Football Governance Bill [HL]

Baroness Evans of Bowes Park Excerpts

Committee stage
Wednesday 15th January 2025 Lords Chamber

[Lord Birt (CB)]

My Lords, I rise to move Amendment 295A and to speak to my other amendments, 297A through 297G. While I have, of course, had expert help in the drafting, the approach in these amendments is entirely my own. They are my response to discussions I have had within football and right across this House about the single most radical measure in the Bill: the process for determining fund flow down the football pyramid.

I have already made clear my conviction that the precious and unparalleled role that football clubs play in their communities justifies regulation. Fans should be listened to, and they deserve protection from the occasionally bad, if generally well-intentioned, stewardship of owners and management who take ill-considered risks and lose control of their finances—the overwhelming reason why clubs fail and falter.

I wholeheartedly welcome the provisions in the Bill for promoting good and prudent management. They should have a major and beneficial—indeed, radical—impact on English football. I believe, however, that the precise mechanism set out in the Bill for determining fund flow carries severe risk and could adversely impact the whole of the English game. I note the cogent reservations about the mechanism set out in the EFL’s own briefing paper from last November. I note, too, that the Bill’s progenitor, Dame Tracey Crouch, described the backstop mechanism as the “nuclear equivalent for football.” She observed, quite rightly, that in a nuclear conflict, he who pulls the trigger may not be the winner.

The backstop is an inappropriate measure to resolve issues between two groups who live cheek by jowl and whose membership is interchangeable every 12 months. Next year, any club might find itself sitting on the other side of the table. The essential task of establishing an appropriate flow of funds down the leagues is to balance two public goods, and “balance” is the key word: on the one hand, to maintain the extraordinary success of the Premier League; and on the other, to share sufficient of the fruits of the Premier League’s success to encourage the healthy operation of the whole of the football pyramid and to ensure that any well-managed club can rise to the very top.

Why is the Premier League the world’s most successful sporting league? It is because 40% of the world’s best footballers play in it—twice as many as in any other league. In its squad, Liverpool has nine players, from all over the globe, who captain their country. I mention only Egypt, the Netherlands, Scotland, Brazil and Japan. Premier League players are trained to extremely high levels of fitness. Their skills are honed and developed by the most expert professional support staff available anywhere. Game by game, they are schooled in ever more sophisticated tactics by the world’s best managers.

Ian Graham, the pioneering data scientist who had such a profound impact on the modern Liverpool football club, tells me that all the top Premier League teams are now far stronger than any national side anywhere in the world. So—and this is the absolutely critical point—week after week, fans and viewers all over the globe experience not just the best football in the world, but the best football the world has ever seen. That is the core reason why the Premier League attracts such high revenues and why we must do nothing to threaten that.

The second reason for the Premier League’s success is that English football is so competitive: 51 clubs have played in the league since its inception and only six clubs have survived the whole journey so far from 1992. It might surprise noble Lords to be reminded that Man City are not one of them. Three seasons ago, Nottingham Forest were in the Championship. This day, they are second in the Premier League, and the only team to beat Liverpool in the league this season—unfortunately, a game at which I was present. Eleven seasons ago, Luton were playing in the Conference Premier League. Over 10 years, they rose up through League Two, League One and the Championship to the Premier League. Most impressive of all, in 2008, Leicester were in League One. Eight years later, they won the Premier League, 10 points clear of Arsenal in second place. Plainly, therefore, the necessary balance of which I spoke has been struck: sufficient funds have been flowing down the football pyramid to enable well-managed clubs to prosper, and that must continue.

Currently, around £500 million each year flows down from the Premier League to the rest of the football pyramid, which is hardly parsimonious; but I entirely accept that a regulator must bring conceptual clarity and rigour to this critical arrangement. I have sympathy, for instance, with the EFL’s unease about the balance between parachute and solidarity payments. The current process set out in the Bill for setting the precise quantum of fund flow is, however, unlike anything I have experienced in a long and varied career. It would be divisive, and it could be destructive. It is likely to lead to both sides gaming, not to rational, evidenced negotiation aimed at achieving the necessary balance I have identified.

The core process set out in my amendment embraces the valuable concept in the Bill of a state-of-the-game report; requires the regulator to appoint a heavyweight, experienced commercial arbitrator; allows both leagues first to meet each other alone to discuss their response; and then proposes that the two sides convene under the chairmanship of the arbitrator to try to reach an agreement. If they fail to reach agreement, the arbitrator then determines the settlement according to the detailed and comprehensive criteria set out in these amendments —criteria notably absent from the Bill as it stands.

Keeping everyone in the room and talking is key. Arbitration is a proven process for crafting a solution that balances the interests of all sides, for a substantial and neutral person in the room encourages constructive dialogue and discourages posturing. Moreover, arbitration is likely to foster tailored solutions consistent with the complexity of football’s ecosystem.

Perhaps most importantly, unlike the nuclear and binary final-offer process proposed in the Bill, arbitration is widely used in commercial contexts where relationships are of critical importance. English football would surely benefit more from collaboration and dialogue than from conflict and division. Moreover—and this is no small matter—the criteria set out in these amendments are rooted in public law principles and neutral considerations of sporting competition, thus making it far less likely that the regulator’s decisions would be challenged in the courts.

I do not make these proposals lightly. I hope all sides of the House will see the benefits that this approach would bring. Above all, I hope the Minister will not reject this approach out of hand, but rather, agree to reflect on it and to consult with the key parties before we move to the next stage of this important Bill. I beg to move.

[Baroness Evans of Bowes Park (Con)]

My Lords, I have added my name to amendments in the next group that also propose changes to the resolution process, to which I will speak shortly. However, if the Minister is favourable to the proposed arbitration approach of the noble Lord, Lord Birt, as set out in these amendments— as opposed to those I have added my name to—and would be willing to accept and reflect further on the noble Lord’s proposal, I will be fully in support of that as I believe that his model is unquestionably preferable to that in the current legislation.

The intent behind the noble Lord’s approach is the same as mine—as he eloquently set out, to avoid the divisive approach currently contained in the Bill that could lead to both sides simply facing each other down, and instead to propose a mechanism that would ensure a tailored solution to the distribution of revenues that balances the interests of all sides and encourages constructive dialogue and collaboration to the benefit of the game and clubs at all levels.

As the noble Lord, Lord Birt, set out in his remarks, arbitration is a proven process; it is widely used in a range of commercial contexts and would lend itself effectively as a mechanism for helping to determine the revenues that flow through the football pyramid. In appointing an independent, experienced arbitrator to oversee the process and work with a set of detailed published principles, the regulator itself would remain one step removed, which the Minister has referred to in previous comments. I very much hope that she will look favourably on this well-considered and credible proposal.

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[Lord Jackson of Peterborough (Con)]

Yes indeed, comrade.

I suppose the significant point I am making is that not enough credence has been given to the efforts, which were very well enunciated by my noble friend Lady Brady, of the Premier League through very difficult times, economic downturns and, of course, Covid. At the moment we have that self-correcting economic mechanism to prevent smaller clubs making calamitous economic decisions that may end up with them closing, going into administration, et cetera—although of course, as we have seen from the figures, a relatively small number of clubs have been in that position.

Conversely, we are being asked to formalise in primary legislation a situation where we are putting in the hands of the IFR, along with very significant enabling powers, including Henry VIII powers, the right to redistribute wealth. It may be a simplistic argument but, as my noble friend Lord Markham said, it would be an unprecedented situation for a regulator to redistribute capital between entities. In other words, there will be no internal mechanism or sanction to prevent inordinate amounts of risk being taken. It would be a market distortion and there would be no disincentive for those clubs to make those decisions, as there is now.

That is the philosophical underpinning of why we support these clauses not standing part of the Bill. It does not mean that we do not care about community football clubs. We are being asked to vote not on a perfect piece primary legislation but on the Bill with 100 clauses that is in front of us today. For that reason, I support my noble friend’s contention that Clause 61 and others should not stand part of the Bill.

[Baroness Evans of Bowes Park (Con)]

My Lords, I have added my name to Amendments 302 and 304.

As I said in previous debates on the backstop, I have real concerns about the resolution process, and in particular the binding final offer arbitration model included. The Minister has repeatedly claimed, and said again today, that these powers are to be used only as a last resort, but we have heard from noble Lords across the House that this does not feel like the situation in which we find ourselves today. As has been identified by other noble Lords, the approach being legislated for in the Bill is unduly adversarial and pits two sides against one another rather than encouraging comprise and dialogue. As we have heard, the very existence of the proposed mechanism set out seems to have played a role in the breakdown of the latest round of financial negotiations, which is concerning and does not bode well for the future.

The Government would be unwise to dismiss and ignore this chilling effect, as the current backstop proposal threatens to undermine and damage relations across the football pyramid. The model just does not make sense. In any deal negotiation, if both sides are disappointed at the outcome reached, it is more likely that it has been fair and balances the two sides’ competing proposals. Yet, as we have heard, under the process set out in the Bill, rather than consider each proposal and determine the best approach—which may very well be a compromise between the two—the expert panel formed by the regulator must instead choose one of the proposals.

Amendment 304 gives the expert panel set up by the regulator to oversee the process the ability to combine elements of the proposals

“where it considers that this will result in an order which is most consistent with the principles in subsection (2)”.

This is a far more sensible approach. It does not mean that the regulator or its expert panel would be forcing a proposal on the two leagues involved. Rather, they can play a constructive role in facilitation and mediation to help achieve an outcome that both parties can agree with.

I really hope that the Minister will use the time between the end of Committee and the beginning of Report to discuss further some of the ideas that have been brought forward in this and, as I said in the previous debate, consult with the leagues and individual clubs again. A number of them have expressed concerns publicly about the process. I hope that she will think about tabling amendments that will be supported across the House at our next stage.

[Baroness Twycross (Lab)]

My Lords, I thank noble Lords for their at times passionate discussion on this group of amendments. I agree with the noble Lord, Lord Goddard, that it has been a good debate. All noble Lords who have taken part clearly believe in getting the best governance for our national game, which should be at the heart of discussions.

Let me be clear that the Government’s preference is for an industry-led solution. While we acknowledge that there is an existing agreement in place, if a new updated agreement cannot be reached, an industry-designed proposal, facilitated by the regulator, is the next best option. The model adopted by this Government for a backstop was in the previous Government’s Bill.

One of the dividing lines in your Lordships’ House is clearly on the rights and wrongs of parachute payments and their inclusion or otherwise in the scope of the regulator. This was referred to by, among others, the noble Baroness, Lady Brady, the noble Lord, Lord Markham, and my noble friends Lord Watson of Invergowrie and Lord Bassam of Brighton. I hope that we can all agree, not least because of the debate on this, that parachute payments are a significant part of football’s financial landscape. They clearly play an important role in supporting the survival of relegated clubs and the Government are clear on that.

However, the regulator needs to be able to consider all relevant revenue sources as part of the backstop process, to arrive at an accurate picture of any proposal’s impact on financial sustainability and the potential for distortion of the parachute payments. This is not to say that they must be included. It is to allow the regulator to include them if, having gone through the process with, for example, the “state of the game” report, it has arrived at the view that they should be included in the process.

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As my noble friend Lord Hayward rightly said, we know that many smaller clubs will be hit much harder. Premier League clubs with large existing compliance and legal teams will be able to absorb the extra staffing requirements and the new costs of compliance. But those clubs in League Two or the National League, which have only a few full-time employees, will likely have to engage external support, such as by hiring lawyers or regulatory consultants.

[Baroness Evans of Bowes Park (Con)]

My noble friend makes a good point, and I am sure he has seen the comments by Mark Ives, the general manager of the National League, who said that it is worried that the Bill will be onerous. Some National League clubs work with two or three people and some volunteers. As he rightly says, these are the clubs most worried about the cost of compliance. I know that the Minister has talked about proportionate regulation but, for all of us, and as Mark Ives rightly pointed out, this is a serious concern for those clubs in the National League, the very ones that we want to protect and support.