quite like that.
It depends on the particular issue. There are still some very stubborn areas of under-representation in English football. Black people make up 40% of players and 14% of the coaches qualified with a UEFA A licence, but only 4% of coaches. There is something going wrong in the recruitment system. South Asians are the single largest ethnic minority in the UK, but they make up only 10% to 15% of players at grassroots level, 0.5% of professional players, and 1% of the academies from age six. That is not acceptable. There is something going wrong in those recruitment processes. Those are the kinds of things that call out for targeting.
Matt Rodda
Q
Sanjay Bhandari: We see clubs like Brentford, which I worked with when it was recruiting independent non-executive directors. I helped to support that process. Having non-executive directors on the board is something that other people may talk about.
The Premier League is doing some good work trying to develop black coaches. An organisation called BAMREF has been working very effectively with the FA and Professional Game Match Officials Limited on developing the pipeline and pathway for Black and Asian referees and female referees. In many ways, that is one of the best examples of interventions that are connected across football, with a pathway to try to change the way the workforce looks. It is a relatively rare example. Football is a team sport, but not off the pitch. We are really not very good at teaming across, but that was a rare example of good teaming.
Rachel Hopkins
Q
Sanjay Bhandari: I think it is because the culture of football is such that people do not feel comfortable coming out. Every time there is a suggestion that someone might be coming out, there is a black silhouette on the front page of a tabloid newspaper, which then further discourages people from coming out. If we get the culture right, people will feel more comfortable being themselves.
Rachel Hopkins
Q
Sanjay Bhandari: After the Government’s response in September 2023 to Dame Tracey Crouch’s excellent review, we said that football needed to do three things. One was that EDI requirements should be incorporated into the club licensing system via the code for governance. It kind of appears that they now will be, although the wording is slightly ambiguous and probably could benefit from being clarified in schedule 5.
Secondly, we said that the processes for recruiting the leadership of the IFR should adopt best practice on inclusion. Again, there is some slightly ambiguous wording in relation to the recruitment of the CEO, which could benefit from being clarified.
The third one was that the requirements in the code for football governance should include, along with other requirements, significant mandatory data transparency reporting on representation, recruitment, progression and cases of discrimination. Transparency is the greatest disinfectant. Clubs are often collecting all this data for the Premier League equality standard or the EFL code, but they are not publishing it, so no one can hold them to account on it. We are asking for consistency and transparency.
I will give an example of where it goes very wrong. There are currently between 200 and 300 mechanisms for reporting discrimination incidents in English football. Those are 200 to 300 orphaned databases of information that do not speak to each other. We probably run the biggest reporting app. I have been banging my head against a brick wall for five years asking for insight from that data to be able to say, “What are the root causes? What are the outcomes of those incidents?” Then we can we create data-driven policy interventions, but we have not been able to get the clubs to agree to share the data.
From the clubs’ perspective, and I suppose often very legitimately, they think that data privacy is a worry. I do not share those concerns in the same way; I think there are exemptions that allow it. Fans have done their bit and said what they want. They are not tolerating discrimination. If we do not listen to them, we are doing them a disservice. Football needs to do its bit, and if it cannot volunteer to do that, an independent regulator can certainly cut through and help to create the exemptions to get that data sharing. Then we can start addressing the root causes of some of these incidents.
Shaun Bailey (West Bromwich West) (Con)
Q
My second point is on D&I, which has obviously been really important, particularly in the financial services space. Do you think there comes a point, which perhaps could be addressed in the Bill, at which there is not just a proactive obligation but maybe even a penalty system? It could be that if your club is not meeting those standards because of incidents like those you have highlighted, you as a senior manager become accountable, just as you would in a professional setting elsewhere.
Sanjay Bhandari: There is an answer in principle and an answer in practice. The answer in principle is that there should always be a sliding scale of sanctions, depending on the degree of the harm being caused. Whenever we are in any kind of regulatory or law enforcement regime and create sanctions frameworks, we reflect not just the offence itself, but the offender, the nature of the offence that has been committed, and whether it is persistent or egregious. You need to have that sliding scale. In reality, it will be relatively rare where you get to that point of actually sanctioning an individual. There might be rare occasions, but I think they will be highly unusual cases.
Damian Collins (Folkestone and Hythe) (Con)
Q
Sanjay Bhandari: Yes. Schedule 5(7)(2) says:
“‘Corporate governance’, in relation to a club, includes”—
so it is non-exhaustive, and you could argue that it includes equality, diversity and inclusion. Some of the things included are
“the nature, constitution or functions of the organs of the club…the manner in which the organs…conduct themselves…the requirements imposed on organs of the club, and…the relationship between different organs of the club.”
That is probably the area where you might amend it.
If you go back to the September 2023 Government White Paper response, there is a list. Paragraph 65 on page 30 talks about the principles of governance and a wide range of responses, and then it lists the kinds of issues that were regarded as principles of governance, which include:
“independent non-executive directors; integrity; equality, diversity and inclusion (EDI); sustainability; fan representation and stakeholder engagement; training on appointment; following best practice with regard to board constitution and decision-making processes; communication and transparency; and promoting clear guidelines and processes.”
The benefit of adding clarity to schedule 5(7)(2) is that we also have to remember what environment we are in. I have worked in lots of environments, and football is the lowest of low-trust environments. If something is not explicitly in there, there is a fear that it means it is not going to be covered. Our submissions were in response to noises we were hearing that there was going to be an attempt to artificially fetter the power of the regulator. Our view is that if there is going to be a regulator, it should be a standard regulator with the standard inherent powers that any regulator would have to perform its functions and deliver on its objective, in the same way that any other regulator would, so to artificially fetter it to reduce the power to deal with equality of inclusion would be wrong in principle.
Damian Collins
Q
Sanjay Bhandari: It should. We are doing a project with the University of York, and we are up to 40 pages of a review looking at lots of different regulators in comparison to other industries, and saying, “What should be in that code for football governance, which we will deal with along with the regulator once constituted?” If the provision stayed as it was, though, we would argue that it includes equality, diversity and inclusion, because it is a non-exhaustive list and it falls within some of the subcategories.
It would be difficult, if it was in the corporate governance code under the Companies Act, to say that it is not included. The fear, as has been expressed by other people giving evidence, is that football is a low-trust environment and that is why you are getting this response asking, “Is this a way of wriggling out?”
Mr Clive Betts (Sheffield South East) (Lab)
Q
Sanjay Bhandari: Our view is that the regulator should have the ability to have oversight in the way that any other regulator does, as a matter of governance, and that what should go in the governance code is what reflects contemporary best practice. In our experience, to drive change it is probably a couple of different things. There is the base standard and mandatory stuff, and we think the key to that is transparency reporting. Again, transparency is disinfectant. What there might then be is good and/or best practice guidelines, reflecting what is going on in other industries and in this industry. It would say, “Here are some examples of good or best practice that the good or the best institutions are doing,” and try to encourage change through that.
The Chair
Thank you for coming and for giving your evidence.
Examination of Witnesses
Alistair Jones, Sarah Turner and Tim Payton gave evidence.
The Chair
Good afternoon. Thank you for coming along. Would each of you please introduce yourselves?
Tim Payton: I am Tim Payton, and I am from Arsenal Supporters’ Trust.
Alistair Jones: I am Alistair Jones, and I am from West Bromwich Albion independent supporters’ trust, formerly Action for Albion.
Sarah Turner: I am Sarah Turner, the chair of the STAR: Supporters’ Trust At Reading.
Stephanie Peacock
Q
Tim Payton: It would be good to see supporters’ trusts recognised in the Bill. They are democratic organisations registered with the Financial Conduct Authority, and they bring governance standards that reflect the wider aims of the Bill.
There are other areas where the Bill could be strengthened to recognise supporters. I want to highlight one that is almost breaking news: you might have seen that, overnight, FIFA, at its congress, set up a committee to look at allowing club games to be played overseas in different jurisdictions.
In clause 48(4), which relates to the duty not to relocate, it would be very reassuring to see supporters given a direct role in engagement with the IFR before approval to relocate is given. I can promise you that the next event where you will see my members marching on stadiums and flooding your inboxes at the levels they were after the super league was announced will be when they try to move Arsenal, Spurs, West Brom or Reading games to jurisdictions overseas. A tightening of that area for supporters would be really welcome.
Alistair Jones: For me, I think it is a lack of trust from the organisations that run football. Independent supporters’ trusts that have been democratically elected by the fans that support the teams will definitely help. Since 1992, there has been a constant mistrust of regulation and football in this country, and having fans able to represent the views of all the fans that they cover will definitely help.
Sarah Turner: We were disappointed that the “golden share” idea was not taken through from the White Paper, because we feel that fans are in the best position to protect our heritage and other things that are in fans’ interest. We think supporters’ trusts are exactly the right way forward, but we would have liked that in a more authoritative way so that we had more of a say on heritage, kit, moving stadiums, changing names and anything else like that.
Stephanie Peacock
Q
Sarah Turner: Reading have had a terrible couple of years. If an independent regulator had been in place, they may have been able to stop some of the things from happening to us. We were in a position where no one could actually help us. We had an owner who was unwilling or unable to fund the club. The EFL was unable to help because it could not make him sell the club.
The impact on the community is huge. Reading is a small town; the football club is at the heart of it. The uncertainty has really affected everybody, not to mention the liabilities: people have not been paid for things at the football club, because it has been unable to.
Alistair Jones: We have just recently come out. We speak to Reading regularly. West Brom were purchased by Mr Shilen Patel and Bilkul Football in March 2024, but until that point there was a real genuine fear that West Brom would no longer exist. We did not have enough money towards the end of the season.
It became apparent that we had to do something ourselves as a voluntary fan group, and that just cannot be right for football moving forward. There were questions back to 2016 and the initial purchase about how on earth a company with no transaction or trading history at all was allowed to purchase West Bromwich Albion for north of £200 million, which was way above the market value.
We look at many things, and the fundamental reasoning for me is that it should not be down to fan groups such as those at Reading and West Brom to try to protect their football clubs. There should be something in governance to be able to stop that before it gets to that point.
Stephanie Peacock
Q
Sarah Turner: I think fans need to be consulted on where the club plays, because people can move clubs and historically people have moved things away; and on the sale of clubs, because our assets have been stripped at Reading and sold on.
Although there is protection in the Bill for grounds, we would like that to be extended to cover training grounds. Our owner split off the training ground, the stadium and the car park from our club, and they were all sold under different entities, which has made the sale very complicated. We would like a regulator to look at protecting the other assets as well as the stadium.
Alistair Jones: I will just touch on that very quickly. We have had a similar experience, but we have come out of it now. There was a spider’s web of who actually owned West Brom behind the initial vehicle of Yunyi Guokai Sports Development. We proved where the money had come from—it was China in this particular instance—but there has to be some sort of ability to stop that moving in the future.
On corporate governance, for 10 years we have had one named director of West Bromwich Albion Group, so we support schedule 5. We need independent non-executive directors to ensure corporate governance in football clubs.
Tim Payton: I would like to briefly cover not just what we are consulted on but how we are consulted. I will use ticket pricing as an example, because there are now supposed to be advisory boards in place, but the process this year seems to be really unsatisfactory.
Before coming here, I put a message on the Premier League loop, where we talk to all the other trusts. I had messages from the Tottenham Hotspur Supporters’ Trust, Save Our Seniors at Spurs, Spirit of Shankly, Fulham Supporters Trust, Foxes Trust, Nottingham Forest, Newcastle and Wolves 1877 Trust, and all of them feel that there is not really fan consultation on ticket prices; it is more broadcast. You go into a meeting, you get told the announcement, and an hour later it happens.
In the evidence I put in—as policymakers, you will understand this—I thought about a framework almost like a supporter impact assessment following a regulatory impact assessment. It would be very basic: you set out what you plan to do, you have a consultation over a number of weeks, you particularly listen to affected parties—at Arsenal at the moment, they are trying to move season tickets from all senior concessions—and then at the end you produce a report.
In producing a report and explaining what you have done, you bring that accountability and transparency, which might lead to better policymaking. I know that is probably not for the face of the Bill, but we would welcome the understanding in guidance that there will be thought about what effective consultation is, as well as the list of items we are consulted on.
Alistair Jones: It is not just the Premier League. Fan representation is not just about ticket pricing; it is about the times of games too. Next year, more than 1,000 games will be televised by the broadcast partners just in the EFL alone. That means that an average of 20 games per season will be covered, but what does that mean to the travelling fan? For instance, I have to be in Southampton for one of the biggest games of our lives at 8 o’clock tomorrow night. Now, I have young children, and if there is extra time and penalties—hopefully we win—it will be a half-past 2 or 3 o’clock journey back. I understand that commercial revenues are important, but that is part of being a fan who goes to these games, so that needs to be thought of as well.
The Chair
I have six colleagues who want to ask questions, so can we make them brief, please?
Damian Collins
Q
Tim Payton: Specifically, at the moment it mentions Premier League broadcast revenue, and that does not address where the game is moving. I picked up the widespread dismay on Second Reading and on Tuesday about the loss of FA cup replays. Why are FA cup replays going? Because the European competitions are expanding. The European revenue that will come in is not captured by the relevant revenue clause, because it goes directly to the clubs. Similarly, FIFA is going to expand the Club World cup, and the big clubs are earning more and more from commercial revenue. I know there is a heated debate about whether you have parachute payments within that clause and how it is triggered, but it is almost an irrelevant debate to us until you address the relevant revenue.
The clause also does not future-proof the Bill because at the moment if you move to individual broadcast selling, which is what the large clubs want to do, the clause is meaningless because there is no revenue left to be redistributed. I think a simple wording change could make it much more effective.
Damian Collins
Q
Tim Payton: The way Premier League broadcast revenue is distributed is fantastically collective. I think it is 1:1.6, so it really helps to keep a competitive balance, which of course Richard Masters was stressing the importance of to all of you. But the regulator is in effect having the powers over the wrong bit of the broadcast income. It is Manchester City, Manchester United and Arsenal’s revenue that must be included, so that we have a progressive system of redistribution, but also a check on where the game is heading.
Robin Millar
Q
Alistair Jones: For the EFL, the precipice between the bottom of the Premier League and the top of the Championship is massively disproportionate to wherever it has been before. The simple fact is that over the 72 football league clubs, there is £450 million of losses just last year alone. That cannot continue—everything has to be sustainable.
For me and for Albion fans, a fairer distribution of wealth and a fairer redistribution of Premier League income would make that difference less between the 20th team and the 21st team in the country. At the moment, over £50 million of turnover is written off more or less overnight, and that is dependent on whether parachute payments are consistent. Also, the lack of competition is a big worry. The bottom three of the Premier League were the top three that got promoted last year, and they have just swapped places. It is more than likely that two of the three will be promoted this year.
Sarah Turner: We would like parachute payments to come under the independent regulator because we think it does make it an unfair competition. You are striving to reach the promised lands, so you will throw everything at it, and it makes owners gamble and spend recklessly, which is what has happened to Reading and many other teams. It is an unfair competition because you are pushing yourself so far to get there. We were relegated because of a points deduction to League One, and we are striving to get back up to the Championship.
Tim Payton: We are here because of the European Super League and the furore. I was in the meeting with the Prime Minister where he said he would “drop a legislative bomb” on it. What I hope you are all doing is passing legislation that means we do not need to throw bombs around but we have a good defensive mechanism in place. The two big threats to the heritage and competitive balance of the Premier League are all the revenue being earned outside of that in the UEFA and FIFA competitions and, as I said before, the relocation of our games. I would urge you to look closely at the suggestions we have made for tightening up in those areas.
Matt Rodda
Q
Sarah Turner: It is a good start, but there is probably more we can do. I do not know if the owners and directors test is a duplication of the ones that the EFL will do or whether it will hand that over to the independent regulator. We think there needs to be some real-time tracking of what is going on at clubs because they are continuously overspending and risk-taking. We think the regulator should be taking an overview all the time of what is going on, rather than just at the beginning when they purchase.
Alistair Jones: I concur on real-time accountability around accountancy. From looking back at 2016 when we were purchased, it would be—quite simply; I am a simple man—a great case study to look at. If we could look at West Bromwich Albion, when they were purchased in 2016, and use that as a case study, what if the same company came and purchased West Brom now? Would it still be allowed? If that were the case, quite frankly there would be no point in doing it because it has proven that it was a poor opportunity to buy the club.
Tim Payton: In our evidence, we put forward the importance that the independent non-executive director can have. Following up from what you heard from Sanjay, we think that it would be powerful having in the Bill the need to have two INEDS on the board of each club, and the regulator obviously could then set the guidance and framework. Of course, we already have that in the corporate governance code, which is set out in—I think you mentioned—the Companies Act. Where I see it linking across to other areas of the Bill is the INED under the corporate governance code already has a lead responsibility to consider stakeholders, and of course the stakeholders in football are the supporters.
When we look for improved fan engagement, we do not just look at the fan engagement standard, but to the INEDs on the board being there to ensure that effective fan engagement is taking place. Good INEDs are an early warning system to many other things going wrong. The Minister will be aware of the improvements that have come to national governing body governance through the corporate code. He inherited all that from the pioneering work that Tracey pushed through. I really hope we can have the same framework for the football clubs under the IFR.
Brendan Clarke-Smith
Q
Sarah Turner: I think they probably can, but the FSA do a fantastic role in that. Your first port of call would always be to go to them, but the independent regulator may go over it on the financial side.
Brendan Clarke-Smith
Okay. Alistair?
Alistair Jones: I agree. The FSA does a fantastic job for independent supporters’ trusts. It is more fitting for us to report into an FSA sort of body rather than directly into an independent regulator, if you want my honest opinion.
Tim Payton: The Arsenal Supporters’ Trust used to own shares in Arsenal and used that association to have a role in the governance. Unfortunately, we were squeezed out. Under companies law, somebody reached 95% and compulsorily took the shares off us. I do not see a practical way of going back to us being shareholders in the club any more, so I very much look to the Bill to, in effect, give us shadow ownership and powers going forward. I hope we see this Bill on the statute book and that it will help supporters have a more meaningful say in their clubs.
Alistair Jones: It is very difficult to give you an all-encompassing answer, because we have 12% of shareholders, represented by Shareholders for Albion. If it had not been for them telling people about the issues we have, it might have been a very different story for us at West Brom. So it is a very difficult to give an all-encompassing answer.
Anna Firth
Q
Sarah Turner: It is not, is it? It cannot be a fair distribution. The whole system and pyramid is not fair. That is one thing we would like the independent regulator to be looking at—how money could be distributed down. At Reading we looked at some of the players that have come forward and are starring in the Premier League, and they were made in the National League and the EFL—so yes, we think so.
Alistair Jones: I could not agree more in terms of the distribution, and it is not just because we are at the top of the Championship or in the Premier League. We believe that it cannot be right. There is no way that the top 20 clubs can have so much power in this country over the 72 below. It has got to change. We can point to the FA Cup replays being scrapped for rounds one and two. That was decided by the Premier League, and they are not even entering it until the third round. How can that possibly be right? It has to change.
Tim Payton: The Arsenal Supporters’ Trust is also your ally, because why did we fight the Super League so hard, together with the supporter groups at all the other big clubs? We wanted to fight the self-interest. What is football if Southend cannot dream of coming up to the Premier League? Football is about us all working together. It strengthens the pyramid, promotion and relegation, and the jeopardy. Everybody must be able to dream in football.
Anna Firth
Q
Alistair Jones: Personally, no. I do not think it goes far enough. I think it needs some work on it at the moment. Again, I stress that the competition is key. There are 51 clubs that have participated in the Premier League since its inception in 1992. There are only six that have stayed in there. That means that 45 clubs have been spread right across the Football League and even the international leagues—Oldham being an example that are now in the National League but were in the Premier League. We have to support, carry and help those clubs.
Sarah Turner: I would really hope that the Premier League and the EFL could come to an agreement without requiring the backstop.
Tim Payton: I would just take you back to what I said before, which is that if a backstop is going to be activated, the Bill needs to redefine “relevant revenue”, so that it is effective. It must capture all the revenue coming into the game, rather than just the broadcast revenue, or it will not do what you want in the years to come.
Shaun Bailey
Q
Tim Payton: It is a very good question. I think the regulator must have some means of acting a bit like an Ofsted, or there must be a check and balance whereby supporter trusts and other organisations can go and say they do not feel the consultation is being effective, but of course, you do not want to reach that stage. You want effective consultation, so let us work with the IFR and the clubs to come up with a framework. I think we all know what good consultation looks like. As I set out, you announce your proposals; you talk to the affected parties; and then, at the end of the process, you have to write up and explain where you have got to. But it will be important that the regulator has some real teeth to enforce that on clubs, because it will be about changing a culture that is very much one where clubs say, “We’re going to do what we want to do, and you’re so loyal and committed to us that you will suck it up whatever we do.”
Alistair Jones: We are in a fortunate position at my club, because we have had really good dialogue and communication. My club is an outstanding example of what can be achieved if you sit down at a table in a room and discuss what we both want, given what we share, which is the love of our football club. From our point of view—speaking selfishly—we already have that at West Brom. We have a really good dialogue. The issue is, of course, that every club is different, as we have intimated before, so I think the regulator has to set out some guidelines as to what can be done with regard to ticket pricing, fan entertainment or anything to do with fan engagement.
Shaun Bailey
Q
Alistair Jones: We campaigned and tried to get answers, and credit to them: they did provide that over a certain amount of time. Once we got to the table, they recognised that we are only here to help. The members of every independent supporters’ trust that I have sat down with volunteer because they love the football club; they do not do it for kudos.
Tim Payton: Of course, if you have the independent non-executive director there, you have a different check and balance, because the INED follows the corporate governance code and would be making sure that effective consultation was happening from a different perspective, but over-layering with whatever the IFR does.
Sarah Turner: Formalising how that engagement looks would be a really good idea, because as you say, people look at it in a different way. Anything that goes forward and that listens to fans and gives them that forum to have their opinions heard has to be a good thing.
Ian Byrne
Q
Tim Payton: I always think independence is good and important, so I assume the IFR board will have INEDs in its process. I think you asked how we make the fan engagement processes better. Ultimately, it comes down to the fact that a supporter trust must have the ability to go to the IFR and say that it does not think that the consultation has been effective. To do that it probably needs a checklist or a process of consultation to have been set out so that it can say, “This has not been followed”. That takes you back—it is starting to sound a little bit repetitive—to a supporter impact assessment or a regulatory impact assessment for all consultation issues.
Alistair Jones: You are right. We cannot guarantee that we will have constant and good communication with our football club—we did not for eight years, for instance. The IFR needs to put procedures and processes in place to address any lack of meaningful communication with the football club. That needs to be addressed in the Bill as well.
Sarah Turner: I agree. Fans are the best early warning signal of anything going wrong, so any independent body that you can go to will always be useful.
Alistair Jones: At the end of the day, if you have 12,000 people marching on a football stadium, it is too late. We need action before that. That is something that needs to be addressed in the Bill.
Anna Firth
Q
Alistair Jones: From the point of view of West Brom, it fell upon Albion fans and Shareholders for Albion to get an asset of community value to try to protect the stadium. It was probably not the all-seeing answer that we hoped it would be, but again, that was reliant on us.
To put it simply, we need better governance. Our previous owner borrowed money from West Bromwich Albion to put into another business portfolio. He could do that without any governance at all. That was never paid back, even though he promised it three times. It was finally paid back by our new owner last month. There must be procedures in place where that can be stopped. If you have money from broadcast revenue, or wherever the money has come from from your football club, and you are using it for other areas of your business portfolios, that should be stopped and not allowed.
Sarah Turner: We would also like the other assets protected, such as the training grounds. We cannot get an ACV on our training ground because it is not a public property, but we think that should be protected in some other way so that it is for the use of the football club.
The Chair
If there are no more questions, may I thank all three of you for your concise and very helpful answers? Thank you very much.
Ordered, That further consideration be now adjourned. —(Mike Wood.)