Football Governance Bill [HL]

Debate between Baroness Taylor of Bolton and Baroness Brady

Report stage
Monday 17th March 2025 Lords Chamber

[Baroness Brady (Con)]

My Lords, I refer the House to my interests, as declared in the register. I support my noble friend’s amendments, which would remove parachute payments from the backstop.

I hope it will assist the House if I explain why I am so concerned about the inclusion of parachute payments within the definition of relevant revenue. It is not because I believe that the parachute system is perfect—I really do not. It is not because I believe that the precise level or design of parachutes should be fixed forever or protected from scrutiny—I do not. Nor is it because Premier League clubs are insensitive to the aspirations of clubs throughout the pyramid—we are not. We all share the same common goal: a thriving, dynamic, sustainable football ecosystem from top to bottom. It is because the backstop mechanism as it has been designed is so fundamentally unsuited to addressing the issues of parachutes.

The previous Government’s backstop was badly flawed, enabling a binary choice between two proposals, one of which must be selected in its entirety. That was highly unusual and posed significant risks. However, that mechanism could have just about been tolerable because, by isolating solidarity or voluntary payments as the sole issue for resolution, the backstop at least delivered a binary choice between two numbers. That is a judgment the regulator could reasonably make. I remind noble Lords that the levels of solidarity are explicitly linked to parachute payments in the existing distribution agreement between the Premier League and the EFL. One can be used to smooth the potential rough edges of the other, which is what the previous Bill correctly recognised.

However, the expansion of the Bill’s scope to include parachute payments transforms the backstop entirely. It is no longer about determining quantum, but now forces a judgment on the wholesale redesign of football’s financial architecture. It has become a choice, not between two numbers but two fundamentally different systems and it is substantially more legally and financially risky as a result.

The crucial thing to appreciate is the connection between the now systemic nature of the backstop and the position of the EFL. The EFL’s chair has called parachute payments

“an evil that needs to be eradicated”

—not reformed or adjusted, but eradicated. When we combine that system, a binary process, with the open agenda of one of the two parties, we create an absolutely intolerable risk. The backstop offers no capacity for careful calibration or fine tuning, which I would be wholly supportive of.

There is no part of this Bill that allows the regulator to make a reasoned, balanced judgment. It creates a binary, “winner takes all” approach, with no room for nuance but plenty of room for poison pills and final damage. It enables a proposal from the EFL that would level down the bottom half of the Premier League, rather than genuinely elevate the entire football pyramid. Surely, we want a mechanism that delivers both a strong Premier League and a strong EFL, rather than a zero-sum game.

The Government have made their political choice on the backstop, but I believe that they did so without the full understanding of its implications for the delicate ecosystem that sustains football at all levels. If we are to avoid serious, legal and economic consequences for football over the next few years, the Government would be well advised to now address the serious problem they have created. If they are not prepared to revisit the decision on parachutes, my amendments on how the IFR should make its final decision offer a constructive path forward that would benefit the entire pyramid. The proposal from the noble Lord, Lord Birt, offers an alternative. There can be no doubt that change is needed.

We all want the same thing—financial sustainability throughout English football—but the starting point must surely be a shared recognition that we cannot achieve this by dismantling the very mechanisms that have made English football, from the Premier League to the National League and beyond, the world’s most successful ecosystem.

[Baroness Taylor of Bolton (Lab)]

My Lords, I start by reminding the House that the Bill will not abolish parachute payments or change the architecture in the way that has just been suggested. When the noble Lord, Lord Markham, talked about the need to have confidence, so that clubs can invest in new players and have confidence in the strong club structure and financial position, he mentioned only the Premier League. He did not refer at all to the rest of the football pyramid. The Bill needs to make sure that we have sustainability, not just of those clubs in the Premier League, but of the whole English football pyramid. It is important to bear that in mind because, while parachute payments may have a place—as most people have acknowledged, certainly at the moment—there is no doubt that the level of parachute payments is such that it distorts competition in the Championship. I asked the noble Baroness, Lady Brady, when we were in Committee, whether she would acknowledge that, and she declined to comment.

If we look at the actual figures involved, there is no doubt that the current arrangements distort competition. At the moment, clubs that are relegated receive, in year one, £48.9 million. Other clubs receive £5.3 million. The redistribution that is often talked about from the Premier League to the EFL does not help all the clubs in the EFL equally. It distorts competition, which is something we should bear in mind when we are talking about parachute payments. Although they may help a few, they do not help the sustainability of the whole pyramid, as they could—and should—if we had a fairer system of distribution.

Football Governance Bill [HL]

Debate between Baroness Taylor of Bolton and Baroness Brady

Report stage
Tuesday 11th March 2025 Lords Chamber

[Baroness Brady (Con)]

My Lords, I support Amendments 3 and 32, which would make the economic and social impact of a football club part of its corporate governance requirements. It has become something of a cliché to point out that football clubs are deeply woven into the fabric of their communities, but it is such an important part of why football is so important in the lives of millions in our countries.

If I may, I will very briefly share what this looks like in practice, through the example of my own club, West Ham United. I am proud that our foundation reaches over 50,000 people annually across east London, operating in some of the most deprived boroughs in our country. When West Ham moved to the London Stadium, we made a commitment that this would not just be about a bigger stadium but about deeper community roots.

The foundation now delivers over 30 different programmes, focusing on health, education, employment and social inclusion. During the pandemic, players and staff personally delivered meals to vulnerable residents. The club and fans made significant financial contributions to local food banks. None of this was seen as charity; it was about responsibility. It is what a football club is all about. Our award-winning Players’ Project has seen first team players become ambassadors for specific community initiatives, giving not just their names but their time and their genuine engagement. These connections matter profoundly to local residents.

What makes these initiatives particularly powerful is that they leverage what football does uniquely well: they bring people together across the divides of age, background and circumstances. When a young person struggling with education attends a programme at West Ham United, they engage in ways that traditional institutions often cannot reach them. I have seen the personal impact for myself countless times.

The economic impact is equally significant. West Ham supports thousands of jobs, directly and through a supply chain predominantly sourced within east London. My club has contributed £323 million in gross value added to the regional economy through supply chain, supporting employment and the visitor economy. Match day brings vital trade to local businesses, where targeted employment programmes have helped hundreds of local residents find sustainable work.

These amendments would help to ensure that such contributions are not peripheral or dependent on the good will of particular owners but are fundamental to how clubs operate and are governed. I commend the Minister, as well as the noble Lords, Lord Addington and Lord Bassam, and the noble Baroness, Lady Taylor, for supporting these amendments. I know that this is a particular passion for the noble Lord, Lord Addington, in relation to his Amendment 50, which is also part of this group. I believe he has had some productive conversations with the Premier League about how we can build on our experience and support football charities.

I believe the league will now be examining how we can work with expert organisations, such as the NCVO, to make good governance advice more accessible to small community organisations. This would be a good use of the Premier League’s reach and profile within communities, so I am pleased it is happening.

Football clubs receive extraordinary loyalty and emotional investment from their communities. These amendments formalise that this relationship is reciprocal and should be embedded in governance structures. That is a perfectly reasonable thing to ask as we develop this new regulatory framework, so I fully support these amendments.

[Baroness Taylor of Bolton (Lab)]

My Lords, we have spent some seven days discussing the detail of the Bill, and I think this is probably the first time I can rise and say that I actually agree with the noble Baroness, Lady Brady. It is true that football has the power to do an awful lot of good. Many clubs—not just West Ham —actually do an awful lot of good in their community. The Minister has tabled Amendment 32, and my noble friend Lord Bassam and I have added our names to it, because this is one of the issues that we have discussed with the Minister and have mentioned in this House.

I will resist the temptation to talk about the good work that Bolton Wanderers does in the community. Suffice it to say that it is one of the few clubs that has actually got a chair who not only talks about helping the community but actually involves herself in the overnight sleep-outs for charity and other such activities. It is a mark of the level of commitment that many of the people who run football clubs have towards their communities and it is something that we should appreciate.

There is sometimes an accusation of sportswashing when clubs make big gestures, but an awful lot of direct involvement with communities can make a difference. In this context, it is particularly important in terms of men’s mental health, because many football groups are reaching people who would not be reached in any other way.

Therefore, I am very grateful to the Minister for the time that she has taken to talk to all of us about these issues, and for the amendment she has tabled, which I am very happy to support.

Football Governance Bill [HL]

Debate between Baroness Taylor of Bolton and Baroness Brady

Committee stage
Wednesday 15th January 2025 Lords Chamber

[Baroness Brady (Con)]

My Lords, I shall speak also to Amendment 312. These amendments would ensure that any distribution order affecting parachute payments is introduced with a three-year, rather than one-year, transition period, and that an order would come into effect only from the start of a new football season.

Before I give the Committee my experience of why that is so important, having spent 32 years running Premier League and EFL clubs, I want to make the point that I think there is a total misunderstanding in the Committee about parachute payments. Parachute payments are not about helping clubs get promoted into the Premier League; they are about helping Championship clubs that are promoted into the Premier League to have the ability to invest to give them a chance to stay in the Premier League. You cannot invest to stay and be competitive in the Premier League if you do not know that there is some sort of safety net to help you in the event of relegation. My Amendments 311 and 312 are, in my view, essential to safeguarding the stability and sustainability of English football, particularly for those clubs that face the challenges of relegation.

As I have said before in the House, parachute payments are not a luxury or a reward for failure. They are an essential tool that encourages the competitiveness, investability and financial sustainability of English football. Without them, relegation would create a financial free-for-all and a cliff edge that could devastate clubs, their communities and the broader ecosystem. Without them, newly promoted clubs cannot invest in their squads to ensure that they have any chance of remaining in the Premier League.

[Baroness Taylor of Bolton (Lab)]

Will the noble Baroness acknowledge that they distort competition in the Championship?

[Baroness Brady (Con)]

I do not say that they do or do not. I am saying that, if they were not there, you would have to invent them. If a club is promoted from the Championship to the Premier League and cannot invest in its team to stay in that league, it is automatically almost certain to be relegated. If an established club, such as those mentioned earlier, is relegated, without the parachute payment it will be in financial trouble. Some 50% of all administrations come as a result of relegation; that is why parachute payments are fundamentally important. They are designed to manage the financial shock of relegation, where clubs could lose significant revenues, almost overnight, while their costs remain fixed.

For a recently promoted Premier League club, squad costs alone average £115 million a year, with most player contracts running for three to five years. Relegation means that clubs face an average shortfall of £165 million over three years, even with parachute payments included in that equation. It is important to recognise, therefore, that they do not help clubs avoid a painful transition but soften the blow to a degree. Without them, the financial impact would escalate from being very painful to being catastrophic.

Football Governance Bill [HL]

Debate between Baroness Taylor of Bolton and Baroness Brady

Committee stage
Wednesday 4th December 2024 Lords Chamber

[Baroness Brady (Con)]

My Lords, I support this group of amendments, which I think are very helpful because they will help to tease out one of the real challenges at the heart of this Bill—how to achieve the right balance of proper oversight with the absolute necessity of delivering regulatory independence. We should, of course, acknowledge the natural instinct to ensure democratic accountability of any new regulator. Given the cultural and economic importance of football to our nation, Parliament should rightly maintain some oversight of how this new body exercises its considerable powers.

The question “Who regulates the regulator?” is beginning to be asked more and more often, not least in relation to the many clear failings of UK regulators, and rightly so. However, I believe we must also tread with real care here. Football’s international governing bodies, UEFA and FIFA, have clear provisions against state interference in the game. While their primary concern has historically been direct government control of national associations, they could well choose to interpret these provisions more broadly. We have already seen their willingness to act even in response to the mere creation of this regulator, and we have seen the Government’s instant removal of a clause in this Bill relating to foreign and trade policy. This tension means we must achieve a delicate balancing act: too little accountability and we clearly risk regulatory overreach; too much involvement of the state and our democratic institutions and we risk creating leverage that could be used against English football’s interest.

I have already spoken about some of the risks here. If Select Committee oversight and IFR responsibility to both bodies was seen as political interference, it could feasibly create that leverage we have warned about whereby clubs participating in European competition, or even England’s tournament participation, is put in jeopardy. We have already seen concerning signs of how these tensions might play out. In just a short time since this Bill’s introduction, we have witnessed numerous attempts to expand the regulator’s scope from environmental sustainability to ticketing prices and kick-off times to corporate responsibility requirements. I am concerned about how this pressure might intensify with direct parliamentary oversight.

Members of the other place, responding quite correctly to constituents’ concerns, might press the regulator to intervene in broadcast arrangements or ticket allocations, or elements that go to the heart of competition tools that should be reserved for the leagues. Select Committees could demand action on issues far beyond the regulator’s core financial sustainability purpose. Each intervention, however well intentioned, risks creating exactly the kind of state interference that could threaten English football’s international position.

We have seen this pattern in other sectors: regulatory mission creep that is driven by political pressure and external events. Football’s unique international framework makes this dynamic particularly dangerous. Every expansion of scope and political intervention creates new vulnerability to UEFA and FIFA leverage. I would be grateful if the Minister, when she responds, could explain how the Government intend to manage these competing demands. How will they maintain appropriate accountability while preventing political pressure from expanding the regulator’s remit? How will they ensure that parliamentary oversight does not become a backdoor for state intervention in football’s affairs? What safeguards will protect against the regulator being drawn into issues that should remain matters for the football authorities only?

Finally, I would be grateful if the Minister could confirm whether this issue has been directly discussed with UEFA and, if so, what its view is on how the IFR’s independence should be preserved in this respect. It seems clear that without comprehensive assurances on every single aspect of the IFR and how it will operate, we risk inadvertently subjecting English football to permanent external control. The irony of creating this leverage will be quite incredible. In seeking to protect our game through regulation, we must not end up permanently compromising its independence and losing control of English football for ever.

[Baroness Taylor of Bolton (Lab)]

My Lords, when the noble Baroness, Lady Brady, started speaking, I thought that we were going to have a first. She started off by agreeing with the noble Lord, Lord Parkinson, on some points that I would agree with him on. Then she went totally against that and said that a Select Committee might be too interfering. I point out to her that the Select Committee that covers DCMS has, for many years, talked about the problems in football such as ticket pricing and the timing of matches. That has not impinged in any way on any international arrangements.

We have to make a clear distinction between Parliament and the Executive, because we are not talking about state control or government control. What we are talking about in this amendment is a proper accountability for any regulator. As I mentioned at Second Reading, I have the privilege of chairing the Industry and Regulators Committee of this House. We had a report about who regulates the regulator, so it is strange that the noble Baroness should use those words. This is not about regulating the regulator; it is actually about holding regulators to account. Both Houses have a very important role to play in making sure that regulators are held to account by Parliament.

I go further: if some of the regulators had been held to account more closely by Parliament in recent years, we would not, for example, have the crisis that we have today in the water industry. There has been a failure of Parliament to hold regulators to account.

My Amendment 89 is not grouped with these amendments but covers very similar points and the same principle. I hope that the Minister will give us an assurance that Parliament will have a role to play in holding all regulators to account, including the independent football regulator.

Football Governance Bill [HL]

Debate between Baroness Taylor of Bolton and Baroness Brady

Committee stage
Monday 2nd December 2024 Lords Chamber

[Baroness Taylor of Bolton (Lab)]

I am very grateful to my noble friend for giving way. Was it not said at some stage during the consideration of the predecessor Bill before the election that it would be a good idea if the regulator was up and running and got some experience of the regime being introduced before considering extending it?

A few minutes ago, we heard that Members opposite thought that this would be too great a burden on smaller clubs. So perhaps it is a good idea to consider when the time is right and what experience the new regulator will have.

[Baroness Brady (Con)]

It was the smaller clubs, as well as us, that said it would be a burden to them. I read out what the National League’s general manager said about his clubs and their concerns.